Good morning, everyone. Nice to see so many of you here. Welcome to Scandics Capital Market
Day here in Stockholm. We are today, as all of you in the room knows, but
we are Stockholm. We are today, as all of you in the room knows, but we are also some on the web. We are here based at the roots, which is one of our meeting and conference areas here at Downtown Kemper by Scandik, one of our signature hotels in the Central Stockholm. We are very delighted and happy to see so many of you here. Thanks for you that you really prioritized this during this morning.
We have been looking very, very much forward to this day to tell you a bit about what's cooking at Scandic and also, of course, our way forward. We have, as you have, I'm sure, already seen, announced our Q4 result this morning. And we are very delighted also to deliver the highest EBITDA result ever in 2019. We have also today announced that we are launching a new brand, ScandiGo, a new brand that will tap into a very growing economy segment and also something we are extremely excited about. I can tell you all of the organization is really that's happening a lot of positive energy in this organization these minutes, because all the announcement went out to the organization this morning as well.
Something that we think will be extremely interesting for Scandic and we believe significantly increases our growth potential. If we look at the agenda for today, we will start, of course, with the Q4 reporting and this part will also be sent on the web. So we have people looking on the web. And for those of you on the web, you can follow the presentation from our homepage. And also, you can ask questions in there, which then will be raised to us later on.
After that, I will take you through some of the current states of the markets, the trends, also our strategic priorities and also those going forward. After that, Jan Johansen will talk our CFO. He will take you through all of our financial development and also give you an update of our hotel portfolio and our sensitivity analysis. Vanessa Butani, who is responsible for all of our sustainability, will talk about sustainability, an area where Scandic has been a true, true pioneer in our hotel industry and where we have a lot and high ambitions going forward. And then finally, but not least, Svein Arstein Miewald, who was recently appointed Chief Portfolio Officer, will present our new brand, Scan de Go into a bit more details and also a bit more thoughts around that new responsibility.
And finally, at the end, we will wrap up with some closing remarks and a Q and A. Sounds good. So hopefully, a good morning with all of you until the launch. But let us first start with the 1st 4th quarter report. As you might have seen, our net revenues grew by 5.1% in the quarter and adjusted EBITDA increased from SEK487 1,000,000 in Q4 2018, which was a fairly strong quarter for us to SEK 504,000,000.
On a full year basis, we reached our highest adjusted EBITDA ever. We have during this quarter strengthened our portfolio organization with the ambition to improve efficiency of our portfolio development, both when it comes to dealing with our existing portfolio and also our growth ambitions. We have also, like I mentioned today, announced that we are launching this new brand, ScandiGo, which gives us the opportunity to tap in to the very growing economy segment in the Nordic hotel market as well as outside the Nordics. And then the board decided yesterday a proposed raised dividend from €3.50 to 3 €70 for 2019. On this page, you can see market RevPAR development on a 12 month rolling basis.
Demand growth has been quite strong in all markets throughout this year or throughout 2019. In Sweden, we have seen a very stable environment for some time with total RevPAR growth of around 2%. And overall demand has held up relatively well and supply growth has been fairly balanced. In Norway, the market RevPAR trend has actually been slightly positive lately. We saw quite a lot of new capacity in Oslo in the first half of twenty nineteen, but this has been more than fully offset by demand growth.
Both in Oslo and in the other parts of the country, Norway has actually been the market with the strongest increase in number of sold rooms during the year 2019. The RevPAR continues to be strong in Finland. Last year, as you can see, we got some support from the fact that Finland held the EU presidency in the second half of the year. And this led to a solid demand growth in Helsinki, especially in the period between September November. The only Nordic market where we have seen a negative market trend is Denmark, not a big surprise as there has been a lot of new capacity coming in, especially in Copenhagen in a very short period of time.
And this is expected to continue in the coming year. We do, however, have a positive view of Copenhagen over time. Occupancy in that market is high. So the market actually needs more capacity. Also, it is a market where Scandic is strengthening our position in the market significantly.
We have, as you have seen, opened 2 new hotels in the last 2 years, one in the Midpac district and another one centrally in FLEXPAIR area, and both of those are doing very well. And we have a couple of very good hotels in our pipeline in Copenhagen for the years to come. So all in all, I would describe the market situation as relatively solid with slight positive RevPAR development in the Nordic region at present. As you may recall, Scandic outgrew overall markets in all the Nordic countries in the Q3. This is the Q4.
In this quarter, Scandic's total RevPAR grew by 2.4%
in local currencies. In Finland, where
you can see quite a big uplift, we managed to outgrow in a very strong market. This is, of course, partly explained by our very strong position in Helsinki, also including the Vanta region around the airport, where demand was very strong in the quarter with some support from the EU presidency. In Norway, Scandic's RevPAR was a bit weaker than for the overall market and that is due to the fact that Scandic did not have any new capacity in Oslo last year, where the overall market grew quite a lot year on year. And both in Denmark and Sweden, Scandic's RevPAR developed with pretty much in line with the market. There has been several changes in our portfolio.
We opened Scandic Royal Stavanger in Q4, early Q4, a hotel that we took over from Radisson in June last year. We also signed an agreement for a new hotel in Helsinki, Scandik Avenue, a new Congress meeting hotel in the Central Helsinki with 3 50 rooms to open in 2022. And we also signed a new hotel in in Sweden, next to the railway station with 160 rooms to open in 2022. During Q4, we also exited 2 hotels in Finland, Scandik La Paranta and Scandik Sierrahoina, with 213 rooms in total. These were 2 hotels with relatively high investment needs that we decided to leave as the leases expires.
At year end, we had a gross pipeline of 18 hotels and 6,200 rooms, corresponding to almost 12% of the current existing portfolio. Quite a strong pipeline. We have 3 planned exits in the pipeline, 1 in Kiruna in Sweden and 2 more small hotels in Finland, where leases are about to expire. If we adjust for these 3, the net pipeline is 15 hotels and close to 5,900 rooms. This corresponds around 11% of the current portfolio.
On this page, a busy page, you see that we have a very, very attractive pipeline, where our focus is on relatively large hotels with central locations in key cities where we see room for continued good demand growth. We estimate that the average EBITDA margin for these hotels will be higher than the average margin of the existing portfolio. And apart from the Nordics, we also have 2 hotels in Germany in the pipeline, 1 in Munich and our second hotel in Frankfurt, both with planned openings in 2022. On average, we will grow the portfolio with around 2.5% per year. We only have 2 new hotels for this year, of which actually VOS in Norway opened in January, So another one coming up later this year.
But on top of that, we also have ongoing extensions of existing in the existing hotels of nearly 600 rooms, as you can see in the bottom of this table. So quite a calm year, but then 2021 2022 will be very, very active years for us. We will have growth those years of around 4% per year And this corresponds to around 2,000 new rooms every year. Here you can see some of the nice pictures. We only took brought a few of them.
Some of the projects that we have in our pipeline. The upper picture you can see a new hotel in Copenhagen located at the seafront close to the airport. It's 600 meters from the airport in walking distance. But you can also see a hotel in this bottom left corner where we are opening in Helsinki, like I mentioned, in 2021. And the other pictures are 2 hotels in Gothenburg, 1 in the airport, Scandvik Landwetter and 1 new hotel in the emerging area called Elf Storeten.
On the next page, you see a few more pictures from the pipeline. On the upper left, you can see Scandic Spectrum, which is going to be Scandik's largest hotel with more than 600 rooms in Central Copenhagen. You also see a picture from Aarhus. You see Helsinki Ball, 2 Ocou and Frankfurt. We have recently done an organizational change with the ambition to strengthen our portfolio management.
Sven Eilstein Miewald, who you will meet later on, was previously Head of Norway. He is now Chief Portfolio Officer. This is a new position. It includes the overall responsibility for portfolio development where we are coordinating our expertise in everything from lead generation, contract management, design and concept development and investments. The ambition is to strengthen portfolio management, both in how we work with the existing portfolio, but also when it comes to growing the portfolio.
I am very convinced that we will see positive effects from this in the years to come. Then we are very, very excited about the launch of a new brand this morning, Scandic Go. This is a new brand to Scandic, you could call it a sub brand to Scandic, with a lean customer offering in city locations. For us, this is a way to tap into an already growing economy segment. This will be a great complement to our existing portfolio of full service hotels in Scandi, and we have high hopes for this new brand and see considerable growth potential.
With quite a high share of room revenue, we expect these hotels to contribute positively to our margins, both when we compare to the existing portfolio and to the signed pipeline. We will start with an initial launch of 5 hotels. You will hear much more about this during the day. And with that, I hand it over to our CFO, Jens Johansson. Welcome.
Thank you, Jens. Thank you. Yes, Jan Johansen is my name. I've been CFO for Skandvik now since 3.5 years. And yes, we have a quite nice set of numbers, which I would like to go through with you here.
I will go through the sales development, the segment reporting, the EPS, obviously then the cash flow and also summarize a little bit with our outlook for the next coming quarter. I will concentrate very much on disclosing or explaining the development excluding IFRS 16 effects, because I think they disguise a little bit of the development. And I will come back to that during today, not so much during the first 10 minutes though. First, as Jan said, also has been a very good year for hospitality in the Nordics. We have a quite high occupancy level, almost as in this room here.
So it has been good despite the fact, which Jens also said here, that there has been more capacity in the market, especially in Copenhagen and in Oslo. But in general, we have a demand growth of 5%. And I think looking back and if we were to stand there 1 year ago, I think we would have been surprised if we would have said that. So in general, a very, very good year. And then if we start then with the sales development here and maybe look upon the total numbers first for the 1st 6 year, we can first conclude that we have had support translation support from the currency all through the year here.
Organic growth, 3.9%, that's below our stated objective of having an organic growth of 5%. But we should remember that we have a lot of forced exits here. And that is connected to the acquisition of Ristel, where we were forced to sell out free hotels. So if you were to just exclude the exited hotel here, you will see that we are actually on this 5% for the year and also for the year before. Very close to NOK 19,000,000,000 We did not reach it, but very, very close.
It's a record year. Going back, I will come back to the financial development since the stock introduction later on then. A few comments on the new hotels, drive around 3.5%, 3.7% in the last quarter. That's where we should be with the pipeline we are having and so on. And that's also where we expect to be in the future.
Like for like development more or less in at the same traveling speed as RevPAR, which is not a surprise. You can see here, it's a kind of a big variation between the market as you can see here. Finland consistently high throughout the year, 8% in the last quarter, driven by the EU precedency, but also good internal performance. We have a quite solid price component in that also, which is important. Norway, despite the situation in Oslo, this is actually better than we thought initially during the year here.
Northern Norway providing support and also Western Norway bouncing back from the low level where it has been. Other Europe, a mixed picture. It contains the development in Poland, Germany and Denmark. Germany and Poland, okay, slightly positive. And Denmark, as Jan said, the new hotels are doing well.
They are not included in the like for like numbers, so this is the like for like portfolio. And especially in Copenhagen, it's more under pressure there due to new capacity. Right. So and how is that reflected now into the development by segment, which I have on this slide here? Once again or maybe I should start with this number, because I think this is the first time we are over €2,000,000,000 on adjusted EBITDA.
So I need to once more mention that. It's an uplift of around. And also this is excluding any IFRS effects. I will come back to that later on. So it's a record year in terms of EBITDA, but we are not pleased.
And the reason why we are not fully pleased that we are not on the 11%, because that is important for us to reach that. We have when you look upon and relate to last year, there is an uplift of around NOK 90,000,000 here. If we exclude electricity derivatives, which we had in the result last year of NOK 43,000,000, you can see it's almost NOK 140,000,000 uplift. Primarily coming from Finland, we have done well in the market, but also the effects from the acquisition of Risdael, which has really paid off this year. And also I think reasonably good development in Norway given new capacity in Oslo.
Of course, we have suffered in Oslo, but Northern Norway and Western Norway has more than compensated for that. But also with the help of a high very high cost focus, we have had productivity increases in the Norwegian Important to say that the German operations is improving the results. So this negative result effect is coming 100% from the like for like portfolio in the Copenhagen, especially then in Copenhagen. And when you compare the Q4 number here, underlying Finland was actually even better because we had a positive one off effect of SEK 20,000,000 last year. So it's a very, very nice development in Finland during Q4.
Sweden is on full year basis and almost in the quarter perfectly flat both in terms of sales margin and EBITDA. However, remember that in the beginning of this year, Hasselbock and the hotel at Jurgordon was divested. So underlying, we actually have an improvement in the Swedish operations. Right. And that takes us over to EPS.
And here we have 3 measurements on EPS. But I comment on the 4th one. So I need to take you through this one. The reported EPS, as you can see, has an improvement, but this includes a kind of a big effect from IFRS 16, which I will come back to later on. Excluding that, still a very good effect.
