Welcome to the Scandic Hotels Group Q1 2026 report presentation. For the first part of the conference call, you will be in listen-only mode. During the questions- and- answer session, you are able to ask questions by dialing pound key, five on your telephone keypad. Now I will hand the conference over to the speakers, CEO Jens Mathiesen and CFO Pär Christiansen. Please go ahead.
Thank you very much and good morning, everyone, and thank you for joining us for this Q1 presentation. Like just said, I'm Jens Mathiesen, I'm the CEO of Scandic, and together with me we have our CFO, Pär Christiansen. Let's go into the highlights of this quarter. Please go to page two. Looking at the quarter, we are off to a good start to this year with stable growth and solid results. Revenue, they grew by 3%, and adjusting for currency effects, organic growth was close to 5%. We operate with high efficiency and very good cost control, delivering a result and margin in line with last year.
Market conditions, they remain positive overall, and we continue to see good demand across our markets, although development varies somewhat. Cash flow improved during the quarter, and our financial position remains strong, giving us a solid foundation going forward. The second quarter has started well. Business and books are at good levels, supported by strong leisure demand, stable business travel, and a solid event calendar. Despite the ongoing geopolitical uncertainty, we do not currently see any direct impact on demand. All in all, we are entering the peak season with good momentum.
I would also like briefly to comment on the strike that has been underway in the Norwegian hotel sector since Sunday. Based on our current assessment and experience from the similar situations in the past, we do not expect this to have a material impact on our financial performance. All our hotels are open, and we are monitoring development closely and have mitigation plans in place should this situation become more prolonged or extensive. Please turn to page three.
We deliver a solid result in the quarter with an adjusted EBITDA of SEK 105 million, corresponding to a margin of 2.2%. The result and profitability were in line with last year, supported by high operational efficiency and good cost control. At the same time, the quarter was impacted negatively by a few factors, including the early Easter and also higher energy costs due to the cold weather in the beginning of the year. Also note that the first quarter last year was supported by a one-off in Denmark of SEK 43 million, which was offset by the contribution from the Dalata management agreement in this quarter. I'm pleased with the performance in most of our markets.
Looking at Finland, demand improved towards the end of the quarter, with more stable occupancy and pricing. At the same time, we are currently renovating our largest hotel and congress center in Helsinki, which was a key reason for the lower result year-over-year. All in all, we deliver a solid result while continuing to develop the business at a good pace with high efficiency and disciplined cost control. Of course, Pär will take you through more of the financials later on in this presentation.
Please turn to page four. You've seen this before. Here you see the development in occupancy, average room rates, and RevPAR for the Nordic markets indexed to 2019. Overall, the Nordic hotel market had a positive start to the year, with both occupancy and average room rates increasing, resulting in stable RevPAR growth for the quarter. Again, note that the early timing of Easter had a negative calendar effect in March, particularly in Sweden and in Norway.
In Sweden, the market developed well with high occupancy and moderate price growth. Norway also continued to perform positively, despite tough comparables from last year when the World Ski Championships were held in Trondheim. Denmark remained strong, supported by high levels of international travel and a solid event calendar in Copenhagen, resulting in strong growth in both occupancy and room rates. Finland continued to lag with a more cautious market sentiment, although both occupancy and prices improved compared to last year. Overall, the Nordic hotel market remains healthy, with stable underlying demand and positive momentum.
Please turn to page five. Turning to Ireland and the U.K., overall market conditions remain positive across both Ireland and the U.K., with continued good demand and a solid start to the year. In Ireland, performance was good, with both Dublin and the regions achieving solid RevPAR growth. The U.K. was stable across both London and the regions. Looking ahead, expectations for the second quarter are positive across both Ireland and the U.K. Overall, these markets show stability. Dalata is performing well, broadly in line with or slightly ahead of the market.
Please turn to page six. This slide shows our hotel pipeline at the end of the quarter, including Dalata's pipeline. In total, the pipeline comprises 22 hotels and over 5,000 rooms. For the rest of the year, we plan to open eight new hotels, including several Scandic Go hotels, supporting our expansion in the economy segment. Overall, we are developing the portfolio at a good pace, which creates strong conditions for higher growth going forward.
