Scotland’s hotels outshine the rest of the UK—here’s why

Hotels in Scotland have been the “clear winners’ in a challenging hospitality landscape in 2024, outperforming the national average for revenue per available room (RevPAR) growth and average daily rate (ADR) growth according to the latest data from CoStar. The 12-month data through to October highlights that hotels across the region have managed to increase RevPAR by 8.5%, significantly ahead of the UK average, which is approximately 2.4% higher than 2023. But what has driven the recent success of Scotland-based hotels? According to Cristina Balekjian, director of UK Hospitality Analytics at CoStar, Scotland has seen quite a strong rebound from international travelers and this was also seen in Visit Britain's recent tourism statistics which saw Scotland’s inbound travel increase 46% with a record 2.0m visits between January and June 2024. This has in turn translated into much stronger performance for the region. She says: “Scotland is specifically seeing travellers from North America visit the region more followed by European travellers.” She adds that the region has gained popularity and international appeal because of its Highlands and the North Coast 500, which is the famous road that goes around all around Scotland, that has become a lot more popular and has been driving more demand to that area. Hotels here stood out as outperformers, experiencing strong growth in occupancy and rates over the past 12 months. The area’s increasing popularity attracted a greater number of domestic and overseas visitors, with 53% of overnights in the area being from abroad. Balekijan also states that being host to various events, such as the Open Championship at the Royal Troon, which is not very far from Glasgow to agreeing to host the Commonwealth Games in 2026, has also helped to bolster demand, which in turn, drove pricing, as occupancy across Edinburgh ranges between 85% and 90% for most of the year. She says: “The Open Championship at the Royal Troon benefited hotels in Glasgow and also in the surrounding areas. Scotland is not a very big country in that sense, and between Glasgow and Edinburgh, you can travel quite easily, which also makes the region easily accessible.” She also states that Scotland has been showcased in a lot of Netflix series and films recently, such as Outlander and Black Mirror, and she believes that that also helps attract demand in those parts of the country, too, as Northern Ireland has had a similar experience with Games of Thrones. She explains: “Overall, I guess there's been limited supply-side pressures from like new hotel development compared to other parts of the UK. For example, if you look at Manchester, there's been a lot more new supply coming to Manchester. London also had a lot of new supply when compared with Edinburgh, which hasn't seen a lot of new supplies, and even though Glasgow has seen quite a few new hotels into that market, I think because it has done so well in capturing events to the city, and has had a few big events over the past couple of years, rooms have been able to be absorbed a bit more quickly. All these factors together have had a positive influence on the hotel market in Scotland.” Looking at the success of Scotland’s hotels Balekijan said that while it’s a bit difficult to say for sure, there are certain lessons and strategies that can be applied by hotel operators in other parts of the UK to improve their performance. She says that sometimes it's not down to the hotel operators as much as it’s on the city’s funding. She explains: “I heard in the past, for example, that Glasgow has been successful in attracting events to the city, but that has also been supported by investment from the local government bodies or local organisations that help to drive funding and inward investment into the city. On the other hand, cities such as Birmingham have more challenges with funding from the city council, and because of that, they're not able to invest so much in attracting major events to the city and things like that. But Birmingham has actually done relatively well this year. However, there are other challenges, for instance if we look at Manchester, it has a very diverse offering, and the local government and industry bodies work really well together to attract events to the city. But Manchester has been getting new supply coming into that market and those additions have somewhat limited the ability of hotels in the city to drive pricing especially.” However, she continues stating that when we consider how many rooms have entered that market, Manchester has actually done “relatively well”. Manchester also has a very strong football demand which helps drive a lot of business. She says: “It's hard to say what other destinations can learn, as sometimes some of it can be dependent on the local organisations that are willing to support the region.” Looking ahead, just as CoStar data highlights that the outlook for the year ahead is “broadly positive” Balekijan also believes that there's still opportunity for further international demand growth, because global travel is expected to continue growing, although it hasn’t fully recovered post-Covid. Furthermore she states that from a domestic demand perspective, the macroeconomic picture is looking “a bit more positive” heading into next year. She predicts: “With consumer spending expected to go up, real wages are expected to grow ahead of inflation, so that should boost demand in the region. I also think Edinburgh will see a greater growth in supply in 2026 but next year, it still looks fairly positive. There are few events happening as well. You have Oasis coming, which should boost demand into places like Edinburgh, which, then again, will boost demand in Glasgow as they are in close proximity.” She concludes that while there are opportunities, there are some risks that also stand out, because “we don’t fully know how things are going to turn out next year.” but overall it's a “more positive outlook looking into 2025”.