Growing consumer confidence as the economy improves is giving Scottish tourism a boost and helping its vital hotel sector to return to growth.
Fresh figures show revenues at the nation’s hotels increased by 4.3 per cent in June, continuing a positive trend from the month before and staying well ahead of their counterparts south of the Border.
Analysis by accountancy firm BDO also reveals that occupancy levels remain above those for the rest of the UK.
It follows recent data suggesting that the economy is improving on both sides of the Border – the last two monthly business surveys from Bank of Scotland have shown that firms are expanding at a solid pace, while UK-wide indicators point towards GDP growth continuing in the current quarter.
Alastair Rae, a partner specialising in the hospitality and leisure sector at BDO, said the continued improvement in revenue among Scottish hotels suggested the crucial summer season may turn out better than previously expected for the sector and was likely caused by an increase in consumer confidence.
“The hospitality sector is very susceptible to discretionary spending which is itself dependent on ‘the feel good factor’,” he said. “With improved employment and economic data being released, there may be a feeling among consumers that they can spend a bit more on leisure.”
Rae said there are also signs that spending by business may be improving, albeit at a fairly slow pace. If the recovery takes hold as expected, Scotland’s more business-oriented destinations should feel the benefit.
“If the economic improvements continue over the next few months then the hotel sector will be a major beneficiary of this upturn and we should, hopefully, see the Scottish market lead the way throughout 2013,” added Rae.
BDO inherited the long-running survey of three and four-star hotels following its takeover of PKF earlier this year.
The survey shows that rooms yield – the industry term for revenue – stood at £63.93 in June in Scotland, up from £61.30 a year earlier. The figure compares to just £48.80 in the UK regions, where the year-on year-increase was also lower at 2.8 per cent.
Although occupancy dipped 0.3 per cent in Scotland it was still higher than the rest of the UK, despite a moderate increase in England and Wales.
Average occupancy was 81 per cent in Scotland, compared to 76.1 per cent in England and 79.5 per cent in Wales.
In Edinburgh and Aberdeen, revenue figures were the third- and fourth- highest respectively in the UK after Windsor and Oxford. Aberdeen saw a 19 per cent increase in revenue during June, in part thanks to its hosting of the Piper 25 oil and gas safety conference.
Glasgow experienced an 11.6 per cent boost to revenue through its successful concert and events promotions, including the Neil Young concert in the city.
Despite a healthy occupancy rate, Inverness saw revenues fall 5.8 per cent, which BDO said indicates hoteliers in the Highland capital resorted to discounting to maintain volume.
Occupancy levels were strong in all four Scottish cities with Edinburgh at 85 per cent Inverness at 84.6 per cent, Glasgow at 83.7 per cent and Aberdeen at 79.3 per cent.