New research has produced fresh evidence of a sharp fall in Aberdeen hotel room rates and occupancy levels.
The monthly LJ Forecaster Scottish Intercity Report from tourism market research specialist LJ Research, tracking city centre hotel business in July, showed a positive performance in Edinburgh, an expected decline in Glasgow a year on from the Commonwealth Games and sustained losses in the Granite City.
It is the latest data to highlight the negative impact of the oil and gas downturn on hotels in Europe’s energy capital after similar findings from business advisory firms AlixPartners and BDO.
Edinburgh-based LJ Research said: “The trend observed throughout the year was again apparent as fewer rooms were sold compared to last year.”
The firm highlighted an occupancy rate of 65.3% in Aberdeen last month, which was more than 20 percentage points down from 81.7% in July 2014.
It added: “A double-digit contraction was also evident in hoteliers’ room revenue figures as ARR (average room rate) dropped by 18.9% to £79.43.
“Overall, this equated to an eye-watering revpar (revenue per available room) reduction of 35.2% from £80.04 in July 2014 to £51.86.”
LJ Research said Granite City revpar figures were now comparable with those seen in July 2011.
It added: “Whilst the city awaits an influx of business for the biennial SPE (Society of Petroleum Engineers) Offshore Europe conference and exhibition in September, LJ Forecaster forward bookings analysis suggests that the oil and gas conference will do little to revert the downward trend observed in recent months.
“Aberdeen hotel performance has again been heavily affected by a global oversupply of oil.
“Historically, hotel yields have correlated closely with oil prices so it is interesting, and perhaps of some comfort to hoteliers, to see yield trends in recent months outperforming oil price reductions.”
The firm said Edinburgh hoteliers achieved the highest room occupancy in its survey last month, with “a staggering” 91.6% of hotel rooms sold – down slightly on last year – as the capital prepared for its annual festival and fringe.
ARR in the city grew by 10.3% to £126.30, which meant a third consecutive month above £100.
LJ Research said Glasgow’s occupancy performance surprised many, as the city sold 1.1% more rooms this year than in July 2014, a month which registered an 8% rise on July 2013 due to the Commonwealth Games.
“Unsurprisingly, however, room revenues tumbled from their record high level last year as ARR dropped by 22.3%, the firm added.”
Aberdeen’s hotels are in decline just as room supply continues to increase, thanks to a flurry of new openings. Another new hotel, the Crown Plaza, near the airport, is due to open next week.
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