Building too many hotels in Edinburgh is 'leaving rooms empty' as 61 new hotels thought to be in construction pipeline

Industry leaders have raised concerns over the 'negative' impact of building too many hotels in the city.

Wednesday, 19th February 2020, 11:45 am
Updated Thursday, 20th February 2020, 1:12 pm

Edinburgh is facing an “over-supply” of hotel rooms as rocketing construction figures have left rooms lying empty even during the peak tourist season, experts have warned.

The Edinburgh Evening News reported last week that industry leaders had raised concerns over the “negative impact” the glut has on hotels in the city.

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Some of the hotels to have recently opened or soon to be open.

“There is no doubt at all that the increase in hotel supply over recent years is now having a negative impact on hotel performance, especially in the low season,” said Russell Imrie, spokesperson for the Edinburgh Hotels Association, which represents more than 50 of the city’s key players.

New hotels

But exactly how many new hotels are planned for the city and where will they be?

A report from the Edinburgh City Council released in January 2019 estimated there were 61 new hotels in the construction pipeline, representing 6,338 rooms.

Overseas House.

However not all of these rooms are likely to end up being built, as some applications never make it past the planning stage.

The same report indicates that the city has capacity for almost 8,000 new rooms by 2030, in line with a prediction for passenger numbers at Edinburgh Airport to rise to 20 million in 2030, up from 14 million in 2018.

There are currently at least 15 hotels and 2427 rooms due to open in the next few years in the city centre, according to council planning documents.

The largest site is the new St James Centre, with a 253-room W Edinburgh and 75-room Roomzzz hotel to open in 2021.

This year should see 549 new rooms, as a Moxy hotel opens in Fountainbridge along with Voco Edinburgh on Torphichen Street and a Premier Inn in the former BHS outlet on Princes Street. The Canongate Venture will also open in summer 2020 with a 21-room aparthotel at the site of the former North Canongate Infant school.

This will complete the New Waverley development, already housing a 146-room Adagio aparthotel, 127-room Premier Inn and 121 rooms in the Hub by Premier Inn.

As well as the St James development the following year will see 365 new rooms opened in two hotels on Morrison Street at the old Haymarket goods yard and 225 in the Virgin Hotel on the Cowgate.

These additions look set to increase the total number of rooms in the city, as the rate of hotels opening far outstrips closures.

The city housed 167 hotels and 12,180 rooms as of most recent Council data from January 2019. Of these the majority of rooms (34%) were in budget hotels, of which there were 40.

However the largest number of hotels are 3-star, at 52, followed by 43 4-star hotels.

There were just 12 5-star hotels in the city, with 1,078 rooms. At least five hotels have arrived in the city since the report’s release.

“Millennial-focused” Moxy opened at the airport in January. Yotel on Queen Street and the Carlton on Market Street opened in the summer, while cabin-like boutique hotel House of Gods followed in October, Malmaison in Leith followed in December.

Hotel openings and closures

Just ten hotels closed in the period between 2012 and 2019.

With the exception of the Thistle King James, which was demolished to make way for the new Edinburgh St James development, all were small hotels with fewer than 50 bedrooms.

In the same period 24 hotels were opened, adding 2442 bedrooms. The vast majority of these were part of chains, with seven hotels opened by Premier Inn and three by Travelodge.

Liberal Democrat Councillor Hal Osler said it was a “very difficult thing” to determine what is “overprovision” of hotels.

“Our biggest issue is that we can grant permission but we don’t know when something is going to be built,” she said.

“It’s a very complicated issue, and it’s more about planning policy than about individual decisions.

“It’s not fair to say to one applicant that they will be refused because of a successful applicant next door.

“If someone wants to build a hotel in an area that’s been zoned for hotels they have every right to.”

She added: “The most important factor is getting control of short-term lets, that’s what’s really concerning.

“We’ve been caught on the hop over short-term lets and there are casualties. And one of those casualties is the hotel business.”

Conservative Councillor Jo Mowat said the council’s approach to planning decisions has changed recently.

“I think we’re approaching this in a less strategic way than we used to – I don’t think we’ve been assessing the need for hotels in the past few years,” she said.

“But that said the market isn’t a planning requirement, we’re looking at land use. We’re going from a position of incredibly high hotel occupation and the fact that that’s reducing isn’t really a surprise.

She added: “If there is capacity in hotel rooms and that sees some levelling of hotel prices, then I don’t think that’s a disaster.”

A spokesperson for Edinburgh City Council said: “Many of the new hotels which have opened or are in the pipeline exist because developers have identified a gap in the market or an area of greater need.

“Edinburgh still has one of the highest average occupancy rates in the UK even with the wide choice of accommodation on offer.”

Hotel rooms increase in Edinburgh

2016: Completed - 868; under construction - 340; planning consent - 2858; planning waiting - 2148

2017: Completed - 706; under construction - 661; planning consent - 3313; planning waiting - 2428

2018: Completed - 549; under construction - 697; planning consent - 3157; planning waiting - 2509.