Rising costs pose significant threat to Scotland’s hotel sector

3rd of December, 2018 | Posted in Edinburgh, Glasgow, Hotel News Email Article | Print Article
The fear of rising costs – caused by inflation, business rates, staffing and online travel agency (OTA) fees – is the biggest threat facing the hotel sector in Scotland according to industry experts.
Just under half of those surveyed at Addleshaw Goddard’s inaugural Scottish Hotels Conference in Edinburgh* prioritised rising costs (46%) ahead of an economic downturn (25%), staffing issues (13%) and political uncertainty (13%) as their top concern.
Nevertheless, Scotland’s hotel sector continues to experience significant growth thanks to record numbers of tourists coming to visit each year. As such, more than three-quarters (76%) of those surveyed identified the strategic importance of air routes to as key to continued growth of the sector.
Across the country, the sector recognises the impact of the oil and gas sector recovery in the north east, with more than half (52%) citing Aberdeen as the city most likely to see the highest Revenue Per Available Room (RevPAR) growth in the next 12 months. This was followed by Inverness (17%), Edinburgh (13%) ang Glasgow and Dundee (9%).
A surge in investment from both domestic and overseas interests has also led to significant hotel development across the country’s major cities and regions. However, nearly half (48%) of those surveyed identified the country’s many underinvested city centre hotels as most likely to suffer from an economic downturn, ahead of country house hotels, luxury hotels and budget hotels.
Addi Spiers, business support and restructuring partner at Addleshaw Goddard, said, “Scotland’s hotel sector is riding a wave of growth and a number of factors are playing into this. The Outlander effect, the launch of Route 500, the V&As and a host of sporting competitions taking place across the country, have all significantly contributed to an increase in tourism. Underpinned with improved infrastructure in the form of international routes, growth looks set to continue. However, while the outlook is generally positive, experts have shone a light on a number of challenges facing the industry.
“Specifically, rising costs outwith the control of the industry are causing significant worry, with fears that hoteliers may have to pass on additional costs to the customer. This could negatively impact the number of bookings for many, with upper and upper mid-scale hotels in cities predicted to be hit the worst as customers trade down.
“In the event of an economic downturn, this impact would be magnified and could be catastrophic for some. Given the current political and economic uncertainties facing the UK, it’s easy to see why rising costs are such a concern.
“The industry is hugely affected by consumer confidence, and so Brexit negotiations and uncertainty will continue to affect the sector well into 2019 and beyond. In the meantime, many will be looking to the Scottish Budget later this year in search of a respite against rising costs which, as it stands, are proving challenging to contend with.”
The following two tabs change content below.
Hotel Magazine Scotland News Team

Hotel Magazine Scotland News Team

Hotel Scotland is a new publication (2017) from the publishers of DRAM - Scotland's leading on-trade magazine. Hotel Scotland is a newsy magazine which covers all aspects of the industry in Scotland. From who's who, to industry issues and refurbishments.
Hotel Magazine Scotland News Team

Latest posts by Hotel Magazine Scotland News Team (see all)

Recent News

    Priory Hotel adopts employee-ownership model

    The Priory Hotel in Beauly, near Inverness, has transitioned to employee ownership to 46 staff members as its founder prepares to retire after…


    UKHospitality and Scottish-based organisation, Green Tourism, which helps businesses and attractions achieve sustainability goals, have joined forces in order to raise awareness…

    One Devonshire Gardens

    One Devonshire Gardens by Hotel du Vin in Glasgow has seen its bedrooms and restaurant areas transformed and two new luxury townhouse…

    Gleneagles outpost for Edinburgh 

    Press reports that Ennismore is planning a new Gleneagles Hotel in Edinburgh are short of the mark, instead, Communications Director John Diviney…

    DoubleTree by Hilton Glasgow Spa and Golf Resort

    The former Westerwood Hotel & Golf Resort in Cumbernauld, home of Scotland’s only Seve Ballesteros-designed golf course, is now part of a…

    Interview with Robert and Vivien Kyle

    Robert and Vivien Kyle are the husband and wife team behind the Ayrshire-based RAD Hotel Group, which employs 500 people over six…


    A landmark ruling over fake TripAdvisor reviews in Italy, known as paid review fraud, has resulted in the world’s first prosecution and…


    The Sunday Times’ Top 100 Great British Hotels singled out Hotel Indigo Dundee for special mention naming it as Scotland’s best hotel.…


    Chris Rickard has led a management buyout of the Strathmore hotel group which was founded by his father, Ronnie Rickard, in 1991.