And obviously, now look upon the full year numbers because they make sense. Full year numbers where you can see that we have the uplift. But this year, we also sold Hasselbatten with a big capital gain. If I exclude that, that corresponds to 1.66 plus some other small items. Last year, the integration cost for Restell, if we correct for them, you can see that we have a slight negative development.
But we state anyway here that we have an underlying EPS growth of 4%. How come? Well, last year we had a change in Swedish tax rate, which we revalued the tax liabilities, which gave a positive inefficient hedging of electricity derivatives, which is also included. So if I correct for those numbers, we have a 4% increase in underlying EPS. And this is also part of the reason why we continue to raise dividend from NOK 3.50 to NOK 3.70 and that's a proposed increase, I should say, which is around 6% something like that, if I calculate right.
I look upon you Henrik, yes, in odes. Right. And then cash flow. And this is the cash flow statement where I exclude IFRS effect. I know there are some confusion how to read this, but this is the right way to read cash flow.
And you can see here, it's a very, very strong solid free cash flow of over 3% including expansion CapEx. It's an easy number to remember, NOK 777 We arrived on a net debt below NOK 3.5 and adjusted net debt adjusted EBITDA multiple of 1.7, which is actually where we were 2 years ago when we made the Restelle acquisition. So we have restored the financial capacity during these 2 years. A favorable development not only on the adjusted EBITA, but also change in working capital. And it's actually something which we should have when we grow the business due to the prepayment order we have.
So this is a natural financing which we will get as long as we grow, which there should always be positive working capital development when we grow as a group. So it's a kind of a free financing. I look at the banks now. And then we have had some one offs with Hasselbakken, but we have also paid in penalty tax to that Finnish tax authorities, which we are claiming back. We haven't had the result yet from that.
We expect to have that during the year. Investments, both in existing operations and in expansions, more or less on the same level as last year. All in all, TILSC gives free cash flow, which is €500,000 better than last year. As I said, this has restored the balance sheet after the Risdale acquisition. And we enter into And we enter into 2020 with good financial flexibility and we will come back during the day how we look upon that.
And then finally then, outlook. I should start to say that when we look upon new hotels coming into the market, 2020 will be a little bit of a softer year in relation to 2019. Copenhagen will still have new capacity and the like for like portfolio in Copenhagen will still be challenged. Norway, not so many hotels in the market as we have seen and Sweden and Finland more or less in line with what we saw during 2019. We have a positive view on the demand development, at least as long as we can see right now, which means that all in all, we believe that we are able to have a like for like growth of 1% to 3%.
We get an extra fuel from the leap year now, an extra day. This is always good with an extra day. You remember that usually new inventory provides some 3% to 4% of our sales. That will not happen the Q1 and that is also due to that we have negative effects from the exits which we have done. So count on a slightly positive effect there, but not to the same extent as earlier.
So that was the last slide for this session. And this is yes, now we have the Q and A.
Yes, questions? Yes.
Stefan from Schlosby. A few questions. First, if you look at the 2 exits you did in the quarter and to make it easier for you also included the 3 exits that you are planning to do. If you look you talk about heavy investment needs and that's one thing. But if you look at the margin that they perform on, are they above or below the group?
Above. And I'll come back to that. We will source. So this has actually been the exit should be margin accretive. But so far they have actually diluted margin.
We have had as you know, we had 3 forced exits in total due to the Resell acquisitions, which we did. And then we have a mixed picture of those we are leaving, a few that are okay marginal wise, but we don't see fits well into the portfolio long term and some others that are also very low on margins that we are leaving.
And then if you look at the pipeline, you said that margin is higher in the pipeline than what you have in the group. First of all, I guess I assume that you talk about situation after a ramp up period. So I'm just wondering part 1 of the question, how long would that ramp up be, you think, on average? And secondly, why would you say that the margin is higher? Is it because they are located you have higher margins in cities versus the countryside?
Or what is the reason?
Yes, yes. You're kind of spot on for both reasons. You said the first question with the ramp up, that is very different from location to location. When it is a prime seating location, the ramp up is very fast. We have seen in some of the largest our latest openings we have done, we have a ramp up period of maybe 1 year, 1.5 years, then we are kind of into market speed.
Some of the openings that we have done lately in the city locations have been extremely positive. And we see that the pipeline is also on very essential locations. It's kind of large hotels that fits into strong markets. So the ramp up will be pretty fast. And that's also the reason why the margins will be higher.
They are larger hotels based in the strong markets where we see also in our average portfolio, we have already stronger markets in these cities.
And then a nitty gritty question maybe. I just thought the depreciation seemed a little bit high on the reported numbers in the quarter. Is there something in there which is unusual?
Yes. We have made some I think we commented on in the report also, we have made some write downs of some assets. It's on loss making units here during the year also.
Do you know the number in the quarter?
I don't have the number in the quarter, but I'll check it out for you later on.
And then my final question. Just you talked about the outlook, Jan, there. And you said it looks softer going into this year than last year. Just what do you mean by softer? Is it softer less challenging?
Or is this the softer market?
Yes. Did I say that? Then I have to rephrase myself. I said we don't see any change
in demand development, even if last
year was very, very average there. What I found maybe went with software, I think about what I meant right now, is that we will see less capacity coming to the market this year than last year.
Yes. There was another question. Yes, Christian?
Yes. On the margins, let's focus on the margins.
That's good.
Yes. But and on the nice slide there that you're not opening up so many hotels in 2020, then you can have all your managers just focus on getting the margins up.
Yes, it's a good thing.
Yes. So wouldn't you assume then that the margins will
go above your goal in 2020? We do not comment on that specifically, but it is very clear that we as a management and the whole organization has some clear focus on margins. You will hear that throughout the day, both from me and from Jena. So all of the organization, I promise you, is really looking at margins. We do something that is short term and we do a lot of initiatives a bit more long term.
When it comes to short term initiatives, it's also around the whole food and beverage area, which we have mentioned, how we look at that, opening hours and concepts and offers, etcetera, in order to optimize that. And of course, we see immediate effect in some of these areas, but also in some of the long term, it's about the whole portfolio where we need to work a bit longer to see the effects since we have this bigger chain.
On the previous question, you discussed that some of the hotels that you're exiting had better margins than that had weaker margins. And if you take a picture today, you had 2 70 hotels. Yes. How many of them approximately would you say has very weak margins?
You will have an exact answer to that later on.
We will see a picture where we have split the portfolio. So we actually show you how many hotels that are below 5%.
That slide is so good. So we shouldn't preempt that question right now.
Okay. And then my third question, of course, some of the margins expansion has to come from you exiting some of these weaker hotels in this great slide that we would see in here. The market for buying and selling hotels, is that good or bad?
We'll also come back to that and not to postpone all the things, but we will be quite specific when we talk about growth opportunities and also how we look at the market. So it is something we will come back to. Okay. I hope we can take it later on if you have additional questions. Yes.
Thank you. Okay. Yes.
Maybe then looking at the CapEx angle to the same question. Yes. Obviously, you have had quite high expansion CapEx, and I saw there was also big pickup in renovation CapEx in Q4. How do you see that going forward? I guess, when you're looking at at least expansion CapEx, there should be a big drop during this year.
That's why I like Skidigo. I mean this is capital efficient. So if we can have a more kind of those hotels into that should be make us enable us to have a much more capital efficient CapEx approach going forward. There are historically, there are some that we in some areas have overspent.
But I think if also to your question, this is a year with fewer openings. And of course, a year with fewer openings also leads to a bit lower CapEx in those perspectives. We are quite good at balancing this, because we have the whole technical service departments, etcetera, that can handle certain amount of workload. So when we have lower new openings, we kind of secure that we also renovate a bit more here and there where we need to renovate. And then maybe the coming 2 years, you will see us slightly renovate a bit lower because we have a lot of new openings.
So we balance this quite of stably out and we want to stay around these 4% just below
in CapEx when it comes to the renovation of CapEx. And you should also remember here as part of and that was part of the restel calculation and part of the investment case that there was some properties there which we need to deal with either by exiting them or lift them to kind of a Scandic level in terms of standard. And we have started to get through that.
And then hearing still also in this room people, quite a few sitting, sneezing. Coronavirus, is that something that you're hearing for your business? Or do you see any impact of it? Or
If I didn't think about it or we didn't think about it, we would be probably a bit naive. But if you look at the circumstances in the whole, it is a topic that I will also put a few comments to later on. I'll show you some slide with the different source markets. You will see how big an impact that has on Scandi. But right now, it's a very limited effect.
It is a seasonality issue as well. We have much more Chinese in the summer than we have in the winter. So in the beginning of the year, it is fairly nothing. And during the summer, it's a bit more. But I'll come back to the exact numbers, But not something that is worrying me when we talk about Chinese, maybe more what is happening with side effects of the economy as such that we need to all evaluate.
Was it a lot of impact of travel bans and these kind of things if you go back to the SARS time?
Well, there were some, but it was if I compare at that time, I think there were a bit of panicking because it was kind of the first thing. Now you know this because you value the whole market as well. It seems that the panic is very different around the world. You see some airports where everybody is wearing masks and in some other airports nobody does. So it's a bit where do you come from.
And the travel bans is also related to this because some companies are, of course, putting some travel bans to China right now and to Hong Kong and certain of these markets. But that could also be an opportunity to use this summer in Europe or Northern Europe, where it's pretty safe so far.
And one final question. Looking at the portfolio coming into the market, I see some of the hotel has slighted a little. Are you certain about the timing of them now? No planning permission problems or anything like that?
No, we are not worried with the current pipeline. And I must say that I took over some of these this pipeline. I was part of the Executive Commission before, but the Executive Commission of Scandi. But you can say that a lot of these decisions was also done by my former colleague and before me as well. But I think the pipeline is extremely strong.
It fits well into our strategy. It fits well into the key cities. It is the cities where we have high occupancy, where we have a high growing demand. So I'm very I look forward to getting these hotels into the market also to prove to all of you that this will improve margins.
Thank you.
Yes, more questions? Then I think also time wise, we are a bit over. So I think we will conclude with this and come back to questions later on. Thank you for those who was following us on the web. And I can say to you that the whole day will be done in a video version together with the presentations that will be on the web page or home page later on.
But thank you for joining us, to The
year is 1963. The world's population is half of what it is today. Beatlemania is raging all over the world. And in the small village of Laksa, Sweden, a spark ignites and starts what is to become a great hotel adventure. It was a simple but smart idea, a roadside hotel with parking right outside the room.
This was the first Esso Motor Hotel and start of Scandic's history. The hotel chain for the many people was born. The ambition was high, over 100 roadside hotels. 5 years later, the expansion abroad was a fact, starting with Denmark and Norway. In 1983, the name Scandic was born.
And in 1993, our focus on sustainability breached the guests, and Scandic started to inspire a whole industry. In 5 decades, we have grown to become the Nordic market leader, laying the foundations for the modern hotel industry. In 2014, Scandic Podrica, expanding the portfolio with 72 hotels in Norway and Sweden. And soon after, in 2015, we got introduced to the stock exchange, welcoming everyone to join Scandic's journey. In 2017, the company grew once again when acquiring the Finnish hotel chain Restal with a portfolio of 43 hotels.
Today, Scandic operates almost 280 hotels in 130 destinations in Sweden, Norway, Finland, Denmark, Poland, and Germany. Our path is based on creating extraordinary guest experiences founded in our strong culture and values. Every day, our 18,000 team members are living by the values be caring, be you, be old, be a pro. It is the base we're offering world class service to our guests from all over the world, representing 18,000,000 guest nights per year. With a focus on innovation, growth and sustainability, we continue to raise our ambitions and set high targets for the future.
And just like when we opened more than half a century ago, we will continue to create great hotel experiences for the many people.
So welcome back to next part of this day. With this small movie or intro movie, we kind of wanted to take you through maybe what you already knew, the whole history of Scandic. But this was a good way to do it. We thought instead of me using the first 20 minutes of your time talking about the history. So what I will do is to talk a bit more about the current state, the strategy and the market trends and how we see the way forward.
We are in a market where demand is growing. That we have said again and again. We have built a strong position in that growing market and we are today the clear market leader. We have an attractive pipeline and an attractive business model with good cooperation with the landlords, also with margin stability over time. And then we are a true pioneer within sustainability, an area that is becoming more and more important.
We have a unique culture, extremely important in a service industry. The strong culture, which is, of course, driven customer satisfaction. We have very, very highly engaged team members in Scandi. We are also a very attractive employer due to that. And you can imagine these years where we are all fighting for the right workforce.
