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Sharp decline in Scottish hotel revenues

29 November 2012 by
Sharp decline in Scottish hotel revenues

Hotel revenues in Scotland fell sharply in September compared to the rest of the UK, with rooms yield down 7.8% compared to a drop of 1.3% in the UK regions, according to a Scottish hotel survey of three and four star hotels from accountants PKF.

While occupancies in Scotland were comparable with the UK regions, down 1.6% and 1.4% respectively, it was the room yield which suffered with Glasgow experiencing a substantial fall of 15% in revenue and Aberdeen declining at 11.5%. Both Edinburgh and Inverness also had respective revenue falls of 4.7% and 4.1%. Hotel revenues were down 0.8% in England and up 3.1% in Wales.

Alastair Rae, a partner in the real estate and hospitality sector at PKF, said: "This continued decline is of concern for the Scottish hospitality sector which has already had a difficult year. Occupancy held up on average across Scotland, but Edinburgh experienced a fairly significant fall of 4.5%. In Glasgow the 15% fall in revenue to £55.41 is the lowest revenue figure since 2005 and is likely to be due to reduced corporate events, concerts, and conferences which the city relies on to fill its hotels."

"Although Aberdeen suffered an 11.5% fall in revenue during September this was undoubtedly due to the peak achieved during the 2011 biennial Offshore Europe (OE) conference which boosts the sector's figures every second year. This is therefore of less concern since it is a known cyclical effect which indicates just how much the OE conference produces for the city."

Rae continued: "There will be a long term effect produced by this continued downturn in the sector. The appointment of administrators to the group which operates the Malmaison and Hotel du Vin brands, as well as the well publicised problems within the Travelodge group, is surely a further indication of how hard the current economic environment is affecting operators carrying significant debt burdens."

"With the sector coming up to its quiet period it is likely that further hotel operators may go under as the gap until the upturn in the spring may be just too long to last even with the hope of Christmas and New Year earnings."

Scottish hotels outshone rest of UK in February >>

UK hotels enjoy a strong October >>

By Janet Harmer

E-mail your comments to Janet Harmer here.

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