Budget hotels pose revenue risk for Edinburgh’s leisure industry

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A SURGE in the number of budget hotels in Edinburgh could cause financial problems for many operators in the sector, a report has warned.

The latest monthly survey by accountants and business advisers BDO highlighted “continuing underperformance” of the capital’s hotel sector, an issue first highlighted by The Scotsman last month.

Although poor weather and the “never ending disruption to the roads network” were cited as factors, the report also pointed to overall revenues being driven down by budget hotels.

BDO partner Alastair Rae said several new hotels were opening in the city charging £25-35 per night.

“There is a concern that pricing expectations among tourists may be lowered, resulting in reduced rooms yield among the non-budget offering. This could cause financial issues for many operators over the coming year if it continues,” he warned.

The number of rooms in sites such as the Easyhotel on Princes Street and Motel One on Market Street has rocketed from 890 to more than 3,000 in the past seven years.

The overall Scottish hotel sector experienced almost static occupancy and room yield during February said to the report.

Occupancy rose by 0.3 per cent in February compared to an increase of 2.7 per cent in England and 2.6 per cent in Wales. Aberdeen saw a 2.5 per cent dip, Edinburgh 0.7 per cent and Inverness 0.2 per cent but Glasgow saw a rise of 3.9 per cent. Revenue was up 8.3 per cent in Aberdeen, 4.9 per cent in Glasgow and 1.9 per cent in Inverness but down 6.3 per cent in Edinburgh.