Having such a high team member satisfaction is really supporting us. It means that we have a higher team member satisfaction, leading also to higher guest satisfaction. We have seen year on year, the last many years, that that has increased year on year, also when it comes to net promoter score, which is the guest satisfaction. And that is, of course, spreading the perception towards the brand is much higher than ever. And also, due to that, we see lower turnover of team members even in a market and environment where everybody is fighting to get the right workforce in.
This is how we present our strategy. Our vision is to be a world class Nordic hotel company. And we are not restricted, as you know, to the Nordic region, but we do have a Nordic heritage. And we think our values and the way we think can work well also outside the Nordics. Our mission is to create great hotel experiences for the many people.
And you also see the values that you heard in the small movie, the 4 values, be caring, be you, be bold and be a pro. But I would like to focus a bit on what we would call our strategic cornerstones in the bottom of this pyramid. This is what we work with every day in order to reach our goals. The engaged and motivated team members, very important, as I mentioned, in our industry. Sustainable business, something that should reflect all our decision making in how we decide things in the company.
Then we want to have a growing and improved hotel portfolio. We want to have attractive brands and customer offering. Optimized distribution to make sure that we reach customers in the best possible way wherever they are, also something we will come back to. And then in the bottom of everything, we have an extremely efficient operational model. You know that Scandig is kind of worldwide in the hotel industry well known for a very strong model in the bottom.
Also something that continuously is something we work with in order to improve the KPIs and the key figures. With the acquisition of Riga, we did in 2014 and in Norway and Mastel in Finland in 2017, we are today a very strong and leading actor in this region. We are not only in a leading position, but we have kind of a position where nobody can actually compete with us. We operate, as you know, 253 Scandics, but we also have some signature hotels. Today, we have 5, where we are based here in one of them, which means that it is a brand by Scandic.
This is downtown Kemper by Scandic. We also operate some other brands, 7 IHG Hotels, that's Indigo Holiday Inn and Crowne Plaza in Finland and also 3 Hilsons in Helsinki. All of these are in Finland and was part of the acquisition we did with Fastel. So Scandigo is already today, you can say, a multi brand operator, even before launching Scandigo. After a few years now with relatively rapid growth, 2019 was a year of refocusing.
And we initiated different measures, the 5 focus areas, etcetera, to drive margins, cash flow and market position, something we continue to work with. And we have a clear ambition to grow from a position of strength. We have a great business model. We have long revenue based lease agreements, which is the dominant model in our region. And most of the contracts, as you see on this picture, is variable.
They enable stable margins over time and maybe even a bit more stable than you might think when you compare internationally us with others. And Jernie will touch upon that in his presentation a bit later. We are, at Scandic, responsible for both the operation, the brand and the distribution all the way through. So the complete P and L of the hotel versus franchises that only gets a small fraction of the revenue. There are, of course, several clear advantages with our model, and that's why we like it.
It creates margin stability. We control the customer offering, which is a bit unlike franchises. It gives us a very quick time to market. And I can say that when we did change this also during 2019, I was extremely impressed by the strong culture of Scandic to see the speed of the from decision making from my office and the management office into the organizational impact. It is a huge and powerful thing we can do when we control all of the team members in the hotels.
We get full economies of scale, both in operation and distribution. And then we have shared interest with the landlords. Landlords have an incentive to drive our revenues. And we have also discussed CapEx with many of you. Please remember that with our model, we kind of invest together with the landlords.
So they take also quite a big share of the investments in order to drive the revenues. And then you can say the model allows us also to keep international players out of the Nordics a bit because they like the management and the franchise model, whereas we go in with leases. So it's kind of also a way to control the market a bit more. So it's also a strength
in our model.
We have, as I have mentioned before, a very strong operational model with very efficient hotel operations. It is a high degree of standardization in the back end, where, of course, we want to benefit from economies of scale, etcetera. And we also steer this on an extremely tight target model, meaning that every week, every day, we look at the expected turnover and we do the planning of the manning accordingly. So, we use this to both adjust up and down according to the turnover, which we expect. This is something we are extremely good at.
We have to be quite good at that since the payroll costs in the Nordics are pretty high compared to other parts of the world. So we need to be really lean in our model. That's something that also works outside the Nordics, of course. So this, combined with a very strong front end focus or combined with our customer focus, is a very strong model. We are in a growing industry.
Travel and tourism globally is growing at a premium to GDP. So it's kind of nice to be in this industry. We also know that it accounts for nearly 10% of the global GDP, the whole travel industry and it's growing. There is a lot of reasons behind it. Of course, we have seen the last many years now that low fare airlines has been increasing.
It creates an environment where people can travel pretty cheap and they do. We see the digital distribution that allows anybody to find the good offers. And it helps us, of course, to hit the customers wherever they are. You see urbanization, you see growing leisure, which we will come back to, and also an individualization in general, meaning that people travel more and more individually, 1 or 2 or 3 or 4 than in bigger groups. We estimate when we look at some numbers, which we have been digging into the last 10 years, we estimate that the average growth in demand growth has been around 3% to 4% the last 10 years on average.
And you see fairly stable growth in all markets. 2019 was also pretty much in line with the long term trend, so pretty stable. The annual growth actually corresponds to around now 10000 to 12,000 extra rooms per year. So 10000 to 12,000 extra rooms per year. You can also say an extra 3,000,000 room nights per year, quite a big increase, 3,000,000 room nights in average.
When we look at the structural differences, the growth in the leisure segment is estimated to grow between 5% 6%. So that is actually growing more than the whole region as such. The international demand is also growing more at the same 5% to 6% speed. And this is an average of the last 10 years. So international and leisure are growing more than the local, which is interesting and very interesting for the future.
And that's why you also heard us in our strategy tapping more and more into this growing part of the segments. And when we finally look also linked to some of the questions around the major cities. When we look at the major cities versus the total, we also see growth rates at 5% to 6% on a total Nordic base. When we then look at the supply demand balance we have in the Nordic region, Capacity growth has increased in the past years, but demand has actually continued to outgrow the supply, leading to higher occupancy levels, a very solid picture. This shows that new capacity also supports the increasing demand.
For 2020, we expect supply growth to be slightly lower than it was in 2019. A few words on the distribution landscape. The distribution landscape is something that has changed a lot the last years. And globally, everybody is talking about what is going on with meter searches and OTAs, etcetera, etcetera. It is very important for me to say, I look at all of this as possibilities.
For Scandic, this is a possibility. We are a Nordic hotel chain with a few hotels outside the Nordics, But we use all of these partnerships to reach customers all around the world, something that we couldn't do ourselves. And that's why we find partnerships with these booking channels and search engines, etcetera, being very, very valuable. What is, of course, important and something that I will come back to as well is that you should remember all of this is kind of a booking channel. We own our inventory.
We have the guests in a long time at the hotels. We are you can cut away one of these. You cannot cut away the hotel itself. So, we feel kind of confident working with these partners and I'll come back to how we see this from a loyalty perspective as well. Our distribution mix is changing quite rapidly.
I don't think this is a surprise for anybody, not for me, and that you shift from analog to digital. Of course, we do. We do have around 60% direct distribution. But an important thing is, if you look at these two pictures in each part of I don't know which side as you go through, if you look at the own web, the orange one, and see the growth of that and you see the OTAs, you can actually see that even with everything we did last summer, where we took a lot of decisions related to driving international growth a bit more, you see that OwnWeb has increased more than the OTAs, a very, very healthy signal. Then if we split it in another way and look at OwnWeb versus
the OTAs,
Of course, a lot of own web is intra Nordic business, but we also see that we get more and more international business on own web. And on the OTAs, you see more than half is international, but some is also inter Nordic. And I would say for me that other part of the international business is really, really good, something we couldn't reach ourselves, whereas the intra Nordic business, of course, I would prefer them to book our Scandics webpage directly. So what we do, we focus a lot on converting intra Nordic business from the OJs into own web. I prefer that the Nordic people should book directly.
And of course, if you come from U. S. Or India or Africa, it's probably easier to do it with the OJ's. So this is a focus for us. If we look then at the different source markets and look at the international markets, it has been growing quite rapidly.
You see Germany, extremely big, U. K. And U. S. So these three markets, Germany, U.
K.
And U. S, they are the biggest markets for us. And then of course, you see China. If you look at China as the 4th biggest international market and it is growing, it accounts for approximately 1% of our room nights, but it accounts for less and just below 0.6 percent of our turnover on a full year basis. And you know the Chinese are primarily coming.
Of course, you see a few here and there in the streets right now, but primarily during the summer. So to be honest, we really haven't seen a lot of effects from the corona situation in the beginning of the year. And if it was only the Chinese that were hitting us, then we would be able to handle that as well. If you look at the whole Asian market, it accounts for below 1.5% of our turnover. So it's not that big a source market yet.
But of course, the big question that I cannot answer today and I don't think you can either is what kind of side effects will corona have on the whole industry. But right now, we do all we can to source from other markets than the Chinese and the Asian market. So, with our partnership with 2 operators, etcetera, we already, for the coming summer, are filling in with customers from other source markets and all of our campaigns are directed towards anything else than the Asian market to secure that we are impacted with the least effect. We are working a lot and we have been speeding up our digital investments. We have been spending more also last year in this area.
We think that this digitalizing the customer experience is extremely important. And already by Q4 this year, we will be launching an updated and new version of check-in and check out solution, where customers on the mobile will be able to check-in and check out and even use their mobile as a room key. We will start by doing this at all our new ScanDIGO hotels. So, the first five openings, which we will come back to, will all have check-in, check out and room key solution. And thereafter, as of next year and ahead, we will introduce this to all the Scandics.
There's kind of 2 dimensions in this, which I think is important to say. I think this will create a fantastic customer experience, avoid standing in queues and lines, but also it gives us a lot of opportunities in Scandic to interact with our customers in another way. And if we look this into a perspective of our very large and strong loyalty program, our loyalty program is by far the largest hotel program in the Nordics with more than 2,500,000 team members or guests in the program, and it accounts, as you can see on this, for more than 1 third of the turnover. So very, very loyal guests we have in that program. Personally and with the management team, we have had a lot of conversation around this.
And I don't think I will reveal any thoughts that the market and the competitors cannot listen into. I think you will see a lot of speed in this area. I will make sure that Scandic is also securing that we develop our digital solutions to the customers in a fast and efficient way in order also to drive loyalty. It is back to the part where we own the inventory or the inventory of Scandi. We kind of control like nobody else do whether a loyal customer should have some benefits that the non loyal should not have.
Of course, they could check-in before. They could even select their room before the others. So if you prefer a certain room, you could actually as a loyal team member or a guest, you could be able to do that before the others or maybe check out a few hours later because you are a loyal member without paying for that. So a lot of things will pop up in this area, and I'm looking extremely much forward to that. And I think that will create an environment where you will see a larger part of the customer base being part of the loyalty program.
I don't think it will go the other way around. Then during the summer and last year, I reported together with the team some 5 key focus areas. And this doesn't mean that we do not focus on other areas, but this was extremely important for me and for Scandic that we had a refocus on these areas: portfolio management, food and beverage, CapEx, optimized distribution and digitalization. And I just touched upon a few of them, but I'll do it a bit in a ramped up version. Strengthening portfolio management organization, something that we have now done.
We will increase also resources in that area in order also to support our ambitions within the growth. Then there will be a continued focus on actions to address the underperforming units. Jan will come back to it in his presentation as well. But this is quite high on my agenda. I don't like to see hotels that are not profitable or with very low margins.
So we will never be satisfied with anything unless it is supporting our overall targets and goals and we will be constantly working on solving things that are below. Then we have today announced the launch of ScandiGo, something I mentioned that I am extremely excited about. I think this has a big, big potential for Scandic. And really nobody owns that segment in the Nordics, even though it's grown. So it's a big fragmented segment where we want to step in.
And of course, with high ambitions, we are the market leader in the Nordics. We are the largest operator in the mid market segment, where we are the market leader as well. And we want to be so as well in the economy segment. Finally, but not least, we will continue to secure a high quality pipeline with an increased growth. Then food and beverage, something that actually accounts for around 1 third of our turnover.
So 1 third of our revenues comes from food and beverage if you also put in the meeting part of the business. And you all know that certain areas of this is very profitable. Meetings are quite profitable. I can tell you bars and alcohol is pretty profitable. But the a la carte business is less.
So what we do, of course, is we work a lot in this area, look over all the concepts, opening hours, offers in order to improve. We also even evaluate outsourcing a la carte restaurants, something we have already now done in 2 restaurants and something we will continue to evaluate. If somebody else has a clear focus on doing that and they like 2%, 3% or 4% margin because they run a business with another focus than we do, then it might be a better solution that they operate one of these restaurants, especially in some of the key cities. Then all of our signature hotels, they will be charging for breakfast as of now. So we changed already 1st January some and the rest will be changed all of them now in Q1.
