Edinburgh can now look forward to exciting new wave of landmark hotels
Retail emptying many traditional shopping locations and the pull of the new St James Quarter may provide opportunities, says Colin Morrison
Having attended almost every conference on the Edinburgh hotels market over the last 20 or so years, the recurring theme has been the lack of available sites in Edinburgh city centre to meet the demand from hotel operators. It is very much at the top of the market where that demand has been strongest – particularly at the premium, luxury and lifestyle level.
It has long been felt that if Edinburgh could deliver more destination top-class hotel options, the city would capture more of the spend at the affluent end of the international tourism market – which often by-passes Edinburgh touring the grand cities of Europe. While Edinburgh is undoubtedly a city with comparable historic and cultural attractions, when compared with city break destinations such as Amsterdam, Prague, Budapest and Copenhagen, the paucity of our top-end hotel options is clear, as is the lost trickle-down potential for the restaurants, retail outlets and wider economies in the city.
But things are beginning to change in the capital with the two key catalysts being, firstly the systemic market change in retail emptying many of our traditional shopping locations, and secondly, the magnetic eastward pull of the new St James Quarter.
With these headwinds leaving an excess of space in our traditional city centre, the city planning authority has become increasingly supportive of the repurposing of key buildings within the Unesco World Heritage site in order that they might find new purpose in the next chapter of the city's history.
Consequently, Edinburgh can now look forward to an exciting new wave of landmark hotels – arguably on a scale not witnessed since the turn of the 20th century and the advent of the rail network. In the last few months, we have seen the openings of the Virgin Hotel at India Buildings in Victoria Street, as well as the Gleneagles Townhouse on St Andrew Square.
Just before the pandemic, Malmaison and Cheval’s Edinburgh Grand also opened on St Andrew Square. In the next few months, we can also look forward to Scotland's first W opening within the heart of St James Quarter, the Red Carnation at 100 Princes Street and, a little further down the line, Hyatts' first two hotels in Edinburgh.
Equally exciting is the pipeline beyond that which includes the hotel proposals at the hear t of the redevelopment of the former Debenhams and Jenners department store buildings, which are both aiming for five-star luxur y brand occupants. Notwithstanding, the new sites will still not be enough to meet the demand for new hotel locations in the city.
Adam Maclennan, from hospitality consultants, PKF, explains that: “Edinburgh has a unique convergence of tourism, business activity, sporting and cultural events that fill the calendar and keep both room occupancy and room prices high throughout the year, with some particularly high spikes around Christmas and the Festival."
Alexander Robinson, director of industry partners at STR, a global hospitality data and analytics company, said: “Both occupancy and room rates in the market have held strong in August. Hotels reported an average daily rate of £185.06, which was 16.4 per cent above August 2019 levels”
This augurs well for yet further development. Adam Maclennan adds: "I think we are some way off cannibalisation yet. Many of the new hotel entrants create demand and enlarge the potential market through their own promotions networks and loyalty programmes. It's no secret that Mandarin Oriental, Soho House, Corinthia Hotels, Rosewood, and others all have appetite for Edinburgh – it's just a case of finding the right deals."
The challenge will be to cater for such demand, yet without compromising the unique historic and architectural legacy that led to Edinburgh being such an appealing destination in the first place. Colin Morrison is a Partner with Brodies LLP