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Oil price fall hits Aberdeen hotels hard

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Oil price fall hits Aberdeen hotels hard
Written by:

Aberdeen’s hotel market has suffered at the hands of falling oil prices, with double-digit drops in both occupancy and revpar.

That’s according to the latest figures from professional services firm BDO.

Data for May this year showed a year-on-year fall in occupancy in the city of 17.5%, down to 62.5%. Meanwhile revpar fell by 30% to £52.45.

The sharp drops mark a reversal of fortune for the city, which had been one of the stars of the UK hotel market until the global oil price started to fall.

In contrast to the Granite City, Edinburgh saw the highest occupancy rise in Scotland in May, rising 7% to 86.9%, as revpar rose 7.3% to £75.

Glasgow occupancy stayed at 86.5%, although revpar was up 7.8% to £57.49.

Alastair Rae, a partner in the property, leisure and hospitality sector at BDO, said: “Aberdeen’s hotel sector continues to suffer from the downturn in the oil and gas sector. Although the oil price may have stabilised it is clear that the economy in Aberdeen and the surrounding area is likely to be deflated for some considerable time to come.

“The economy in Aberdeen is so heavily based on oil and gas and the industry is using the current downturn in oil price as a period of reflection on the viability of the sector as a whole both now and in the future.”

Rae warned that the impact on hospitality as a result of the downturn in the Aberdeen economy was not known but was “likely to be severe”.

“Hoteliers and their investors need to examine current and future costs to ensure they are prepared for all eventualities,” he said.

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