News Source:
Developer appetite for Edinburgh also has drawbacks
News Source/Courtesy:

Courtesy: Terence Baker | Courtesy: | News Source:

EDINBURGH, Scotland—Edinburgh, the Scottish capital and the second most-visited city in the United Kingdom after London, remains atop hotel developers’ wish lists, but hotel occupancy in the market has dropped lately due to supply increases.

The annual Edinburgh Fringe Festival, considered the world’s largest festival, is the star of the city’s events calendar, but for many visitors, accommodations during the festival are often booked with alternative providers, according to hoteliers.

Clinton Campbell, commercial director at Edinburgh-based Apex Hotels, said hoteliers realize alternative supply is driven by how well Edinburgh performs in its ability to draw visitors every year, particularly over the summer months.

“Currently it’s a buyers’ market as the growth in supply outpaces the demand for that supply,” Campbell said. “This comes in two forms, which is new traditional hotels in the midscale and upper-scale segments and alternative-accommodation providers, which seem to pop up to absorb the additional demand. This ranges from student accommodation to Airbnb.

“I believe the demand will catch up in the future.”

Apex has 10 hotels dotted around the U.K., four of which are in Edinburgh. In April 2021, the company will open the Apex Grasshopper, an aerial gondola that will run from its Apex Grassmarket Hotel directly to the top of Castle Rock, which is home to Edinburgh Castle.

Campbell said Apex has definitely felt the impact from the alternative-accommodations market and that the dynamics of this type of traveler differ quite dramatically from that of regular city-break visitors.

“Hotels have benefited for a long time, and we need to take a lesson from the increase in this type of supply. Visitors want to come and experience not only this beautiful historic city but the world’s largest arts festival, too,” he said.

“They want to stay longer and get more in. The average length of stay increases during the Fringe Festival. Hotels saw all this demand and hiked prices up, so we shouldn’t be surprised that these visitors responded to seeing alternative options during this period. This combined with the changing behavior of visitors means that hotels should not stand still and expect to see the same demand in to their properties year after year.”

Sean Morgan, director of research at STR, the parent company of Hotel News Now, said concerns around the rise of alternative accommodations only add to Edinburgh’s struggles with supply.

“We see from our ongoing survey of predominantly leisure visitors to Edinburgh that approximately 20% stay with Airbnb during peak season months,” Morgan said.

He added he is keeping an eye on what, if anything, comes of the forthcoming government consultation on short-term rentals.

“Will Edinburgh Council and/or the Scottish government impose stringent restrictions on Airbnb?” he said. “Probably not, but it’s an issue that is raising increasing frustration among locals in a city which has limited housing availability and yet is growing fast and will soon overtake Glasgow as Scotland’s most populous city.”

The effects of Brexit will also significantly impact hoteliers in Edinburgh.

“Edinburgh, being a key financial hub, is bracing itself somewhat as larger financial institutions, including RBS (Royal Bank of Scotland), continue to undergo consolidation. Headcount and travel activity in this space seems likely to be affected,” Morgan said, who added the city recently has done very well attracting startups and transforming itself into a tech hub.

Supply still strengthens
Harry Douglass, associate director for London at business consultancy HVS, said supply is coming to Edinburgh’s airport and suburbs.

“Airport passenger traffic goes up year on year,” Douglass said. “That might be due to stagnation around Brexit, and inbound visitors have benefitted from the weaker pound (sterling), which would have been noticeable in July and August for the Fringe.

“Performance for the upper-upscale, 5-star luxury sector probably is not substantiality different to what you have seen in 2014 in terms of year-on-year ADR growth. But for other sectors, bus tours and school groups are all price-sensitive.”

Douglass said Edinburgh is looking expectantly to what will happen to the former Old Royal High School, where development has been delayed by public inquiries and politics. Rosewood Hotels & Resorts has been mentioned as a possible operator if the property is permitted to become a hotel.

“We were supposed to have heard what would happen to it in May,” he said. “It is a huge political issue. Any luxury hotel company would eat it up, but local government just does not get it. For 60 years on and off, it’s been abandoned, costing taxpayers £275,000 ($351,242) a year to maintain. Its site is perfect, with Arthur’s Seat to one side, Waverly Station to another and the cityscape, including the castle, to the third.”

