Old Town or New Town ?

There are 2 simple options.. Old Town or New Town .. But both are very different markets out of season.. yet very similar during the summer months.
Out of season the New Town market is much quieter for tourist bookings but instead is better for corporate bookings..
The corporate market can be good but this does mean you are in direct competition with local hotel groups that will be slashing prices and offering dinner or breakfast as an incentive for the corporate customer working Monday to Friday in Edinburgh.
To be able to compete and attract corporate customers your apartment must be very central and have all the amenities of a hotel suite.. Generally you will find that a corporate customer has a set budget to spend for example £100 per night for a hotel while he or she works in the city.. normally they will opt to bring the family or simply prefer to have more space and either top up themselves to your rate or ask for a reduced rate.
Baring in mind NewTown is pretty quiet out of season to be able to get an extra few hundred pounds on top of a weekend booking from tourists is actually pretty good.

as long as you have an apartment in a great location

The Old Town has a great all year round market.. although rates do drop off considerably more during the off season and the type of customer changes to people touring around Scotland or European students visiting for a few days..  However the bookings will be far more regular as long as you have an apartment in a great location. The competition during off season in the Old Town is generally between owners and agents instead of hotel groups. This is when the small independent owner of one or 2 apartments can benefit as you generally have more flexibility with rates due to your overheads.

The bottom line when deciding where to buy and what to buy is really what you want to use the property for…

If you are buying a property as an investment for the future and plan to use it yourself throughout the quieter months but also want to achieve a really good capital appreciation then New Town is the best option, you will make good rental throughout the year and have an alternative option of making good money from longer rentals such as corporate or even 6/12 month rentals.

naturally you will still achieve capital appreciation

If you plan to buy a property that you can add some value to in the way of renovation and achieve a regular income the Old town may be a better option.. naturally you will still achieve capital appreciation.. just not perhaps as much unless you buy right on The Royal Mile and can add value.
Old Town is a great choice as long as you buy the right property for the right money.. (yes I know thats obvious for all property purchases.. just more so for the Holiday Rental Market)

This simple map is a guide to where is the perfect place to purchase. 

Blue is the general area tourists tend to stay. Red is the preferred location.