Edinburgh hotels set for long-term growth

By Carina Perkins contact

- Last updated on GMT

Related tags: Hotel

Edinburgh hotels have faced tough trading conditions over the past seven years, but things are looking up
Edinburgh hotels have faced tough trading conditions over the past seven years, but things are looking up
Edinburgh hotels are set to enjoy revenue growth on the back of sporting events, increased corporate bookings and additional flight routes to the city, according to a new report from HVS.

The report revealed that in recent years, the growing number of new limited-service hotels in the city have prompted an overall decline in Average Daily Rates (ADR).

“Edinburgh has experienced a 170% increase in its limited-service hotel inventory in the last eight years,” it said.

Hotels were also hit by the recession and London Olympics – with occupancy falling to 76 per cent in 2008, climbing back up to 80 per cent in 2011 and dropping again in 2012.

As a result of these dynamics, Revenue per Available Room (RevPAR) has fallen 31 per cent in Edinburgh over the past seven years.

However, things are starting to look up for Edinburgh hotels – and further growth is forecast for the rest of 2014.

“As has been seen elsewhere in the UK, RevPAR for the year to date May 2014 is up on the previous year,” stated the report.

“We also forecast an overall increase in ADR this year due to the impact of the Commonwealth Games and Ryder Cup, coupled with some corporate demand growth.”

Long-term growth

In the short-term, new limited service supply is set to constrain Edinburgh’s occupancy and RevPAR growth.

“After a challenging operating period we anticipate a much more subdued increase in overall RevPAR in Edinburgh’s hotels as the upscale market competes with the new limited-service hotel inventory,” said report author Harry Douglass.

However, additional flight routes to the city should help boost occupancy and lift ADR and RevPAR in the longer-term.

In total, 15 million additional foreign visitors expected to arrive in the city over the next five years as a result of EasyJet’s new flights from European destinations, as well as a new Air Canada Rouge route from Toronto. 

“A master plan is also in place to ensure that Edinburgh airport can handle an increase in  international passenger movements to 12.3 million by 2020 and to 20.5 million by 2040,” said the report.


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