SCOTTISH ENTERPRISE EDINBURGH & LOTHIAN EDINBURGH AND THE LOTHIANS TOURISM ACCOMMODATION AUDIT. September 2006

Transcription

1 SCOTTISH ENTERPRISE EDINBURGH & LOTHIAN EDINBURGH AND THE LOTHIANS TOURISM ACCOMMODATION AUDIT September 2006 TOURISM RESOURCES COMPANY Management Consultancy and Research Services 2 LA BELLE PLACE, GLASGOW G3 7LH Tel: Fax: info@tourism-resources.co.uk

2 Management Consultancy and Research Services 2 LA BELLE PLACE, GLASGOW G3 7LH Tel: Fax: info@tourism-resources.co.uk Mr Cameron MacKenzie Scottish Enterprise Edinburgh & Lothian Apex House 99 Haymarket Terrace EDINBURGH EH12 5HD 22 nd September 2006 Dear Mr MacKenzie EDINBURGH AND THE LOTHIANS TOURISM ACCOMMODATION AUDIT We have pleasure in presenting our report that provides a comprehensive audit of the tourism accommodation sector in Edinburgh and the Lothians and its supply and demand position. The scope of our work on this project is detailed in our original proposal (Ref: P1240). The content of this report has been conscientiously prepared based on our research and information provided to us from various sources at the time of our study. As is customary with such documents, the contents should be regarded as valid for a limited period of time and should be subject to examination and update at regular intervals. This report has been prepared for use by the study sponsors and no liability to third parties can be accepted. We have welcomed the opportunity of preparing this report on your behalf. Yours sincerely David G. Bullough Associate Director Ref: DGB/IMac/MTM/0665-R1

3 TABLE OF CONTENTS SECTION PAGE NO EXECUTIVE SUMMARY i 1 INTRODUCTION 1.1 Background 1.2 Study Objectives and Approach 1.3 Report Format ANALYSIS OF SUPPLY 2.1 Introduction 2.2 Profile of Regional Provision (Establishments) 2.3 Analysis of Regional and Dispersed Bedrooms Supply 2.4 Analysis of Regional and Dispersed Bed Space Capacity 2.5 Holiday / Touring Park Supply 2.6 Average Size of Operation 2.7 Seasonality of Supply 2.8 Losses of Accommodation Stock 2.9 Additions to Accommodation Stock / Future Accommodation Supply QUALITY STANDARDS IN EDINBURGH AND THE LOTHIANS ACCOMMODATION SECTOR 3.1 Graded Properties Profile 3.2 Geographic Property Grading Analysis 3.3 Graded Property Analysis by Star Rating 3.4 Comparison of Regional and National Grading Profiles 3.5 Achieved Quality Standards Regional / National Comparison 3.6 Bed Stock Grading Analysis 3.7 Bed Stock Quality Analysis 3.8 Holiday / Touring Parks BENCHMARKING 48 5 ACCOMMODATION TARIFFS 54

4 TABLE OF CONTENTS (Cont d) SECTION PAGE NO 6 DEMAND AND TRADING OVERVIEW 6.1 Introduction 6.2 Annual Bedroom Occupancy and Achieved Annual Room Rates 6.3 Regional Demand Profile DEMAND OVERVIEW BY GEOGRAPHY 7.1 Introduction 7.2 Sub-Regional Overview CONSUMER RESEARCH FINDINGS 8.1 Introduction 8.2 Company Accommodation Buyers Non-Discretionary Business Demand 8.3 Tour Operators 8.4 Conference Organisers 8.5 Conclusions CITY OF EDINBURGH AND THE LOTHIANS SUPPLY AND DEMAND MODEL 9.1 Introduction 9.2 Model Parameters 9.3 Model Scenarios 9.4 Conclusion STRATEGIC RECOMMENDATIONS 99

5 TABLE OF CONTENTS (Cont d) APPENDICES I II III IV V VI VII VIII IX X XI Contacts List Web Directories Maps Showing Distribution of Accommodation Supply Accommodation Categories Operations Lost From Supply in the Recent Past Potential Future Supply of Tourism Accommodation Make Up of Samples Comparison Between Edinburgh and Key European Competitors Comparison Between Edinburgh and Key UK Competitors Occupancies for Edinburgh and the Lothians (Source: TNS / VisitScotland) Revpar Rankings (Source: KPMG)

6 TABLE OF CONTENTS (Cont d) Table No. Page No. 1 NUMBER OF SURVEY RESPONSES AND INTERVIEWS 3 2 NUMBER OF ESTABLISHMENTS / OPERATIONS BY CATEGORY ALL STOCK (2005) 6 3 NUMBER OF ESTABLISHMENTS / OPERATIONS BY CATEGORY EXCLUDING FESTIVAL STOCK (2005) 8 4 NUMBER OF ESTABLISHMENTS / OPERATIONS BY SUB-REGION ALL STOCK (2005) 9 5 NUMBER OF ESTABLISHMENTS / OPERATIONS BY SUB-REGION EXCLUDING FESTIVAL STOCK (2005) 11 6 SUB-REGIONAL DISPERSAL OF SERVICED APARTMENT AND SELF-CATERING UNITS 12 7 NUMBER OF ROOMS AND CATEGORY MIX ALL STOCK (2005) 14 8 NUMBER OF ROOMS AND CATEGORY MIX EXCLUDING FESTIVAL STOCK (2005) 15 9 REGIONAL AND SUB-REGIONAL DISPERSAL OF ROOMS SUPPLY ALL STOCK (2005) REGIONAL AND SUB-REGIONAL DISPERSAL OF ROOMS SUPPLY EXCLUDING FESTIVAL STOCK (2005) SUB-REGIONAL DISPERSAL OF SUPPLY 1999 Vs ANALYSIS OF REGIONAL BED SPACE CAPACITY ALL STOCK (2005) ANALYSIS OF REGIONAL BED SPACE CAPACITY EXCLUDING FESTIVAL STOCK (2005) REGIONAL AND SUB-REGIONAL DISPERSAL OF HOLIDAY / TOURING PARK SUPPLY (2005) REGIONAL AND SUB-REGIONAL DISPERSAL OF BED SPACE CAPACITY ALL STOCK (2005) AVERAGE SIZE OF OPERATIONS [REGIONAL AND SUB-REGIONAL ANALYSIS] (2005) SEASONAL AVAILABILITY OF ROOMS (2005) ANALYSIS OF LOST OPERATIONS IN RECENT YEARS RECENT ADDITIONS TO HOTEL STOCK ( ) CITY OF EDINBURGH ADDITIONAL HOTEL ROOMS POTENTIAL DEVELOPMENTS [OPERATIONS] REGIONAL AND SUB-REGIONAL ANALYSIS (2005) REGIONAL ACCOMMODATION GRADING ANALYSIS BY CATEGORY ALL STOCK (2005) SUB-REGIONAL GRADING ANALYSIS SERVICED SECTOR ALL STOCK (2005) SUB-REGIONAL GRADING ANALYSIS NON-SERVICED SECTOR ALL STOCK (2005) ANALYSIS OF SERVICED AND NON-SERVICED PROPERTIES BY STAR GRADING ALL STOCK (2005) GRADING PROFILE REGIONAL Vs NATIONAL (2005) AVERAGE GRADING SCORES NATIONAL Vs REGIONAL [PROPERTIES] (2005) AVERAGE GRADING SCORES NATIONAL Vs REGIONAL [ROOMS] (2005) GRADING PROFILE EDINBURGH Vs GLASGOW Vs ABERDEEN SUB-REGIONAL ANALYSIS OF GRADED BED SPACE CAPACITY (2005) FURTHER SUB-REGIONAL GRADING ANALYSIS SUB-REGIONAL ANALYSIS OF BED SPACE CAPACITY BY STAR GRADING (2005) GRADING PROFILE OF HOLIDAY / TOURING PARK PITCHES (2005) MAJOR EVENTS AT BENCHMARK VENUES IN DELEGATE NUMBERS AT BENCHMARK DESTINATIONS IN ICCA WORLD RANKINGS IN ANALYSIS OF LOW AND HIGH SEASON AVERAGE SINGLE RATE PUBLISHED TARIFFS BY SUB-REGION AND CATEGORY (2005) ANALYSIS OF LOW AND HIGH SEASON AVERAGE TWIN RATE PUBLISHED TARIFFS BY SUB-REGION AND CATEGORY (2005) REGIONAL AVERAGE ANNUAL BEDROOM OCCUPANCY PERCENTAGES EXCLUDING FESTIVAL STOCK COMPARATIVE BEDROOM OCCUPANCY PERCENTAGES BY CATEGORY EXCLUDING FESTIVAL STOCK AVERAGE ROOM OCCUPANCY BY SUB-REGION (SERVICED SECTOR) AVERAGE ROOM OCCUPANCY BY GRADE (SERVICED SECTOR) AVERAGE ACHIEVED ROOM RATES ( ) SERVICED SECTOR SUB-REGIONAL AVERAGE ACHIEVED ROOM RATES ( ) SERVICED SECTOR AVERAGE ACHIEVED ROOM RATE ( ) BY GRADE SERVICED SECTOR INDICATIVE OVERALL ROOMS DEMAND PROFILE MIX (WEIGHTED AVERAGE) INDICATIVE NATIONALITY MIX (AVERAGE) EVENTS STAGED AT THE EICC 2000 TO ESTIMATED NUMBER OF BED NIGHTS SOLD (2005) ESTIMATED MARKET MIX OF EXISTING BED NIGHTS SOLD (2005) 83

7 TABLE OF CONTENTS (Cont d) Table No. Page No. 51 ESTIMATED VALUE OF EXISTING SERVICED ACCOMMODATION SALES IN CURRENT PROPENSITY TO PURCHASE BY CATEGORY CURRENT PROPENSITY TO PURCHASE HOTELS BY GRADE OUTPUTS ADDITIONAL ROOMS / UNITS / BEDS REQUIRED OUTPUTS HOTEL ROOMS REQUIRED BY GRADE OUTPUTS HOTEL MARKET TRADE-UP OUTPUTS ADDITIONAL ROOMS / UNITS / BEDS REQUIRED OUTPUTS HOTEL ROOMS REQUIRED BY GRADE OUTPUTS ADDITIONAL NUMBER OF HOTEL ROOMS REQUIRED SCHEDULE OF PLANNED FUTURE HOTEL SUPPLY NUMBER OF ROOMS (ILLUSTRATIVE) OUTPUTS HOTEL ROOM SUPPLY REQUIRED Vs PLANNED MARKET FAIR SHARE ROOM OCCUPANCY PERCENTAGES OUTPUTS ADDITIONAL ROOMS / UNITS / BEDS REQUIRED THEORETICAL ACCOMMODATION REQUIREMENTS IN EDINBURGH AND THE LOTHIANS BY OPERATIONS LOST FROM SUPPLY IN THE RECENT PAST APP V 66 POTENTIAL FUTURE SUPPLY OF TOURISM ACCOMMODATION APP VI 67 OCCUPANCIES BY SUB-REGION SAMPLE SIZE (2005) APP VII 68 AVERAGE ACHIEVED ROOM RATE BY SUB-REGION SAMPLE SIZE (2005) APP VII 69 COMPARISON BETWEEN EDINBURGH AND KEY EUROPEAN COMPETITORS APP VIII 70 COMPARISON BETWEEN EDINBURGH AND KEY UK COMPETITORS APP IX 71 EDINBURGH AND THE LOTHIANS HOTEL ROOM OCCUPANCY APP X 72 EDINBURGH AND THE LOTHIANS GUEST HOUSE & B&B ROOM OCCUPANCY APP X 73 EDINBURGH AND THE LOTHIANS SELF-CATERING ROOM OCCUPANCY APP X 74 EDINBURGH AND THE LOTHIANS HOSTEL / BOTHY BED OCCUPANCY APP X 75 EDINBURGH AND THE LOTHIANS CARAVAN PITCH OCCUPANCY APP X 76 REVPAR RANKINGS (2005) APP XI

8 EXECUTIVE SUMMARY 1 Strategic Recommendations The following paragraphs represent the key observations and recommendations derived from Edinburgh and the Lothians Accommodation Audit. Edinburgh and the Lothians has a significant role to play in driving achievement of Scotland s target to increase tourism value by 2015 by 50%. Edinburgh has experienced growth in the volume and value of tourism for several decades. As Edinburgh and the Lothians continues to see demand growth, the area will need additional accommodation supply across the whole spectrum of types / categories, but in terms of generating economic benefit and satisfying the main demand generators, the Hotel sector in Edinburgh is key. Edinburgh s existing Hotel sector performance, in global terms, is impressive but because of this, it is constrained in contributing to the growth target in tourism value. Occupancy levels and average room rates achieved in the region are already some of the best in the UK and internationally. This is important to attract developers to invest in the region, albeit the City will be the focus for most. The tightly defined City Centre is the preferred location for most visitors to stay so is the most attractive for tourism development. This plainly presents challenges in terms of available sites, land / development costs, not to mention heritage and conservation issues. There needs to be concerted efforts to expand visitor horizons and make other areas of the wider City and wider region as attractive to visitors and developers. Marketing activity to raise the profile of non-traditional visitor areas such as Leith and further afield will help educated / re-educate visitors. Accommodation hotspots need to be developed outwith the City Centre. Improvements to transportation links and infrastructure are practical means of widening regional appeal and equally that of certain areas of the City itself. There is an opportunity to explore the merits of a further conference and exhibition venue as a focus for out of City accommodation development. Edinburgh and the Lothians needs to continue to embrace new product concepts as they evolve. Future opportunities could well include fractional ownership models, Condo-Hotels, super Budget Hotels (eg Easyhotel). The hospitality sector must be encouraged to maintain / improve visitor value for money perceptions to combat the perception of Edinburgh as increasingly an expensive destination. The Festivals period is one where particular concern is being expressed about a shortage of affordable accommodation. Steps should be taken to explore ways of widening the offer of temporary accommodation / making accommodation further afield more attractive eg through enhanced transport provision. Market intelligence and market information recording and gathering must be improved to assist future studies to monitor progress in balancing accommodation supply and demand in the region. Increases in tourist accommodation supply will inevitably increase pressure on the labour market, on housing and social infrastructure. The authorities and industry need to consider what responses / initiatives can be used to mitigate the negative impacts of this growth. -o-o-o- i

9 Of the scenarios examined in this study, those pointing to the achievement of the Scottish Executive and tourism industry aspiration of a 50% growth in the value of Scottish tourism by 2015 are the most relevant. The model demonstrates the following need for Hotel accommodation in the City of Edinburgh and the Lothians by 2015 in broad terms given the aspiration to meet this target if translated into volume growth: THEORETICAL ACCOMMODATION REQUIREMENTS IN EDINBURGH AND THE LOTHIANS BY 2015 City of Edinburgh The Lothians Scenario 1 Scenario 1 Growth 50% 50% Propensity to Buy Same as Today Same as Today Star Grade No of Hotel Bedrooms ii % No of Hotel Bedrooms Ungraded % % % % % % 3 1, % % 4 1, % % % - - AI % % TOTALS 3, % % The reader s attention is drawn to the table on Page xxiii which demonstrates the likely range of additional accommodation required to meet the national target of 50% growth in value by A mix of modest rate growth and additional accommodation stock are the elements most likely to contribute to achievement of the 2015 objectives. In essence, the model demonstrates / suggests across each accommodation type: - A requirement for up to 1,500 additional bedrooms at 4 Star standard and around 1,100 additional bedrooms at 3 Star standard in the City of Edinburgh by 2015; - Research identified a need for a large 3 Star property certainly in excess of 200 rooms to satisfy demand for some conference / meeting business and group business; - Given the Edinburgh International Conference Centre s target markets at the 4 / 5 Star end of the convention / corporate market, a large 4 Star Hotel would complement the conference offering in Edinburgh. Modelling here reflecting discussions with tourism officials at the coalface ; - 5 Star Hotel stock achieves slightly poorer room occupancy levels than the 3 / 4 Star stock, suggesting the supply of such rooms is adequate for current demand. By 2015 the model scenario suggests a further Star Hotel rooms could be supported; - Smaller 3 and 4 Star Hotels should be developed in the Lothians, predominantly supporting leisure needs in East Lothian and business and conference needs in Midlothian and West Lothian. Opportunities in Linlithgow, Midlothian, along the ring road corridor, and as part of the Science commercial cluster around Penicuik are suggested; - In the Lothians, there is a requirement of about 130 bedrooms at 3 Star standard and around 200 bedrooms at 4 Star standard; - Given the aspirations of developers in East Lothian for a golf focus, upmarket resort development the aspiration should be supported as the model demonstrates potential future demand will be generated and can be satisfied by such a development. This should be of 4 or 5 Star standard; %

10 - The model demonstrates the need for more Guest Houses and B&Bs, around 500 additional rooms of 3 Star standard and 170 rooms of 4 Star standard in the City of Edinburgh. There is a need in the future for around 200 new Guest Houses and B&B rooms in the Lothians; - Self-Catering and Guest House provision should be allowed to continue to expand on the back of activity markets such as golf and short break requirements; - The model demonstrates approximately 2,500 beds in this area could be required by 2015 in the Hostel and Campus sectors. There is opportunity to support activity hotspots. Watersports activities development along the coast might be the catalyst for such accommodation; - Additional Holiday / Touring Park pitches around 600 touring pitches in the Lothians are required by Background A supply and demand audit of tourist accommodation in Edinburgh and the Lothians region was undertaken in early 2006 on behalf of Scottish Enterprise Edinburgh & Lothian, the Councils of City of Edinburgh, West Lothian, Midlothian, East Lothian, VisitScotland Edinburgh. Along with the physical audit, a theoretical arithmetical model was developed to enable the future dynamics of supply and demand to be explored. The aim of the review and model is to provide reliable information which will better inform public and private sector investment and policies affecting the City and wider region s tourist accommodation sector. An earlier study of tourist accommodation in the region was concluded in 1999, and this provided a good overview of the tourist accommodation Serviced sector and its supply in particular, but it was not an exhaustive study in relation to either the supply or demand. This study s objectives were to: assess volume of available accommodation by type, split between Serviced and Non-Serviced accommodation types as utilised by VisitScotland s Quality Assurance (QA) Scheme; establish the quality composition of supply; establish the levels and profile of demand for accommodation across the wider geographic area; establish with qualitative research the perceptions and needs of key buyers responsible for delivering business to accommodation operators. Research involved documentary reviews, consultations, face-to-face and telephone interviewing, questionnaire surveying etc. 3 Analysis of Supply From the wide range of published sources available, TRC compiled a comprehensive database of tourist accommodation. This document draws from this information. Analysis is provided of: establishment type and numbers (in total and by Council area); number of available rooms; total bed space capacity; in each of the above, stock is presented as All Stock or Core Stock, the difference being the temporarily available Festival stock; The analysis also provides Serviced and Non-Serviced totals. In this summary document, all tables include Festival stock. iii

11 4 Total Number of Establishments in Edinburgh and the Lothians The table below shows a total of nearly 1,600 operators / establishments in the tourism accommodation sector in Edinburgh and the Lothians. 714 (some 44.7% of all operations) are Serviced providers while 863 (54% of operations) are in the Non-Serviced sector. If the number of seasonal operations is omitted, the number of operators / establishments shows a reduction to 1,392 from 1,599, the reduction primarily in the Non-Serviced sector. In the Non-Serviced sector, the summer Campus accommodation is absent, as well as a significant number of operators of Self-Catering Units that are seasonal / operated for the Festival period only. NUMBER OF ESTABLISHMENTS / OPERATIONS BY CATEGORY ALL STOCK (2005) Category Number of Establishments % Sector Mix % Overall Mix Serviced Sector Hotel % 6.9% Small Hotel % 2.9% Guest House % 15.4% B&B % 17.8% Inn % 0.6% Lodge % 0.8% Restaurant with Rooms 3 0.4% 0.2% Serviced Sector Sub-Totals % 44.7% Non-Serviced Sector Campus 7 0.8% 0.4% Serviced Apartment % 1.6% Self-Catering % 49.7% Hostel % 1.5% Exclusive Use 6 0.7% 0.4% Other 6 0.7% 0.4% Non-Serviced Sector Sub-Totals % 54.0% Holiday / Touring Park % TOTALS 1, % In terms of Serviced operators (table overleaf), over 75% of those identified operate within the City Council area. East Lothian boasts 12.2% of Serviced operators, West Lothian having 7.1% and Midlothian 5.5% of operations respectively. Non-Serviced sector this concentration in the City of Edinburgh more apparent with 81.4% of operations in the City of Edinburgh. This is due to the large number of Self-Catering establishments / operators which are seasonal to service the Edinburgh Festival each year. iv

12 Geographic Dispersal of Establishments NUMBER OF ESTABLISHMENTS / OPERATIONS BY SUB-REGION ALL STOCK (2005) [1] Category Total Number of Establishments City of Edinburgh West Lothian Midlothian East Lothian Serviced Sector Hotel Small Hotel Guest House B&B Inn Lodge Restaurant with Rooms Serviced Sector Sub-Totals % of Total 100% 75.2% 7.1% 5.5% 12.2% Non-Serviced Sector Campus Serviced Apartment Self-Catering Hostel Exclusive Use Other Non-Serviced Sector Sub-Totals % of Total 100% 81.4% 1.9% 2.4% 14.3% Holiday / Touring Park % of Holiday / Touring Park Total 100% 13.6% 18.2% 9.1% 59.1% TOTALS 1,599 1, Note: [1] Includes Festival-only stock. v

13 5 Analysis of Regional and Dispersed Bedroom Supply Currently, the region at its peak (summer months) offers just under 23,000 bedrooms and 2,200 caravan pitches. NUMBER OF ROOMS AND CATEGORY MIX ALL STOCK (2005) Category Total Rooms % Mix of % of Overall Sector Rooms Mix Serviced Sector Hotel 7, % 30.5% Small Hotel % 2.6% Guest House 1, % 7.0% B&B 1, % 4.5% Inn % 0.5% Lodge 1, % 4.5% Restaurant with Rooms % 0.1% Serviced Sector Sub-Totals 12, % 49.7% Non-Serviced Sector Campus 3, % 14.2% Serviced Apartment % 2.5% Self-Catering (1) 5, % 22.4% Hostel % 1.9% Exclusive Use % 0.3% Other (2) % 0.4% Non-Serviced Sector Sub-Totals 10, % 41.7% Holiday / Touring Park (Pitches) 2, % TOTALS 25, % Notes: (1) Includes a number of University owned units that are classed and graded as Self-Catering (different from Campus rooms). (2) Includes Luxury Train nominally based in Edinburgh. The region currently has a stock of around 12,400 Serviced rooms which represents just under 50% of all its tourist accommodation bedroom stock. Of this stock, the single largest category is the Hotel sector, accounting for 7,612 bedrooms, four times the number of rooms of the next Serviced sector category in terms of scale. Hotels are followed by the Guest House and B&B sectors that provide 1,700 rooms and 1,100 rooms respectively in the area. If the categories: Hotels and Small Hotels are added together, they represent a third of the overall stock and two-thirds of the Serviced accommodation stock. Guest Houses represent 7% and B&Bs 4.5% of the Serviced sector stock. The largest Non-Serviced sector category of rooms is the Self-Catering sector, 22.4% of total room stock. Also significant is the Campus sector with up to 3,550 rooms available during the summer months. When the seasonal Festival stock is excluded from the equation, the Serviced sector rooms stock equates to 12,268 rooms, a fall of only 120 rooms. In the Non-Serviced sector however, if Festival stock is excluded, the stock of available Self- Catering rooms drops dramatically by two-thirds from 5,578 to 1,856. The table overleaf presents the geographic spread of rooms supply across Edinburgh and the Lothians area broken down by Council boundaries (City of Edinburgh, West Lothian, Midlothian, East Lothian). Of the total 12,388 Serviced rooms in the area, nearly 10,500 rooms are located within the City of Edinburgh boundary, representing 85% of Serviced rooms. West Lothian accounts for nearly 1,000 rooms (8%), with East Lothian 700 rooms (6%) and Midlothian 280 rooms (2%) respectively. vi

14 Category REGIONAL AND SUB-REGIONAL DISPERSAL OF ROOMS SUPPLY ALL STOCK (2005) Total Rooms City of Edinburgh % of Total Category West Lothian % of Total Category Midlothian % of Total Category East Lothian % of Total Category Serviced Sector Hotel (1) 7,612 6,591 87% 645 8% 151 2% 225 3% Small Hotel (1) % 21 3% 25 4% % Guest House 1,737 1,640 94% 14 1% 22 1% 61 4% B&B 1, % 106 9% 69 6% % Inn (1) % 8 6% 16 12% 29 21% Lodge (1) 1, % % 0 0% 85 8% Restaurant with Rooms (1) % 0 0% 0 0% 6 26% Serviced Sector Sub-Totals 12,388 10,468 85% 937 8% 283 2% 700 6% Non-Serviced Sector Campus 3,550 3,309 93% 201 6% 40 1% 0 0% Serviced Apartment % 0 0% 0 0% 4 1% Self-Catering 5,578 5,022 90% 591 1% 91 2% 406 7% Hostel % 0 0% 0 0% 0 0% Exclusive Use % 30 37% 0 0% 36 44% Other % 15 17% 0 0% 47 52% Non-Serviced Sector Sub-Totals 10,407 9,478 91% 305 3% 131 1% 473 5% Holiday / Touring Park 2, % 163 7% 75 3% 1,497 67% TOTALS / ROOMS / PITCHES 25,021 20,437 82% 1,405 6% 489 2% 2,690 11% Note: (1) These categories make up the Hotel and related category used in certain parts of this report. vii

15 6 Comparison with Previous Study Hotels The previous study carried out in 1999 into visitor accommodation in Edinburgh and the Lothians area suggested that between 1990 and 1998 the City of Edinburgh s Hotel room supply grew from 4,500 rooms to 6,500 bedrooms, 44% growth. For comparative purposes, we have aggregated Hotels, Small Hotel, Inn, Lodge and Restaurant with Rooms as Hotel and related category to reflect previous reports designation of Hotel. In 2005/06 the Hotel and Related category in the City of Edinburgh accounts for 8,019 rooms. Over the last seven years (end of 1998 to end of 2005), there has been a growth of an estimated 1,500 rooms in the Hotel sector in the City of Edinburgh. The region as a whole now has 9,525 Hotel-type rooms. At the end of 1998, the Hotel room estimate was a total of 7,648 rooms in the study area (Edinburgh and the Lothians). Guest Houses / B&Bs The previous study noted 495 B&B / Guest House operations registered with ELTB providing 2,336 rooms and suggested this number had declined over previous years as a result of the impact of the Budget Hotel sector in the Edinburgh area. This study in 2006 excluding Festival stock identified 531 operations across the area, some 411 in the City of Edinburgh providing 2,700 rooms in total, 2,329 in the City of Edinburgh. This suggests that the B&B / Guest House sector is a stable feature of the portfolio of tourist accommodation products. Hostels The 1999 study reported around 1,400 Hostel beds registered with the ELTB which today number in excess of 3,000. Campus Accommodation The total Campus room stock with the ELTB membership analysis in 1998 was 3,484 available predominantly June to September. In 2006 the count stands at 4,347 units. Holiday / Touring Parks The current distribution of caravan pitches to an extent reflects the traditional role of the respective areas in terms of Holiday visits and their rural components with East Lothian having the lion s share of caravan pitch capacity 1,497 (67%) of the 2,226 pitches across the region due to East Lothian s coastal location. In 1998, the caravan pitch stock comprised 2,700 pitches and static vans with 2,000 in East Lothian (74%). The current stock level at around 2,200 pitches with 1,500 of them in East Lothian suggests this is where the decline in capacity has occurred. Self-Catering The previous report acknowledged the difficulty in assessing the scale of the Self-Catering market and excluded it from their analysis. viii

