On Thursday, the 5th of November 2015. I would now like to hand the conference over to your speaker today, Mr. Anders Nissen. Please go ahead, sir.
Well, good morning, everybody, and welcome to Pandox presentation of quarter three report 2015. This is our second report since we come back on the stock market. We have an agenda on page number two, which is the introduction, which I am doing now. We have the financial review, and then at the end, the Q&A. In the room, I have also Liia Nõu, which is the CFO of Pandox. If we go to page number three, it shows you where we are today after 20 years. As we established the company in 1995 as a quite small company. Today we are the leading European hotel property company. We own 104 hotel properties for the value of, in Q3, SEK 27.7 billion. 87 of these is leased out to a third party, and that is representing 77% of the market value.
We also have 17 hotels under our own operations, which is representing 23% of our market value. As you can see on the map on the right-hand side, we are just in high-quality countries like Scandinavia, Germany, Belgium, and Canada. If we go to page number four, you can see this is 20 years of Pandox, since we started the company, as I said, 1995.
I will just mention two things here, and that is the steady growth and stable growth of cash year on year, and also that we have managed three downturns during this period. Maybe to take down a little bit of what many people think it is a big risk in the hotel industry. These slides maybe show that it is not that huge risk if you have a good business model, which we have in Pandox.
If I go to page number five, some highlights for July to September. We believe it is a strong quarter. It is a combination of a couple of positive drivers. First, of course, a very strong market with a good summer and an extraordinary strong month of September in Stockholm, where we have 14 hotels, so that is we gaining from that very strong market.
But also from hotel returning from renovation and both coming back in full capacity, but also gaining market shares with new concept. On top of this, we also have a very high productivity in our own operations and a lower financial cost. All in all, four very strong drivers who give a clear improvement in net operation for both segments. We repeat what we have said before that the outlook for 2015 remains unchanged. I give over to Liia, which is taking the more difficult part, the numbers.
Thank you, Anders. We are now turning to page six. We are, as Anders said, happy to present another strong quarter. A strong quarter supported by a pickup in the market demand and good performance in both segments, property management and operating activities. Like-for-like growth in revenue and net operating income from property management was close to 10%, respectively.
Like-for-like is then, of course, adjusted for currency, one-time items, and reclassification. In the quarter, we had one-time items of, in total, SEK 79 million. This refers to SEK 60 million relating to mediation with Nordic Hospitality Group. This is reported in other property income. And another SEK 19 million of compensation for a past tax expense relating to Germany. The latter is reported in other current tax, why there is a positive current tax in the quarter.
During the period, January to September, investment properties experienced an uplift of increase of 4.3%. And for operating properties, the uplift for the nine months was 6%. By the end of Q3, EPRA NAV per share was SEK 104.45. This is an increase with 13% since year-end 2014. Turning to the next page. Continued strong improvement in revenue and net operating income due to, again, Anders said, on a combination of an exceptionally strong hotel market in some cities, renovated hotels coming back to market, and strong productivity improvements, as well as lower financing cost. Included in the revenues for operating activities are also revenues from Grand Hotel Oslo. In the quarter, SEK 57 million. In the period year to date, which includes seven months as we started in 1st of March, it is total SEK 145 million.
This is a pure operator business without any property ownership, thus operated at a lower operating margin and diluting the overall net operating margin somewhat. Mr. Chips and Radisson Blu Lillehammer was reclassified in second quarter. Reclassification of Hotel Prinses Amalia, which we press released in the quarter, is effectuated in fourth quarter, 1st of October.
Finally worth mentioning, the decrease in financial expenses reflects underlying lower interest rates, maturing interest as well as lower refinance bank margins. Going to page eight. All in all, a strong growth in EBITDA and cash earnings in the quarter, and adjusted for the one-time item, a strong 15% increase in EBITDA and 27% in cash earnings. Pretty good. Page nine. In our segment, property management, the 87 leased-out hotels. The like-for-like growth in income and net operating income was close to 10% respectively.
