Scottish hotels recorded stronger occupancy and profit growth than the wider UK market in February, according to the latest RSM Hotels Tracker, though analysts are cautioning that persistent cost pressures and geopolitical instability could weigh heavily on performance through the rest of 2026.
Occupancy in Scotland rose from 69.1% to 72.2% year on year in February, while UK occupancy remained broadly flat, edging from 71.7% to 71.9% over the same period. Gross operating profit margins in Scotland improved from 15.3% to 17.6%, while the UK-wide figure moved in the opposite direction, falling from 23.4% to 22.3%.
Average daily rate in Scotland increased from £99.11 to £105.97 year on year, against a UK average of £128.09, up from £125.97. RevPAR in Scotland rose from £68.45 to £76.46, compared to a UK-wide increase from £90.31 to £92.07. The data is compiled by Hotstats and analysed by RSM UK.
Katie Morrison, partner and head of consumer markets at RSM in Scotland, said, “While the latest data points to a comparatively promising performance for Scottish hotels in February, these results are likely skewed by higher rates across Edinburgh and St Andrews. Overall, the year-on-year figures remain relatively flat as persistent headwinds threaten future growth prospects. The widespread disruptions and continued cost pressures exacerbated by the conflict in the Middle East mean that the UK-wide hotel sector faces an uphill battle heading into spring.”
Morrison added that Scotland’s reliance on international tourism increases its exposure to geopolitical disruption, while rising fuel and travel costs could affect summer booking patterns. She noted that the staycation market may see some benefit if consumers choose to holiday domestically rather than travel abroad, but cautioned that any resolution to the Middle East conflict was unlikely to translate quickly into lower energy costs or a recovery in operator margins during the peak season.
On the Scottish political outlook, Morrison said, “With the Scottish elections looming, there is a significant opportunity for the new government to provide much-needed support and investment for the sector. A collaborative approach, working with UK government counterparts and key industry voices, would be particularly valuable in helping to shape future regulation and policies that help the sector flourish, rather than hinder growth.”
Thomas Pugh, chief economist at RSM UK, said the hotel sector faced pressure from three directions simultaneously. “The hotel sector faces a triple blow from the energy crisis. As one of the most energy-intensive service industries, the sector will face a bigger increase in input costs than others. At the same time, rising energy costs for consumers mean a squeeze in disposable incomes that will likely result in a drop in spending on things like hotel stays, especially for the squeezed middle. Finally, the sharp rise in travel costs, especially flights, and an increase in business input costs more generally, are likely to curtail business travel.”
Pugh said the combined effect was likely to compress margins as both costs and revenues came under simultaneous pressure.
