Scottish hotel market enjoys February rebound amid strong demand for staycations and Valentine’s Day getaways

Average occupancy rate during the month exceeded pre-pandemic levels, according to latest RSM study.

Scotland’s hotel sector saw demand pick up in February, boosted by half-term holiday staycations and Valentine’s Day getaways, a new report has revealed.

Publishing its latest hotels tracker, RSM UK, the audit, tax and consulting firm, said the nation’s hoteliers would be relieved to see a rebound in activity after a slow start to the year. The data, which is compiled and produced by Hotstats and analysed by RSM, shows that the average occupancy rate jumped to 68.8 per cent in Scotland in February; up from 64.2 per cent in the same month last year and compared with 58 per cent in January 2024, while also exceeding pre-pandemic levels.

Average daily rates (ADR) of occupied rooms increased to £102.68 during February, up from £89.39 in January, £92.17 in February 2023, and pre-pandemic rates of £80.77 in February 2020. Revenue per available room (RevPAR) - a key industry measure - increased to £70.61 in February 2024, up from just £51.88 a month earlier, £59.22 in February 2023 and £51.92 in February 2020.

Despite the improved figures, RSM pointed to 'ongoing challenges' for Scotland’s night-time economy which are likely to impact the hotel sector, including the low emission zone scheme in Glasgow, above.

Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said: “February was a relatively strong month for the Scottish hotel sector, boosted by households opting for UK staycations during the half-term holiday and romantic Valentine’s Day getaways. The latest uptick does not come as a surprise, as it’s a very seasonal business, however hoteliers will be relieved to see activity pick up in February, after a slow start to the year.

“While the wider leisure and hospitality industry achieved only a modest increase in sales, and growth was flat for retail sales, it seems the hotel industry continues to be the most resilient when facing current headwinds. Encouragingly, the outlook also remains positive, helped by the UK’s economic recovery and improving consumer confidence as households start to feel like they have more money in their pocket.”

The latest report also showed that gross operating profit margins jumped sharply from just 2.4 per cent in January to 18.3 per cent in February, with further increases in comparison to February 2023 (12.8 per cent) and February 2020 (15.2 per cent).

Despite the improved figures, McCallum pointed to “ongoing challenges” for Scotland’s night-time economy which are likely to impact the hotel sector, including staffing issues and Glasgow’s low emission zone, which is weakening footfall for local businesses and demand for taxis.

Thomas Pugh, economist at RSM UK, added: “The strength of the hotel sector in February is another piece of evidence that suggests last year’s recession is already over. It is also a sign that consumers’ preference for spending on experiences over goods remains intact.

“Looking ahead, there are reasons to be positive about the outlook over the next two years. Inflation should fall back below the Bank of England’s 2 per cent target in April and remain below it for most of this year, combined with decent wage growth that will cause households’ real incomes to rise rapidly. Throw in another 2p cut in national insurance and households’ incomes look much stronger in the second half of this year.”

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