Edinburgh’s hospitality sector is above the UK average

EDINBURGH’S hotel sector has outpaced the UK national average in revenue growth, according to new research from property services firm Cushman & Wakefield.

The Hospitality Market Spotlight report for Edinburgh, which looked at the city’s branded full-service hotels, showed revenue growth increased by 22% compared to Q1 2023. Gross operating profit per available room increased by almost 69% over the same period.

Growth in gross revenue (rooms, food and beverage) also outpaced costs, however, there was an increase in undistributed expenses despite a decrease in utility costs. In particular, wage costs rose by 11%, partly due to the increase in the national living wage.

Carl Ridgley, Head of Hospitality Valuation and Advisory at Cushman & Wakefield, said: “This is encouraging news for hoteliers in Edinburgh, especially as VisitScotland recently announced that Scotland has broken its record number of international visitors this year last. There was also an increase in the number of hotel investment transactions taking place in Edinburgh last year, which again was unique to the city compared to the rest of the UK, where the annual sales volume fell in 2023.”

More than £170m worth of investment deals took place in Edinburgh’s hospitality sector last year – a 132% increase on the previous year. Major deals included the sale of the Crerar Hotel Group to Fairtree/Blantyre Capital and the acquisition of the Dalmahoy Hotel by Warner Leisure Hotels.

Murray Strang, managing partner, Scotland, Cushman & Wakefield, added: “Although the sector continues to face significant challenges, hotels in Edinburgh remain attractive to investors, particularly in light of this encouraging revenue growth. This was due to strong trading in operational hotels and also recent acquisitions of new hospitality developments – mainly focused on the re-use of out-of-date office space in Edinburgh’s central business district.”