Please begin, speakers.
Thank you very much. Jens Mathiesen here, and welcome everybody to this morning call. Thank you for joining us on our presentation of Scandic's fourth quarter report. We start at page two for a brief summary before I later on hand it over to J for the financial walk through. Our results continued to improve significantly compared to last year, and we are especially pleased with the strong cash flow during the quarter with a net debt reduction of more than SEK 800 million in the quarter and SEK 1.3 billion in the past six months. However, supported by some positive one-off effects which Jan will come back to.
The strengthening of demand that started during the summer last year continued into October and November, but we saw reintroduced restrictions during December that resulted in low occupancy during the final weeks of 2021, especially in Norway, Denmark and Germany. We have a positive view on market development in 2022, despite a slow start of the year. January is normally a relatively slow month for us, and this year it has also been negatively affected by restrictions. We do foresee a significant market improvement during this year, as most of the restrictions have now been lifted or are being lifted in all our markets. Please turn to page 3, where you can see our quarterly adjusted EBITA that came in at SEK 436 million in the fourth quarter, despite a weak December.
This corresponded to a margin of 11.5%. Actually one percentage point higher than we had in the fourth quarter of 2019. Our results in the quarter did, however, include state aid of SEK 111 million, and there was also some effects from our regional quarantine business. When we adjust for all of these items, our underlying margin was around 7% and results remained positive in all segments. We are quite pleased with this performance considering the weak December. Please turn to page 4. Here you can see monthly market occupancy in the Nordic countries. We have seen a similar pattern in all countries within Scandic.
We had a very weak start of last year and a rapid improvement from the beginning of last summer that continued into October and November, with occupancy rates of around 60% in Sweden, Norway and Denmark, and just above 50% in Finland. Thereafter, we saw a clear slowdown in December, and that continued into January, with occupancy rates of 24%-27%. December and January are months that are normally seasonally weak for us, but this year has also been impacted by the reintroduction of government restrictions on all our markets. If you turn to page 5, here you can see the development of the number of occupied rooms for Scandic on a seven-day rolling basis.
The start of 2022 was slow, but we still see a clearly higher level than in the beginning of last year, and the trend is positive. You can also see how quickly the market turned during last summer. The number of occupied rooms basically doubled from the beginning of June to mid-July last year on the back of lifted restrictions, and our customers acted with very, very short lead time. The pattern from last year shows that underlying demand is robust and that the market turns quickly once the restrictions are being removed. We have now a situation where restrictions basically have been removed in all our markets or are being removed these days, and we are now seeing a positive trend both in bookings and in occupancy. Please turn to page 6.
That shows market statistics on development of average room rate. Rates have more or less been on levels back to pre-COVID levels in all Nordic markets at the year-end. Development has been especially strong in the Norwegian market, with prices higher than during the latter part of 2019. This is of course somewhat impacted by mixed effects, but pricing is very much a key priority for us. We have a lot of focus on yield management. That of course is crucial for Scandic's profitability during the market recovery, especially now when we are seeing some signs of inflationary pressure. Please turn to page 7. Scandic has improved our workforce efficiency during the pandemic, and we are, as you can actually see, ahead of 2019 levels when it comes to work hours per sold room.
This even despite the lower occupancy in December, and we are still below the levels before pandemic. We have increased our headcount significantly since last spring, and we do still have a need to further increase the number of team members on the back of expected increase in demand. We do have also implemented the permanent reductions in central functions and we have a more efficient organization than we did before. We remain highly focused on cost efficiency and on flexibility in order to drive profitability and to further improve our resilience over time. Please turn to page 8. Here you can see a very nice picture of a beautiful new hotel in Sundsvall in Sweden that we recently signed together with Skanska.
We have for obvious reasons had very few additions to our pipeline during the pandemic, but this is a really exciting hotel with a great location. The hotel is entirely built of wood with very high environmental standard and is climate neutral. It will have 210 rooms, and we plan to open it in 2024. Please turn to page 9. Here you see our gross pipeline that amounts to around 4,000 rooms, but it's just above 3,100 when adjusting for planned exits of 5 hotels. We have a very busy 2022, as you can see, with 8 openings in the first half of the year. One of these hotels is Scandic Spectrum, our largest hotel yet that we will open before the summer at a unique location in downtown Copenhagen.
