Plans for new 195-bedroom Premier Inn unveiled for Edinburgh in 1980s office block revamp

Edinburgh is set for one of its largest budget hotels after multi-million-pound plans were unveiled to convert a city centre office block.

Hospitality giant Whitbread has submitted a planning application for a new 195-bedroom Premier Inn on the capital’s Festival Square, adjacent to the existing upmarket Sheraton hotel.

An overhead visual design of the new Premier Inn | Whitbread PLC

The firm has made a commitment to invest more than £21 million in the conversion of the existing building into the new budget hotel.

After acquiring the 65,350sqft office block off Lothian Road from Federated Hermes last year, Whitbread has been preparing a planning application to change the use of the building.

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Those plans involve converting the 1980s office block and its rear extension into a latest format Premier Inn hotel, incorporating a ground floor restaurant and bar.

The Capital House Premier Inn is expected to generate an additional £8.1m per year in visitor expenditure through the external spending of the 56,000-plus guests who are predicted to stay at the hotel every year.

Half of this external expenditure is anticipated to be spent supporting city centre businesses.

Whitbread welcomes close to a million visitors to its established network of 14 Premier Inn hotels within the Edinburgh council area. The business calculates its guests staying at these hotels generate more than £32m in visitor expenditure to the local economy every year.

Jill Anderson, acquisitions manager for Scotland at Whitbread, said: “The visitor economy in Edinburgh is thriving, but there remains an unmet demand for additional budget hotel rooms in the city.

“Capital House represents an excellent opportunity for us to deliver new Premier Inn bedrooms at affordable prices for our customers in a fantastic city centre location.

Inside one of the planned rooms for the new Premier Inn at Capital House | Whitbread PLC

“The location is ideal for both business and leisure customers. It is sustainable and highly accessible with direct bus, tram and rail networks within a short walk. It’s a stone’s throw from the Edinburgh International Conference Centre and Exchange District and is close to tourist destinations like Edinburgh Castle, Usher Hall and other theatres.

“We’re thrilled to submit proposals to transform this underused office building and bring life back into this corner of Festival Square. We look forward to working with Edinburgh council to progress the application towards determination.”

The plans come as it emerged that occupancy and room rates dipped slightly for Scotland’s hotel sector in March, with further headwinds expected amid the increase to employers’ national insurance contributions from last month.

Data compiled by Hotstats and analysed by audit, tax and consulting firm RSM UK shows average occupancy of Scotland’s hotels in March was 73.5 per cent, compared to 73.6 per cent a year earlier.

Average daily rates of occupied rooms in Scotland saw a small decrease, from £106.39 to £104.71 in March year-on-year, with the downward trend also seen in London and elsewhere in the UK.

Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said: “The fall in Scotland’s hotel occupancy in March could be a sign of choppier waters ahead, with the increases to employers’ national insurance contributions and national minimum wage, which will impact already squeezed revenues.”