16 Geographic Distribution of Room Supply SUB-REGIONAL DISPERSAL OF SUPPLY 1999 Vs 2005 Sub-Region 1999 Study 2005 (1) 2005 (All Stock) City of Edinburgh 90% 85.8% 76.6% West Lothian 4% 6.8% 6.4% Midlothian 1% 2.3% 2.6% East Lothian 5% 5.1% 14.4% Note: (1) Calculated on equivalent categories: Hotel, Small Hotel, Guest House, B&B, Inn, Lodge, Restaurant with Rooms, Campus, Hostel. In 1999, the geographic distribution of the room supply was as outlined above with 90% of the room stock reported in the City of Edinburgh. Recalculating our 2005 findings for as direct a comparison as possible 85% of stock now resides in the City of Edinburgh, 7% in West Lothian, 2% in Midlothian and 5% in East Lothian. 7 Analysis of Regional and Dispersed Bed Space Capacity The table highlights the total bed space capacity of the region which runs to in excess of 42,700 bed spaces, 59% in the Serviced sector and 41% in the Non-Serviced sector. If the number of notional caravan bed spaces is included in the calculation at 3.5 bed spaces per pitch then a further 7,800 bed spaces could be included taking the overall total bed space capacity to in excess of 50,000. ANALYSIS OF REGIONAL BED SPACE CAPACITY ALL STOCK (2005) Category % Mix of Total % Mix of Total Bed Sector Bed Overall Bed Spaces Spaces Space Stock Serviced Sector Hotel 15, % 35.8% Small Hotel 1, % 3.0% Guest House 3, % 8.6% B&B 2, % 5.3% Inn % 0.6% Lodge 2, % 5.4% Restaurant with Rooms % 0.1% Serviced Sector Sub-Totals 25, % 59.0% Non-Serviced Sector Campus 4, % 10.1% Serviced Apartment 1, % 3.0% Self-Catering 8, % 20.0% Hostel 3, % 7.2% Exclusive Use % 0.4% Other % 0.4% Non-Serviced Sector Sub-Totals 17, % 41.0% TOTALS 42, % Holiday / Touring Park (Pitches) 2,226 The table overleaf provides analysis of the geographic dispersal of the region s bed spaces. ix

17 REGIONAL AND SUB-REGIONAL DISPERSAL OF BED SPACE CAPACITY ALL STOCK (2005) Category Total Bed Spaces City of Edinburgh % of Total Category West Lothian % of Total Category Midlothian % of Total Category East Lothian % of Total Category Serviced Sector Hotel 15,340 13, % 1, % % % Small Hotel 1, % % % % Guest House 3,699 3, % % % % B&B 2,278 1, % % % % Inn % % % % Lodge 2,327 1, % % 0 0.0% % Restaurant with Rooms % 0 0.0% 0 0.0% % Serviced Sector Sub-Totals 25,244 21, % 1, % % 1, % Non-Serviced Sector Campus 4,347 4, % % % 0 0.0% Serviced Apartments 1,275 1, % 0 0.0% 0 0.0% 6 0.5% Self-Catering 8,507 7, % % % % Hostel 3,071 3, % 0 0.0% 0 0.0% 0 0.0% Exclusive Use % % 0 0.0% % Other % % 0 0.0% % Non-Serviced Sector Sub-Totals 17,520 15, % % % % TOTALS 42,764 37, % 2, % % 2, % Holiday / Touring Park Pitches 2, % % 1, % x

18 8 Average Size of Operation A table in the main report gives an indication of the scale of the average business / operation by category and in each of the different Council areas. Notable points: The average size of Hotels in the area is only 83 rooms in comparison to, for instance, Glasgow where the average size of Hotel in the City is in excess of 136 rooms; The larger than normal average size of the Guest House and B&B categories at over seven rooms per operation and over four rooms respectively; The overall average size of operation in each accommodation category is larger in Edinburgh than in the regions. 9 Losses of Accommodation Stock The consultants were not able to source the original database from which the 1999 study drew its information, so the current audit cannot provide any specific information on the change in scale or make up of overall stock. However, during the extensive research phase of this study, properties were initially identified from a wide range of sources, some more up to date than others. The subsequent checking of the operational status identified some 84 properties as having ceased to operate for one reason or another. The property closures are a result of various factors, some of the losses due to proprietor retirals, other larger properties being converted to domestic apartments and yet others reverting to domestic dwellings. 10 Potential Additions to Supply Sub-Region Between 1990 and 1998, approximately 2,000 rooms were reported as having been added to stock. Between 1999 and 2005, based on figures provided by VisitScotland Edinburgh, a further 1,700 Hotel bedrooms have been added. Most developments have averaged under 200 rooms and mostly below 150. The call for a large-scale Hotel on a single site to support the Edinburgh International Conference Centre to date and to satisfy demand growth in the future remains unsatisfied despite a further 1,780 rooms added to supply. Our research with respective Councils uncovered a wide range of proposals at various stages in the planning process. These are highlighted in the table below with more detail provided in the main report Appendices. POTENTIAL DEVELOPMENTS [OPERATIONS] (1) REGIONAL AND SUB-REGIONAL ANALYSIS (2005) Total Potential New Operations / Extensions Hotel Serviced Sector Guest House B&B Lodge Campus (1) Indicates new development or extensions to existing operations. xi Non-Serviced Sector ANALYSIS OF LOST OPERATIONS IN RECENT YEARS Hotels Guest Self- Holiday / B&Bs Houses Catering Touring Park Total Numbers Lost % Loss 13% 20% 53% 13% 1% 100% % of Total Stock Available 10% 7% 15% 1% 5% 5% Self- Catering Hostel City of Edinburgh West Lothian Midlothian East Lothian Note: TOTALS Holiday / Touring Park

19 Key observations include: Most potential development activity (50% overall and 58% in the City of Edinburgh) is in the Hotel sector (which will translate into an increased concentration of new rooms in this sector which is, after all, the main economic driver of overnight tourism in the area); New projects include new build and extensions to existing properties; East Lothian proposed developments include proposals for golf resort type products. 11 Graded Properties Profile The table below provides an overview of the properties that participate in the VisitScotland QA Scheme. Category REGIONAL ACCOMMODATION GRADING ANALYSIS BY CATEGORY ALL STOCK (2005) Total Properties % Sector Mix Not Graded % of Category Awaiting Inspection % of Category Total Graded % of Categor y Serviced Sector Hotel % % 9 8.2% % Small Hotel % 3 6.4% 2 4.3% % Guest House % % 7 2.8% % B&B % % 6 2.1% % Inn % % % % Lodge % % 1 7.7% % Restaurant with Rooms 3 0.4% 0 0.0% 0 0.0% % Serviced Sector Sub-Totals % % % % Non-Serviced Sector Campus 7 0.7% % 0 0.0% % Serviced Apartment % % 0 0.0% % Self-Catering % % % % Hostel % % 1 4.2% % Exclusive Use 6 0.6% % 0 0.0% 0 0.0% Other 6 0.6% % 0 0.0% % Non-Serviced Sector Sub-Totals Holiday / Touring Park 1, % % % % % % 0 0.0% % This table indicates that around 60% of the region s total Serviced operations are participants in the VisitScotland s QA Scheme. In the Non-Serviced sector, it is significantly lower, at 34%. However it must be noted that this is based on all stock ie including that available for Festival-only which will not by its temporarily available nature interact with VisitScotland. xii

20 12 Graded Property Analysis by Star Rating Category The table below provides a detailed analysis of the graded properties across the study area in Serviced and Non-Serviced sectors. ANALYSIS OF SERVICED AND NON-SERVICED PROPERTIES BY STAR GRADING ALL STOCK (2005) Total Graded % 1 Star % 2 Star Serviced Sector Hotel % 2 3.3% 5 8.3% % % % Small Hotel % 4 9.5% % % 4 9.5% 0 0.0% Guest House % % % % % 1 0.6% B&B % 5 3.8% % % % 3 2.3% Inn % 0 0.0% % % 0 0.0% 0 0.0% Lodge % 0 0.0% 0 0% % 0 0.0% 0 0.0% Restaurant with Rooms % 0 0.0% % 0 0.0% % % Serviced Sector Sub-Totals % % % % % % % Non-Serviced Sector Campus % % % 0 0.0% 0 0.0% 0 0.0% Serviced Apartment % 0 0.0% 1 5.0% 1 4.5% % % Self-Catering % 4 1.4% % % % % Hostel % 1 8.3% % % % 1 8.3% Exclusive Use 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% Other % 0 0.0% 0 0.0% 0 0.0% 0 0.0% % Non-Serviced Sector Sub-Totals Holiday / Touring Park % 7 2.1% % % % % % 1 6.7% % % % 3 Star % 4 Star % 5 Star % 13 Comparison of Regional and National Grading Profiles The following represents the composition of Edinburgh and the Lothians accommodation properties graded in comparison to the mix nationally by Star rating. GRADING PROFILE REGIONAL Vs NATIONAL (2005) Star Grade Edinburgh and the % of Total National Profile % of Total Lothians Profile Graded Properties Total Graded Properties Total % % % 1, % % 5, % % 4, % % % TOTALS % 12, % Notes: Excludes Holiday / Touring Parks, Cruise Ship and International Resort Hotel. Includes Self-Catering with an adjustment for the operators with a range of grades. The table indicates that in Edinburgh and the Lothians area, in comparison to the national profile, there is a marginally lower proportion of properties graded in the quality standard of 3 and 4 Star with a greater concentration than the Scottish average in 5 Star properties. The above provides an analysis of those properties participating in the VisitScotland QA Scheme and does not necessarily reflect the quality profile of the total stock. xiii

21 14 Achieved Quality Standards Regional / National Comparison The average quality profile achieved by the different categories in Edinburgh and the Lothians accommodation sector has been calculated and is displayed. AVERAGE GRADING SCORES NATIONAL Vs REGIONAL [PROPERTIES] (2005) Category Edinburgh and the Lothians Average (1) National Average(2) Serviced Sector Hotel Small Hotel Guest House B&B Inn Lodge Restaurant with Rooms Serviced Sector Average Non-Serviced Sector Campus Serviced Apartment Self-Catering Hostel Exclusive Use N/A 5.00 Other N/A N/A Holiday / Touring Park Non-Serviced Sector Average OVERALL AVERAGE Notes: (1) Calculated by TRC. (2) Source VisitScotland. A further analysis was carried out into the QA grading by bedroom and bed spaces and is reported in the main document. 15 Accommodation Tariffs The report provides an insight into the tariff structures and pricing policies across the different accommodation sectors and categories. The following general observations can be made: Tariff increases in recent years have been relatively flat with few price increases ahead of inflation; Evidence of some establishments adjusting the structure of their pricing to maximise revenue increases in relation to market demand; Evidence of prices being inflated for the duration of the Edinburgh Festivals which Fringe organisers voiced concern over; Conventional Hotel stock is increasingly employing revenue managers following the principles of yield management. 16 Annual Bedroom Occupancy and Achieved Annual Room Rates The table overleaf gives a broad indication of the level of annual bedroom occupancy achieved across the whole region. Within each category there are obviously operations performing higher and lower than the averages. It appears that over the last three years, bedroom occupancy levels have, in most instances, been growing. It is estimated that across the region the overall Serviced sector achieves a highly respectable 65% annual room occupancy level. xiv

22 REGIONAL AVERAGE ANNUAL BEDROOM OCCUPANCY PERCENTAGES EXCLUDING FESTIVAL STOCK Category Serviced Sector Hotel (Sample Size 54) [1] 70.6% 69.7% 75.1% Small Hotel (9) 62.1% 62.9% 67.2% Guest House (17) 59.1% 59.0% 55.6% B&B (25) 40.7% 41.3% 45.2% Overall Simple Average Occupancy [2] In Serviced Sector (105) 57.9% 57.6% 64.8% Non-Serviced Sector Self-Catering (105) 24.7% 25.3% 40.8% Holiday / Touring Park (3) 50.1% N/A N/A Notes: [1] Sample Size for [2] Includes two Lodge remitters in addition to above sample. It is to be noted that the occupancy data above has been derived from information provided by individual operators. In addition to this individual operator data, Edinburgh Principal Hotels Association (EPHA) and West Lothian s key Hotels provided collective occupancy statistics. Additional information adds a further dimension to the overall picture of demand in the area and has been incorporated into the model, to enable the demand equation to be more robust. A further issue in some categories is where a proportion of the stock is seasonal the above percentages present annualised occupancy percentages. The table below provides a comparison of the 2005 bedroom occupancy level monitored by the audit and those prepared by VisitScotland for the wider Area Tourist Board geography and the national averages. COMPARATIVE BEDROOM OCCUPANCY PERCENTAGES BY CATEGORY EXCLUDING FESTIVAL STOCK Category Serviced Sector This Audit SE Edinburgh & Lothian VisitScotland Survey VisitScotland National Average Hotel 75.1% 75% 63% Small Hotel 67.2% Guest House 55.6% B&B 45.2% Overall Simple Arithmetic Average Occupancy in Serviced Sector Non-Serviced Sector 54% 47% 64.8% 64% 55% Self-Catering (Unit Occupancy) 40.8% 67% 55% Hostel (Bed Occupancy) N/A 59% 47% Holiday / Touring Park (Pitch Occupancy) 50.1% 38% 40% Discussions with accommodation agencies representing Self-Catering operations suggest that occupancy levels of 70% plus are common across the City of Edinburgh. Those properties of higher quality and most central City Centre locations are rarely without occupants. Similar can be said for quality operators in the Lothians. Those properties represented by agencies that come on stream for the Festival period only, will in general, achieve full (100%) or near full occupancy for the limited period of their availability. xv

23 The main report provides detail of annual bedroom occupancy for the Serviced sector across each of the sub-areas. From analysis of the Serviced sector as a whole ie Hotel, Small Hotel, Guest House and B&B in terms of occupancy, the City of Edinburgh has seen a growth in room occupancy over the last three years of around 2% from 67.9% to 70.2%. In reference to the previous report for the period 1990 to 1999 demand over that period demonstrated almost uninterrupted room occupancy growth from 63%-67% peaking in the mid 1990 s in the low 70%. AVERAGE ROOM OCCUPANCY BY GRADE (SERVICED SECTOR) Category 1 Star 2 Star 3 Star 4 Star 5 Star Ungraded / Awaiting Inspection Overall Average Hotel & Related Types 73.5% 65.4% 76.4% 77.2% 71.2% 72.0% 74.4% Guest House / B&B 25.0% 45.7% 48.2% 58.1% 50.0% 49.5% 49.4% SERVICED TOTAL 57.3% 61.1% 63.4% 72.7% 67.6% 56.7% 64.8% Displayed below are the average room rates achieved by the different categories of Serviced accommodation across the region. Caution is recommended given the size of the sample. AVERAGE ACHIEVED ROOM RATES ( ) SERVICED SECTOR Category Hotel (Sample Size 24) Small Hotel (8) Guest House (14) B&B (9) Lodge (2) (1) N/A N/A N/A Overall Single Average Room Rate (57) Note: (1) Not disclosed to protect commercial sensitivity. Again, the table below provides some overview of geographic difference in average achieved room rate. SUB-REGIONAL AVERAGE ACHIEVED ROOM RATES ( ) SERVICED SECTOR Sub-Region Average Achieved Room Rate 2005 City of Edinburgh West Lothian Midlothian East Lothian Overall Simple Average Room Rate Note: ARR calculated as weighted average by rooms available. AVERAGE ACHIEVED ROOM RATE ( ) BY GRADE SERVICED SECTOR Category 1 Star 2 Star 3 Star 4 Star 5 Star Ungraded / Awaiting Inspection Overall Average Hotel & Related Types Guest House / B&B n/a SERVICED TOTAL xvi

24 17 Demand and Nationality Profiles The following two tables have been compiled from operator responses. Again these should be read with caution as different operators deal with market mix differently. INDICATIVE OVERALL ROOMS DEMAND PROFILE MIX (WEIGHTED AVERAGE) Business Type Mix Corporate 22.5% Leisure 51.0% Group / Coach Tours 14.2% Meeting / Conference 12.3% TOTAL 100.0% The following table plots the responses received from operators indicating the nationality of their demand. INDICATIVE NATIONALITY MIX (AVERAGE) Demand Nationality Mix Domestic Scottish Demand 12.6% Other Domestic UK Demand 60.0% Overseas Demand 27.4% TOTAL 100.0% The model indicates room sales value at 147 million this translates as a Hotel room Revpar of It is estimated that other (non-room) revenue in Edinburgh Hotels is between 45% and 50% of total revenue. Therefore estimate of Revpar for the audit devolves as to across the Edinburgh Hotel stock. The following paragraphs provide a brief overview of demand characteristics in each Council area. Edinburgh Business / corporate demand represents around 22% of the region s demand mix. Similarly leisure demand remains reasonably constant throughout the year but in contrast peaks at Christmas and Hogmanay. January is the only month which operators tend to described as quieter. Edinburgh, in leisure terms, is renowned for its summer Festivals programmes which sees high levels of demand for five / six weeks over July / August at its peak. One-off / itinerant events such as MTV Awards, G8 Summit can also create isolated peaks in accommodation demand. The most recent report available on the impact of the summer Festivals of 2005 suggested attendances of 3.1 million generated by 1.4 million trips. Hotels, reporting to EPHA, achieve an 88% occupancy for August and 90% of the Hotels over this period reported turning bookings away. Other Festivals driving demand include the winter celebrations of Christmas and Hogmanay. The Six Nations Championship also regularly impacts on the City s accommodation sector. The Edinburgh International Conference Centre opened in 1995 and has established itself in the international associations and international corporate events market which sees September, October and November as peak months of demand. Future business levels appear healthy and plans to increase the Centre s capacity by 40% are in place. xvii

25 A reported constraint to the growth of the Centre is the lack of sufficient 3 Star Hotel properties in the City. Budget and 4 / 5 Star properties are in adequate supply but there are no Hotels of scale at any grade. For many companies and organisations, Edinburgh as a conference venue is not an option given its generally small average size of individual Hotel properties. Future projects that will impact positively on demand include: West Lothian Edinburgh Airport s projected growth in direct flights, development of second runway and development of rail link (EARL); Cruise Terminal; General population growth forecast; Centre for Biomedical Research and numerous other projects of scale in the City of Edinburgh. West Lothian has a very modest tourist accommodation base, demand for which remains corporate in nature with modest demand from leisure tourists. Key Hotels in West Lothian achieved occupancy levels in 2005 at an average of around 73%. The mix of Lodge accommodation and traditional Hotels sees the range of occupancies vary by up to 20% across the best and worst performing properties participating. Proximity to the Airport is beneficial if convenience is a factor, particularly in the meetings market, but for many the attraction of staying in Edinburgh will be compelling. In future, factors / projects with the potential to positively impact on demand for tourism accommodation include: Midlothian Potential move of the Royal Highland Showground; Heartlands project redevelopment of Polkemmet Colliery; Extensive residential stock expansion in the area; Reopening of rail-line Winchburgh, Bathgate, Airdrie; City region / Inspiring Capital branding project; Oatridge College National Equestrian Centre. Midlothian has only a very modest number of tourist accommodation establishments. Hotels and Small Hotels reporting occupancy levels from 50%-75% are generally modest in size. Demand is a mix of local corporate generated by local businesses, and leisure / VFR sectors, wedding celebration etc. It is considered that the area suffers from a lack of convenient transport infrastructure options with the City of Edinburgh which constrains potential benefit of displaced demand and those wishing to stay in Edinburgh and venture out to Midlothian or vice versa. East Lothian Increasingly adopted as commuter territory to Edinburgh (46% of working population commute into Edinburgh) the demand profile of the area tends to have an increasing leisure focus across the area from west to east. Properties to the west of East Lothian benefit from demand displaced from the City on occasion, particularly during the Festivals period. xviii

26 East Lothian benefits from its traditional role as a holiday destination and this is evident from the number of Self-Catering Units and the caravan pitch provision which is a significant proportion in the mix of supply in East Lothian compared with other sub-areas under study. Leisure tourism is relatively buoyant in North Berwick but the corporate demand base is poor. Hotels in the area report occupancy levels in the range 50%-70% and an average room rate of around A proportion of the residential stock in East Lothian is second homes and those proving unsuitable for holiday lets are marketed for 1-6 month lets to those in the area on contract work and on occasion those moving into the area while house hunting. The combination of holiday lets and out of season longer lets was reported to see units achieve occupancies of 75% annually. Over recent years, East Lothian has seen a loss of stock. This is as a result of properties, particularly B&Bs and Guest Houses but also Small Hotels, being granted planning permission for change of use. A number of trends are emerging which in future should stimulate accommodation demand, namely the intended development of golf resort properties. In addition there is growth demand for heritage style properties being presented to the marketplace and a focus on promoting activities eg coastal watersports. 18 Consumer Research Findings Interviews with a number of local businesses, tour operators and Hotel booking / conference agents to establish views of the stock and services provided by the area s accommodation sector were held. The aim was to identify product gaps / market gaps and development opportunities. Company Accommodation Buyers There is little demand seasonality, no one time of year was identified as busier. Edinburgh is viewed as an expensive visitor destination. No company would use Hotels of a quality lower than 3 Star with the majority looking for Hotels of 4 Star quality. 5 Star Hotels were viewed as too great a luxury for all but very senior personnel. Half of the companies interviewed had actually visited the accommodation before placing guests there. The inclusion of leisure facilities were seen as important to most of the companies. Location was mentioned by most as being one of the most important factors in choosing a Hotel convenient to business, access to City / Airport etc. 50% noted some difficulty in booking Hotels and any kind of visitor accommodation during the Festivals period. Those unable to book Hotels during the Festival period reported either booking B&Bs if they were available or booking outside the City of Edinburgh as far afield as Dalkeith, Glasgow, Dumfries and Peebles. There was felt to be the lack of 4 Star quality Serviced Hotels in the Lothians. Some companies mentioned small increases in the number of rooms they booked in the area in the short term. xix

27 Tour Operators Edinburgh was mentioned as a key destination by tour operators. It is a must see destination for a Scottish visit. Tour operators reported that their clients wanted to be as central in Edinburgh as possible. On occasions, the tour operators interviewed have used accommodation in the Lothians, but this tends to be limited to times when Edinburgh is too busy. East, West and Midlothian are not well known to tourists as destinations, and tour operators generally find that they are too close to Edinburgh to be included in tours that already include Edinburgh as the main port of call. A lack of accommodation was identified, particularly a lack of good value, good standard 3 Star Hotels. Some group tour operators are trying to place groups of up to 200, requiring at least 100 rooms. A weakness highlighted by several respondents was transport. This included traffic congestion in the City Centre, problems with the road network, high taxi fares and the limited number of budget airlines currently using Edinburgh Airport. In terms of trends, an increase in short break, off-season business, and increased business from Scandinavia, Spain and Ireland thanks to budget flights were reported. Conference Organisers Most are happy to use the City Centre Hotels, and base their selection on the availability of rooms. Again the issue for conference organisers is finding large enough Hotels to take groups (sometimes up to 200 rooms), with suitable meeting facilities. Trends mentioned included tightening budgets, a new trend of more conference delegates booking their own accommodation when attending a conference. 19 Benchmarking As part of the terms of reference for this study, TRC investigated a number of European and UK Cities in order to compare the scale of stock, the key conference / meeting venues, the quality make up of accommodation, trends in the meetings sector and volumes of visitors / delegates attracted. Cities included: Glasgow Copenhagen Aberdeen Gothenburg Manchester Prague There are difficulties in comparing conference statistics between destinations due to differing interpretations of types of event, scale of event, geographic boundaries, grading of accommodation etc. However, it is still possible, with caution, to draw some inferences from the available benchmark data. One interesting point concerns the breakdown of Hotel establishments by quality in each City. Edinburgh has by far the highest percentage of 5 Star Hotels both against the UK and European comparators. The Cities chosen from the UK Glasgow clearly show that domestic tourism accounts for the large majority of all visits. In Edinburgh and Glasgow domestic tourism accounts for approximately 80% and 75% of overall bed night demand respectively and in Aberdeen and Manchester, the domestic tourism market rises to over 95% of total visits. Figures for Gothenburg also indicate that the majority of visitors came from Sweden. xx

28 Two of the other Cities reviewed on the continent show a complete reversal of this situation, with overseas tourists making up the majority of their visits. In Prague, 87% of all visitors are from outwith the Czech Republic and in Copenhagen, 73% of visitors come from outwith Denmark. One further source of interesting comparison is the International Congress and Convention Association (ICCA) league table of Cities hosting international association meetings. Edinburgh was ranked 17 in the Cities in Europe league in 2003, and in 2005 rose to sixteenth position. The relative positions of the cities considered are shown below. ICCA CITY RANKINGS European Ranking World Ranking 2005 Edinburgh Copenhagen Prague = Glasgow Gothenburg Manchester Edinburgh, with its breadth of accommodation products and meeting space, is well placed to host international conferences and congresses. The business / conference market is considered to be worth million per annum to the area and whilst competition is fierce, the business visitor is of key importance to the accommodation sector: business visitors spend more than leisure visitors; present a wider spread of demand across the year; complement economic development aims and objectives. The Edinburgh Convention Bureau Ltd and Edinburgh International Conference Centre see Edinburgh offering a differentiated product at the high quality end of the market but the City and venue are constrained suffering from an inability to offer organisers of larger events their bedroom accommodation requirements in a single or limited number of Hotels. 20 City of Edinburgh and the Lothians Supply and Demand Model The study commissioned the design of a theoretical arithmetic computer model to help forecast the future supply and demand equation for the area. The research and analysis from the supply and demand audit of tourist accommodation was used as the base for the development of this theoretical model. In the main report (Page 81) we provide a flowchart / diagrammatic representation of the elements of the supply and demand model developed. The model estimates that the City of Edinburgh and the Lothians sold around eight million tourist bed nights in Serviced and Non-Serviced accommodation in 2005 which equates satisfactorily to the results of the IPS and UKTS returns for ESTIMATED NUMBER OF BED NIGHTS SOLD IN 2005 Category City of Edinburgh The Lothians Total (Millions) (Millions) (Millions) Hotel and Related Guest House / B&B Campus Self-Catering Hostel Holiday / Touring Park Total Bed Nights Sold xxi

