NEARLY 2000 hotel rooms are still needed in Edinburgh within the next five years to keep up with demand, despite the raft of new developments in recent years.
A new city council report has dismissed fears that too many hotels are being built in the city - or that the number of budget operators are threatening the future of guest houses and bed and breakfasts.
The proportion of top-end four or five-star
operators in Edinburgh is higher than any other Scottish city. However, council chiefs insist that more are still needed at every section of the market.
They say that, in the next five years, up to 737 new three-star hotel rooms could be developed in the city, as well as 1132 new four or five-star rooms.
And city leaders insist there is still strong interest from top brands in coming to the city.
Councillor Tom Buchanan, the city's economic development leader, said: "This council has had a policy of attending trade fares to meet developers and hotel brands and encourage them to come to the city.
"We have had a large amount of interest, particularly from four and five-star brands who see Edinburgh as a 'must-have' destination.
"There are four key parts of the city we market to developers: the Waterfront, Princes Street, the BioQuarter - albeit less so to hotel brands - and west Edinburgh. We are also keen to show off certain iconic buildings that may be suitable for hotel development."
The council's city development department has now built up a database of hotel operator requirements that it then matches with development opportunities as they arise. It also offers to introduce hotel brands to developers. And Cllr Buchanan said that more new hotels can help keep up the standards of others.
"You need to have a good mix of hotels," he said. "New hotels encourage existing operators to maintain high standards."
Many of the budget operators have expanded significantly in Edinburgh in recent years, and 18 per cent of all hotel rooms in the city are at the one-star or two-star level. Edinburgh currently has the third most Travelodge rooms in the whole of the UK, at 900, and the firm has announced that it intends to operate more than 1000 rooms in the city by 2012.
Holiday Inn also operates more than 800 rooms, while Premier Inn currently has more than 600.
However, Dave Anderson, the council's director of city development, said there is no evidence of the budget end of the market impacting the guest house sector.
A 2009 survey by Visit- Scotland said there had been a "steady growth" in the guest house/bed and breakfast sector, while average room occupancy increased from 41 per cent to 49 per cent. Mr Anderson said: "Average annual room occupancy has increased in guesthouse/bed and breakfasts rated three-star-plus, and either remained stable or declined in those rated below three-star.