So we will charge for breakfast, also because we have a broader international mix of customers in these hotels that are used to paying for the breakfast, which they do all over the world, but not in the Nordics. And the first signs I can tell you from the beginning of January are very positive when I look at this. Then of course also meeting is a very important part of the business. And we have centralized all our strong people into destination desks in order to give customers a full and speedy reply. So when you have a request for a meeting at Scandi, you will get immediate reply whether we have room and also an offer for the price.
That allows us to, of course, be closing the deals a bit faster than if it lies in an inbox in one of the hotels. We have a more structured approach to maintenance CapEx. It's not that Scandig was not good at this. And it's easy as a new CEO to point fingers at everything, but this is something where we could be a bit more structured. The new organization also with Svenail in heading that will also now integrate all of these decisions from business property and design development and from prioritizing the different projects.
We are looking in, in a more detailed way on the business cases linked to the investments, even on smaller renovations. We don't want to build any tail. That's for sure. I want to continue to renovate and secure a perfect portfolio. But of course, we should not invest or over invest in an outskirt hotel if we couldn't get the return.
So like we have said, maintenance CapEx should not exceed 4% in a yearly average. Then we have several ongoing development projects to enhance the customer experience on the digital platform. This online check-in and take out is something we spent a lot of time with right now. And we also implement in Jens' responsibility a new ERP system for all our markets and hotels. So we will have a group wide ERP system and you can say, well, we thought you already had.
But since we have bought other chains like Riek and Restell, we haven't had. But now we put everything into one ERP system, which secures that we kind of get immediate data and can work with this on a group wide basis. And then we work a lot on replacing manual processes. Not that we have a lot of that, but we have a lot of manual borrowing processes that we can optimize and we can put into robotization and secure that we handle that. That is rate loading and a lot of transactions from payments in the shifts between the nights and stuff like that, that we automate a bit more in order to be more speedy and to save costs.
And then the 5th one, the optimized distribution. We have talked quite a lot the last year around this. We want to secure that we take our share or even unfair share, larger share of the growing international business and also taking a larger share of both when it comes to international but also the growing leisure segment. We saw a lot of positive effect of that during the summer in the Q3, where we outperformed all of the markets with our initiatives. And then one of the big great news of today is, of course, our new brand ScandiGo.
You will hear more and you will see some much more about this brand from Sverneil later on. But the most important thing for me to say is kind of why we do this. We are moving into this segment because it's a growing segment. We see that there's a clear position that we can take. It is in trends, in line with the trends of the markets, what is going on with individualization and growing leisure and urbanization.
So that's something we want to tap into. And it enables us also pretty clearly to take a larger share of the Nordic market than we can today. It's a very standardized brand, so it's pretty easy to expand with, even outside the Nordics. With a high share of room revenue and less F and B and other areas, this is also more capital efficient and even more capital efficient than both the current portfolio and the pipeline we have in Scandi. With ScandiGo, you can see on this picture and don't be too careful about the Signature hotels, I will come back.
It's not that we have an ambition in Signature hotels to add another 50 hotels in that area, but just to show that we have 5 Signature Hotels. We do not plan more Signature Hotels right now. But if there is a possibility for a hotel that doesn't really fit in and we would like it because we could get the right terms and conditions, then we could do a signature. But when I look at the focus we have, that's on Scandic and now on ScandicGo, tapping in to a larger part of the growing market. So pretty clear, in economy segment, we will be doing more as ScandiGo.
But also, as you see, we can be a bit more crisp with our offering with Scandi. The next one is kind of a busy slide and I'll try to go through it so that you all understand what we are showing. This is our way of looking at it. And no matter whom will look at it, there might be different numbers when you look at the potential in the economy segment because who defines the economy segment. But here, we have taken 2 examples.
We have taken the capital cities on the right one. So that's the 4 capital cities. And on the left one, we have taken Copenhagen as a case and we have added Airbnb. And if I look at this, you can see that on a Nordic basis, it's above 10,000 rooms that you see on the 4 capital markets. If then add all the regional cities, etcetera, where also these economy hotels pop up, I don't know if it's doubled, but it might be.
But if you look at Copenhagen as a case and I know that you know that I'm Danish and it's not that that's not the reason why I brought this. But of course, I use this because I hope I do not offend anybody, but Copenhagen has more international guests than any of the other markets. So that's simply just a fact and that's growing. So Copenhagen has actually difficult maybe to see in this one, but if you look at the bottom and can see the difference in the color, it is nearly 6,000 rooms now in Copenhagen alone into this economy segment and it's growing. If you add then the Airbnb part, which is also pretty big And in all of our regions, this really has become a big player in the market.
And they have actually come into this market on top of all the growth percentages that I showed earlier on. Shows that we have a huge growing leisure and international market. I think with Scanigo, we will tap into both regaining some of this from the Airbnb and of course, taking our share of this growing economy segment. Maybe then a somewhat simplified picture, but it is pretty easy to read. We mentioned earlier that the yearly annual demand growth was some 10 to 12000 new rooms per year in the Nordics.
With our portfolio and with our pipeline, we do have around 1500 new rooms per year on average. So it's kind of 15% of that. We do have a market share in the Nordics around 15% as well. So it fits well into that. If we take the branded market share, it's much larger.
And we think when we add now the ScandiGo that we can grow our potential, we can grow our pipeline in order to get to some 2,500 to 3,000 rooms instead ahead of us. So, this is a clear ambition in the growth. As you know, we also have business outside the Nordics, even though it's not that many. But we have a very proven model in Germany. I'm really, really positive and satisfied to see the numbers in Germany that is constantly improving.
And we do actually have nice and 2 digit margins in Finland, and we see that we also take a clear position in those cities where we are based. So even with few hotels in Germany, we have 4 hotels in operation and 2 on the way, 2 in Berlin, 1 in Hamburg and 1 in Frankfurt. I can tell you that when we look at our comp sets, which is not easy comp sets, then we are beating our comp sets in these markets. Shows that Scandic has a model that works also outside the Nordics with our very proven solid operational model. Then we have strengthened our business development organization and the whole portfolio organization with Svenail and his team, where we will do much more.
We do have internal funding capacity. So we do have the possibility to do more. So I can tell you that I think it's time for Scandic to explore a bit broader and a bit more the opportunities also outside the Nordics. Why shouldn't we? But when that is said, we say shareholder value is key.
We do not compromise with our business models and nor with our financial targets. So that's why we also have said no and rejected a lot of possibilities in Germany. And that's why the speed of the growth has been maybe not that fast, because we do not want to grow faster than we can deliver on our promises when it comes to shareholder value, just to make that pretty clear. If we look at the growth alternatives outside the Nordics, there's of course, you could look at this from many angles. We try to say we have like 3 different ways of doing it.
We could grow with new build projects where we could do like we have done now in Germany that we do greenfield openings. But you know from getting the lead, finalizing the contract, building the hotel and opening it, it takes quite a long time. The positive thing is we get exactly what we want. We get the exact configuration we want. And that's why they also deliver very solidly because we can build the hotels that we really need.
The negative part is it's fairly slow. When you look at the right segment of the M and As and look into what kind of environment do we see on the M and As. When I look at Germany and the transactions that has been done in Germany lately, I think it's on very, very high multiples, too high for us to be interested. That's why we haven't done any. So back to shareholder value.
We want to do deals when they are good. Otherwise, we wait. But we have the financial firepower, which also you will see more from Jens, so we can do quite a lot. But we don't want to do it unless we find the perfect solutions and offers. Then, of course, you can see the one in the middle, where we have been writing here increased focus.
We really haven't spent a lot of time to analyze the opportunities outside the Nordics. When it comes to takeovers of existing hotels, single properties that we could take over. I think Berlin has some 765 hotels or so. We have been looking at finding new locations. Maybe we should look a bit more on how to grow also with takeovers that fits in to our brands.
And then, of course, you could also say that there might be smaller chains. What is a small chain? Could be anything from 2, 3 hotels up to, I don't know, 20, 25 hotels. That maybe we should look a bit more as well. So within Sam's and Sverneil's responsibility, this is something we will intensify, we will add resources and we will be looking broader and not only on Germany, but mainly in the northern part of Europe, but look broader than we have done previously to secure that we have more to choose from keeping our financial targets.
Thank you. And I'll leave it to Janne next.
Thank you.
I don't know if you should take some questions or we should combine them afterwards actually. But, Helmer, should we take a few? So this or do we sure? We go and Johan the next time we take the question together.
All right. So then I'll continue clicking here. Right. Our financials. I will start to go back in history, reflect a little bit on why what has driven us to where we are today.
And the starting point will obviously be then the stock introduction. After that, as I promised before, we will go through the profitability spread in the portfolio. I think it's quite intriguing and interesting things that you will see there. We'll probably save those charts for later and follow us up on them. And then I couldn't resist to put in a few slides on IFRS 16, because I think we have lived with that now for a year.
We have I mean, try to embrace that in a positive way. However, we have now been with it for a year and I will come back to you and I will be quite clear what my opinions are about that recommendation. And then finally, of course, we talk about where we are heading with the group strategically and how well are we equipped financially to take on that journey. So I will conclude with that. But first, if we start then 2015, I think it was in December 2015 this was launched to the stock market.
We recorded some NOK 12,000,000,000 that year and we are now close to NOK 19,000,000,000. If we look into the organic growth, which is something which we believe that we can control over time reasonably, We have a target of 5%. And you can see that over the years here now we are on 6.9 percent. Quite high organic growth in the beginning 2016 2017 I think and that was very much driven by a strong RevPAR in all our main markets. That has softened a little bit the last couple of years due to more capacity in the market.
Nothing wrong with the demand as Jens showed earlier. The like for like portfolio has down 3% or 2.9%, which is in line with the RevPAR development in the market. Currency has been supportive during this year with the help of the low interest here in the Nordics. Exits, and you have seen that we have done some forced exit, which was a prerequisite from the FCCA when doing the restel transaction. But we will also come back to that later on, because we will need to focus the tail part of the portfolio more.
So all in all, NOK 6,800,000,000 in sales additions during these years. Right. And then our adjusted EBITDA excluding any IFRS effects, starting at NOK 1,200,000,000, 2015, now over NOK 2,000,000,000 4 years later on. And you can see here that the like for like portfolio have contributed NOK 158,000,000 on a margin of SEK 16.1. So the like for like portfolio has been margin accretive during this year.
And the like for like definition is the 2015 definition. That's the only way to do it. New hotels, 12.6 percent, and this is obviously below our investment criteria. But we do have some of those which are in ramp up. But don't make any mistakes.
Our investment criteria are higher than EUR 12,600,000 Exits, you touched upon that earlier, Stefan. Unfortunately, they are margin decreitive here. And this is the reason is Hasselbatten here, which was not a bad business. It's reflected in the capital gain. And also that some of the exit, which we have been forced to do, has had quite high margins.
So this is not really tail hotels, which has gone out in terms of margin. Some might be considered tail hotels if you look into the shape and form of them because they were a little bit worn out, if I may say so. Risdell, on pro form a level 19.6%. This year we are close to 14%. This is absolutely in line with our expectations, which is good.
Are we satisfied? So far. But we have higher ambitions than this for the Risdael portfolio. And we will come back also later on because there is a profitability spread also in this portfolio, obviously. So 10.8%.
And of course, we have our mines on +11%, which we I remind about us. And I can assure you, we talk about this all the time in the management team. Right. And this is a little bit of new information, return on capital employed. And we did this in 2 ways.
Why? 1 was that we when was introduced to Stockholm Stock Exchange, had a goodwill in the operation, which come from earlier acquisitions then. So we made a bar where we exclude that and reset, how to say, the capital employed calculations where we are on 11% at the time of the IPO. And you can see that that has been increased to 12.5%. How come?
Well, the like for like portfolio has improved. Also including the fact that some of the new hotels are in ramp up and actually diluting that number. So if I just take the new hotels as a kind of aggregate, they are actually on single digit return, because then their explanation is that they are in a ramp up so far. Ristel, over 10%, not that bad, only 2 years into the acquisition. And as I said, the bars and the expectations and the plans are higher than that.
So there is an improved return here. And you might ask, where do we put the bar when we make new investments? How do our discussion go with some and Janssen? And obviously, we say that we need to have some 14% at least on the fully ramped up hotel. So this should be better over time.
And I think, I mean, when you look upon Skandikou, you might the logo is fine and the concept is fine. But I have it looks very nice in XL also, so you are aware about that. Right. And here we come to the profitability spread. What we've done here is that we have divided it into 3 sections.
1 is above 15%. And why 15%. This is excluding central support cost, which is approximately 4%, which means that when we invest in a new hotel in order to secure that they are margin accretive, they should be all here after ramp up. They should all be here. So that's the reason why this is important.
