Against a backdrop of Brexit uncertainty that has subdued performance in a number of commercial sectors, tourism and hotels have defied conditions to deliver significant growth in Scotland.
GVA’s inaugural Hotels Economic and Property Market Review has highlighted strong hotel market performance across the UK in 2017.
Thanks to an increase in inbound tourism to Scotland, hotels enjoyed impressive hotel performance across much of the country in 2017.
Edinburgh led the way with a 12.4% increase in RevPAR, while average daily room rates (ADR) in the city were over £100 in 2017 for the first time.
Glasgow also achieved strong growth (5.2% increase in RevPAR) due largely to a 2.5 percentage points increase in occupancy to 82.1%.
Inverness returned impressive performance figures, with a slight increase in occupancy (it was already over 83% in 2016 and unlikely to go any higher due to seasonality), the strength of high season demand allowed hotels to achieve an 8.1% increase in ADR to £81.77.
Interest in visiting the Highlands has increased greatly since the release of TV show Outlander and the launch and promotion of North Coast 500.
On the back of this strong performance, hotel investment transactions in Scotland exceeded £240m in 2017, rising 69% against £142m in 2016. Much of the investment in the sector is from overseas markets taking advantage of the exchange rate, with Middle East and Far Eastern buyers in the ascendancy.
VisitScotland statistics show that the number of international tourist trips to Scotland in the first nine months of 2017 increased by 14.6% (to 1.26m) over the same period of 2016. This offset a drop in domestic overnight trips over the same period, which fell by 5.5% to 8.29m.
Unlike the rest of the UK, Scotland saw a drop in the number of ‘staycation’ trips following the Brexit referendum.
Andrew Renouf, director of Retail, Hotels and Leisure for GVA in Scotland, said: “The hotel sector across Scotland has benefitted in 2017 from the continued weakness of Sterling in currency markets, coupled with the very high profile of destination Scotland around the world. Further expansion of both Glasgow and Edinburgh Airports will continue to open up new markets, with a direct route to China high on the agenda.
“We have seen high levels of investment and development appetite in key locations as a result of this, and hope that the fundamental market strengths outweigh any impacts of a slowing of the economy highlighted in the latest Scottish Government State of the Economy report.”