You can see in the circle in the diagram to the right, that close to 60% or 58% of our revenue, rental income, sorry, is coming from Sweden, 15% Finland, 30% Norway, close to 10% from Denmark, and around 4% from three hotels, one in Switzerland and two in Belgium. Out of which, one in Belgium is sold and will be effectuated 1st of December. Turning to page 10. The other business segment, operating activities. A good like-for-like increase in revenue of more than 5% and a net operating income of more than 12%. Like-for-like RevPAR increase in the quarter was 7.2%.
The circle to the right, you can see the revenues from the operating activities, 38%, close to 40% from our hotels in Belgium, 22% in Canada, 20 Germany, 12 in Norway, 7% in Denmark, and then a small part from a few hotel in Sweden and Finland. Turning to next page. NOI margin at our operating activities, as mentioned before, it was 20% in 2014. In Q3 2014, it was 21.9%. In Q3 this year, it's 21.5%, about the same level.
But then again, remember that we have Grand Hotel Oslo, which is representing a pure operating business that pays rent to a property owner. So adjusted NOI margin is 2.2% higher, close to 24%, which would be the figure which one looks at when comparing with the same quarter last year. Page 12. Valuation. Total property portfolio market value per end of Q3, SEK 27.7 billion.
Our average valuation yield for investment properties, 5.9, stable from Q2. On operating properties for information purposes is 7.6, also stable from Q2. The increase in the quarter is 1.1% uplift, out of which around 25 basis point or forth is coming from continued yield compression in Sweden. The remaining yields are pretty stable, so the remaining 85 basis points or so of the uplift in the third quarter comes from renovated hotels coming back from a stronger market and from stronger cash flow in our existing hotels. All in all, for the period of nine months, 4.3% uplift on the investment properties, 6% on our operating properties. In total, 4.7% for the nine months. Next page 13. Our capital structure. Our EPRA NAV increased with 13% from year-end on the nine months to SEK 15.7 billion. Our loan-to-value gross, 46.4%.
Net is 44.1%, which is in the lower range of our financial target of 45%-60%. Liquid funds and long-term committed credit facilities, a little bit above SEK 2 billion. All in all, this picture gives quite good, strong financial flexibility. Turning to next page 14. On our capital structure. Our net interest bearing debt, SEK 12.2 billion, and the net loan-to-value is at 44.1%.
Our average interest rate in the end of the Q3 period has gone from 3.3% in Q2 to 3.2% in the third quarter. Average interest rate period have gone from last quarter for 3.5% down to 3.3%, as interest swaps are maturing. Our average repayment period is stable on 3.5% from the second quarter in 2015, as we refinance close to SEK 1 billion of debt in the third quarter. Turning to page 15, finally.
All in all, a strong third quarter supported with a mix of strong hotel market, growth effect from renovated hotels to turn into full capacity, productivity in Pandox operations, and lower financial costs. Good growth like-for-like in net operating income from property management and operating activities respectively. Strong cash earnings of 27%, excluding any one-time items in the quarter. EPRA NAV increase of 13% from the nine months from a year-end 2014 to SEK 104.5 per share. All in all, financial flexibility based on a strong cash earning growth and low financial leverage. With that, we turn page and give the word to Anders.
Thank you very much, Liia. Before I will sum up this, let me give you some insight about the Pandox business. On page 16, you can see that we have a delivery in equity return year-on-year on 18%. That is coming from a few strong strategies that we have followed since the company was established in 1995. The first is focus on one asset class. We believe that hotels need a special expertise, which we have developed over these years.
With that expertise, we have built a portfolio with large properties in good locations. Most of the operators have a strong interest of these sorts of hotels, which give us good circumstances for signing long leases with the best operators. Together with them, we share investment, and we invest a lot and develop hotels frequently, meaning that the portfolio will be in high quality, which it also is.
Geographic diversification is the fifth strategy. It is important to have hotels both in international and domestic markets in different countries to balance out the risk, but also having opportunities to use the business cycle. If we don't find any good operator, or if there are some other opportunities, we can run the business ourselves.