Then of course, I have these ones which are below 5% to the right. It's easier to stand here. And the reason why we put up 5% is to secure that they are cash flow positive over time because we have a reinvestment need of around 4% here. And that's the reason why we need to focus those because they could potentially destroy our cash flow. So it's not enough that a 1 year or 2 years have positive cash flow.
We need to see this over time. So 48 hotels in that group with some 6,500 rooms and revenues of around SEK 2,000,000,000. And in the top left corner here, 109 hotels, 24,000 rooms and close to €10,000,000,000 in sales. And then you have this middle group. And one interesting conclusion, which you probably have already have made, is that you can see that there is a correlation between size and profitability here.
And that is natural in the Scandic model. So the bigger the hotels are, the higher probability that they will earn high margin. Obviously, Skandeco might change this logic a little bit because we will see that also smaller hotels will have the possibility to give good margin. It works very well in Nexa. We should just prove it in reality also.
Right. So how did we end up here? Is this just a consequence of the history? Or have we created new problems the last couple of years? And here you see once again this profitability classes, but you can also see there our region.
This is where we started with. You can see Ristel and you can also see the new hotels. So it's actually a good mix of older structural issues. And why do we have hotel? Why do we let them be there for 4 years?
Are we sleeping? Or are we blind? Or are we incapable of doing with it? This is not badly managed hotels. This is very often so that you have a structural explanation.
You sit on an unfavorable rent agreement or you sit in a location where something has happened, which means that you struggle with very, very low occupancy level or something like that. We will address this harder as you have heard, but there is very often a structural explanation to this. Then when you buy something, it's quite natural that you get the whole menu of good things and bad things. And we are addressing this also. And we have also said that we will leave hotels.
We have actually announced that also then. And of course, the new hotels, some of them start their travel here, which is fine, and then go up here. But for some hotels, we have started the travel down here. Obviously, we would like them to start the travel here for the future. So this is you can see here, if we manage the portfolio in the right way, there is a clear opportunity to lift the margin here.
And also one thing, which I should repeat, the calculation or the expectations, the plans we are having for the current pipeline, they are on an EBITDA adjusted EBITDA of 17%. And the Skandigo not below that Not below that number. We're looking forward that I start with a 2. Right. And then change of subject.
And this is also this is a very, very theoretical slide. So please handle with care. It's the CFO version, I should say. Jens have a slightly other opinion here regarding this. So what we have done is to the left, you have the share of revenue.
So you can get an idea of our cost structure. This is something which is direct variable to volume, like for example sales commission to external parties like food and things like that, which is 100% variable. If we have less customers, we will have less cost. Then we have the hotel operations with the payroll, which we believe is and which we know is variable. And the tougher times gets, the more variable it will be.
So we assume some 45% here. And then rest of the hotel operations like energy and water and things like that, part of that is always of course variable, but some of it you cannot you need to heat the hotel. So it's not fully variable. Water consumption is more variable than heating. And then we have general expenses of around 14%.
And of course, it's a little bit more difficult because in one way it's fixed cost, but in another way not. So if the ship hits the fan, of course it's variable. But if you have small movements in volume, we should regard it as kind of a fixed cost. And then rent, today you can say that and you saw that also from the rent structure which Jens showed you that 75% of the rent of 27% is variable. So that takes us down to some 6%, 7% in total of fixed costs.
So if you assume that you have looking at the rents, some 6%, 7% is fixed. And then there is always a fixed element here. You need to audit it and things like that. So maybe some 10%, 12% of sales is totally fixed, somewhere there. Rest is up to us to manage.
Hope this gives a little bit of idea of our sensitivity, but I would like to add here that I think the sensitivity of the Scandic has gone down the last couple of years. And that is due to that I mean initially this was primarily a company which was I mean, very much a Swedish company. Now we stand on more four legs, I would say. And I think what we have seen in Copenhagen last year and Oslo last year, we have still managed to improve the results despite that there has been negative RevPAR in those big cities. So I think from a business point of view that we have a better composition today.
So we hope that this will only be a theory, which we see here. Right. And now time to IFRS 16. And I will not hand out a recommendation. Instead, we will look have a kind of a visual on this one.
And this is a visual we will have in the annual report also. And it's not that difficult. Normally, and you know that very well from your own business and so on, rent is straightforward. That's the dotted line. You pay more or less the same amount every year, maybe a little bit inflation here and there, but more or less the same.
So what does IFRS 16 do? Hang on. Forget about the rent. We talked about 2 components. We talked about an amortization and an interest on the financial leasing debt.
And what does it do? It moves it takes the result from the future or the cost from the future and put it into where we are today. So we actually move a lot of take down the result today instead of having it in the future. And the implication of this is that you punish growth. You punish growth with this recommendation.
It's important to think. I will come back to this at the moment. So you actually punish growth when you do this. It might be good if you don't have any ambitions. Right.
So let us take an example. And this is only a theoretical example I would like to underline that. We have a let's say, some come in with a fantastic investment proposal here. And for some reason, we have a debate whether this should be a lease of 5 years or 20 years. A 5 year lease is not something which is abnormal.
In the retail world, for example, where you have a lot of alternatives, you would never probably see it in hotel industry because the alternative to driving a hotel is hard to find. And a hotel is built for hotel purposes. This is a good investment. FNB share 20%, not too high, 350 rooms, a GOP of 47%, an efficient configuration, an efficient model, a decent rent. The landlord will still earn some money, but not too much.
And then adjusted EBITDA of 20% accretive to our margin. We've spent some CapEx, not too much. We get the return on investment of close to 40%. With the rent cover, and rent cover is a very important key rate because that tells us about how sensitive are we to GOP changes. And 2.1% is not bad.
We can lose half the GOP here. And it takes quite much to do that. So and then we impose IFRS on this. So on a short lease, it's not a big difference. We will have more or less the same effects because the rent isn't that important during a short lease.
But over a 20 year lease, it's quite a big difference. This has never happened and it will never happen. But think about whether we should put in 2 alternative calculations where we say that we need to choose between a 5 year lease and a 20 year lease under IFRS 16 or IFRS 16, then we should actually take the shorter lease. It doesn't make sense because we would never take a 5 year lease from a hotel perspective. Not this, this is a fantastic hotel.
Why should we even take the risk of losing that after 5 years? I have the auditor in the room here also, so she will nail me if I say something wrong now. Quite interesting, but it's also a little bit disturbing. The conclusion is quite disturbing. So how we will deal with this?
This is actually wrong. We already know this regard IFRS 16. So we will not include IFRS 16 in our internal controlling in our internal way of making decisions. This is the only recommendation which is totally dangerous to include in the internal controlling, which does it doesn't really make sense here. So I will need to employ a few specialists on this to see that they keep IFRS 16 outside the business.
So financial objectives will have to be defined excluding. I have worked with this now for a year and I cannot get my head around how should I express the financial objectives including IFRS 16. It doesn't work. And what we will do for you is that we will do some extra work. So we will have complete financial statements excluding IFRS 16.
And I suggest that you make your estimates excluding because I think you will have a tough time to get it right including IFRS 16. And with regard then to financial leases, financial debt, that number is 100% correlated to the length of the lease, which means that if we would like to have that number down, we should go for shorter leases, which would increase the risk very much. I'm looking at the banks here now because they know what they're aiming at. Is that clear? So we will have in Q1 next year complete financial statements both with or without IFRS.
But we will also start to report rent cover, so we can assure you about our risk taking in the financial leases.
Right.
And then going back to the how do we enter the future and can we service now both the strategic Tesco and Go initiatives, but also the existing pipeline. To the left far left, our net debt to adjusted EBITDA, where I said earlier today that we are now more or less on the same level as after we bought the restyle acquisition here. And even with today's dividend proposal, we should be under 1 point 9 on pro form a basis, if I calculated right then. So we would still be a little bit outside the interval. However, I mean this is a target we should look upon on a midterm range.
And we believe it makes sense to have this capacity right now when we are launching these initiatives. If we would use the balance sheet fully today, if we get find a good opportunity, we believe that we could raise immediately EUR 2,500,000,000 with the balance sheet we are having. And in addition to this, the cash generative model which we are having, we should at least be able to have a free cash flow. At least, I'll say, even with years where we have more expand with a little bit higher maintenance CapEx, at least 4% before any expansion CapEx of dividends with the model we are having. So I mean, I think we are well equipped to take on new opportunities here.
Right. Thank you, Jene. And Now we will take a few questions. We'll come back to a Q and A session in the end as well. But I know 1 or 2 has to leave later on here after the next break.
So if you have any questions to mine or Jens' presentation, let's take a few.
Now when we see in this slide, these 38 hotels, yes, that you mentioned, Johan, that some structurally it's difficult to get them to be to improve. So I guess you were going to want
to sell them gradually more?
No, it's not all of them because as Jan was also mentioning, we do have some even some of the newer openings that are in ramp up that also started on a bit low, where we can see them improving. So we kind of you can say this, I would say I wouldn't say it's half and half, but it's kind of a big picture. I think at least half of them we see potential in lifting with all the focus areas we have in order to lift the margins. And maybe the other half is something that we need to deal with either with renegotiating contracts or get out of them.
And Scanning Go, you meant some of the you will change some of the existing hotels to Scanning Go, correct?
Yes. Yes.
What is the rollout planned a little bit? You mentioned
Svenai will show you later on which 5 hotels that we initially will put into the ScandicGo brand. This is something we launched this morning. So, we really haven't been able, because then we were not allowed to, to speak to landlords and owners about this new exciting brand. So we expect, of course, as of today, we will be I think that anybody will both call Svennheil and me a lot the coming days around a lot of suggestions into this new brand. But we haven't been talking to the landlords, which means that the first openings are 5 conversions of some Scandics.
But it is very, very important for me to underline and highlight that we do not do the Scandi GO as a defensive move. This is not to convert existing I don't think we will convert. It will be below 10 as a total. That's my estimate. But we see a really, really strong potential in the market and in our region, also even outside over time, the Nordic region with Escambigo into the economy segment.
So this is a way to tap into a growing segment and this is a quite offensive move not to convert to existing.
And then my third question, if I may. All these slides, when you look at those that are performing, not performing, we went through the FNB. You're talking about the new sales in the pipeline in especially 2021 2022. And you don't have to be that great a math to kind of question your financial objective then of having an EBITDA margin of 11%. That seems a little bit strange, to be honest.
To keep the
No, to have
a financial goal of 11%. I mean, because the goals that you're having, I mean, for me, that would entail quite much higher margins.
Yes. I think we kind of were prepared for that question.
We were trained on it.
So we did all of the Sunday and a bit hours on the Saturday as well to train on this question because, of course, you can say that, Jens, it sounds like you and the group has higher ambitions than this, but we haven't delivered stably above these 11%. I want to reach these goals. And when we have done so and we deliver on this, of course, we will discuss whether we should set new financial targets. But right now, it's the current ones that we are staying with.
Thank you very much.
Thank you. It was Marie over here, I think. More questions? Yes.
Well, I'll continue on Go. And obviously, at the time of the IPO, you had another brand in the portfolio called HTL that also was aiming at the city center, but maybe a little more lifestyle and economy. How does this change? Because obviously, that you weren't able to grow, so you discontinued it quickly.
I think we will both me and Sennheil will give you a few more comments on this, because I think I was part of the organization also when we launched HCL. And we did 2 things, which I think in the hindsight, we wouldn't do today. First of all, we are pretty early out. And secondly, we did, as you said, a bit more lifestyle. It was maybe a bit more also F and B wise, a bit more areas for that.
And when you look at what we do today and in the new, it is something that also you will see later on that we support from the existing organization all around. So we get the full benefit from Scandic and the full scale of Scandic, which we really didn't do. We put it kind of on the side as a separate brand and we created new functions for anything because it should kind of live their own life. This is a clear Scandic brand. You can call it a sub brand Scandic.
We use the word Scandic as well. It's a Scandic Go. It's not a separate name. So we include securing all the power from the organization as such. So this will be a ScandiGo in Norway will be handled by the Norwegian organization, ZEPFUL.
So that's the big difference.
Yes? And quickly continue on that. You also now gives maybe you haven't been outspoken about the Signature Hotels before in the same way as you did today, saying that you don't really aim to grow it. And I think the aim there was also originally to maybe to get it up to 2025 hotels.
I honestly can't remember what was said, but that's at that time. But I look at when I look at profitability, etcetera, we do see stable results and this is doing very well and we also see in the others. But we have no aim and I don't think over time that in Scandic's portfolio, you would see that a lot of Signature hotels will provide higher margins because most of these also have much larger F and B and then spa facilities and fitness and meeting facilities and a lot of square meters where you all know which we have said that the key earnings comes from the room side. So we don't want really to move upwards too much. We can let other operators do that.
We kind of stay in the mid market and we stay now also in the economy segment with the new brand where we find much better margins to be looked for.