Please turn to page seven. Let's take a look at how we continue to develop the portfolio. As you can see on this slide, we continue to expand the Scandic Go brand at a good pace. During the quarter, we opened our first Scandic Go hotel in Norway, centrally located in Oslo. This is an important milestone as we continue to scale the brand in attractive city locations. We also highlight the agreements for the Scandic Go hotel that we signed in Tromsø and in Stavanger. These hotels were signed earlier and were also communicated in Q4 presentation. All in all, this just reflects the strong momentum we are seeing in Scandic Go with high interest and a growing pipeline.
In addition, through Dalata, we have added a new Maldron Hotel in London with around 370 rooms planned to open in 2029. This will be the seventh hotel in London and further strengthen the position in a very attractive market. Please turn to page eight. During the quarter, we took another important step in our sustainability work with our climate targets now validated by the Science Based Targets Initiative. This confirms that our targets are aligned with the 1.5 degree pathway and reflects our ambition to reach net zero emission across the value chain by 2050. It also strengthen our sustainability profile and supports the increasing demand for sustainable solutions from our guests and corporate customers.
Please turn to page nine. Let me give you a brief update on the Dalata acquisition. The process is progressing well and remains fully on track, with completion expected in the second half of 2026. Once the restructuring is complete, and provided we exercise the option to acquire Dalata's hotel operations, we expect to operate Dalata's markets using the same COO-led structure already in place across Scandic. This leverages our established structure to drive scale, efficiency and strong local execution.
As part of this, the current COO of Dalata will continue to lead the operation in these markets and will be joining Scandic's executive committee once the carve-out process is completed, while the current COO will remain with the business for a transitional period. At the same time, the business will continue to be led by the experienced local teams, ensuring stability throughout the restructuring process. Overall, we see strong collaboration and a very good progress. With that, I hand it over to Pär. Please turn to page 10.
Thank you, Jens. Good morning, everyone. I will now go through the Q1 financials. Please turn to page 11. Looking at the first quarter, we saw good organic growth of 4.7%. Top line faced some currency headwinds. Good results, better than last year in Sweden, other Europe, including Dalata. Norway was negatively affected by the early Easter and the World Championships in cross-country skiing last year. The lower results in Finland compared to last year, mainly due to softer prices, cold weather, and renovation of our largest meeting and congress hotel.
In the quarter, we saw increased cost for electricity and heating of around SEK 40 million due to the very cold weather that lasted for quite a long period. We have seen a good start for Dalata. The contribution from the management contract was SEK 56 million on top line and SEK 50 million on EBITDA. Group cost in line with same quarter last year. Efficiency improvements balancing the inflation and salary increases. Just a reminder that last year we had a non-recurring item in Denmark of SEK 43 million related to government support during the pandemic.
In total, we saw a result of SEK 105 million and a margin of 2.2% in line with last year's margin. All in all, a stable result in line with last year if we exclude currency effect, Dalata, and the one-off. Please turn to next page. We had a strong cash flow of more than SEK 2.2 billion on a rolling 12 basis. Investments in line with plan. We deliver on our portfolio strategy. Free cash flow improved clearly in the quarter and totaled to SEK 1.1 billion on a rolling 12 basis. Please turn to next page.
We have a strong financial position, net debt of SEK 510 million, meaning a leverage of 0.2x , compared to last year when the leverage was 0.4x . We're in a good position to support the portfolio growth agenda and also the acquisition of the Dalata hotel operations. All in all, we deliver a solid quarter. We have a good momentum ahead of the larger important coming quarters. Now I hand back to you, Jens, and turn to page 15, please.
Thank you, Pär. Let's move to the next page. Let me briefly sum up and give you a few comments on the outlook. We're off to a good start to the year with stable growth and solid results. Market conditions remain positive, and we continue to see good demand across our markets. Dalata delivered a strong quarter with performance slightly ahead of last year, and the acquisition is progressing according to plan. Collaboration is strong, and we are quite impressed by how well managed the business is. There are clear similarities also between the two companies.