We will also strengthen our position in Sweden with new hotels in Gothenburg, Helsingborg, Örebro, and in Kiruna. In addition, we will in March open Scandic München Macherei in Munich, which is a new destination for us, and it becomes Scandic's 5th hotel in the German market. We have a clear ambition to add new hotels to our pipeline, already this year and to grow the business over time. It's important for me to say that we are not stressed by this. We are coming out from an extreme period, and our main focus near term is to ensure that we become as efficient and resilient as possible so that we can grow from a position of strength. In parallel with that, around 15% of our lease contracts expires during 2022 and 2023, as you can see on page 10.
The majority of these contracts expire at year-end 2022 and in the first quarter of 2023. We are now involved in a relatively large number of negotiations with the landlords, which is progressing well. With that, I hand it over to Jan, who will take you through the financials.
Thank you, Jens. We'll go to page 12 where we focus on sales and results for Q4. First going into Q4 in particular here, 2021 of course a very, very complicated year. Six reasonable months and six bad months. If we zoom in on Q4 in particular, October and November, it was good months, as Jens said, and I would say something like up to mid-December was reasonable. Then when the restriction was launched around mid-December in many of the countries, we lost a lot of occupancy during those weeks. It almost got to the half of the level we had in the beginning of December there. Anyway, despite this turmoil, this volatility, we managed to get a positive EBITDA for the full year of SEK 6 million.
Looking into Q4 in particular, we have a margin there which we have posted of SEK 11.5 million.
Percent.
Thank you. That's SEK 446 million. There comes the million. Improvement over last year over SEK 700 million. We have had governmental support of some SEK 100 million that is coming from previous periods. That is not attributable to Q4 as such. That is coming from earlier periods. We have also had some quarantine business in Norway. If we exclude those items, we have an underlying margin of around 7%. Having said that, bear in mind also that we have rent rebates supporting the result for 2021 of around SEK 500 million, around SEK 300 million the first six months and around SEK 200 million the second half.
We will probably have another SEK 100 million supporting us into 2022 here, predominantly in the first six months of 2022. Another thing which is worth pointing out here is that we have segments. All segments are actually positive during Q4, also when we exclude the governmental support, which I think is the first quarter in a long time, where we have all segments positive. Having said, as we said, we have reinstated restrictions here in December and January. That will also lead to that we expect further governmental support, which we expect to support results in Q1 there. That should be an amount between SEK 100 million and SEK 200 million as we see it, which should help Q1. Yeah, very good. We go to the next page, the cash flow there.
Positive cash flow for the full year, SEK 185 million. We had some, I'll say, payment delays during the year. It was something between us and the bank here. If we exclude that, we have more or less zero cash flow. What you see here, this positive working capital movement, if you exclude for those payment errors, the working capital movement will be around SEK 900 million, something like that. It's normal when you increase sales, so as much as we have done, you get the working capital movement, which is positive due to that we have prepayments from the customers and you pay other stuff afterwards.
It's also so that when you have this strong payment or sales increase, you come a little bit after with the rents, so you build up kind of around that. All these things means that we will need to settle some stuff here now in Q1. We see that besides the normal nice negative working capital which we're having in Q1, you should count on an extra negative effect of SEK 600 million during Q1, which we have also pointed out in the report. Regarding net debt, it's on SEK 3.1 billion, and of course that is helped by this payment delays done. That should have been closer down to SEK 3.2 billion, a little bit more than SEK 3.2 billion, if everything had worked perfect there. Available cash is SEK 2.8 billion.
We have here during the autumn started to amortize the extra credits, which we got when we got into this crisis. You remember that we extended the credit lines with SEK 1.1 billion in beginning of the crisis. That has in part amortized during the quarter then, but SEK 2.8 billion is a good cushion also now for Scandic. Going into the next page, where we have the financial net, we can see that it's a very high number. This SEK -1.6 billion here. 75% of that or SEK 1.2 billion is interest expenses, which refers to the IFRS 16, i.e., the interest component on the lease liability of over SEK 40 billion.
