Glasgow leads UK hotel growth with soaring revenues

Glasgow is spearheading growth in the hotel sector as the cost of overnight stays in the city soared by more than 3.5 times the UK average in 2018.

PwC's Claire Reid said Glasgow enjoyed 'an exceptional 2018'. Picture: Peter Devlin
PwC's Claire Reid said Glasgow enjoyed 'an exceptional 2018'. Picture: Peter Devlin

Increased appetite from business and leisure travellers meant the city’s hotel sector was the UK’s fastest growing last year when measured by average daily revenue (ADR), which rose 6.1 per cent to £76.52, according to PwC’s latest UK Hotels Forecast Update.

This is against a national average of 1.7 per cent growth.

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The opening of almost 1,000 new rooms caused Glasgow occupancy rates to slip 1.7 per cent to 80.7 per cent, but the key revenue per available room (RevPAR) metric climbed by 4.4 per cent to £61.77 due to higher rates.

As of January, there are 11,672 hotel rooms available in Scotland’s largest city, marking a 10.5 per cent increase in the last 12 months.

RevPAR at Edinburgh hotels slid 0.3 per cent to £86.04 as occupancy rates dipped from 83.6 per cent to 82.9 per cent. This marks a significant fall from 12.4 per cent RevPAR growth in 2017.

Although ADR in the Scottish capital only rose 0.5 per cent in 2018, it remained the most expensive place to spend the night in the UK outside of London, at £103.72.

Claire Reid, head of retail and leisure for PwC in Scotland, said “Glasgow had an exceptional 2018, becoming the fastest growing city in the UK in terms of average daily rate.

“With the lure of The SSE Hydro and the TRNSMT music festival along with the success of the city’s ongoing international charm offensive, we can expect a strong 2019 with an additional 1,400 new rooms opening in 2019 and 2020.”

Edinburgh figures illustrated “the enduring appeal” of the capital, said Reid, adding: “This is reinforced when you consider that hotel operators in Edinburgh have been challenged more than anywhere else in Scotland by disruptive new accommodation offerings, and yet occupancy rate remains well above 80 per cent.”

Almost 3,000 hotel rooms have been added to Edinburgh in the past five years, with a further 2,000 set to open by 2020.

In Aberdeen, the growing confidence in the local economy did not translate to growth in the city’s hotel sector.

While the occupancy rate climbed 4.4 per cent, it remained the lowest of the 22 UK cities analysed by PwC, at 64.8 per cent.

Kevin Reynard, Aberdeen senior office partner for PwC, added: “The stability that Aberdeen and the surrounding area craves is returning. However it will take time to fully adapt following the ongoing impact of the 2014 collapse in the oil price.

“The Aberdeen Harbour expansion is likely to have a positive impact on the city with cruise ships set to arrive from 2020, while the opening of The Event Complex Aberdeen in the summer will increase demand for hotel rooms.”