We have done that since the company start, and we have today in own operations, which is quite substantial, and which is both a risk minimizer and of course, as I said before, create opportunities that we can buy the property including the business, which in some cases is the best value-creating thing we can do. At the end, I will also very proud to point out the management team and expertise we are building in these companies. I believe I have the best team you can have.
We use these strategies in a business model where we are both operator, but most likely as the most important part of it is, of course, to having a lease portfolio. That business model, I will say after so many years, is tried and tested, and this is also supported by both expertise and a good management system, which give us guidelines how to take daily decisions.
On page 17, I would like to say what we are doing with these strategies. We are implementing in these half flagship hotels that we have. This is just a few of them. Hilton Stockholm Slussen, which we bought as a Scandic in 1995 and had now developed as one of the leading hotels in Stockholm City, with a strong growth in revenue and guest satisfaction. Scandic Copenhagen, 486 rooms, the second-largest hotel in Copenhagen, new renovated since two years ago.
The Scandic Park Helsinki, which is the largest hotel in Finland, new renovated as a part of The Big Change program. You have the Scandic Hasselbacken, which is a small hotel, but it is in Djurgården in Stockholm, which gives us in a premium position. Hotel Berlin, 700 rooms, which we run ourselves, and Park Avenue Gothenburg. You see, this is just example of flagship hotels that we have. We have many more, but that give you some sort of flavor of the quality of the portfolio. As I said also, we investing a lot in this, so it is very high quality. These hotels, in page 18, you can see operate in a very strong market, where we can look at the RevPAR development. RevPAR means revenue per available room. It is a mix of occupancy and rate.
Where you can see that United States, which in this case, is the leading in this business cycle. You can see that they have a strong and stable growth of 6% in Q3, and that is a number which they have now for a couple of years ago, they had been on this level, and it looks still very strong because of low new capacity also further on.
New York, which is the leading city in the U.S., is always interesting to have a look at. You can see that they are on the minus for beginning of this year and starting to come up with stable. That is two reason. The first is a lot of new capacity coming in this year in New York, and also extraordinary strong month last year. New York are now coming back, we believe, into positive numbers again.
Montreal, which we have two hotels, city center, close to 1,000 rooms in the city of Montreal. Then you can see has a Q3 of 5% in a very strong and stable market. Most of the growth now are in rate, which give us a strong uplift in our own operations, which we have two in Montreal. Europe, extraordinarily strong Q3, 10%, but as you can see, that was six and seven end up last year, but also beginning of this year. So still very strong hotel market out in Europe, running and driving by a combination of more leisure and increasing number of business travelers. London, 5%. Brussels, 13% in Q3. Fantastic rate is coming now in Brussels, which also is good for us. Berlin, still strong. Then we go to Scandinavia.
You can see that as we have reported, both Stockholm had an extraordinarily strong September. You can also see Oslo and Copenhagen has double-digits number. Look specifically at Helsinki, and people very often talking about that Finland has a weak domestic economy, but this hotel market has a positive Q3, which shows the strength of the hotel market also in weaker markets.
Let me just give you on page 19 some guidelines here, that the 1% change in RevPAR in property management, it will contribute about SEK 10 million revenue growth. If you look at the same math in our own operation, that means about 18%, then if you have a split of 50% occupancy on 50% rate. If you have more rate, it will be more than SEK 18 million. So this positive market has a strong impact, of course, in the Pandox business.
Another important driver for our strong growth is those investments that we are doing continuously. I am now on page 20. Thank you very much, Anders. We have here a few examples of ongoing investments. At the moment, we are committed for SEK 550 million. That is something we continuously looking for doing, an uplift, upgrade, build more rooms, give other profile to the hotel and strengthen the market profile. We normally have 8%-12% return on this sort of investment, so we like to have a lot of them. This here is a few Scandic Vinsta, is now at the end of it. We will do about SEK 25 million, and of totally SEK 50 million, SEK 22 million is Pandox part. Radisson Blu Lillehammer, we are taking over. It is also own operations.
