Scottish Hotel Industry
Scotland heats up for luxury hotel investment
EDINBURGH, Scotland - With five Scottish cities among the top 10 European cities with the highest hotel occupancy rates during 2011, Scotland is heating up as a prime destination for luxury hotel investment.
Edinburgh had the second highest occupancy rate (80.1%) in Europe during the past year, outstripping Paris, Rome and other major cities. During the month of August, Inverness, Glasgow and Dundee joined Edinburgh to hold the top four spots in European hotel occupancy. Edinburgh also ranked in the top 10 European cities in revenue per available room (RevPAR) in 2011.
"Demand for four- and five-star hotels in Scotland has outstripped supply," said Kenneth Clark, Head of Tourism at Scottish Development International, the government economic development agency that works with developers, investors and operators to maximize the opportunities Scotland provides. "We believe that the Scottish hotel industry has the potential to generate one of the highest returns in Europe with an increase in investment in the luxury-end of the market and we're ready to work with investors who want to capitalize on the huge potential the Scottish hotel sector is showing."
"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 centers on room sales," Mr. Clark continued. "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 to source the investment to meet it."
As Scotland gears up for an influx of tourists over the next few years with the Commonwealth Games, Ryder Cup and 2012 Olympics all coming to the UK, top hoteliers and developers have already been investing in the country. Case in point is U.S.-based Southworth Developments Ltd., which has been investing in a 120-acre property in Machrihanish. The development includes the first new 18-hole golf course to open in Scotland in 100 years, redevelopment of the Royal and Ugadale hotels and golf village apartments.
Edinburgh, the historic Scottish capital now known for its year-round slate of festivals, has also been red hot for investment, according to Mr. Clark. In January 2012, Marriott International, Inc. celebrated the grand opening of the 107-room Residence Inn Edinburgh, the first Residence Inn branded property in the United Kingdom.
After a $32 million refurbishment, The Caledonian, the iconic 241-room hotel overlooking the Edinburgh Castle, is set to join the Waldorf Astoria Hotels and Resorts portfolio this summer when it reopens. Commenting on adding The Caledonian, John Vanderslice, from Hilton Worldwide, said: "The introduction of the Waldorf Astoria Hotels and Resorts brand to Scotland demonstrates the realization of our aggressive growth strategy which brings these authentic and unique products, and guest experiences, into markets where we believe there is significant growth potential in the luxury sector."
Boutique properties are also blossoming. Set behind the facade of five original residential properties in the heart of Edinburgh, the Hotel Indigo will soon open with 60 guest rooms and suites. The high-end Glen Affric Estate is also scheduled to open in April in the National Nature Reserve outside of Inverness and will offer guests a luxury Highlands hunting lodge experience.
Known for its stunning scenery, rich history and world-class golf courses, Scotland attracts some 15 million visitors each year with overseas travelers staying an average of nine nights per visit. Projections suggest that passenger volumes at Scottish airports could triple to 50 million over the next five years.
"Scotland is ripe for hotel investment," Mr. Clark concluded. "Scottish Development International stands ready to serve as a one-stop shop for operators, developers and investors, assisting with everything from site location, developer selection and permitting through to financial support."