Aberdeen's hotels continue to feel effects of troubled North Sea oil and gas sector

The oil industry's crisis is continuing to have an affect on the Scottish city's businesses with hotels, built to cope with a predicted increasing demand for beds for a booming energy sector, seeing their first like-for-like fall in room revenues over two years. 

According to LJ Research's Scottish Intercity Report, the average room rate (ARR) fell by 2.9 per cent to £96.72 and coupled with a decrease in occupancy led to a negative revPAR growth of 5.6 per cent. 

Sean Morgan, managing director at LJ Research, said: "Whilst the trend of steeply falling oil prices appears to have abated, our LJ Forecaster results highlight challenges currently impacting on North Sea oil and gas production and looking to the next few months there are indications of decreasing accommodation demand in Aberdeen."

Muted performance​

Morgan said hotels in all three of Scotland's main cities had encountered a 'muted performance' in January 2015 in the wake of a positive 2014, which included Glasgow's hosting of the Commonwealth Games. 

Glasgow and Edinburgh both had modest overall growth with Glasgow faring well for ARR and occupancy. There, room revenues continued to grow for the thirteenth consecutive month with ARR up 3.1 per cent to £59.90 and revPAR up 0.8 per cent to £37.81 while occupancy was down 2.9 per cent to 63.5 per cent. 

In Edinburgh ARR rose by 2.8 per cent on the previous year to £72.85 and revPAR was up by 2 per cent to £43.64 while occupancy, although still negative, was better in comparison to the drop in Glasgow and Aberdeen where it reached 59.9 per cent, a fall of 0.8 per cent. 

Positive outlook​

Looking ahead, marketing chiefs for Glasgow and Edinburgh both had a positive outlook for their cities' hotel sectors. 

Glasgow City Council leader and chair of Glasgow City Marketing Bureau Gordon Matheson said forward bookings were up 2 per cent on the previous year and noted a number of new hotels, including De Vere Urban Village and Motel One coming into the pipeline.  

He said: "As an investment destination Glasgow has risen to the top as one of the UK’s outstanding performers and with the burgeoning convention and events scene in the city confidence in Glasgow is at an all-time high.”

Paul Wakefield, director of marketing and commercial at Marketing Edinburgh said forward bookings were 5 per cent above those recorded a year ago.

“Overall feedback from Marketing Edinburgh’s members indicates bookings for February and March are performing well," he said. "Along with the mass appeal of the Six Nations bringing UK and international visitors to the city, Edinburgh is also hosting a number of high profile conventions in the coming weeks. For example, the Scottish Renewables Conference and Exhibition 2015 and National Association of Pension Funds (NAPF) will bring in a combined 2,300 delegates to the city in March, generating an estimated £2.7m for the local economy and over 2,300 room bookings in Edinburgh’s hotels.”