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Insider UK
Insider UK
Business
Peter A Walker

Scottish hotel sector 'buoyed by increased demand'

Scotland’s hotel sector saw an increase in occupancy levels, average room rates and gross operating profits in April, as the sector ramps up for the summer season.

The latest RSM Hotels Tracker, based on data produced by Hotstats, shows occupancy rates of hotels in Scotland rose from 65.4% in March to 70% in April.

Average daily rates of occupied rooms jumped from £101.9 in March to £117.27 in April in Scotland.

Room rates are up 10% in Scotland and 16% in the UK when compared to the same month last year.

Revenue per available room rose from £66.7 in March to £82.11 in April in Scotland.

Gross operating profits rose 5% to 24.8% in Scotland last month.

Stuart McCallum, partner and regional head of consumer markets in Scotland at RSM UK, said: "Visitors to the key hot spots in Scotland are helping improve the performance of the hotel sector.

"This looks set to continue with the onset of summer, particularly with big draw events such as the UCI championships, golfing tournaments and the Fringe festival, which will be key in driving consumer demand.

"Hotels are still tackling rising costs and soaring inflation, but it’s encouraging to see demand increasing which means hoteliers can occupy rooms without the need for heavy discounting," he continued, adding: "This is also having a positive impact on the bottom line, which will come as a good flip for the sector as businesses start to rebuild their balance sheets."

Thomas Pugh, economist at RSM UK, added: "Falling inflation, a drop in energy prices, and a tight labour market means consumers’ real earnings should start rising again in the third quarter, which will support demand.

"However, concerns about sticky inflation mean that interest rates are likely to rise to 5%, or even a little higher, raising the risk that the UK goes into a recession later this year or early in 2024.

"That, of course, would offset any benefit of falling inflation on consumer spending - so there are reasons to be optimistic about the second half of this year, but only cautiously so."

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