29 As part of the modelling exercise the consultants have quantified the value to the economy of the Serviced accommodation sector. ESTIMATED VALUE OF EXISTING SERVICED ACCOMMODATION SALES IN 2005 City of Edinburgh The Lothians Total Hotel Sector Number of Room Nights 2.2 million 0.41 million 2.61 million Value of Accommodation million 22.4 million million Guest House / B&B Number of Room Nights 0.42 million 0.07 million 0.49 million Value of Accommodation 18.5 million 2.6 million 21.1 million TOTAL SERVICED SECTOR Number of Room Nights 2.62 million 0.48 million 3.1 million Value of Accommodation million 25.0 million million In 2005 it is estimated that the Serviced accommodation sector in Edinburgh and the Lothians area sold 3.1 million room nights to an estimated value of million at 2005 prices. This is the value of direct bedroom sales only and does not take account of other direct food and beverage or other onsite sales. This value does not take account of offsite expenditure or the multiplier effect. The main objective of the model is strategic, to estimate the number of beds and rooms required to meet the aspirations of demand growth at a national level. The theoretical model assumes that the whole market will trade at the same averaged level, so that theoretically both existing and new supply trade at fair share and can be supported by the overall quantification of market demand. 21 Model Scenarios The reader s attention is drawn to the main report where a number of scenarios are illustrated using differing criteria for growth including: differing propensity to buy types of accommodation; different growth targets 35% and 50% and by market sector; further increases in occupancy of existing stock; incorporating planned future stock at same supply absorption levels as historic position; supporting a 5 Star Hotel in East Lothian. The national target for tourism growth is for a 50% increase in the value of Scottish tourism by The model was used to explore how Edinburgh could meet this growth target. The audit research has demonstrated the following: Edinburgh is already perceived by many as being expensive to visit so an increase in accommodation pricing significantly greater than the rate of inflation may be an issue in future albeit accommodation rates in the past have outstripped inflationary growth; Between 3 and 4 Star grades the audit has revealed limited average room rate difference so upgrading would result only in limited increase in value. The result of the above is that Edinburgh is likely only to be able to meet the growth targets through significant increases in volume of accommodation rather than just through increases in value (rate) or visitors propensity to upgrade. We are therefore of the opinion that in order to meet the national growth target Edinburgh s accommodation in terms of volume will have to grow by between 35% and 50% by This is broken down as follows: xxii

30 OUTPUTS ADDITIONAL ROOMS / UNITS / BEDS REQUIRED City of The Lothians Edinburgh Approximate Cumulative Demand Growth 35% 50% 35% 50% Number of Units / Rooms / Beds Required Hotel Rooms 2,811 3, Guest House Rooms 869 1, Campus Beds 752 1, Self-Catering Units Hostel Beds 1,043 1, Holiday / Touring Park Pitches At a 35%-50% growth aspiration the results show a need for around 2,800-4,000 Hotel bedrooms in the City of Edinburgh and in the Lothians by This accommodation type being the most important in terms of economic impact and ability to deliver growth. Of the 4,000 Hotel bedroom increase in the City of Edinburgh accommodation stock, more than 60% of the growth is at 3 and 4 Star level. The other types of accommodation eg B&B, Self-Catering also see varying additions to volume needed to meet tourism value growth targets but they are not as significant in scale and in some cases public sector agencies have less opportunity to influence their development. xxiii

31 1 INTRODUCTION 1.1 Background Scottish Enterprise Edinburgh & Lothian, the Councils of City of Edinburgh, West Lothian, Midlothian, East Lothian and VisitScotland Edinburgh commissioned (TRC) in early 2006 to undertake a comprehensive review of tourist accommodation supply and demand in Edinburgh and the Lothians. Along with a physical audit, there was a desire to see a theoretical model developed which would enable the future dynamics of supply and demand to be plotted. This model would take account of demand growth and future supply opportunities. It would also demonstrate the impact of large-scale developments across the area. The aim of the review and model is to provide reliable information which will better inform public and private sector investment and policies affecting the City and wider region s tourist accommodation sector. An earlier study of tourist accommodation in the region was undertaken in 1999, and this provided a good overview of the tourist accommodation Serviced sector and its supply in particular, but it was not an exhaustive study in relation to either the supply or demand. Since 1999 there have been considerable changes in both the supply and demand sides of the equation. The client partners were keen to have an up to date overview of the current constituents of the tourist accommodation sector along with future supply information largely lodged with the individual Councils planning authorities. In addition, the absence of more detailed information about demand levels, source markets and trends was inhibiting a full picture to be formed of the tourist accommodation situation in the City and wider region. The phenomenon of the temporary commercial accommodation supply available for the duration of the Edinburgh Festivals season also needed some detailed examination. It was considered a review of the sector would fill important market intelligence and information gaps. The establishment of a database, an essential part of this study, provides an important tool and benchmark against which to compare future activity / development. Similarly, an understanding of profiles and levels of demand for accommodation is essential, if future policies and investment in accommodation supply are to be targeted in an appropriate manner. -1-

32 In particular, there is a growing need to understand supply and demand characteristics on a sub-regional basis as different areas within Edinburgh and the Lothians perform differently and face different issues and challenges. Future policies and intervention must reflect / take account of sub-regional differences in supply and demand characteristics. 1.2 Study Objectives and Approach The study was commissioned to address the information shortfall in terms of tourism accommodation across the area. It was a requirement of the study to report on supply at an individual Council level resulting in the four sub-areas: City of Edinburgh; Midlothian; West Lothian; East Lothian. In summary, the study objectives were to: assess volume of available accommodation by type, split between Serviced and Non-Serviced accommodation types as utilised by VisitScotland s Quality Assurance (QA) Scheme; establish the quality composition of supply; establish the levels and profile of demand for accommodation across the wider geographic area; establish with qualitative research the perceptions and needs of key buyers responsible for delivering business to accommodation operators from the following sources ie the end user s assessment of current provision: - corporate; - conference organisers; - accommodation agents; tour / specialist groups; - the short break markets. Given the scale of the task and the geography of the area, considerable time involvement was needed to source both supply and demand characteristics. This involved documentary reviews, consultations, face-to-face and telephone interviewing, questionnaire surveying etc. Available published listings and references to accommodation provided a starting point to identifying operations. However, the information about the nature and quality of accommodation provided is scant except for those businesses that engage with VisitScotland. A wide range of research source material had to be used to inform this study. This included:

33 VisitScotland.com; Edinburgh and Lothians Tourist Board (ELTB) Guide (now replaced by VisitScotland Edinburgh); Thomson Local Directory; Yellow Pages; AA / RAC Guides; NTS Guide; Landmark Trust Guide; A plethora of web directories (indicative list provided in Appendix II). These sources were used to help identify the overall tourist accommodation supply situation in the study area. In terms of demand, research was concluded amongst accommodation operators. Research enabled the compilation of a database with 1,749 tourist accommodation records, of which 714 are within the Serviced sector. As part of this study, direct contact / survey returns were achieved with 236 businesses. This in comparison to similar studies undertaken by the consultants represents particularly good coverage of the Serviced sector given the access to collective Edinburgh Principal Hotels Association (EPHA) performance data. The Non-Serviced sector level of contact was less satisfactory but again performance information was derived from third party representatives and much of the Self- Catering stock particularly is only available during the Festivals period. NUMBER OF SURVEY RESPONSES AND INTERVIEWS Category Number of Percentage Total Direct Coverage of Records Contacts Category Serviced Sector Hotel % Small Hotel % Guest House % Bed & Breakfast (B&B) % Inn % Lodge % Restaurant with Rooms % Serviced Sector Sub-Totals % Non-Serviced Sector Campus % Serviced Apartment % Self-Catering % Hostel % Exclusive Use % Other (1) % Non-Serviced Sector Sub-Totals 1, % (2) Holiday / Touring Park % TOTALS 1, % (3) Notes: (1) Tourist accommodation not falling into VisitScotland categories. Table 1 (2) 36.0% excluding Self-Catering Unit operators. (3) 29.3% excluding Self-Catering operators. -3-

34 The scale of accommodation discovered in the supply audit process far exceeded that anticipated or indicated in the study brief. Given the scale of supply, with client agreement, it was decided not to attempt individual contact with each single Self-Catering Unit operator, but to obtain a representative sample concentrating resources on contact with agencies with multiple units representing owners eg Mackays, Factotum, Dickins etc to gain an overview of demand within this category of accommodation. In terms of identifying future supply, research was conducted with each of the participating Council Planning Departments in an attempt to identify projects currently in the planning process: either granted permission or awaiting planning decisions. As indicated, telephone interviews were also conducted amongst buyers and prospective buyers of accommodation and placement organisations. 1.3 Report Format This report adopts a format that seeks to display clearly the key relevant supply and demand data uncovered by the audit. In addition to this report, a full electronic database of the stock findings has been provided to the Client partners. This database is presented in a format that allows the data to be interrogated further by the client group, to provide additional information of the stock structure, in addition to that presented in tabular format in this study if so required. Within this study, the VisitScotland Categories (types) of accommodation are adopted for analysis throughout the document. Establishments, rooms and bed spaces analysis are presented as overall totals, as well as at individual Council area levels. Stock levels are presented where appropriate including and excluding the temporarily available Edinburgh Festival stock. -4-

35 2 ANALYSIS OF SUPPLY 2.1 Introduction This section presents an analysis of the existing tourism accommodation supply in Edinburgh and the Lothians in all recognised accommodation categories. The supply is analysed by type of accommodation, adopting the same categories as used by the VisitScotland QA Scheme. Where a property is not a member of the Scheme, an assessment based on how the property is listed or marketed has allowed the consultants to apply a type designator (however no attempt has been made to grade non-members). Analysis is provided of: establishment type and numbers (in total and by Council area); number of available rooms; total bed space capacity; in each of the above we have presented the stock as All Stock or Core Stock, the difference being the temporarily available Festival stock. The analysis also provides a breakdown of the categories of accommodation to provide a Serviced and Non-Serviced total. Categories in each of the subsets are as follows: Serviced Non-Serviced Hotel Campus Small Hotel Serviced Apartment Guest House Self-Catering B&B Hostel Inn Exclusive Use Lodge Other Restaurant with Rooms Note: Holiday / Touring Parks as a category are recorded separately. Visual representations of the geographical distribution of accommodation supply within the different Council areas across the region are provided in the maps in Appendix III. For each area, two accommodation distribution charts have been prepared: one set identifies the distribution of Serviced accommodation; and the other, Non-Serviced accommodation. In each case the illustrations have been prepared incorporating seasonal Festival stock. -5-

36 2.2 Profile of Regional Provision (Establishments) Total Number of Establishments in Edinburgh and the Lothians The table below provides analysis of the research findings in terms of number of accommodation operations within each category. All VisitScotland categories are represented within the area apart from International Resort Hotel. (The complete list of accommodation categories used by VisitScotland and a brief description of each is provided in Appendix IV). Over recent years, the number of tourism accommodation categories used by VisitScotland, has increased to take account of evolving product and shifts in market demand. The categories of Small Hotel, Restaurant with Rooms, Lodge and Serviced Apartment are all relatively new designations. NUMBER OF ESTABLISHMENTS / OPERATIONS BY CATEGORY ALL STOCK (2005) Category Number of % Sector % Overall Establishments Mix Mix Serviced Sector Hotel % 6.9% Small Hotel % 2.9% Guest House % 15.4% B&B % 17.8% Inn % 0.6% Lodge % 0.8% Restaurant with Rooms 3 0.4% 0.2% Serviced Sector Sub-Totals % 44.7% Non-Serviced Sector Campus 7 0.8% 0.4% Serviced Apartment % 1.6% Self-Catering % 49.7% Hostel % 1.5% Exclusive Use 6 0.7% 0.4% Other 6 0.7% 0.4% Non-Serviced Sector Sub-Totals % 54.0% Holiday / Touring Park % TOTALS 1, % Table 2-6-

37 The previous table shows a total of nearly 1,600 operators / establishments in the tourism accommodation sector in Edinburgh and the Lothians. 714 (some 44.7% of all operations) are Serviced providers while 863 (54% of operations) are in the Non-Serviced sector. The significant categories of accommodation, in terms of operator numbers, are Self-Catering with nearly 800 operators, and B&B and Guest House operators with 285 and 246 respectively. It must however be borne in mind that this operator analysis is only of business entities, and by their very nature B&Bs and Self-Catering are very often small single operations with few units, bedrooms, beds. It is surprising to note that Hotels and Small Hotels represent just over 10% of the overall number of establishments in the area however, individual Hotels, whilst only a small proportion of businesses overall, offer more rooms / bed spaces per operator unit see later sections). A trend in the sector noted over the last few years and exhibited in various parts of Scotland is a number of Hotel, Guest House and B&B operators who also have Self-Catering Units or Serviced Apartments as adjuncts to their main business. For these, and for a number of Serviced Apartment, Universities, Hostel and other operators owning multiple sites / units, where they have been identified, the previous table counts the operator only once. The table overleaf displays the tourism operators excluding those operators of only temporary Festival stock. If this number of seasonal operations is omitted, the number of operators / establishments shows a reduction to 1,392 from 1,599, the reduction primarily in the Non-Serviced sector. In the Non- Serviced sector, the summer Campus accommodation is absent from the equation, as well as a significant number of operators of Self-Catering Units that are seasonal / operated for the Festival period only. -7-

38 NUMBER OF ESTABLISHMENTS / OPERATIONS BY CATEGORY EXCLUDING FESTIVAL STOCK (2005) Category Number of % Sector % Overall Establishments Mix Mix Serviced Sector Hotel % 7.9% Small Hotel % 3.4% Guest House % 17.7% B&B % 20.4% Inn % 0.7% Lodge % 0.9% Restaurant with Rooms 3 0.4% 0.2% Serviced Sector Sub-Totals % 51.2% Non-Serviced Sector Campus 2 0.3% 0.1% Serviced Apartment % 1.8% Self-Catering % 42.7% Hostel % 1.7% Exclusive Use 6 0.9% 0.4% Other 6 0.9% 0.4% Non-Serviced Sector Sub-Totals % 47.2% Holiday / Touring Park % TOTALS 1, % Table 3 There is only a single omission from the Serviced sector. This is due to one less B&B operator. This operator is in fact a B&B agent who coordinates, inspects and markets around 80 Festival-only B&B providers. We have been unable to identify individual operators for reasons of commercial sensitivity Geographic Dispersal of Establishments The table overleaf profiles the accommodation establishment make up of each of the different Council areas. The table shows both the concentration of Serviced sector and Non-Serviced sector tourist accommodation to be very much focused not unexpectedly on the City of Edinburgh Council area. -8-

39 NUMBER OF ESTABLISHMENTS / OPERATIONS BY SUB-REGION ALL STOCK (2005) [1] Category Total Number of Establishments City of Edinburgh West Lothian Midlothian East Lothian Serviced Sector Hotel Small Hotel Guest House B&B Inn Lodge Restaurant with Rooms Serviced Sector Sub-Totals % of Total 100% 75.2% 7.1% 5.5% 12.2% Non-Serviced Sector Campus Serviced Apartment Self-Catering Hostel Exclusive Use Other Non-Serviced Sector Sub-Totals % of Total 100% 81.4% 1.9% 2.4% 14.3% Holiday / Touring Park % of Holiday / Touring Park Total 100% 13.6% 18.2% 9.1% 59.1% TOTALS 1,599 1, Note: [1] Includes Festival-only stock. Table 4-9-

40 In terms of Serviced operators over 75% of those identified operate within the City Council area. East Lothian boasts 12.2% of Serviced operators with West Lothian having 7.1% and Midlothian 5.5% of operations respectively. In the Non-Serviced sector this concentration in the City of Edinburgh is even more apparent with 81.4% of operations in the City of Edinburgh Council area. This is due to the large number of Self-Catering establishments / operators which are seasonal to service the Edinburgh Festival each year. East Lothian by virtue of its Self-Catering operations sees 14.3% of Non- Serviced operations with West Lothian and Midlothian each having around only 2% of operations. East Lothian fares well in the Holiday / Touring Park sector with 59.1% of Park operators (being more of a traditional seaside location) ahead of West Lothian, with 16.2%, City of Edinburgh 13.6% and Midlothian with 9.1% of operators. The respective Council areas outwith the City of Edinburgh lack representation in some categories of both Serviced and Non-Serviced types eg there are no Restaurants with Rooms or Serviced Apartments in West Lothian or Midlothian, no Lodge sector representation in Midlothian and no Campus accommodation operators in East Lothian. The analysis of geographic dispersal of accommodation establishments excluding the Edinburgh Festival seasonal stock sees the City of Edinburgh still achieve 75% of Serviced operations in the area, but Non-Serviced operations drop from 81% to 76% with East Lothian s proportion rising from 14% to 18%. The analysis of operators / operations in terms of Serviced Apartments and Self-Catering operations in the previous tables disguises the number of units available in these accommodation categories. When moving on to look at the scale of provision in terms of bedrooms and bed spaces in the following sections of the report the normal unit of sale ie flat / apartment / house / chalet is also missed. This analysis of the Serviced Apartment and Self- Catering stock of units is provided in Table

41 NUMBER OF ESTABLISHMENTS / OPERATIONS BY SUB-REGION EXCLUDING FESTIVAL STOCK (2005) Category Total Number of Establishments City of Edinburgh West Lothian Midlothian East Lothian Serviced Sector Hotel Small Hotel Guest House B&B Inn Lodge Restaurant with Rooms Serviced Sector Sub-Totals % of Total 100% 75.2% 7.2% 5.5% 12.2% Non-Serviced Sector Campus Serviced Apartment Self-Catering Hostel Exclusive Use Other Non-Serviced Sector Sub-Totals % of Total 100% 76.3% 2.3% 3.0% 18.4% Holiday / Touring Park % of Holiday / Touring Park Total 100% 13.6% 18.2% 9.1% 59.1% TOTALS 1,392 1, Table 5-11-

42 The following table provides analysis of the unit type and geographic distribution of these two accommodation categories. SUB-REGIONAL DISPERSAL OF SERVICED APARTMENT AND SELF-CATERING UNITS Category City of City of Proportion of West East Total Midlothian Edinburgh Edinburgh Stock Lothian Lothian All Including Excluding Available Stock (Year-Round Position ie Festival-Only Festival-Only Festival-Only No Festival-Only Stock) Stock Stock Serviced Apartment Unit Type Apartment / Flat % House / Cottage % Chalet / Lodge % Self-Catering Unit Type Apartment / Flat 1,617 1, % House / Cottage % Chalet / Lodge % OVERALL TOTAL UNITS 2,163 1,927 1,080 44% Table 6 The table reflects the position in terms of Festival-only stock in Edinburgh where the effect is exclusively confined (ie there is no Festival-only stock in the other Council areas). At its peak, Edinburgh sees its Self-Catering stock rise to 1,497 units during the Festival. Outwith the Festival period there are only 657 Self-Catering Apartments available in Edinburgh ie 840 units are added on a temporary basis for let during the Festival period. As a separate category of tourism accommodation, the Serviced Apartment is one of the most recent product category recognised by VisitScotland. The term currently encompasses a range of product offerings with varying facilities and levels of service, some operations could be considered to be very similar to Hotels where multiple units are supported by 24-hour reception, concierge services and a meals provision. This is in contrast to single Apartment units which are in effect little different to Self-Catering Units. The term Serviced Apartment, in these cases, is used more as a marketing tool than product description. With the exception of two units in East Lothian, all the Serviced Apartment stock is located within the City of Edinburgh. -12-

43 It is interesting in this region of Scotland that Serviced Apartment and Self- Catering Units are available for longer-term lets as well as the traditional weekly and short break tourist products. In the Lothians area and City of Edinburgh in particular, both Serviced Apartments and Self-Catering Units straddle the commercial letting and tourist holiday / short break market. This is unusual this phenomenon is not seen in other parts of Scotland. The reason is due to the buoyancy of the short-term commercial letting market for company relocations etc which has been fuelled by the financial sector in Edinburgh, Scottish Parliament and house prices also playing a part. There is therefore a blurring between long-term letting and tourist letting markets in Edinburgh. Within the stock, there are 673 units that are designated as Self-Catering category and graded accordingly, but are actually owned and operated by the Universities and Colleges in the area. This stock is situated in a variety of different locations across the City. This University designated Self-Catering stock is generally available between June and September (outwith term time). This stock is available to service demand from the Edinburgh Festivals. The scale of this stock is vast and we believe that the importance of this stock has been underestimated in the past. 2.3 Analysis of Regional and Dispersed Bedroom Supply The quantification and profile of available tourist accommodation bedrooms across the wider Edinburgh and the Lothians region is displayed overleaf. Currently, the region at its peak (summer months) offers just under 23,000 bedrooms and 2,200 caravan pitches. The quantification of this stock gleaned from VisitScotland, various guidebooks, consortia listings and the Internet. This quantification of accommodation stock has been broken down into Serviced and Non-Serviced accommodation and split up by VisitScotland category. -13-

44 NUMBER OF ROOMS AND CATEGORY MIX ALL STOCK (2005) Category Total Rooms % Mix of % of Overall Sector Rooms Mix Serviced Sector Hotel 7, % 30.5% Small Hotel % 2.6% Guest House 1, % 7.0% B&B 1, % 4.5% Inn % 0.5% Lodge 1, % 4.5% Restaurant with Rooms % 0.1% Serviced Sector Sub-Totals 12, % 49.7% Non-Serviced Sector Campus 3, % 14.2% Serviced Apartment % 2.5% Self-Catering (1) 5, % 22.4% Hostel % 1.9% Exclusive Use % 0.3% Other (2) % 0.4% Non-Serviced Sector Sub-Totals 10, % 41.7% Holiday / Touring Park (Pitches) 2, % TOTALS 25, % Notes: (1) Includes a number of University owned units that are classed Table 7 and graded as Self-Catering (different from Campus rooms). (2) Includes Luxury Train nominally based in Edinburgh. The region currently has a stock of around 12,400 Serviced rooms which represents just under 50% of all tourist accommodation bedroom stock. Of these, the single largest category is the Hotel sector, accounting for 7,612 bedrooms, four times the number of rooms of the next Serviced sector category in terms of scale. Hotels are followed by the Guest House and B&B sectors that provide 1,700 rooms and 1,100 rooms respectively in the area. If the categories: Hotels and Small Hotels are added together, they represent a third of the overall stock and two-thirds of the Serviced accommodation stock. Guest Houses represent 7% and B&Bs 4.5% of the Serviced sector stock. The Hotel and Related category (Hotel, Small Hotel, Inn, Lodge and Restaurant with Rooms) account for 77% of Serviced rooms stock. -14-

45 The largest Non-Serviced sector category of rooms is the Self-Catering sector at 5,578 rooms, 53.6% of the Non-Serviced stock, 22.4% of total room stock. Also significant is the Campus sector with up to 3,550 rooms available during parts of the year (mainly outwith term time during the summer months), 34% of the Non-Serviced stock and 14.2% of all room stock. The Universities of Heriot Watt, University of Edinburgh and a number of Colleges offer rooms in student halls of residence (identified as Campus rooms in the table). However, it must be remembered that this stock is only available for limited periods of the year. NUMBER OF ROOMS AND CATEGORY MIX EXCLUDING FESTIVAL STOCK (2005) Category Total % Mix of % of Overall Rooms Sector Rooms Mix Serviced Sector Hotel 7, % 40.9% Small Hotel % 3.4% Guest House 1, % 9.3% B&B 1, % 5.4% Inn % 0.7% Lodge 1, % 6.0% Restaurant with Rooms % 0.1% Serviced Sector Sub-Totals 12, % 65.9% Non-Serviced Sector Campus 1, % 5.7% Serviced Apartment % 3.4% Self-Catering (1) 1, % 10.0% Hostel % 2.5% Exclusive Use % 0.4% Other (2) % 0.5% Non-Serviced Sector Sub-Totals 4, % 22.6% Holiday / Touring Park (Pitches) 2, % TOTALS 18, % Notes: (1) Includes a number of University owned units that are classed Table 8 and graded as Self-Catering (different from Campus rooms). (2) Includes Luxury Train nominally based in Edinburgh. When the seasonal Festival stock is excluded from the equation, the Serviced sector rooms stock equates to 12,268 rooms, a fall of only 120 rooms. -15-

46 In the Non-Serviced sector however, if Festival stock is excluded, the stock of available Self-Catering rooms drops dramatically by two-thirds from 5,578 to 1,856. With the impact of student demand in term-time for Campus accommodation, the seasonal Campus stock available for visitors drops by 70% from 3,550 rooms to 1,065 rooms. The Self-Catering sector now only represents 10% of the overall bedroom stock compared with 51% for Hotel and Related. The table overleaf provides an analysis of the sub-regional geographic dispersal of rooms supply across the area. The table presents the geographic spread of rooms supply across Edinburgh and the Lothians area broken down by Council boundaries (City of Edinburgh, West Lothian, Midlothian, East Lothian). Of the total 12,388 Serviced rooms in the area, nearly 10,500 rooms are located within the City of Edinburgh boundary, representing 85% of Serviced rooms. West Lothian accounts for nearly 1,000 rooms (8%), with East Lothian 700 rooms (6%) and Midlothian 280 rooms (2%) respectively. Again, probably surprisingly, the concentration of Non-Serviced rooms is focused on the City of Edinburgh with 9,478 of the 10,407 rooms (91%) located within the Council area. East Lothian has 473 rooms (5% of total), West Lothian 305 (3%) and Midlothian 131 (1%) rooms. The distribution of caravan pitches to an extent reflects the traditional role of the respective areas in terms of Holiday visits and their rural components with East Lothian boasting the lion s share of caravan pitch capacity 1,497 (67%) of the 2,226 pitches across the region due to East Lothian s coastal location. Perhaps unexpectedly the City of Edinburgh has 491 pitches 22% of the total cheap accommodation to service visitors to the City. West Lothian has 163 pitches (7%) and Midlothian 75 pitches (3%). When all these categories are combined 20,437 rooms / pitches of the 25,021 rooms / pitches are located in the City of Edinburgh, 82% of overall room / pitch stock. East Lothian has 2,690 rooms / pitches (11%), West Lothian 1,405 (6%) and Midlothian 489 rooms (2% of all rooms stock). The level of stock in the respective Council areas reflects the current relative economic importance of the tourism sector in each area and to the region as a whole. -16-

47 REGIONAL AND SUB-REGIONAL DISPERSAL OF ROOMS SUPPLY ALL STOCK (2005) Category Total City of % of Total West % of Total % of Total East % of Total Midlothian Rooms Edinburgh Category Lothian Category Category Lothian Category Serviced Sector Hotel (1) 7,612 6,591 87% 645 8% 151 2% 225 3% Small Hotel (1) % 21 3% 25 4% % Guest House 1,737 1,640 94% 14 1% 22 1% 61 4% B&B 1, % 106 9% 69 6% % Inn (1) % 8 6% 16 12% 29 21% Lodge (1) 1, % % 0 0% 85 8% Restaurant with Rooms (1) % 0 0% 0 0% 6 26% Serviced Sector Sub-Totals 12,388 10,468 85% 937 8% 283 2% 700 6% Non-Serviced Sector Campus 3,550 3,309 93% 201 6% 40 1% 0 0% Serviced Apartment % 0 0% 0 0% 4 1% Self-Catering 5,578 5,022 90% 591 1% 91 2% 406 7% Hostel % 0 0% 0 0% 0 0% Exclusive Use % 30 37% 0 0% 36 44% Other % 15 17% 0 0% 47 52% Non-Serviced Sector Sub-Totals 10,407 9,478 91% 305 3% 131 1% 473 5% Holiday / Touring Park 2, % 163 7% 75 3% 1,497 67% TOTALS / ROOMS / PITCHES 25,021 20,437 82% 1,405 6% 489 2% 2,690 11% Note: (1) These categories make up the Hotel and Related category used in certain parts of this report. Table 9-17-

48 In terms of the core stock there is little variation in the distribution of the Serviced stock if Festival stock is excluded. However, excluding the Festival stock from the Non-Serviced sector sees available rooms drop from 10,400 to 4,200 (a drop of 60%). This drop however, is evident only in the City of Edinburgh and West Lothian, hence the relative proportion of rooms stock in Midlothian and East Lothian increases when seasonal Festival stock is excluded. The City of Edinburgh s proportion of Non-Serviced rooms stock excluding Festival stock is 83% down from 91%. West Lothian Non-Serviced room stock at 104 rooms represents 2.5% of Non-Serviced room stock, Midlothian s rises from 1% to 3% and East Lothian s from 5% to 12%. In overall stock terms (Serviced and Non-Serviced rooms) for the core stock the City of Edinburgh accounts for 77% of stock East Lothian 14% West Lothian 6% and Midlothian 3%. Hotels Comparison with Previous Study A previous study was carried out in 1999 into visitor accommodation in Edinburgh and the Lothians area. The consultants were not able to source the original database from which the 1999 study drew its information, so the current audit cannot provide any specific information on the change in scale or make up of overall stock over the intervening period. In this section we have where possible highlighted a number of comparisons however these need to be treated with caution. In the previous study, it was suggested that between 1990 and 1998 the City of Edinburgh s Hotel room supply grew from 4,500 rooms to 6,500 bedrooms, 44% growth. This growth represented an average of 220 new Hotel bedrooms each year, or a compound growth rate of just over 4.5% per annum. For comparative purposes we have aggregated Hotels, Small Hotel, Inn, Lodge and Restaurant with Rooms as Hotel and Related category to reflect previous reports designation of Hotel. In 2005/06 the Hotel and Related category in the City of Edinburgh accounts for 8,019 rooms (Serviced sector totals excluding Guest House and B&B counts this gives the best direct comparison). Over the last seven years (end of 1998 to end of 2005), there has been a growth of an estimated 1,500 rooms in the Hotel sector in the City of Edinburgh. This is equivalent to an average of 214 new rooms per annum, an annual average new supply growth rate of 3% per year compound. The region as a whole now has 9,525 Hotel-type rooms. West Lothian has 823 Hotel-type rooms, Midlothian 192 Hotel-type rooms and East Lothian 497 Hotel-type rooms. At the end of 1998, the Hotel room estimate was a total of 7,648 rooms in the study area (Edinburgh and the Lothians). -18-

49 REGIONAL AND SUB-REGIONAL DISPERSAL OF ROOMS SUPPLY EXCLUDING FESTIVAL STOCK (2005) Category Total City of % of Total West % of Total % of Total East % of Total Midlothian Rooms Edinburgh Category Lothian Category Category Lothian Category Serviced Sector Hotel 7,612 6,591 87% 645 9% 151 2% 225 3% Small Hotel % 21 3% 25 4% % Guest House 1,737 1,640 94% 14 1% 22 1% 61 4% B&B 1, % % 69 7% % Inn % 8 6% 16 12% 29 21% Lodge 1, % % 0 0% 85 8% Restaurant with Rooms % 0 0% 0 0% 6 26% Serviced Sector Sub-Totals 12,268 10,348 84% 937 8% 283 2% 700 6% Non-Serviced Sector Campus 1,065 1,025 96% 0 0% 40 4% 0 0% Serviced Apartment % 0 0% 0 0% 4 1% Self-Catering 1,856 1,300 70% 59 3% 91 5% % Hostel % 0 0% 0 0% 0 0% Exclusive Use % 30 37% 0 0% 36 44% Other % 15 17% 0 0% 47 52% Non-Serviced Sector Sub-Totals 4,200 3,472 83% 104 3% 131 3% % Holiday / Touring Park 2, % 163 7% 75 3% 1,497 67% TOTALS 18,694 14,311 77% 1,204 6% 489 3% 2,690 14% Table

50 Guest Houses / B&Bs Comparison with Previous Study At the end of 1998, the previous study noted 495 B&B / Guest House operations registered with ELTB providing 2,336 rooms and suggested this number had declined over previous years as a result of the impact of the Budget Hotel sector in Edinburgh and the Lothians area with many traditional B&B properties reverting to solely residential use. This study in 2006 excluding Festival stock identified 531 operations across the area, some 411 in the City of Edinburgh providing 2,700 rooms in total, 2,329 in the City of Edinburgh. This suggests that the B&B / Guest House sector is a stable feature of the portfolio of tourist accommodation products, albeit as with other areas, there will be a constant churn in ownership. Hostels Comparison with Previous Study In 1998 the Hostel sector comprised 13 units all within the City area. Hostels now number 24 units with the product evolving to now include a 5 Star purpose-built Hostel, Smart City Hostel all new operations since the previous study in this category have been developed within the City boundary. The 1999 study reported around 1,400 Hostel beds registered with the ELTB which today number in excess of 3,000 (see Section 2.4). It is likely that some of these units were not counted in the original study so the increase should not be seen solely as growth. All the Hostel accommodation is available year round apart from one company which leases University property for the three months of the summer and sells it using the company s corporate brand. Hostel prices are modest but have a pronounced high spike in August when demand levels are high. Campus Accommodation Comparison with Previous Study The total Campus room stock with the ELTB membership analysis in 1998 was 3,484 available predominantly June to September. In 2006 the count stands at 4,347 units. This may be new stock, additional players in the marketplace or a greater imperative to sell accommodation during the summer months. -20-

51 Holiday / Touring Parks Comparison with Previous Study In 1998, the caravan pitch stock comprised 2,700 pitches and static vans with 2,000 in East Lothian (74%). In 2005 the stock level is around 2,200 with around 1,500 in East Lothian, suggesting this is where the decline in capacity has occurred but we are unable to comment on the reason for the decline. One operation Fordel Caravan and Camping Park in Midlothian was noted as having ceased to operate. Self-Catering Comparison with Previous Study The previous report acknowledged the difficulty in assessing the scale of the Self-Catering market given the previous consultants brief, and excluded it from their analysis so comparisons cannot be made. Geographic Distribution of Room Supply SUB-REGIONAL DISPERSAL OF SUPPLY 1999 Vs 2005 Sub-Region (1) 2005 (All Stock) City of Edinburgh 90% 85.8% 76.6% West Lothian 4% 6.8% 6.4% Midlothian 1% 2.3% 2.6% East Lothian 5% 5.1% 14.4% Note: (1) Calculated on equivalent categories: Hotel, Small Hotel, Guest Table 11 House, B&B, Inn, Lodge, Restaurant with Rooms, Campus, Hostel. In 1998, the geographic distribution of the room supply was as outlined above with 90% of the room stock reported in the City of Edinburgh. Recalculating our 2005 findings for as direct a comparison as possible 85% of stock resides in the City of Edinburgh, 7% in West Lothian, 2% in Midlothian and 5% in East Lothian. By comparison, a truer picture is revealed if we consider the whole stock identified by this study including Self-Catering. The City of Edinburgh still accounts for the bulk of accommodation stock at 76.6% but each of the Lothians has a better proportion of rooms than was apparently the case in

52 2.4 Analysis of Regional and Dispersed Bed Space Capacity Even more important to the economic impact of the area s accommodation sector is the number of bed spaces. The bed space analysis can align more directly with the bed night demand as reported through the annual United Kingdom Tourism Survey and the International Passenger Survey. The table below highlights the total bed space capacity of the region, which it is estimated currently runs to in excess of 42,700 bed spaces, 59% in the Serviced sector and 41% in the Non-Serviced sector. If the number of notional caravan bed spaces is included in the calculation at 3.5 bed spaces per pitch (to take account of the varying berth capacities of static and touring caravans) then a further 7,800 bed spaces could be included taking the overall total bed space capacity to in excess of 50,000 at peak capacity times. ANALYSIS OF REGIONAL BED SPACE CAPACITY ALL STOCK (2005) Category % Mix of Total % Mix of Total Bed Sector Bed Overall Bed Spaces Spaces Space Stock Serviced Sector Hotel 15, % 35.8% Small Hotel 1, % 3.0% Guest House 3, % 8.6% B&B 2, % 5.3% Inn % 0.6% Lodge 2, % 5.4% Restaurant with Rooms % 0.1% Serviced Sector Sub-Totals 25, % 59.0% Non-Serviced Sector Campus 4, % 10.1% Serviced Apartment 1, % 3.0% Self-Catering 8, % 20.0% Hostel 3, % 7.2% Exclusive Use % 0.4% Other % 0.4% Non-Serviced Sector Sub-Totals 17, % 41.0% TOTALS 42, % Holiday / Touring Park (Pitches) 2,226 Table

53 The previous table shows Hotel bed spaces representing 61% of Serviced bed spaces and 36% of overall bed spaces. The Hotel and Related bed space count of 19,267 represents 76% of Serviced bed spaces in the Serviced sector and 45% of overall bed spaces. In the Non-Serviced sector, Self-Catering bed spaces at 8,507 represent 49% of Non-Serviced bed spaces followed by Campus with 4,347 bed spaces 25% of the stock. It is also in the bed stock analysis where the scale of the Hostel sector becomes apparent with 3,071 bed spaces available in the Non- Serviced sector 17.5% of such bed spaces. ANALYSIS OF REGIONAL BED SPACE CAPACITY EXCLUDING FESTIVAL STOCK (2005) Category % Mix of Total % Mix of Total Bed Sector Bed Overall Bed Spaces Spaces Spaces Serviced Sector Hotel 15, % 44.4% Small Hotel 1, % 3.7% Guest House 3, % 10.7% B&B 2, % 5.9% Inn % 0.8% Lodge 2, % 6.7% Restaurant with Rooms % 0.1% Serviced Sector Sub-Totals 25, % 72.3% Non-Serviced Sector Campus 1, % 3.2% Serviced Apartment 1, % 3.7% Self-Catering 4, % 11.8% Hostel 3, % 8.9% Exclusive Use % 0.4% Other % 0.5% Non-Serviced Sector Sub-Totals 9, % 28.4% TOTALS 34, % Holiday / Touring Park (Pitches) 2,226 Table

54 The previous table indicates the mix of bed spaces by category excluding the Festival stock. The exclusion of the Festival stock results in availability of 7,800 fewer bed spaces, mainly Self-Catering and Campus bed spaces ie fewer in the stock make up, as they are only open during the Festival period. If the stock proportions are then recalculated, Serviced bed spaces now account for 72.3% of all bed spaces at 25,004 with available Non-Serviced bed spaces numbering 9,852. The Hotel and Related category bed spaces account for 55% of Serviced bed spaces. Self-Catering bed spaces now represent 41.4% of Non-Serviced bed spaces and Campus 11.2%. The year-round availability of the Hostel bed space stock of 3,071 represents 31.2% of the Non-Serviced bed spaces when Festival stock is excluded and 9% of overall bed space stock. The table overleaf indicates the overall regional mix and dispersal of bed space capacity through the area. (The level and mix of supply available in each of the sub-regional market foci has been presented). 2.5 Holiday / Touring Park Supply As part of the overall analysis of tourism accommodation supply, a more detailed breakdown as part of the audit was conducted for the Holiday / Touring Park sector. The table below provides an overview of the category and the differing types of accommodation offered to visitors; from pitches for those with touring caravans and those camping, to stances for motor homes and holiday homes / caravans for let. REGIONAL AND SUB-REGIONAL DISPERSAL OF HOLIDAY / TOURING PARK SUPPLY (2005) Sub-Region Holiday Motor Home / Total Touring Tent Homes Static Pitches Pitches Pitches to Let Caravans City of Edinburgh West Lothian Midlothian East Lothian 1, TOTALS 2,226 1, Table

55 REGIONAL AND SUB-REGIONAL DISPERSAL OF BED SPACE CAPACITY ALL STOCK (2005) Category Total Bed Spaces City of Edinburgh % of Total Category West Lothian % of Total Category Midlothian % of Total Category East Lothian % of Total Category Serviced Sector Hotel 15,340 13, % 1, % % % Small Hotel 1, % % % % Guest House 3,699 3, % % % % B&B 2,278 1, % % % % Inn % % % % Lodge 2,327 1, % % 0 0.0% % Restaurant with Rooms % 0 0.0% 0 0.0% % Serviced Sector Sub-Totals 25,244 21, % 1, % % 1, % Non-Serviced Sector Campus 4,347 4, % % % 0 0.0% Serviced Apartments 1,275 1, % 0 0.0% 0 0.0% 6 0.5% Self-Catering 8,507 7, % % % % Hostel 3,071 3, % 0 0.0% 0 0.0% 0 0.0% Exclusive Use % % 0 0.0% % Other % % 0 0.0% % Non-Serviced Sector Sub-Totals 17,520 15, % % % % TOTALS 42,764 37, % 2, % % 2, % Holiday / Touring Park Pitches 2, % % 1, % Table

56 Table 14 indicates the total number of licensed pitches sits at around 2,200 with around 1,250 of these being touring pitches for caravans. Each of the four Council areas boasts some of the caravan pitch provision. The bulk of the stock of pitches however resides in the East Lothian Council area which accounts for nearly 1,500 of the 2,200 pitches approximately two-thirds of the total capacity. Over 800 pitches are designated for longer-term static vans used by owners as second / holiday homes or as weekly lets. Again East Lothian and its seaside location is the most popular location in the area for static caravan stock. Note: This analysis of Holiday / Touring Park provision excludes Home Parks where residential caravans can be located and lived in year-round (ie 52 weeks). This is in contrast to Holiday / Touring Parks in the tourism sector that are licensed for varying lengths of a season and specifically exclude provision for year-round occupation in their operating licenses. 2.6 Average Size of Operation The table overleaf gives an indication of the scale of the average business / operation by category and in each of the different Council areas. The table serves to demonstrate the differing scale of category operations by rooms and bed spaces. There are two notable points to make about the findings. One is the average size of Hotels in the area even in the City of Edinburgh the average number of bedrooms per property in the Hotel category is only 83 in comparison to, for instance, Glasgow where the average size of Hotel in the City is in excess of 136 rooms. This is because Edinburgh has a greater proportion of smaller traditional-style Hotel offerings in character properties, where Glasgow has a greater proportion of larger new-build operations. Two, the larger than normal average size of the Guest House and B&B categories at over seven rooms per operation and over four rooms respectively both a function of the scale of former residential properties in Edinburgh compared to other regions of Scotland. The overall average size of operation in each category is larger in Edinburgh than in the regions. West Lothian Hotels are significantly larger than those in Midlothian or East Lothian. -26-

57 AVERAGE SIZE OF OPERATIONS [REGIONAL AND SUB-REGIONAL ANALYSIS] (2005) Category Overall Average Size City of Edinburgh West Lothian Midlothian East Lothian Serviced Sector Hotel Rooms Hotel Bed Spaces Small Hotel Rooms Small Hotel Bed Spaces Guest House Rooms Guest House Bed Spaces B&B Rooms B&B Bed Spaces Inn Rooms Inn Bed Spaces Lodge Rooms Lodge Bed Spaces Restaurant with Rooms Rooms Restaurant with Rooms Bed Spaces Non-Serviced Sector Campus Rooms Campus Bed Spaces Serviced Apartment Rooms Serviced Apartment Bed Spaces Self-Catering Rooms Self-Catering Bed Spaces Hostel Rooms Hostel Bed Spaces Exclusive Use Rooms Exclusive Use Bed Spaces Other Rooms Other Bed Spaces Holiday / Touring Park (Pitches) Table

58 2.7 Seasonality of Supply As in other areas of Scotland, there is a proportion of the accommodation stock which for one reason or another is not available all year round. The most significant category in terms of the Scottish picture is Campus stock. In all areas hosting, Universities offer their Campus stock to the commercial marketplace during the summer months when students are on vacation. In addition, across Scotland, Holiday / Touring Park sites are seasonally licensed and some B&B operators are lifestyle businesses close during the winter. Unusual in the Scottish context is a proportion of accommodation in the City of Edinburgh which is only available at the high-pressure peak period coinciding with the summer Festivals. The only other manifestation of this casual provision of accommodation is seen during large-scale one-off events for instance the Open Golf Championship when staged in Ayrshire or East Lothian. The general level of core stock is insufficient to support the needs of visitors during these events and so to maximise the benefit to the area steps are actively taken to encourage residents to offer bedrooms in their houses or some choose to vacate their properties for the income that letting their property brings on such occasions. In the City of Edinburgh context, the guaranteed demand built over many years seems to be the driver to many people entering this marketplace. The accommodation stock in Edinburgh and the Lothians which becomes available for the duration of the Festivals in Edinburgh across the months of July and August is an interesting aspect of the overall supply picture. The table overleaf provides analysis of seasonality (bedroom availability) by type of establishment across the wider Edinburgh and the Lothians area. In terms of total available rooms, the stock availability peaks as in other areas of Scotland in the summer months (August absolute peak). At this time the Universities bed spaces become fully available (June to September). When the availability is viewed excluding Campus and Holiday / Touring Park sites, then seasonality of supply is less marked (albeit at the sub-regional level there are certain higher degrees of variations in certain types of accommodation eg rural locations in the lifestyle business / B&B category). -28-

59 SEASONAL AVAILABILITY OF ROOMS (2005) Category January February March April May June July August (peak supply) September October November December Serviced Sector Hotel 15,298 15,298 15,340 15,340 15,340 15,340 15,340 15,340 15,340 15,340 15,340 15,340 Small Hotel 1,292 1,255 1,292 1,292 1,292 1,292 1,292 1,292 1,292 1,292 1,292 1,292 Guest House 3,568 3,699 3,699 3,699 3,699 3,699 3,699 3,699 3,699 3,699 3,699 3,625 B&B 1,855 1,870 1,909 2,031 2,038 2,038 2,038 2,278 2,038 2,003 1,886 1,866 Inn Lodge 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327 2,327 Restaurant with Rooms Serviced Rooms Sub-Totals 24,648 24,757 24,875 24,997 25,004 25,004 25,004 25,244 25,004 24,969 24,852 24,758 Non-Serviced Sector Campus 1,045 1,045 1,045 1,045 1,045 4,266 4,287 4,347 3,666 1,045 1,045 1,045 Serviced Apartment 1,275 1,275 1,275 1,275 1,275 1,275 1,275 1,275 1,275 1,275 1,275 1,275 Self-Catering 4,000 4,016 4,040 4,061 4,071 4,404 7,641 8,507 5,113 4,061 4,020 4,013 Hostel (Beds) 3,071 3,071 3,071 3,071 3,071 3,071 3,071 3,071 3,071 3,071 3,071 3,071 Exclusive Use Other Non-Serviced Rooms Sub-Totals 9,702 9,718 9,742 9,763 9,773 13,327 16,585 17,511 13,436 9,763 9,722 9,715 Overall Number of Rooms Available 34,350 34,475 34,617 34,760 34,777 38,331 41,589 42,755 38,440 34,732 34,574 34,473 Percentage of Total Stock Available 80.3% 80.6% 81.0% 81.3% 81.3% 89.7% 97.3% 100% 89.9% 81.2% 80.9% 80.6% Availability Excluding University Campus Room Accommodation 33,305 33,430 33,572 33,715 33,732 34,056 37,302 38,408 34,774 33,687 33,529 33,428 Percentage of Available Stock (Excluding University Campus 86.7% 87.0% 87.4% 87.8% 87.8% 88.7% 97.1% 100% 90.5% 87.7% 87.3% 87.0% Rooms) Festival Rooms 3,286 3,842 1,107 Available Stock (Excluding Campus and Festival Rooms) 33,305 33,430 33,572 33,715 33,732 34,065 34,016 34,566 33,667 33,687 33,529 33,428 Percentage of Available Stock (Excluding University and Festival 96.4% 96.7% 97.1% 97.5% 97.6% 98.6% 98.4% 100% 97.4% 97.5% 97.0% 96.7% Rooms) Overall Availability of Holiday / Touring Park Pitches ,151 2,226 2,226 2,226 2,226 2,226 2,226 2,196 1,218 1,218 Percentage 32.5% 17.5% 96.6% 100% 100% 100% 100% 100% 100% 98.7% 54.7% 54.7% Table

60 The previous table provides an overview of availability across the region by category of accommodation. In essence all stock, excluding Holiday / Touring Park sites and Campus rooms and the other Festival stock, is available virtually throughout the year with only a few percentage points variation. The modest level of non-available stock is the University owned stock categorised and included under Self-Catering and not Campus, and a smaller number of Guest Houses and B&Bs. The stock level falls more in January / February and December when some of the Hostels, Hotels, B&Bs and Guest Houses, mainly in the rural areas, are closed, albeit the overall impact on stock availability is not that significant. 2.8 Losses of Accommodation Stock As previously mentioned the consultants were not able to source the original database from the 1999 study so the current audit cannot provide analysis of the changes in profile of the accommodation stock. However during the extensive research phase of this study, properties were initially identified from a wide range of sources, some more up to date than others. The subsequent checking of the operational status of the properties identified some losses and gives an insight into the churn of property numbers with some coming into and going out of stock. Some 84 properties were identified as having ceased to operate for one reason or another. The table below shows an analysis of this loss in recent years. ANALYSIS OF LOST OPERATIONS IN RECENT YEARS -30- Guest Self- Holiday / Hotels B&Bs Total Houses Catering Touring Park Numbers Lost % Loss 13% 20% 53% 13% 1% 100% % of Total Stock Available 10% 7% 15% 1% 5% 5% Table 18 A full list of those properties identified as having ceased to operate is provided in Appendix V. These are properties that during our research phase were identified from recent guides, brochures, websites etc and are no longer operating as accommodation businesses. In some instances guide references could be several years out of date.

61 The property closures are a result of various factors not all known to the consultants. However, some of the losses are fairly significant and are undoubtedly the result of properties reverting from hospitality use to residential use (housing). Some are a result of proprietors retiring, some properties the subject of conversion to domestic apartments, others reversions to domestic dwellings. This decline is most apparent in the B&Bs and Guest Houses categories and is not necessarily unhealthy in terms of refreshing the product. It is not unusual for there to be tourist accommodation churn. This is particularly noticeable in the B&B sector. In other audits the consultants have carried out, the churn over a five-year period can easily be as high as 40% in the B&B sector. In addition to these properties, it may be possible that a small number of other operations on the database compiled for this study are not operating. 2.9 Additions to Accommodation Stock / Future Accommodation Supply Again, because of lack of access to previous study data the consultants cannot make any assessment or judgement about recent additions to the area s overall stock other than those known to the client partners. However, like other areas of the Country, there has been movement in stock in the last 5 to 10 years, both in terms of scale and types of addition. Most notably in this have been developments in the Lodge and Serviced Apartment sectors. In the fully Serviced Hotel sector, there has also been some significant development with additions in the sector including Holiday Inn, Novotel and Premier Lodge. The table overleaf highlights a selection of properties which have been opened or extended since 1998 (Source: VisitScotland). The late 1990s in Edinburgh was a period of strong economic performance, growth in business enterprises, retail space, growth in population and in jobs but it would be imprudent to attribute the significant increases in Hotel rooms directly to this. -31-

62 RECENT ADDITIONS TO HOTEL STOCK ( ) Hotel Star Rating Premier Lodge 112 Holiday Inn Express, City Centre 161 Apex City Hotel Edinburgh Novotel The Glasshouse 5 65 Hotel IBIS 2 99 Tailors Hall 2 42 Hanover Hotel 2 42 Travel Inn, Dreghorn 2 30 Holiday Inn Express, Waterfront Jurys Melvin House 3 23 Parliament House 3 53 Quality Airport 3 62 Apex International 4 71 Bonham 4 48 Dalmahoy 4 63 Forte Posthouse 4 95 Royal Terrace 4 15 Roxburghe Simpsons 4 58 Stakis Airport 4 16 The Holyrood Hotel The Scotsman Hotel 5 68 Travelodge Edinburgh 2 Lodge 193 City Travel Inn 3 Lodge 152 Frederick 3 Lodge 40 Edinburgh Royal 4 Serviced Garden Apartment Apartments 30 Canon Court 4 Serviced Apartment Apartments 43 The Chester 5 Serviced Residence Apartments 20 Total New Bedrooms Source: VisitScotland Table 19 These developments however will be joined by others as some of the proposals uncovered by the research proceed. This follows a continuous addition of rooms identified between 1990 and 1998 in the 1999 study. -32-

63 CITY OF EDINBURGH ADDITIONAL HOTEL ROOMS (then Projected) Full Service 389 N/A Limited Service N/A N/A TOTALS Source: RGA Ltd Table 20 Between 1990 and 1998, approximately 2,000 rooms were reported as having been added to stock. Between 1999 and 2005, based on figures provided by VisitScotland Edinburgh, a further 1,700 Hotel bedrooms have been added. Of interest, since the opening of the Sheraton in 1985 at 260 rooms, most developments have averaged under 200 rooms and mostly below 150. Of the projects identified between 1998 and 2004, the average size of Hotel development / extension was 85 rooms. The call for a large-scale Hotel on a single site to support the Edinburgh International Conference Centre (EICC) to date and to satisfy demand growth in the future remains unsatisfied despite a further 1,780 rooms added to supply. The graph overleaf displays the profile of Hotel establishments in terms of room size. This has been set alongside the same profile of combined Hotel and Related types, which in terms of properties above 200 rooms, sees only one additional property (Lodge) being added. As part of this research study, contact was made during the research phase with each of the Council planning departments to establish within the tourism accommodation sector potential new planned developments, proposed extensions or establishments subject to any change of use applications. A detailed listing of proposals and their planning status is presented in Appendix VI. -33-

64 Profile of Hotel Establishments by Number of Rooms Numberof Establishments Hotels Hotels & Related under Size Range -34-

65 Our research uncovered a wide range of proposals at various stages in the planning process. These are highlighted in the table below with more detail provided in Appendix VI. The proposed City of Edinburgh developments are by far the greatest. However, what also needs to be closely monitored in the future is the net gain in stock. It is the loss of stock in comparison to additions, not just in terms of scale / numbers, but also accommodation locations. Pressures and demand for housing is seeing properties once operating in the commercial tourism sector returning or changing back to residential use. The development of new stock must be based on growth in the tourism sector to minimise any negative impact on the demand levels for existing businesses. Already in recent years, there has been controversy over properties in part of the Lothians reverting to residential stock thereby depleting low accommodation stock levels in some categories. POTENTIAL DEVELOPMENTS [OPERATIONS] (1) REGIONAL AND SUB-REGIONAL ANALYSIS (2005) -35- Total Potential Serviced Sector Non-Serviced Sector Holiday / Sub-Region New Operations / Guest Self- Hotel B&B Lodge Campus Hostel Touring Extensions House Catering Park City of Edinburgh West Lothian Midlothian East Lothian TOTALS Note: (1) Indicates new development or extensions to existing operations. Table 21 Key observations include: Most potential development activity (50% overall and 58% in the City of Edinburgh) is in the Hotel sector (which will translate into an increased concentration of new rooms in this sector which is, after all, the main economic driver of overnight tourism in the area); New projects include new build and extensions to existing properties; East Lothian proposed developments include proposals for golf resort type products.

