Research publicised earlier this year from the accounting group UHY Hacker Young underlined the extent of the European oil capital’s ability to sail through and indeed flourish during what was arguably the worst period of the global recession triggered by the 2007 banking crisis. Aberdeen was the UK’s only major city to grow its economy during what many think (and hope) was the height of the financial crisis, generating a 1.1 per cent rise in Gross Value Added per person between 2008 and 2009.
Of course it’s no secret that the boom of the oil industry has been the key factor driving Aberdeen’s growth, despite an economic slowdown which affected most other parts of the UK and much of the world. During this time Aberdeen emerged stronger than ever and now is becoming a key international energy centre, not just for the North Sea but for the wider global oil and gas sector.
There is however one growing problem which could put Aberdeen’s potential for further growth and expansion at risk: the lack of hotel accommodation in the city. It’s an issue which is ever-present for firms like ours operating in the corporate travel sector and one which causes much frustration for clients within the oil and gas sector wanting to do business in the city.
It is an all-too-common theme. We get approached by a client looking for a last-minute midweek hotel room for two engineers who are required to travel offshore the following morning. Quite often these workers are being dispatched to carry out essential maintenance work for which any delays in the high cost and high maintenance oil industry can prove financially crippling. After an extensive search it is not uncommon to find the only availability comes at an inflated rate – rooms which sell for around £70 at the weekend can be charged at upwards of £300 for a weeknight – or is located several miles outside of Aberdeen. Both of these common scenarios are impacting the competitiveness of the city as a global oil centre.
As anyone who works within the travel sector will know, this problem is not a recent one. The Aberdeen City and Shire Hotel Accommodation Report published by Scottish Enterprise in 2009 flagged up the problem when there were just over 3,500 hotel rooms available in the city. Since that time we have seen around 1,000 additional rooms added to the city’s overall stock with the opening of a number of new centralised premises, including the Jury’s Inn at Union Square and the Park Inn on Justice Mill Lane.
Meanwhile, at Aberdeen International Airport we have also seen the Marriott Courtyard and Premier Inn open their doors, while Accor has announced plans for two new airport hotels under its Novotel and Ibis brands. This news, along with the fact that plans are afoot in 2014 to open a De Vere Urban Village Resort west of the city centre, could lead you to think the solution to the problem is all in hand.
However, while these new developments are about to come on stream, existing stock is set to vanish. It was announced in the Autumn that the Marcliffe Hotel & Spa, Aberdeen’s only five-star hotel, is to close its doors to make way for a residential property development, a significant blow for a city trying to build a reputation as an international business centre.
The existing lack of overall capacity and the lack of higher-end luxury accommodation is not only affecting the day-to-day operations of the oil and gas sector but, as the Scottish Enterprise report from four years ago also highlighted, it is resulting in conference business being turned away by Aberdeen Convention Bureau. The report states: “Any conference requirement which is for 800 delegates or more would require spreading the accommodation over many hotels, potentially of differing star grading and at locations across the City. Accommodation providers are reluctant to commit rooms to conferences which are typically booked three – five years in advance.”
A failure to compete for international conferences will not only limit the growth of the oil and gas sector, it will also impact on the potential for the North East economy to diversify. How can Aberdeen become a leading life sciences centre, for example, if we cannot host major medical research conventions?
Encouraging further investment from hotel groups, as we are currently seeing within the city, must be a key focus for the future. The local authority must continue to take a leading role here. The tourism sector must also do its part to help promote the city as a great short break destination. This could help spread the demand for rooms and ensure that new developments are viable throughout the week, not just Sunday to Thursday when the oil industry demand puts an inflated price on the city’s existing hotel stock.