Edinburgh continues to attract visitors from across the world and is doing so in increasing numbers.

The Scottish capital has been one of the key beneficiaries of a spike in tourist numbers across Scotland which saw a 17 per cent rise in tourism last year. Tourist spending was also up by almost a quarter in that period, according to a report from the Office for National Statistics.

 

Meanwhile figures from the 2018 Fringe Festival showing record sales this year suggest tourism figures could be set to increase further. The Fringe reported a year-on-year rise of 5.25 per cent with an estimated 2.8 million tickets issued, the festival’s sixth consecutive annual increase in ticket sales.

 

While there are concerns about oversaturation, Edinburgh is likely to see further growth in tourism which would coincide with a projected rise in population, expected to grow to nearly 600,000 by 2039.*

 

Increasing the size of the hotel market to accommodate further increases in visitor numbers will be a key challenge in managing the potential for economic growth through increased tourism. The city is currently focused on building hotel room capacity, especially for times of increased demand like the month of August and over the Hogmanay period, but what is likely to be the best route in delivering the extra rooms the will be required? Should there be a greater drive to create new boutique hotels to compliment some of the excellent sites that already operate in the city including 24 Royal Terrace, The Witchery and The Raeburn? Alternatively, should potential owners consider what might be a safer bet of entering into a franchise agreement, bringing a more recognised brand into the city’s hotel market? 

 

The concept of hotel franchising is thought to have started nearly 80 years ago in Florida by the group Quality Courts United which today has become Choice Hotels International, a company now operating more than 6,500 hotel franchises. Holiday Inn and Howard Johnson also entered the franchise market in the early 1950s, significantly expanding their brands. Today there are now numerous well-known brands involved in franchising across the UK, including Travelodge, Best Western, Hilton, Mercure, Holiday Inn and Marriott. The Hilton Edinburgh Carlton; The Mercure, Edinburgh City and The Courtyard by Marriott, Edinburgh are among the franchised hotels that currently operate within the city.

 

Franchising has grown in popularity within the hotel sector because it offers significant benefits for operators. It often succeeds because it provides franchisees with a brand consumers are often familiar with. Visitors arriving from foreign destinations tend to trust brands that they know and, because many of the franchised groups have an established worldwide reputation they are more likely to secure bookings from within this market.

 

The franchising model also offers a tried and tested system and usually comes with an in depth support base to help ensure cost-effectiveness and operational efficiency for the franchisees.

 

While franchising could offer a positive route for growth of Edinburgh’s hotel sector to help ensure the city is equipped to manage further sustainable growth of tourism, it is not the lone solution. Continued development of Edinburgh’s unique and often high quality independent hotel market remains an important aspect which is also essential in supporting growth. As with all forms of development, striking the right balance and ensuring we maintain a variety in the marketplace will be essential. 

 

As Edinburgh continues to attract high levels of both leisure and business tourism it will be vital that the level of hotel capacity can service demand. Franchising is an effective means of meeting this growing need, as it can provide greater scale for the market and more flexibility for franchisees. This mix of recognised brands, co-existing in a thriving international city alongside a range of quality boutique hotels can provide the right solution to ensure Edinburgh capitalises on the opportunity to grow its tourism economy.

 

Will Anderson.jpg

Will Anderson is a Senior Associate and member of the Scottish hotels & leisure group at law firm CMS

 

 

 

 

 

 

 

CMS Edinburgh
Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2EN
T +44 (0)131 228 8000

(* source: Invest in Edinburgh)


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