The remaining 400 which we are having is the convertible bond, which for the full year amounts to SEK 100 million. We have around SEK 46 million per quarter, which you can calculate with here to the termination of the convertible here. The maturity of the convertible is October 2024. This is not a rent which is paid, so this is a payment in kind interest component which goes into the capitalized amount of the convertible. However, we do have interest components which we pay, and that is to the lending banks. Our current banking agreement and with the current indebtedness, you should calculate around SEK 260 million per year in paid interest. You see a higher amount here, and that is due to the refinancing we had during the year, mainly.
Finally here, a few comments on the IFRS effects which we're having. The most significant effect is of course the leasehold accounting. We have a leasehold debt of SEK 42 billion in the balance sheet. This year, it has been a very big difference between the non-IFRS 16 and IFRS 16 on net income, SEK 581 million. That is due to that we have posted quite big rent rebates, and that increases the difference. As I said this year, those will be much smaller, and 2023 they will go away. Those means that the effects, the difference between IFRS and non-IFRS will be smaller.
On the other hand, as Jens said here, we have a good and significant pipeline that will increase the leasehold debt, and that will also then increase the difference between the IFRS 16 and the non-IFRS 16. Our best estimate today is that we will have a difference of SEK 380 million for 2022. If we assume no other changes in the portfolio, we should have a zero difference between IFRS 16 and non-IFRS in 2027. However, that's a theoretical calculation, as you probably realize it. Also the convertible bond also an IFRS accounting. The maturity value of this one is SEK 8.1 billion, and that will gradually increase the debt element of this accounting up until maturity then.
The nominal interest cost of this is 11% as calculated by Oscar. I think that this concludes my part of the presentation, and I leave the word back to Jens.
Thank you, Jan. If we then move to page 17, then finally a few comments on our outlook. Our occupancy was around 25% in January. January is normally a slow month for us, as you all know, and this year we were also impacted by restrictions. January was above last year, but below a normal level. We are seeing a positive trend in occupancy and bookings at present, on the back of the recent lifting of restrictions in the Nordic countries. As I mentioned before, development last year clearly showed that underlying demand is robust, and our customers act very quickly when restrictions are being removed.
Our meeting bookings for the second quarter are on a good level, and we expect more events during this summer than we did last year, which is expected to drive hotel demand. All in all, we have a positive view on the hotel development in the coming year, and we are entering 2022 with improved efficiency and an attractive and well-invested hotel portfolio. Also, we are putting a lot of efforts into further strengthening resilience of our business model in order to ensure higher and more stable earnings over time. Before I hand it back to you, operator, I would like to take the opportunity to say thank you to Jan, who will actually leave Scandic at the end of this month.
Jan has been with Scandic for 5.5 years now, corresponding to 22 interim reports. I really appreciated our cooperation, and he has been very important for the company's development and growth during this period of time. He has really strengthened our financial organization, and he has really done an outstanding job together with the entire team in handling the effects of the pandemic during the past 2 years. I'd like to extend my warmest thanks to you, Jan, and wish Jan all the best in his future career. Jan's successor, Åsa Wirén, will start in the beginning of March, and we of course look very much forward also for her to join Scandic. With that, I hand it back to you, operator.
Thank you. If you do wish to ask a question, please press 01 on your telephone keypads. If you wish to withdraw your question, you may do so by pressing 02 to cancel. Our first question comes from the line of Adela Dashian of Handelsbanken. Please go ahead.
Yes, good morning, everyone. My first question relates to your activity levels going forward, and specifically, you mentioned earlier that you've increased the head count significantly. Do you feel comfortable with the current levels to meet the increased activity levels from here on with restrictions now being lifted? Do you see some challenges or risks on that front?
A very good question. I think we are definitely. We employed approximately, I think just above 5,000 people between May and end October last year. But we are still quite below. We ended, I think, around 15,000 when we were on the max. Included in that number that we also have some temporary workers in. But we are definitely below what we did see in 2019 levels, where we were approximately almost 20,000 when we were at the high peak summer season. Yes, we still need to employ more people. We are on a good level now.
