Scottish hotels struggling as travellers cut their costs

Published on Saturday 21 January 2012 00:14

SOME Scottish hoteliers are struggling to stay in business because of the economic downturn, according to new figures.

Revenues at hotels in Scotland fell by 7.3 per cent in November as operators cut their prices to try to attract visitors, according to figures from accountancy and business advisory firm PKF.

Hoteliers say a drop in business and public sector spending and in consumer confidence is behind the fall.

Alastair Rae, a partner in the real estate and hospitality sector at PKF, said hotel operators were having to work hard to maintain occupancy and revenue in “difficult” trading conditions.

“Maintaining revenues is essential if profitability growth is to return to the sector, which is trading with revenues at the same or lower levels than four years ago,” he said.

“Costs have risen with inflation which, coupled with staffing shortages, has meant it has been a struggle for some hoteliers to keep their heads above water. A dip in revenue like this could be very damaging for businesses with high debt levels.

“These figures show that the sector remains vulnerable to sharp reductions in occupancy and revenue which, with a damaged economy and fairly sensitive customer base, is a real risk. It is clear that the wider economy remains in the doldrums and, unfortunately, this will have its impact on the hospitality sector.”

Scotland’s two largest cities recorded falls in both occupancy and rooms yield.

Glasgow recorded a 1.6 per cent fall in occupancy and an 18 per cent drop in revenue. Edinburgh’s revenue fell by 7 per cent, despite occupancy dropping less than 1 per cent.

Hotels in Inverness and Aberdeen managed to buck the trend. Aberdeen’s occupancy levels rose by 4.2 per cent and revenue by 10 per cent, while Inverness had an increase of 5.5 per cent in occupancy and a slight rise in revenue. The buoyancy of the oil industry and the growing popularity of UK holidays were said to be responsible.

Mr Rae said: “Aberdeen and Inverness continue to perform well with occupancy and revenue up in both cities indicating the importance of, respectively, the oil price and staycationing.”

Nonetheless, Mr Rae said the latest figures were disappointing after a positive summer in which Scotland outperformed England and Wales. The fall of 7.3 per cent in room “yield” compares to a drop of less than 2 per cent in regional UK and 0.6 per cent in England.

Colin Paton, chairman of the Edinburgh Hotels Association and chief executive of Portland Hotels, said: “It strikes me that it is the simple fact that corporate travellers have been spending less and leisure travellers are spending less.

“Sales are down, costs are up and therefore profits are down. The industry is dealing with it as best it can.”

He said marketing and sales were a key to maintaining profits: “You have to have as good a product as possible but marketing, sales and e-commerce is absolutely crucial.”

Russell Imrie MD of Queensferry Hotels, which has hotels in Edinburgh and Dunfermline said he wasn’t surprised to hear of the downturn in revenues. He said both leisure travellers and business travellers were seeking to cut costs – while the cost of running hotels was rising.

“I think what is behind it is the challenging economic circumstances we find ourselves in.” he said. “Consumer spending, corporate spending and public sector spending are all being squeezed.”

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piedodger

Thursday, January 26, 2012 at 01:32 AM

With me and probably many others its about best value for money, prices and location. Iam happy to walk another 10 mins each way to save the extra, and surely a last minute heavily discounted booking is better than no money and another empty room.

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Canton-eze

Monday, January 23, 2012 at 01:51 AM

Good news. Let them struggle. Scottish (and English) hotels are a sickening rip-off. A zillion quid a night for a bed + no breakfast and no internet connection. Extend the rip-off to mainland Europe and there we have it. Take Edinburgh for one rotten domestic example. You want in-room internet connection? We'll rip you for that on top of your basic accommodation cost, and it's only unreliable WiFi anyway. Bloody scandalous. They're at it everywhere. Except ... in China. For many years I have travelled, and continue to travel, throughout mainland China and get excellent reliable FREE wired broadband in my equally excellent room wherever I go. In my regular billet in south China I not only have a well-lit room the size of two average living-rooms (and all-included breakfast) plus FREE in-room wired internet connection. (And I get a generous discount from my lovely managers there who have over the years become dear friends.) Contrast with Hong Kong, where I also spend a great deal of time (and money), where hotel rip-offs now echo those of the UK. Let the hotel rip-off merchants rot everywhere. They are a damned disgrace.

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vistaero

Saturday, January 21, 2012 at 01:54 PM

I have worked abroad and lived in Hotels for years, they had a different attitude to guests better and cleaner Hotels, better prices, heavily discounted rates for long stays, I had 60% discount for long stays on accommodation, and 40% on food, I had my dog with me for years in the Hotels, it came to work with me every day, I had no problems with keeping my dog in the Hotel room, but as you would expect it was not allowed in restaurants and bars. But in the UK you do not get discount, and it is almost impossible to have your dog in the room overnight, and the greedy BAST_ARDS who do allow you to have a dog in your room charge you a daily rate. I have no sympathy for any of them. All they do is Screw guests for all they can.

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vistaero

Saturday, January 21, 2012 at 01:37 PM

SOME Scottish hoteliers are struggling to stay in business because of the economic downturn, according to new figures. What a shame these greedy Hotels and guesthouses are struggling, most of the Hotels in Scotland are below the standard of Hotels abroad and also much more expensive. If they charged per room and not per person then that might help them, but they are so arrogant, think they know best, then I hope thousands of them go bankrupt, change of die, it is that simple.

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Rob I

Saturday, January 21, 2012 at 12:33 PM

Hoteliers are becoming a tiresome story. Every few months they do a 180. Things are great, or wait, no they aren't. When a new hotel is proposed there is a great gnashing of teeth over an overabundance of rooms, then we hear that there are not enough rooms. Are we sure they are not all operated by politicians?

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samcoldstream

Saturday, January 21, 2012 at 10:25 AM

London hotels are suffering exactly the same downturn in business as revealed on the VisitEngland website where a large number of Central London hotels, including the 4 star Shaftesbury, have been offering up to 75 percent discounts. VisitEngland claims that the hotel sector in London will undergo a "flat period" until the Spring and before tourists start arriving for the Olympics. (Source: VisitEngland)

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Charles Linskaill

Saturday, January 21, 2012 at 01:45 AM

"SOME Scottish hoteliers are struggling to stay in business because of the economic downturn", And it serves them all right, for charging £240 for Bed&Breakfast, Their Own Fault for being more than Grotesquely Greedy.

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The Answer

Saturday, January 21, 2012 at 12:56 AM

Iconic!

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