Aberdeen hotels see double digit falls in occupancy and revenue

BDOAberdeen’s hotel sector experienced double digit drops in both occupancy and revenue in May as the low oil price continued to take its toll, according to the latest report by accountants and business advisers, BDO.

The firm’s monthly hotel survey found that year-on-year occupancy in Aberdeen dropped 17.5 per cent to 62.5 per cent whilst rooms yield (the industry term for revenue) fell an alarming 30.0 per cent to £52.45.

This contrasted with strong increases in revenue in Edinburgh, Glasgow and Inverness of 7.3 per cent, 7.8 per cent and 10.2 per cent respectively.

Edinburgh had the highest occupancy rise in Scotland in May rising 7.0 per cent to 86.9 per cent with an increase of 7.3 per cent in revenue to £75.06. Although occupancy in Glasgow was static at 0.0 per cent remaining at 86.5 per cent revenue rose 7.8 per cent to £57.49. Hotel occupancy in Inverness fell 1.1 per cent as revenues rose 10.2 per cent to £60.27.

The downturn in Aberdeen dragged Scotland-wide occupancy growth down to the lowest in the UK with a 0.3 per cent increase to 80.1 per cent. In regional UK occupancy was up 2.0 per cent to 77.2 per cent; up 2.1 per cent in England to 76.6 per cent; and up 4.3 per cent in Wales to 80.3 per cent.

Although revenue in Scotland was the highest of all the countries in the UK at £60.98 it only rose 1.3 per cent compared with a 7.3 per cent increase in regional UK to £50.05; an 8.6 per cent increase in England to £48.19. Wales only rose 0.6 per cent increase to £44.59.

Alastair Rae
Alastair Rae

Alastair Rae, a partner in the property, leisure and hospitality sector at BDO, said: “Aberdeen’s hotel sector continues to suffer from the downturn in the oil and gas sector. Although the oil price may have stabilised it is clear that the economy in Aberdeen and the surrounding area is likely to be deflated for some considerable time to come.”

“The economy in Aberdeen is so heavily based on the oil and gas sector and the industry is using the current downturn in oil price as a period of reflection on the viability of the sector as a whole both now and in the future. The impact this could have on hospitality is unknown but likely to be severe so hoteliers and their investors need to examine current and future costs to ensure they are prepared for all eventualities.”

Mr Rae continued: “Meanwhile Edinburgh, Glasgow and Inverness saw substantial increases in revenue as tourism and conferences boosted their respective markets. Glasgow continues to perform well in the conference and event market which saw a strong revenue increase despite a static, although high, occupancy level.”

“Inverness is picking up strongly as tourism returns in strength to the Highlands with a very respectable 10.2 per cent increase in revenue at a time when occupancy dipped. Edinburgh is almost becoming a year round tourist destination with revenue in May the second highest in the UK after Windsor (excluding London).”

Mr Rae concluded: “Aberdeen aside, the hotel sector has seen a strong improvement in revenues as visitor numbers return and confidence increases. This is to be welcomed and will, I believe, continue throughout the year as consumers express their new found confidence with an increase in leisure spending.

For Aberdeen there will be more serious concerns over future investment in the sector. Until the oil and gas sector stabilises and its future becomes more certain the hospitality sector will remain vulnerable in the city.”

This hotel trends survey has been published since the early 1970s and features a broad range of hotels in the 3 – 4 star categories.

Share icon
Share this article: