Aberdeen Hotel Sector Strong and Ripe for Investment

The Scottish hotel sector is the fastest growing in the UK, as recent data released by accountants BDO indicates year...

The Scottish hotel sector is the fastest growing in the UK, as recent data released by accountants BDO indicates year-on-year revenues have surged by 10.6% to May 2013. This is over 4 times the 2.5% growth recorded as the national average for the sector excluding London. And if the Scottish hotel sector is a shining light, then the Aberdeen hotel sector is the bulb.

Scottish RevPAR (Revenue Per Available Room) grew 10% to £58.94 over the year – impressive in itself but dwarfed by the 16% year-on-year growth in RevPAR to £77.02 experienced by Aberdeen hotels. Meaningless comparisons to the London market aside, this was the highest rooms yield figure achieved anywhere in the UK.

Lying at the heart of the North Sea Oil and Gas industry, Aberdeen's economy has been key to the fortunes of the UK as a whole for decades, and the city's hotel sector has always been a key beneficiary of relatively high, steady demand as a consequence.

More recently, a surge in business travel has seen hotel room prices increase 9% to £93 in Aberdeen according to the latest Hotels.com Hotel Price Index (HPI), highlighting how tax breaks in the energy sector have driven up economic activity, training and conference demands, to the benefit of the city's hotels.

With Aberdeen now in the top 10 UK destinations for overseas visitors, occupancy levels have continued their upwards trajectory, growing from 79.8% in May 2012 to 80.9% this year. VisitAberdeen's CEO Steve Harris has pointed to the energy sector as a key – but not exclusive - factor: "The front end of the week it is the main driver but towards the back end and the weekend we return to normal and we have plenty of capacity. 

"Oil and gas are very important to us, but there are lots of other industries, life sciences for example, we have two thriving universities, but oil and gas does underpin everything else."

Harris added: "We are noticing considerable interest from hotel chains looking to move into the area. It demonstrates we need to increase the number of beds in the city to meet this growing demand."

The IPIN Global Woolmanhill Aberdeen application of the Secure Exit StrategyTM is well suited to benefit from such market indicators. Centrally located, the project is one of a new brand of 4-star extended stay hotel facilities currently in development across the UK, expecting to capitalise on the immaturity of a market sector already well established in key international cities of business.

Offering greater comfort and independence than conventional hotels, at prices directly competing with the budget sector, the extended stay hotel strikes a chord with businesses increasingly sending employees on short-term assignments and increasingly looking to reduce operating costs. In particular, Woolmanhill Aberdeen will offer considerable business and conference resources – features typically unavailable from the independent operators of existing extended stay facilities in the city.

Woolmanhill Aberdeen

With the competitive advantage gained through the backing of a large branded operator, Woolmanhill Aberdeen is expected to prove immensely popular with off-plan and end user investors, paving the way to another successful application of the Secure Exit StrategyTM.

Existing IPIN Members can view the Woolmanhill Investor Report here

- Friday 09 August 2013

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