Our, let's say, given the strong platform that we have both in Scandic and Dalata, and it's looking positive that we can build on that going forward. Looking ahead, the second quarter has started well, and the booking situation is good, supported by strong leisure demand, stable business travel, and also a solid event calendar. This gives us good visibility into the peak season, and we expect both occupancy and room rates to be slightly higher than last year in the second quarter. Scandic is in a strong position with good momentum, a robust financial position, and clear opportunities to drive further growth and profitability. With that, I hand it back to the operator for the Q&A session. Thank you.
If you wish to ask a question, please dial pound key, five on your telephone keypad to enter the queue. To withdrawa your question, please dial pound key, six on your telephone keypad. The next question comes from Alice Beer from ABG Sundal Collier. Please go ahead.
Good morning, Jens and Pär, and congratulations on a strong start to the year. Just firstly, you flagged high leisure demand in a stable corporate environment for Q2. Given that several European corporates are beginning to tighten travel budgets and macro uncertainty, could you give us just a sense of the corporate to leisure mix in your current bookings and whether you're seeing any softening on the corporate lead times or cancellation rates?
Yeah, absolutely. Thank you for that question, and good morning as well. No, I think we see quite a lot of stability in this area, and there has definitely been a change in corporate traveling, for the last, I would say, 10 years or so. We have seen that the inbound airline traffic has gone down, but at the same time, we have been growing our business. It's clear that people, maybe they might travel less with the airlines, but once they travel, they also tend to stay longer, and thereby also using hotels.
For us, the stability in the corporate traveling has been fairly strong and stable during the last years. We do not see a high increase or even a notable decrease either in the corporate segment. The growth is more driven still by a larger increase in the leisure segment, leisure traveling. I t's also more and more difficult to really compare what is corporate, what is leisure, because people are using our online channels. They book more directly. Eventually we really can't see whether it's purely corporate, purely leisure. that is something we just need to mention. All in all, I think it's very stable in that segment.
Okay. Thank you. Then on Finland, the market RevPAR was at 9%, yet your sales in the region fell 2% on a comparable basis. Is Scandic losing share in Finland, or is this entirely explained by renovations or meeting segment weakness? Could you just expand on Finland, please?
Actually, almost 2/3 of these results come from one single property that we are renovating at the time being, so we are doing quite a lot of stuff. We actually use this opportunity in the market to invest quite a lot in the strong portfolio we have, to be able to even gain further shares in that market once the market rebounds. We are really preparing ourselves for something which we believe in the future will be another strong market, like we have seen in the rest of the Scandinavian countries so w e are preparing for that. That is partly some of the reason.
Okay, how long will this renovation go on? How long will this effect be sustained?
Yeah. If you take the biggest congress center that we're renovating, then we're actually renovating the rooms now in different phases, and that will last until the latter part of the year. It's early December until we are totally done with that, so w e have simply taken that out. We are taking less rooms during midsummer, so we are doing most of the rooms now in the spring and in the autumn, and then we renovate the congress part of it during the midsummer, where that is congress slow. We try to not take a whole hotel out in the same period, but try to balance so that we have more rooms available during the summer.
Okay, perfect. On to Norway, the margin.
No, I think you can also add to the RevPAR comparison that we have not had 12 months of the breakfast excluded yet.
Yeah.
Of course, comparing rates, that could be also a factor that put a bit pressure on our rates compared to last year because we have the breakfast excluded, so don't forget that part.
Yeah, that's a good point. If I move on to Norway then, margin was slightly down year-over-year. Was this due to cost inflation, mix, or is it something more structural? How confident are you that Norway's margin would recover throughout the rest of the year?
We think Norway has really been strong the last years. We are facing a comparison with last year, where you had the World Cup in cross-country skiing, which of course led to a lot of high prices. Looking at the quarter, that had an impact on Norway. Looking ahead, we look into a very stable Q2 and a strong summer.
All in all, that was part of it. Of course, like Pär was mentioning, I think when you look at this result, which we are very satisfied with, a strong result, it also included an increased cost of energy and heating of a total of SEK 40 million that we managed to handle in other, let's say, initiatives. Underlying, you can say, if you look away from the SEK 40 million, we're actually doing a better result in the different markets on the results.
Yeah, we did have some tailwind on the heating cost. That is not because of the prices, that's because of the consumption. That's done.
Okay, great.