66 3 QUALITY STANDARDS IN EDINBURGH AND THE LOTHIANS ACCOMMODATION SECTOR 3.1 Graded Properties Profile The table below provides an overview of the properties that participate in the VisitScotland QA Scheme. REGIONAL ACCOMMODATION GRADING ANALYSIS BY CATEGORY ALL STOCK (2005) Category % % of Total Not % of Awaiting % of Total Sector Categor Properties Graded Category Inspection Category Graded Mix y Serviced Sector Hotel % % 9 8.2% % Small Hotel % 3 6.4% 2 4.3% % Guest House % % 7 2.8% % B&B % % 6 2.1% % Inn % % % % Lodge % % 1 7.7% % Restaurant with Rooms 3 0.4% 0 0.0% 0 0.0% % Serviced Sector Sub-Totals % % % % Non-Serviced Sector Campus 7 0.7% % 0 0.0% % Serviced Apartment % % 0 0.0% % Self-Catering % % % % Hostel % % 1 4.2% % Exclusive Use 6 0.6% % 0 0.0% 0 0.0% Other 6 0.6% % 0 0.0% % Non-Serviced Sector Sub-Totals 1, % % % % Holiday / Touring Park % % 0 0.0% % Table 22 This table indicates that around 60% of the region s total Serviced operations are participants in VisitScotland s QA Scheme. In the Non-Serviced sector, it is significantly lower, at 34%. However it must be noted that this is based on all stock ie including that available for Festival-only which will not by its temporarily available nature seek to interact with VisitScotland. (The overall regional average of all properties calculates at only 45.1% which is low). -36-

67 We cannot comment on whether this figure is up or down on previous years as the information is not available. (In certain areas of Scotland, there have been significant drops in the number of properties being graded). The category with the lowest percentage of graded properties is the Lodge sector. However, this is a national phenomenon as many of the national operators of the Lodge branded chains have made a corporate decision not to participate in national grading schemes; however, the quality of their operations is often of a good standard and failure to participate is not an indication of fears of receiving a poor grading. Of significance, however, is the low percentage of Hotel properties graded at only 54% and B&B operations at 46%. Apart from seasonal Self-Catering establishments, Small Hotels, Guest Houses and Inns all demonstrate a high proportion of graded establishments. 3.2 Geographic Property Grading Analysis The table overleaf provides an analysis of those properties participating in the QA Scheme. The table indicates the QA make up at Council area. In the Serviced sector, it demonstrates that establishments in West, Mid and East Lothian lag behind the City of Edinburgh in membership participation of the VisitScotland QA Scheme. This is particularly noticeable in the Hotel sector, where only 18% of properties in East Lothian are graded, 22% in Midlothian and 36% in West Lothian. This proportional analysis covers only those properties which have been graded under the VisitScotland QA Scheme. In the Serviced sector as a whole, 75% of all establishments are graded at 3 Star standard or above. The Hotel sector has 88% of properties of 3 Star standard and above and B&B 79%. The only Serviced sector where the majority of establishment are below 3 Star standard is the Inn category. The average Star rating in Edinburgh and the Lothians within the Serviced sector as a whole is For the Hotel sector, the average Star rating is 3.5. In the Non-Serviced sector as a whole it is even more marked, more than 90% of establishments are graded at 3 Star standard or above. The average Star rating of Self-Catering is

68 SUB-REGIONAL GRADING ANALYSIS SERVICED SECTOR ALL STOCK (2005) Category Total Properties City of Edinburgh West Lothian Midlothian East Lothian Hotel Total Properties Total Properties Graded % Graded 54.5% 65.8% 36.4% 22.2% 18.2% Small Hotel Total Properties Total Properties Graded % Graded 89.4% 87.5% 100.0% 100.0% 90.0% Guest House Total Properties Total Properties Graded % Graded 73.6% 74.5% 66.7% 75.0% 50.0% B&B Total Properties Total Properties Graded % Graded 46.0% 45.0% 40.6% 38.1% 55.8% Inn Total Properties Total Properties Graded % Graded 70.0% 75.0% 100.0% 50.0% 66.7% Lodge Total Properties Total Properties Graded % Graded 15.4% 22.2% 0.0% 0.0% 0.0% Restaurant with Rooms Total Properties Total Properties Graded % Graded 100.0% 100.0% 0.0% 0.0% 100.0% REGIONAL SERVICED TOTAL PROPERTIES % of Properties Graded 59.7% 63.3% 43.1% 43.6% 54.0% Table

69 SUB-REGIONAL GRADING ANALYSIS NON-SERVICED SECTOR ALL STOCK (2005) Category Total Properties City of Edinburgh West Lothian Midlothian East Lothian Campus (1) Total Properties Total Properties Graded % Graded 71.4% 100.0% 0.0% 0.0% 0.0% Serviced Apartment Total Properties Total Properties Graded % Graded 87.5% 87.5% 0.0% 0.0% 100.0% Self-Catering Total Properties Total Properties Graded % Graded 32.5% 27.7% 42.9% 45.0% 53.9% Hostel Total Properties Total Properties Graded % Graded 50.0% 50.0% 0.0% 0.0% 0.0% Exclusive Use Total Properties Total Properties Graded % Graded 0.0% 0.0% 0.0% 0.0% 0.0% Other (2) Total Properties Total Properties Graded % Graded 16.7% 33.3% 0.0% 0.0% 0.0% Holiday / Touring Park Total Properties Total Properties Graded % Graded 72.7% 66.7% 75.0% 100.0% 69.2% REGIONAL NON-SERVICED TOTAL PROPERTIES 1, % of Properties Graded 34.9% 30.6% 42.9% 47.8% 53.8% OVERALL REGIONAL TOTAL 1,749 1, % of Properties Graded 45.1% 43.6% 43.1% 45.2% 53.9% Notes: (1) Campus A proportion of overall stock is graded but not all. Table 24 (2) No applicable grading scheme. -39-

70 3.3 Graded Property Analysis by Star Rating The table below provides a detailed analysis of the graded properties across the study area in Serviced and Non-Serviced sectors. ANALYSIS OF SERVICED AND NON-SERVICED PROPERTIES BY STAR GRADING ALL STOCK (2005) Category Total % 1 Star % % % % Graded Star Star Star Star % Serviced Sector Hotel % 2 3.3% 5 8.3% % % % Small Hotel % 4 9.5% % % 4 9.5% 0 0.0% Guest House % % % % % 1 0.6% B&B % 5 3.8% % % % 3 2.3% Inn % 0 0.0% % % 0 0.0% 0 0.0% Lodge % 0 0.0% 0 0% % 0 0.0% 0 0.0% Restaurant with Rooms % 0 0.0% % 0 0.0% % % Serviced Sector Sub-Totals % % % % % % Non-Serviced Sector Campus % % % 0 0.0% 0 0.0% 0 0.0% Serviced Apartment % 0 0.0% 1 5.0% 1 4.5% % % Self-Catering % 4 1.4% % % % % Hostel % 1 8.3% % % % 1 8.3% Exclusive Use 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% Other % 0 0.0% 0 0.0% 0 0.0% 0 0.0% % Non-Serviced Sector % 7 2.1% % % % % Sub-Totals Holiday / Touring Park % 1 6.7% % % % Table 25 The figures clearly indicate that of the properties that are members of the QA Scheme and graded across all categories and both sectors (Serviced and Non-Serviced), the majority achieve a quality standard of 3 Stars or above. 3.4 Comparison of Regional and National Grading Profiles Overleaf represents the composition of Edinburgh and the Lothians accommodation properties graded in comparison to the mix nationally by Star rating. -40-

71 GRADING PROFILE REGIONAL Vs NATIONAL (2005) Star Grade Edinburgh and the % of Total National Profile % of Total Lothians Profile Graded Properties Total Graded Properties Total % % % 1, % % 5, % % 4, % % % TOTALS % 12, % Notes: Excludes Holiday / Touring Parks, Cruise Ship and International Table 26 Resort Hotel. Includes Self-Catering with an adjustment for the operators with a range of grades. This table indicates that in Edinburgh and the Lothians area, in comparison to the national profile, there is a marginally lower proportion of properties graded in the quality standard of 3 and 4 Star with a greater concentration than the Scottish average in 5 Star properties. Representation is high in Hotels and Holiday / Touring Parks at 5 Star level. The area as a whole has marginally greater proportion reported in the 1 and 2 Star ratings influenced by Campus stock, Inns and Small Hotels. It must be remembered the above provides an analysis of those properties participating in the VisitScotland QA Scheme and does not necessarily reflect the quality profile of the total stock. 3.5 Achieved Quality Standards Regional / National Comparison The average quality profile achieved by the different categories in Edinburgh and the Lothians accommodation sector has been calculated and is displayed overleaf. This has been compared to that achieved nationally across Scotland by the accommodation type / category. -41-

72 AVERAGE GRADING SCORES NATIONAL Vs REGIONAL [PROPERTIES] (2005) Category Serviced Sector Edinburgh and the Lothians Average (1) National Average (2) Hotel Small Hotel Guest House B&B Inn Lodge Restaurant with Rooms Serviced Sector Average Non-Serviced Sector Campus Serviced Apartment Self-Catering Hostel Exclusive Use N/A 5.00 Other N/A N/A Holiday / Touring Park Non-Serviced Sector Average OVERALL AVERAGE Notes: (1) Calculated by TRC. Table 27 (2) Source VisitScotland. The table indicates that, overall, the average quality of Edinburgh and the Lothians properties is marginally better in terms of Non-Serviced accommodation but slightly worse in terms of Serviced accommodation than the national average. The difference is also more marked in certain categories of accommodation eg Hotels, Serviced Apartments and Self- Catering properties. Overall the quality of properties in Edinburgh and the Lothians area are of 3 Star standard. Within the Serviced sector the grading of the Hotel properties is the highest at an average of 3.5 Stars (11% above the national average). Small Hotels however pull the average down as their rating is only 2.6 Stars (12.5% below the national average). -42-

73 AVERAGE GRADING SCORES NATIONAL Vs REGIONAL [ROOMS] (2005) Category Serviced Sector Edinburgh and the Lothians Average (1) National Average (2) Hotel Small Hotel Guest House B&B Inn Lodge Restaurant with Rooms Serviced Sector Average Non-Serviced Sector Campus Serviced Apartment 4.29 N/A Self-Catering 1.68 N/A Hostel Exclusive Use N/A 5.00 Other N/A N/A Holiday / Touring Park (Pitches) 4.23 N/A Non-Serviced Sector Average 2.48 N/A OVERALL AVERAGE 2.94 N/A Notes: (1) Calculated by TRC. Table 28 (2) Source VisitScotland. A further analysis was carried out into the QA grading by bedroom. The above table indicates that, overall, the average quality of Edinburgh and the Lothians Serviced bedrooms is higher than the national average. Hotels, Lodges, Restaurants with Rooms compare favourably but again Small Hotels, Guest Houses and B&Bs, Inns are all pulling down the average quality score (average 3.7 Stars, 13% above the national average) compared to national position. The table overleaf provides an indicative comparison between the Cities of Edinburgh, Glasgow and Aberdeen in terms of numbers of properties and their grades. It is to be noted that the grading profiles derive from studies undertaken by TRC between 2002 and The analysis is across all graded property types but does provide an insight into the different quality make up of the stock in the various Cities. -43-

74 GRADING PROFILE EDINBURGH Vs GLASGOW Vs ABERDEEN Star Grade City (only) National of % of Total % of Total % of Total % of Total City of City of Profile Edinburgh Graded Graded Graded Graded Glasgow Aberdeen Properties Properties (2005) (2004) (2002) (2005) Total Total % 16 13% 6 4% 563 5% % 31 25% 38 27% 1,744 14% % 48 38% 77 54% 5,465 44% % 26 21% 20 14% 4,114 33% % 5 4% 1 1% 554 4% TOTALS % % % 12, % AVERAGE Table 29 Edinburgh and the Lothians stock has a higher average grade than for Glasgow or Aberdeen. It has a greater proportion of stock at both 4 and 5 Star levels. In reality the City of Edinburgh very closely mirrors the national grading position. 3.6 Bed Stock Grading Analysis Previous tables provide an overview of the operations / establishments graded. The table below highlights the region s bed stock capacity that is graded under the VisitScotland QA Scheme highlighting the geographic spread and foci of graded capacity by Council area. SUB-REGIONAL ANALYSIS OF GRADED BED SPACE CAPACITY (2005) % of % of Sub- % of Sub- % of Sub- Sub-Region Total Bed Regional Not Regional Awaiting Regional Total Regional Spaces Bed Graded Bed Inspection Bed Graded Bed Spaces Spaces Spaces Spaces City of Edinburgh 37, % 8, % 2, % 26, % West Lothian 2, % 1, % 5 0.2% 1, % Midlothian % % % % East Lothian 2, % % % 1, % TOTALS 42, % 10, % 2, % 29, % Table

75 The City of Edinburgh has nearly 72% of its accommodation bed stock graded compared with less than 50% of the stock graded outside Edinburgh. East Lothian only has 45% of its bed stock graded. However, at the time of research, there was some 6% of the bed stock in the overall area awaiting inspection. This stock will ultimately become graded under the VisitScotland QA Scheme. If awaiting inspection, stock is included, then approximately 75% of the current bed stock is graded: FURTHER SUB-REGIONAL GRADING ANALYSIS Sub-Region % of Bed Stock Graded and Awaiting Inspection City of Edinburgh 77.3% West Lothian 51.9% Midlothian 54.2% East Lothian 59.0% TOTAL 74.5% Table 31 At the time of research, East Lothian had a significant proportion of the bed stock awaiting inspection. However, even if the awaiting inspection category is included, the Lothians, excluding the City of Edinburgh, lags well behind VisitScotland QA grading ambitions. The bulk of the stock awaiting inspection, particularly outside the City of Edinburgh, being single unit operations. 3.7 Bed Stock Quality Analysis The table overleaf profiles the quality standards achieved across all the different accommodation categories by bed stock in each sub-region. This analysis shows the number of graded beds available across all accommodation types by Star rating by location. -45-

76 SUB-REGIONAL ANALYSIS OF BED SPACE CAPACITY BY STAR GRADING (2005) % of Sub- % of Sub- % of Sub- % of Sub- % of Sub- Sub-Region 1 Star Region Region Region Region Region 2 Star 3 Star 4 Star 5 Star Graded Graded Graded Graded Graded Stock Stock Stock Stock Stock City of Edinburgh 3, % 5, % 7, % 7, % 2, % West Lothian 0 0.0% % % % 6 0.5% Midlothian 4 1.0% % % % 0 0.0% East Lothian % % % % % TOTALS 3, % 5, % 8, % 8, % 2, % City of Edinburgh Excluding Campus Bed Spaces 3, % 2, % 7, % 7, % 2, % Table 32 The table is perhaps one of the more revealing as it gives an indication of the actual quality spread / offering of bed spaces graded in each Council location. Of note is the balanced spread of bed supply across all grades if grouped together eg in the City of Edinburgh there is about one-third of the bed supply at 1 and 2 Star level, just under 30% at 3 Star level and nearly 40% at 4 Star and above. The effect of excluding University Campus graded bed stock from the above analysis sees the focus of the City of Edinburgh s bed stock at 3 and 4 Star level at around one-third in each of these grades with 11% at 5 Star level which is high compared with other Scottish City locations. There is only approximately 22% of the bed stock below 3 Star level. The low number of bed spaces in West and Midlothian has the stock concentrated in the 3 and 4 Star grades. This is due to a small number of larger individual units. About 85% of the bed stock in these Council areas is of 3 and 4 Star standard and both see 4 Star and above beds representing more than 50% of the stock provision. In East Lothian, again a more balanced spread is noticeable. The currently low volume of 4 Star beds in reality is addressed when the Marine Hotel, North Berwick is reintroduced at 4 Star standard following refurbishment and grading inspection. The proportion of 5 Star beds outwith the City of Edinburgh is very low. -46-

77 3.8 Holiday / Touring Parks Holiday and Touring Parks operate under different VisitScotland QA Schemes to other forms of visitor accommodation. These Schemes assess general sites / parks but also where applicable specific units on offer to let. The table below provides an analysis of the region s stock based on site grading. GRADING PROFILE OF HOLIDAY / TOURING PARK PITCHES (2005) Sub-Region Total Not Awaiting Total % % % Pitches Graded Inspection Graded % City of Edinburgh % 5 1.0% 0 0.0% % West Lothian % % 0 0.0% % Midlothian % 0 0.0% 0 0.0% % East Lothian 1, % % 0 0.0% 1, % TOTALS 2, % % 0 0.0% 2, % Table 33 The above table indicates that a very high proportion (94%) of the overall stock is graded. The stock, which is not graded, is that stock provided on small Caravan Club (grading-exempt organisation) certified sites where up to only five (member) units can be accommodated. -47-

78 4 BENCHMARKING As part of this study, TRC investigated a number of European and UK Cities in order to compare the scale of stock, the key conference / meeting venues, the quality make up of accommodation, trends in the meetings sector and volumes of visitors / delegates attracted. The Cities chosen for benchmarking and comparison against Edinburgh were: Glasgow, Aberdeen, Manchester, Gothenburg, Copenhagen and Prague. These Cities are seen as competitive destinations for primarily discretionary business / conference and incentive business. Berlin and London were also considered, but it was decided that based on their size and volume of tourist business they did not represent good comparators for Edinburgh. Comparisons were made on the basis of several characteristics of each destination. These included population, published number of beds, and percentage of domestic Vs overseas visitors (for all types of visitors). Additionally, specific information about the major conference facilities of each destination was sought, including maximum venue capacities and distances from the nearest international airport. Finally, statistics were collated on annual numbers of events, annual numbers of delegates and the corresponding number of delegate nights generated by discretionary business / conference tourism. It should be stressed at the outset that there are difficulties in comparing conference statistics between destinations, as different measurement methods are used in different Cities. For example, Copenhagen records participants to international congresses, but not delegates to domestic conferences. Gothenburg statistics only show numbers of conference delegates attending conferences with over 200 participants, but not delegates at smaller events. Prague Convention Bureau statistics include anyone attending a business event, including meetings, incentives, conferences and other events. However, it is still possible, with caution, to draw some inferences from the available benchmark data. One interesting point concerns the breakdown of Hotel establishments by quality in each City. Edinburgh has by far the highest percentage (12%) of 5 Star Hotels both against the UK and European comparators. -48-

79 Glasgow, Manchester and Aberdeen have between 2% and 4% of establishments graded at 5 Star. In terms of the European comparators both Prague and Gothenburg reflect the same range as in the Cities chosen from the UK at around 3% of establishments offering 5 Star standard accommodation (excluding Edinburgh). However, Copenhagen sees 7% of Hotel establishments at a 5 Star grading. Without detailed accommodation audits in each of the Cities we are unable to comment on the make up of supply at bedroom or bed space level. However, Prague in particular has a much higher number of published beds (72,412) compared with Edinburgh s 37,383. Nonetheless, this seems to indicate that Edinburgh is well equipped at the top end of the market with 5 Star Hotels in comparison to the other Cities under review. Another interesting point is the split between domestic and overseas visitors. The Cities chosen from the UK clearly show that domestic tourism accounts for the large majority of all visits. In Edinburgh and Glasgow domestic tourism accounts for approximately 80% and 75% of overall bed night demand respectively and in Aberdeen and Manchester, the domestic tourism market rises to over 95% of total visits. Figures for Gothenburg also indicate that the majority of visitors came from Sweden. However, two of the other Cities reviewed on the continent show a complete reversal of this situation, with overseas tourists making up the majority of their visits. In Prague, 87% of all visitors are from outwith the Czech Republic and in Copenhagen, 73% of visitors come from outwith Denmark. This highlights the relative importance of the overseas markets to these Cities and the corresponding importance of the domestic tourism market to Edinburgh. In the UK as a whole, the domestic tourism market is more developed. Throughout Europe the large outbound tourist markets are the UK and Germany. In terms of its population base, Edinburgh is on a similar scale to Copenhagen, Gothenburg and Manchester and is much larger than Aberdeen. However, Glasgow and Prague both have populations over one million. This is bound to have repercussions on the conference market in that larger Cities are likely to be able to afford more and larger conference facilities which will allow them to compete for larger and more lucrative conferences. -49-

80 In fact, the major venues in Glasgow [Scottish Exhibition and Conference Centre (SECC)], Prague [Prague Congress Centre (PCC)], Copenhagen (Copenhagen Congress Centre) and Gothenburg [Gothenburg Convention Centre (GCC)] all have maximum capacities far exceeding what the EICC is able to offer. The SECC currently has a maximum capacity of 10,000 and is planning a new arena which will take 12,500. The PCC in Prague can seat 9,000 theatre-style, the CCC in Copenhagen 10,000 and the GCC in Gothenburg 8,800. Even the new Aberdeen Exhibition and Conference Centre can seat 2,000. The EICC is small by comparison, it has a maximum capacity of only 1,200 at present. This is a considerably lower capacity than all the others benchmarked [except Manchester where the Manchester International Convention Centre (MICC) can only seat around 800 delegates]. The scale of the EICC influences the type of event that Edinburgh is able to attract the largest international congresses and conventions are just too big for the current facilities available in Edinburgh. The Royal Highland Centre at Ingliston does have a much larger capacity but lacks the caché and the attendant accommodation and other facilities that would be required for a large international conference. The EICC does have plans to extend its capacity and should have a new auditorium seating 2,000 on stream by However, it will still be smaller than its international and domestic competitors. Due to the statistical difficulties of the available data as previously mentioned above, perhaps the best way to compare the performance of these Cities is to take the most recent figures that are available for all destinations (2003) and consider the number of large, potentially international conferences that are held in each major venue. This allows for some comparison of the success in attracting these large and lucrative events. In 2003, the EICC was host to 168 events in total (although these varied in size). The SECC in Glasgow held 78 major conferences, the CCC in Copenhagen held 94 international congresses, the GCC staged 61 conferences with more than 200 participants, the MICC 29 conferences and the PCC in Prague held 300 events (of all sizes). This is illustrated in the following table. -50-

81 MAJOR EVENTS AT BENCHMARK VENUES IN 2003 Edinburgh International Conference Centre (EICC) Scottish Exhibition & Conference Centre (SECC) Copenhagen Congress Centre (CCC) Gothenburg Conference Centre (GCC) Prague Congress Centre (PCC) Manchester International Conference Centre (MICC) Number of Events 168 (all events) 78 major conferences (of which 3 international association meetings) 94 international congresses 61 conferences with over 200 delegates 300 (all events) 29 conferences Table 34 In terms of delegate numbers, and delegate nights generated by the above events, comparisons are extremely difficult due to the different recording methods. However, the table below shows the data that is available for DELEGATE NUMBERS AT BENCHMARK DESTINATIONS IN 2003 Numbers of Published Delegates Number of Delegate Nights Edinburgh Glasgow Copenhagen Gothenburg Prague Manchester 172,459 Not available 63,569 45, ,000 41,744 [all events] (3 international (international (at conferences (all events) (at MICC) (International association congresses) with over 200 association meetings delegates) meetings attracted 17,000) 17,750 delegates) 217, , ,366 84,000 Not available Not available (all events) (all (international (at conferences conferences) congresses) with over 200 delegates) Table 35 One further source of interesting comparison is the International Congress and Convention Association (ICCA) league table of Cities hosting international association meetings. This identifies which Cities are most popular amongst the international association meeting planners and delegates. The criteria used by the ICCA to define the meetings that the organisation monitors are very specific providing a level playing field for comparison. That said the fluctuations year on year in a City s ranking can vary greatly. -51-

82 Edinburgh was ranked 21 st in the Top Cities in Europe in 2004 but in 2005 rose to 16 th position. Copenhagen was ranked eighth in 2004 and 2005, and Glasgow has moved from 24 th in 2004 to 21 st in ICCA WORLD RANKINGS IN 2005 City Position Vienna 1 Singapore 2 Barcelona 3 Berlin 4 Hong Kong 5 Paris 6 Amsterdam 7 Budapest 8 Seoul 9 Stockholm 10 Selected others Copenhagen 11 Prague 14= Edinburgh 23 Glasgow 33 Gothenburg 40 Manchester 49 Source: ICCA Table 36 More detail from each of the Cities is provided in tabular format in Appendices VIII and IX. Edinburgh, with its breadth of accommodation products and meeting space, is well placed to host international conferences and congresses. The business / conference market is considered to be worth million per annum to the area and whilst competition is fierce, the business visitor is key to the success of the accommodation sector and wider economy: business visitors spend more than leisure visitors, industry estimates suggest up to three times as much; present a wider spread of demand across the year; complement economic development aims and objectives. -52-

83 The Edinburgh Convention Bureau Ltd and EICC see Edinburgh offering a differentiated product at the high quality end of the market but the City and EICC venue are both constrained at present and suffer from an inability to offer organisers of larger events their bedroom accommodation requirements in a single or limited number of Hotels. It is also suggested, although unproven, that a second conference venue in the region is needed. This might be explored / incorporated as part of Royal Highland showground s potential relocation. -53-

84 5 ACCOMMODATION TARIFFS Provided overleaf is an insight into the tariff structures and pricing policies across the different accommodation sectors and categories. The following table highlights the geographic and seasonal variations in pricing across the region. The figures presented are arithmetic averages calculated from the database of research findings. Again, the database can be interrogated for any variations / averages by geography, Star rating etc. We cannot comment on any changes in pricing policies over the last few years as no earlier audit has been carried out to plot pricing average / ranges in a similar format to that presented overleaf. The following general observations can be made drawing on survey responses, discussions and general trends in the Scottish marketplace: Tariff increases in recent years have been relatively flat with few price increases ahead of inflation; There has been evidence of some establishments adjusting the structure of their pricing to maximise revenue increases in relation to market demand ie increasing prices for single occupancy and premium rooms / suites but double occupancy rates have been held; There is evidence of prices being inflated for the duration of the Edinburgh Festivals which in certain instances is causing Fringe organisers concern and difficulty in continuing to stage events. One regular event organiser during the Festivals saw a per capita increase in accommodation cost of 107% between 1999 and Some accommodation providers are being greedy and beginning to overheat the market. The Festival / Fringe organisers, particularly in the context of the performers, are looking for cheaper accommodation. Accommodation demand for the duration of the Festival may be sought outwith the City of Edinburgh if cost effective transport can be arranged; Conventional Hotel stock is increasingly employing revenue managers following the principles of yield management which is seeing pricing follow the airline model. Published tariffs in the large properties are increasingly becoming an artificial measure due to general discounting and yield management practices. Prices offered are dependent on levels of likely demand, lead time of booking etc. -54-

85 ANALYSIS OF LOW AND HIGH SEASON AVERAGE SINGLE RATE PUBLISHED TARIFFS BY SUB-REGION AND CATEGORY (2005) Category City of Edinburgh West Lothian Midlothian East Lothian Type Overall Single Average Serviced Sector Hotel Small Hotel Guest House B&B Inn Lodge Restaurant with Rooms Serviced Sector Average Low Average High Average Low Average High Average Low Average High Average Low Average High Average Low Average High Average Low Average High Average Low Average High Average Non-Serviced Sector Campus Low Average High Average Self-Catering Low Average (Week) Unit Price High Average (Week) Self-Catering Low Average (Nightly) Unit Price High Average (Nightly) Serviced Apartment Low Average (Nightly) Unit Price High Average (Nightly) Hostel Low Average High Average Other Low Average High Average Non-Serviced Sector Average (Nightly Rate) Holiday / Touring Park Low Average Nightly Touring Van Rate High Average Nightly Touring Van Rate Table

