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Scandic faces competition from new operators in key destinations

by | Nov 8, 2018 | Chains

Scandinavia’s largest hotel group Scandic is facing some stiff local competition in some key destinations and cities. We find out how they are planning on tackling this new scenario.

An unexpected end to 2018

Nordic hotel group Scandic did not see 2018 ending the way it looks to be going. The company surely thought it was going to finish the year without much to worry about, given their domination of the Scandinavian market and some recent acquisitions that have cemented their position as the leading hotel company in the region. However, third quarter results indicate an increase in competition from other hotels and operators in Copenhagen, Oslo and Stockholm, which would be important destinations for Scandic. This competition has been reflected in a slowing of growth for Scandic in the third quarter, something that they would have expected to see coming towards the end of the year.

Cost cutting

One of the strategies that Scandic might employ to curb this unexpected onslaught of competition in these vital locations is to implement some cost cutting measures, although CEO Even Frydenberg was vague about what form these could possibly take, saying that there is no one strategy in terms of cost cutting that they are currently putting in to practice. Although the competition has affected Scandic’s growth, Frydenberg says that this may not be apparent from the analysis on room rates, but is reflected in occupancy, explaining, “When you have more supply, it doesn’t necessarily have a direct impact on the average rate in the near-term, but it does have an impact on the occupancies.”

Restel acquisition

Scandic acquired Finnish Hotel Group Restel in December of 2017, and the group was delighted with how well the new brand was integrating into their portfolio. Revenue was boosted significantly by Restel’s presence under the Scandic umbrella, with profits increasing by 22.6% to bring the total figure to $535m in the third quarter of this year. So it will no doubt be a disappointment for Scandic that the overall growth and profit will be hit by this new wave of competition. For further information, click here.




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