Easy.
Moving on then. The buybacks were paused since the Dalata announcement, and leverage is set to temporarily spike. At what leverage do you feel comfortable reinstating buybacks? Do you have any framework for resuming these returns?
I think if you looked at the debt situation, we're now in a really good position. We will go in and conclude the deal with Pandox around Dalata in the second half of the year. Of course, that will increase the debt during a period. Then, I guess, coming out from that period, a year or two later, I guess they could be starting to discuss buybacks again, dependent on how the share price looks at that point. I think it's too early to give any guidance around when and at what levels we will do buybacks.
Thank you. Just one final question from me then. Have you learned anything new about the Dalata operations that changes your view on the CapEx needs? Could you expand a bit on the profile of near-term and long-term needed investments there?
No, we think it is exactly like we have said before. It's a very strong, young portfolio. We believe that the CapEx need for maintenance CapEx will be lower than Scandic, and thereby supporting that we are looking into some years with lower CapEx spend, which is very positive. I think overall, Dalata is just like we see already now. Both the quarter was good and the outlook looks positive. Of course, when looking at the future on the Dalata, we are actually more optimistic now than ever. We think there's a lot of good synergies, and we are very optimistic about what lies ahead of us with that transaction. Of course, both Pandox and us are very keen on getting this done with this carve-out process. We continue with high speed on that. All in all, it looks very positive.
Okay, thank you. That was all for me.
Thank you.
Okay.
The next question comes from Jamie Rollo from Morgan Stanley. Please go ahead.
Thanks. Good morning, everyone. I've got a few questions on Dalata and then one on operating costs. Just on Dalata, the statement says strong first quarter with year-on-year improvement. Could you please quantify what its revenues were up and also how those profits perform, at the Dalata level, of course, not at your fee contribution. Then the statement also says, should we seek to exercise an option to acquire its hotel operations, which obviously we understand there is an option, but you sounded. Well, you've not mentioned it before, and just then you sounded very confident this will go ahead. Why have you apparently changed the language? And is there a risk that the deal does not go ahead? If so, what could cause that? Thank you.
Firstly, I guess we cannot comment on the details on the Dalata top line or the profits, given also that we have Pandox and us both two listed companies. We are only commenting on the management contract, the SEK 56 million and SEK 50 million. We can say that they have a good start. That's what we can say on that one. On the restructuring and the carve out process, everything goes according to plan. We have the agreement with Pandox to go through with this. It's not done yet. Of course, from a formal perspective, having this sentence in the CEO statement to say that it's of course subject that the deal goes through but there is no negative or any change than before. We're still very positive that the deal will go through.
Okay. Sorry, when do we get the FY 2025 pro forma base figures for Dalata, will that be at the second half completion?
When we have completed the deal, we will of course consolidate Dalata's result into Scandic, the operational result into Scandic, and also give you the pro forma results so you can do good comparisons for the previous periods.
Thanks. Just on the operating costs, if we adjust for Dalata and the provision last year, it looks like there's about 2% operating cost inflation in the first quarter. That's excluding rent and D&A. About half that seems to be the energy cost, which I guess is more winter skewed. Just really wondering what the underlying Scandic level of operating cost inflation is, and particularly because currency was about a 2.7% sort of headwind to revenue. I guess that 2% may be more like 4.5% on constant currency. How should we be thinking about cost for the rest of the year? Thank you.
Yeah. It's a complex question with a lot of things there. I think overall, if you look at the operating cost, I think we're on a balanced level on salary increase expectations. Even the strike in Norway is not about the salary levels, it's about other things. We expect the salary levels to be balanced as well as the inflation. We haven't seen any big changes on the incoming inflation to our operating cost yet, so it will be balanced. The salary levels will be probably around 3% in average for the Nordics and then inflation below between 1%-2%, I would guess, as an assumption. No change to that yet. Of course, as Jens said, we haven't seen any effect on the conflict in the Middle East. That could, of course, translate to price increases over time. Right now we haven't seen anything from that yet.
Okay. Thank you very much. That's all from me.
Thank you, Jamie.
The next question comes from Adela Dashian from Jefferies. Please go ahead.
