According to the latest LJ Forecaster Sottish Intercity Report, room rates soared across Scottish cities in August, with Glasgow rates up an impressive 21.1 per cent to £78.99 and Aberdeen and Edinburgh rates rising by 6.5 per cent and 4.9 per cent respectively.
Although occupancy in Glasgow slipped slightly during the month, the increase in room rates during the 2014 Commonwealth Games meant revenue per available room (RevPAR) rose 20 per cent year-on-year to £72.27.
In Edinburgh, a record 2m festival tickets were sold during the month, helping drive a 5.8 per cent RevPAR increase to £142.62.
Aberdeen occupancy fell 1.3 per cent year-on-year but this was more than offset by the rise in room rates, resulting in a 5.1 per cent RevPAR increase to £75.39 during the month.
Value for money
Although this strong performance was good news for Scottish businesses, LJ Research warned that hoteliers should carefully monitor the impact of their rate setting strategies, pointing to visitor surveys that showed lower levels of satisfaction in relation to perceptions of value for money over the summer 2014 period compared to the same period 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.”
Meanwhile, the latest report from HotStats revealed that UK provinces continue to go from strength-to-strength, enjoying double digit growth in gross operating profit per available room (GOPPAR) in August.
West Midland hotels also performed strongly, with an 11.1 per cent GOPPAR surge. According to HotStats, a simultaneous increase in average room rates and occupancy meant RevPAR increased 9.4 per cent in the region in August, with non-room revenue also showing positive movement. Lower payroll and operating costs helped offset a 6.5 per cent rise in overheads, contributing to the profit growth.
London bounces back
Analysing performance by city, HotStats said London hotels bounced back in August, with year-on-year profitability growth.
Hotels in the seaside resort of Brighton also enjoyed a strong month, with growth in occupancy and average room rates contributing to a 12.3 per cent lift in RevPAR and food and beverage growth pushing TRevPAR up 8.6 per cent. Astute operating cost control and a reduction in payroll helped offset a rise in overheads, driving GOPPAR up 15 per cent in August.
Southampton hotels saw GOAPPAR rise 4.9 per cent on the back of occupancy and room rate growth, as well as efficient cost control and a decline in payroll and overheads.