THE man leading an English hotel group’s £40 million expansion into Aberdeen has expressed confidence in the long term prospects for the market in the city although the downturn in the oil and gas industry has weighed on trading.

Andrew Mcloughlin said the London-based Dominvs Group was pleased with the progress it has made in the Granite City since it opened its first outlet there in June, under the Holiday Inn Express brand.

The 193-bedroom hotel opened near Aberdeen airport during a period when oil and gas firms have been slashing spending in response to the plunge in the crude price since June last year. Travel budgets area seen by some as a soft target.

A report earlier this month found occupancy levels slumped in Aberdeen hotels in May.

Dominvs will open a 165-bedroom Crowne Plaza hotel near Aberdeen airport next month amid signs the North Sea oil and gas industry faces a long downturn. This did not seem to be on the cards when Dominvs bought into the city.

Dominvs Group acquired sites for both hotels in November 2013 during the boom in the oil and gas market that ended last year.

However, Mr Mcloughlin, who is general manager of the Aberdeen hotels, said the indications are the new Crowne Plaza will get off to a good start.

“We are happy with the level of rooms that we’ve picked up in line with our forecasts,” said Mr Mcloughlin.

The hotel, which offers conference facilities, has signed up a range of corporate clients. It has taken bookings for events.

Mr Mcloughlin said the Holiday Inn Express had taken slightly longer to build up momentum than would have been expected during the boom. However, it has achieved occupancy rates of around 90 per cent on key midweek nights.

Occupancy is averaging 70 per cent over the seven days.

But the hotel has accepted lower rates than may have been hoped for to attract retail customers.

“It’s common knowledge that rates in the market have dropped,” said Mr Mcloughlin. “We have dropped in line with the competition.”

While rates paid by corporate customers have held up, Mr Mcloughlin noted other signs that market conditions have got tougher, including the trend for people to leave it increasingly late to book hotels.

“The booking lead team has dramatically reduced,” he said.

However, he expects such pressures to ease as conditions improve in the oil and gas industry.

“We see the current situation as a dip, it will not last for ever,” said Mr Mcloughlin, who noted other aspects of the Aberdeen market that encourage confidence.

“It’s a fantastic city … it’s not just oil and gas. There’s wind and energy, there’s a vast amount of corporates.”

Recent reports have underlined the scale of the challenge facing the leisure sector in Aberdeen.

Aberdeen Airport said recently that its domestic passenger numbers in July were down by 5.9 per cent on the same month of 2014.

Helicopter traffic remained below 2014 levels, showing a 14.8 per cent year-on-year decline in July.

Aberdeen’s international passenger numbers in July were up by 1.8 per cent on the same month of last year.

By contrast, Glasgow and Edinburgh airports saw total passenger numbers increase by 13.7 per cent and 10 per cent respectively year on year in July.

Accountants BDO found occupancy in Aberdeen dropped 17.5 per cent year on year in May to 62.5 per cent, whilst the cost per average room fell almost one third to £52.45.

Edinburgh, Glasgow and Inverness recorded strong increases in business.

Source: www.heraldscotland.com

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