Low oil price takes toll on hotels in Aberdeen

Picture: PAPicture: PA
Picture: PA
THE low oil price is taking its toll on Aberdeen’s hotel market with double-digit drops in both occupancy and revenue, latest figures show.

Data for May revealed that year-on-year hotel occupancy in the city dropped 17.5 per cent to 62.5 per cent, while revenues per room fell by 30 per cent to £52.45. This contrasted with strong increases in revenue in Edinburgh, Glasgow and Inverness, according to the monthly hotel survey from accountant and business adviser BDO.

Edinburgh had the highest occupancy rise in Scotland in May, rising 7 per cent to 86.9 per cent with an increase of 7.3 per cent in revenue to £75.06. Although occupancy in Glasgow was static at 86.5 per cent, revenues rose 7.8 per cent to £57.49. Hotel occupancy in Inverness fell 1.1 per cent but revenues rose 10.2 per cent to £60.27.

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Alastair Rae, a partner in the property, leisure and hospitality sector at BDO, said: “Aberdeen’s hotel sector continues to suffer from the downturn in the oil and gas sector. Although the oil price may have stabilised it is clear that the economy in Aberdeen and the surrounding area is likely to be deflated for some considerable time to come.

“The economy in Aberdeen is so heavily based on oil and gas and the industry is using the current downturn in oil price as a period of reflection on the viability of the sector as a whole both now and in the future.”

Rae said the impact this could have on hospitality is unknown but “likely to be severe”.

Hoteliers and their investors need to examine current and future costs to ensure they are prepared for all eventualities,” he said.

Outside of Aberdeen, Rae said the hotel sector had seen a strong improvement in revenues as visitor numbers and confidence increases.