Scandic releases year end report 2023

Fourth quarter in summary, October 1 – December 31, 2023.

  • Net sales rose by 3.5 percent to 5,410 million SEK (5,228).
  • Average occupancy rate was 57.9 percent (57.0).
  • Average revenue per available room (RevPAR) went up to 734 SEK (695).
  • Operating profit totaled 502 million SEK (488).
  • Adjusted EBITDA was 451 million SEK (476).
  • Excluding IFRS 16, earnings per share equaled 0.78 SEK (0.49).
  • Free cash flow was 549 million SEK (945).
  • Interest-bearing net debt/adjusted EBITDA amounted to 0.6x (0.2x excluding the convertible loan).

January 1 – December 31, 2023 in summary.

  • Net sales rose by 14.1 percent to 21,935 million SEK (19,230).
  • Average occupancy rate increased to 61.4 percent (57.7).
  • Average revenue per available room (RevPAR) went up to 782 SEK (683).
  • Operating profit totaled 2,785 million SEK (2,457).
  • Adjusted EBITDA was 2,566 million SEK (2,536).
  • Excluding IFRS 16, earnings per share equaled 5.09 SEK (4.10).
  • Free cash flow was 1,754 million SEK (2,202).
  • Interest-bearing net debt/adjusted EBITDA amounted to 0.6x (0.2x excluding the convertible loan).

Events during the period

  • On December 14, Scandic signed an agreement with Pandox to take over a 311-room hotel in Nuremberg. Scandic will start operating the hotel on March 1, 2024.
  • Scandic also signed an agreement on November 24 to extend and rebrand the Holiday Inn City Centre hotel in downtown Helsinki. From 2025, the hotel will be operated under the Scandic brand.
  • On November 15, Scandic repurchased convertible bonds for a nominal amount of 590.2 million SEK.
  • On October 24, Scandic announced that it would implement Oracle Hospitality OPERA Cloud.

Events after the reporting date

  • On January 14, Pär Christiansen was appointed new Chief Financial Officer and member of the Executive Committee. Per will start on March 1, 2024.

CEO’S COMMENTS

“Bookings are in line with last year and we have a positive outlook for 2024. With a strong financial position and high ambitions for Scandic, we’re now stepping up the pace to grow the hotel portfolio and create even better guest experiences.”
A good fourth quarter has concluded yet another record year where we maintained a high pace and achieved new milestones. Scandic has delivered good growth and profitability, and I am proud that guest satisfaction has increased across all markets while at the same time we improved efficiency.

The meeting season this past fall was good with high demand from corporate guests, and with the hotels we’ve opened in the past years, Scandic has a strong offering. Compared with the same period in 2022, we sold more room nights, and all markets saw increased occupancy rates at higher room rates. Scandic continues to perform slightly better than the overall market, and RevPAR remained at consistently high levels.

Net sales in the fourth quarter increased steadily, and we reported a good result in line with last year, excluding non-recurring items. For the full year, revenues increased to 22 billion SEK, and adjusted EBITDA rose slightly to 2.6 billion SEK, which resulted in an operating margin of 11.7 (13.2) percent. Adjusted for non-recurring items, the operating margin improved to 11.4 (11.1) percent.

During the quarter, we did a buyback of about one-third of the convertible bonds. This means a significantly lower dilution of shares in the event of a conversion in October 2024. Scandic generates robust cash flows, and we continued to reduce our debt, which, including the convertible loan, amounted to 0.66x adjusted EBITDA (1.1x) at year-end.

With a strong financial position, we’ve increased the pace of investment in the hotel portfolio and within digitalization to create even better guest experiences. Our ambition now is to return to a more normal level of investment for renovations and maintenance, about 3 to 4 percent of net sales per year. The implementation of our new cloud-based IT solution (Oracle Hospitality OPERA Cloud) is going according to plan, and we’re still aiming to connect all hotels and central functions to the new platform during the first half of 2024. Once the new platform is in place, we expect to capitalize on higher efficiency and make significant improvements to the guest journey where among other things we’re making our Scandic Friends loyalty program even more attractive.

During the quarter, we also signed a new lease agreement for a 311-room hotel in Nuremberg. Pandox recently carried out a major renovation of the hotel, which reopened in fall 2023. Scandic will take over operations of the hotel on March 1, another milestone on our growth journey in Germany.

Our first Scandic Go has now been open for six months, and we’re very pleased with how the hotel and brand have been received by guests. We’re now gearing up to open another Scandic Go in Stockholm toward the end of the summer and looking forward to expanding in the fast-growing economy segment.

To strengthen our offering and optimize growth and profitability, we constantly evaluate which agreements should be extended or terminated. During the quarter, we signed an agreement to extend and rebrand Holiday Inn City Centre, a 174-room hotel in Helsinki, that we will operate as a Scandic hotel from 2025. We also terminated two lease agreements during the first quarter and during the year, we plan to exit two more hotels. At year-end, we had net 2,138 new rooms in the pipeline, corresponding to about 4 percent of the hotel portfolio.

Bookings are in line with last year and we have a positive outlook for 2024. Because the Easter holiday will fall earlier this year than last year, we expect somewhat lower occupancy for the first quarter compared with 2023 however at continued higher price levels. Scandic is commercially and financially stronger than ever, and we’re stepping up the pace to grow our hotel portfolio and to create even better guest experiences. In conclusion, I would like to extend a thank you to all our team members who made this possible and to our guests who choose to stay at our hotels. I look forward to an eventful year.

Jens Mathiesen
President & CEO