We invest SEK 60 million there in a new sport concept, sport and family concept, which we are now done two third of that investment, and that will be ready beginning of next year. Scandic Mölndal, we are just starting together with Scandic, an uplift of a beautiful hotel in southern Gothenburg. We have the Hilton Helsinki Strand up on the right-hand side, which is the last hotel in The Big Change program, which including 40 hotels together with Scandic. Now we are at the end of this big investment program. We are reinvesting SEK 60 million, and the target is to create a leading business hotel in Helsingborg, which I think we have good circumstances to achieve. Quality Hotel Ekoxen in Linköping, it is a city center hotel with 190 rooms, we do together with Choice. That is something also we are in at the end.
Then we all introduce a new big investment in Hotel Berlin. Hotel Berlin, we operate ourselves, 700 rooms. That is the third-biggest hotel in Berlin. Very strong market, and it is time for upgrade all rooms. We will do not all rooms. We will do 500 of 700 rooms in the program, and that is something we will start this December, January next year. Then we will take in couple of different phases where the market is a little bit weaker. This is a total investment for about SEK 90 million. We also, at Berlin, now evaluate to upgrade also the meeting center. That is something when then we have to come back with. This is just example of profitable investment that is ongoing in Pandox all the time. It is what we are doing at the moment.
Ladies and gentlemen, just to give you some sort of sum up, as we can see on page 21, that is strong market growth in the portfolio, which is something we see in the portfolio in strong for Q3. We have a high-quality portfolio with a lot of project pipelines, which give an organic growth, and that also we see in quarter three. We see in a good conversion in our own operations, which means more cash out. We have a lower interest rate, and we are, of course, active in looking for opportunity acquisitions. This all in all is some sort of sum up for Q3, which we believe is in line with expectation, which is in our way, a strong report. Thank you very much. It is time for questions.
Thank you. As a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel this request, please press the hash key. Your first question comes to line of Fredrik Stensved of ABG. Please ask your question.
Good morning, guys. A few questions from my side. Starting off with the like-for-like rental growth, very strong here in the third quarter. What about 2016? Do you believe that we'll continue to see more rental growth in the operating segment than in the property management segment?
Well, as you know, we don't give any outlooks more than we have repeat that 2015 looks good. What the guideline maybe can be, but that is not a forecast for Pandox. But the driver of an higher activity in the business segment gives more demand in the hotel industry, and together with more wealth in the world, gives more leisure. If that continuously and that means more demand in the industry.
That doesn't mean I'm saying that will be in Pandox's own hotels, but generally, that is the driver for the industry. So as long as that looks good, then you can also count on that the industry will have a positive outlook. But that is very in general, an answer which you should not be taking into your account as there will something will be positive also for us, but it's just in general.
And then second question on the NOI margin for the operating segment. The adjusted margin was up some 100 basis points year-over-year. You said previously that you expect that to continue to climb for the near future given the investments you have done. Do you still believe you can do more with the margin there going into.
Well, absolutely. I mean, the business model as such, taking out Grand Hotel, we have the NOI margin of 24% on the third quarter. When our hotels, when we have renovated them or when we, typically, they come in, they reclassify, they come in on a lower margin. So there's a natural climb in there. We said before that the mid-20s is what we are hoping for. It depends on, again, how many new hotels we're taking in, but with the productivity achievements, and there are continuously productivity achievements to be done.
Given that you have reclassified a couple of hotels here, that should mean that we shouldn't expect much improvement 2016 versus 2015, right?
Well, hopefully we'll do better with the hotels we are reclassifying. But these are smaller hotels. This is Mr. Chips, Lillehammer. So there will be some investments, there will be some productivity. It takes some time before this is being put in place. I don't know, Anders, if you want to add something.
No, well, that is the reason why we're taking over. We are not happy with the performance of the hotel, so we're taking over themselves, and that means that we change brand, we change management, and we do some renovations and upgrading of the hotel. And that all normally takes a year before that bites. So I would say that is how we should look at when we're taking over an operations, that it takes some time before things going better. But we have a strong belief that we can do better after some time.
