Only time will tell whether legislation passed by MSPs last week to allow local councils the right to introduce a visitor levy will undermine the competitiveness of the Scottish tourism industry.

But in the meantime there are encouraging signs that the sector is moving in the right direction, at least in the capital.

A new report published by property firm Cushman & Wakefield today stated that the hotel sector in Edinburgh turned in a “healthy performance” in the first quarter of the year, as the supply of hotels continued to rise.

READ MORE: Di Maggio's owner swoops for Paesano in eight-figure deal

The Hospitality Market Spotlight for Edinburgh, which surveyed full-service city branded hotels, shows that revenue was up 22% compared with the same period in 2023, ahead of the UK average, while gross operating profit per available room was up nearly 69%.

The report also found that gross revenue growth, from rooms, food and beverages, surpassed costs, although it highlighted a rise in undistributed costs, despite utilities falling. Payroll costs increased by 11%, driven in part in the rise in the National Living Wage.

Coming hard on the heels of the 2023 International Passenger Survey by the Office for National Statistics, which found that the number of people who visited Scotland from overseas last year was higher than in 2019, the report offered grounds for encouragement that the sector was putting the Covid crisis firmly behind it.

Carl Ridgley, head of hospitality valuation and advisory at Cushman & Wakefield, noted that there was also an “uplift in the number of hotel investment transactions that took place in Edinburgh last year, which again was unique to the city compared to the rest of the UK where annual volume of sales decreased in 2023.”

Cushman & Wakefield noted that hotel sales worth more than £170 million had been transacted last year, up 132% the level seen in 2022, underlining confidence in the future of the sector in the Scottish capita. Major deals included the sale of the Crerar Hotel Group to Fairtree/Blantyre Capital and the purchase of Dalmahoy Hotel by Warner Leisure Hotels.

READ MORE: Scottish business chief backs Labour as Sir Ed makes splash

Of course, Scottish tourism is not just about Edinburgh, important though the capital is to the sector overall given its many attractions and international appeal. And it is important to observe that the tourism industry faces a number of challenges, including from the ongoing cost-of-living crisis, which is continuing to impact the domestic market.

But it is encouraging nonetheless to see the fortunes of the hotel sector on the rise.

“Whilst the sector still faces significant challenges, Edinburgh hotels remain attractive to investors particularly in light of this encouraging revenue growth,” said Murray Strang, managing partner for Scotland at Cushman & Wakefield added. “This has been borne out of strong trading of operating hotels, and also the recent acquisitions of new pipeline hospitality development - primarily centred around repurposing obsolete office premises in Edinburgh’s central business district.”