Scottish hotel market enjoys February lift
Scotland’s hotel sector saw demand pick up in February, boosted by half-term holiday staycations and Valentine’s Day getaways, a new report has revealed.
Publishing its latest hotels tracker, RSM UK, the audit, tax and consulting firm, said the nation’s hoteliers would be relieved to see a rebound in activity after a slow start to the year. The data, which is compiled and produced by Hotstats and analysed by RSM, shows that the average occupancy rate jumped to 68.8 per cent in Scotland in February; up from
64.2 per cent in the same month last yearandcompared with 58 per cent in January 2024, while also exceeding prepandemic levels.
Average daily rates (ADR) of occupied rooms increased to £102.68 during February, up from £89.39 in January, £92.17 infebruary2023,andpre-pandemic rates of £80.77 in February 2020. Revenue per available room (REVPAR) – a key industry measure – increased to £70.61 in February 2024, up from just £51.88 a month earlier,£59.22infebruary2023and £51.92 in February 2020.
Stuart Mccallum, partner and head of consumer markets in Scotland at RSM UK, said: “February was a relatively strong month for the Scottish hotel sector, boosted by households opting for UK staycations during the half-term holiday and romantic Valentine’s Day getaways. The latest uptick does not come as a surprise, as it’s a very seasonal business, however hoteliers will be relieved to see activity pick up in February, after a slow start to the year.
“While the wider leisure and hospitality industry achieved only a modest increase in sales, and growth was flat for retail sales, it seems the hotel industry continues to be the most resilient when facing current headwinds.”
The report also showed gross operating profit margins jumped sharply from 2.4 per cent in January to 18.3 per cent in February, with increases in comparison to February 2023 (12.8 per cent) and February 2020 (15.2 per cent). Despite the improved figures, Mccallum pointed to “ongoing challenges” for Scotland’s night-time economywhichare likely to impact the hotel sector, including staffing issues and Glasgow’s low emission zone, which is weakening footfall for local businesses and demand for taxis.
Thomas Pugh, economist at RSM UK, added: “The strength of the hotel sector in February is another piece of evidence that suggests last year’s recession is already over.
“Looking ahead, there are reasons to be positive about the outlook over the next two years. inflation should fall back below the Bank of England’s 2 per cent target in April and remain below it for most of this year, combined with decent wage growth that will cause households’ real incomes to rise rapidly. Throw in another 2p cut in national insurance and households’ incomes look much stronger in the second half of this year.”