Edinburgh is the only UK city outside London to be named among the top eight European cities expected to achieve strong growth in 2015 and 2016 according to PwC’s latest European hotel forecast.
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And according to PwC’s analysis of 22 UK cities, Aberdeen and Glasgow join the capital city in the top six locations for both active room pipelines and overall forecasted growth above the long term average.
The improving economic and business travel backdrop is expected to continue driving growth in the hotel sector over the next two years. Events such as the World Gymnastics Championship, Open Championship, Richo Woman’s British Championship and Turner Prize as well as the Scottish Government initiative, Year of Food and Drink, are expected to fuel hotel demand throughout 2015.
The Scottish hotel industry is also be building on a strong 2014 with events such as the Commonwealth Games and a wide range of cultural festivals, combined with interest in the Scottish Referendum, helping boost performance.
Bruce Cartwright, partner, PwC in Scotland, said:
“Here in Scotland, we’re seeing growth driven by a combination of higher average daily rates (ADR) and occupancy levels. This could, in part, be attributed to a structural shift towards more branded budget hotels as well as access to online distribution channels and greater propensity by people to travel.
“In strong performing cities – like Edinburgh and Glasgow – which operated at over 80% occupancy in 2014, this gives hotels the confidence to raise rates and in 2015 and 2016, we could see ADR rise by as much as 4.6%, driving RevPar growth of around 5.4%. Despite the ongoing oil price challenges, Aberdeen still commands the highest ADR outside of London, at £97.64 – a 9% uplift on the previous year.
“We can expect this trend of strong growth across the three cities to continue over the next two years, albeit at a slower pace to 2014.
“As we look ahead, there is no doubt that the hotel sector faces plenty of challenges, particularly as a result of economic and geopolitical uncertainties. However, we remain optimistic in its ability to compete, adapt and succeed.