Strong quarter with high activity and good booking situation
Scandic delivered a strong second quarter with positive price development where RevPAR reached a new record level of SEK 828 compared to SEK 749 last year. Occupancy for the quarter is in line with the previous year and amounts to 63 percent with just over three percent more available rooms, meaning that guests are purchasing more rooms than before. Net sales increased by 8 percent to SEK 5,693 million compared to 2022.
Based on our strong financial position, we have gradually increased activity within the company during the first half of 2023, primarily with a commercial and data-driven focus, as well as with the development of Scandic Go. The investments are part of building an even better and stronger Scandic through a strengthened customer offering and higher efficiency that will enable faster growth. We foresee that the pace of hotel renovations will increase during the latter part of the year to create an even more competitive hotel portfolio.
Adjusted operating profit amounted to SEK 772 million (1,083), with the difference mainly attributable to non-recurring items in the previous year and investments during the year. The adjusted operating margin when non-recurring items are excluded amounted to 13.3 percent, which is a significant improvement compared to 2019. After the restrictions were gradually lifted in 2022, employees have been recruited and trained to handle the increasing demand. The operating margin is in constant focus and with trained employees and further investments in increased efficiency, there are conditions for continued good development.
The establishment of Scandic Go is underway with great interest from partners and property owners, where we are maintaining a high pace in all our markets to take a leading role and develop the fast-growing economy segment. In early July, an agreement was communicated with landlord Pandox to open another Scandic Go with 221 rooms in central Stockholm.
The hotel market developed strongly in the quarter with high demand and positive price development driven by a strong interest in leisure travel and good demand for meetings and conferences. Domestic travel and travel between the Nordic countries are at high levels and intercontinental travel continues to recover. During the spring and early summer, the entertainment offering has been extensive with concerts, sporting events and other events that have contributed positively to demand and price development. I am proud of how we commercially meet market demand and that we operate our hotels with high efficiency and good guest satisfaction.
We expect a strong third quarter driven by continued high levels of leisure travel during the summer and business travel and meetings picking up in the latter part of the quarter. Based on current bookings, we expect occupancy rates to be in line with the same period last year, at a higher average room rate.
With strong momentum, we look forward to an eventful summer and I would like to thank all employees for their fantastic commitment and our guests for their trust.
Summary second quarter, April 1 – June 30, 2023.
- Net sales increased by 7.9 percent to SEK 5,693 million (5,276).
- The average occupancy rate was 63.0 percent (63.2).
- Average revenue per available room (RevPAR) increased to SEK 828 (749).
- Operating profit amounted to 833 (1,016).
- Adjusted EBITDA1) amounted to SEK 772 million (1,083).
- Excluding IFRS 16 adjustments, earnings per share amounted to SEK 1.55 (2.44).
- Free cash flow amounted to SEK 664 million (1,300).
- Interest-bearing net debt/adjusted EBITDA amounted to 1.1 times (0.5 times excluding the convertible loan).
1) Operating profit before opening costs, items affecting comparability and before depreciation, financial items and tax and adjusted for IFRS 16.
Events after the balance sheet date
- On July 3, it was announced that an agreement had been signed to open a new Scandic Go at Fridhemsplan in central Stockholm. The hotel has 221 rooms, space-efficient public areas and is expected to open in late summer 2024 after a renovation and technical upgrade of the property.
CEO COMMENT
”"Based on our strong financial position, during the first half of 2023 we have gradually increased activity within the company, primarily with a commercial and data-driven focus and the development of Scandic Go"”
According to the press release.
