RSM: Scotland’s hotels outperform wider UK market following hottest May on record

The data, which is compiled and produced by Hotstats and analysed by RSM UK, shows gross operating profits (GOP) of Scottish hotels reached 42.6% in May, up from 37.4% in the same period last year, surpassing pre-pandemic GOP of 36.9% and the previous month of 26.7% (April). In comparison, UK hotels reached 38.9% in May.

Occupancy of Scottish hotels jumped to 82.4%, up from 79.4% in May 2023 and 72.5% in April 2024. Occupancy of UK hotels rose from 76.3% to 79.6% in May year-on-year.

Scottish hoteliers saw RevPAR increase from £89.51 in April to £127.48 in May, up from £109.95 in May 2023 and £88.23 in May 2019, whereas RevPAR was up slightly in the UK from £117.60 to £122.05 in May year-on-year.

Average daily rates (ADR) of occupied rooms soared to £154.80 in May, up from £138.55 in the same period last year, above pre-pandemic rates of £103.44 and up from £123.81 last month.

However, ADR of occupied rooms fell from £154.04 (May 2023) to £153.38 (May 2024) in the UK but remain significantly higher than pre-pandemic rates of £118.41.

Stuart McCallum, partner and head of consumer markets in Scotland at RSM UK, said: “Although the hottest May on record saw rather inconsistent weather in Scotland, it was certainly another strong month for Scottish hoteliers, with Scotland outperforming the UK in May.

“While UK hotels saw a modest increase to REvPAR, alongside falling average daily rates of occupied rooms, Scotland saw another encouraging monthly boost, bucking the wider UK trend.

“As consumer confidence continues to improve, the addition of two bank holidays will have bolstered occupancy in May, helping hoteliers to offset cost pressures following the recent national minimum wage hit.

“This upward trend is likely to remain throughout the summer months, especially with the arrival of warmer weather and various international events including The Open at Royal Troon, Edinburgh Fringe Festival and Taylor Swift’s Eras tour.”

He added: “Scotland is also starting to attract more international tourists to cities outside of Edinburgh, as the introduction of new direct flights from the US and China enhances global connectivity.

“This is enabling Scottish hoteliers to offer new premium experiences to a wider market, including whisky tours and golf breaks. While UK hotels are seeing room rates plateau, this new tourist market is boosting room rates, profits and RevPAR in Scotland, allowing businesses to rebuild their balance sheets post-Covid and invest in higher quality products.”

Thomas Pugh, economist at RSM UK, added: “The positive results for the UK hotel sector in May is another piece of evidence pointing to a strong rebound in May after a bleak April.

“It appears that stronger consumer confidence and an improvement in real disposable incomes is feeding through into increased demand for everything from retail goods to hotel rooms.

“We expect consumer spending to continue to improve through the second half of this year and in 2025 as real incomes rise, which should support demand for hotel rooms. However, with inflation in the accommodation sector running at around 7%, compared to 2% inflation overall, price pressures in the industry are clearly still an issue.”