The hotel sector in Scotland's energy capital has recorded a major slump in occupancy and revenue in May as the low oil price continues to take its toll.

A new report states that year-on-year occupancy in Aberdeen dropped 17.5 per cent to 62.5 per cent, whilst the cost per average room fell almost one third to £52.45.

By contrast, strong increases in hotel revenue were recorded in Edinburgh, Glasgow and Inverness, rising to 10 per cent year-on-year.

The figures, by accountants and business advisers BDO, come on the heels of another recent report blaming the slowdown of the North Sea oil sector in a slump in the volume of property sales in the Aberdeen area.

The April to June period in Aberdeen city and Aberdeenshire showed the same price levels as the first quarter of 2015. However, the volume of sales dropped 9.4 per cent on the same period last year.

Aberdeen Airport has also reported a "mixed" set of figures for July, with international passenger figures up 1.8 per cent on 2014 while domestic travel was down 5.9 per cent year-on-year and helicopter traffic down 14.8 per cent.

Earlier this year BP cut just under 10 per cent of its 3,500-strong workforce in Aberdeen, followed by Sinopec-Talisman making similar levels of lay-offs.

According to BDO's report, Edinburgh had the highest occupancy rise in Scotland in May rising 7.0 per cent to 86.9 per cent, with an increase in revenue per room to £75.06.

Occupancy in Glasgow remained static at 86.5 per cent, with the cost of an average room rising to £57.49. Hotel occupancy in Inverness fell slightly.

The downturn in Aberdeen dragged Scotland-wide occupancy growth down to the lowest in the UK.

Revenue in Scotland remains the highest of all the UK nations but has risen at a much lower rate than in England and Wales.

Alastair Rae, a partner at BDO, said: “Aberdeen’s hotel sector continues to suffer from the downturn in the oil and gas sector. Although the oil price may have stabilised it is clear that the economy in Aberdeen and the surrounding area is likely to be deflated for some considerable time to come.”

“The economy in Aberdeen is so heavily based on the oil and gas sector and the industry is using the current downturn in oil price as a period of reflection on the viability of the sector as a whole both now and in the future.

"The impact this could have on hospitality is unknown but likely to be severe so hoteliers and their investors need to examine current and future costs to ensure they are prepared for all eventualities.”

The increases in revenue in Edinburgh, Glasgow and Inverness have been put down to boosts in tourism and conferences.

Edinburgh's May revenue was also the second highest in the UK after Windsor and excluding London.

Concluding the hotel trends survey, which has been published since the early 1970s, BDO also warns that until the oil and gas sector stabilises the hospitality sector in Aberdeen "will remain vulnerable".

Willie Young, finance convenor at Aberdeen City Council, said the area's hospitality sector had slumped to such an extent due to starting from a higher level than competitors.

He added: "We were starting at around 100 per cent occupancy rates. But we're still receiving planning applications for hotels and serviced apartments, with more being built. The city has held its own."

A VisitScotland spokeswoman said: “Whilst it is disappointing to see that figures have dipped (in Aberdeen), we are pleased to see that this has not deterred future investors and interest in the city from hotel developers remains high, demonstrating a continued confidence in the city.

"The changes in the market also present an opportunity to grow Aberdeen’s reputation as a leading leisure destination, famed for its diverse culture and rich history.”

Source: www.heraldscotland.com

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