The low occupancy rate in the wake of the coronavirus is expected to continue in the coming months and only recover in the second half of the year, according to Scandic. The hotel chain sees a financing need of up to 1.5 billion during the year. 60 hotels are closing in Norway.
Scandic has implemented significant cost-cutting measures in recent weeks as the coronavirus has hit the hotel industry globally. The occupancy rate at the company's hotels was 10-15 percent last week. At the same time, the company's costs excluding rent are estimated to have been reduced by just over 60 percent from April onwards.
Scandic has agreed with the majority of its property owners on a temporary rental payment profile that is adapted to the current market situation. The hotel chain is now planning its operations so that occupancy rates will remain at these low levels in the coming months and then gradually recover in the second half of the year.
Scandic has credit facilities of SEK 5.5 billion that expire on June 30, 2022, and the available liquidity currently amounts to approximately SEK 1.3 billion. Given that the low occupancy is expected to persist in the second quarter, Scandic estimates that it will have an additional financing need of between SEK 1 and 1.5 billion in 2020, the majority of which is related to the settlement of deferred rent payments, taxes and fees at the end of the year. The company expects to have a financing solution in place during the second quarter of 2020 for this scenario.
”"In addition to significantly reducing costs, Scandic has also taken measures to defend cash flow in the coming months. Investments and ongoing projects have been reduced and payments of taxes and fees have been postponed in line with the deferral options available in Scandic's markets," the company writes.
The hotel industry has been hit hard by the corona pandemic and Scandic has been forced to issue profit warnings twice in the past and has also given thousands of employees in Sweden notice of layoffs. Last week, Scandic's board also withdrew the dividend proposal of 3.7 SEK per share.
In Norway, 60 hotels are closing.
