DUNDEE is winning hotel business and attracting companies to set up bases in the city because of an Aberdeen "overspill" factor, a key player in Tayside's £1 billion Waterfront regeneration project has revealed.
A recent analysis by CBRE Hotels found "substantial unmet demand" for accommodation in the city, with hotels enjoying occupancy rates of around 85 per cent.
The demand is being fuelled by Aberdeen-based oil and gas firms sending staff to stay in the city, driven by an under- supply of rooms in the Granite City and more competitive rates on Tayside.
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At the same time such companies are being encouraged to set up bases in Dundee on account of more competitive property leases and thanks to the new facilities being brought by the Waterfront regeneration.
Rigmar Group, the Aberdeen-based oil and gas services company, is a notable example.
Allan Watt, co-ordinator for the Waterfront project, said: "For some companies [in Aberdeen] it's proving beneficial for them to go to the inconvenience of actually bussing their workforce down, and then back up.
"What we are noticing is that the big players are happy to pay big money to get anything they want, but the supply chain linked to that is a bit more competitive in terms of pricing.
"Where that is the case we are viewed as a good back-up."
The hotel stock in Dundee is currently being expanded as part of the Waterfront investment. Planners have identified the need for a further 500 rooms in the city based on the predicted upsurge in visitors due to the investment in infrastructure either underway or consented on an 8km stretch of the River Tay.
The investment ranges from a new marina and commercial quay to a V&A museum, to open in 2017.
Willie Macleod, executive director of the British Hospitality Association, told a recent meeting of independent hospitality operators in the city there is "no reason why" Dundee could not accommodate as many as 1000 further hotel rooms, such is the level of expectation around the Waterfront.
Among recent additions is Malmaison, which launched a 91-bedroom hotel overlooking the Tay at the start of the year. That followed the opening of a Doubletree by Hilton in the west end's former Landmark Hotel.
Budget hotel brand Sleeperz has been confirmed as the operator of a hotel to be built as part of construction of a new railway station, and there remain plans to convert Customs House into a five-star hotel.
While the Aberdeen overspill factor is currently driving room occupancy in Dundee, Mr Watt said the facilities by the Waterfront investment are persuading oil and gas companies to locate on Tayside.
He also cited the talent pool in the city as a key attraction, noting there are 40,000 students in Dundee - equivalent to a quarter of its population.
Rigmar Group, which provides engineering solutions and maintenance to oil and gas and renewable sectors, is among major firms to have recently opened a base in the city.
Mr Watt said: "Our colleagues in Aberdeen are keen to work with us to jointly market our offerings [and identify] where we can do things to mutual benefit.
"It's to not turn the business away from Scotland - it's to be able to say within the wider Aberdeen area, which includes Dundee, here's the range of services, personnel and facilities we have.
"While some of the elements of a business will remain in Aberdeen and can be accommodated in Aberdeen, some of the other elements can be accommodated elsewhere."
It is not only oil and gas companies attracted to Dundee. The first of what could be 10 office blocks in District 10, a former railway goods area in the Seabraes area being developed under the Waterfront masterplan, is close to being fully let.
Scottish Enterprise has leased many units to companies in the creative industries, including designers and computer game developers. Mr Watt said: "It's exactly the kind of fledgling businesses we are trying to attract to that facility. We would be keen to see more of that."
Meanwhile, turning the quayside into a hub for the manufacture and maintenance of offshore wind turbines is another key part of the Waterfront jigsaw.
Dundee has been identified by the Scottish Government as a strategic location for offshore wind turbine manufacturing because of its proximity to areas where the Crown Estate has given permission for farms to be developed.
Access roads to Dundee Port have been upgraded and consents are in place for renewable companies to start operations.
Up to 1000 jobs could be supported by wind turbine manufacturing and 400 in the longer term through operation and maintenance work in Dundee.
Mr Watt, who said Waterfront bosses have "live enquiries" from major renewable companies, expressed frustration at the pace of progess. "A lot of the likely investment to come from that is linked to the level of subsidy, though the energy tariffs which are dictated by Westminster, so there is a real frustration around waiting for that to be clarified. The investors won't move until there is real clarity around that.
"We feel our best chance of landing a lot of jobs linked to that is more to do with operations and maintenance of those turbines. Even though we are the number one Scottish location for their manufacture, the greater likelihood is that we land over 400 operations and maintenance jobs linked to that industry."