On RevPAR, we are one month into Q4 now. Are the trends similar as you have seen in Q3 regarding RevPAR? Can you comment anything about how our comps compared to last year? Was there any events impacting Q4 that we should be aware of?
No, not any big one. I will say in most of our markets, specifically those we are. The dominant market that we have, it was a good 2014, but it is nothing extraordinary.
On cost of debt, it continued to decline in the third quarter. Do you still believe you can reduce it further with the hedges expiring?
Absolutely. Automatically by just not. With this low interest environment we are, if that continues, as you can see, we are 61% hedged with more than one year. You can see the tail. This is, of course, just by time maturing. This will gradually go down. There is in the report, actually, you can see the split of what is the sort of actual debt and what is maturity. This will come down gradually, continue to do so for the next coming years, as long as that low interest environment is continuing.
Okay, just two more questions from my side. What are you seeing in terms of opportunities for acquisitions? You are at the lower end of your LTV. The market is fairly hot.
You are right, the market is very hot. That is why you need to look not where everybody is, and you need to try to find. You need to focus on hotels maybe who is a little bit more difficult to buy, and that could be size, so that could be hotels, small portfolio in many different cities that people do not like. That could be underperforming things that need to be change of brand, so management, that sort of thing.
That what we try to look at, and that is still some sort of, I would not call it a discount, but I would call it it is a lower competition to buy. That is what we are looking at. So this is something that we are active. We have people working with it, but we have nothing to report yet. Hopefully we can do something over the next year or so.
My final question on CapEx level. It has been decreased, as you said earlier. We are now probably in the range of SEK 300 million to SEK 400 million on an annual level. Should we expect that to continue going into 2016?
Yeah. We have said this SEK 120 million is something that some sort of what we said or call it SEK 100 million, something. We do for having continued to have the standard of hotels as it is before. You need to do something just to make sure that you are in the same level as you should be. But to do having extra investment to where we found opportunities to invest together with an operator, that is coming uneven. That is something at the moment that is a lot of project for us to do. I will not call it that we had increased it more than what we have said in the roadshow. More than that had coming up opportunities, and we believe that these opportunities are very good for us, because that give us an add cash and value for the hotels.
As long as that is coming in, then we are happy to do whatever it takes. It is not a normal level. That could be a normal level, but I am saying it is a normal level for 2015 and 2016, then we have to report it more specifically year on year, what we have for asset setting and opportunities together in the discussions we have with operators.
That is very clear. That was all my questions. Thank you.
Okay. Thank you. Thank you. Any more?
Your next question comes to the line of Nicolas McBeath of SEB. Please ask your question.
Good morning. Two questions.
Good morning.
Starting with the like-for-like revenue growth in operating activities. That was down 2 percentage points if you compare Q3 versus Q2. But if we look on your markets, it seems like RevPAR was actually improving most of the markets where you have operating activities. You also have some hotels here which are in ramp up. What is explaining the decline here in the like-for-like revenue growth in the operating activities?
Well, the RevPAR increase is 7%, and the revenue increase is a little bit more than 5%. The difference, of course, there is also reflected in the fact that you have F&B and other revenue that has not increased as much as the RevPAR as such. So that is why there is difference between RevPAR and the overall income. Anders, if you want to give more light on
No, I cannot see that. What, Nicolas, you said that you mean that we have a decrease in together. Or you compare it to-
Yeah, in Q2, the like-for-like revenue growth, I think it was 8.6% in the operating activities, and now it was around 5.5%.
Okay.
Well, you do continue to come from a higher base as well, as there is 35% is F&B and other revenues. So it a little bit depends on the mix of this and the new hotels coming in, of course.
Okay. Similar to what Fredrik asked, I am not sure if we got an answer here. Could you say something about the current trading in October and also the booking situation for the remainder of Q4, how that compares to the similar point in time one year ago?
