The Scottish hotel sector maintained near-identical occupancy levels year-on-year this November, according to the latest data from RSM UK’s Hotels Tracker—but rising costs meant small revenue gains failed to translate to profit.
The figures, compiled by Hotstats and analysed by RSM UK, show occupancy in Scotland edged up from 78.6% to 78.8% compared to November 2022. This was broadly in line with the UK average, which rose from 79.5% to 79.7%.
Average daily rates (ADR) in Scotland increased modestly from £123.60 to £127.25, while revenue per available room (RevPAR) grew from £97.14 to £100.21. Across the UK, ADR rose from £152.84 to £157.55, and RevPAR from £121.49 to £125.62.
However, the uplift in revenue did not reach the bottom line in Scotland. Gross operating profit margins fell from 30.4% to 29.5%, while UK-wide margins remained stable at 36.9%.
Katie Morrison, partner and head of consumer markets at RSM in Scotland, said, “While top-line figures in Scotland are holding steady, the real concern is how little of that is reaching the bottom line. Unlike the rest of the UK, Scotland’s profit margins are already starting to feel the squeeze. We are seeing the clear impact of rising costs, particularly high staff wages and food prices, which are beginning to erode the sector’s profitability.
“There’s also a significant regional disparity across Scotland. While popular locations such as St Andrews and Edinburgh can command relatively high room rates, other cities such as Aberdeen are generally much lower. For more remote or rural locations that are harder to reach, the pressure is even more acute. We also saw a sluggish performance in banqueting and conferencing, with revenues per square metre in Scotland rising from £76.44 to £77.07, an increase of only £0.63, compared to a much healthier £4.58 increase across the UK. I’d expect that December figures will show an improvement though, boosted by Christmas and Hogmanay festivities.
“Looking ahead to 2026, the sector faces further headwinds. The introduction of the tourist tax and the reduction in business rates relief, dropping from 40% to 15%, will present additional challenges. While occupancy shows that people are still very keen to travel, operators face a difficult balancing act between maintaining affordable room rates while managing an increasingly expensive operating environment.”
