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RSM: Bumper Hogmanay sees Scottish hotels hold their own in line with rest of the UK

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Scotland’s hotel industry concluded 2023 on a high note, reaching pre-pandemic levels of occupancy for the first time in December 2023, as reported by the RSM Hotels Tracker.

The data, which is compiled and produced by Hotstats and analysed by RSM UK, showed occupancy hit rates seen in December 2019 at 67.2% to 67.1% in December 2023, suggesting that the industry is moving in the right direction after three turbulent years.

Hoteliers were able to increase their rates during the festive season, with average daily rates (ADR) of occupied rooms up from £109.43 (November) to £129.69 (December) in Scotland. ADR in Scotland is significantly higher than pre-pandemic levels (£93.28 in December 2019), and also up on December 2022 (£117.48).



Revenue per available room (REVPAR) increased from £80.53 (November) to £87.05 (December) in Scotland. Gross operating profits in Scotland were also up from 22.3% in November to 25.8% in December, whereas in the UK they remained flat, falling slightly from 35% to 34.9%.

Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said: “December 2023 marked a positive end to the year for Scottish hoteliers, seeing marginal gains above the rest of the UK for gross operating profits.

RSM: Bumper Hogmanay sees Scottish hotels hold their own in line with rest of the UK

“Businesses were able to make the most of the festive period, without having to navigate the challenges of train strikes and pandemic limitations as seen in previous years. With the Christmas party season in full swing, occupancy, which typically sees a dip at this time of year, remained strong and finally reached pre-pandemic figures, a sign that the tides have turned for hoteliers, with Christmas festivities back to normal levels.

“Average daily rates have seen a 20% uplift on pre-pandemic levels, which also demonstrates how Scotland is holding its own and is in line with the rest of the UK.”

He added: “Hogmanay celebrations will likely further boost occupancy, average daily rates and profits in December and into January, meaning Scottish hoteliers will be starting 2024 in a strong position.

“As consumers continue to tighten their purse strings and prioritise experiences over goods, Scotland’s hotel industry is feeling the benefit of this shift in consumer behaviour, especially looking towards the summer months, when the country hosts a number of international events.

“This includes the Taylor Swift Eras Tour in Edinburgh, the 152nd Open Championship at Royal Troon and of course the Edinburgh Fringe Festival, which will all be a significant boost to Scottish tourism, particularly as inflation continues to ease.”

Thomas Pugh, economist at RSM UK: “The resilience of the hotel sector provides some hope that the economy managed to avoid a recession at the end of last year. Indeed, the shocking 3.2% m/m decline in retail sales volumes in December suggests that consumers have continued to prioritise spending on experiences, such as hotels and restaurants over retail goods.

“Looking ahead, the first six months of this year are likely to remain tough with high interest rates dragging on economic growth and inflation remaining well above target. However, things look brighter in the second half of this year.

“The inflation rate will probably fall to about 2.5%, which will allow the Bank of England to start cutting interest rates. At the same time, real earnings growth will continue to rise and there is the distinct possibility of further tax cuts coming in March.

“All this would mean more consumer spending, which will be a positive for the travel and hotel sector.”

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