Europe -  Edinburgh

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Edinburgh, with 542,000 inhabitants as of 2021, ranks ahead of Milan, Prague, Budapest and Lisbon in the Global Financial Centres Index (GFCI, 2022). While the largest private sector in Edinburgh is financial services, employing 35,000 workers and managing over £500 billion of funds, the city also enjoys a good reputation for fintech services, IT and web-based marketing. The city is home to a thriving technology and software sector, including global companies founded in Edinburgh, such as Skyscanner and Fanduel. Key infrastructure includes the state-of-the-art Edinburgh International Conference Centre and Edinburgh Airport. Passenger movements at the airport grew at a compound annual growth rate of 5.0% from 2009 to 2019, during which the share of international passengers increased from 45.7% to 63.8%. 2019 was the airport’s busiest year on record, with 14.7 million passengers, a 3.2% increase over 2018.

The biggest leisure demand driver in the city is the Edinburg Festival Fringe, which last took place in 2021 (6 – 30 August) after being cancelled in 2020 for the first time in 70 years. The festival’s events normally push 100.0% 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 occupancy of over 80.0% for the last decade and beyond. Average rate growth stagnated in 2018 after seven consecutive years of growth from 2011 to 2017, and further declined by 1.5% in 2019; however, the city still enjoyed one of the highest citywide RevPARs in Europe, pre-pandemic. In 2020, Edinburgh tourist demand contracted significantly on the back of the COVID pandemic. In the first couple of months in 2021, the city experienced the same dynamic as in most of 2020, but an uptick in volume followed the relaxation of COVID measures across the UK in May. Over the summer months, Edinburg recorded occupancy rates north of 60.0%, which led to city-wide RevPAR growth of more than 150.0%, compared to 2020.

Edinburg’s pipeline stands at around 3,000 rooms (around 18.0% of the current supply) with most of the planned hotels being independent. The most notable branded hotels in the pipeline include the 285-room Hyatt branded hotel in the Edinburg marina waterside development and the 131-room NYX Hotel Edinburgh by Leonardo Hotels, both hotels are currently in the planning stage without an opening date set.

In 2021, Edinburg saw an increase in hotel transactional activity compared to 2020, when no transactions occurred. The most notable hotel sales include the 146-room Adagio Aparthotel Edinburgh (€320,000 per room), the 240-room Courtyard by Marriott Edinburgh (€200,000 per room) and the 183-room Edinburg Carlton, which was sold as a part of the portfolio and reopened under the Hilton brand.

Overall, Edinburgh’s hotel values recorded an increase of around 6.0% in 2021, in euro terms (1.5% in pounds sterling). The recovery is expected to continue to be mostly driven by the strong domestic and leisure demand. However, the substantial new supply could possibly prolong the pace of the recovery, if it fully materialises.

Change In Value For Market: (€Euro)

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: More than -10%

For more information, please contact:

Sophie Perret, MRICS, MBA
Senior Director
[email protected]
  • +44 20 7878 7722 (w)
  • +44 0 7725781037 (m)
Nikola Miljković
Associate
[email protected]
  • +44 0 2078787724 (w)
  • +44 0 7593572865 (m)