And a final one on the margin spread that you showed, where does ISG and Hilton fit into that kind of structure? Is it profitable to drive other hotel brand names in the Nordic for you?
Yes, absolutely. Absolutely. So it could be that somebody would ask us to operate another type of hotel, like I said, that fits well in and something we think we could do a good case on and then put another brand like that. That's absolutely we are we own Scandic, we own the brand, we own our own operations. So it's up to us to decide which kind of operation we want to have behind it and which brand.
Thanks. Those questions, somewhere here. Yeah.
Talking about ScandicGo. Yeah. I'm a bit confused because, having lived with Scandic since I was born, more or less, well, not to be honest, but
but almost.
I have always considered Scandik as the best offer. If you want a good room, you get the best price going to Scandic. Now you say that the leisure market is growing, which is right. We are following those markets, we know, but they are growing in the bigger cities. And now Scandico will take care of parts of this market.
But how shall you deal with the property costs or the rents? Because they will not give you a discount just because you call the hotel Scandicco. So what's the key to the success?
I think I will if I answered the whole thing right now, I think I would take all of Sven Ayl's presentation away from him because that's pretty much what he will show you. He will show you the clear differences. He will also show you why this is a bit more lean offer. Of course, if you want a full service hotel, you want the a la carte, you want to go to the gym and you want to have a meeting room, etcetera, you should use Scandic. And if you are a lesser guest with your family, etcetera, you could use Scandic as well.
So we are there, but we have a limit for how long we want to go down and jeopardize our margins and the price on Scandi. So this is tapping lower into also price wise, we can do something more with the price in this segment by, of course, cutting some areas that a customer that is looking for a place to stay is not looking for. So but we'll come back to that and Sam will be extremely specific on showing this. And then you can ask him as well afterwards on me. Okay.
Should we take a final question before we take a short break? Otherwise, we will have a 20 minutes break and then we're back here and then you will hear more about sustainability and this portfolio thing and Scandigo. Now it's time for the next session, which is 2 sessions. We actually have the sustainability now with Vanessa coming on and then Svein Eyal afterwards explaining a bit more about the ScandiGo. But to start the first one and to present also Vanessa on stage, I think we should start with a movie just to secure that you are up to speed with Scandic and what we have done in this area in the last years.
To achieve great goals, every step counts. Since first opening our doors, we have continuously taken steps to develop Scandic into a pioneer, working for a better and more sustainable tomorrow. And when we take a step forward, the industry often follows. In 1993, we were the 1st Nordic hotel chain to ask guests to reuse their towels. In 1996, we began phasing out single use plastic packaging.
In 2,001, we launched Scandic in Society, creating thousands of initiatives to help the local society around our hotels. In 2003, we introduced what is now a 159 point standard for accessibility. In 2008, we started serving water from the tap in our own refillable bottles. In 2019, we introduced a new initiative where we clean on request, already saving millions of liters of water, but we're not finished. Working together with guests, organizations, suppliers and business partners we strive every single day to decrease our footprint and increase positive effect on our society.
We are the hotel chain in the Nordics with the toughest eco label certification. We go beyond certification requirements to set even higher sustainability requirements on our suppliers and we combat food waste every day in our restaurants with the help of artificial intelligence. Our ambition is to lead sustainability action by offering a world class Nordic Hotel experience by focusing on 3 core parts of our business. Being the most inclusive company for the many people, leading the way to better food and beverage with less impact and offering the most sustainable room experience. With 18,000 team members on our sustainability team consisting of over 120 nationalities and almost 280 hotels.
Sustainability is a natural part of what we do every day in every hotel for every team member, regardless of position or expertise. We are all in it together. To achieve great goals, every step counts.
Hi, everyone. I'm Vanessa Butani, Director of Sustainable Business here at Scandic. Hope you enjoyed the film. We're quite proud of it. I want to talk to you today about sustainability at Scandic and how we use this, a cornerstone of our business, to drive even more strong and profitable business at Scandic.
As you saw in the film, we have a legacy of inspiring change in the hospitality industry, and we have a lot to be proud of. Since 1993, we've worked hard at Scandic to reduce our impact and become a positive force in society. Sustainability is not just a word that we use to make ourselves look good, it's a fundamental part of our business proposition. And today, it's even more important than ever before. We know that we can help and contribute to combating climate change, and we have an imperative to do so, right now, starting in 2020.
We have the power to drive change. We have 18,000 team members on our sustainability team at Scandic, And I really mean that. I joined Scandic about 2 years ago and I have been blown away by the passion I see in every single person that I meet, how proud they are of what we do with sustainability, how they want to drive for even more and how they've got lots of ideas of what we can do to become more sustainable. As the biggest chain in the Nordics with over 18,000,000 guest nights, 4,000,000 meetings every year, We have great power to positively impact people in our societies and to drive transformation, not just in our own industry, but beyond. So you also saw in the film some of the examples that we're most proud of.
And I thought I'd just take a moment to dive into those a little bit more and tell you more about why we're so proud of those. So we'll start back in 1993 with our famous towel initiative. I'm not going to ask you for a show of hands because I'm assuming that most of you, when you stay at a hotel, hang up your towel and reuse it. It's kind of what we do, right? We do that across the world.
And that started at Scandic. That's pretty cool. What I like to say about that example also is it really encompasses the way that we work with sustainability at Scandic. And there's 3 parts of that that are important to know. So first is that it comes from within.
So this idea with the towel was actually one of our team members up at the hotel in Kiruna who thought, isn't this a good idea? We ask our guests to hang up the towels. Great. We rolled it out across all the hotels because we can do that, as Jens said, and now everybody else is doing it too. The second part that's important is that it supports our business.
When we started hanging up the towels or asking the guests to hang up the towels, we saved water, we saved detergents. But of course, we at Scandic saved money on having to wash all those towels, sending them to the laundromat. And that is really important and something that we're not afraid to share and to say, because that's what makes the business truly sustainable when we implement ideas that we can keep doing for a long time. And the third part is, of course, that we need our guests to help us out to do this. We couldn't do it without the guests hanging up the towels, right?
So if you look at our most recent initiative, which we started in Sweden last year, where we now clean on request, right? So if you stay at Scandic more than 1 night, we won't automatically clean your room, you have to let us know and then we'll do that. Again, it encompasses all those three things, right. It was an idea that came from within. Of course, it helps our business.
And we need our guests to help us out to do it. And we're going to keep driving our business that way. In 1996, we started getting rid of all the plastics in our hotel. So you don't see those little bottles anymore at Scandic. We did that a long time ago, and now we see the big guys are following us.
So Marriott has said by the end of this year, they're going to get rid of all the little bottles, little plastic bottles at their hotels. And Hyatt is also looking into it. The state of California has said by January 2023, all hotels above a certain size have to take out all the little plastic bottles from their hotels. That's pretty cool. Again, it started at Scandic, maybe it started other places too, but we've been doing it for a long time and we show people that it works.
Sustainability for us, of course, is not just about the environment. The social aspect of sustainability is super important as well. And we're very proud of our accessibility standard that we started in 2003 and now has 159 points on it. And we implement that at every single hotel that we have. So that also makes all the hotels much more welcoming to everyone and helps us invite people come and stay with us at Scandic.
And finally, our water bottle, which I think is a great example of how we can make our sustainable decisions, fun attractive for our guests and create symbols that we can talk about to show that we really mean business. And we're doing this for real. You're sitting in a Nordic Swan certified hotel. We've been certifying our hotels since 1999. And today, the majority of our hotels are certified either by the Nordic Swan in the Nordics or the EU eco label or the Green Globe in Germany and Poland.
So maybe you're wondering, okay, why is this so important? Why do they keep talking about this one? But it's actually a pretty tough criteria sorry, a pretty tough certification for us to achieve. The Nordic Swan is a type 1 certification, which means that for 1, they look at a lifestyle perspective when they set the criteria, and they also set criteria. So they say, Scandic, you have to have this much water use, this much energy use, this much waste a whole bunch of other factors that they look at, that they check.
And then that's what they do. They come to our hotels and they take a look and they make sure that we are actually living up to the criteria that we've said that we are. This year, the Nordic Swan is updating their criteria. So we'll have next year to recertify all our hotels again and again, move ourselves forward. So what's the difference between the Nordic Swan certification and another one like the ISO certification?
Well, the ISO certification, there you basically choose your own targets. You choose which areas you'd like to work with, you set your own targets. And as long as you keep making progress, you can be certified. And that's really good because that of course encourages everyone to keep moving and making a difference. But it's not like the Nordic Swan certification where we say you got to be here.
And it's great for us to work with the Nordic Swan. As I said, we've been doing that for over 20 years. We have a great dialogue with them. It gives us that 3rd party certification that people know that, yeah, this is really good stuff that Scandic is doing. And also, it helps us to keep an eye on the industry and where are things going, what's important, what should we be thinking about.
And we can have that dialogue with the Nordic Swan as well. If we take a step back and look at why we think sustainability is so important to us, of course, we'll talk about the UN Global Compact and Agenda 2,030 and the 17 Sustainable Development Goals. We support those fully. You see, of course, the Sustainable Development Goals here on the chart, And we've highlighted the ones that we think are most important for Scandic in the sense that they're the ones that we can contribute to the most with our business. So you got number 5, gender equality.
Number 6, clean water and sanitation. Number 8, decent work and economic growth. Number 10, reduced inequalities number 11, sustainable cities and communities number 12, responsible consumption and production number 13, climate action and number 17, which I think perhaps is the most important one, the partnerships for the goals. And that means that we need to work together, together across our hotels, across the industry, with our suppliers, with our partners, with you guys to make sure that we're all working to get to 2,030 and achieving all these goals. And we have a bunch of challenges that we're looking at today that we are trying to overcome.
We begin with climate change, of course, where we have a responsibility and an opportunity to show that we can make a difference. And we know that you are all interested in what we're doing and making sure that we're making our business more resilient going forward. We saw just a few weeks ago, right, the CEO of BlackRock sent out a email, a letter to all of the CEOs of the companies that they're investing in, saying you guys better get sustainability on your agenda or else for 1, you're not going to be existing in the future and for 2, you won't have BlackRock support anymore. So we know that's important. But for us, of course, we see that our guests and our customers are demanding this of us more and more.
So our corporate customers and our the government agencies that we work with, they're asking us all the time, what are we doing? How are we moving ahead? What impact do we have? And then they want to know also how do the staying with us help them to achieve their targets. And that's a great dialogue that we can have with them and help them understand what more they can do to become more sustainable.
We've talked about the fact that we need people, of course. We fight every single day to great people into our hotels and our support offices. And those people are asking us too, what are you doing for sustainability? How can I contribute? What more is going to happen?
And it's great when we have answers to give them and can use them to do even more. And of course, our existing team members, as I said, are super proud of what we do, and want us to do more as well. And I think that really is a staying factor. That's why a lot of people like Scandic and want to stay here because of the great things that we do. Our F and B costs, we also spoke about.
And we're working to make F and B more efficient, more exciting and we know that sustainability can definitely help out with that working with sustainability. And finally, 18,000,000 guest nights, of course. When you have that many people coming through our hotel, every single thing that we do makes a difference, right? Every step counts. So we've been working hard to address all of these challenges.
And we've set targets for ourselves up to 2020 that we are pretty much actually achieved, not quite, but we're getting there for this year. So it's in these four areas and I thought I'd give you a couple of examples of the things that we've been doing to ensure that we achieve our targets and that we do make progress. So first, it comes to diversity and inclusion. We've done a lot with working on solidifying our culture and our values. I think if you ask most people in the organization, they can count the values on their fingers, they know them.
And that makes us also work on our we worked a lot on our empowering leadership model. And that allows the leaders to make decisions, to feel that they have the right to move everything forward, and that also gives people opportunities at Scandic that they feel that can really get somewhere if they have the right energy. We recently also introduced our new recruiting platform called Bring Your Culture, Build Ours. Again, everyone's welcome. If you have the right energy, we have the great opportunities for you at Scandic.
When it comes to health, we have been working with something called the Scandic Health Club, where we have ambassadors at all of our hotels, health or health coach, you could call them across all the hotels, working to get our team members motivated, thinking a little bit more about health and feeling better on the job basically. So that's really, really fun actually to get involved in. And finally, of course, our CO2 emissions, where we've done a lot to reduce the emissions. The one big thing that we've done is switching to renewable electricity. So almost all our hotels and our goal is 100% of our hotels will be on renewable electricity, which means we have 0 emissions on the electricity that we use at our hotels.
That's pretty cool. Another thing that we do that helps us a lot is, of course, working with our suppliers. And we have great relationships with a lot of our suppliers where we push them and they push us as well. And we asked them to do that. We asked them to come and tell us about the new initiatives that they're taking, ideas that they have so we can test them at our hotels.
