Scandic Reports Q2 2021 Results

Second quarter in summary

  • Net sales rose by 147 percent to 1 640 MSEK (665).
  • Average occupancy increased to 27.1 percent compared with 17.5 percent during the previous quarter. The rate of increase accelerated at the end of the quarter, with occupancy reaching 35.9 percent in June.
  • Adjusted EBITDA was -364 MSEK (-1,138). Results for the quarter were impacted positively by state aid of 203 MSEK and rent discounts of approximately 105 MSEK.
  • Excluding IFRS 16, earnings per share totaled -3.08 SEK (-11.08).
  • Several new hotels opened: Scandic Grand Central in Helsinki, Scandic Strandpark in Copenhagen and Scandic Landvetter in Gothenburg. In total, the number of rooms in operation increased by 1 188.
  • Scandic’s CFO Jan Johansson announced he would leave Scandic, but is continuing in his current position during the period of notice. 
  • Fredrik Wetterlundh was recruited as Chief Human Resource Officer starting in August.  

First six months in summary

  • Net sales dropped by 36 percent to 2,569 MSEK (4,008) and adjusted EBITDA amounted to -1,138 MSEK (-1,311).
  • Excluding IFRS 16, earnings per share totaled -7.98 SEK (-46.94).
  • In March, Scandic carried out an offering of convertible bonds, raising 1,609 MSEK in gross proceeds. At the same time, Scandic’s existing credit facilities were extended until December 31, 2023.

CEO’s comments in summary

As expected, demand for hotels improved during the second quarter as restrictions from authorities were eased in all markets. After a very weak start to the year, Scandic’s occupancy rate rose to around 20 percent in April, 25 percent in May and 36 percent in June. The increase has been across the board, with similar development in all of the Nordic countries and improved occupancy at almost all destinations both on weekdays and weekends.

As the holiday period is getting off to a start, we’ve continued to see improvement during the first two weeks of July. Based on current bookings, we expect occupancy in July to be around 55 percent compared with 42 percent during the same month last year. The most significant improvement this month compared with July last year is evident in the big cities thanks to more entertainment options on offer including now-open amusement parks and easing of restrictions on gatherings and dining in restaurants. Until now, demand has to a very large extent come from domestic travel.

That said, I’d like to emphasize that we see significant potential for continued improvement in the important metropolitan regions going forward as more events are held in the cities and business travel recovers. In June, market occupancy in the Nordic capitals was considerably higher than in the same month last year, but it was still only about one-third of what it was before the pandemic.

We are convinced that the growth in leisure travel that we saw before the pandemic will continue now that the market is stabilizing, both during the holiday period and other parts of the year. Scandic is well positioned for this and we have a sharp focus on further strengthening our position in this segment. Ahead of the summer, Scandic launched attractive offers for families and was the first Nordic hotel chain to launch “multi-booking” online which makes it possible for travelers to book up to five different hotel stays in one booking.  

There is great pent-up demand for meetings among our corporate customers, and we’ve seen an increase in booking requests for the fall. During the year, Scandic introduced a number of initiatives to offer new, more flexible solutions for meetings. Corporate customers, however, are continuing to operate with short lead-times, which makes it difficult to assess the pace at which business will pick up after the summer.

At the end of the quarter, Scandic’s available liquidity totaled more than 2,100 MSEK and with an occupancy rate of more than 50 percent, we expect to generate positive cash flow. After just over a year with a sharp focus on costs, Scandic today is a more cost-efficient company than before the pandemic, giving us a good opportunity to achieve higher profitability than earlier when the hotel market improves.

Jens Mathiesen
President & CEO