Capital to curb budget hotels in

● Edinburgh to pursue new strategy to lure big spenders to city

despite the opening of 12 new hotels in the last few years and an average occupancy rate of 83 per cent.

New controls on budget chains are expected to be drawn up after an official report warned that hotel developers were “typically able to outbid office developments for land and leases.”

Budget hotel operators, who also include Apex, Ibis and Holiday Inn Express, are said to be able to regularly outbid luxury hotel brands for sites.

Tourism and marketing chiefs in Edinburgh are expected to priorise the targeting some of the world’s biggest luxury brands for key development sites in future.

New planning regulations are set to be drawn up to ensure an “appropriate mix of uses” in the city centre.

The last luxury hotel to open in the city was Missoni on George IV Bridge in 2009, although the chain pulled out of the city after fve years and it has been operated as the G&V Royal Mile since then. Two five star hotel developments on the Royal Mile and at Haymarket had to be scaled back in the face of opposition.

By the end of 2018, planning permission had been approved for more than 3,000 new hotel rooms, while a further 15 developments are awaiting approval and could deliver another 2,100. Of the 4,653 budget hotel rooms in the city, Premier Inn and Travelodge operate 2,693 – well over half. Just two five-star developments are planned – at the St James development and on Victoria Street.

In a report for the council, director of place Paul Lawrence 0 Budget chains make up more than half of city hotel rooms states: “Demand for more hotel provision within the city continues at a time when business growth, entrepreneurship and new-starts is also applying pressure on availability of office and workspace.

“Hotel developers are also typically able to outbid office developments for land and leases, since hotel leases carry less risk and offer better returns on investment.

“Edinburgh’s hotel offering is weighted towards budget hotel chains.

“Lower construction costs and higher occupancy of budget hotels mean they can often out-bid more expensive brands for buildings and land. While this means Edinburgh is a relatively affordable destination by European standards, it reduces the ability of the city to attract high-spending visitors.

“This runs contrary to the strategic priority of attracting less volume and more highspend visitors.”

Gavin Barrie, the council’s tourism leader, said: “Edinburgh’s economy performed well against other areas during the economic downturn but there was some slowing of investment in luxury hotels in the Capital.

“It is really encouraging to see that changing, as demonstrated by last week’s Virgin announcement to bring their first five-star hotel outside America to Edinburgh.

“This clearly shows the current strength of the tourism market in Edinburgh and the potential for a greater mix of hotel development and investment in the future.”

Visitor numbers to Edinburgh have soared from 3.27 million to 4.1 million in the past five years, while visitor spending is up from £1 billion to £1.4bn over the same period.

However, the Edinburgh Tourism Action Group (ETAG), the main independent industry body, wants to see tourism revenue reach £1.6bn and the city attracting 4.8 million visitors a year by 2020.

However, the city is believed to be way below a target of increasing the average spend of visitors to Edinburgh by 10 per cent. It is hoped luxury hotels across the city will help efforts to tap into new markets in the likes of China and India, as well as boost the business tourism sector in the city.

The new ETAG strategy states: “The quality of visitor experience in Edinburgh is key to driving future growth. With an ever growing and competitive global market, it is essential that the sector is outward looking and continually benchmarking the quality of its visitor experience relative to competitor destinations.”

ETAG chair Robin Worsnop said: “You would always want to attract higher-end hotels to Edinburgh to get greater value out of the visitors who come here.”