SCOTTISH hotels achieved overall rises in occupancy levels, room rates and gross operating profits in April, as the sector geared up for the summer season, a survey reveals.
Publishing the results of its latest hotels tracker, based on data compiled by Hotstats, accountancy firm RSM UK flagged reasons for cautious optimism over the Scottish hotel sector’s prospects in the second half of the year, noting consumers still seemed to be prioritising experiences over goods.
The overall occupancy rate for hotels in Scotland rose from 65.4% in March to 70% in April. The occupancy rate increased from 68.7% to 71.2% between these two months across the UK.
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Average daily rates of occupied rooms jumped from £101.90 in March to £117.27 in April in Scotland, and from £135.69 to £142.73 in the UK as a whole. Room rates are up 10% in Scotland and 16% across the UK when compared with the same month of last year, the tracker shows.
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Revenue per available room (revpar) jumped from £66.70 in March to £82.11 in April in Scotland and increased from £93.23 to £101.57 in the UK as a whole. The hotel sector’s gross operating profit margin rose from 19.8% to 24.8% in Scotland last month, while falling from 31.9% to 31.4% across the UK.
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Thomas Pugh, economist at RSM UK, said: ‘Falling inflation, a drop in energy prices, and a tight labour market means consumers’ real earnings should start rising again in Q3, which will support demand. What’s more, consumers still seem to be prioritising experiences over goods, which should further support demand for hotels.
“However, concerns about sticky inflation mean that interest rates are likely to rise to 5%, or even a little higher, raising the risk that the UK goes into a recession later this year or early in 2024. That, of course, would offset any benefit of falling inflation on consumer spending. There are reasons to be optimistic about the second half of this year, but only cautiously so.”
Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said: ‘Visitors to the key hotspots in Scotland are helping improve the performance of the hotel sector. This looks set to continue with the onset of summer.”
He added: “Hotels are still tackling rising costs and soaring inflation but it’s encouraging to see demand increasing, which means hoteliers can occupy rooms without the need for heavy discounting. This is also having a positive impact on the bottom line, which will come as a good flip for the sector as businesses start to rebuild their balance sheets. While there’s reason for optimism as consumers choose to spend on going out and on leisure, hoteliers need to be flexible and agile. With another interest rate rise on the horizon, the rest of the year will be far from plain sailing.”
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