86 ANALYSIS OF LOW AND HIGH SEASON AVERAGE TWIN RATE PUBLISHED TARIFFS BY SUB-REGION AND CATEGORY (2005) Category City of Edinburgh West Lothian Midlothian East Lothian Type Overall Single Average Serviced Sector Hotel Low Average High Average Small Hotel Low Average High Average Guest House Low Average High Average B&B Low Average High Average Inn Low Average High Average Lodge Low Average High Average Restaurant with Rooms Low Average High Average Serviced Sector Average Non-Serviced Sector Campus Low Average (full board) High Average (full board) Self-Catering Low Average (Week) Unit Price High Average (Week) Self-Catering Low Average (Nightly) Unit Price High Average (Nightly) Serviced Apartment Low Average (Nightly) High Average (Nightly) Hostel Low Average High Average Other Low Average High Average Non-Serviced Sector Average (Nightly Rate) Holiday / Touring Park Low Average Nightly Touring Van Rate High Average Nightly Touring Van Rate Table

87 6 DEMAND AND TRADING OVERVIEW 6.1 Introduction This section provides an overview into demand characteristics for tourist accommodation across Edinburgh and the Lothians. Key demand indicators monitored include: average annual bedroom occupancy percentage; average achieved annual room rate; ie Rooms revenue (Published bedroom tariffs excluding all meals, VAT and discounts) number of rooms sold and qualitative discussions of market segmentation. The information presented in the following pages is compiled from discussion with operators and returns of survey questionnaires issued to operators. In later sections we provide an overview of discussions with buyers and prospective buyers of accommodation in the region specifically tour group operators, conference / room placement agencies and those purchasing from a corporate perspective. 6.2 Annual Bedroom Occupancy and Achieved Annual Room Rates Bedroom Occupancy Levels Bedroom occupancy is a measure of the sector s success in selling available bedroom stock and is expressed as an annual percentage. Bedroom occupancy is the number of bedrooms sold in a year divided by the number of bedrooms available. The table overleaf gives a broad indication of the level of annual bedroom occupancy achieved across the whole region (the number of questionnaire / interview returns were not large but give an indication of trends etc). Within each category there are obviously operations performing higher and lower than the averages. Of note is that from the information received, it appears that over the last three years, bedroom occupancy levels have, in most instances, been growing (note some operations were reluctant to discuss trading figures and others do not monitor these statistics, particularly lifestyle B&B and Guest House businesses. Edinburgh and the Lothians is no different in this from other areas of Scotland and the UK). -57-

88 It is estimated that across the region the overall Serviced sector achieves a highly respectable 65% annual room occupancy level (weighted average of survey returns from Hotel and Related types and Guest House / B&B figures calculated by TRC). This is high when compared to the calculation from the TNS VisitScotland figures for Scotland as a whole, around 53.5%, but is very similar to the TNS results for Edinburgh in 2005 at 64% (see Table 39). REGIONAL AVERAGE ANNUAL BEDROOM OCCUPANCY PERCENTAGES EXCLUDING FESTIVAL STOCK Category Serviced Sector Hotel (Sample Size 54) [1] 70.6% 69.7% 75.1% Small Hotel (9) 62.1% 62.9% 67.2% Guest House (17) 59.1% 59.0% 55.6% B&B (25) 40.7% 41.3% 45.2% Overall Simple Average Occupancy In Serviced Sector (105) [2] 57.9% 57.6% 64.8% Non-Serviced Sector Self-Catering (105) 24.7% 25.3% 40.8% Holiday / Touring Park (3) 50.1% N/A N/A Notes: [1] Sample Size for Table 39 [2] Includes two Lodge remitters in addition to above sample. It is to be noted that the occupancy data in this section has been derived from information provided by individual operators. In addition to this individual operator data, we were provided with collective occupancy statistics from EPHA and West Lothian s key Hotels. This additional information adds a further dimension to the overall picture of demand in the area and has been incorporated into the model, to enable the demand equation to be more robust. A further issue in some categories is where a proportion of the stock is seasonal the above percentages present annualised occupancy percentages. Reported occupancy percentages have had to be annualised to create uniformity eg a Self-Catering Unit reporting 100% occupancy for a sixmonth operating season of availability only equates to an annual unit occupancy of 50%. -58-

89 The table below provides a comparison of the 2005 bedroom occupancy level monitored by the audit and those prepared by VisitScotland for the wider Area Tourist Board geography and the national averages. COMPARATIVE BEDROOM OCCUPANCY PERCENTAGES BY CATEGORY EXCLUDING FESTIVAL STOCK Category This Audit 2005 SE Edinburgh & Lothian VisitScotland VisitScotland Survey National Average Serviced Sector Hotel 75.1% 75% 63% Small Hotel 67.2% Guest House 55.6% B&B 45.2% 54% 47% Overall Simple Arithmetic Average Occupancy in Serviced Sector 64.8% 64% 55% Non-Serviced Sector Self-Catering (Unit Occupancy) 40.8% 67% 55% Hostel (Bed Occupancy) N/A 59% 47% Holiday / Touring Park (Pitch Occupancy) 50.1% 38% 40% Table 40 Of note, the findings of the audit confirming the area s performance as published by VisitScotland, shows not unexpectedly that Edinburgh & Lothians outperforms national averages. The Hotel sector is demonstrably the category with the highest annual bedroom occupancy levels and the wider sample in our study underpins the occupancy levels reported in the VisitScotland survey. Discussions with accommodation agencies representing Self-Catering operations suggest that occupancy levels of 70% plus are common across the City of Edinburgh. Those properties of higher quality and most central City Centre locations are rarely without occupants. Those properties represented by agencies that come on stream for the Festival period only, will in general, achieve full (100%) occupancy for the limited period of their availability. -59-

90 AVERAGE ROOM OCCUPANCY BY SUB-REGION (SERVICED SECTOR) Sub-Region City of Edinburgh 67.9% 68.4% 70.2% West Lothian 57.0% 66.0% 66.7% Midlothian 49.2% 43.2% 47.4% East Lothian 54.7% 51.0% 55.7% Sample Size Table 41 The table above demonstrates the level of annual bedroom occupancy for the Serviced sector across the area. The City of Edinburgh, as expected, performs at the highest level at 70% and Midlothian at the lowest at 47%. The analysis at a Serviced stock level disguises the fact that the Hotel sector in the larger Midlothian Hotels is trading at an average of around 65%. From analysis of the Serviced sector as a whole ie Hotel, Small Hotel, Guest House and B&B in terms of occupancy, the City of Edinburgh has seen a growth in room occupancy over the last three years of around 2% from 67.9% to 70.2%. East Lothian and West Lothian also have seen an overall occupancy increase across the three years, but there was a drop in East Lothian in Midlothian s annual demand seems less robust over the last three years, with 2005 recovering from a dip in demand in 2004 but not back to the level achieved in By way of reference to the previous report for the period 1990 to 1999 demand over that period demonstrated almost uninterrupted increase from 63%-67% peaking in the mid 1990 s in the low 70%. Average Room Occupancy by Grade AVERAGE ROOM OCCUPANCY BY GRADE (SERVICED SECTOR) Category 1 Star 2 Star 3 Star 4 Star 5 Star Ungraded / Overall Awaiting Average Inspection Hotel & Related Types 73.5% 65.4% 76.4% 77.2% 71.2% 72.0% 74.4% Guest House / B&B 25.0% 45.7% 48.2% 58.1% 50.0% 49.5% 49.4% SERVICED TOTAL 57.3% 61.1% 63.4% 72.7% 67.6% 56.7% 64.8% Table

91 The previous table provides analysis from our sample of annual bedroom occupancy levels of Hotel and Related types and Guest House / B&B operations across the grading profile. As can be seen and reflecting the profile evident in VisitScotland s occupancy surveying, room occupancy percentage achieved tends to increase as grade increases. This is true of Hotel and Related types, although 2 Star Hotels appear not to do as well as 1 Star or 3, 4 and 5 Star and notably 5 Star Hotels report not achieving the occupancy levels of 1, 3 or 4 Star Hotels. Guest Houses and B&Bs again have 5 Star properties performing less well in occupancy terms than 4 Star but better than 1, 2 and 3 Star properties. Overall the Serviced sector sees higher room occupancy levels increasing with Star grade with the exception of 5 Star properties which fall behind 4 Star properties at 67.6% against 72.7%, perhaps a function of the scale of 5 Star supply and pricing policy. Average Achieved Room Rate Another key measurement in the hospitality industry of trading performance is the annual average achieved room rate. This is the revenue achieved from the sale of each room net of breakfast, VAT etc. Displayed below are the averages achieved by the different categories of Serviced accommodation across the region. Again, caution is recommended given the size of the sample, however it provides variations / trends re category. Those providing data for 2005 totalled 57 operations. Not surprisingly, fully Serviced Hotels recorded the highest achieved average room rates. AVERAGE ACHIEVED ROOM RATES ( ) SERVICED SECTOR Category Hotel (Sample Size 24) Small Hotel (8) Guest House (14) B&B (9) Lodge (2) (1) N/A N/A N/A Overall Single Average Room Rate (57) Note: (1) Not disclosed to protect commercial sensitivity. Table

92 Again, the table below provides some overview of geographic difference in average achieved room rate; however, again, caution is advised. SUB-REGIONAL AVERAGE ACHIEVED ROOM RATES ( ) SERVICED SECTOR Sub-Region Average Achieved Room Rate 2005 City of Edinburgh West Lothian Midlothian East Lothian Overall Simple Average Room Rate Note: ARR calculated as weighted average by rooms available. Table 44 AVERAGE ACHIEVED ROOM RATE ( ) BY GRADE SERVICED SECTOR Category 1 Star 2 Star 3 Star 4 Star 5 Star Ungraded / Overall Awaiting Average Inspection Hotel & Related Types Guest House / B&B n/a SERVICED TOTAL Table Regional Demand Profile The following two tables have been compiled from operator responses. Again these should be read with caution as different operators deal with market mix differently eg leisure / coach tours etc. Some operators will split room sales between the two; others will report sales as purely leisure. In later sections, the profile of demand by sub-regional area has been profiled and discussed in qualitative terms and is probably more relevant since this table merely provides a region-wide average as reported by operators. Sub-regional variations in scale of demand are expected, but importantly the sub-regional demand profiles vary significantly. It is these profiles that affect performance the most dramatically overall. -62-

93 INDICATIVE OVERALL ROOMS DEMAND PROFILE MIX (WEIGHTED AVERAGE) Business Type Mix Corporate 22.5% Leisure 51.0% Group / Coach Tours 14.2% Meeting / Conference 12.3% TOTAL 100.0% Table 46 In terms of generating source, the following table plots the responses received from operators indicating the nationality of demand. INDICATIVE NATIONALITY MIX (AVERAGE) Demand Nationality Mix Domestic Scottish Demand 12.6% Other Domestic UK Demand 60.0% Overseas Demand 27.4% TOTAL 100.0% Table 47 Here, again, caution is required but it is clear that domestic UK demand is the main generating source for the region similar to the national picture and other regions of Scotland. Double / Multiple Occupancy Factors Double / multiple occupancy in Hotel and Related types reported as approximately 1.5 while in the combined Guest House and B&B sector the ratio was reported as around 1.9 ie each Hotel bedroom on average is occupied by 1.5 people, where at each Guest House and B&B bedroom is occupied by nearly 2.0 people. -63-

94 7 DEMAND OVERVIEW BY GEOGRAPHY 7.1 Introduction As highlighted in the previous sections, the region and the demand for accommodation throughout is not homogenous in terms of scale or mix. There are wide variations in demand and specific hot spots across the different geographical sub-regions / market foci adopted by this audit. Some of the key market trend differences are highlighted in qualitative terms in this section. A brief thumbnail of the characteristics of each marketplace is provided below. 7.2 Sub-Regional Overview Edinburgh and the Lothians display different demand trend characteristics in each area and sub-area of each Council region. Different categories of accommodation perform with differing degrees of success and at an individual operator level, different properties of same or similar types can operate professionally year-round or seasonally on a lifestyle basis. In the sections below we highlight the key aspects of demand in each of the Council areas in terms of demand for tourist accommodation. City of Edinburgh Edinburgh, as Scotland s Capital City, is a significant tourism magnet both for business and leisure tourism. The importance to the City is evident from a number of impressive comparisons with other UK and overseas Cities. In 2005, according to KPMG research amongst 3, 4 and 5 Star Hotels, Edinburgh ranked third in Europe for achieved room occupancy with only Gatwick and Heathrow ahead of it. In terms of Revpar (ie Revenue per available bedroom gross bedrooms income divided by the number of bedrooms) similarly it was placed third at Euros ( 70.20) behind London (143.7 Euros 97.28) and Paris (136.9 Euros 92.68). In terms of average room price, again Edinburgh appears placed at third behind Paris and London. -64-

95 The TRC model indicates room sales value at 147 million (213 million Euros) this translates as a Hotel room Revpar of (72.8 Euros). It is estimated that other (non-room) revenue in Edinburgh Hotels is between 45% and 50% of total revenue. Therefore estimate of Revpar for the audit devolves as (132.4 Euros) to (145.0 Euros) across the Edinburgh Hotel stock. The full position rankings from the KPMG report are available in Appendix XI. Business / corporate demand, representing around 22% of the region s demand mix, is generally constant throughout the year with dips at Christmas, New Year and January along with a slacking of demand to coincide with summer holiday period July / August. Similarly leisure demand remains reasonably constant throughout the year but in contrast peaks at Christmas and Hogmanay. January is the only month which operators tend to described as quieter. Edinburgh, in leisure terms, is renowned for its summer Festivals programmes which sees high levels of demand for five / six weeks over July / August at its peak. This period sees the annually available core accommodation stock being augmented by seasonally available University stock. These are primarily single rooms and flats (clusters of single rooms with cooking and living facilities) and a plethora of Festival-only temporary rooms and Self-Catering Units. This stock comes into play in the marketplace to satisfy the heightened levels of demand associated with the Festivals. The summer Festivals of 2004 saw attendances of 2.6 million generated by 845,000 trips. The origin of visitors to the Festivals was 36% Edinburgh and the Lothians residents, 27% from rest of UK, 22% from rest of Scotland and 15% from overseas visitors. 47% of trips to the Festivals involved at least one night away from home and of those staying away from home 85% spent at least one night in Edinburgh. Indications from the 2005 Festivals season show significant growth with 3.1 million attendances (from 1.4 millions trips) reported of which 35% were residents, 29% from the UK, 15% rest of Scotland and 16% from overseas. Hotels, reporting to EPHA, achieve an 88% occupancy for August and 90% of the Hotels over this period reported turning bookings away. -65-

96 Glasgow, Scottish Borders and Fife were all beneficiaries of visitors not staying in Edinburgh and the Lothians area due to perceived unavailability of accommodation, lack of choice and price. Whilst there might be an argument to spread the Festivals across the year, the compact timeframe in which they are held is considered to be important in generating the audience levels achieved a longer Festival period is like to have an impact in diluting the audience. A concern expressed by organisers of the Fringe was the relentless increase year on year in prices of accommodation, in part considered to be driven by the accommodation letting agencies. Secured accommodation is slowly pricing itself out of the market. Continued growth will be fuelled by performers desires to come to Edinburgh but lack of available venues and cheap accommodation will increasingly be a constraint. Alternative accommodation outside the City is increasingly being sought. In addition to the August Festivals, other Festivals driving demand include the winter celebrations of Christmas and Hogmanay. Other events to regularly impact on the City s accommodation sector are: the rugby matches, the Six Nations Championship reported as filling local Hotels and other guest accommodation over the weekends they are staged. Open Golf is a further guaranteed generator but not all large-scale events have positive effects eg the G8 Summit hosted at Gleneagles 2005 was reported as detrimental to the City s hospitality businesses. The EICC opened in 1995 and has established itself in the international associations and international corporate events market which sees September, October and November as peak months of demand. The number of staged events in the years were as follows. The EICC has adopted a policy of targeting fewer, better yielding events which has been a successful and profitable strategy. -66-

97 EVENTS STAGED AT THE EICC 2000 TO 2005 Year Number of Events Delegates Delegate Days , , , , , , , , , , , ,710 Source: EICC Table 48 The EICC is now fully established and is consistently returning an operating profit annually. Future business levels appear healthy and plans to increase the Centre s capacity by 40% are in place. It is hoped that a new extension will open in The additional facilities, some 2,000 square metres, are designed to allow hosting of more events simultaneously with increased capacity for catering and exhibitions. A reported constraint to the growth of the Centre is the lack of sufficient 3 Star Hotel properties in the City. Budget and 4 / 5 Star properties are in adequate supply but there are no Hotels of scale at any grade. The target market of EICC associations and company events tends to seek to accommodate their delegates in as few Hotels as possible. For many, Edinburgh as a conference venue is not an option given its generally small average size of individual Hotel properties. The need for available City Centre sites to be ring-fenced for large-scale accommodation development is vitally important as this is constraining market demand growth ie Edinburgh requires a large Hotel of 3-4 Star standard. Discussions with Edinburgh Convention Bureau Ltd suggested that a second venue out of town would balance Edinburgh s offering in the conferences and meetings market. The importance of the conference / congress market to Edinburgh and the Lothians and its economic wellbeing is evident from the City s ICCA ranking. -67-

98 Future projects that will impact positively on demand include: Edinburgh Airport s projected growth in direct flights, development of second runway and development of the rail link (EARL); Cruise Liner Terminal; General population growth forecast; Centre for Biomedical Research and numerous other projects of scale in the City of Edinburgh. West Lothian West Lothian has a very modest tourist accommodation base, demand for which remains corporate in nature with modest demand from leisure tourists. There is VFR and displaced demand from the City of Edinburgh. The significant Hotels in the area now collate their occupancy statistics on a weekly basis emulating the EPHA model. These key Hotels in West Lothian achieved occupancy levels in 2005 at an average of around 73%. This is very respectable in national terms (at a Scottish level) but points to a lack of strength of the leisure market in comparison to the City. The mix of Lodge accommodation and traditional Hotels sees the range of occupancies vary by up to 20% across the best and worst performing properties participating in the sample. West Lothian events are more regional in nature than Edinburgh and therefore do not tend to generate overnight stays in any volume. Key visitor attraction assets in the area include Linlithgow Palace and Hopetoun House but are attractive to the day visitor market rather than being drivers of overnight accommodation demand. Proximity to the Airport is beneficial if convenience is a factor, particularly in the meetings market, but for many the attraction of staying in Edinburgh will be compelling, with price perhaps only being a consideration to West Lothian s benefit. -68-

99 In future, factors / projects with the potential to positively impact on demand for tourism accommodation in addition to the promotional activities of VisitScotland include: Potential move of the Royal Highland Showground; Heartlands project redevelopment of Polkemmet Colliery; Extensive residential stock expansion in the area; Reopening of rail-line Winchburgh, Bathgate, Airdrie; City region / Inspiring Capital branding project; Oatridge College National Equestrian Centre. Midlothian Midlothian has only a very modest number of tourist accommodation establishments with the bulk of stock being B&B operations and Self-Catering Units. The area has a number of good quality Hotels such as Melville Castle, Dalhousie Castle etc. Hotels and Small Hotels reporting occupancy levels from 50%-75% are generally modest size independent Hotels (less than 35 rooms). Demand is a mix of local corporate generated by local businesses, and leisure / VFR sectors, wedding celebration etc. Reported occupancy levels of the B&B sector are low with some operators open year round with occupancy percentages below 20%. However, there is evidence of some lifestyle businesses amongst private operators. It is considered that the area suffers from a lack of convenient transport infrastructure options with the City of Edinburgh. This constrains potential benefit of displaced demand and those wishing to stay in Edinburgh and venture out to Midlothian or vice versa. Tourism assets in the area include: Scottish Mining Museum, Midlothian Ski Centre and the Butterfly & Insect World. It is considered by some observers that the current interest in Rosslyn Chapel as a result of the Da Vinci Code book and film offers further opportunities to the benefit of the area s tourism operators. East Lothian Increasingly adopted as commuter territory to Edinburgh (46% of working population commute into Edinburgh) the demand profile of the area tends to have an increasing leisure focus across the area from west to east. -69-

100 Properties to the west of East Lothian benefit from demand displaced from the City on occasion, particularly during the Festivals period. East Lothian benefits from its traditional role as a holiday destination and this makes its profile distinct from other areas of the region. This is evident from the number of Self-Catering Units and the caravan pitch provision which is a significant proportion in the mix of supply in East Lothian compared with other sub-areas under study. Leisure tourism is relatively buoyant in North Berwick but the corporate demand base is poor. Notable is the number of Hotels under new ownership and the inability to provide historic performance data. Hotels in the area report occupancy levels in the range 50%-70% and an average room rate of around No data was available from the key Hotel in the area, the Marine at North Berwick, which was closed from April to October 2005 undergoing an extensive refurbishment programme. The leisure tourism peak season in North Berwick extends to the main summer months of July and August with Self-Catering Units seeing weekly lets, and a few two weekly lets. At other times of the year Easter, October Week and the fortnight at Christmas and New Year constitute the only other periods of significant demand. Short breaks of a minimum of four nights are entertained during the shoulder and off-seasons but not less than this due to the cost of servicing an apartment against the tariff that can be charged. The average number of weeks sold is low. Many unit owners use local agents to market, control bookings and service the apartments between bookings. This suggests that in fact many of these units are second homes and not available for commercial let all year round. The bulk of demand for holiday lets is from the UK, with two adults and two children the typical party size. Most demand is therefore for two-bedroom units although there is noticeable demand increasing for larger properties for family gatherings / tribing trend. A modest proportion, in the order of 7%-8% of all demand, is repeat business. -70-

101 As discussed, a proportion of the residential stock in East Lothian is second homes and those proving unsuitable for holiday lets are marketed for 1-6 month lets to those in the area on contract work and on occasion those moving into the area while house hunting. The area over the last year or so has seen good levels of demand from contractors working with Lafarge, Torness and on the redevelopment of the Marine Hotel. The combination of holiday lets and out of season longer lets was reported by one agency to see their portfolio of units achieve occupancies of 75% annually. Although a number of bookings are attributable to activities such as golf, particularly for those properties in the Gullane area, few other activity specific motives for staying in the area were reported by operators. One agency suggested that the supporting infrastructure focused in North Berwick made it much easier to sell for leisure tourism purposes than for instance Dunbar. Over recent years, East Lothian has seen a loss of stock. This is as a result of properties, particularly B&Bs and Guest Houses but also Small Hotels, being granted planning permission for change of use / demolition etc to develop residential properties houses, flats etc. East Lothian has a reputation for quality golf courses and periodically hosts championships, the most notable of which is the Open, last staged at Muirfield in The area attracts small golf groups primarily from the North East of England. A number of trends are emerging which in future should stimulate accommodation demand, namely the intended development of golf resort properties. In addition there is growth demand for heritage style properties being presented to the marketplace eg Lennoxlove, Broxmouth House; and a focus on promoting activities eg watersports guide, horseracing development etc will help to continually stimulate overnight demand. -71-

102 8 CONSUMER RESEARCH FINDINGS 8.1 Introduction As an integral part of the overall audit process, the consultants held interviews with a number of demand generators to establish views of the stock and services provided by the area s accommodation sector. We consulted with: Local businesses; Tour operators; Hotel booking / conference agents. These interviews and other work provided a consumer view of Edinburgh and the Lothians accommodation sector in terms of quality / quantity of supply and buying patterns. The aim was to establish if there were any perceived shortfalls in regional / sub-regional supply of rooms / quality of rooms either across the year or at specific times. The aim was to identify product gaps / market gaps and development opportunities. A range of intermediaries were approached for interview, from small operators dealing with individual clients to large operators dealing with groups of up to 200 people at a time. Both leisure operators and those involved in the corporate, business and conference sector were approached. Participant companies and organisations are provided in the Appendices. An overview of the findings is provided below. 8.2 Company Accommodation Buyers Non-Discretionary Business Demand The most commonly used Hotels are as follows: The Hilton Edinburgh Grosvenor (3 Star); Ramada Jarvis (3 Star); McDonald Houston House (4 Star); Dalmahoy Country House (4 Star); The Marriott Edinburgh (4 Star); Novotel (4 Star). -72-

103 Other establishments mentioned included: The Roxburgh (4 Star) Braid Hills Hotel (3 Star) Newcraighall Premier Inn Crown Plaza (now Radisson) Radisson (4 Star) Jury s (3 Star) Glasshouse (5 Star) Norton House (4 Star) Holiday Inn (4 Star) Roslin Glen (no grade) There was some mention of B&B usage but in the main they were only used when absolutely necessary as a result of a lack of availability of Hotels during the Festival period. Some of the companies did use B&Bs for those staying for longer periods, but this type of booking occurs infrequently. Only one B&B and a Guest House were mentioned by name. Neither Self-Catering operations nor Serviced Apartments were mentioned by any local corporate buyer as being used by them. The average length of stay in Hotels was reported as 1-2 nights with a few people staying up to a week. On average local companies interviewed book between one and 250 rooms per month with the majority using being between 20 and 30 room nights per month. Rooms tend to be mainly booked for visiting management with some clients and trainees also mentioned. There is little demand seasonality, no one time of year was identified as needing more rooms booked. However, one company who have a lot of foreign clients wanting to come during the Festival period. Two companies also mentioned that they usually booked slightly more rooms as demand levels were greater during the conference season ie April / May / September / October. Edinburgh is viewed as an expensive visitor destination. Interviewees expected to pay for accommodation in the Hotel sector around 50 per night for Travel Inn style accommodation to 100 bed and breakfast for a 4 Star Hotel. On average most expected to pay 80 bed and breakfast in a Hotel. -73-

104 Of those questioned three-quarters had a discounted corporate rate with the Hotels they used regularly. One company who currently don t have a corporate rate used to in the past, but found they could not sustain the offer, because the Hotel expected a certain amount of bookings from them each month that could not be sustained. No company would use Hotels of a quality lower than 3 Star with the majority looking for Hotels of 4 Star quality. 5 Star Hotels were viewed as too great a luxury for all but very senior personnel. The most popular way of buyers judging the standard of accommodation was from the Hotels, local reputation plus personal word of mouth recommendations from those who stayed there. Half of the companies interviewed had actually visited the accommodation before placing guests there. The inclusion of leisure facilities were seen as important to most of the companies interviewed, especially if guests were staying for longer than 2 nights. A good restaurant in the Hotel was also mentioned as a significant asset by a quarter of those questioned. Although locality is not a facility this was mentioned by most as being one of the most important factors in choosing a Hotel convenient to business, access to City / Airport etc. Of those interviewed, 50% noted some difficulty in booking Hotels, specifically and generally, any kind of visitor accommodation during the Festival period, but no other periods were mentioned as proving difficult. Many Hotels look after their regular corporate clients by holding blocks of rooms in anticipation of their corporate rate companies booking at short notice. Those unable to book Hotels during the Festival period reported either booking B&Bs if they were available or booking outside the City of Edinburgh. Other destinations mentioned as attracting displaced demand from Edinburgh included Glasgow, Dumfries, Peebles and Dalkeith. -74-

