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Edinburgh suffers but Scotland outperforms rest of UK as weather plays havoc for hotel industry

By Luke Nicholls , 13-Jul-2012

Related topics: Business, Trends & Reports, Hotel Trends, Hotels

Hotels in Edinburgh have seen occupancy rates and revenues plummet for the third month in a row, with the downward trend looking set to continue in the Scottish capital for the rest of the year.

PKF's monthly hotel report reflects the negative impact the bad weather is having on the UK hotel sector

PKF's monthly hotel report reflects the negative impact the bad weather is having on the UK hotel sector

According to new figures released by accountancy firm PKF, occupancy fell in May by 5.4 per cent, while revenue was down 7.9 per cent.

"The fall in the value of the euro (around 9 per cent lower than this time last year), coupled with the continued economic uncertainty in the UK means that both European and British tourists are tightening their belts,” said Alastair Rae, partner at PKF.

"Whether this continues remains to be seen but this is unwelcome news for the sector in Edinburgh and increases its reliance on the late summer/autumn period."

Rae went on to point out that travel problems in Edinburgh, caused by tramworks and other roadworks, could make any improvement on these figures ‘difficult to achieve’.

"At that time the city runs flat out so a compensating improvement will be difficult to achieve, particularly as the city is beset with so many travel problems due to the trams and other roadworks."

Scotland outperforms England

The figures for Edinburgh contrasted with those for the Scottish hotel sector as a whole, which actually reported a significant rise in occupancy and revenues in May. In fact, Scottish hotel occupancy and revenues rose at a faster pace than the rest of the UK.

Scottish hotel occupancy increased by 0.6 per cent in May compared with a fall of 0.1 per cent in regional UK.

Scottish hotel room yields – the industry measure of revenue – rose by 3.1 per cent compared with a 1.6 per cent rise in regional UK revenue.

Aberdeen was the best performer in the Scottish sector, with occupancy up 8.7 per cent and yields up 20.2 per cent in May.

Rae added: "The improvement in the figures for Scotland is welcome against a backdrop of fairly static numbers for the UK as a whole.

"There is little doubt that, business travellers aside, the weather has been playing havoc with the tourism sector."

Challenging operating conditions

Meanwhile, the PKF report showed mixed results for England, with hotels in London seeing room yield decline by 0.8 per cent to £126.82, compared with £127.78 a year ago. This was the result of a 0.5 per cent fall in room rate from £151.09 to £150.37 accompanied by a 0.4 per cent decrease in occupancy from 84.5 per cent to 84.3 per cent.

Hotels in the regions increased rooms yield by 1.6 per cent to £45.82 in May 2012 compared with £45.09 a year earlier.  This was due to a 1.9 per cent increase in room rate from £60.99 to £62.12, which more than offset a 0.3 per cent drop in occupancy from 73.9 per cent to 73.8 per cent.  

Robert Barnard, partner for Hotel Consultancy Services at PKF, commented: “This is a solid set of results from hotels in the regions, which continue to deliver year-on-year rooms yield growth despite a challenging set of operating conditions.

“London may have seen a very slight downturn, but occupancy and room rate remain very high so I don’t expect there to be too much concern amongst the capital’s hotel operators.”


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