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Calls for tourist tax in Scotland to be shelved to help hotels recover from lockdown

Posted: 2nd July 2020

Calls for tourist tax in Scotland to be shelved to help hotels recover from lockdown

Colliers International research shows Scottish cities hit hard by COVID-19

But Edinburgh ranked number one for hotel development and acquisition

Edinburgh, 2 July 2020 – The Scottish Government and local authorities are being urged to scrap plans for a tourist tax over fears it would further slow recovery from the impact of the COVID-19 lockdown for hotels and the wider leisure and hospitality sector.

Colliers International, the real estate professional services and investment management company, is making this call to help safeguard the future of the sector, and the Scottish economy as a whole, as it publishes two new reports on the hotel industry. The UK Hotels Market Index and COVID-19 Recovery Hotels Index reports show that while some Scottish cities, particularly Edinburgh, have strong hotel sectors, they are likely to be among the slowest to recover from the impact of the lockdown.

Colliers’ fifth UK Hotels Market Index analyses 35 locations across the UK to identify the ‘hot spots’ for hotel development and acquisition. Edinburgh ranks top of the index for the third consecutive year. This is as a result of the Scottish capital’s consistently strong occupancy and average daily rate (ADR) levels, a robust four-year upward revenue per available room (RevPAR) trend, relatively low build costs and its position as one of the most sought after cities for hotel investment in the UK.

Edinburgh has also experienced a significant decline in its active pipeline, which is currently only 4.5% of its current supply, compared to 13.5% in the previous year. In 2019 more than 1,000 rooms opened, including the 276-room Yotel property in Queen Street and the 230-room Moxy hotel at Edinburgh Airport.

Glasgow, an attractive destination for international conferences and events, ranked seventh in the Hotels Market Index.

In tandem with its market report, Colliers has also released its first COVID-19 Recovery Hotels Index, which examines the impact of the pandemic on the rate at which hotel markets will recover across the UK. Edinburgh and Glasgow have both ranked in the bottom 10 when it comes to recovery rates. The study shows that the stronger the city’s hotel market was before the lockdown, the longer recovery will take.

Glasgow tied with Manchester to place 27th out of 35 destinations. Colliers says Glasgow has traditionally attracted a significant number of international travellers as a leading conference destination, recording the highest volume of delegates across Scotland. The Scottish Event Campus, which includes the SSE Hydro Arena, is Scotland’s largest public exhibition and conference venue and a key generator of hotel demand. All of this business in the city has been halted by the lockdown and will take time to return.

Edinburgh is expected to take even longer than Glasgow to recover, placing 30th out of 35 destinations. Colliers explains that this slow recovery in the Scottish capital reflects the fact it normally hosts a large volume of conferences and is known as the world’s leading festival city, with 12 major annual festivals including Edinburgh International Festival, Edinburgh Fringe Festival, Edinburgh International Book Festival and the Edinburgh International Science Festival. London is the UK destination that is expected to take the longest to recover.

On the COVID-19 Recovery Hotels Index, Marc Finney, head of hotels & resorts consulting at Colliers International, said: “The bottom ten locations in the COVID-19 Recovery Hotels Index are heavily reliant on overseas visitors and meetings, incentives, conference and events (MICE) business. It’s therefore no surprise that restrictions on air travel, quarantine measures and gatherings of large groups could affect these markets well into 2021.

“But for hotel investors who have deeper pockets and the patience to wait for the market to return, clearly cities such as London, Oxford and Edinburgh remain of great interest.”

Given the detrimental impact of COVID-19 on the hotel business in Edinburgh in particular, Mr Finney is calling for plans for a tourist tax to be shelved and for the Scottish Government and councils to focus on supporting the sector.

He warned: “The introduction of the transient visitor levy, or tourist tax, would inevitably slow Scotland’s recovery from the effects of the coronavirus lockdown.

“We are calling on policy makers to recognise the importance of the hotel and hospitality sector to the whole Scottish economy by formally taking the threat of the tax off the table.

“The current crisis has emphasised just how important tourism is to the Scottish economy and it needs the support of the government and local authorities if it is to recover.”

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