We are, as you saw in the report, following this very intense and clearly to secure that our efficiency is even better than it was before the pandemic. This is something we track but we will employ more people, especially also with all of these 8 new openings between now and the summer. The combination of new hotels and let's say a very strong ongoing trend will demand more people. We're having good models to follow this and secure that we put in the people to secure the right efficiency.
Okay. Thank you. also maybe on the new hotels and new concept. Is it time to revisit the Scandic Go concept now that, you know, that you announced at the Capital Markets Day in 2020?
Yes, absolutely. Thank you for that question, which I really enjoy because we have been putting Scandic Go on hold for natural reasons during the last two years. We were announcing this on the Capital Markets Day, as you mentioned, and then it was put on hold, unfortunately, due to this COVID period. Yes, we have restarted that project now, and I expect us to actually open the first Scandic Go hotel, maybe even in the latter part of this year. I don't know exactly when. It's something we will come back to, but hopefully during the later autumn we will be ready with the first Scandic Go.
The first Scandic Go will be a conversion of an existing hotel to secure that we do it. I can also tell you it will be in Stockholm because we want it to be very close to where we are in the headquarters to secure that we actually create the first Scandic Go as we really would like them to be. Yes, it is a concept that we now intend to put to the market.
Excellent. Thank you very much.
Thank you.
Our next question comes from the line of Karl-Johan Bonnevier of DNB Markets. Please go ahead.
Yes. Good morning. Good to hear that we are talking about the continued normalization of the market, and you seem to be able to get your right exposure towards that. Continuing on the previous question, just looking at that pipeline and now suddenly then bringing a lot of new capacity into the market, into your portfolio here in the first half of this year. Given the macro environment, Omicron, and all these kind of things going on out there, are you dealing with this upstart and pre-openings in a different way this time? Or should we have a different thinking about the burden of these openings in the first half of this year?
Thank you, Karl-Johan. Yes, it's absolutely we do have a different approach because normally, when we open new hotels, historically, we have employed a lot of external workforce. We still do that, but we are more focusing on what we call Scandifying the hotels, meaning that in order to deliver the needed efficiency levels, et cetera, we do move people from some of the other already existing hotels in our portfolio to secure that we are, let's say, Scandifying the efficiency levels and the service levels and securing the culture from day one. That is, let's say, a change which we are more cautious about. Definitely it is.
I think also one thing which is good to mention is that some of these openings we have actually delayed. Some of these openings was originally expected to be last year. We have, of course, together with the landlords, have been working not that fast in order to secure that we waited with the openings until COVID was over. I think timing is much better to open all these hotels during this year than it was if we had opened half of them last year.
Yeah. It looks like you're bringing them to the market at just the right time now, so as it seems so. Just on those tight exits you mentioned, are these renewals for 2022, 2023 that you have now decided to basically walk out, walk away from?
No. We have made a—I would say, you also heard it a bit when we did the Capital Markets Day. We are much more, let's say, into the detail of every property. If we don't see that a hotel long term fulfill our targets and needs for delivering the needed margins or results, then once they run out of the contract, then we will either we need better deals and secure lower levels of lease agreement, or we will simply get out of them.
I'm sure you will see that also in the years to come, that we are more prepared to leave a hotel if it doesn't fulfill also the financial needs for Scandic. That's mainly why we're here as well. We like our business, but we also need to make the right profits. This is, let's say, underperforming hotels we are actually leaving.
Good. On that topic as well, looking at, say, rebuilding the pipeline, obviously that has not been the main question now for you for the last, say, two years or something. Looking at, say, rebuilding the pipeline for 2024, 2025, is that something that now becomes a key priority for you on the top management level?
It is absolutely a priority, and we will invest more in the business development department to secure that we have more opportunities on the table. I'm not at all stressed about it. It's very important to say, because I think we have a lot to do in the coming two years to really get Scandic back on track in all levels. With 280 hotels in operation, it's a big machinery, and that has a lot of focus. We are still on the side of that, of course, expanding our activities, and securing that we have more opportunities on the table to now start to build the pipeline. It's not important whether we sign 1, 2, or 5 this year.
It's important that we start the work and that we will be adding to the pipeline in the coming years.
Yeah. Excellent. No, thank you very much, and looking forward to see the development here during Q2 and into the summer.
Thank you very much.
