As destinations respond to changing visitor expectations, travel trends and economic priorities, understanding where accommodation is needed, what form it should take and the value it can deliver is increasingly important. An evidence-led approach therefore has an important role to play in helping destinations adapt and plan for the future, and we are increasingly being asked to undertake visitor accommodation needs assessments for a range of projects across the UK.
In Scotland, for example, the shift towards more flexible working patterns following the pandemic has created opportunities to repurpose vacant or redundant office space for hotel use, leading to a growing number of planning applications for changes of use from offices to hotels. This trend, coupled with significant growth in short-term let accommodation, has contributed to a perception in some locations that the visitor accommodation market is becoming saturated. Robust, locally specific evidence is therefore important in understanding whether further accommodation is needed and in making the case for development and investment.
Accommodate in action: insights from Edinburgh’s hotel market
As Lichfields’ Edinburgh office can attest, although autumn in Edinburgh can feel like a bit of a breather between August’s Fringe Festival and the festive period, there is never really an off-season for the city’s visitor economy.
In 2024, Edinburgh attracted an estimated 5.05 million overnight trips, with visitor spending around £2.57 billion in the city. Recent studies point to continued growth in demand, estimating that an additional 10,406 hotel and serviced apartment rooms will be needed by 2040 to accommodate future visitor levels.
Recent analysis by Lichfields takes a closer look at how Edinburgh’s hotel market is performing, including how demand has changed over the past decade and whether new accommodation is keeping pace.
A closer look at Edinburgh
Between 2015 and 2024, annual demand for hotel bedspaces in Edinburgh increased by 30.3%, almost twice the rate of growth across Scotland as a whole. Hotel occupancy in Edinburgh also reached 84.5% in the latest year of data, compared with 79% across Scotland, with occupancy levels remaining above the city’s pre-pandemic peak.
The growth is also reflected in hotel performance. Average daily room rates in Edinburgh increased by 36.8% between 2015 and 2024, after adjusting for inflation, while revenue per available room (RevPAR) grew by 41.9%. Both measures outpaced growth across Scotland over the same period.
Looking beyond the market as a whole, analysis of occupancy rates by market segmentation highlights that strength of growth in demand for hotel bedspaces has been most pronounced in economy and midscale hotel types between 2015 and 2024, with midscale hotels recording a 34.5% increase in annual demand for bedspaces. Revenue per available room in midscale hotels grew by 47.2% over the same period, compared with 11.7% across Scotland.
While city-wide data provides a useful overview of market performance, more localised analysis also offers an understanding of how demand varies across different parts of Edinburgh. Analysis of the Edinburgh Park sub-market, for example, found hotel occupancy rates to be approaching 90%, highlighting the strength of demand beyond the city centre, where business activity and transport connections play an important role in supporting hotel performance.
Is supply keeping up?
In short – no.
Lichfields’ analysis found that demand has grown faster than the available supply of hotel bedspaces over the past decade, with Edinburgh’s hotel supply growing by 25.7% between 2015 and 2024, compared with demand growth of 30.3%.
At the average rate of room delivery observed between 2015 and 2024 – around 362 rooms per year – the city is falling short of its identified longer-term accommodation needs. The rate of delivery would need to almost double over the remaining period to 2040 to meet the implied requirement.
In terms of future supply, our analysis identified 2,530 hotel rooms under construction across Edinburgh at the time of the study, not including further schemes with planning permission that were yet to begin construction. While these will add significantly to the city’s accommodation supply, increasing the rate of delivery will be important if Edinburgh is to accommodate the continued growth in visitor demand anticipated over the coming years.
Edinburgh’s experience highlights how demand, supply and market conditions can shape the case for visitor accommodation. However, the picture will vary from place to place, and locally specific analysis is essential to understanding accommodation needs, informing investment decisions and supporting proposals through the planning process. This applies not only to proposals for new accommodation, but also to investment in existing facilities and decisions about the retention of existing provision.
Making the case with Accommodate
Accommodate provides a flexible, evidence-led approach to assessing the need and demand for visitor accommodation. Combining market analysis, planning policy and an assessment of the wider economic and social benefits of development, our methodology brings together five complementary stages:
- Understanding the context – establishing the relevant planning policy context and wider visitor economy objectives.
- Establishing the local position – examining the characteristics and performance of the local visitor economy to understand patterns of demand.
- Understanding the existing supply – considering the availability of existing accommodation and the potential for additional provision.
- Establishing the need – bringing together market evidence to assess the case for additional visitor accommodation.
- Reinforcing the case – using our other tried and tested toolkit methodologies, we assess the wider economic and social value of a proposal.
Together these stages provide a rounded understanding of how a proposal responds to local market conditions, addresses an identified need and contributes to the wider visitor economy.
Our approach can be applied across a range of visitor accommodation types and tailored to the specific needs of individual projects, proposals and locations, to support a range of clients, including:
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Developers and investors – to establish market demand and support development and investment decisions;
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Hotel operators and asset owners – to demonstrate the case for expansion, refurbishment or diversification;
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Landowners: to understand the potential for visitor accommodation development; and
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Local planning authorities – to assess accommodation needs and inform planning policy and development decisions.
If you’re considering a visitor accommodation project or would like to explore the need and demand within a particular market, get in touch with our team to discuss how Accommodate could help.
Also,
our recent blog by Clare Catherall considers the planing policy for visitor accommodation in London.
Look out for a forthcoming blog, where we’ll explore how visitor accommodation needs assessments can help inform local planning policy.
