• Nordic groups continue global growth

Rezidor Hotel Group said that it had made “significant progress” with its five-year plan, which is expected to see it more closely aligned with Carlson.

The comments came as fellow Nordic-based operator, Scandic Hotels said that it would continue to look to Germany to growth, but “selectively”.

At Rezidor, Federico González-Tejera, president & CEO, described the group’s five-year plan as “a comprehensive and ambitious strategy which is aligned with our partner Carlson and which will help us to reach a very promising future for our partners, employees and shareholders”.

The group aims to start the roll-out of the strategy in January 2018. The core components of the plan will be shared with the investor community at an Investor Day on 17 January.

Looking at the performance for the third quarter, González-Tejera said: “Operating margins improved versus last year and the Ebitda margin is one of the highest in our recent history, supported by our focused asset management activities, higher fee revenue generation and lower central costs.”

During the quarter the company continued to expand, with eight new hotel openings and seven new signings – adding 1,500 rooms in operation to its portfolio and another 1,800 in the pipeline. Radisson Blu was the strongest driver of this growth, with four new hotel openings and four new Radisson Blu signings, in Beirut, Venice, Makkah and Dubai.

Elie Younes, EVP & CDO, said: “Our upper-upscale hotel brand, Radisson Blu, continues to grow from strength to strength and attracts great development opportunities around the world” with the group describing it as the largest upper upscale brand in Europe. Commenting on the the Radisson Blu Hotel Venice San Marco, due to open by the end of 2019, Younes said: “This new addition fits perfectly with our new expansion plan that will be launched later this year”.

As of 3 October, HNA Tourism owned 69.65% of Rezidor’s shares. In addition to welcoming a new CEO, Rezidor has seen a number of changes to its executives since HNA’s involvement, including the appointment of Chema Basterrechea as EVP & COO. Basterrechea joined from NH Hotel Group, González-Tejera’s previous employer, in which HNA is also a shareholder.

Iñigo Capell, Rezidor’s EVP & global chief resources officer, also joined the group over the summer, also from NH Hotel Group, where he was chief resources officer.

At Scandic Hotels, the company said that it expected sales to grow at a slower pace in the fourth quarter, on strong comparables and room stock growth in Stockholm.

President & CEO Even Frydenberg, told analysts: “We do not see that there’s anything wrong with the demand situation in Stockholm. Demand is good in all of Sweden, we’re seeing some effects over a short period of time after an increase of about 5% on supply and this is coming as a bit of a shock to the market. We believe that there will be a natural market adjustment and as Stockholm does not have a major supply increase in the coming months and years we do not expect to see Q3 repeated. We still expect good growth in the rest of Sweden

“Last year in Q3 and Q4 there were a lot of events in Copengahen so when you compare year-on-year the growth will be less.”

The company reported an 11.1% rise on the year in sales, which it attributed to higher revpar and more rooms in operation.

During the quarter an agreement was signed to acquire a 293-room hotel in central Frankfurt, which will open in early 2018. Commenting on Scandic’s expansion plans in Germany, the CEO said:  We continue with our strategy in Germany, which is to growth selectively. We are selective about it, because it is a highly fragmented market and it is a lease market, which we understand quite well.

“It is a highly domestic travel-driven market – the Nordics is very similar so we’re very comfortable with that set up. We have a good track record with our three German properties today. We will be selective, it is a complicated market and we want to do the right deals, not just any deals.”

In June Scandic announced plans to buy 43 hotels in Finland from Restel for EUR114.5m, making it the largest operator in Finland. The company said that Restel deal was currently under scrutiny with the Finnish competition authorities, but that it was expected to close by the end of the year. Frydenberg said: “A lot of this is about educating the authorities over the hotel market, versus other industries which they are more used to. We would expect to hear back from them over the next few weeks.”

HA Perspective [by Katherine Doggrell]: As we report elsewhere in Hotel Analyst this week, everyone wants to get into the Nordics. And, to look at Rezidor and Scandic, everyone already there wants to expand outwards.

For Scandic, slow and steady wins the race, whereas for Rezidor, if our contacts are to believed, the company’s five-year strategy is going to look more like a merger with Carlson than a separate strategy and is expected to come with a name change to reflect it. Expansion, as Younes’s comment suggests, is likely to look more towards the Radisson brand where the company is dominant and less towards the lower end of the market where it has most-recently bought a stake in Prizeotel.

So it may not have gone as planned for HNA, but they got there in the end. The question now is what will happen at NH Hotels Group, which was expected to be folded in with Carlson and Rezidor, but where rambunctious shareholders have rather held NH back, seeing it cut is holdings to avoid an offer. Here at Hotel Analyst we hear that there are investors circling to take HNA’s place at the Spanish group. Barcelo told us it wasn’t planning a bid. A bit of competition may change that.

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