The monthly LJ Forecaster Scottish Intercity Report, from tourism market research specialists LJ Research, tracking city centre hotel performance in Glasgow, Edinburgh and Aberdeen, shows that all three Scottish cities recorded a year-on-year increase in average room rates.
Glasgow soars
The highest room rate increase was recorded in Glasgow as city centre rates soared by 21.2% to £78.99. Meanwhile, buoyed by strong ongoing corporate demand Aberdeen, the Granite City, saw a 6.5% increase to an average level of £94.40 per night during the month. In Edinburgh, where a record number of festival tickets were sold during the month, average room rates rose to £151.33 (which was an increase of 4.9% compared to August 2013).
Whilst occupancy during the month fell slightly in Glasgow, the benefits of the 2014 Commonwealth Games and other major business and leisure events during the month were evident as Revenue Per Available Room (RevPAR), a measure evaluating the room revenue return on all hotel rooms, not just those that were sold, was well above last year at £72.27 per night (a growth of nearly 20%).
Edinburgh’s booming festival
Edinburgh’s booming festival season was a major contributor of success to its hotel performance. This Festival season, which saw a record breaking year of over 2 million ticket sales for the Edinburgh Fringe and a first time ever sales income of over £3 million for the Edinburgh International Festival, brought artists, performers, journalists and spectators from across Scotland, the rest of the UK, and as many as 75 other nations.
Combined with the growth in room rates, hotels sold slightly more rooms than a year ago as occupancy increased by 0.8%. Overall, this translated to a 5.8% increase in room performance as city centre hoteliers achieved a RevPAR figure of £142.62.
Boosted by major one-off events
John Donnelly, Chief Executive of Marketing Edinburgh, said: “It is very encouraging to see the increase in visitors to the city throughout the month of August – as well as hosting the world’s largest arts festivals, Scotland has seen a number of major one-off events this summer, including the Commonwealth Games, the Ryder Cup and the Scottish Independence Referendum, in addition to the Fringe Festival and Military Tattoo, all of which have had an incredibly positive impact on Edinburgh’s hotel occupancy figures.
Edinburgh has been seen on TV screens across the world more than ever this year and this will help further to attract visitors to the city. The quality and variety of accommodation the city has to offer our leisure and business visitors also continues to move from strength to strength, with a number of more recent openings including Motel One, Ibis Hotels and The Old Town Chambers.
“As well as exciting renovations, launches and events taking place throughout the city on a daily basis, the aim is to make Edinburgh an all year round destination city, particularly during the months either side of the festivals. Preparations are well underway for Edinburgh’s Christmas and Hogmanay celebrations.”
Aberdeen RevPAR up
In line with recent trends, declining occupancy in Aberdeen was again evident as room occupancy fell by 1.3% compared to last year to 79.9%. However, the rise in room rates was more than enough to see overall growth in the market as RevPAR increased by 5.1% to £75.39 during the month.
Lower levels of guest satisfaction
Whilst 2014 so far can be characterised as a period of strong hotel performance in Scotland, insights from LJ Research’s Scotland visitor surveys which capture continuous feedback from visitors to Edinburgh, Glasgow and Stirling , highlights a need for hoteliers to carefully monitor the impact of their rate setting strategies as guests showed lower levels of satisfaction in relation to perceptions of value for money in the 2014 summer period (July to August) compared to the same period in 2013 (7.68 out of 10 in 2014 vs. 8.61 in 2013).
Sean Morgan, Managing Director at LJ Research, said: “Room rate increases in Scotland’s three largest cities in August is another positive indication of growth in the hotel sector. However, these increases must not come at the expense of the customer experience. A marked decrease in the perception of value for money of accommodation compared to last year might not immediately translate into loss of bookings, but it is important that customer expectations are exceeded or at least matched in this increasingly price competitive sector.”
About LJ Research Ltd
LJ Research Ltd is a leading provider of key data and specialised insight to the tourism, travel and hospitality industry. Produced by LJ Research Ltd, the LJ Forecaster produces the most comprehensive set of destination occupancy reports available, providing hotel and destination tourism managers with an up-to-date picture of the total room occupancy and availability in their city based on past and future sales.
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