Scottish hotels could have biggest investment potential in Europe

The Scottish hotel industry could generate the highest returns in Europe if investors target the luxury-end of the market, according to Scottish Development International (SDI).

Hotels in Edinburgh had the highest occupancy rates in Europe at 86% and 92% in May and June respectively, followed closely by Inverness¹. Edinburgh was rated above all other UK cities (including London) for its hotel occupancy rates as well as other established tourist centres such as Paris, Rome and Amsterdam.

The average rate earned from hotel rooms in Edinburgh is also on the increase with room rates increasing by 8.1% in the year to June 2011 to £95.58, according to accountancy firm PKF².

These trends give Scotland a unique advantage over other cities in winning new investment and SDI is challenging overseas investors to take advantage of the country’s popularity and consider the huge potential of the Scottish hotel industry. In particular, SDI is aiming to increase investment at the luxury and mid-tier market, which will be needed to generate similar returns from room rates as industry leaders in Paris, London and Rome.

Kenneth Clark, Head of Tourism from Scottish Development International said: “Scotland’s pre-eminence as a tourist destination is clear from the fact that we are outperforming many of the world’s most established tourist centres on room sales.

“However, to surpass them on overall returns, we need to add to our selection of quality, luxury hotels in order to increase our revenue per available room (RevPAR). This presents a great opportunity for long-term investors to benefit from Scotland’s quality assets and growing status as a global tourist destination. The demand is there: we just need the funding to meet it.

“UK City investors and fund managers need to capitalise on our knowledge of the hotel sector in Scotland. With help from the Scottish Government and our partner organisations, we are perfectly positioned to support those wishing to invest, whilst matchmaking the investing individual with high yielding Scottish hotel investments.”

Scotland also beats England and Wales on average hotel room yield: the yield in May increased 3.1% to £55.83 in Scotland, 1.3% to £44.88 in England and 12.2% to £44.28 in Wales³.