Planning matters

Edinburgh’s comeback festival season 2022 has injected some much-missed hustle and bustle back into the Scottish capital’s streets, no doubt welcome relief to the local hospitality and retail sectors across the city that have endured a turbulent few years. Drawing eye watering numbers of visitors to the city each year, the cultural bonanza has become an essential component of many businesses in the area whose fortunes hang on the success of this part of the calendar.

Those in the know are predicting that the staycation market will remain strong beyond 2023. This is not surprising given many are still reluctant to travel overseas and that many have had positive experiences of holidaying in the UK over the past couple of years visiting places they had never been before or returning to old haunts.  Overseas travellers are also expected to return but perhaps more slowly and business travel is anticipated to reach pre pandemic levels again by 2024.

Hotel occupancy is strong in the city throughout the year, with peaks in the summer, room occupancy rates[1] were over 80% in May – September 2019. With the exception of January and February other months are also relatively strong (room occupancy over 69% in 2019) with the winter festivals, marathons, rugby and concerts, not to mention all the rest the city has to offer, making Edinburgh a year-round tourist draw. The pandemic had a considerable impact on these numbers but figures for April 2022 suggest that room occupancy levels are returning to 2019 levels (74.22%).  Figure 1 compares hotel occupancy data from Visit Scotland for Edinburgh and the Lothians in 2019 and 2021.

The most up to date and comprehensive published information on tourist accommodation on Edinburgh is 2019 based. This is a report prepared for the City Council by Ryden and GVA.   It sets out that in 2019 there were 167 hotels in Edinburgh providing 13,180 bedrooms, there were 40 serviced apartment buildings providing 1488 apartments. 38% of the hotel rooms were in the 2 star / budget sector, 54% were 3 / 4 star and 8% were 5 star.  There are no budget serviced apartments, 28% are upper midscale, 50% are upscale / upper upscale and 22% are luxury class.  In 2019 there were 15 hostels with 457 bedrooms, 200 guesthouses / B&Bs with around 1300 bedrooms and there are 35 student halls with rooms available to rent during the summer.

In addition to this there are great number of bed spaces available in Edinburgh that are short term lets, sometimes referred to as Airbnbs. In the quarter to September 2021 there were 4,168 whole properties listed on Airbnb and 1894 single rooms within the Edinburgh City boundary.  Airbnb list shared rooms but these are mostly in hostels and some hotel rooms but these are not reported here as they form part of the formal tourist accommodation stock.

Given these findings it is reasonable to assume that in the key summer period the following accommodation is available in Edinburgh:
 

• 13,180 Hotel bedrooms
• 1,488 Serviced Apartments
• 457 hostel bedrooms
• 1,300 B&B/Guesthouse bedrooms
• 4,168 Airbnb whole properties
• 1,738 Airbnb private bedrooms

Contrary to reports in the press pre pandemic that there were too many hotel bedroom in Edinburgh recent reports in the press suggest that there wasn’t enough reasonably priced accommodation available for festival goers and artists this year and some have said this threatens the future of the Fringe. Hotel rates benchmark against each other but private short term lets can go for huge sums if there is huge demand and this can price many out of the market.  Similar, issues arose in Glasgow last year with accommodation for COP26. 

Added to this, there were also reports of the soaring homelessness problem in the city and the lack of both temporary accommodation, now that hotels couldn’t be used as they were during the pandemic, and shortages of permanent accommodation given the number of properties used for short term lets.

So, there are 2 wants here (1) more accommodation in August for visitors and (2) more accommodation all year round for residents.

 

There are a number of new hotels in the pipeline. Given current consents and construction activity since 2019 we can be reasonably sure that there will soon be over 16,000 hotel bedrooms in the city.  In terms of serviced apartments there are 506 additional bedrooms with planning approval or under construction bring in this to total to nearly 2000 additional bedrooms.  There are 2 hostel schemes with a total of 30 bedrooms also approved.

 

As measures introduced by the Scottish Government to address the short-term let (STL) phenomenon begin to bite and the numbers of STLs in the city can be expected to begin to drop.

The number of Short Term Lets in Edinburgh is well publicised and various data sources are available. The most popular booking platform, Airbnb is the most interrogated but others such as booking.com do play a role. Inside Airbnb is a website that seeks to “add data to the debate”. 

The data collected by Inside Airbnb indicates that for the quarter ending September 2021 47% of whole properties listed were listed by a host with more than 1 property. Some of these hosts are agents for individuals but it is fair to assume that these properties are all being let commercially and that these are not family homes being let while people are on holiday.  There will be hosts that have only listed 1 property who are also letting commercially.  It is difficult to calculate with any great accuracy from the data how many that might be so we have assumed that if you have more than 4 reviews in a quarter you are probably letting that property commercially.  There are 1,165 listed whole properties that have had 4 reviews or more suggesting multiple lettings.  It is impossible to verify this data and Lichfields do not take any responsibility for its accuracy.  It is used here simply to paint a picture of what might be assumed to be going on in the city.

As Lichfields has previously blogged, the requirement for licensing and the STL control area could significantly reduce the number of properties that are available to rent via Airbnb and other platforms.

Edinburgh’s Short Term Let Control Area is now in force. Implemented from 5 September 2022, this control area covers the entirety of the City of Edinburgh Council area. This means that the use of a dwelling as an STL, in certain circumstances, will constitute a material change of use and planning permission will be required. In addition, from September this year, the Scottish Government’s licencing regime will commence, with a requirement for all STL properties to be licensed by July 2024.This will include evidence of planning permission or evidence that it is not required. Licence requirements will apply to all STLs, including homeowners renting out a single room or their whole home for short periods while on holiday.

It is difficult to accurately predict the likely impact of these measures. The Council of course are hoping it is significant and a great number of short term let properties become available for long term residents instead.

 

In conclusion more accommodation is needed in the city for residents and tourists alike. The hotels are pretty much at capacity during the summer period and there will be less short-term lets in the future.  New purpose-built affordable tourist accommodation is needed to replace the short term let stock that will be lost.  Hotel developers, operators and investors should start sharpening their pencils.