105 Just over 40% of those questioned felt that suitable accommodation facilities were lacking in their area. The main problem was felt to be the lack of 4 Star quality Serviced Hotels in the Lothians areas and the focus and a concentration of them only in the City Centre was an issue. One company also mentioned that they would benefit from the availability of studio apartments for long-term (ie 6-8 week) lets. Few companies noted any significant future trends developing in the demand for accommodation from their company. Some mentioned small increases whilst the largest booker of rooms predicted their company would see a 5-10% increase in the number of rooms they booked in the area over the next year. No companies envisaged a reduction in room bookings. The trends for the future growth of the accommodation sector are good. 8.3 Tour Operators In all cases, Edinburgh was mentioned as a key destination by tour operators in their published itineraries for visitors. In most cases, Edinburgh was cited as the most popular of the destinations that they currently offer in Scotland, and some tour operators even suggested that their clients, especially from overseas, would not consider a tour of Scotland that did not include Edinburgh. It is a must see destination for a Scottish visit. Generally, when their customers talk about Edinburgh they mean Edinburgh City Centre. Most tour operators reported that their clients wanted to be as central in Edinburgh as possible. Some tour operators do use B&Bs for their clients, and these do tend to be located nearer the outskirts, with some exceptions. However, the majority of incoming tour operators work mostly with Hotels and these are primarily located in or near the City Centre. Hotels often mentioned by tour operators as satisfying their demand included the Thistle Hotel, Jury s Inn, Point Hotel, Menzies Belford, the Hanover Hotel and the Royal British Hotel. Those tour operators with higher spending clients mentioned both the Balmoral and the Caledonian Hotels, but stressed the expense of using these Hotels and were therefore limited only to top end tours. On occasions, the tour operators interviewed have used accommodation in the Lothians, but this tends to be limited to times when Edinburgh is too busy, and accommodation in the City cannot be found (Edinburgh overspill displaced demand). -75-

106 East, West and Midlothian are not well known to tourists as destinations, and tour operators generally find that they are too close to Edinburgh to be included in tours that already include Edinburgh as the main port of call. It was suggested that East, West and Midlothian should concentrate more on appealing to the local / domestic UK tourist market, rather than trying to attract overseas visitors out of Edinburgh. East Lothian in particular was well liked by the tour operators interviewed, but few of them considered it worthwhile including East Lothian in their offering (even those concentrating on golf tourism) clients prefer to stay in Edinburgh. Edinburgh has many strengths amongst those identified by the tour operators interviewed were: Edinburgh is World famous, it is a Capital City, it has a wide range of attractions, event and amenities and it is considered by overseas tourists to be iconic. However, weaknesses were also identified and these included the fact that Edinburgh is extremely busy in August (due to the Festivals) and at Easter, Bank Holidays and on Rugby International weekends. Additionally, a lack of accommodation was identified, particularly a lack of good value, good standard 3 Star Hotels. This was particularly stressed by those tour operators dealing with group bookings. Some group tour operators are trying to place groups of up to 200, requiring at least 100 rooms. There is not enough accommodation available in the City to accommodate larger groups of that size and some groups are being split up into a number of accommodation establishments (not popular with tour organisers) whilst others are being put to other further afield destinations (for example Glasgow). Another weakness highlighted by several respondents was transport. This included traffic congestion in the City Centre, problems with the road network, high taxi fares and the limited number of budget airlines currently using Edinburgh Airport. These are not issues that tour operators have any control over, but nonetheless feel that transport difficulties do affect their business, and would like to see improvements. The transport issue could constrain Edinburgh s ability to optimise tourism growth potential. -76-

107 A few operators mentioned that although Edinburgh has a large selection of B&Bs and Guest Houses, the quality of these could vary substantially. Some tour operators feel that it is hard to judge the quality of B&Bs and so try not to use them, particularly as there is a growing number of ungraded properties. Others suggest that B&B operators are less likely to be aware of how tour operators work, and are unwilling to offer good loyalty rates to tour operators. In fact, one operator stated that they would rather use a 2 Star Hotel than a B&B because the hoteliers understand better how tour operators work and can offer a better service at the same price. They felt that B&B operators by and large are not professional enough and many are just lifestyle businesses, even in Edinburgh. With regard to the prices being charged, many operators felt that Edinburgh, and its Hotels in particular, were overpriced. Prices vary depending on accommodation type, and the requirements of clients, but in general for bed and breakfast, tour operators are paying around (group rate) for 3 Star Hotels, (group rate) for 4 Star Hotels and up to for single occupancy. These rates go up in August. One operator even stated that in August, she had been quoted room only in one large 5 Star Hotel. Clients are usually unaware of the individual prices of the Hotels, as these rates are amalgamated into an overall tour package price, but feedback from customers suggests that Edinburgh (and Scotland) is not always seen as particularly good value for money. It is becoming increasingly expensive in comparison to mainland Europe ie flight, costs, fuel, eating out, transport, accommodation etc. The tour operators were asked what in their view needs to change in order to make Edinburgh and the Lothians more attractive to their customers. Generally, it was felt that Edinburgh is doing very well as it is, and that any efforts to attract more people should be aimed at the shoulder months rather than in the main summer season. On the other hand, for East, West and Midlothian, the tour operators felt that more effort should go into promoting them to a market that is broadly unaware of what they have to offer. In relation to Midlothian, capitalising on the success of the Da Vinci Code was mentioned. Stressing the quality of the food and drink available, especially in East Lothian was also suggested as a possibility. Few operators currently use or would consider using West Lothian (except Livingston corporate demand and when Edinburgh is busy), and so perhaps these operators need more information on what West Lothian has to offer. -77-

108 Finally, in terms of trends, several points were raised. One operator has seen an increase in short break, off-season business, and increased business from Scandinavia, Spain and Ireland thanks to budget flights. However, others have reported that business generally is down in the past few years. Reasons quoted included people taking shorter holidays and using cheaper accommodation, the high pound, increasing competition from Ireland for visitors from the Eurozone and competition from Prague, Barcelona, Milan, Paris and especially Dubai for weekend breaks. 8.4 Conference Organisers Generally, the corporate conference market involves group travel, although some companies do find accommodation for individual conference delegates too. The average length of stay quoted does vary depending on requirements, but it seems that average would be around 2 nights. Although asked to name specific Hotels that they preferred to use, most interviewees stated only that they are happy to use City Centre Hotels, and that they will base their selection on the availability of rooms. The reason given for using the City Centre is that this is what clients are asking for. As with other markets, the conference organisers revealed that there are availability issues in Edinburgh, especially around the peak periods of Easter, August and the Rugby International weekends, but generally most organisers are able to place their clients somewhere in Edinburgh. Conference clients tend to be higher spending than leisure visitors and so are more willing to pay the increased rates demanded by City Centre Hotels during these peak periods. The issue for conference organisers seems more to be one of finding large enough Hotels to take groups (sometimes up to 200 rooms), with suitable meeting facilities. One organiser stated a preference not to place groups in Edinburgh at all, as finding large enough reasonably priced Hotels was just too difficult. Almost no conference organisers interviewed used any accommodation in East or West Lothian (except one organiser who occasionally uses the Marine Hotel in North Berwick). However, most would consider using the larger country-house style Hotels in Midlothian if these were made more suitable for their clients. Examples include the Marriot Dalmahoy and Dalhousie Castle. Size / scale seems to be an issue and links to the City. -78-

109 Trends mentioned included smaller budgets now than previously, especially for corporate events. Although numbers attending conferences and other corporate events seems to be relatively stable, the overall budgets are being reduced and this impacts on the quality of the accommodation that groups can afford and the amount of extras that a conference organiser can include in events or the length of stay of the event. Several organisers expect this state of affairs to continue and perhaps even get worse in the future. One conference organiser mentioned a new trend that they are becoming aware of, and it concerns more conference delegates booking their own accommodation when attending a conference instead of booking through the conference organiser. In fact, she considers the internet to be their biggest competitor, since they can earn no commission from bookings made to Hotels directly by conference delegates. Most organisers concluded that their clients have a wholly positive image of Edinburgh before they travel (although perhaps no clear image of the Lothians). The only issue centres around the perceived high costs / price associated with Edinburgh and the rest of Scotland. There were also no reported problems emerging from customer feedback occasional problems with individual groups and / or Hotels as is to be expected, but no negative comments about the City of Edinburgh or its environs as a whole. Caution however was given, that in an ever-increasing competitive environment with budget pressure, that Edinburgh and Scotland must not price itself out of the market. 8.5 Conclusions The main issues identified seem to be a lack of availability, especially during the peak periods of the Festivals (mainly August), Easter and the Rugby International weekends, a lack of good quality good value for money 3 Star Hotels in Edinburgh, and a shortage of Hotels big enough to take larger groups. Additionally availability problems are exacerbated by the fact that most people want to be in the City Centre. However, there could be demand for 4 and 5 Star Hotels in East, West and Midlothian if perceptions of these destinations can be overcome and advantages sold. -79-

110 9 CITY OF EDINBURGH AND THE LOTHIANS SUPPLY AND DEMAND MODEL 9.1 Introduction As part of this study, TRC were commissioned to design an arithmetic computer model to help forecast the future supply and demand equation for the area. The objective of this model was to indicate theoretically the number of bedrooms required in the future, depending on the area s ability to satisfy aspirations at a national level for tourism growth the model outputs to help with strategic planning. The model cannot be used to identify specific sites or locations nor is it a substitute for detailed feasibility studies for individual properties. The model equation has been developed at two levels: Supply and demand within the City of Edinburgh; and In the wider Lothian region. The research and analysis from the supply and demand audit of tourist accommodation was used as the base for the development of this theoretical model. The information gleaned from the audit process was then compared with, and augmented by, the annual VisitScotland TNS Occupancy Survey data by type and grade of accommodation at a regional level. In addition, as part of the reported interview process of the audit, an amount of collective occupancy data was collated from the EPHA and other consortia / organisations. This data has been factored into the modelling process to enable a more robust base from which to project in to the future. In this section we briefly describe how the model works, the input options and its parameters, together with a number of illustrative supply and demand scenarios and their outcomes / results. Overleaf we provide a diagrammatic representation of the elements of the supply and demand model. 9.2 Model Parameters Existing Supply The model operates by taking the supply data from the audit and converting the room and bed stock into an existing average daily bed and bedroom accommodation supply as at March

111 SUPPLY AND DEMAND MODEL SPREADSHEET FLOW DIAGRAM EXISTING EDINBURGH AND THE LOTHIANS SUPPLY AND DEMAND INPUT Sheet 1 Existing Bed Supply Input - Source TRC Audit 2006 Sheet 2 Existing Room / Unit Supply - Source TRC Audit 2006 Sheet 3 Existing Demand Input - Source TRC Audit 2006 and TNS EXISTING DEMAND CALCULATIONS Sheet 4 Sheet 5 Sheet 6 Existing Demand Rooms / Units Existing Demand Seasonality Rooms / Units Existing Demand Seasonality Bed Nights Sheet 7 Sheet 8 FUTURE SUPPLY INPUT Future Supply Input Edinburgh Future Supply Input Lothians FUTURE DEMAND INPUT Sheet 13 Future Demand Input: Edinburgh City Growth and Propensity to Purchase Lothians Growth and Propensity to Purchase FUTURE SUPPLY CALCULATIONS FUTURE DEMAND CALCULATIONS Sheet 9 Sheet 10 Sheet 11 Sheet 12 Future Supply Calculations Edinburgh Future Supply Calculations Lothians New Supply Summary Edinburgh New Supply Summary Lothians Sheet 14 Future Bed Night Calculations Edinburgh / Lothians Sheet 15 Future Bed Nights by Star Rating Edinburgh / Lothians Sheet 16 Future Room Night Calculations Edinburgh / Lothians Sheet 17 Future Room Nights by Star Rating Edinburgh / Lothians FUTURE DEMAND CONSTRAINTS Sheet 18 Sheet 19 Future Demand Levels Existing Accommodation Edinburgh / Lothians Demand Per Available Bed FUTURE REQUIREMENTS Sheet 20 Sheet 21 Sheet 22 Sheet 23 Future Number of Unsatisfied Bed Nights Number of Future Beds Required Future Number of Unsatisfied Room Nights Number of Future Rooms Required OUTPUT SUMMARIES Sheet 24 Fair Share Occupancy % Sheet 25 Key Output Summary Sheet 26 Planned Vs Required Supply Sheet 27 Value of Rooms Sold -81-

112 The average daily supply has been factored from the accommodation audit to take account of the seasonal variations in stock, although this only has a significant impact on the Non-Serviced sector of the supply. As previously discussed, average daily supply is broken down as follows: By location: City of Edinburgh, the Lothians (ie rest of region); By type of accommodation: Hotel and Related, Guest House / B&B, Self-Catering etc; By VisitScotland QA grade Existing Demand The model inputs for demand are based on this accommodation audit occupancy information and supplemented where necessary with TNS data as previously discussed. The consultants have used their own judgement, discussions and returns from operator interviews to estimate the overall proportional market mix data and multiple occupancy factors for each category and grade of accommodation. The input criteria for existing demand accommodation is as follows: Estimated annual unit occupancy percentage unit, room, bed; Market mix proportions corporate, business / conference, leisure and tour group; Multiple occupancy factors by sector of market mix Existing Demand Bed Nights The model, from these inputs of supply and demand characteristics, and the unit occupancy percentages gleaned from interviews, converts the demand into bed nights sold by applying the multiple occupancy factor by market sector. For example, most Hotel operators record and can quote bedroom occupancy levels but not bed occupancy levels. They also record the proportion of their demand which is business and leisure. It is understood that business people tend to occupy a room alone but leisure visitors tend to share. -82-

113 For those with experience of the industry, it is possible to estimate the likely double occupancy factor for different types of accommodation demand. By applying the previous inputs, the model suggests the following analysis of existing bed night demand: ESTIMATED NUMBER OF BED NIGHTS SOLD (2005) Category City of Edinburgh (Millions) The Lothians (Millions) Total (Millions) Hotel and Related Guest House / B&B Campus Self-Catering Hostel Holiday / Touring Park Total Bed Nights Sold Table 49 The model estimates that the City of Edinburgh and the Lothians sold around eight million tourist bed nights in Serviced and Non-Serviced accommodation in We have compared this with the results of the IPS and UKTS returns for 2003 (latest information available). In the 2003 survey, Edinburgh and the Lothians visitors stayed for 14.8 million bed nights. However, if those staying with visitors, friends and relatives are excluded, then there were an estimated 8.6 million bed nights staying overnight in commercial visitor accommodation within Edinburgh and the Lothians. This is similar to the TRC audit / model quantification above. The UKTS and IPS is extrapolated from visitor survey data. The TRC information has been derived from operator interviews / questionnaires. The existing bed nights sold have also been broken down by market sector as follows: -83- Serviced Sector Non- Serviced Sector ESTIMATED MARKET MIX OF EXISTING BED NIGHTS SOLD (2005) City of Edinburgh The Lothians Corporate Conference Leisure Group Total Corporate Conference Leisure Group Total 23.7% 7.3% 52.8% 16.2% 100% 29.6% 6.2% 42.7% 21.5% 100% 18.8% 3.9% 76.9% 0.4% 100% 11.6% 0.5% 87.9% 0% 100% TOTALS 21.8% 6.0% 62.2% 10.0% 100% 21.6% 3.7% 62.7% 12.0% 100% Table 50

114 9.2.4 Total Bed Nights and Value of Accommodation Sold As part of the modelling exercise the consultants have quantified the value of the Serviced accommodation sector. This has been based on achieved average room rate information supplied by individual operators. The overall base is low and as a result cannot be accurately broken down with any accuracy to an individual accommodation type, Star rating, location level. Based on the consultants calculations, the following devolves: ESTIMATED VALUE OF EXISTING SERVICED ACCOMMODATION SALES IN 2005 City of Edinburgh The Lothians Total Hotel Sector Number of Room Nights 2.2 million 0.41 million 2.61 million Value of Accommodation million 22.4 million million Guest House / B&B Number of Room Nights 0.42 million 0.07 million 0.49 million Value of Accommodation 18.5 million 2.6 million 21.1 million TOTAL SERVICED SECTOR Number of Room Nights 2.62 million 0.48 million 3.1 million Value of Accommodation million 25.0 million million Table 51 In 2005 it is estimated that the Serviced accommodation sector in Edinburgh and the Lothians area sold 3.1 million room nights to an estimated value of million at 2005 prices. This is the value of direct bedroom sales only and does not take account of other direct food and beverage or other onsite sales. This value does not take account of offsite expenditure or the multiplier effect Planning Future Supply The model has been designed to work in one of two ways for scenarios, either with or without the planned known future supply to meet growth targets. (An element of new supply was identified in our discussion with the region s planners). -84-

115 Impact of the planned new supply can be considered with and without growth. In most instances the model will be used to identify the level of future supply required for a given factor of growth ie can the proposed new supply be accommodated? Alternatively the question What additional supply is required to meet growth targets? can be explored. Very often new accommodation is planned, but the scale and the quality is not identifiable, it is only indicative. Planners may need to understand if the proposed market growth can accommodate the planned additions to supply Future Demand Input Future demand is calculated / estimated based on individual market sector growth rates corporate, conference, leisure, group. Each market sector will be influenced by different trends resulting from: Buoyancy of the Edinburgh economy Scottish corporate business growth; Major growth and regeneration projects eg New Street, Fountainbridge, Quartermile, Granton and Leith waterfronts, centre for biomedical research business growth; Potential introduction of Transient Visitor Tax (TVT); Addition of new EICC facilities conference growth; Edinburgh s perception on the World stage as a must see destination leisure growth; Future of the Edinburgh Festivals leisure growth; New Cruise Liner Terminal group leisure growth; Expanded Edinburgh Airport, direct budget flights, rail link, second runway all sector growth. The level of projected future growth can only be an assumption. At a national level the target / aspiration for Scottish tourism is a 50% growth in the value of tourism expenditure between 2005 and This level of growth has been based, we understand, on World Tourism Organisation estimates. This is growth in real terms, both growth in volume and value. The model allows for growth to be factored into the model and growth to be flexed year on year and by individual market sector. -85-

116 9.2.7 Future Propensity to Purchase The demand for accommodation in the area at present exhibits a certain pattern of buying, which undoubtedly is related to the current level of available supply ie some visitors select Hotel accommodation in preference to Hostel accommodation. Within Hotels, some will select a 2 Star Hotel, some a 4 Star Hotel, some in City and some in the Lothians. The current propensity to purchase accommodation in the area by type is outlined below. CURRENT PROPENSITY TO PURCHASE BY CATEGORY Category City of Edinburgh The Lothians Hotel and Related 49.1% 45.3% Guest House / B&B 11.7% 10.7% Campus 9.4% 1.3% Self-Catering 18.0% 15.5% Hostel 9.9% - Holiday / Touring Park 2.0% 27.3% TOTALS 100.0% 100.0% Table 52 The existing propensity to purchase accommodation has also been broken down by grade within each accommodation type as shown below. CURRENT PROPENSITY TO PURCHASE HOTELS BY GRADE Hotels City of Edinburgh The Lothians Ungraded 12.6% 43.1% 1 1.7% 1.4% 2 5.3% 6.5% % 13.7% % 27.0% 5 8.9% - Awaiting Inspection 8.5% 8.3% Table 53 In the future, the market may seek accommodation of a greater quality and thus the propensity to purchase by grade may alter. The operator of the model can input a change in the proportional split of the market in the future to reflect this. For example, at present there are no 5 Star Hotels in the Lothians but in the future the market may demand a Hotel so the propensity to purchase will have to alter to achieve this goal. -86-

117 9.2.8 Future Demand Calculations Based on the existing level of bed nights hosted, the anticipated growth and the propensity to purchase, the future bed night demand picture devolves by type of accommodation and by Star rating. The model then converts the new demand back into room nights and unit nights as required Future Demand Constraints Theoretically it is assumed that the existing accommodation stock in any new supply and demand equation would seek to or expect to maintain its existing level of demand ie perform at a similar level of occupancy in the future as today (unless there was an overall decline in the levels of demand or if new supply was developed too quickly). The model is able to accommodate scenarios where the demand satisfied by the existing accommodation stock is either maintained at the same level, or illustrates trading levels above or below the existing level before new supply is advocated. The choice is made by the operator of the model Level of Future Supply Required The main objective of the model is strategic, it is to estimate the number of beds and rooms required to meet the aspirations of demand growth. The theoretical model assumes that the whole market will trade at the same averaged level, so that theoretically both existing and new supply trade at fair share and can be supported by the overall quantification of market demand. (Fair share is a term used in a marketplace to indicate that all participants perform at an average level whereas in reality some will perform better and some worse, depending on professionalism, marketing budget, location etc). -87-

118 9.3 Model Scenarios In this section we report a number of illustrative scenarios which have been modelled by changing the various parameters detailed previously within the theoretical model template as follows: Scenario 1 Assumptions for this Scenario The demand for accommodation in the City of Edinburgh and the Lothians grows at 50% over the next 10 years (to meet national targets); Annual market growth parameters adopted: corporate 3%, conference 3%, leisure 5%, group 4%; The propensity of future demand to buy differing accommodation products is the same as in 2005; Occupancy levels are maintained in the future at the current level ie new stock does not detrimentally affect existing businesses. The tables below display the scale of new demand generated using these assumptions and the additional supply requirements to satisfy the growth in demand. OUTPUTS ADDITIONAL ROOMS / UNITS / BEDS REQUIRED City of The Lothians Edinburgh Cumulative Demand Growth 22.5% 50.4% 23.0% 52.5% Number of Units / Rooms / Beds Required Hotel Rooms 1,790 3, Guest House Rooms 571 1, Campus Beds 497 1, Self-Catering Units Hostel Beds 654 1, Holiday / Touring Park Table

119 OUTPUTS HOTEL ROOMS REQUIRED BY GRADE City of Edinburgh The Lothians Star Grade Number of Hotel Rooms Number of Hotel Rooms Ungraded , , Awaiting Inspection TOTALS 1,790 3, Table 55 At a 50% growth aspiration the results show a need for around 4,000 bedrooms in the City of Edinburgh and 800 in the Lothians by Of this 4,000-bedroom increase in the City of Edinburgh accommodation stock, more than 60% of the growth is at 3 and 4 Star level. In the Lothians, the greatest need theoretically is for ungraded properties. It is hoped however that a greater proportion of demand in the Lothians would be graded in future. In any event an estimated 80% of this new ungraded demand would in reality be of 3 and 4 Star standard. [The model cannot theoretically predict the need for a supply-led scenario if there is no existing supply (ie 5 Star Hotels in the Lothians). However this has been illustrated in the next scenario by flexing the propensity to purchase higher grades of accommodation] Scenario 2 Assumptions for this Scenario In this scenario the same growth assumptions as in Scenario 1 have been adopted but the Hotel market demand wants to trade-up ie customer expectations and buying decisions see proportions of 3 and 4 Star demand increase in Edinburgh and 5 Star demand in the Lothians. -89-

120 A greater demand for 3 and 4 Star Hotel accommodation in the City of Edinburgh (say 20% of the demand for ungraded, 1 and 2 Star upgrades to 3 and 4 Star) and the need for a 5 Start Resort Hotel in the Lothians. OUTPUTS HOTEL MARKET TRADE-UP City of Edinburgh The Lothians Star Grade Number of Hotel Rooms Number of Hotel Rooms Ungraded , , Awaiting Inspection TOTALS 1,826 4, Table 56 This scenario demonstrates a greater need for 3 and 4 Star Hotels in the City of Edinburgh in future as the market is wanting to upgrade thus fewer new Hotel bedrooms ungraded and at 1 and 2 Star level are required than in Scenario 1. (In fact some ungraded, 1 and 2 Star Hotels may close in the period up to 2010, or their occupancy level will be depressed). Within the Lothians this scenario demonstrates that if 6% of the Hotel market demand wants to stay in a 5 Star Hotel (9% of beds sold in the City of Edinburgh are at 5 Star Hotel level) in the future, then theoretically 123 bedrooms can be supported in 2010 and 149 bedrooms in Please note: as the model is theoretical, it can result in a negative future supply in some categories as the market trades up (ie there is no apparent need for the level of accommodation stock that exists today in some categories). What in effect will occur is that demand levels in these categories cannot be maintained at their current level creating an oversupply in the accommodation for that grade in the future. This can be verified by considering the future annual fair share occupancy level, which will be below the current level of operation. Eventually the market as it grows will rebalance some Hotels will refurbish and upgrade and others will cease trading. -90-

121 9.3.3 Scenario 3 Assumptions for this Scenario This scenario illustrates a lower level of growth rate than in Scenario 1. Future achievable growth in the City of Edinburgh and the Lothians in this scenario is only approximately half the national target ie approximately 25% over 10 years or 2.3% per annum cumulative. OUTPUTS ADDITIONAL ROOMS / UNITS / BEDS REQUIRED City of Edinburgh The Lothians Cumulative Demand Growth 12% 25.4% 11.8% 25.1% Number of Units / Rooms / Beds Required Hotel Rooms 960 2, Guest House / B&B Rooms Campus Beds Self-Catering Units Hostel Beds Holiday / Touring Parks Table 57 OUTPUTS HOTEL ROOMS REQUIRED BY GRADE City of Edinburgh The Lothians Star Grade Number of Hotel Rooms Number of Hotel Rooms Ungraded Awaiting Inspection TOTALS 960 2, Table 58 Instead of a requirement of 4,000 bedrooms in the City of Edinburgh by 2015, there is only a requirement for 2,000. The Lothians has a requirement of around 400 bedrooms. -91-

122 9.3.4 Scenario 4 Assumptions for this Scenario This scenario assumes the same growth rate as Scenario 1 but allows for a 5% increase in demand levels for 2007 and a 10% increase in occupancy in 2008, above today s level. This will apply to all existing stock and all new stock in both the City of Edinburgh and the Lothians. The impact on the requirement of Hotel beds has been modelled. OUTPUTS ADDITIONAL NUMBER OF HOTEL ROOMS REQUIRED City of Edinburgh The Lothians Star Grade Number of Hotel Rooms Number of Hotel Rooms Ungraded , Awaiting Inspection TOTALS 905 2, Table 59 By allowing demand to grow within the existing stock, the need for bedrooms drops to around 3,000 in the City of Edinburgh by 2015 and 600 in the Lothians Scenario 5 Incorporating Planned / Known Future Supply Assumptions for this Scenario As part of this study, research was carried outwith the area s Planning Departments and potential new supply was identified. -92-

123 The table below highlights the planned new supply in the Hotel sector in both the City of Edinburgh and the Lothians. However, some of this new supply will only be aspirational and will not happen in the planned timescale. The size of the establishment in some instances is only anecdotal. TRC have estimated, where possible, the likely Star rating of each establishment and the number of beds. The schedule of planned future supply is outlined in the following table. SCHEDULE OF PLANNED FUTURE HOTEL SUPPLY NUMBER OF ROOMS (ILLUSTRATIVE) Sum of Number of Rooms / Units Opening Grade Council Area Assumed Category Total (Stars) 1/6 1/9 1/10 1/1 1/3 1/5 1/1 1/6 1/9 3 Hotel City of Edinburgh 4 Hotel Hotel City of Edinburgh Total Hotel / 4 East Lothian Chalets Hotel Midlothian 3 Hotel Lothians Total TOTALS ,581 Table 60 The above demonstrates that the planned supply in the Hotel sector, even with a 50% growth aspiration, will impact on the existing market demand level as follows: The planned increase in 3 Star Hotels in Edinburgh to 2008 will have little impact on the existing trading level in the marketplace; The planned increase in 4 Star Hotels to 2008 is too great and will cause the market fair share to drop from 77% to 71.5%; The planned increase in 5 Star Hotels to 2008 will have little impact on the existing trading level in the marketplace; -93-

