Scottish Hotel Occupancy Falls

Hotels in Scotland have witness a fall in occupancy and revenue compared to the rest of the UK. PKF International’s accountant and business advisers have found that occupancy dropped 0.1% in March, while it increased 2.7% across the region in the same month. In England, occupancy was up 1.3%, and in Wales it rose 7.4%. In Scotland, revenue fell 0.7% to £42.14, while it increased 0.8% to £41.15 across the region.

However, PKF’s research showed that Aberdeen isn’t following the trend, with occupancy up 0.1% to 75.8% and revenues increasing 7.4% to £58.74. Glasgow also did well during the month, with occupancy falling 1.9% but revenue up 4.6% to £45.99, while occupancy in Inverness rose 8.5% to 69.2% but revenue dropped 0.4% to £24.96. However, occupancy in Edinburgh fell 3.9% to 66.4% and revenue dropped 8.9% to £43.66.

PKF International partner in real estate and hospitality Alastair Rae says these figures show the fragility experienced in the hotel sector in Scotland, with falls in occupancy and room yield against the wider trend of the UK, which has seen an increase in both. Occupancy in Scotland is the lowest among the four regions in the UK, while revenue is now on par, though it’s usually higher overall. It’s clear Aberdeen continues thriving with improving occupancy, while revenue is increasing. Glasgow is also performing well, with a strong improvement in revenue likely to be the reason for the small fall in occupancy.

Rae added that, while one month isn’t an indication of a trend, it’s notable that occupancy and revenue in Edinburgh both fell in March. Since the Edinburgh City Council is considering a bed tax on its hotels, it should be noted that the sector is still fragile and is prone to fluctuations in performance, as well as rising costs. It’s unwise to read too much into the March figures, but it’s clear the sector continues facing considerable instability – much like the wider economy. There’s no reason to assume this year will be great for Scottish hotels with these figures.

Coalition partners Labour and the SNP have pledged in an agreement to further consult on the legality and viability of a transient visitor levy. Under the tax, visitors to Edinburgh would pay extra to support city services, as well as marketing and promotional initiatives. Hotel bosses have accused councillors of complacency in regard to the fragile state of the sector and warn that any move to go ahead with the new levies will result in job cuts.

Edinburgh Hotels Association and Portland Hotels chairman Colin Paton says they are told by the council that the city is doing very well. However, the hotel sector says things aren’t great. The new PKF figures match their industry numbers, which indicate a softening in the city’s business, with the city dropping from number two for performance after London to fifth place.

Paton admitted that Edinburgh always has a seasonal drop in business during the early part of the year, as people have less money to spend after Christmas and New Year’s. However, he says the drop they have witnessed this year has been greater than during the same period last year. Despite this, the idea of a levy on visitors is still in the coalition agreement, and it would be “stupid” for the council to waste time and resources on it when it would negatively impact the sector. If the tax is added on top of what’s going on in the economy, jobs will be lost in the city, he added.

Conservative MSP for Lothians and former Scottish Parliament tourism committee member Gavin Brown says the tourism and hotel industries are vital to the city’s economy. The new coalition should rule out the bed tax, as it’s a bad idea, and instead should focus their energy on attracting visitors to the city.