Edinburgh hospitality sector ‘outperforms UK’

POSTED ON June 7, 2024 BY James Garry

Edinburgh hotels remain attractive to investors

Edinburgh’s hotel sector outperformed the UK national average in revenue growth according to new research from real estate services firm Cushman & Wakefield, showing a healthy performance for the first quarter of the year despite an ongoing increase in the supply of hotels.

The Hospitality Market Spotlight report for Edinburgh, which surveyed full-service city branded hotels, shows that revenue growth rose by 22% in comparison with Q1 2023. Gross operating profit per available room increased by almost 69% over the same period.

Gross revenue (rooms, food, and beverage) growth also surpassed costs, however, there was a rise in undistributed expenses, despite a drop in utilities costs. In particular, payroll costs rose by 11%, partly due to the rise in the National Living Wage.

Carl Ridgley, head of hospitality valuation & advisory at Cushman & Wakefield, said: “It’s encouraging news for Edinburgh hoteliers, particularly as VisitScotland recently announced that Scotland broke its record for the number of international visitors last year. There’s also been an uplift in the number of hotel investment transactions that took place in Edinburgh last year, which again was unique to the city compared to the rest of the UK where annual volume of sales decreased in 2023.”

More than £170m worth of investment transactions took place in Edinburgh’s hospitality sector last year representing a 132% uplift on the previous year.

There were six transactions in 2023 totalling c. 934 rooms and major deals included the sale of the Crerar Hotel Group to Fairtree/Blantyre Capital and the purchase of Dalmahoy Hotel by Warner Leisure Hotels. Across the UK, nearly £2.4bn real estate transactions took place by hotel investors, involving 152 properties.

Murray Strang, managing partner, Scotland, Cushman & Wakefield, added: “Whilst the sector still faces significant challenges, Edinburgh hotels remain attractive to investors particularly in light of this encouraging revenue growth. This has been borne out of strong trading of operating hotels, and also the recent acquisitions of new pipeline hospitality development – primarily centred around repurposing obsolete office premises in Edinburgh’s central business district.”

Sourced from Scottish Construction Now 

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