A combination of strong levels of demand, rising average daily rates (ADRs), relatively low development costs and high occupancy levels has seen the capital of the Highlands beat Edinburgh into second place.
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The Scottish hotel index, published by property consultancy Colliers International, is based on analysis of five locations, ranking them according to nine key indicators, to determine the hot spots for hotel development and acquisition activity.
It has found that Inverness is the most attractive market for investors, followed by the Scottish capital then Glasgow, Perth and Dundee (which are combined in the study), and Aberdeen.
Marc Finney, head of hotels and resorts consulting at Colliers International, said: “Our Scottish hotels market index shows the changes taking place in the sector.
“The study in particular, highlights that Inverness is not necessarily the best hotel market north of the Border, but it is currently providing the best opportunities in Scotland. Inverness has recorded high levels of demand of around 80 per cent over the past four years, which has enabled ADR to rise by 22 per cent between 2013 and 2016.”
He added: “It is cheap to acquire hotel sites there, providing investors with much better value for money than, say, Edinburgh.”
Alistair Letham, Scottish director in the UK hotels agency team at Colliers, said: “The index shows that hotel performance is on an upward trend in Inverness, and there is little new stock of guest rooms in development. Despite being expensive, Edinburgh is also on an upward trend.”