And we really do. And then we get feedback, and we can move ahead. Of course, we ask them to sign our code of conduct, and we do a proper review of each of the suppliers as well before they join us. I thought I'd show you those some great examples of what we've done. These are the new sheets and towels or new sheets at least that we're going to be having at our hotels.
And we had a new tender process for this last year, where first the suppliers came and gave us one offer. There are several suppliers and we said, guys, this isn't good enough. So we push them back and ask them to come and give us something better. And by doing that, we managed to get even more organic cotton into our sheets and towels and more polyester as well, which means that depending on the product, we're saving between 18% 26% of carbon dioxide emissions. That's pretty great.
In that same process, we managed to get one of the launderers to Nordic Swan certify themselves as well. And of course, that's great for us, but we like to see the impact that we can have on the industry because then the rest of the customers that they're working with will also know that they're Nordic Swan certified and they'll also have an impact. The next one I'd like to tell you about is our new shirts. So these are I'll show you this. These are the shirts that we are rolling out now into the organization.
They are organic cotton and recycled polyester. The buttons are all recycled polyester and they come packed in this what you call a ranger packs or a roll, rather than coming like this in a plastic bag. So everybody gets them like this. It saves a lot of transport. You can pack them a lot better, and we don't have that plastic.
The other thing I really love about this shirt, and you can come up and take a look like this, is that we have printed our values in the color. So every time our team members put on their shirts, they see our values and they're reminded of what a great place it is they're working at. Feel free to come and take a look. I also have you can compare the feeling of the new sheets with the old sheets as well if you want to, or you do it when you come and stay at the hotel. Then of course, there's waste.
And we've been working a lot to reduce our waste. Right now, we're piloting an artificial intelligence tool to help us reduce our food waste. So basically, we have a camera that can identify what's being thrown away and put that all together in nice graphs and charts so that we have stuff to discuss in our team meetings and to help to drive behavior change there. So I'm really looking forward to seeing how that pilot works out and I hope that we can roll that out even bigger. And then of course, nudging at our buffets.
And you may have noticed that if you haven't, I would recommend you either have lunch up here one day, or you had to Scandic Continental, where we have a great lunch, but also it really is a very nudging buffet. So what we try and do there is to help our guests reduce their food waste without really telling them, please don't throw anything away. So you start by coming in and you get you take your plate. It's a smaller plate perhaps than you might have otherwise. You don't get a tray, so you can't load up all kinds of stuff.
You're welcome to take as much as you want, right? It's a buffet. But we're helping you to not throw things away and maybe be a little bit more healthy too. You start then with a fantastic salad buffet, and you fill up your plate with lots of salads, they look beautiful, And again, it's a little bit more healthy. And then you get to the end at the back where there's a window to the kitchen where you have the protein served and either it will be served by the chef themselves, you can chat them and they will give you a portion, or there's a plate where you take a portion.
And again, it's not about limiting what you can take, but it's saying, you know, take a portion, don't take 25 spoons, and eat as much as you'd like, and let's all try and work to not throw things away. So we keep working with those kind of things to help people, again, unconsciously make great choices for themselves and for us. So in addition to these examples, we also run sustainability workshops at our hotels every year, all the hotels. And there, all the team members get together and they talk about sustainability. They talk about what we've done and what more we can do.
And then they start setting targets together for their hotel about what can they focus on and what can they do this year. We're not following up, we're not whipping them into shape to try and try and get them to do things, but we are encouraging them to have that conversation and to start understanding how their actions have an impact on their individual hotel. And we've noticed that we get great action from that, but we also create lots of pride in the organization because people start talking about what we do, new team members understand what we've done in the past, and they're really happy again to be here. So as we said, every step counts. And these are just some of the things that we do to try and make ourselves better every day.
But we're not satisfied. We are raising the bar. As we look beyond 2020 and our current targets, we are launching a new strategic platform for sustainability. Our ambition is to lead sustainability action in our industry, and our vision is a world class Nordic hotel experience where Scandic is the most sustainable place to meet, to eat and to sleep away from home. This is our strategy summarized.
You can see that we've got our vision at the top, a world class Nordic Hotel company. In the middle is the core of our strategy, where we innovate to drive change. And that's really about the core of what we do, right? And that's how we're going to drive change. Just keep doing what we are doing, but doing it even better.
And all of this rests on a foundation of what we call sustainable hotel operations. And that's where we work to get better and better each and every day. So let's take a closer look at what we mean by each of these areas, meet, eat and sleep. And I'm going to keep saying that, so you're going to know it when you walk out of here this afternoon. So meet, that's all about our people, the people who work with us, the people who come into our hotels and the people in our local societies that we also work with.
We want to be the most inclusive company for the many people. We want to be the place that everyone wants to be. And how are we going to do that? We're going to work for diversity and inclusion in recruitment, career development and training opportunities. And we're going to continue to engage with our local communities to make a positive impact.
When it comes to EAT, that's all about our food, of course. We want to lead the way to better food and beverage with less impact. And we'll do that by reducing waste, both in food and in packaging, offering sustainable alternatives, offering more plant based and healthy options, and will source sustainably by optimizing ordering and delivering and choosing certified and seasonal products. When it comes to sleep, we're talking about our rooms. And here we want to offer our guests the most sustainable room experience.
That means we're going to have to work at our hotel room sustainability, using less chemicals and more sustainable materials. Think circular in our rooms as well, encourage, reduce, reuse, recycle, of course. And that means thinking about every product that comes into the room, where did that come from and then where is it going to end up at the end of its life? Or how can we use it somewhere else perhaps? And of course, here is where we can really engage our guests in sustainable behaviors.
And then when it comes to the sustainable hotel operations, there's a lot we can do there, of course, looking at how we reduce our CO2 emissions, how we reduce waste, removing plastics, and we continue to Nordics 1 certify our hotels. On the social side there, we are increasing team member and guest safety, health and accessibility and setting standards, of course, for anti trafficking and corruption. So this is the framework for our ambitions. And throughout this year, we're going to be diving deep into each of these areas and show you our specific targets and what we really want to achieve going forward in each of the areas. So keep an eye on us and you'll see.
As we look forward, I'd like to leave you with this. At Scandic, we don't run sustainability projects. We run projects that are sustainable. And we're going to keep doing that. But we don't have all the answers.
We know for us to make this work and to be truly sustainable going forward, we have to also work more closely with our property developers and the owners to make sure that we consider the whole hotel and work together to make it better for all of us. In addition to that, we need to look at our indirect emissions, our Scope 3 emissions as we call them. So looking at all of our laundry, how people travel to our hotels, of course, and the food that we buy and the impact that that has. And this again requires close collaboration with our suppliers and with our partners, in addition to talking to our guests and nudging them even a little bit more. So we still have challenges ahead of us.
And with 18,000 team members, led by the group that you see sitting here, we think that we are up for the challenge. Thank you very much. And I'm happy to take any questions you have.
When you look at sustainability and the hospitality industry, obviously, it's a sector that is singled out by a lot of the rating agencies as being a problem area, so to say. How do you work within the industry on this to, say, develop the whole scope of it?
I mean, I think for 1, just by being the pioneer that we've been and trying to do more and push ourselves more, we know that people are looking at us and looking at the example that we're setting. But the other thing we do is actually we are part of the International Tourism Partnership, which is an international group with hotels from all over the world that discusses specifically sustainability issues and works together to drive sustainability, both again, social sustainability and environmental sustainability. And I found in my participation in that group, it's been fantastic because both I'm able to inspire them, but I learn a lot from what's happening and we can work together on topics to drive change. There is some benchmarking that they have. They are collecting data and putting it together.
The problem that we have with that is they don't have any data on the Nordics. So the closest we can get is Germany. And since we have not that many hotels there, the numbers still just aren't really comparable for us.
If you
go into a hotel today as a guest and you check out tomorrow, today, Would you say what would you say is the most from a sustainability perspective, the experience that you would say this was the single most this single experience was the one that I kind of took with me like the sustainable was it the food that you eat? Was it on in the room? Or was it how you saw the logo? Or what is it today?
I think that you can't say it's just one thing. I think it's the total perspective. It's all the little things that you see that make the difference, right? You notice, oh, wow, they asked me to hang up my towel. Oh, wow, look, why do I have a smaller plate here?
Oh, look, look at the diversity of people who are working here and how happy they all seem. It's all those things together. And we know that people, when they stay at our hotels, they want to know that they're making a good sustainable choice. And we often talk about making our guests our sustainability heroes. And it's that feeling that you want to have when you leave.
So it's all the little things that come together. And we're not trying to point it in people's faces all the time either.
Do you run your hotels in certified buildings? You may have mentioned that. Or do you have a policy around it? Or is it part of the Swan label?
I didn't mention it, and it's not part of the Swan label. We do have some of our hotels, actually, I think the majority are certified with Brie, Morlead or Braumilhav, all those kinds of things. We don't have a policy on it today, but I think that's something me and Sam are going to be working on going forward as the next step that we need to take to really start getting into that aspect of it too. I don't know if you want to comment on that Sam.
I think you're doing good.
Thank you.
Thank you, Vanessa. I can say that there are some of us in the room that Enbio, our native language, Sounds so nice to hear your native English. Now we are on to the next topic, and Sven I will start by talking a bit about his new role probably and his focus areas and then take you a few into a few slides around Scanigo and a bit more of that. Maybe we drew that to answer some of your questions. And then after that, we take some Q and A for that and we can conclude for the day after.
So please, van Ayn?
Thank you.
Thank you, Jens. Yeah, just to clarify, I have just I've been called Sven Ariel and Sam. It's the same guy. Normally, only the 2 bosses I have called me Sven Ariel. That's Jens and my wife.
The rest of the organization use Sam. So but it's the same guy. As Jens told you, we aim with Scandico to tap into the growing economy segment. And but before we deep dive into Scandico, I just want to give you sort of who I am and what I've been doing, so that you know what kind of background I come in with. I started in this new position in January, and I've recently spent 9 years Head of Norway in Skandik, and we started with 16 hotels and now it's 87.
So I've been working a lot with the expansion, configuration, hotel design and doing a growth journey in Norway, not only with Rika, but also with other hotels. I would say that I am a true hotel nerd. I love drawings to look at hotels from different perspectives and really mold the hotel to be a hotel that could be at its best, because a lot of the margins that we produce actually lies in how we manage to build and create those hubs. So I'm really looking forward for this opportunity to work with the whole portfolio and also all the way from you have a lead and all the way to the lease expires. Well, since we have 20 years lease agreement, some of them will be after my retirement, obviously, but I can work with a hotel in a very long period of time and it never stops.
You always discover new things that you can do. So then we will start to look more in details for Scandico. And to kick it off, I think we will have a look at the premiere of a film, very nice movie about Scandicar. So here we go.
Every day and every night for almost 60 years, Scandic has cared for guests of all kinds. We know that traveling can be so many things. Sometimes, for some people, the full service hotel experience is more than you want. For the curious ones and the ones who know their way around the city, the ones looking for a different, leaner travel setup, we are launching a new brand within the Scandic family, Scandic Go, a smart and urban hotel concept for the open minded. Pay less and get the things that really matter to you.
A great night's sleep at a great location. No gym, no conference rooms, no traditional front desk. Check-in and access your room using your phone. Stay for breakfast if you want. The rest is right around the corner.
A proud Scandic sub brand powered with its own identity and purpose. Scandic Go is playful, intuitive and urban. Dressed in vivid colors. An expressive clear cut brand. Witty, fun, and to the point.
Enjoy a no nonsense hotel experience. Functional, warm, and unpretentious. Welcome to ScanITGO. What a great place to stay. Let's go out.
Yeah, I hope you enjoyed that film. When we start to look at who are going to stay at this hotel, you can look at generation Y and Z, they mix business and pleasure and they don't really matter what day of the week they work. Well, sometimes they don't work at all. And you could say that these people, they would like an environment that they might could have invented themselves, somewhere to feel home. But we won't age discriminate.
It's more a state of mind. It's more like that you can pay less if you get less, but you will make the choice yourself. I would say that these people, they like to be around others. I was working up here yesterday in the reception, and they just put on a colorful headset if they want their privacy, but they are all working at the same community table. So it's young and a vibrant feeling.
And they are highly digital. They are used to use their phone to everything. And that's why it's so important also that this brand will be digitalized from day 1. I think we should look at the Scandic brand as the reliable parent here. Scandic Go is a young family member you go to if you would like to have new adventures, but you always have the safe haven of the Scandic family in the background.
So it's a part of Scandic. You go into the Scandic web page and you find the whole family color in also Scandic Go. As Jens mentioned, we aim also to make the Scandic mother brand a bit more crisp with this. So we are trying to make both more distinct Scandic, but also a very distinct Scandic Go. And in Scandic Go, we will differ from Scandic.
