Euan McGrory: Edinburgh’s £400 a night hotel rooms come at a cost

Tourists throng the Royal Mile. Pic: Lisa Ferguson
Tourists throng the Royal Mile. Pic: Lisa Ferguson
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It’s tempting when you hear about hotels charging more than four times their regular price for a room at Hogamanay to think, “well, if people are daft enough to pay it...”

Edinburgh is a beautiful city with world-class festivals and tourist attractions. If that were not true, no one would get away with charging sky high rates like the £400 a room being advertised by the Ibis hotel on Hogmanay.

Will it put tourists off visiting? There is no evidence of that. Hotels have been ramping up their prices at peak times for years, and there is no sign yet of it deterring visitors to the city. Some of the current prices may well be unsustainable in the long run, but simple rule of supply and demand will ensure that the most inflated prices will quickly tumble when rooms go unsold.

One thing which these huge prices does is undermine a key argument against a so-called tourist tax. Would hotels charge so much in a market that was terribly price sensitive? Of course not.

There are consequences though for the city when hotels feel free to ratchet up prices so much. It fuels the unregulated market of AirBnB and other privately rented rooms. This is having a huge impact in some areas and the city will need to address this soon.