Edinburgh, with 553,000 inhabitants as of 2023, ranks ahead of Milan, Munich, Prague, Brussels and Lisbon in the Global Financial Centres Index (GFCI, 2024). While one of the most thriving sectors in Edinburgh is financial services, employing 37,000 workers and managing more than £500 billion of funds, the city also enjoys a good reputation for fintech services, IT, advanced robotics, and health research. The city is home to a thriving technology and software sector, including global companies founded in Edinburgh, such as Skyscanner, Fanduel and Rockstar North. Key infrastructure includes the state-of-the-art Edinburgh International Conference Centre and Edinburgh Airport.

The Edinburgh Festival Fringe remains the biggest leisure demand driver in the city, as it normally pushes 100% hotel occupancy for a six-week period every year. This, and other events such as Hogmanay (New Year’s Eve) and a strong summer season, have historically contributed to year-long average occupancies of more than 80% historically. Average rate growth stagnated in 2018 after seven consecutive years of growth from 2011 to 2017, and declined by a further 1.5% in 2019; however, the city still enjoyed one of the highest citywide RevPARs in Europe. Following weak demand in 2020 due to the pandemic, in 2021 an uptick in volume followed the relaxation of COVID-19 measures across the UK in May. Over the summer months of 2021, Edinburgh recorded occupancy levels north of 60%. In 2022, Edinburgh’s hotel market performance continued to grow, experiencing a further strong increase in marketwide occupancy and a 25% rise in average rate, which resulted, remarkably, in RevPAR marginally surpassing its pre-pandemic levels in real terms. Both occupancy and average rate experienced further growth in 2023, comfortably in the double digits. As a result, the RevPAR recorded a substantial 25% increase in real terms by the end of 2023, compared to 2019.

Edinburgh has a significant hotel pipeline of some 30 projects that are expected to bring around 3,700 rooms to the city’s hotel market (around 22% of the current supply) with most of the planned hotels being independent. Branded hotels in the pipeline include lifestyle projects such as the 211-room Hoxton, which is currently under construction and is expected to open in Q2 2024, and the 349-room Hyatt Centric Edinburgh Hotel set to open in December 2026.

In 2023, Edinburgh saw increased transactional activity with four hotels sold during the year. Three of the transactions happened in June, including the sale of the 241-room Caledonian for £85 million (£350,000 per key) and the 215-room Dalmahoy Hotel & Country Club, which was sold as part of a portfolio, for an allocated price of £15 million (£69,000 per key). The 35-room Dalhousie Castle Hotel was sold for £7 million (£200,000 per key) in October 2023.

Overall, our 2024 European Hotel Valuation Index indicates a value increase of 3.3% (around 0.4% in pounds sterling) per key in Edinburgh in 2023 compared to 2022. 

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