THE average daily rate for a hotel room in Glasgow jumped by 6.1 per cent last year – more than three times the UK-wide increase – a key survey shows.
Rooms in Glasgow became significantly more expensive in spite of a major increase in supply. The number of hotel rooms available in Glasgow in January, at 11,672, was up by 10.5% on the same month of last year, according to the UK hotels survey published today by accountancy firm PricewaterhouseCoopers.
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The survey shows that the average daily rate for a hotel room in Glasgow jumped to £76.52 last year, with the 6.1% increase well ahead of a corresponding 1.7% rise in the UK as a whole.
Edinburgh has remained the most expensive place to stay in a hotel, outside London, with the average daily rate for a room in the Scottish capital last year recorded at £103.72. However, this average daily rate was up by only 0.5% on 2017.
The hotel occupancy rate for Glasgow slipped from 82.4% in 2017 to 80.7% last year, with PwC attributing this dip largely to the addition of around 1,000 new rooms.
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Revenue per available room (revpar), a key performance measure for the hotel industry, nevertheless grew by 4.4% to £61.77 in Glasgow, with the decline in occupancy more than offset by the increase in the average daily room rate. Revpar is calculated by multiplying the average daily rate by occupancy.
PwC noted this revpar growth signalled a “successful year”, although it noted that it was a weaker rise than the 5.2% increase recorded by the Glasgow hotel sector in 2017.
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Edinburgh’s hotel occupancy rate dipped to 82.9% last year, from 83.6% in 2017.
This meant the Edinburgh hotel sector’s revpar slid by 0.3% to £86.04, following a 12.4% increase in 2017.
PwC noted Edinburgh hoteliers faced further pressure from the Scottish Government’s proposed Transient Visitor Levy (TVT), noting this could add 2% or £2 to the cost per night of staying in the capital. The accountancy firm observed that this proposed levy had the support of Edinburgh councillors but required legislation from the Scottish Parliament, which was not expected until next year.
Claire Reid, head of retail and leisure for PwC in Scotland, said: “Hotel operators in Edinburgh have been challenged more than [those] anywhere else in Scotland by disruptive new accommodation offerings, and yet occupancy rate remains well above 80%.”
She added: “Investors clearly still have appetite in Edinburgh, with a number of new openings lined up. We await the Scottish Government’s decision on the TVT with interest as its introduction would clearly drive up the cost of staying in Edinburgh, but there is as yet no indication of its impact on demand. With other UK cities looking at the tourist levy option it will be interesting to see what is decided.”
PwC noted Edinburgh’s hotel sector had seen nearly 3,000 new rooms added in the past five years, with a further 2,000 scheduled to open over this year and 2020.
Ms Reid was upbeat about the prospects for Glasgow’s hotel sector, noting the beneficial impact of the The SSE Hydro concert venue and the TRNSMT music festival. She also flagged a further sharp increase in the number of hotel rooms in Glasgow over this year and 2020.
She said: “Glasgow had an exceptional 2018, becoming the fastest- growing city in the UK in terms of average daily rate. The opening of [around] 1,000 new rooms has led to a reduction in revpar but, 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.”
Occupancy in Aberdeen’s hotel sector climbed from 60.4% in 2017 to 64.8% last year, amid brighter signs for the oil and gas industry, but remained the weakest among the 22 UK cities analysed.
The average daily rate for a hotel room in Aberdeen fell by 3.1% to £56.14. Revpar rose by 1.1% to £36.36.
Kevin Reynard, senior office partner for PwC in Aberdeen, said: “The stability that Aberdeen and the surrounding area craves is returning, of that there is no doubt. However, it will take time to fully adapt following the ongoing impact of the 2014 collapse in the oil price.”
He added: “With less people required in Aberdeen on oil and gas business, it follows that hoteliers will face challenges, and, while those challenges remain, it is encouraging to see an increase in revpar.”
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