Occupancy, room rates and gross operating profits at Scottish hotels all rose in January, but with margins well below the UK average and external pressures mounting, the sector faces a challenging period ahead, according to new data from RSM UK.
Figures compiled by Hotstats show gross operating profits in Scotland increased from 3.4% to 5.4% year on year, though this remains well below the UK-wide figure of 18.8%. Occupancy rose from 58.4% to 62%, average daily rate climbed from £92.30 to £95.89, and RevPAR improved from £53.89 to £59.44 — all up year on year but trailing UK averages across each metric.
Katie Morrison, partner and head of consumer markets at RSM in Scotland, said the low margin figures left little room to absorb the cost pressures ahead. “With gross operating profits so low, there’s very little headroom for Scotland’s hotels to cope with increased cost pressures, including more energy price hikes and increased staff costs. Such low average margins suggest that while some hotels, particularly luxury ones, are doing comparatively well, others may be running at a loss.”
The gap between Scotland’s luxury and budget sectors was highlighted in RSM’s full-year 2025 data, reported recently by Hotel Scotland, which showed luxury room rates up 12% to £321.86 and gross operating profits per available room rising 13.5% to £140.59 — while budget hotels struggled to grow occupancy despite raising rates to cover rising costs.
Morrison flagged further risk from geopolitical tensions in the Middle East, warning that travel disruption could hit Scotland’s internationally dependent tourism market hard. Recent Scottish Tourism Alliance data showed more than half of Scotland’s tourism businesses have little or no financial reserves, leaving many poorly placed to absorb further shocks.
RSM chief economist Thomas Pugh added that rising energy costs posed a particular threat, given that hotels remain one of the most energy-intensive service industries despite improving efficiency by around a third since Covid. Sustained price rises, he warned, could squeeze consumer disposable income and prompt businesses to cut back on travel.
With Scottish elections on the horizon, Morrison said hoteliers would be watching closely for policies that could ease pressure on the sector.
