The Scottish hotel sector is attracting new investors and enjoying relatively healthy trading conditions despite the current gloomy economic picture, a leading property consultancy and estate agency said yesterday.

The Scottish hotel sector is attracting new investors and enjoying relatively healthy trading conditions despite the current gloomy economic picture, a leading property consultancy and estate agency said yesterday.

London-based Knight Frank said properties in the £1m to £20m bracket are selling well.

The latest edition of the consultancy's UK Hotel Review says the Scottish hotel market is remaining relatively buoyant despite difficult economic conditions in other sectors. The review says townhouse hotels in many Scottish cities, including Edinburgh and Aberdeen, are doing particularly well.

Businesses such as the Number Ten Hotel in Edinburgh are attracting the interest of new investors who seek the security of having a product with a long-term future and flexible business model. Knight Frank is handling the sale of the business, which made profits of more than £500,000. Knight Frank said the sale is already attracting interest from a variety of potential buyers.

The report also highlights that the Aberdeen hotel market is being supported by the city's booming oil industry and has typically shown stronger-than-average occupancy rates.

There were several transactions in the Granite City's hotel sector in 2007 during which Knight Frank acquired the 50-bedroom Simpson's Hotel in Aberdeen on behalf of Manorisms LLP at a price of more than £10m.

Edinburgh has benefited from the fringe festival and business travel, while cities like Inverness remain buoyant tourist destinations. Glasgow's hotel performance has been lifted by its importance as a conference destination, and among the noteworthy single transactions of 2007 was the purchase in January of the 250-bedroom five-star Glasgow Radisson SAS hotel by Edinburgh-based Strategic Investment Management for a sum believed to be around £68m.

David Reid, a Knight Frank partner, said: "As Knight Frank's Hotel Review highlights, small boutique hotels in Scotland are attracting a lot of interest at present due to their lower operating costs and change-of-use potential. Cities such as Edinburgh have really exploited this, with many townhouse properties now marketing their potential as both a hotel business and residential use. Scotland's hotel sector is still very active and there are many investors with cash reserves who are looking to capitalise on these opportunities."