Celebrating its 60th anniversary this year, Scandic Hotels Group AB has grown its portfolio to 269 hotels and plans to debut its new economy brand with the Sept. 5 opening of the Scandic Go Upplandsgatan 4, named for its street address in Stockholm.
The largest hotel firm in Scandinavia by hotel count, Scandic opened its first hotel — the Esso Motorhotell in Laxå, Sweden — on July 14, 1963.
That hotel was considered an innovative concept in region when it opened, said Jens Mathiesen, the firm’s president and CEO.
“We now have 269 hotels and almost 56,000 rooms. That is quite an achievement,” he said.
The Stockholm-based company also has five hotels and 1,524 rooms in its pipeline. All but eight of its hotels are in the Nordics region.
That pipeline includes a second Scandic Go hotel, also in Stockholm, set to open next summer with 221 rooms.
Mathiesen said the second hotel will be in a part of Stockholm — on the island of Kungsholmen — where there is no other Scandic hotel. The property has a lease signed with the firm’s largest landlord, Pandox AB.
“It is our ambition to take a leading position in the sector,” he said of the new brand and the economy sector.
Reporting the company's second-quarter earnings, Mathiesen touted high demand for its hotels, positive price development and “all-time high revenue per available room.”
“Occupancy at 63% is on par with the same quarter last year and in line with our guidance, but because we have opened properties, we sold more rooms than we did last year,” he said. “Occupancy throughout the rest of this year is on par with that of 2022 but at a higher [average daily rate].”
Åsa Wirén, Scandic's group chief financial officer, said there has been lower demand from transcontinental travelers, but that is now trending in the right direction.
“Norway is the strong Scandinavian market in terms of revenue per available room,” she said.
Scandic also has been instrumental in Norway's housing of Ukrainian refugees.
Without Wolves
Mathiesen said business travel demand has been stable and leisure travel this summer has been strong.
“The industry keeps hearing ‘the wolf is coming, the wolf is coming, but we do not know when.’ … And, personally, I do not see the macro-economic concerns mentioned coming to our sector,” he said. “Interest rates seem to be falling, as is inflation. We are selling more rooms as we have more available, and at a higher rate. We are also much more ready since the crisis. We are very much more flexible.”
Wirén said other notable financial metrics in the quarter included net sales rising 7.9%; average revenue per available room rising to 828 Swedish krona ($81); operating profit totaling 833 million Swedish krona; and free cash flow of 664 million Swedish krona.
She said Scandic has been focused on operating margins. Earnings before interest, taxes, depreciation and amortization in the quarter was 772 million Swedish krona ($75.35 million).
“We also had lower [capital expenditures] compared with the same quarter of last year, but that will rise before the end of this year, even as we continue to reduce our debt levels,” she said.
Wirén said Scandic will keep up its high pace of development, with a guidance for its CapEx funding of between 3% and 4% of turnover.