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Published on Tuesday, December 6, 2016

Record profit growth for Edinburgh hotels - but other cities see declines

A marked rise in the number of international visitors to Edinburgh in October led to record profit growth for the city's hotels of 9.8%.

Profit per room during the month was up 18.4%.

As a result of top line increases in both room occupancy (+1.9 percentage points) and achieved average room rate (+10.1%), hotels in the Scottish capital recorded a 12.7% increase in revenue per available room for the month to £92.29, according to the latest HotStats UK chain hotels market review.

The strong demand for hotel accommodation is a direct reflection of the continued success of Edinburgh Airport, said the report. The airport handled 1.1 million passengers in October, a 12.5% year-on-year increase on the same period in 2015, of which the number of international passengers increased by 23.6%.

Meanwhile, the addition of approximately 820 bedrooms to the Newcastle hotel market has contributed to a 7.1% year-on-year decline in revenue per available room and a subsequent 8% drop in profit per room for the year-to-date.

Since the beginning of 2015, additions to the market have included a 160-bedroom Hampton by Hilton, 222-bedroom Motel One, 251-bedroom Crowne Plaza and 184-bedroom Premier Inn, which have contributed to falling room occupancy (- 3.8 percentage points) and achieved average room rate (-2.4%) performance for year-to-date.

The decline in profit accelerated in October, falling by 24% year-on-year, as the city was one year on from the exceptional performance in October 2015 when St James' Park hosted three group matches in the Rugby World Cup.

The bottom line decline was primarily due to top line decreases as room occupancy fell by 3.3 percentage points, to 78.5%, and achieved rate plummeted by 15% to £69.43.

Profit per room at hotels in the South West region fell by 5% year-on-year in October, but remained on course for a third consecutive year of growth in 2016, according to HotStats.

Following 9.5% growth in 2014 and 11.7% in 2015, the gross operating profit per available room at hotels in the South West has increased by 2.6% for the year-to-date to £33.02.

The decline in profit in October was the largest monthly year-on-year drop in the region in 2016 and might be related to the demand associated with the Rugby World Cup 2015 fixtures hosted this time last year at venues in Exeter and Gloucester, and volume displaced from nearby Cardiff.

As a result, year-on-year occupancy levels in the South West fell by 2.2 percentage points to 77.1% in October, month, with a 1.4% decline also recorded in achieved average room rate, as decreases were recorded in both the conference (-7.8%) and group tours (-6.1%) segments.

Despite the decline in October, hotels in the South West region recorded a 30.9% increase in profit per room in the 36 months to October 2016, to £32.51.

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