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Insider UK
Business
Peter A Walker

Hat-trick of bank holidays boosts Scotland’s hotel sector

Scotland’s hotels sector benefitted from a starker increase in room rates than usual in May, as the hat-trick of bank holidays helped to boost demand.

Data compiled by Hotstats and analysed by RSM UK shows that occupancy rates of hotels in Scotland rose from 73.2% in April to 77.8% in May, higher than the increase across the rest of the UK.

Average daily rates (ADR) of occupied rooms jumped from £114.32 in April to £136.08 during May in Scotland, while rates of UK hotels increased from £138.38 to £150.12.

Revenue per available room (RevPAR) saw a significant increase from £83.71 in April to £105.94 during May in Scotland.

Scotland hotels also benefitted from an uptick in gross operating profits, which rose by 10% to 36.3% in May, up from 26.4% in April.

Stuart McCallum, RSM UK’s regional lead for consumer markets in Scotland, said: "The impact of the hat-trick of Bank Holidays in Scotland in May has undoubtedly helped performance in the hotel sector.

"May would be the traditional start for the summer holiday season in Scotland and this trend through April into May really does bode well for a great season for Scottish hoteliers.

"With the Edinburgh Fringe Festival in August and the UCI Championships at the same time in Glasgow, demand for hotels is going to rise rapidly, with limited discounts available given the strong demand."

Thomas Pugh, economist at RSM UK, added: "The hotel sector epitomises the recent resilience of the UK economy where demand has remained robust despite the cost-of-living crisis and rising interest rates.

"However, consumers are taking out less credit and are using savings to pay down expensive debt.

"It now looks more likely that the lagged effect of the huge rise interest rates that has already happened, combined with the risk of further rate rises, tips the economy into recession later this year or in early 2024 - which will impact on consumer demand and affect spending on discretionary items like holiday bookings."

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