INVESTMENT in Scotland’s hotel market surged last year, research shows, with overseas buyers involved in nearly half of the deals.
Real estate adviser Savills said the Scottish hotel market saw investment volumes reach around £185m in 2021, a 166% increase on the £70m transacted in 2020 and up 12% on the 2019 total of £165 million.
Savills noted the total investment figure for 2021 was transacted across 18 hotel deals, with international buyers accounting for 46% of the deals
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Steven Fyfe, associate director at Savills, said: “Despite the inevitable impact of hotels essentially being closed during the pandemic, Scotland was high up the staycation list when restrictions began to ease after the first lockdown.
“As a result, our hotel market has performed relatively well over the last 12 months and we have seen renewed interest from investors who have shown confidence in the sector. This is evidenced in particular by many deals taking place during the first half of the year when hotels in the region had not fully reopened. When hotels did actually open in May 2021, it generated further confidence in the market.”
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Savills noted key deals to have taken place in Scotland last year included the sale of the Macdonald Holyrood Hotel in Edinburgh, the acquisition of the Scores Hotel in St Andrews, and the purchase of Bruntsfield Hotel in the Scottish capital.
It added that Scotland had also seen several high-profile and established brands committing to its cities. The real estate adviser noted W Hotel planned to open at St James Quarter in Edinburgh in July 2023. And it observed Virgin Hotel would arrive in both Glasgow and Edinburgh city centres in March 2022.
Savills noted that, in addition to this, Gleneagles was expanding through the introduction of a private members’ club in the heart of Edinburgh that would offer 33 bedrooms.
Mr Fyfe said: “The market has entered 2022 with the strong sentiment of 2021 behind it, however, the sector faces a number of headwinds; Government support has been slowly tapered with the withdrawal of the furlough scheme at the end of September and the VAT rate for retail and hospitality increased from 5% to 12.5%, before returning to the standard 20% on April 1, 2022.”
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