Outlander effect boosts Scotland's hotel sector but revenues slip

A surge in the number of hotel rooms in Scotland’s two biggest cities has led to a fall in the level of revenue generated per available room, a report today suggests.

Claire Reid is regional leader ofPwCScotland. Picture: Contributed

PwC’s latest hotels forecast reveals that Glasgow and Edinburgh have added more than 2,000 rooms between them in the last year.

However, the increased investment means that both cities are in a “strong position for future growth in visitor numbers”, according to the Big Four accounting firm.

The openings are set to accelerate further over the course of 2019 and 2020, with almost 5,000 new rooms expected to be added by the end of the decade.

Revenue generated per available room, which is key industry measure, has come under pressure in Edinburgh, above. Picture: Contributed

Claire Reid, regional leader of PwC Scotland, said: "From international business conferences to the ‘Outlander’ effect that has given our tourism industry a boost, more people are looking for somewhere to stay in Scotland, and that is an opportunity which investors have capitalised on with more than 2,000 new rooms opening across our largest cities in the last year.

Pressures

"This has impacted the RevPAR [revenue generated per available room] figures in Edinburgh, Aberdeen and Glasgow, with the latter seeing this most keenly felt, however we believe that while the metric is key to providing a snapshot of the hotel industry’s health, the expansion of room numbers shows a confident sector well-placed for future growth in visitor numbers.

"However, we expect RevPAR to reduce further as the number of new openings accelerates through 2019 and 2020 until the point the increasingly demand is absorbed by the supply."

She added: "The weak pound continues to make the UK a more affordable destination, but the cost of importing goods is higher than in the past. In addition, a reduction in EU nationals for recruitment due to Brexit concerns, and increases in the minimum wage have all contributed to increased costs.

"Looking ahead to next year, Glasgow being one of the host cities of UEFA Euro 2020, will be one of the major draws, while the likes of TRNSMT and of course the Edinburgh festivals will ensure Scotland remains a popular destination."