The data, which is compiled and produced by Hotstats and analysed by RSM UK, shows occupancy of Scottish hotels increased from 81.4% to 84.5% in October year-on-year, compared to the rest of the UK hotels which rose from 80.9% to 82.4%.

Average daily rates (ADR) of occupied rooms also saw strong growth, rising in Scotland from £135.54 to £145.03 in October year-on-year, compared to the rest of the UK, where rates rose from £151.81 to £155.03.

The combined effect of higher occupancy and increased rates drove an increase in RevPAR, which rose from £110.40 to £122.52 in Scotland, an 11% increase, well ahead of the UK’s growth from £122.88 to £127.76.

Hoteliers capitalised on this growth to significantly increase profit margins. Gross operating profits of Scottish hotels increased from 35% to 37.1% in October year-on-year, outpacing the rest of the UK’s marginal 4% increase from 38.4% to 38.5%

Katie Morrison

Katie Morrison, partner and head of consumer markets at RSM in Scotland, said: “The 11% increase of revenue per room in Scotland far exceeded the UK’s performance, and was most likely boosted by the October school holiday period.

“This fed directly into gross operating profits, which also saw a greater increase. Scotland recorded a higher year-on-year profit increase compared to the rest of the UK, although its final gross profit margin is still sitting lower than the UK average, due to the cost pressures it’s also faced.

“This profit increase was largely driven by the fact that Scotland’s occupancy levels are already higher than the rest of the UK, which gave Scottish hotels the confidence to successfully close the gap in average room rates.”

She continued: “Scotland tends to have lower average room rates than the rest of the UK, but this gap is closing, contributing to Scotland’s revenue growth.

“Looking ahead, we expect room rates to maintain their upward trajectory, driven by key seasonal factors such as Christmas markets, festive events including Hogmanay, and increased travel to see family. However, the outlook for profit margins remains uncertain due to rising operational costs.”

Commenting on the UK-wide picture, Thomas Pugh, chief economist at RSM UK, said: “The good news is that now the budget is behind us we may see consumer and business confidence start to recover, especially as there won’t be any significant tax increases next year.

“What’s more, a likely interest rate cut in December and further declines in inflation should support a recovery in consumer confidence.

“However, the labour market is still weakening, and wage growth is set to slow. Real household disposable income growth is set to fall to just 0.4% over the rest of this decade as future tax rises eat into incomes. The outlook is therefore far from rosy for consumer spending, despite the lack of imminent tax rises.”