Taylor Swift effect drives hotels’ growth
Scotland’s hotels outperformed the wider UK market in May, buoyed by bank holidays and warm weather, according to a new report that also expects momentum to continue on the back of events including Taylor Swift’s recent Murrayfield concerts.
The latest hotels tracker from accountancy firm RSM has found that the gross operating profits (GOP) of Scottish hotels reached 42.6 per cent during the month, up from 37.4 per cent in the same period last year, and overtaking the UK’S 38.9 per cent. The Scottish figure exceeded April’s 26.7 per cent, and 36.9 per cent before the pandemic.
The report, which is compiled and produced by Hotstats and analysed by RSM UK, said occupancy of Scottish hotels jumped to 82.4 per cent, higher than the UK’S 79.6 per cent, and up from 72.5 per cent in April as well as 79.4 per cent 12 months previously.
Furthermore, Scottish hoteliers saw revenue per available room (revpar) increase to £127.48 in May from £89.51 in April, having also increased from £109.95 in May 2023 and £88.23 in May 2019, and the metric was up slightly in the UK to £122.05 in May year on year from £117.60.
Average daily rates (ADR) of occupied rooms stepped up to £154.80 in May, up from £138.55 in the same period last year, above the £123.81 seen in April, and a pre-pandemic £103.44. The UK, however, saw the ADR of occupied rooms fall to £153.38 from £154.04 12 months previously, but above pre-pandemic rates of £118.41.
Stuart Mccallum, partner and head of consumer markets in Scotland at RSM UK, said it was “certainly another strong month for Scottish hoteliers”, who enjoyed “another encouraging monthly boost” amid the hottest May on record.
“As consumer confidence continues to improve, the addition of two bank holidays will have bolstered occupancy in May, helping hoteliers to offset cost pressures following the recent national minimum wage hit,” he added. “This upward trend is likely to remain throughout the summer months, especially with the arrival of warmer weather and various international events including The Open at Royal Troon, Edinburgh Fringe Festival, and Taylor Swift’s Eras tour.”
Thomas Pugh, economist at RSM UK, added: “The positive results for the UK hotel sector in May is another piece of evidence pointing to a strong rebound in May after a bleak April. We expect consumer spending to continue to improve through the second half of this year and in 2025 as real incomes rise, which should support demand for hotel rooms. However, with inflation in the accommodation sector running at around 7 per cent, compared to 2 per cent inflation overall, price pressures in the industry are clearly still an issue.”
Edinburgh in April came top in the UK for the performance of its hotels.