Oil slump giving hotel owners sleepless nights

Aberdeen occupancy rates fall as crisis takes its toll

THE hotel sector in Scotland’s energy capital recorded a major slump in occupancy and revenue in May as the low oil price continues to take its toll.

A new report states that year-onyear occupancy in Aberdeen dropped 17.5 per cent to 62.5 per cent, while the cost of an average room fell almost one third to £52.45. By contrast, strong increases in hotel revenue were recorded in Edinburgh, Glasgow and Inverness.

The figures, by accountants and business advisers BDO, come on the heels of another report blaming the slowdown of the North Sea oil sector for a slump in property sales in the Aberdeen area.

The April to June period in Aberdeen city and Aberdeenshire showed the same price levels as the first quarter of 2015. However, the number of sales dropped 9.4 per cent on the same period last year.

Aberdeen Airport has also reported a “mixed” set of figures for July, with international passenger figures up 1.8 per cent on 2014 with domestic travel down 5.9 per cent year-on-year and helicopter traffic down 14.8 per cent.

Earlier this year BP cut just under 10 per cent of its 3,500-strong workforce in Aberdeen, followed by Talisman-Sinopec making similar levels of lay-offs.

According to BDO’s report, Edinburgh had the highest occupancy rise in Scotland in May rising 7 per cent to 86.9 per cent, with an increase in revenue per room to £75.06. Occupancy in Glasgow remained static at 86.5 per cent, with the cost of an average room rising to £57.49. Hotel occupancy in Inverness fell slightly.

The downturn in Aberdeen dragged Scotland-wide occupancy growth down to the lowest in the UK. Revenue in Scotland remains the highest of all the UK nations but has risen at a much lower rate than in England and Wales.

Alastair Rae, a partner at BDO, said: “Aberdeen’s hotel sector continues to suffer from the down- turn 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 time. The economy in Aberdeen is 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. The impact this could have on hospitality is unknown but likely to be severe.”

Concluding the hotel trends survey, BDO also warns that until the oil and gas sector stabilises the hospitality sector in Aberdeen “will remain vulnerable”.

Willie Young, finance convener at Aberdeen City Council, said the extent of the slump in the area’s hospitality sector was partly due to it beginning at a higher level than competitors. He said: “We were starting at about 100 per cent occupancy rates. But we are still receiving planning applications for hotels and serviced apartments. The city has held its own.”

A VisitScotland spokeswoman said that although the figures were disappointing “interest in the cit y f rom hotel developers remains high”.

‘‘ We’re still receiving planning applications for hotels and serviced apartments. The city has held its own

A CANCER survivor whose record flight around the world in a gyrocopter was blocked by Russian spies has touched down on British soil for the first time in more than five years.

Norman Surplus, who landed in Stornoway, is now planning for a return home after his 7,500-mile journey.

After a summer island-hopping across the North Atlantic, Mr Surplus is hoping fellow aviation enthusiasts will join him in a formation flight as he crosses the Scottish mainland tomorrow.

He arrived at Stornoway after departing from the Faroe Islands.