By Ian McConnell

Business Editor

HOTELS in Glasgow and Edinburgh have recorded precipitous overall declines in revenue per available room, weighed down by the coronavirus pandemic, according to a report which flags potential for “staycations” to help recovery in 2021.

Accountancy firm PricewaterhouseCoopers’ UK hotels forecast report predicts an occupancy rate of 55 per cent across the UK in 2021. This would be an improvement on 42.2% for the year to July 2020. PwC flagged the situation faced by the hotel sector as the “bleakest” since benchmarking began in the 1970s. Its report concludes that it could take four years for occupancy to return to pre-pandemic levels.

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Edinburgh suffered the sharpest fall in revenue per available room of any of the 24 UK cities covered by the PwC survey, as the pandemic hammered international travel. Revpar is a key industry measure, calculated by multiplying occupancy by the average daily room rate achieved. Hotels in the Scottish capital are heavily reliant on international tourists. And Edinburgh’s traditional summer festivals were cancelled this year amid the coronavirus crisis.

Revpar in Edinburgh fell by 63% in the year to July to £28.32, from £77.37, as occupancy nearly halved to 40.3% from 79.8%. However, although the average cost of an overnight stay in Edinburgh fell to £70.36 during the period – a reduction of around one-third – the Scottish capital remained the third most expensive city in the UK in which to spend the night, behind London and Brighton, as room prices fell across the country.

In Glasgow, revpar declined 54% to £24.89. The average daily rate for a stay in Glasgow fell 17% to £58.57.

PwC said that, in Aberdeen, occupancy was 44.1%, down from 65.5% the previous year. However, it noted that Aberdeen, which “had been recovering from a regional economic downturn following the 2014 oil price crash, saw revpar declining only slightly, by 1%, to £54.99 – representing a less severe impact than in the Central Belt”.

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The firm said the hotel sectors in these three Scottish cities should “begin to recover in 2021 due to increased demand for ‘staycations’ across the UK, outside of London, with Scotland’s largest cities hugely popular with local tourists”.

Hotels in Scotland reopened in mid-July, having closed in late March with the move to full lockdown, missing out on what is normally a key trading period.

Claire Reid, market leader for PwC in Scotland, said: “The hotel sector, like the entire hospitality industry across Scotland, has been more heavily impacted than most by the economic impact of the pandemic, and while the road to recovery is unlikely to be smooth, there are actions that hoteliers, and those who invest in the industry, can take to put themselves on the right path. Through focusing on operations, liquidity and cash, hotels can help mitigate the uncertainty of the market.”

She added: “Our cities still have plenty to offer and will appeal to those looking for a ‘staycation’ in 2021, and that will give hotel operators some hope.”

However, PwC flagged particular challenges for the likes of London and Edinburgh in terms of international visitors. It said: “Business travel will remain muted. Key gateway cities relying heavily on international leisure, or corporate and events-driven demand, including London and Edinburgh, are forecast to experience lower occupancy rates in 2021 compared to coast and country locations.”

Referring to its UK occupancy projections for 2021, for London and the “regional” market elsewhere in the UK, it added: “The forecast for occupancy in 2021 is predicted to be 52.4% for London and 59.2% for the regions. This represents a decline of 31% and 16% respectively when compared to 2019. This shows the scale of the challenge for hotels planning for the year ahead: the only significant market now, and into 2021, will be UK domestic tourism.”

PwC noted its forecast for UK hotels in 2021 was “modelled on an average of two scenarios regarding Covid-19”. It said: “The first assumes a vaccine in Q1 2021, the second assumes a vaccine in Q3, though neither are guaranteed. If no vaccine is developed this will dampen demand further.”