Morning, gentlemen. Just two questions from me. First, if we move back to the Finland commentary, when should we expect Finland to return to becoming a positive contributor again and w hat's the time horizon on that? Specifically now after getting comments on the renovation initiatives over there, because you did mention that there was improvements towards the end of the quarter, so j ust wondering when we should start to see an inflection point, really.
Thank you for that, Adela. Starting with Finland a bit, I think we do all we can on preparing ourself for actually a bounce back, you can say. We are renovating hotels still. We believe this is yet to become a strong market. Finland is actually contributing, on a year-over-year basis, positively to our numbers so it 's a positive result, but Oof course, it hasn't the same levels as they used to have in Finland. We are earning less in Finland today than we did prior to the war and pandemic and all of that looking back versus 2019. Where the rest of Scandic is up a lot, and that's driven by the other markets. We are preparing for that. We cannot say it's very much linked to, of course, the war between Russia and Ukraine.
That has a huge impact, has had that since the beginning. We see small signs of Finland recovering. We saw that the last part of Q1 was better than the beginning. We also see that when we look into the summer and, of course, how we will benefit from some of these renovations, that also has at least not a negative outlook. It looks like it has stabilized, and of course, when the market starts to turn, we will have quite a strong conversion of those results due to the impact on the leases right now where we are hitting a lot of the guarantee leases. It was also important and positive to see a note this morning coming out from Finnair.
Finnair, they actually mentioned that they have a growth. They start to see growth in their business, which has been, of course, important for us that you have infrastructure in place. It's important that Finnair has steadily and slowly started to move business from the Asian market into other markets. That is positive for the Finnish hospitality sector, that that infrastructure is in place. Very positive to see that they are starting to grow. That will also help us going forward.
Okay, great. Thank you so much, Jens. That's good color. Second question was on the energy costs. You quantified the headwind here in the first quarter of the year, h ow should we think about the phasing for the remainder of the year?
I think it was purely linked, and Pär, you can add a few maybe comments there.
Yeah.
It was really linked to, we have a hedging on the energy costs. It's not a price issue for us. It was more the consumption. That was linked to especially January and February, which was very cold in the Nordics. We had like -20 some degrees in certain parts of the region. Of course, the consumption was higher. Looking ahead, we do not expect any price and cost increases on energy. We also saw that March was, compared to last year, stable. I don't know, Pär, if there's-
No, as you say, it was the very long and very cold period that put pressure on that. I guess we want our guests to have a comfortable climate and that had to be balanced with the cost of this, soi t was probably one of the longest and coolest winters in a couple of years. We don't expect it to happen again, but of course, it's not in our control. We will, of course, try to give the guests also a comfortable climate, and our coworkers. I think that was the decision here, to make sure that we had a good stay for them and also balancing it. As Jens say, it's not mainly a price issue, it's a volume issue rather and so w e expect everything to go back to normal once now when we're in normal temperatures in the Nordics.
Of course, there's both energy and heating, you can say. We are really looking at both, and despite what has happened so far with the Middle East, we haven't had that impact. Of course, we are carefully monitoring what is happening, whether that will change or have an impact on us going forward. Not on the price, on the heating.
Okay, great. Thanks for that clarification. That's all for me.
Thank you.
Yeah.
The next question comes from André Juillard from Deutsche Bank. Please go ahead.
Good morning. Thank you for taking my question. First one is about revenues. Could you give us some more color between the split between room revenues and restaurants revenues, which are slightly down? Is it coming from the different accounting of the breakfast or something else? That's my first question. Second question is about the cash flow. I was looking at the tax paid, which were positive in Q1 versus largely negative last year. The evolution of the working cap, which are the two main difference. Could you give us some more color about the rest of the year? Thank you very much.
Yeah. Thank you for the questions. I think when you look at, we definitely, like Pär was mentioning early on, we need like a rolling SEK 12 with the breakfast excluded, which we started in last summer, before we have full comparison year-over-year. It is a very positive story, which I have to say. We are selling more rooms without breakfast in the room price. Then they buy the breakfast as a separate thing. That has been really meeting our expectations and also delivering quite a strong high conversion into the restaurant still. We are not losing that business, but of course, it's moving a bit between the two.
