Rising costs, new flights and ‘timely’ Trump effect: How Scotland’s hotel sector is shaping up in 2025

Scotland’s hoteliers are seeing soaring costs outpace revenue growth with next month’s hikes in national insurance contributions and the minimum wage set to add further pressures, a key survey has warned.

Despite the growing costs burden, industry experts said consumers continued to prioritise travel post-pandemic and wanted to go away, meaning demand should remain strong. They also pointed to a buoyant golf tourism market and an increase in the number of direct flights to Edinburgh.

The latest hotels tracker from RSM UK, the audit, tax and consulting firm, shows total Scottish hotel payroll costs (as a percentage of total revenue) leapt from 31.2 per cent in December 2024 to 46.4 per cent in January, and from 28.8 per cent to 39.6 per cent for the wider UK market. Year-on-year, payroll costs (as a percentage of revenue) increased from 45.4 per cent in January 2024 to 46.4 per cent in January of this year in Scotland.

Eric Trump during a visit to Trump International Golf Links, Aberdeenshire. Picture: Jane Barlow

Occupancy of Scottish hotels was up slightly, from 58 per cent to an average of 58.7 per cent in January, year-on-year, similar to the UK which saw a slight uplift from 61.2 per cent to 62 per cent for the same period.

Meanwhile, the research - compiled and produced by Hotstats and analysed by RSM - showed that average daily rates (ADR) of occupied rooms in Scotland saw a small increase, from £89.54 to £91.57 in January, year-on-year. Gross operating profits were relatively flat.

Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said: “Scotland’s hotel industry experienced a slight lull in January, which is reflective of it being a typically quiet month for the sector. However, it’s encouraging to see a modest uptick in occupancy and average daily rates.

“But, the rapid rise in costs is outpacing the growth in revenues, so higher room rates are yet to translate into increased profits. Cost pressures are set to rise due to the increase in employers’ national insurance contributions and the national minimum wage in April. Additionally, geopolitical tensions are causing turbulence in the global market, leading to uncertainty,” he added.

“However, golf tourism contributes significantly to Scotland’s economy and hospitality industry, attracting a large number of tourists from the UK and overseas, especially from the US. The recent meeting between Eric Trump and John Swinney is therefore timely, increasing visibility of Scotland and its various golf resorts.

“The good news is that consumers continue to prioritise travel and want to go away, so demand should stay strong. Scotland has also seen an increase in the number of direct flights to Edinburgh, ensuring strong numbers of international tourists, but it’s important this success is shared across towns and cities to ensure a balanced and sustainable tourism industry.”

RSM UK economist Thomas Pugh said: “Overall, we expect a gradual rise in the economy this year as the budgeted increase in government spending and investment, and the strong real earnings growth, starts to filter through into stronger consumer spending. However, trade tariffs, economic uncertainty and volatility in financial markets will all weigh on growth this year.”

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