Scandic takes decisive steps to ensure the company’s liquidity. (Picture: B&L Gruppe)

To weather the COVID-19 storm, Scandic has dramatically cut costs to maintain liquidity and implemented new, stricter hygiene and safety measures.

2020 started strong for Scandic Hotels Group and looked like it would have been a year of solid growth.

When security measures were put in place to curb the spread of coronavirus, occupancy rates and sales plummeted, and the group was forced to take drastic measures to secure its financial situation.

We find out which steps Scandic is taking and how the group is navigating the crisis.

COVID-19 impact on Scandic

With travel bans and security measures coming into full force in March, Scandic saw sales drop by around 47% that month. Towards the end of March, the average occupancy at the group’s hotels reached about 10%. Overall, Scandic’s Q1 sales for 2020 declined by 17% compared to Q1 2019.

Mitigation measures taken by Scandic

The sudden collapse of both local and international travel made drastic cost-saving measures necessary.

Scandic has strongly cut back on purchasing and investments in ongoing projects as well as all non-essential business travel. Due to low demand, more than half of the group’s hotels have been closed temporarily and staff have been furloughed. The executive management team’s salaries are being reduced by 20%.

Hotels are also working on rent deferral plans with owners to further improve the cash flow situation. Finally, the previously announced dividend for 2019 has been cancelled. All these measures combined have reduced the company’s monthly costs by approximately 70%, a greater reduction than was thought possible.

“When we saw signs of declining sales at the end of February, we acted rapidly and forcefully to lower costs and protect cash flow. It has been a demanding process to lay off or terminate the employment of so many team members, but at the same time, I am satisfied with how quickly Scandic carried out these necessary measures to allow us to manage a temporary period of extremely low demand,” Jens Mathiesen, President & CEO of Scandic Hotels Group AB, said in a recent media release.

Updated cancellation and rebooking policies

Scandic has changed its cancellation and rebooking policies to allow guests to update reservations for trips they are unable to take. For stays up to May 31, 2020, free rebooking is possible until April 30, 2021.

New guidelines for guest safety and hotel hygiene

To ensure guests who travel during this time and after the crisis feel as comfortable and safe as possible while away from home, Scandic has adopted new measures to ensure top hygiene standards at all hotels.

Staff have received additional training on adhering to local authorities’ guidelines and recommendations to avoid the spread of COVID-19 at their properties. Cleaning protocols now include frequent disinfection of exposed surfaces such as door handles, elevator buttons, handrails and credit card terminals as well as providing hand sanitiser dispensers throughout the hotels’ public areas.