Mixed month for Scottish hoteliers as Aberdeen shows signs of stablisation

Market declines in Aberdeen continue to show signs of stablisation as hotels in Scotland’s three largest cities reported a mixed month during August.

The latest monthly LJ Forecaster Scottish Intercity Report, from tourism market research firm LJ Research, showed flat overall performance for city centre hotels in glasgow, strong growth in Edinburgh and a continuation of double-digit negative yields in Aberdeen during the month.

Average room occupancy was highest in Edinburgh with 92% of hotel rooms filled during a month in which the capital hosted six Edinburgh Festival events. However, the high occupancy still represented a 1.7% decline from the same month last year.

The occupancy loss was offset by buoyant room rate growth of 12.7% – the ninth successive month of revenue growth in the city. This was largely driven by the performance of four and five-star hotels as they achieved average room rate (ARR) growth of around 15%.

Overall ARR was £181.96 which marked the highest ARR Edinburgh figure on record since LJ Forecaster monitoring began over 10 years ago. Revenue per available room (RevPAR) for hotels in the city was £167.40 – 10.7% higher than the same month last year.

Hotels in Glasgow recorded room occupancy of 89.8% and, like their counterparts in Edinburgh, also saw a contraction in room occupancy – of 3.9% – compared with last year. This was the fourth successive month of year-on-year occupancy declines in the city.

Meanwhile, ARR in Glasgow grew by 4.1% to £77.83. As a result, the room rate growth combined with the occupancy loss generated relatively flat RevPAR of £69.91, which was 0.2% higher than last year.

Aberdeen experienced its strongest year-on-year occupancy growth (6.6%) since September 2013 and has now achieved four consecutive months of occupancy growth, but this was at the cost of ARR which fell 16.3% to £66.07.

However, this was the smallest reduction in over a year indicating that the pace of decline in the market has slowed. Occupancy growth and slowing reduction in ARR resulted in RevPAR £49.30 – down 10.7% on the same month last year.

Sean Morgan, managing director at LJ Research, said: “It is interesting to see for the second successive month reducing occupancy in Scotland’s two largest cities. Increases in hotel supply along with the influence of Airbnb are likely to be a few of many disrupting factors in these markets.

“Meanwhile, Aberdeen hotels continue to show signs of market stabilisation although with evidence of declining business on the books for the next few months it will be hard for the sector to shrug off the current challenges.”