The Stockholm, Sweden-headquartered firm is basing its ambitious plans on strong development in the hotel market during the previous quarter, with high demand driven by leisure travel and meetings and conferences.
Faster growth
President and CEO, Jens Mathiesen, noted that domestic and intra-Nordic travel is at a high level, and intercontinental travel continues to recover. He outlined: “Backed by our strong financial position, during the first half of 2023, we gradually ramped up activity in the company with a commercial and data-driven focus and continued developing Scandic Go. These investments are part of building an even better and stronger Scandic by strengthening our offering and improving efficiency to enable faster growth.
“We expect to increase the pace of renovations at our hotels toward year-end, giving us an even more competitive hotel portfolio.
“We foresee a strong third quarter driven by continued high levels of leisure travel during the summer. We also expect business travel to pick up toward the end of the quarter.”
Positive pipeline
The rising renovation rate will dovetail with Scandic’s pipeline of six hotels, comprising three in Sweden, two in Norway and one in Denmark. These will add a total of 1,648 rooms to the system, corresponding to a net increase of approximately 3% of the current 55,930-key portfolio of 269 hotels.
During the first half of the year, the number of rooms in operation increased by 99 after Scandic Frankfurt Hafenpark opened in Germany, while Scandic Kajanus in Finland and Scandic Bygholm Park in Denmark were exited and Scandic Upplandsgatan in Stockholm was closed in order to reopen this September under the new economy Scandic Go brand as the 124-key Scandic Go Upplandsgatan.
Scandic reported it constantly evaluates investments in new and existing hotels to determine which hotels, if any, should be exited to optimise returns, capital efficiency and guest satisfaction. The company believes that developing and managing the hotel portfolio is central for it to grow in and outside of the Nordic region. Scandic’s pipeline includes only hotels with signed lease agreements. Investments in the pipeline are expected to total approximately SEK373 million (US$34.6 million). To date, investments of SEK26 million (US$2.4 million) have been made.
Upcoming additions
In July 2023, Scandic signed an agreement to open the second Scandic Go hotel, this time on Fridhemsplan in central Stockholm. The hotel will have 221 rooms and space-efficient facilities. It is expected to open in the late summer 2024 following a renovation and technical upgrade of the building.
In the upscale sector, the business will welcome properties including Scandic Tromso Vervet District, bringing 305 keys to northern Norway in Q2 2025; the 220-room Scandic Ski near Oslo, housed within a 15-storey building expected to open in 2026; and the 342-key Scandic Aarhus Ø arriving in Denmark in Q3 2026.