Our next question comes on the line of Jamie Rollo of Morgan Stanley. Please go ahead.
Thanks. Morning, everyone. I'm just wondering if you could talk a bit more about the marked improvement you expect this year. I mean, I assume that's relative, not just to the January figures, which are, you know, down about half versus 2019, but also versus the second half of last year, which was a bit more normal. Maybe you could talk a bit about the shape of the year when you think RevPAR might turn positive. You know, could it get there in the second half of the year? And also within that, are you sort of a bit worried about the staycation benefit last year perhaps reversing as international travel normalizes? Thank you.
Thank you for that question. It's also something that, of course, some of this will be assumptions or estimates from my side and our side. I think we have some clear signals of the autumn, like you mentioned, where we saw that clearly, I would say, general corporate business is coming back. We saw normal corporate business coming back quite heavily. Meeting business was also quite strong in the autumn, but still not at levels we knew before the pandemic. This is something we are extremely aware of.
We are prepared for that part, the meeting part might not come back to the full. On the other hand, I think there's a big chance that leisure and international leisure will continue to grow and will over time outperform the corporate segment. This is also something you see when you look at all the new openings that we are looking much more into the leisure segment and securing with spa facilities, et cetera, that we also cater for that.
I think you will see that over time staycation weekends leisure business will continue to all signs shows at least us that there's a huge demand for that and that the people request still a lot of both staycations and people are traveling quite a lot when it comes to vacation wise and leisure. I think if we should be concerned anywhere, I'm more concerned on following what will happen with the meeting segment. We will clearly over time see that the average square meters versus number of hotels room that will decrease. That's something we are aware of, and we already bring into.
The way we overlook the properties when we look at configuring and looking at how to also renovate the existing hotels.
I mean, I appreciate January is not a big month, but it's clearly a very big drop in RevPAR. Is it fair to say that for the year as a whole, the company's RevPAR will probably still be below 2019 levels, even if it sort of turns positive towards the end? Is that a fair assumption?
Yes, absolutely. As you mentioned, even though we see a strong recovery these days, the first quarter will of course need people to get back to the jobs. We still need to get rid of the last part of the Omicron. There's still a lot of people that are affected by Omicron and, you know, the sick leave percentages are higher in companies. Of course, we will be affected into the spring. I think we see very good signs of recovery. When I flew in Monday morning from between Copenhagen and Stockholm, I saw a full airplane and much more people in the airport than just the week before.
We see the same pattern. You can say day by day, occupancy is going up. There's a lot of requests also for meetings into. Especially I would say from March, and mid-March and ahead. I was attending a meeting yesterday in one of our hotels, and a whole meeting facility was fully sold out. It's really nice to see that people are coming back. I think the summer where we have a lot of events also and we have, you know, there's concerts and Tour de France will start in Denmark. Then we have a lot of things that will come during this summer, which we didn't have last year.
Of course, that is supporting on top of what we saw last year. I think we will also maybe hit 2019 levels in certain regions and certain maybe even certain months. For the full year, absolutely not. There's still a road to go before we are back on that level.
Thank you. The other question is just on inflation. You talked about working hours per room better than 2019, but how about costs per working hour, and also other cost lines, particularly energy?
Yeah. I think, and Jan Johansson, you can also support on maybe some of the comments related to the energy, et cetera. I think when it comes to manning, of course, we do see the pressure on salaries as well as all other industries right now. The pressure will definitely be here since we need to employ a lot of people. Also we have our union agreement settled also for this year in all markets. We do not need to go into these, let's say, blue-collar workers settlements because that's fixed in the agreements already for the full year. That's not the biggest issue.
Of course, we do see with certain, let's say, certain workforce groups that there's a pressure. With all restaurants opening up and all hotels reopening for the full, of course, we will be lacking chefs here and there, and then we will see a pressure on that. I think we're following this quite well. We're also adjusting then our offers to make it more lean and simple in order to not overcomplicate things, to secure that we can handle it with lower manning, if need to be.
It's very important for us to secure that we are so focused on securing, let's say, efficiency levels that are even stronger than we were before. Especially from everything above hotel level, we have decreased and we want to remain that decreased. Maybe I'll comment on the energy part.
