Revenue in Scottish hotels fell during November whilst occupancy remained static, according to the latest report by accountants and business advisers PKF.
The firm’s monthly survey found that year on year revenue (measured as rooms yield) fell by 7.3% in Scotland, compared with: a drop of 1.9% in regional UK; down 0.6% in England; and down 12.4% in Wales. Occupancy rose slightly by 0.7% in Scotland; was up 1.0% in regional UK; up 1.0% in England but with no movement in Wales.
Scotland’s two main cities had falls in both occupancy and rooms yield. Glasgow experienced a 1.6% fall in occupancy and an 18.4% drop in revenue, while Edinburgh’s occupancy was down 0.9% and revenue fell 6.9%. Aberdeen increased occupancy by 4.2% and revenue by 9.9% and Inverness had an increase of 5.5% in occupancy and a rise of 0.3% in revenue.
Alastair Rae, a partner in the real estate and hospitality sector at PKF, said: “The hotel sector had a good 2011 until the end of October, despite the uncertainties in the economy. Aberdeen and Inverness continue to perform well with occupancy and revenue up in both cities, indicating the importance of the oil price and ‘staycationing’.”
However, Rae sees the central belt figures as disappointing. Both Edinburgh and Glasgow suffered major revenue falls with slight falls in occupancy. In a straightforward supply and demand economy revenue falls as hoteliers attempt to maintain occupancy; during November, occupancy fell slightly in both cities. Revenue also fell in the case of Glasgow, was dramatically forced down.
Rae said: “This is not great news for the operators who have worked hard to maintain occupancy and revenue despite difficult trading conditions. Maintaining revenues is essential if profitability growth is to return to the sector, which is trading with revenues at the same or lower levels than four years ago.
Costs have risen with inflation which, coupled with staffing shortages, has meant some hoteliers struggling to keep their heads above water. Further dips in revenue could be very damaging for businesses with high debt levels.
Rae said: “These figures show that the sector remains vulnerable to sharp reductions in occupancy and revenue which, with a damaged economy and fairly sensitive customer base is a real risk. It is clear that the wider economy remains in the doldrums and, unfortunately, this will have its impact on the hospitality sector.”
PKF’s hotel trends surveys have been published since the early 1970s and features a broad range of hotels in the 3 – 4 star categories.
