• Investment and expansion drive Nordic groups

Pandox, Scandic and Rezidor Hotel Group were looking to investment in their existing portfolios and expansion as they continued to pursue geographic diversification.

Pandox told us that, while the company was always open to M&A opportunities, it was currently in a consolidation phase.

At Pandox, the group commented on plans for its existing portfolio, while reporting first quarter numbers which showed a 24% increase in Ebitda, to SKr560m (USD63m).

CEO Anders Nissen said: “Pandox will increase its focus during the year to identify additional cash-flow driving investments in existing portfolios. This is of interest in particular in a phase where the valuation yield on the hotel market is under pressure.”

Looking at the Jurys Inn investment, Nissen said: “Pandox sees good potential for increasing the market share of the hotels in the acquired portfolio in their respective markets as and when renovations already completed have their full effect.”

Pandox has identified a number of investment opportunities, including infilling, where it will add more beds in existing rooms, conversion of unproductive spaces into new rooms and expansion by adding new floors and new buildings.

Looking to further acquisitions, Nissen told Hotel Analyst: “We are in more of a consolidation phase  – we need to grow into our new costume”.

Nissen said that having a larger property portfolio, operations in several countries and more business partners required Pandox to further develop its organisational structure, with a number of digital improvement projects underway to prepared Pandox for the next growth phase: “Pandox 4.0”. He commented: “We are taking it step by step, it’s about communication and leadership. We are a big company now and it’s important to have a strong culture and good communication, it is the typical Swedish way, we work in a team.”

At Rezidor Hotel Group, to be renamed Radisson Hospitality following a vote at the group’s AGM, the group reported that strong conversion in the leased portfolio and lower net costs had offset falling revenue and revpar to drive Ebitda up by 144% to EUR6.1m for the first quarter.

During the period the company said it had made significant progress in the execution of the key elements of its five-year operating plan, which sees it aim to deliver revenue growth of 6% to 7% on an annual basis. The Ebitda margin is expected to reach 13% to 15% by the end of 2022, from 8% in 2016. March saw the company launch Radisson Collection, which it described as “a premium collection of exceptional hotels in landmark locations, driven by consumer demand for individuality and more personalised experiences”.

The 15 hotels which have previously been branded under the Quorvus label will be included in the new collection. The launch took the number of brands using the Radisson name up to four, including Radisson Red.

Federico González, president & CEO, said: “We see 2018 as a year of recovery, and, all things equal, expect like-for-like revenue, including renovations, to grow between 4% and 5%, with an Ebitda margin between 9% and 10%.”

At Scandic, the company reported a 25% drop in Ebitda on the year, to SKr115m, due to the timing of Easter. The group said that underlying growth was positive in Sweden, Norway and Finland, but marginally negative in Denmark. In Stockholm, revpar continued to decrease due to increased capacity.

Commenting on the integration of the 43-strong Restel portfolio in Finland, which it acquired last year, the company said that at present there were 17 former Restel hotels operating under the Scandic brand, with  to convert all Cumulus hotels into Scandic hotels during the second quarter.

Even Frydenberg, president & CEO, said: “We have identified cost synergies in a number of areas in Restel such as marketing, sales, purchasing and IT that are expected to have a positive impact in 2018. However, we expect the greatest potential on the revenue side when we fully integrate the hotels with Scandic’s strong distribution capacity.”

Looking ahead to the second quarter, the company said that it expected positive revenue growth, but at a slightly lower level than in the previous quarter. Revpar in Stockholm was expected to remain under some pressure while the group expected more positive development in other parts of Sweden.

Further south east, PPHE announced the full-year results for its 51.97% owned subsidiary, Arena Hospitality Group, which which owns, co-owns, leases, operates and develops full-service upscale, upper upscale and lifestyle hotels, self-catering holiday apartment complexes and campsites in Croatia, Germany and Hungary. The company has the exclusive right to operate and develop the Park Plaza brand in 18 countries in the Central and Eastern Europe region.

Chairman Boris Ivesha described a “transformative” year, during which hotels in the group’s new German and Hungarian regions delivered “a good performance”.  The company plans to use the majority of the proceeds from its 2017 public offering to accelerate the implementation of its capital investment plan aimed at upgrading a number of properties in Croatia and to fund the group’s expansion in the CEE Region.

HA Perspective [by Katherine Doggrell]: Onwards to 4.0 for the Nordic region, which has very much come in from the cold and reached its tendrils out towards markets in central and soon-to-be ex Europe and alerted everyone’s attention in the process.

As one would expect, they haven’t stuck to the old routine – Pandox’s owner/operator, lease-holding stance looked at odds to the established players but is rapidly becoming the model to ape. Radisson Hospitality, which has also avowed a return to lease enthusiasm, is expected to follow the lead of its US-based cousin, now that it is shaking off HNA Group.

Now that the rest of the world has sat up and taken notice of these rapidly-expanding companies and their handy proximity to one of the hubs drawing in China’s outbound travellers, it is only a matter of time before someone makes a more successful investment in the region than HNA and the wave of consolidation consumes the north.

Less so Pandox. Nissen told us: “Anyone who wants to buy us would need a lot of money. As a public company you are always a target, but the number of people who could buy us is very limited, it would have to be a big company like Blackstone which has the resources, and then we have very strong owners who would be reluctant to sell. You will see Pandox in the stock market for the next five to 10 years, then we will see.”

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