Scotland's Granite City saw the highest growth in revenue per available room (revpar) of any UK city in 2013. Aberdeen's economy is booming, its economic success buoyed by North Sea oil and gas. It has also attracted high levels of national and international investment, with many major companies choosing to locate their headquarters in the city.
According to the Cities Outlook 2014 report from think tank Centre for Cities, Aberdeen was second only to London in terms of new business start-ups and one of the top 10 cities in private sector jobs growth between 2010 and 2012. The business boom has meant a shortage of high-grade office, warehouse and industrial space and is driving a string of new projects.
It was named the "happiest city" in a UK government survey and ranked as the best city in Scotland - and second best in the UK - in which to live and work in both the UK Competitiveness Index and PwC's own Good Growth for Cities index, based on economic performance and quality of life. Aberdeen recently became the first city in Scotland to be awarded Purple Flag status for safety at night.
In 2013, while UK regional hotels performed better than expected, Aberdeen's hotels outperformed other regional cities by leaps and bounds. John Ritchie, PwC's private business director, says Aberdeen's hotels perfectly reflect the successes in the city's economy as well as hoteliers' ability to develop high-quality products.
According to the latest HotStats hotel market data, Aberdeen hotels recorded year-on-year growth of 41% in average room rate and 44% in revpar in September 2013, while occupancy rates had exceeded 80% seven months in a row. Overall, in the 12 months to January 2014 revpar was up 24% to £77, with average occupancy reaching 78% and gross operating profit per available room running ahead of 2012 levels by 29%.
PwC's latest regional hotel forecast predicts that the momentum of 2013 will continue into 2014 and will strengthen next year with further economic recovery forecast for Scotland and the UK in 2015.
Liz Hall, head of hospitality and leisure research, PwC
Aberdeen has long been known as the Granite City, but recently it has adopted the more vibrant moniker of Energy Capital of Europe. The origins behind this transition were underpinned by oil and gas exploration and production in the North Sea, which started in the late 1960s.
This activity remains a cornerstone of the city. However, Aberdeen has evolved beyond this and now plays host to many global firms with European headquarters and indigenous firms with significant global activities. The city has a strong office market in terms of take-upâ¨of and demand for Grade A space. It is a leading UK regional market on many levels.
Against this backdrop of economic and commercial prosperity, room supply has grown by 18% over the last five years - it now stands at around 5,500 bedrooms - of which over 70% is branded. Aberdeen is a natural habitat for serviced apartments (7% of rooms) butâ¨in contrast to strong corporate demand and buoyant room rates, the largest number of rooms (40%) remain in the midmarket arena.
Upmarket hotels account for only 25% of rooms, and while Crowne Plaza will enter the market later this year following a rebranding â¨of the Station hotel, the city's only five-star hotel, the 42-bedroom Marcliffe at Pitfodels is due to close at the end of this year to make way for an office development.
The latest major new additions have beenâ¨a 194-bedroom Courtyard by Marriott and 100-bedroom Premier Inn that opened within weeks and yards of each other at the airport in summer 2013. New supply on the immediate horizon is in the shape of a 148-bedroom De Vere Village scheduled to open to the west of the city in November and an additional 89 beds that will replace the conference centre at the Britannia Aberdeen.
Several other pipeline developments are actively under way or likely to be soon. These include two hotels with 251 bedrooms being developed by Dominvs Group, a 182-bedroom Urban Villa aparthotel and a 150-bedroom Residence Inn by Marriott. The council's medium-term proposal for a new conference centre to replace the AECC is also likely to incorporate a hotel.
Despite very strong investor and developer interest in Aberdeen, recent transactional activity has been largely confined to the Marriott and Menzies hotels changing ownership in portfolio deals.
Alan Gordon, director, AM:PM
Aberdeen is one of the most resilient commercial property markets in the UK. The city is, arguably, "Scotland's London", in that the factors driving the economy are from beyond the city and UK shores.
With four distinct hotel sub-markets - City, Airport/Dyce, Westhill and Bridge of Don - the city is punching above its weight. One major issue is that most hotels are running near full during the week but dropping to nearly â¨half-full at weekends.
The city has made many improvements to develop weekend leisure trade to help balance this corporate/leisure swing - Union Square Shopping Centre being one example. Donald Trump's high-profile Trump International Golf Links is also generating a significant increase in visitor numbers.
A public-private partnership between Aberdeen City Council and Henry Boot Developments â¨will see a new world-class business, exhibition and events centre, which is a key component in the promotion of Aberdeen as â¨a World Energy City and Energy Capital of Europe. The new AECC will comprise market-leading exhibition space, three hotels and commercial space.
The property market will also benefit from the development of the Aberdeen Western Peripheral Route. Like Edinburgh's trams and Glasgow's M74 extension, it is an expensive project, but a potential game changer. The success and expansion of Aberdeen International Airport, which has released figures showing it is one of the fastest-growing airports by passenger numbers, can also only help.
Keith McBain, director, â¨JLL Hotels & Hospitality Group
ABERDEEN HOTEL SUPPLY BY CATEGORY/GRADING
|Upmarket hotel brands||-||-|
|DoubleTree by Hilton||1||168|
|Midmarket hotel brands||-||-|
|Courtyard by Marriott||1||194|
|Budget hotel brands||-||-|
|Holiday Inn Express||2||290|