Supply is still coming in, and investors are buying properties in all sectors.

The Hyatt Regency Edinburgh Marina, the brand’s debut in Scotland, will open in 2021 with 187 rooms and 98 serviced apartments. Recent buys in the market include the 186-room Jurys Inn Edinburgh for £52 million ($66.4 million), 115-room Travelodge Cameron Toll for £13 million ($16.6 million) and 241-room Waldorf Astoria The Caledonian for £83 million ($106 million).

Morgan said three high-profile developments in Edinburgh are a Yotel, set to debut in Scotland in early autumn; a W Hotel to open in 2021, one of two hotels for the refurbished Edinburgh St. James shopping mall; and a Virgin hotel that has been delayed while archaeologists sift through ancient artifacts uncovered during excavation work.

According to data from STR, Edinburgh hotels largely posted negative results in both 2018 and year-to-date through June 2019.

For full-year 2018, the Scottish capital posted a 1% year-over-year decline in occupancy to 82.8%, but average daily rate increased marginally by 0.4% to £103.29 ($132.02). Revenue per available room declined 0.6% to £85.50 ($109.28).

Year-to-date through June 2019, Edinburgh hotel occupancy decreased 0.4% to 78%, ADR fell 2% to £91.63 ($117.13) and RevPAR decreased 2.3% to £71.52 ($91.42).

Heavy levy
Also weighing on hoteliers’ minds in Edinburgh is the potential launch of a tourism visitor levy.

Morgan said hoteliers and other hospitality stakeholders are generally opposed to the levy, especially as it is being mooted at a time when the city and U.K. tourism in general is already seen as uncompetitive due to high value-added (sales) and air-passenger duty taxes. Such taxes might have some travelers thinking twice about attending events in the market, he said.

Morgan sees the Edinburgh Fringe Festival as vital during the city’s most buoyant period of the year.

“We had the final weekend (in 2019) of the monthlong festival in Edinburgh, which, in reality, is five festivals happening at the same time, the most well-known being The Fringe, and (concurrently there was also) a rugby World Cup warm-up match … between Scotland and France,” he said.

In addition to a robust events calendar, Morgan cited demand generators such as Edinburgh Castle—Scotland’s most visited paid-entry attraction—and the National Museum of Scotland.

STR data specifically on performance during the Edinburgh Fringe Festival showed demand in 2019 lagged that of previous years.

In 2018, hotel RevPAR during the festival grew 1.8% year over year, driven by a 3.9% increase in ADR despite a 2% decline in occupancy. In 2017, RevPAR grew 11.1% and ADR was up 9.2%, and in 2016, hotels recorded an 8% increase in RevPAR and a 7.2% ADR increase.

Campbell said he sees good demand throughout the year, particularly from North America.

“(Demand) repeats and strengthens every year, and peaks suddenly and then retreats suddenly. The rest of the year there is good demand from domestic and short-haul markets. The market has managed some of the events around summer very well,” he said, referring to a sports calendar appealing to the domestic market and supported by the Six Nations and Autumn International rugby matches.

Additional demand drivers include golf, Christmas markets, shopping and New Year’s.

“Then there’s usually a small lull from the start of the year through to about Easter,” Campbell said. “It’s by no means quiet, but just not as busy as the rest of the year. Occupancy and rate does soften, but still presents the opportunity to apply yielding rather than take whatever you get. Another demand driver can be the conference center.”

Fill the numbers here
If not readable, please refresh.

News Source:

You Might Also Like

Fill the numbers here
If not readable, please refresh.

-: Disclaimer :-

This article has been aggregated from and they maybe/are the copyright owners of the same. If you are the Author/Copyright owner of this article and want us to remove the same then send an email to so that we can delete it immediately. We sincerely regret and apologies for any inconvenience caused to you due to the same. Though it is your decision but please take note that the link to your website and the article have been given above, within and on the bottom of the article.

Popular Posts

Hoteliers In Limelight

Voting Poll