Yeah. We have a hedging regime in place. We have had that since many years here. Of course, it's impossible to hedge everything because we have these price areas within the Nordic here, and you have price differences there which occur from time to time, which you cannot hedge. But I would say that even with these significant price increases which we have had on energy here during the winter, I wouldn't see that the maximum effect for 2022, it shouldn't be more than maybe SEK 50 million-SEK 70 million for the full year, something like that.
It's not good, of course, but I think from our point of view, I think we have as good as control about that as we can have, thanks to this hedging which we are doing.
If spot rates remain where they are and the hedges roll off, what's the sort of?
Possible worst case increase maybe for next year.
Yeah. Well, as I said, I think somewhere between SEK 50 million-SEK 70 million, I would say is the worst case, as I see it.
No, I mean, I meant for next year once the hedges roll off.
No. We hedge just into maybe three years ahead.
Okay. Thank you very much.
Yeah. Thank you. Yeah. Yeah.
Our next question comes from the line of Stefan Andersson of SBAB. Please go ahead.
Hello. Thank you. I was a bit curious on salary inflation as well, actually, and I guess you kind of answered what you could answer on that on the prior question. But connected to that, how do you see the churn on your employees? There's a demand for your type of employees. So are you seeing any movement on that side?
I think it's also a very good question, Stefan, because we have definitely seen that. I mentioned that we were employing more than 5,000 people last year between May and October. Of course, a few thousand of those were former Scandic employees that came back. But we also managed to get them back because they like the company. But we also got some thousands of people that were new to Scandic and maybe even new to the industry. So we have a lot of training we need to do with them.
When we look ahead, and the pressure is on when all, let's say, as I mentioned, hotels, restaurants, the industry is opening up now for full, there will be a pressure on this one. I see us handling it quite well. I don't see this as a major problem for us. There will be a pressure in general, but eventually it's all about pricing as well for us. We need to increase prices to cover for all these increases. Both when it comes to salaries and when it comes to cost increases, there's kind of only one that can pay for that in the end, and that will be our guests. We will adjust prices accordingly.
That's the only way to do it like restaurants are doing, et cetera.
Okay, thanks. Second question I had was a little bit about, sort of about new capacity. If you could help out a little bit, maybe. If you look at your larger destinations, where do you see opportunities and gaps to open more you're looking at? Is there any destinations where you might see a little bit too much capacity coming to the market at the moment?
Yeah. You can see what one market that we are of course following closely is recovery of Finland and Helsinki area, because Helsinki has been very much also a destination that historically has been positively helped by the long-haul traffic from Finnair to Asia. Since Finnair has now used their fleet of airlines and planes to other markets. They are flying more from Stockholm to U.S., etc. That is helping us there. Of course, we are following whether they will reintroduce all this traffic and be the hub to Asia again or not.
Short-term, Helsinki and we have one opening in Helsinki this year, and we had one last year. That might be a bit slower than what we see in some of the other markets that will recover much faster. We're opening a huge hotel in Copenhagen and a small hotel in Copenhagen. Historically, you saw it also after the financial downturn that Copenhagen actually recovered quite fast. Then Copenhagen has quite a lot of international flights from all markets, so less dependent on, for instance, Asia or one market or one area. I think, yeah, if we should have an extra eye on something, it will be Helsinki. That might take a bit longer.
I hope definitely to see that both Stockholm and then Copenhagen will recover faster.
Perfect. Thanks. That's all from me.
Our next question comes from the line of Stuart Gordon of Berenberg. Please go ahead.
Good morning. I was just a couple of questions. First of all, just some thoughts on CapEx for 2022 and 2023, particularly obviously quite a bit more activity on new properties and furnishing there. The second question, I think in previous presentations you've spoken about cash flow being positive with occupancy of around 50%. Well, you obviously did 51%, and I think outside of the working capital would have been still negative once taking into account interest and CapEx. It looks to me as if that's going to end up more like 55% for breakeven. If we normalize that CapEx, probably somewhere around about 60% for breakeven. Is that fair? Thank you.
