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Buoyant hotel performance in Edinburgh whilst Glasgow and Aberdeen record declines

The monthly LJ Forecaster Scottish Intercity Report, from tourism market research specialists LJ Research, tracking city centre hotel performance in Glasgow, Edinburgh and Aberdeen, showed strong growth in Edinburgh and reductions in performance in Glasgow and, most notably, Aberdeen for the month of June.

In June 2016, 93.3% of all hotel rooms available in Edinburgh were occupied. Put differently, and to illustrate the strength of the local market, only 6.7% of the city’s rooms were unoccupied. In Glasgow, room occupancy for the month of June stood at 85.9%; in Aberdeen, average room occupancy achieved 70.8%.  

In Edinburgh, higher room occupancy was accompanied by a strong rise in average room rates (ARR), too. The average price of a room in the capital’s city centre was a staggering £125.69 which constituted a 10.8% increase compared to June 2015. The figure also signalled the highest June room rate recorded since the inception of the Edinburgh LJ Forecaster hotel study in 2005.  

Factoring in the occupancy and room rate performance, Edinburgh’s Revenue per Available Room (RevPAR) – a key performance metric for the sector – was up a whopping 13.8% on last year at £117.28.  

Glasgow’s room occupancy of 85.9% was down 7.4% on June 2015. At £80.03, the average room rate in Glasgow was down too by 0.7% compared to this month last year. As a result, RevPAR fell by 8.3% compared to last year.  

Like last month, Aberdeen’s hoteliers noted a small increase in room occupancy – this month saw a 2.4% increase compared to June 2015. However, hotel performance in June overall was still significantly below the levels recorded before the hefty fall in oil prices with ARR at £67.42, down by 21.9% compared to last year, and RevPAR at £47.71, down 20.0%.  

2016 to date
Looking at findings from the first six months of 2016, Edinburgh’s hotel market appears buoyant and growing. More than offsetting the 1.6% reduction in average occupancy between January and June, hoteliers recorded a healthy rise in average room rates of 7.2%.  

Meanwhile, in Glasgow overall growth in the first 6 months of 2016 was negative as falling occupancy of 2.8% outstripped a modest increase of 1.8% in average room rate. That said, it is noteworthy to report that Scotland’s largest city achieved higher occupancy than the capital during the period (78.0% compared to 77.0%).  

During the first half of 2016 Aberdeen’s hoteliers continued to suffer the consequences of the struggling oil industry as average occupancy was down by 9.6% compared to 2015 and average room rates were some 25% lower than a year ago.  

Sean Morgan, Managing Director at LJ Research said: “June saw another month of contrasting fortunes for hoteliers in Scotland’s largest cities. The frontrunner this month was Edinburgh which recorded remarkable double digit room rate growth. Savvy revenue management by hotels and the impact of a diverse range of events helped to affect the strong performance. For the second consecutive month in Glasgow year-on-year reductions in both indicators – occupancy and, to a lesser extent, room rate – was recorded. RevPAR as a result fell again by over 5% compared to 2015. Whilst the last few months’ performance highlights challenges in the market, hotels in Glasgow continue to achieve notably higher RevPAR compared to two years ago – pre the Commonwealth Games.”

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