Budget hotels failing to cash in on the downturn

Published on Friday 17 October 2008 22:42

SCOTLAND'S budget hotels have suffered a fall in occupancy rates and revenues, according to new research, which would appear to pour cold water on industry talk of guests trading down during the credit crunch.

According to PKF's monthly hotel survey, hoteliers offering rooms for less than 40 a night reported a 6.1 per cent drop in revenues and a 4.4 per cent fall in occupancy rates

The Scottish hotel sector as a whole reported a 3.2 per cent rise in revenues in August, compared with a 0.3 per cent fall across the UK as a whole.

Occupancy levels throughout the whole of the Scottish market fell by 2 per cent, matching the drop recorded UK-wide.

All three of Scotland's main cities recorded falls in occupancy during August, with Edinburgh dipping 2 per cent, Glasgow by 1.8 per cent and Aberdeen 1.3 per cent.

The festival season gave Edinburgh a boost though, with the Scottish capital's hotel rooms generating an average of 112.57, 30 above the Scottish average and the highest in the UK.

Alastair Rae, a partner at PKF, said: "The stability of rooms yield in August is an extremely positive situation for hoteliers, who have been experiencing a fall in both occupancy and revenue for the last few months. The late summer period has provided some respite from a difficult year to date and hoteliers can take comfort that revenues remained strong in one of their key periods, even in these unprecedented times of economic turbulence.

"It is too early to say whether August is the harbinger of better times ahead for the hospitality sector or whether it is likely to face a continued downturn."

A spokesman for Travelodge played down the report's findings on the budget hotel sector. "Our occupancy rates in Edinburgh in August were over 90 per cent and we had a similar strong performance across Scotland," he said.

"The budget hotel sector is under-represented in Scotland, which is why we interned to expand rapidly over the forthcoming years.

"It is inevitable that, given the competition, some hoteliers are going to struggle but we are strongly placed to grow our market share at their expense."