Edinburgh loses hotels crown as occupancy rates drop

Edinburgh has lost its crown as the UK city boasting the highest hotel occupancy rate following a surge in new accommodation in 2018, suggests research released today.

An influx of new hotels rooms sees Edinburgh fall from first to fourth place in BDO's Hotel Britain report, with Glasgow close behind.
An influx of new hotels rooms sees Edinburgh fall from first to fourth place in BDO's Hotel Britain report, with Glasgow close behind.

The Scottish capital has slid from first to fourth spot, as its occupancy rate dropped to 83.1 per cent in 2018 – from 85.3 per cent in the previous year – on the back of a host of new room additions, according to accountancy firm BDO’s Hotel Britain report.

Edinburgh hotels remained the fullest in Scotland, although Glasgow was close behind with an occupancy rate of 82.8 per cent, earning the city fifth place overall.

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Liverpool scooped first place with 84.3 per cent, followed by Heathrow (83.9 per cent) and London (83.6 per cent).

Aberdeen, the worst performing regional destination for the past four years under the key rooms yield metric (also known as RevPar), managed to improve its performance during the first half of 2018 as oil prices recovered. The city finished the year with an uplift in rooms yield of 2.5 per cent.

Rooms yield in Scotland slipped by 6.3 per cent overall, compared to a 1.3 per cent drop UK-wide, pushed lower by an increase in supply. Some 1,689 rooms opened across Edinburgh and Glasgow in the past year.

Glasgow was the second regional hotspot in terms of upcoming hotels, with 1,126 expected to open by the end of 2020. Edinburgh currently has 510 rooms expected to open in the next two years, while Aberdeen has 350 in the pipeline.

The report, which is compiled from the responses of a representative cross section of 649 UK hotels, hailed a strong performance for the Scottish hotel sector despite uncertainty around Brexit, a decrease in visitor numbers to the UK and slower economic growth.

Martin Gill, partner and head of BDO in Scotland, said: “The Scottish hotels market has seen a boom in recent years with a lot of investment activity which has resulted in a number of new hotels.

“The large increase in supply has satisfied that increasing demand but there is still a lot of room for potential growth.

“The strong performance demonstrates the industry’s robustness despite facing continued EU uncertainty and an increase in supply.”

With UK visitor numbers expected to rise by an additional one million people in 2019, Gill said that he did not foresee “any major shocks” for the hotel sector in the coming years.

However, he added: “While the government’s focus is on the UK’s economic future, hotel brands and owners have a number of competing priorities on their agenda, most notably investing in the right technology, managing a EU-heavy workforce and overcoming competition from online platforms.”

“Inevitably there will be challenges ahead but I’m confident the Scottish hotel industry will continue to experience growth over the next 12 months and investor appetite will remain strong.”