Hotel occupancy is returning to pre-pandemic levels

Last month, hotel occupancy in Scotland reached pre-pandemic levels for the first time, marking a good end to the year for the industry. Data collected and published by Hotstats and analyzed by RSM UK showed that occupancy reached 67%, which is the same as in December 2019.

Hoteliers were able to raise prices during the holiday season, with average daily rates (ADR) for occupied rooms increasing from £109.43 (November) to £129.69 (December) in Scotland. The ADR is significantly higher than the pre-pandemic level (£93.28 in December 2019) and also higher than in December 2022 (£117.48). This was reported by dailybusinessgroup.co.

Revenue per available room (REVPAR) increased from £80.53 (November) to £87.05 (December) in Scotland. The gross operating margin in Scotland also increased from 22.3% in November to 25.8% in December, while in the UK it remained unchanged, slightly decreasing from 35% to 34.9%.

Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said there are "signs that the tide has turned in favor of hoteliers" and Scotland is not far behind the rest of the UK.

"Businesses have been able to make the most of the festive period without facing the challenges of rail strikes and pandemic restrictions as they have in previous years," he said.

Stewart added that Scottish hoteliers will start 2024 in a strong position. As consumers continue to tighten their purse strings and prioritize experiences over goods. Scotland's hotel industry is reaping the benefits of this shift in consumer behavior, especially with the summer months when the country hosts a number of international events.

Thomas Pugh, economist at RSM UK, says that the resilience of the hotel sector gives some hope that the economy managed to avoid recession at the end of last year.

"Looking ahead, the first six months of this year are likely to remain challenging, with high interest rates holding back economic growth and inflation remaining well above target. However, the situation looks more optimistic in the second half of the year. The inflation rate is likely to decline to 2.5%, which will allow the Bank of England to start cutting interest rates. At the same time, real income growth will continue to increase, and there is a clear possibility of further tax cuts in March. All this will mean an increase in consumer spending, which will be positive for the tourism and hotel sectors," the economist emphasized.

Earlier TravelWise reported a selection of the best hotels in Los Angeles for your vacation.