Scottish hotels hit hard by pandemic
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The hotel sector in Scotland’s three largest cities has suffered a "precipitous decline", according to the results of the PwC UK Hotels Forecast 2020-2021.
However, the professional services provider also predicted that the three cities should begin to recover in 2021 due to increased demand from UK tourists.
In addition to a stronger "staycation" market, unpredictable overseas travel, ongoing restrictions and local lockdowns are expected to further fuel demand for domestic leisure tourism.
The cancellation of the Edinburgh International Festival Fringe, was a contributing factor in the 63 per cent decline in the capital's revenue per available room (RevPAR), the sharpest fall in any of the 24 UK cities measured. Edinburgh dropped from £77.37 in July 2019 to £28.32 in July 2020 largely as a result of occupancy halving to 40.3 per cent from 79.8 cent the previous year.
In Glasgow, RevPAR fell by 54.2 per cent to £24.29 as occupancy dropped to 24.25 per cent. The average daily rate for a stay in Glasgow fell 17 per cent to £58.57.
The picture was similar in Aberdeen, where occupancy was 44.1 per cent, down from 65.5 per cent the previous year. Aberdeen, which had been recovering from a regional economic downturn following the 2014 oil price crash, saw RevPAR declining only slightly, by one percent, to £54.99 – representing a less severe impact than in the Central Belt.
In the bleakest outlook since benchmarking began in the 1970s, hotel occupancy rates in 2021 are forecast to be 55 per cent across the UK, increasing from 42.2 per cent in the year to July 2020.
The study reports that it could take four years to return to pre-pandemic levels with London set to be particularly hard hit.
Claire Reid, regional market leader for PwC in Scotland, commented: “The hotel sector, like the entire hospitality industry across Scotland, has been more heavily impacted than most by the economic impact of the pandemic, and while the road to recovery is unlikely to be smooth, there are actions that hoteliers, and those who invest in the industry, can take to put themselves on the right path. Through focusing on operations, liquidity and cash, hotels can help mitigate the uncertainty of the market.
“Our cities still have plenty to offer and will appeal to those looking for a ‘staycation’ in 2021 and that will give hotel operators some hope.
“We’ve seen how quickly hotels adapted to our new way of living when they reopened in the summer, and there is a fresh impetus now for digital transformation. A number of hotels have been deploying more contactless technology, digital check-in, and digital room keys, as well as in-room voice devices and digital concierges. This allows fewer touchpoints with workers, but also automates systems and frees up staff time to improve guest experiences.”
Kevin Reynard, senior partner for PwC in Aberdeen added:“Aberdeen has not had to look far for economic challenges in the last decade, and we are all too aware of how patient we have to be through the recovery, having experienced a local lockdown in August.
“The city’s hotels had shown strong signs of recovery last year and I am confident that the sector will recover again as oil & gas activity picks up and the region embraces diverse opportunities in energy transition. Like the rest of the country, we do not expect business travel to return to pre-Covid levels quickly – although Aberdeen has great potential as a hub for tourists looking to explore the north-east of Scotland, especially while international travel becomes increasingly difficult.”
