Scotland’s hotel sector has been advised to use its current strong performance to drive quality of properties and experience to drive sustainability.
Attendees of a webinar hosted by HotelPartner Revenue Management and the Scottish Tourism Alliance heard that the country continued to see solid international demand, with some caution around the domestic market.
Marc Crothall MBE, chief executive, Scottish Tourism Alliance, said: “The American inbound tour groups are holding up and being a cooler destination means that we are drawing people because of the climate. The challenge for business is how to convert to margin to reinvest and improve the offer. The domestic family market is seeing a squeeze, but 31% of the visitor spend is luxury and that includes the younger generation looking for luxury breaks.
“There’s definitely a degree of anxiousness; it’s not seeing the demand from the domestic audience that we would have hoped for given the issues with jet fuel and the Middle East. The mood music is positive, but we need to make enough hay in the summer to allow businesses to invest in the dark season. There’s lots to play for, but margin is challenging.”
Looking at current trading and supply, Aoife Roche, VP, sales, EMEA, STR said: “As we go into August forward booking is very varied, there is currently a very short booking window, but we usually see the occupancy come through, even if it’s last minute.
“In Edinburgh, revpar is up 5.7%; this is a story of resilience amid expansion, the city has seen growth in supply, but demand is growing at the same pace, so that is allowing for strong ADR growth. What is coming next for Edinburgh is that when the rooms in construction come to fruition this will mean 16% growth on existing supply, which will undoubtedly mean some pressure.
“In Glasgow the city is well above last year’s business on the books but there are peaks and troughs through the week. Glasgow is really a story of supply and demand; demand has grown ahead of supply and that has resulted in a 13.4% lift in revpar. Much of Glasgow’s new supply was delivered in 2021 and 2022; that’s not to say there hasn’t been a lot of supply, it’s just coming it at a slower pace than demand.
“Glasgow looks like it’s going to continue its solid path of growth in the summer months and is about to break the £100 ADR ceiling with an 82% occupancy. [Performance] will then be about how to build on that with new stock.”
Ian Stokes, former House of Gods COO, now advising hotels in Scotland, echoed this, adding: “We’re seeing a mixed picture from different operators. ADR wise we are seeing a good year, driven by international visitors, but what we are seeing from larger operators is more cancellations – there’s a new war every day.
“My feeling is that the summer is going to be OK, but we need to think about October, November and December, about how to attract the domestic visitor. A lot of that is about nurturing the customer with the CRM; as a nation we expect value and if you’re putting marketing money anywhere, feed it into your CRM. A drink when people arrive can make a difference.”
There was hope that the World Cup, in which, at the time of writing, Scotland had just won its first group game, would help to drive interest amongst potential visitors.
Cat Leaver, director of strategy & competitive intelligence, VisitScotland, said: “Growth is increasingly being driven by international markets, while domestic travel remains fragile but vital for sustaining year-round demand.
“Despite a challenging environment, Scotland continues to benefit from strong global appeal, expanding international connectivity, a diverse regional offering and a strong pipeline of major and mega events.
“The Euros in Germany provided a clear example of the impact of Scotland’s presence on the global stage, particularly the influence of the Tartan Army. We’ve seen how this kind of exposure can translate into long-term demand, and we expect the World Cup, on an even larger scale, to build on that momentum.
“Looking ahead, VisitBritain forecasts 4% growth in UK inbound tourism this year compared to 2025. Scotland typically follows a similar pattern, often slightly outperforming, so we expect continued steady growth, particularly from North America and Europe, where cooler climate destinations are increasingly appealing.
“Domestically, cost-of-living pressures continue to present challenges, with travellers opting for shorter stays, lower spend and more last-minute bookings. As a result, our focus remains on delivering a high quality mix of experiences for both leisure and business visitors.”
With a number of events in the calendar and Scotland’s profile being raised around the world, the country was attracting visitors. Individual hotels looking to draw them in were advised to look at their relationship with AI-driven search, with Robert Holland, managing director, UK & Ireland, HotelPartner Revenue Management commenting: “Forty per cent of journeys now start with AI and we have to make sure we’re optimised for AI”.
Stokes said: “With AI, the first thing to do is start with the customer and understand how they use AI. The majority of people are using it as a search engine; what you need remember is that ChatGPT doesn’t use the traditional referencing; it doesn’t go to TripAdvisor, it goes to Reddit. It’s lazy. The first thing to do is understand what people can find out about your property and how they can access it. You also need to know how the third parties are using it. They’re going to be using your ratings as a shop window.
“The important thing to remember is that AI was first used to compare to data sets and that’s a good place to start. Where I would urge caution is in using it for marketing.”
Visitor levies were also discussed, with Crothall commenting on the remaining unknowns around how money raised would be used and when they would be introduced, but the view from the panel was one of a country thriving and eager to cement its place as a globally-competitive destination.