Of course, as we mentioned, this is a very small quarter. It is the smallest quarter in the year, as you all know. Of course, when you have changes in some of the meeting between one hotel that are undergoing renovation in Finland, etc., it has an impact shortly on that. Meeting business is also part of that. Meeting in overall is slightly down. When we look on like for like comparable numbers, it is really fairly stable. The growth is more on the room side, and that's driven both by actually a bit of uplift in the corporates, but a lot on the campaigning and leisure segments.
Yeah. Around the tax, we saw a little bit lower tax, and also a positive effect from getting some tax back from the Swedish tax authorities regarding the previous year. That was a little bit of opportunity coming into the coming years. A little bit as a one-off from the past. We might see a little bit lower tax rates the following year, dependent on the ability to use the accelerated depreciations in some of our properties that we haven't used before. A little bit positive, maybe. Not major coming forward.
Of course, when we go into the last acquisition, that will be a completely different setup, with the Irish business with much lower tax rates. I think for this year, you can expect a little bit lower tax, in percentage, than we had before. I think the cash effect was a little bit of a one-off, versus last year, where we got a little bit money back from the tax authorities.
When you say a slightly lower tax rate, do we talk about 1%-2% or something more significant?
Probably around 1% if you look at going forward.
Okay. Very clear. Regarding the change in working cap, anything specific to mention or-
No, it's more timing. Positive timing effect.
Okay.
If you compare to the Q4, it probably looked a little bit negative, and then now it looks a little bit positive, so more a timing effect than a structure effect.
Okay. Very clear. Thank you very much.
Thank you.
The next question comes from Artem Prokopets from UBS. Please go ahead.
Good morning. Thank you for taking my questions. I have three, please. I think you mentioned that there is no direct impact from the conflict in the Middle East, but do you see any perhaps indirect impact, either positive or negative? Maybe in the way airlines behave or rerouting of travel, cost impact, inflation-
Yeah.
...maybe traveler sentiment, etc .
Yeah. Thank you for that question as well, and also good morning to you. I think you absolutely, if you go really deep into the numbers, you see that there are small effects and changes in some behaviors. We got, for instance, some cancellations from some group business from the Middle East area. We got some cancellations when this, let's say, conflict started. So of course, we have had some small changes.
On the other hand, we also got some other kind of business in because it is maybe that people cannot really fly. They are not really flying into the Middle East right now. So a lot of the people who tend to go to the Middle East, they really don't go as long as we have this conflict. I have friends personally living in Dubai, and I know that there's no tourists in Dubai right now.
Of course then, that might also be an opportunity that the people, they shuffle around, and we do get requests in for the summer for group business that were intended to go to the Middle East that now looks at alternatives into Europe. Yeah, we might see that we are lacking some business from that area, but we're also getting other business. That's why it is on fairly small numbers. It's not having a negative impact in total figures.
Okay, thank you. My second question on business rates. Could you please share your estimates of the impact of this increase in business rates in the U.K. in the coming years because I'm not sure it is anywhere in the public domain?
No. I think we mentioned the exact numbers in the last quarter, and Pär, you have the-
Yeah. I think, what we said is, it's of course the increase that comes from 2025- 2029, and we're going from a level of around GBP 4.5 million to around GBP 9 million, when we look at that until 2029. That's how we have seen it. Of course, there's still a debate around the rates in itself, but this is how we have interpreted the levels. A little bit from GBP 4 million to almost double it, so until 2029.
Okay. Thank you. Lastly, on lease liabilities, how do you expect the lease liabilities to increase when Scandic, and if Scandic acquires the Dalata hotel operations? Would it be in line with the room count or differently?
You're talking IFRS 16.
Yeah, I think, I mean.
IFRS 16.
Yeah. We will not guide on that at this point. Of course, there is different types of contract in the deal, some that will be with Pandox and some with the other landlords. Of course, it will be dependent on the rate as well as the duration of these leases. I think we will come back to that when we are concluding the deal. I think it's too early to give guidance on that.
Sure. Okay. Thank you very much.
Thank you.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Thank you very much, and thank you all for listening in. If anything pops up, you know where to find us, so you can always reach out. Otherwise, we wish you all a fantastic day out there. Take care