RevPAR to surge in Scotland's Aberdeen

Moxy Aberdeen Airport, Scotland, United Kingdom. Photo credit: Marriott International (Aberdeen, Scotland is forecast to see surging RevPAR growth in the second half of 2018 for the first time since 2014.)

Aberdeen, Scotland is forecast to see surging RevPAR growth in the second half of 2018 for the first time since 2014, according to a report from Savills. 

RevPAR in the market plummeted in the first quarter of 2016 due to a fall in average room rate and occupancy after an oil-price crash. However, the city’s hotel industry is benefiting from the steady recovery and a positive outlook for further oil-price growth.

The market is also growing with the addition of several hotel projects currently underway. 

The city is also working to boost its conference and leisure offering. Savills expects the 50 golf courses in the area and the new Exhibition and Conference Centre opening in 2019 are expected to attract 4.5 million visitors in its first six years. Aberdeen International Airport is undergoing a £20-million expansion that will increase terminal capacity 50 percent once the project is complete in 2019 while Aberdeen Harbour is undergoes its own £350-million expansion. “While there has been a historical dominance and reliance on the oil industry, there are efforts to diversify Aberdeen's economy and this will prove positive for hotel operational performance over the longer term,” Steven Fyfe, associate director in the hotels agency at Savills, said in a statement.

As a result, Savills expects Aberdeen's room count will rise 10 percent by the end of 2019, up from the 6,867 guestrooms originally recorded by AM:PM. Several new hotels are opening this year, including brands from independent operators making their initial arrival in the market. New openings include Sandman Signature Hotels' third UK hotel on St Andrews Street at the end of May 2018 and a 200-room Hilton Hotel.

The improving outlook for Aberdeen is drawing in more investor interest, particularly from overseas. These investors see that Aberdeen has opportunities to acquire assets at a discount. Hotel investment volumes in the city totaled £12.25 million in 2017 across three deals, following a year of inactivity in 2016. Savills predicts this trend will continue to build momentum in 2018.

Two of these deals include the £5.7-million sale of the ground lease investment of the Marriott's Moxy hotel next to Aberdeen International Airport to British Steel and the sale of the Holiday Inn in Westhill and the Holiday Inn Express on Chapel Street to Cairn Hotels for an undisclosed sum.