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Further slump for Aberdeen hotels

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Aberdeen hotels suffered a further slump in trade in October as the wider impacts of the oil and gas industry downturn continued to hit hard, new research findings show.

The latest monthly LJ Forecaster Scottish Intercity Report from tourism market specialist LJ Research says revenue per available room (revpar), a key benchmark for the sector, tumbled “unprecedentedly” below £50.

Aberdeen’s revpar was £49.18, its lowest rate for several years and down by 37% on October 2014, according to LJ Research.

Granite City hotels sold 66% of their rooms last month, compared to 77% a year ago, a decrease of nearly 15% and the 11th consecutive month of negative occupancy growth, the report says.

Edinburgh and Glasgow hotels delivered modest gains last month, it adds.

Revpar in Scotland’s two biggest cities was “slightly” up and strong levels of demand for accommodation saw average hotel occupancy in both reach an “impressive” 88%, a small year-on-year rise, the report says.

Average room rates (ARR) were highest in Edinburgh at £94.91 – down slightly from £94.98 a year ago – and lowest in Glasgow at £74.58, compared with £75.18 last year.

Aberdeen’s ARR last month was £74.94, which was a “staggering” 26% below the £101.02 seen in October, 2014.

Speaking on the eve of the report’s publication today, LJ Research managing director Sean Morgan said: “In September, we saw RevPAR reductions in all three cities so it’s pleasing to see some, albeit very marginal, growth for hotels in Scotland’s two largest cities last month.

“In Aberdeen, RevPAR tumbled unprecedentedly below £50 which very much is an indication of the ongoing troubles in the oil and gas sector and stubbornly low crude oil prices.”

Analysis of forward bookings over the next three months highlighted continued sharp reductions in trade for Aberdeen hotels and evidence of similar levels of bookings in Edinburgh and Glasgow.

But there were also signs of slightly weaker November bookings in Edinburgh and Glasgow, compared with last year.

Aberdeen City and Shire Hotels’ Association chairman Iain Watson said: “The hotel sector continues to be affected by the downturn in the North Sea and there will be no quick fix.

“We can expect a continuation of these challenging times in the months that lie ahead.

“But we are confident – as has been evidenced in the past – of a recovery in the energy sector.

“No one expects that to happen in the short-term, but many developers are looking to the long-term picture and continuing to invest in new hotel builds, extensions and refurbishments across the city.”