Scottish catering and hospitality news in Scotland

Catering in Scotland magazine is published bi-monthly with in-depth features, views and news for the Scottish catering, hospitality and tourism industry. On this page we have the latest news to keep you constantly updated on the market. On the left hand side of the page you can search our archived news which is stored monthly.

Wednesday, March 10, 2010

Hotel Sector Suffers Poor Start To 2010

Scotland's hotel sector has had a poorer start to the year than any other part of the UK, with both occupancy and rooms yield down, according to the latest monthly survey by accountants and business advisers, PKF. The firm's monthly survey found signs of room-price discounting across the UK to maintain occupancy levels. Among Scottish hotels the impact of the recession was exacerbated by the terrible weather in January which had an adverse impact on occupancy and rooms yield.

During that month, Scotland's hotels witnessed a 1.5% fall in occupancy levels, whilst Wales, in comparison, enjoyed a rise of 1%. Rooms yield also dipped in Scotland, to 6.8%. However, it wasn't all bad; occupancy in Glasgow and Edinburgh rose during January by 7.5% and 0.3% respectively, but was down by 7.3% in Aberdeen.

Alastair Rae, a partner in the Real Estate and Hospitality sector at PKF, said: 'These figures indicate that discounting to maintain occupancy levels remains a feature of the sector as the economy creeps from recession.
'Many hotels will have minimum occupancy levels to ensure they can maintain efficient operational performance. Leaving rooms empty with full capital costs and staffing levels makes no sense so, clearly, many hoteliers are reducing the cost of their rooms to maintain footfall.'

'The positive aspect of this is that customers will experience high service levels for their money and may consequently return when the economy has picked up. The risk is that their expectations of how much services cost may have been reduced which can cause problems when hotels try to return to normal pricing structures.'

Alastair concluded: 'Of some concern at the moment for hoteliers is the re-evaluation of business rates. As these are based on turnover from 2008, many hoteliers will find their rates rising substantially at a time when revenues and profitability are falling. The concern is that, while the rates are reviewed every five years as a matter of course, this review has extremely unfortunate timing for most hoteliers, since it coincides with a major economic downturn and still limited signs of recovery.'

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