Now, while we do not give any of that sort of forecast, more to say the guideline is that the demand in hotel industry created by economy activities and wealth, and so long as that is happening in the world, and not so much new capacity coming in, I believe that the RevPAR in most of our markets has good opportunities to grow. That not say that we will be part of that.
Okay. Thanks. That is it for me.
Thank you.
Your next question comes to the line of Albin Sandberg of Handelsbanken. Please ask your question.
Yes. Hi there. I wonder on the like-for-like in the property management part, is it possible to break down how much is market driven and how much is your market share contributing to the strong growth that we are seeing in Q3?
I will say that the market is more than 50%.
Are there any specific assets that are contributing this quarter, you think, versus a year ago? Is that in Finland or?
No, I would say all hotels, more or less all hotels who are coming back from the renovation program, has a strong growth compared to one year ago. So those are numbers who is more than 10%, more or less everywhere. Otherwise, we follow the market or a little bit premium in most of the markets, a little bit everywhere. Canada are doing fantastic.
Okay, great. On the operator activities assets, it might be rounding, but the yield is just up slightly. Is it just the composition of the portfolio, or have you done anything there in the valuation this quarter?
No, exactly. It is based on the composition of the portfolio. Basically, we are, as you know, external evaluating 25% of our whole portfolio on a rolling basis every quarter. There might be some small changes in some hotels, but this is more on a decimal level.
Yeah. Okay. The pipeline of potential new hotels into the operator segment, how does that look?
Well, maybe there will be one more in Norway. We have given some press release, as there was an article in Norway about Choice, who announced that, say that they were not interested to maybe run Kristiansand in the future. That what we have said that this is nothing we had been told specifically, but if you add that, maybe that is something that we maybe will take into operations in the future. We evaluate it at the moment, and we talk to them about this, and we haven't any decision to communicate. I don't see on this stage any more new hotels. That can change, of course.
Okay. That is good. My final question is on the guidance, where you see cash earnings up year-on-year. Given your 32% ahead year-on-year in Q3, it seems not an overly aggressive guidance, so to speak. Could you say if you would expect the same kind of run rate by end of Q4 that you see Q3?
Well, I think we have a strong Q3, and quarter four was also strong last year, but where the market is going at the moment, it is a difficult question, Albin. We believe that we cannot give you any more guidance than we had more than what I have said before, that so long as things moving with higher activities, more wealth in the world, the demand in the hotel industry will continue to grow.
Okay. Yeah, great. Thank you very much.
Thank you.
Your next question comes the line of Tobias Kaj of Carnegie. Please ask your question.
Yes, thank you, and congratulations to very strong figures. I would like to start to ask a question regarding RevPAR. What kind of trend do you see in regional cities in Sweden? Is it similar to the levels you mention in the other Nordic countries, or is it at a much lower level?
Same trend, specifically Sweden. You see a strong trend here over the summer. We also see good trend in Germany. This is the two. If you look at Norway, cities where it's linked to oil industry have a negative trend. Then it's stable in Finland.
Okay. You mentioned something that you hope you will be able to do something in terms of acquisitions within the next year. Rumors are saying that DNB is out selling a big hotel in Central Oslo. Is that something that you would be interesting in?
Well, I did not say. I said that we are spending, of course, a lot of time trying to find good acquisitions, but we all know it is a quite expensive market. We know that DNB is out with a couple of hotels and try to sell them. They most likely will sell them. They will most likely be expensive. If they will be something we can buy, we do not know, but of course, we are looking at everything coming out in the market. That is too great a tell, but maybe they will be a little bit too expensive for us.
What kind of yield would you require to be able to buy in Central Oslo, for example?
I would say Oslo, I do not know if I can say something more than I will say 5%. Maybe a little bit minus of that.
Okay. Can you mention the yield on the divestment you did in the quarter in Antwerpen?
The divestment of Antwerpen, the yield?
The yield.
We have to look at that from two ways, because this is an acquisition price, which means that the new operator need to spend some money to uplift, to upgrade the hotel. If you include that number, and we don't know what their plan is to do, but if we will have done it, I believe that that yield was 5.25 maybe, 5.5.
