Hotel demand in Edinburgh will be insufficient to fill new rooms set to enter the market, resulting in the off season being "even more challenging" for businesses, the chairman of the Edinburgh Hotels Association (EHA) has said.
The supply of hotels and Airbnb properties is "more than adequate", Neil Ellis, group operations director for Place Hotels, explained.
“Hotels need year-round demand at a good room rate to remain prosperous”, he added.
“Edinburgh is unique in that demand fluctuates hugely from peak months to low months. To provide the number of hotel and Airbnb bed spaces to satisfy peak demand can only mean a reduction in hotel yield in periods of low demand.”
Last month the organisation said there had been a slump in demand for hotel rooms in Edinburgh, claims which were last week refuted by property and investment firm Colliers International.
However, Ellis insisted that demand is not growing to match the recent increase in supply from both hotels and Airbnb, with recent additions including Market Street hotel and a new Moxy.
Edinburgh has around 2,500 rooms in its pipeline to add to the existing supply, including Red Carnation’s redevelopment of 100 Princes Street and Virgin Hotels’ return to the UK market with the development of the Scottish capital's historic India Buildings in Victoria Street.
According to Colliers, while 2019 saw a slight decrease in occupancy to 82% from 82.9% the previous year and the average room price was down from £103.72 to £101.92, total revenue was up to £505.7m from £474.9m, as the number of rooms in supply grew to 16,579 from 15,131.
Marc Finney, head of hotels and resorts consulting at Colliers, said: “While I'm not saying the performance of Edinburgh's hotel market last year was something to rejoice, it was relatively stable despite the background of economic slowdown related to political turmoil in Westminster and Brexit.
“The fact the Edinburgh market generated £30m more from hotel accommodation revenue in 2019 compared to 2018, against a negative economic backdrop, is a strong result.
“There seems to have been an awful lot of talk recently about how the Edinburgh market is over-supplied and how Scotland is a victim of over-tourism. The fact that some of the strongest statements have come from the EHA does that organisation very little credit. I believe they should be rejoicing at the success of the Edinburgh market against a difficult backdrop and perhaps be a little more welcoming to their new potential members.”
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