Edinburgh tops UK hotel development index

Edinburgh has once again topped a UK-wide index revealing “hot spots” for hotel performance and development activity.

The frontage of a Virgin Hotel  a brand that is coming to Edinburgh. Picture: Contributed

The Scottish capital was the best performer on Colliers International’s latest UK Hotels Market Index for the second consecutive year, with a rating of 3.86, a slight drop from 2018’s 3.97.

A strong investment pipeline, consistently high occupancy rates and increased revenue per room in 2018 contributed to the city’s overall score.

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Glasgow also performed well, climbing three places to seventh with a rating of 3.65, up from 3.47 last year.

The property advisor’s index analyses 34 UK locations across five categories to determine “hot spots” for hotel development. Belfast took second place with a rating of 3.78, followed by Liverpool, Chester, Bath and London.

London topped the table in the occupancy stakes, beating Edinburgh’s 82.9 per cent occupancy rate with a score of 83.3 per cent. However, due to higher land and construction costs, this was not enough to lift London’s position above sixth place in the index.

The Scottish capital’s average daily room rate rose by £1 to £104, with only hoteliers in London (£150) and Bath (£117) recording higher prices.

In the last year Edinburgh hotels grew their revenue per available room (RevPAR) by 6.1 per cent, the fourth consecutive year of growth. The city was beaten only by Liverpool in this key industry measure of profitability.

Alistair Letham, director of hotels agency at Colliers International in Scotland, said Edinburgh’s hotels now enjoy revenues per room and investment levels “that most other cities can only dream of”.

He said: “The first couple of months of 2019 have actually been slower in the Scottish capital, compared to 2018, but there is an expectation that visitors will be returning in ever greater numbers when the season gets going.

“This is reflected in the number of new hotel developments in the city: the new hotels at the St James’ Centre, Virgin Victoria Street, Torphichen Street, Morrison Street and a new Premier Inn on Princes Street will soon be joining the new openings around the airport, which kicked off 2019.

“That said, Glasgow is clearly catching up. The Hydro has really made a difference and the city has a thriving business and conference trade.

“Both Glasgow and Edinburgh are among the top five cities in terms of development, with an extra 10.5 per cent and 13.5 per cent capacity respectively set to be added in the next two years.”

Edinburgh and Glasgow scooped first and second place, respectively, on the Colliers’ Development/RevPAR index, which reflects a combination of the land cost, build cost, 2018 occupancy and the active development pipeline.

This index ranks the best markets with regards to hotel performance in relation to the costs of development.

Letham added: “The fact that two Scottish cities topped [this] index, a key measure for investors, is a very promising sign for the hotel operating and construction industries.”

He said that despite caution among investors and developers surrounding Brexit, he was not aware of any Scottish developments that had been postponed or cancelled.