And it's also important to say that we would like to tap into the economy segment, yes, but we will also drive more against the economy design part of it. And if you look around the world today, you will find a lot of brands that are trying to do this and some quite successful. So I would say the inspiration is mainly collected from outside of the Nordics. But you also feel that this is a young, playful, and urban atmosphere. So it's not a hostile feeling.
It's more of a feeling that you might have seen for yourself if you went to the furniture shop and you find out what kind of furniture you would have. If you look at the difference between the two brands, I would say one of the most important thing about ScanLit GO is the location. We say that you check-in to go out. These people, they like to use the city and they read up on the city before they come. So it's very important that it's a AAA location, so it's just a footstep away from everything you need.
You can't find everything in the hotel, but you find it around yourself. If you look at the room size, it will be smaller. In some of these buildings, we might have 8, 10, 15, 20 hotel rooms that are a bit bigger. Well, then we will fill them with more beds because it will be a leaner offer on the room side, but the quality of the bed, the possibility to make it all black at night, the sound, everything else will be Scandic standard. So it will be a fantastic sleeping experience, but in a smaller room.
And for public areas, in a Scandic, there are often many square meters. In this concept, there will be all in one lunch. Here, you can have your breakfast if you choose to include it. Here you can have a drink. Here you can find other people to connect with, but you can also just use that as a place to chill if you like that.
So your living room in the hotel and that is the only public space that we will have. It doesn't need to be in the ground floor either. It could be somewhere else in the building if that is better for the total economy in the building. When it comes to in room entertainment, we think that a lot of the new young travelers, they have their own devices with them and they connect, and they use their own streaming alternatives also when they are away. So it will be a limited number of public channels, the rest you have to take with you yourself in your own TV habits.
And as I mentioned, breakfast not included, you choose for yourself and it will be a cold selection, so a smaller breakfast And no restaurant, no gym, no meeting facilities, and no kids concept. Everything of that you have to go outside of the hotel to find. So there is a clear difference between the 2. So we would like to have a playful, young, vibrant atmosphere. We will choose materials that are quite rich.
We will choose concrete and wood, find inspiration from outside of the hotel building. So it will be a vibrant environment. I think if we should meet this target group that we are targeting, it should be a young feeling. I think that is what they would like to see. And here is the mock up when you see it without the lyrics and it's also very flexible.
You could take the parts with where you get the drinks and everything, you could place it along the wall or you could put it as a square in the middle, because we will have to enter into many different rooms when we build this all in one launch. So it's very important that it's flexible and that we can play with it. And as Jens mentioned when he talked, it will be a more standardized product than Scandic. So this is not exactly how it will look like when we open the first in Q4 this year, because as I've used to say to my team, the 18th February is not the end date. That's the beginning of the journey.
Now we launch it and we present it. This is a good idea of how it will look like, but we will have also time until October to really work with this and mold this to be at its very best when we present it. And there was a question about HDL. And of course, for Scandic, it's always been about large economies of scale that is sort of everything we do. Also when Vanessa talked, it's very important for us to find things that we do a lot of because that is really good for economy as well.
But the HDL, as also Jens touched upon, I was here when that brand was introduced well, and we put it aside on Scandic. We didn't really include it. And that was a mistake, we have to admit today. We have the operational model that is the strongest in the Nordics. So the people in Norway, Finland, Denmark and Sweden and also outside of the Nordic, if it comes to that, they should operate these hotels, but with strict guidelines according to the brand they operate.
I think that is within the strength of Skandi, that is where we really could leverage. We have people and I've seen just today when we launched it, it's a fantastic feeling outside in the organization. So they would really love to take on this. So the platform that Scandic has, which is the best distribution in the Nordics, which is the best operating model in the Nordic, Of course, we should apply this to ScandiCo. And the first five all have AAA location, 2 of them in Stockholm, 2 of them in Oslo and the next is coming in Copenhagen.
The 2 in Oslo will open Q4 in 2020, so with also the 2 in Stockholm and then Copenhagen with the follow quarter 2 in 2021. All of these also fits perfectly with the brand requirements. So they are already with smaller rooms and they have access to that all in one launch that we need. It's not a very large space, but it should be a space that fits the number of rooms, of course, but we estimate a little bit less people to have breakfast there as you can choose to take it away if you would like to. And all of these has just a footstep away from the hotel, a variety of offers in meeting, in restaurants, breakfast offers, gyms if we would like, everything is around the hotel.
So the great location, the great sleep, but also at a great price, it's very important here. It was touched upon earlier today about the price. This brand will give us a bit of a more flexibility when it comes to price. Of course, you get less, then you can pay less. But we can also disconnect a bit from the Scandic destination strategy because naturally a lot of these hotels or I would say maybe all of them when they have arrived will be in a Scandic city.
And we can disconnect a bit from the strategy we do have on those destinations today and use rate more actively to get occupancy if needed. So it will be the right or the great price, not the lowest price maybe, but the great price and it will be connected to where the hotel is situated. So to sum it up, we see a great potential in this growing economy segment. We think that this brand will be an excellent complement to the Scandic offering we already have. We can enter this growing market that also broadened the expansion base that we have And maybe very important in this room, when we expect to use lower CapEx and with a business model that is very connected to the room side, it will produce higher margin.
I was not going to say anything about the margin and I don't need to, because Jan has already done that. So that's nice. So that is ScandiCo for now. The journey is just starting and in Q4 this year we will open the first ones. So
Thank you. I'm still confused. Take the example of the hotel at Uplandskarten, where you are wall to wall to a normal Scandic or let's say Scandic. If the price in the Scandic is, say, NOK 1500, how much will the price be in Scandic go?
I would say that will depend on the occupancy situation. We have dynamic prices in all our hotels. So let's say that the ScanLink next door is near to full, then it could be 2,000 there. And on the other hand, the Scandic Go could have a much lower rate. But if the situation is different and Gold is filled up, you could risk that the price is higher as Scandic Gold, but the flexibility in Scandic go will be higher.
We can play more with the rate if we lack occupancy.
But you are very good in playing with your rates with the Skandik today. And why are you saying that the Scandic Go may be more expensive than the Scandic wall to
wall? I would say that normally not. But in certain situation, it could be. Let's say that they are fully booked before the Scandic around them, then you could experience from time to time. I mean, you will experience today that Haymarket could have a lower price than other Scandic around the corner because Haymarket is not filled up.
That could happen. And I would say that this could happen also with ScandiGo. But normally, I would say in 8 out of 10 times, ScandiGo will be the less expensive alternative because you get a bit less and then you pay less.
How much less?
I would say that that would depend on the market.
Yes, I know it depends on the market.
Let me just in Stockholm, where the occupancy is very high, I will estimate that the price range is not that huge. In, for instance, Oslo, where you have more seasonality, then you might have a different price band. So it will depend on what time of year and season and market conditions.
That's why I proposed NOK 1500 in the normal Skandik. So speak out now. Is it NOK 1000 or is it NOK 800 or is
it But it's kind of easy to say. It's not to try to solve it with something Sam can't, but it's pretty clear. We have price range, which on the same room can be from, I don't know, 700 up to several of several of 1,000. But of course, with a lean offering on ScandiGo where you exclude the breakfast, you would in comparison day at exactly the same market see a slightly smaller price on the Scandigo. But this we are here to adjust the prices every day.
We adjust prices according to the rest and the demand. So you won't you would at least you would hear the difference is always between the price point because of the excluding offers of breakfast, etcetera. This will be a lower price point and also starting lower price point than you see as Scandic, that's for sure. But we could never give you whether it's SEK 100, it's SEK 1,000,000 because it will differ. And even some days, it will be more expensive than neighbor hotel.
To continue on that question, I need the microphone to take it over to you. When I look at those hotels in Oslo, the Grandson and Callaghan, I normally find those being the lowest priced hotels you have in Oslo to start with when I try to travel there. So is this more of an opportunity to take down the cost levels in those hotels to improve the profitability of it than really making the price points move?
No, I wouldn't say so. I would say that there is a reason that they are a bit low on the low side of price today and that is the room is smaller. It will be a bit better operated because this is a leaner model and it will give us a little bit more of a freedom when it comes to price range, because today they are connected to Scandic and have to sort of play around the other Scandic more firmly. But with Scandic Go, you could actually play more with the rate. But we will also do some renovationals, those hotels and make them to the Scandicco that you have seen an example of today.
So I would say that one of the reasons that the rates are lower today is that the rooms are smaller. It's a different product.
Tell me about your growth plans. Do you plan to get new hotels or change hotels? You can also like have a go section in a big scanner hotel with smaller rooms. What's your plans?
I would say that to start with the first, we are not planning to have 2 hotels in 1. When it comes to growth plans, I would say that Jens explained it very well when he said that 1500 rooms was for the Scandic. And now when you combine the 2 brands, we aim to do 2,005 to 3,000. And I hope that we can announce several others of Go this year, but that depending on how the market will react. We launch it today.
But as also Jens was mentioned, this is not a conversion brand. We aim to take new buildings and new plots. So and my phone number is 9,517,190 with country code 47. So please call if you have any exciting plots or buildings, because first of all, this is a new growth avenue for us. We would like to expand further, especially in the Nordic with this brand.
Okay. I have one last question maybe then
to this. So in your hope for a 3 to 5 year expansion of Go, how many hotels would it be in the Nordics? And there is is there also obviously, Copenhagen is the city where you have probably the highest growth, as you as Jens also showed, when it comes to the economy segment. Is there opportunities for acquisitions in this segment as well?
Well, I must return to the a bit boring answer that the ambition was 1500, now it's around 3,000. And to give an exact number, the day we launch, that's not possible. Maybe in some quarters we can do that, but we have to also look at the market reaction. So obviously, the ambition stands for around 2,500 to 3,000 combined with the 2 brands.
Okay. Thank you, Sam.
Thank you.
Then I think we are pretty much close to keeping the timetable for today. I would say, first of all, thank you for sticking out this long with all of what we have addressed. When you look at this kind of concluding slide, we still see that we have a lot of opportunities, which I hope you have seen today. We can continue to grow Scandic in the Nordics, which we will be doing. And now we also can grow with the Scandigo.
So this is also a great opportunity, the rollout of this new brand, both within the Nordics, but also when we look at a longer perspective outside the Nordics. Then, of course, we have also the opportunity, which was also addressed in the questions, operating other brands. This is not a high priority for us. The high priority is Scandic and Scandicos. But if this pops up and great opportunities, we can do so.
Then, of course, we have the continued growth in Germany. That's important. We will be adding a bit more resources into this. So Sam's team will address it a bit more than we have done. Also, when I showed you this slide of the 3 different options, now also to look more for takeovers, potential takeovers, both of smaller chains, but also individual hotels in some of the key cities.
But that we will also do further outside the Nordics. We have been saying pretty clearly all the way through that we are looking at expanding outside the Nordics in Germany, but we are also looking a bit more whether there are opportunities in the northern part of Europe that might be more interesting as long as we keep to our financial targets and our key goals for the economy of that. So this was a brief summarize. I hope you also felt during the day that we gave you all of these answers. And if not, you have a final few minutes in the Q and A where Jan can join me and Sam and Vanessa can also be here if you questions to any of us.
Otherwise, also just after, there will be lunch served outside and we can also address your questions there. But any final questions? Christa?
I have one question. When did you start to work on Scanigo? And did you have any now international example that you kind of looked at?
We have been working with this kind of the most of 2019 from the idea perspective and up to today's launch. This was a thought that I have been watching now in Copenhagen coming from the Danish operation that I've seen that this segment of economy segment has been increasing fast. And I thought that we had some issues if we should tap into this clearly enough with the Scandic. So of course, when I joined my new role a year ago, this was an opportunity to discuss with the rest of the management. And then we decided to persuade this.
So we started kind of a year ago. And I would say most of Sven and I said that also that most of our the way we were inspired from this was a bit more globally because now we have been looking at Germany for quite a long time. And if you look at the German market, a lot of you know also that the German market has a lot of economy hotel chains, etcetera. You saw some of the transaction that has been done in this segment extremely high. So we have been looking into these because we thought it would be interesting.
And through that, they are confirming that doing such a thing would be beneficial for Scandic also in the years to come. So a bit more looking from the international players than but also seeing that this is growing in the Nordics. Yes. Maybe you're hungry. That's why we stopped.
If we don't have more questions, we can take it outside. Then I would once again thank you a lot for spending the day with us. Highly, highly appreciated. Thank you for all your interest and support to Scandic. It is extremely important that you both at these sessions and in between, which I think you investors and analysts are extremely good at, contact us, contact Henley, contact me again or anybody else and ask all of your questions because the more you know, the more precise you will become.
So but thank you for coming.