North Sea oil surge stokes Aberdeen hotel prices

Aberdeen hotel rates have been boosted by the oil industry. Picture: TSPL
Aberdeen hotel rates have been boosted by the oil industry. Picture: TSPL
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ABERDEEN’S booming oil and gas sector left the Granite City with the most-expensive hotel rooms outside London during the opening six months of the year, according to a report published yesterday.

Average prices in Aberdeen rose by 10 per cent year-on-year to hit £86, the fastest rise in Scotland, with Edinburgh notching up a 3 per cent increase to £74 to take third spot in the UK table.

Costs in Glasgow rose by 2.2 per cent to £57.70, although the city still lags behind the £72.80 it reported in 2007, the year it was named as the host city for the Commonwealth Games.

Jason McBurnie, corporate finance director and consumer and leisure specialist at “big four” accountancy firm PwC, which compiled the report, said: “2014 promises to be an important and exciting year for hoteliers in Scotland, particularly those in Glasgow.

“We’re very optimistic about the year ahead for the sector in Scotland. Notwithstanding major planned events, historically, there’s always been a close link between revenues and gross domestic product (GDP) growth and, while it’s early days for an economic recovery, this should lead to increased levels of room demand and revenue growth in the following years.”

PwC said Glasgow could reach “record highs” next year thanks to hosting the Commonwealth Games, if it can replicate the success enjoyed by Manchester in 2002 and London during last summer’s Olympic Games.

Golf’s Ryder Cup and Visit-Scotland’s second Year of Homecoming are also expected to give the Edinburgh hotel market a boost, the firm added.

Commenting on construction work taking place in Glasgow, McBurnie added: “Our analysis shows a further five hotels are due to be completed ahead of next summer’s games adding an additional 671 rooms to the existing 7,806 capacity.”

The report also noted that Aberdeen – which currently has 73 hotels – has plans for a further 20 sites, although only four of these are under construction, with the rest either on hold or still in the planning stage. PwC added: “Surprisingly, there are no five-star hotels in Aberdeen at present, despite the fact that the city boasts some of the highest living costs in the country and attracts oil and gas professionals from all over the world.”

Occupancy rates also rose between January and June, with Aberdeen up by four percentage points to 78 per cent, Edinburgh two points higher at 75 per cent and Glasgow rising by 2.6 points to 74 per cent thanks to its buoyant conference market.

PwC’s findings echo those from rival BDO’s monthly hotels report, which last month revealed a 4.3 per cent increase in Scottish hotel room revenues during June, continuing a positive trend from the month before and staying well ahead of the figures posted in England.

Alastair Rae, a partner 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 a rise in consumer confidence.