Consumer fears pose a major threat for Scottish hoteliers

Scotland's hoteliers are facing a difficult year amid "obvious worry" among consumers about public sector cuts, interest rate rises and the housing market, a new report has warned.

The gloomy outlook for the sector was highlighted as figures showed that December's snow led to large falls in occupancy rates and revenue for hotels.

Data from accountancy firm PKF revealed occupancy levels in Scotland plummeted by 8.5 per cent in the final month of 2010, a much larger drop than the 1.3 per cent fall recorded in England.

Revenue during the same month was also down just over 9 per cent in Scotland while it rose by 2 per cent south of the Border.

Despite the relatively poor December data, Scotland did record the highest occupancy figures of any part of the UK during 2010 at an average of 71 per cent, compared with 69 per cent in England.

But Alastair Rae, a partner in the real estate and hospitality practice at PKF, warned 2011 would not be an easy year for the industry.

He said: "Whilst the annual data shows that Scotland had a relatively good year considering the economic circumstances, there is obvious worry among consumers about the public sector cuts and the performance of the economy, the continuing depression in the housing market and the potential upturn in interest rates.

"These mean that the sector is facing another difficult year."

Rae added: "The late Easter may slightly prolong the agony for many hotels desperate to see an upswing in the market after a long winter.

"The annual numbers indicate that the hospitality sector has performed well in a difficult marketplace but the last quarter indicates that there has been some slowing in the sector which may result in some further discounting in 2011."

PKF's monthly survey revealed some notable regional variations across Scotland in December.

Aberdeen recorded increases in occupancy and rooms yield - the revenue generated per room - of more than 10 per cent in each case. Rae said the rise was thanks to increased activity in Aberdeen, the capital of Europe's energy industry, after oil prices hit $100 a barrel.

Glasgow had a 2.6 per cent fall in occupancy while Edinburgh suffered a 12.5 per cent decrease in occupancy and a fall of 11 per cent in rooms yield.

Despite the December figures, the Scottish capital still ranked among the best-performing cities in the UK last year.

During 2010, it had average room occupancy of 77 per cent and an average rooms yield of 67.According to PKF, only Bath and Cambridge yielded higher revenues during the year.

Rae added: "These figures indicate just how negatively the adverse weather conditions affected the Scottish hotel sector and, in particular, Edinburgh.

Malcolm Roughead, chief executive of VisitScotland, the Scottish Government marketing agency that promotes Scotland as a tourist destination, said: "The severe weather at the end of last year caused a lot of tourism businesses in Scotland to suffer.

"However, Scottish tourism has shown resilience before and will bounce back."

Roughead highlighted the agency's current "winter white" and forthcoming "European touring" campaigns, which are designed to bring in more visitors from abroad.

He added: "Our ongoing 'My Scotland' campaign is continuing to tap into the 'staycation' trend, with last year showing a 6.4 per cent increase in the number of people who live in Scotland choosing to enjoy a holiday in this country."