MARKET OVERVIEW
76
ANNUAL REPORT 2015
FRASERS HOSPITALITY TRUST
1H 2015 ADR was GBP78.70 ($123.10)
according to STR, a 1% increase on 1H
2014. ADR is forecast to grow by 3.5%
in 2015 and 2.7% in 2016 according
to Pricewaterhouse Coopers (PwC).
The last two years saw robust growth
with 4.3% in 2013 and 5.3% growth in
2014.
PwC named Edinburgh among the
top eight European cities expected
to achieve strong growth forecasts in
2015 and 2016. It is the only UK city,
apart from London, in the top eight
cities for ADR growth forecasts.
The entrance of more branded
budget hotels with strong distribution
channels as well as increased
propensity to travel among domestic
and overseas visitors led to the higher
ADR in 2014.
1H 2015 RevPAR was GBP60.7
($94.95), a 3% increase on 1H 2014.
Projected growth is 3.5% and 2.7% for
2015 and 2016 respectively, the 9th
highest forecast RevPAR growth of all
major European cities.
Summer is the peak period,
particularly July and August during
the festival season. The post-
Christmas months of January and
February are the quietest.
Existing Supply
There are approximately 13,000
hotel rooms in Edinburgh as of
quarter one 2015.
Many new hotel openings have
been and will continue to be, in the
economy and upscale segments,
there is a risk of over supply in these
segments pulling down overall
performance indicators in these
segments although demand has
kept apace with supply to date.
Some notable openings include
the 120 room Village Urban Resort,
the 103 room Ibis Styles Centre St.
Andrews while the Carlson Rezidor
Missoni Hotel will no longer operate
under the Missoni brand.
Future Supply
Edinburgh has one of the highest
active pipelines in Europe, 1,270
rooms are under construction,
representing just below 10% of
current room supply. This high
pipeline number is despite the strict
heritage property regulations which
limit new hotel supply compared to
other Scottish cities. In 2015, 250
rooms are due, 2016 will see 650
rooms and 2017 will see 370 rooms.
The Caltongate regeneration project
includes a 150 room Premier Inn
and a 131 room hub by Premier
Inn. Hub by Premier Inn is also
planning a third 157 room hotel
in the city centre. The 175 room
Hampton Hilton will commence
construction in late 2015 near the
airport. A 123 room hotel and spa at
the Marina development in Granton
is also under construction. Marriott
Courtyard Edinburgh Hotel will
have 240 rooms and will open in
2016. Accor’s apart-hotel Adagio is
scheduled to open in 2017. Plans for
an all-suite hotel by the Union Canal
Basin, called Urban Villa have been
submitted for a 180 room “urban
villa” concept development with
kitchens and living rooms.
A recovering office market is
tightening availability of suitable
hotel sites, especially given the
looming shortage of grade A office
supply.
Hospitality Market Outlook
2014 saw many high profile events
such as the Ryder Cup and the
Commonwealth Games. 2015
is expected to be a slower year
although there are still many
events including the government’s
Year of Food and Drink, the World
Gymnastics Championship, and the
Turner Prize.
Rejuvenation projects include
the plan to replace the St James
Centre, a mixed use project which
will include retail, two hotels and
apartments. The former McEwan’s
Fountain Brewery and surrounding
canal areas, unoccupied since 2004,
will also be revamped. The new
National Performance Centre for
Sport and the National Film Studio
may also generate demand. The
Edinburgh International Conference
Centre, the Assembly Rooms and
the Usher Hall were also recently
renovated.
Edinburgh Airport recorded 10.2
million passengers, an annual
record, in 2014 after expansion
plans were completed in time
for the inbound tourism for the
Commonwealth Games. June 2015
passenger movements increased
by 10.6% compared to June 2014.
New services by United Airlines,
US Airways and Qatar Airways
Dreamliner and Air Canada Rouge
have increased long haul capacity.
Easyjet, Jet2, Edelweiss and
Lufthansa have also increased routes
to Europe.
A new tram route, connecting
the airport to the city, carried
1.5 million passengers in its first
100 days of operation in 2014.
Edinburgh Waverley, is the UK’s
largest train station outside London
and continues to be an important
transport hub, generating demand
for overnight stopover guests. The
new Forth Crossing replacement
project is also a key infrastructure
project for the city.
Edinburgh is consistently one of the
most affluent parts of the UK, its
economic prospects are positive and
will continue to attract both visitors
and investors. Edinburgh hotels
are attractive assets due to their
reliable all year income. 2016 hotel
performance indicator growth will
most likely be slower than previous
years due to increased supply.