124 The planned increase in 3 Star Hotels in the Lothians, even with the 50% growth aspiration and a greater propensity to upgrade, is too great unless new demand can be created by the new Hotels or the rate of development is slowed up. The market fair share drops from 64.5% to 55% in 2008; The planned increase in 4 Star Hotels however is not quick enough. Fair share occupancy levels rise above their current level therefore, one of the planned 3 Star Hotels should theoretically be of 4 Star standard to meet / balance the market growth; If 6% of the market in the future demands 5 Star accommodation, then theoretically a 100-bedroom Hotel could be supported by 2008; Between 2006 and 2008, the following new supply versus that planned (if 50% growth is assumed Scenario 1, the stock in the Lothians has a propensity to upgrade and there is demand for a 5 Star Hotel) is as follows: OUTPUTS HOTEL ROOM SUPPLY REQUIRED Vs PLANNED City of Edinburgh Required Star Cumulative Planned Net Supply Required Required Star Cumulative Planned Net Supply Required Required Star Cumulative Planned Net Supply Required The Lothians Required Star Cumulative Planned Net Supply Required Required Star Cumulative Planned Net Supply Required Required Star Cumulative Planned Net Supply Required Table

125 MARKET FAIR SHARE ROOM OCCUPANCY PERCENTAGES (Based on Planned Future Supply and Estimated Growth at 50% Over 10 Years) City of Edinburgh 3 Star 76.8% 79.1% 75.3% 78.1% 4 Star 77.1% 77.3% 74.0% 71.5% 5 Star 71.2% 71.8% 70.4% 73.2% The Lothians 3 Star 64.5% 67.0% 52.9% 54.9% 4 Star 78.3% 81.4% 84.6% 85.5% 5 Star % 74.9% Table Scenario 6 Future Growth Based on Historic Supply Absorption Levels Assumptions for this Scenario This scenario considers historic supply absorption levels. In 1990 there were an estimated 4,545 Hotel and Related type bedrooms in Edinburgh and the Lothians. Hotels in the City of Edinburgh traded at an occupancy level of 63% in By 2005, there were 9,628 bedrooms in the region, and the City of Edinburgh Hotels are trading at an annual occupancy level of 74.4%. The Hotel market in the City of Edinburgh is much more sustainable today than in Growth in rooms in the region over the last 15 years has been 5,083 or the equivalent of 339 new bedrooms per year. Over the next 10 years, to match historic growth trends, Edinburgh and the Lothians would have to add 3,390 new bedrooms in the Hotel sector. The 50% growth aspiration is showing a requirement for 4,777 new Hotel and Related type bedrooms in the area, 3,962 in the City of Edinburgh and 8.5 in the Lothians by 2015, which appears rather too ambitious. A 35% growth over the next 10 years would relate to historic growth patterns, 2,851 new Hotel rooms in the City of Edinburgh and 567 in the Lothians. In order to meet national aspirations, the area would require a value growth trading up in real terms. -95-

126 In this scenario the consultants have considered a 35% growth in volume target, together with an increase in the propensity to upgrade in the future, 20% from ungraded, 1 and 2 Star to 3, 4, and 5 Star accommodation throughout the Serviced sector in the area. The result is an increase in value only marginally greater than the 35% increase in volume. The growth in value in the City of Edinburgh is only 36% between 2005 and 2015 compared with 42% in the Lothians. Overall, growth still falls well short of the national aspiration of a 50% increase in tourism value between 2005 and The consultants consider that national value growth targets are more achievable in the Serviced sector in the Lothians than in the City of Edinburgh itself where a combination of volume, quality trade-up and real price increases above the rate of inflation can be achieved. In the City of Edinburgh during the summer months, price resistance is being witnessed so real price increases may have to be held. Trading-up will not be as apparent as there is already a higher proportion of supply at 5 Star level than in other Cities benchmarked. If national growth targets are to be met, then the City of Edinburgh must build new bedrooms, but these will have to be built at a faster rate than over the last 15 years and this may be unrealistic, given land shortage and prices. It is very probable that the City of Edinburgh will not meet the national growth targets unless the EICC and the Airport expansions happen. Encouragement should be given to promoting and changing perceptions of areas outside to City Centre. It is likely that new locations for Hotel accommodation at the Airport / Leith will have to be considered, but transport connections must improve Scenario 7 Assumptions for this Scenario Given Scenario 1 and a 50% growth projection over the 15 years, when can a 500-bedroom 4 Star and a 500-bedroom 3 Star Hotel be supported? The model suggests: 500-bedroom 4 Star Hotel supportable in 2009 at 77% occupancy; 500-bedroom 3 Star Hotel supportable in 2010 at 76% occupancy. -96-

127 9.4 Conclusion The audit research has demonstrated the following: Edinburgh is already perceived by many as being expensive to visit so an increase in accommodation pricing significantly greater than the rate of inflation may be an issue in future albeit accommodation rates in the past have outstripped inflationary growth; Between 3 and 4 Star grades the audit has revealed limited average room rate difference so upgrading would result only in limited increase in value. The result of the above is that Edinburgh is likely only to be able to meet the growth targets through significant increases in volume of accommodation rather than just through increases in value (rate) or visitors propensity to upgrade. We are therefore of the opinion that in order to meet the national growth target Edinburgh s accommodation in terms of volume will have to grow by between 35% and 50% by This is broken down as follows: OUTPUTS ADDITIONAL ROOMS / UNITS / BEDS REQUIRED City of The Lothians Edinburgh Approximate Cumulative Demand Growth 35% 50% 35% 50% Number of Units / Rooms / Beds Required Hotel Rooms 2,811 3, Guest House Rooms 869 1, Campus Beds 752 1, Self-Catering Units Hostel Beds 1,043 1, Holiday / Touring Park Pitches Table 63 At a 35%-50% growth aspiration the results show a need for around 2,800-4,000 Hotel bedrooms in the City of Edinburgh and in the Lothians by This accommodation type being the most important in terms of economic impact and ability to deliver growth. -97-

128 Of the 4,000 Hotel bedroom increase in the City of Edinburgh accommodation stock, more than 60% of the growth is at 3 and 4 Star level. The other types of accommodation eg B&B, Self-Catering also see varying additions to volume needed to meet tourism value growth targets but they are not as significant in scale and in some cases public sector agencies have less opportunity to influence their development. -98-

129 10 STRATEGIC RECOMMENDATIONS This study provides the most comprehensive analysis of supply and demand of tourist accommodation in Edinburgh and the Lothians to date. The type, scale, quality and distribution have been plotted on the supply side and profiles of demand gathered. A computer model has been constructed using this information as a base to illustrate future accommodation requirements given a series of growth assumptions and other parameters. The area has a wealth of aspirations and plans to maintain its global prominence as a world-class tourism destination and capitalise on its desirability as a place to live and do business, attend conferences and events, and enjoy leisure time. The City of Edinburgh s role as a capital city is key to the success of the wider area. Edinburgh and the Lothians also has a significant role to play in driving Scotland s target to increase tourism value by 2015 by 50%. In reality, this target can only be met in Edinburgh if additional capacity / supply of accommodation is created. (Increases in accommodation stock have been a feature of the City over the past two decades with new supply being absorbed without serious impact to existing businesses). As Edinburgh and the Lothians continues to see demand growth, the area will need additional accommodation supply across the whole spectrum of types / categories, but in terms of generating economic benefit and satisfying the main demand generators, the Hotel sector in Edinburgh is key. Edinburgh s existing Hotel sector performance, in global terms, is impressive but because of this it is constrained in contributing to the growth target in tourism value. Occupancy levels and average room rates achieved in the region are already some of the best in the UK and internationally. This is important to attract developers to invest in the region, albeit the City will be the focus for most. In terms of geography, the tightly defined City Centre is the preferred location for most visitors to stay so is the most attractive for tourism development. This plainly presents challenges in terms of available sites, land / development costs, competition for such sites and potential scale of development not to mention heritage and conservation issues. -99-

130 There needs to be concerted efforts to expand visitor horizons and make other areas of the wider City and wider region as attractive to visitors and developers. Marketing activity to raise the profile and usage of non-traditional areas such as Leith and further afield will help educated / re-educate visitors. Strategically in order to unlock the future potential, accommodation hotspots need to be developed outwith the City Centre at Leith, Edinburgh Airport etc. There are perception and transport issues that need to be overcome if Leith, the Airport and the Lothians are to contribute more significantly to the tourism product growth. Improvements to transportation links and infrastructure is a practical means of widening regional appeal and equally that of certain areas of the City itself. In order for Edinburgh and the Lothians to maintain its position in tourism terms, it needs to continue to embrace new product concepts as they evolve. A prime example of the success of this in the past has been the evolution of the Serviced Apartment sector into the accommodation portfolio. Future opportunities could well include fractional ownership models, Condo-Hotels, super Budget Hotels (eg Easyhotel). The area should and must support these models if a diverse tourism product is to grow and evolve. Factors which will affect future demand for tourism accommodation are many and include (to highlight only a few): (i) Forecasts of increasing population base; (ii) Edinburgh Airport development proposals and forecasts; (iii) Edinburgh Waterfront developments at Granton and Leith; (iv) Edinburgh City Centre retailing development / redevelopment; (v) Centre for Biomedical Research and other Science Triangle projects. Each of the above in their own way will stimulate demand for tourist accommodation from both business and leisure users. The considerable Airport passenger growth and future forecasts suggest opportunities for the development of accommodation to support the Airport. The planned rail link will be a catalyst to this

131 It is generally acknowledged that visitor expectations in terms of quality are increasing, but the existing diversity of both type and qualities of accommodation will remain important in satisfying the diversity of demand from visitors. The hospitality sector must take care not to erode visitor value for money perceptions which see Edinburgh currently and increasingly an expensive destination. The previous section provides a number of scenarios using differing growth factors, different propensity to buy, different fair share positions etc. The model is not designed to identify, nor would be capable of identifying particular geographic locations in the area. Where, at what quality level and at what scale a particular property could be developed depends on a plethora of factors including: Prevailing market conditions; Planning regime / constraints; Heritage considerations; Developer appetite; Public / community opinion; Fruition of planned economic generator projects; Transport infrastructure; Public sector intervention; TVT. The model acts to illustrate the possible supply shortfall across both the City and Lothians, (separately) given its set of input criteria, enabling the authorities to have some sense of future scale of requirement and put in place the conditions to encourage the desired level of developments if seen fit. Of the scenarios we have examined the one the Scottish Executive and tourism industry are working towards and have signed up to is 50% growth in the value of tourism by The model demonstrates the following need for accommodation in the City of Edinburgh and the Lothians by 2015 in broad terms if this target is translated into volume growth, given the constraints on growth of value discussed: -101-

132 THEORETICAL ACCOMMODATION REQUIREMENTS IN EDINBURGH AND THE LOTHIANS BY 2015 City of Edinburgh The Lothians Scenario 1 Scenario 1 Growth 50% 50% Propensity to Buy Same as Today Same as Today Star Grade No of Hotel No of Hotel % Bedrooms Bedrooms % Ungraded % % % % % % 3 1, % % 4 1, % % % - - AI % % TOTALS 3, % % Table 64 The reader s attention is drawn to the table on Page 97 which demonstrates the likely range of additional accommodation required to meet the national target of 50% growth in value by A mix of modest rate growth and additional accommodation stock are the elements most likely to contribute to achievement of the 2015 objectives. In essence, the model demonstrates a requirement for up to 1,500 additional bedrooms at 4 Star standard and around 1,100 additional bedrooms at 3 Star standard in the City of Edinburgh by The research has identified a significant product gap which is the need for a large 3 Star property certainly in excess of 200 rooms to satisfy demand for some conference / meeting business and group business. Edinburgh lacks a large-scale Hotel of any description with the average size of Hotel property below 90 rooms which prevents group / conference organisers and EICC from being able to secure block bookings for larger groups. This is currently a problem and with the EICC expansion plans afoot, will become even more of a constraint

133 In each growth scenario the need for significantly more 3 and 4 Star Hotels across the City and in the Lothians is demonstrated, particularly if one considers the Awaiting Inspection rooms which should be factored back across the 1 to 5 grade categories. Changing expectations in the marketplace will see the need for 4 Star properties and scale is also an issue here. Given the EICC s target markets at the 4 / 5 Star end of the convention / corporate market, a large 4 Star Hotel would complement the conference offering in Edinburgh. Modelling here reflecting discussions with tourism officials at the coalface. Evident from our supply and demand analysis is that the current 5 Star Hotel stock achieves slightly poorer room occupancy levels than the 3 / 4 Star stock, suggesting the supply of such rooms is adequate for current demand. However, the stock resides again mainly in a number of smaller units as well as the 250 and 260 roomed Caledonian Hilton and Sheraton Grand Hotels. By 2015 the model scenario suggests a further Star Hotel rooms could be supported. A range of smaller 3 and 4 Star Hotels should be developed in the Lothians, predominantly supporting leisure needs in East Lothian and business and conference needs in Midlothian and West Lothian. Discussions with relevant observers suggest opportunities in Linlithgow, Midlothian, along the ring road corridor, and as part of the Science commercial cluster around Penicuik. In the Lothians, there is a requirement of about 130 bedrooms at 3 Star standard and around 200 bedrooms at 4 Star standard. In addition, if 6% of the market in the future requires a 5 Star Hotel, then around 135 additional bedrooms can be supported at this level by 2015 in a resort-type development. Given the aspirations of developers in East Lothian for a golf focus, upmarket resort development the aspiration should be supported as the model demonstrates potential future demand will be generated and can be satisfied by such a development. This should be of 4 or 5 Star standard. This type of development is proven to have significant economic benefit to an area in terms of job creation and profile enhancement

134 In addition the model demonstrates the need for more Guest Houses and B&Bs, between 450 and 500 additional rooms of 3 Star standard and around 170 rooms of 4 Star standard in the City of Edinburgh. If these rooms do not materialise or are discouraged / constrained then there could be the opportunity for more budget-style Hotel rooms in the City. There is a need in the future for around 150 to 200 new Guest Houses and B&B rooms in the Lothians. The need for more Self-Catering properties in the City is demonstrated. Self- Catering and Guest House provision should be allowed to continue to expand on the back of activity markets such as golf and short break requirements. The Hostel and Campus categories of accommodation in the City represent significant growth potential. The model demonstrates approximately 1,750 to 2,500 beds in this area could be required by At present there is no Hostel accommodation in the Lothians area, but in the future this should be introduced to support activity hotspots. Watersports activities development along the coast might be the catalyst for such accommodation. The model demonstrates the future need for additional Holiday / Touring Parks, of around 500 and 600 touring pitches in the Lothians, are required by This assumes that the propensity of visitors to camp / caravan remains at the same proportion in the future as today, however even if the propensity halves, there is still a theoretical need for between 200 and 300 new plots. Given the aspirations to maintain and enhance Edinburgh and the Lothians tourism credentials, the increases in tourist accommodation supply will inevitably increase pressure on the labour market, on housing and social infrastructure. The authorities and industry need to consider what responses / initiatives can be used to mitigate the negative impacts of this growth. The Festival period is one where already concern is being expressed about the increasing of tariffs considerably above inflation for this particularly intensive period of demand, which is already having impact on participants and performers securing realistically priced accommodation. The recently published Thundering Hooves report highlights concerns with Edinburgh maintaining its prominence in the Festivals arena in the face of mounting global competition and a shortage of affordable accommodation can only exacerbate this issue

135 Finally, in Edinburgh and the Lothians, as with other areas in Scotland, the quality of performance monitoring amongst operators, with the exception of the properties under corporate ownership, is variable and in general poor. This market intelligence and market information must be improved to assist future studies to monitor progress in balancing accommodation supply and demand in the region. The EPHA provides a network of largely corporate Hotels which contribute to the compilation of Citywide occupancy statistics, both historic and forecasts. This provides a valuable tool, but is a single yardstick. There is benefit to be derived from continual monitoring to be extended to the wider Edinburgh and the Lothians area to take in the key properties in each area and introduce monitoring of consumer feedback, average achieved rate, business mix and nationality. Increasingly the benefits of cooperative working are evident, the days of competitive myopia fading. This is also in line with aspirations of the Scottish Tourism Strategy, A Framework for Change to

136 APPENDICES I II III IV V VI VII VIII IX X XI Contacts List Web Directories Maps Showing Distribution of Accommodation Supply Accommodation Categories Operations Lost From Supply in the Recent Past Potential Future Supply of Tourism Accommodation Make Up of Samples Comparison Between Edinburgh and Key European Competitors Comparison Between Edinburgh and Key UK Competitors Occupancies for Edinburgh and the Lothians (Source: TNS / VisitScotland) Revpar Rankings (Source: KPMG)

137 APPENDIX I Contacts List

138 CONTACTS LIST TRC would like to thank the following individuals, companies and accommodation providers for their participation in this study. Contact Name Louise Dickins Claire Dutton Paul Zochowski Richard Jeffrey Alison Sweeney Graeme Gainey Sue Stuart Geoff Fenlon Simon Williams Ros Sutherland Chris Bosseau / Gill Elizabeth Fairbairn Paul Gudgin Scott Taylor Alan Minto Steve Foster Sandy Macmillan David Williamson Fergus Waters Ann Southwood Graeme Ferguson Cameron Mackenzie Helen Stevenson Fiona Michie Ben Carter Ian Yeoman Fiona Caruthers John Masson CONSULTEES Organisation Dickins & Co East Lothian Council East Lothian Council Edinburgh Airport Edinburgh City Council Edinburgh City Council Edinburgh Convention Bureau Ltd EICC EPHA ETAG / Napier Factotum Festival Beds Festival Fringe Glasgow City Marketing Bureau Golf Officer East Lothian Mackays Agency Midlothian Council Midlothian Council Midlothian Tourism Forum Newbattle Abbey Scottish Apartment SEEL SEEL SEEL VisitScotland VisitScotland VisitScotland West Lothian Council 1

139 CONSUMER RESEARCH INTERMEDIARIES Celtic Trails Macitalia CTC (Creative Travel Connections) Maximillion Eurowelcome Scotland Meeting Makers Expotel Mini Tours Scotland Hotelink (UK) ltd Panorama Tours Hotels by phone Rabbie's Trail Burners Ideal Leisure Room Centre Inceltive The Conference People Integrity International Events Limited Travel Scot World JAC Travel Scotland W L Sleigh Ltd K & N Associates Walkabout Scotland Kyles on Scotland Wangping Travel CONSUMER RESEARCH COMPANIES Aegon Johnstone Press Aptuit Kenmore Property Group Arthur McKay Lafarge Cement ASA International Lidl Bausch & Lomb MacTaggart Scott Belhaven Brewery Monaghan Middlebrook British Energy Torness Power Station Murray International Holdings British Pipe Coaters NHS Lothian Brunton Aero Products Quintiles Cairn Energy Group Racal-MESL Charles River Laboratories Roslin Institute Costco Sainsbury's Dresser Wayne Scotsman Publications Ltd Ethicon Scottish & Newcastle First Edinburgh Scottish Agricultural College Grampian Pork Halls Sharkey Had Fab Tesco Hart Builders The Royal (Dick) Vet School Intelligent Finance Watermark Jabil Circuit Ltd Xansa Jewel & Esk Valley College 2

140 The table below excludes individuals and individually sensitive addresses to protect properties. *Market Place *Church Road *Muirfield Apartments *High Street *Cromwell Road *Melbourne Road *Muirfield Apartments *Muirfield Apartments *Roxburghe Way *Melbourne Road *Royal Apartments *Balfour Street *Royal Apartments *Royal Apartments *Westgate (Marine Lodge) *High Street *Muirfield Park *Lammermuir Court *Douglas Court *High Street *Bramerton Court *High Street *Beach Haven *Harmony Cottage *Hyndford House *Melbourne Place *Melbourne Place *Melbourne Place *Melbourne Place *Nungate *Redcroft Apartment *Seafield Apartment *Tern Cottage *The Neuk *Windy Heugh *Derby Street *Glassel Park Road *Linkfield Road *Letham Mains PROVIDER NAME *Morningside Place *Caerlaverock Avenue *Buckstone Terrace *Albert Terrace Abbotshead House Abcorn Guest House A-Haven Town House Alan's Guest House Allermuir Guest House Allison House Hotel Amaragua Guest House Apex International Hotel Aran House Arden House Ashcroft Farmhouse Balbairdie Hotel Balfour House Balmoral Hotel, The Bankhead Farm Bankton House Hotel Bayswell Hotel Beecraigs Caravan and Camping Site Belhaven Chalet Best Western Braid Hills Hotel Best Western Bruntsfield Hotel Best Western Edinburgh Capital Hotel Best Western Edinburgh City Hotel Blackfriars Street Napier University Bonham, The Botanic House Hotel Briarley House Brothaigh House Bruntsfield Youth Hostel Burns Guest House Caledonian Hilton, The Cameron, The Carlton Hotel, The Edinburgh Casa Buzzo Guest House Channings Hotel 3

141 PROVIDER NAME (Cont d) Charleston House Guest House Hanover House Hotel Chester Residence Hawes Inn Innkeepers Lodge Christopher North House Hotel Herald House Hotel City Centre Tourist Hostel Heriot-Watt University Cityzen Apartments Holiday Inn Edinburgh Clarendon Hotel Holiday Inn Edinburgh North County Hotel Hotel Ceilidh-Donia Dalhousie Castle and Spa Howard, The Dalkeith Guest Eskbank Humbie Cottage Drummohr Caravan Park Ibis Hotel Drummohr Caravan Park James Square Apartments Dunstane House Hotel Jewel and Esk Valley College Duthus Lodge Joppa Turrets Guest House Eaglescairnie Mains Jurys Inn Edinburgh Edinburgh Airport Hilton Kew Apartments Edinburgh Apartments Cowgatehead Kew House Edinburgh B&B Kilmory Edinburgh First Campus Kings Manor Hotel (Best Western) Edinburgh First Kenneth McKenzie Suite Kingsburgh House Edinburgh First Self-Catering Flats Kinnaird Christian Hostel Edinburgh Grosvenor Hilton Kirklea Guest House Edinburgh Hillview Knight Residence, The Edinburgh Marriott Hotel Lindenlea Eglinton Youth Hostel Linkfield Road Eildon B&B Linton Court Apartments Ellwyn Hotel Linwater Caravan Park Eskside West Livingston Inn Festival Beds Loch House Farm Caravan Site Gean House Lothianbridge Caravan Park George Hotel, The Edinburgh Lugton Inn Motel Gifford House Lumsdaine Glasshouse Hotel, The Macdonald Holyrood Hotel Glenalmond B&B Macdonald Marine Hotel Glenfarrer House MacIntosh Guest House Glenlivet House Maitlandfield House Hotel Glenora Hotel, The Malmaison Edinburgh Glenturret Guest House Marriott Dalmahoy Hotel And Country Club Gorton House and Cottages McCrae's Greenside Hotel McDonald Guest House, The 4

142 PROVIDER NAME (Cont d) Melness House Ramada Livingston Minto Guest House Red Holme House Hotel Mortonhall Park Ritz Hotel Mr Divine Robert Burns Guest House Mr Allan Rosebank House Mrs Ferguson Roslin Glen Hotel Murrayfield Hotel Rossborough Hotel Navaar House Hotel Roxburghe Hotel Nether Abbey Hotel, The Royal British Hotel Newbattle Abbey College Royal Garden Apartments Newington Lodge Royal Mile Backpackers Newmills House Royal Mile Residence North Street House Royal Over-Seas League, Over-seas House Northfield House Royal Scots Club, The Norton House Hotel Royal Terrace Hotel Novotel Edinburgh Centre Scotsman, The Number Ten Hotel Seahaven Hotel Oatridge College Seaview Guest House Ocean Hostel Self-Catering Flat North Berwick Old Playground, The Sheraton Grand Hotel & Spa Old Waverley Hotel Springfield Guest House Osprey Hotel Spylaw Bank House Palmerston Lodge St Andrews House Parkview Guest House St Germains B&B Parliament House Hotel St Valery Guest House Pentland Lea Stair Arms Hotel, The Pentlands B&B Stuarts, The Pilrig House Apartment Swallow Craigiebield Hotel Pittencrieff Court Plough Tavern Swallow Edinburgh Albany Hotel (Albany Boutique Hotel) Point Hotel Swallow Learmonth Hotel Premier Travel Inn Edinburgh City Tailors Hall Hotel Premier Travel Inn Edinburgh City Centre Teviotdale House, The Prestonhall Thistle Hotel Pringle's Ingle Thistle, The Edinburgh Priory Lodge Tweeddale Arms Hotel Quality Hotel Edinburgh Airport Waverley Hotel Queen Margaret University West Barns Queen Margaret University West End Hotel Radisson SAS Hotel Edinburgh Ye Olde Original Rosslyn Hotel 5

143 APPENDIX II Web Directories

144 EXAMPLES OF WEB DIRECTORIES USED DURING THE STUDY Source Website About Scotland Accommodata Accommodation Accommodation.uk.net Ample Cottages Apartment Find Association of Scottish Self-Caterers Book Cottages Brit Info Celtic Castles City Visitor CKD Galbraith Conde Nast Johansens Cottage Guide Cottages 4 You Country Cottages Online Dales and Vales Dickens Property Discover Scotland Ecosse Unique Edinburgh and Lothians Guide Edlets.com Express by Holiday Inn Factotum Farm Stay Farmhouse Accommodation Festival Apartments Festival Beds Festival Flats George Goldsmith Global Villas Historic UK Holiday Apartments Holiday Elite Holiday Lets Holiday Lets Edinburgh Holidays Scotland Hoseasons Jolly Interesting Landmark Trust Large Holiday Houses Little Holiday Houses 1

145 EXAMPLES OF WEB DIRECTORIES USED DURING THE STUDY (Cont d) Source Website Mackays Agency Mediafolk Milfords National Trust for Scotland Premier Travel Inn Reception Bell Room Finder Scotia Self-Catering Scotland Scotland Holiday Homes Scotland the Brave Scotland's Best B&Bs Scottish Accommodation Index Scottish Country Cottages Scottish Farmhouse Holidays Scott's Castle Holidays Seaside Cottages Self-Catering Directory Sleep Inn Website Smoothhound Sporting Estates Sporting Lets Stately Homes UK Stilwell's Cottages Direct The AA The Festival Partnership The Traveller's Guide thebestof.co.uk/edinburgh Travelodge Unique Cottages Venue Masters Visit Scotland Vivat Trust Welcome Cottages Where To Stay Wilderness Cottages Wolsley Lodges World Stay Yellow Pages 2

146 APPENDIX III Maps Showing Distribution of Accommodation Supply

147 City of Edinburgh Serviced Accommodation Key Hotel Small Hotel Guest House Bed & Breakfast Inn Lodge Restaurant with Rooms 1

148 West Lothian Serviced Accommodation Key Hotel Small Hotel Guest House Bed & Breakfast Inn Lodge Restaurant with Rooms 2

149 Midlothian Serviced Accommodation Key Hotel Small Hotel Guest House Bed & Breakfast Inn Lodge Restaurant with Rooms 3

150 East Lothian Serviced Accommodation Key Hotel Small Hotel Guest House Bed & Breakfast Inn Lodge Restaurant with Rooms 4

151 City of Edinburgh Non-Serviced Accommodation KEY Campus Serviced Apartment Self-Catering Hostel Exclusive Use Other Caravan Park 5

152 West Lothian Non-Serviced Accommodation KEY Campus Serviced Apartment Self-Catering Hostel Exclusive Use Other Caravan Park 6

153 Midlothian Non-Serviced Accommodation KEY Campus Serviced Apartment Self-Catering Hostel Exclusive Use Other Caravan Park 7

154 East Lothian Non-Serviced Accommodation KEY Campus Serviced Apartment Self-Catering Hostel Exclusive Use Other Caravan Park 8