It was a strong yield, and something which was taken into account in the Q2 valuation. I think we are happy with the price.
Yeah, we are happy with the. Sorry, Liia. We are happy with the price, and I would say that demonstrate a little bit the strengths we have, that the operator who like to buy it, and that was a regional operator who don't have so many opportunities. He saw the opportunity to buy that hotel and convert it into Van der Valk brand, which is a very well-known brand in Netherlands. He also know that we have the capacity to take it into our own operations. So that was, of course, the discussion we had when we have a strong position. That's why I think we could have a more favorable price and much better than average market, and also a little bit over our own expectations, I would say.
Okay. If I think about the impact on your P&L when this goes out of the balance sheet before the investment, the yield on the divestment price, let's say, is probably a bit above 6% then. Is that fair to assume?
Well, as I said, in the second quarter, we valued it at the purchase price because of course these processes take some time before they are ready and announced and negotiated, et cetera. So there will be no further effect of the selling in the P&L. That was also taken into account before. So there was an uplift in the valuation before.
Yeah. But I was referring to the forward effect of that you won't have the recurring earnings from this hotel anymore. Is that slightly above 6% on the EUR 16 million, then?
Yeah.
Yeah.
In that range.
Yeah. Then you have to, as I said, including an investment program to having a more competitive product.
Yeah.
Okay. Thank you very much.
Thank you. Any more question? Please.
Your final question so far comes the line of Chris Fremantle of Morgan Stanley. Please ask your question.
Good morning. I just wanted to follow up on a previous question on the like-for-likes in the operating activities. The 5.4% versus the 8.6% in the second quarter. Can you just clarify? Is there any impact on that like-for-like from the Grand Hotel Oslo? I appreciate it affects the margins, but is it included in the like-for-like calculation? Secondly, the reclassifications that you have made, are those hotels included in the like-for-like figures? I am assuming they are lower growth hotels and therefore dilute the numbers. It is just from the outside where RevPAR has been accelerating so much, it is helpful to really get to the bottom of what is happening in your operating segment, please.
Yeah. When it comes to the like-for-like, you should look at it as it is the same hotels, the same properties, which has been in the quarter versus with the same quarter last year. So it is excluding any hotels that would have been sold, it is excluding any currency effect, it is excluding any reclassification.
Right.
So they are in any of these segments.
While you said in response to the earlier question that reclassifications made an impact on the like-for-likes, you are now saying that they do not make an impact, just to be clear. The reclassifications are not a reason for the like-for-like figures going down.
No. If I said that was a mistake.
Okay.
My bad.
Can you just help us understand what is happening there? I am sure there is a very good reason for it. It is just from the outside, it is hard to understand, in an accelerating RevPAR growth environment, why your operating hotels should have shown a slowdown.
But again, if you look at the RevPAR, which was 7% increase in the quarter, it depends a little bit. As said, there is a portion of 35%, which is F&B. If the RevPAR is very much driven by price, then it does not maybe spill over so much on the F&B. So F&B and other depends on the activities in that quarter. The RevPAR component has been stronger than the overall increase in the income.
Okay. So it is just food and beverage effectively, is what you are suggesting.
And could be other as well, depending on the third quarter, whether there has been conference or other revenue streams.
Okay. Thank you.
There are no further questions at this time. Once again, if you would like to ask a question, please press star one on your telephone. It appears we have no further questions coming through at this time. Please continue.
Yes. Well, thank you very much everybody for having listened to us. I would like us to, the financial calendar. We have an extraordinary shareholder meeting on the 23rd of November, and then of course we have the Hotel Marketing Day on the 24th of November, which if you are interested, you can send an email to us and we will make sure that you have a seat there. It is already fully booked, but it is always open, of course, for people who follow us closely. We are also expecting to report our year-end 18th of February. Thank you very much.
That does conclude our conference for today. Thank you for participating. You may now disconnect.