UK grabs top spot for hotel construction but demand outstripping supply in Edinburgh

The UK has Europe’s highest hotel construction pipeline but demand is outstripping supply in Edinburgh and Manchester, according to new research.

Edinburgh is famous for hotels such as The Balmoral and several new ones are in the pipeline but demand is said to be outstripping supply.

The latest annual hotel monitor from American Express, which forecasts hotel price trends in more than 80 major cities, also notes that hotel rates are likely to continue to rise in most locations globally during 2024, despite an expected softening of leisure travel demand. The study finds that rates could rise by as much as 17.5 per cent in some cities, where tight supply combined with local conditions push the average cost of a room upwards.

Most cities should experience rate increases in line with local inflation, following the large price jumps in 2022 and 2023, Amex added. Softening leisure travel demand should be replaced by the continued uptick in business travel, and meetings and events.

According to the research, the evolution of working culture towards more flexible, hybrid and remote models is having a direct impact on business travel patterns. An incremental lift in weekend corporate travel and a shift to fewer but longer business trips point to a growing trend of travellers combining business trips with leisure activities.

Amex said global hotel chains were responding by expanding extended stay offerings. Vacation letting companies are also reporting growing requests for high-speed wi-fi and later departures to facilitate remote working, suggesting business travellers are increasingly looking beyond traditional hotel accommodation.

A regional breakdown for the UK and Ireland shows that Dublin has the fourth highest predicted hotel price rate increase in Europe - at 10 per cent. This outpaces all cities in Ireland and the UK, with London hotel price growth expected to hit 9.1 per cent. It found that demand is outstripping supply in Edinburgh, though several hotels are in the pipeline.

Simon Fishman, vice president, global hotel, American Express Global Business Travel, said: “With the softening of leisure travel demand, we and our corporate customers have an improved position at the negotiating table, meaning we can make even more rates available to travellers. It’s also the right time to make sure a hotel programme is fit for the future.”

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