No, it was. Yeah. Well, I think that's a very negative calculation, I have to say. I mean, it's a dynamic world, we are living here. Then as Jan said also, there is lots of measures here continuously to develop the business here. I think the model which we have worked with here during the pandemic with an EBITDA breakeven of a little bit more than 40% and a cash flow breakeven around 50% has been quite accurate actually.
Almost surprised myself how accurate this has been actually.
Maybe a comment, Jan Johansson, if I can add a comment to that you need to look into when you look at from your side is that the mix between the occupancy in the hotel portfolio. We have still even though we had a good recovery also in the major cities, we, you know, this has been highly driven by the outskirt hotels that were a lot of them back on 2019 levels or even above. We have hotels that were all-time high. In order to have the perfect world, we need, you know, a better mix so that we are securing that the big cities are coming up, where also these contracts are higher. So,
To elaborate a little bit on your question there, of course. I mean, it's reasonable to believe that, I mean, looking at Scandic 2021, it's almost half the revenues that Scandic had in 2019. It's reasonable to believe that this business will continue to develop on the double-digit growth rates. Of course, that would mean that you will get support from positive working capital variations as you will. You have prepayments from the customers. You pay employees a little bit afterwards. That's normal. And it's also so that you will probably incur kind of a recurrent debt every year due to that you underpay slightly because you will not be able to pay according to the long-term estimates. You pay according to the current situation.
You will have a positive working capital movement. With regard to CapEx, of course, there is many openings this year. I mean, the committed CapEx for that is not higher than it was for 2021. Concerning 2023, I think, I mean, there is very few commitments for the moment when it comes to 2023. I think that will be a question during this year, how management will allocate those resources here. It might be that you work with a pipeline which you would like to extend, but it's also so that you might look into the current existing portfolio and see that you would allocate money there.
For the moment, there is very few commitments beyond 2022, and that gives also perfect possibilities to control the cash flow. I think this is my last report with Scandic. I think my last word will be here to secure that you secure financial flexibility and continue to focus on debt reduction. That will be extremely important because that's the only way to secure some freedom.
Okay. Just to be clear, the CapEx for 2022 will be similar to the CapEx for 20
Give or take.
Give or take.
Give or take.
Okay.
Very little commitments thereafter. Yeah.
Okay. Thanks so much. Thank you.
Thank you.
May I remind you that if you wish to ask a question, please press 01 on your telephone keypads. Our next question comes from the line of André Juillard of Deutsche Bank. Please go ahead.
Yes. Good morning, gentlemen. Two questions, if I may. Coming back to the international market, you are addressing, you are mentioning that the exposure on the Asian market would probably take more time to recover. Do you have any visibility on the diversification of clientele you could expect in the Nordic market and give us some more color about the trend that you've been able to see through the past few months? First question. Second question is about the structure of the Nordic market and the pipeline. You are mentioning that you are refocusing a little bit more on development and in the meantime renegotiating some hotels.
Do you see any opportunities, or do you expect the market to reopen in the next few months and some private owners to be more tempted to deal with you to boost their occupancy and therefore boost your pipeline? Thank you.
Thank you for that. When we start with the international traffic and we clearly saw signs during the autumn that you can say that both. It started with inter-Nordic travel and then it opened more and more up for I would say certain parts of Europe that started to travel more into the Nordics. When I look at the let's say in comparing with history and historically numbers, then remember if we look at 2019 around 80% of our turnover was inter-Nordic business, and that we see a very fast recovery of. We have 20% left and just more than half of that was European and a bit less than half of that was international.
9% was international of the total. Of course, we expect the international part to maybe not come back as fast as we would see the European business. We expect the European business to
Kind of come back pretty fast during this year. I think a lot will travel. I think we will see much more European travelers into the Nordics, but I also see more Nordic people traveling to Southern Europe, the summer versus what they did before. I think we will see more normalized pattern in Europe from the summer ahead. Of course, how much the Americans will start to travel to Europe and Asian people will increase their travel to Europe is yet to be seen. It covered approximately 9% of Scandic's business before pandemic. That's what we need to measure against. Some will come back fast, and some will wait a bit longer.
That's why we also say that this summer and this year will be much stronger of course than last year. We might need to come into 2023 before we really see full effects like we saw before the pandemic.
If I may, you're still expecting the full recovery to take place more or less in 2023?
Right now, it's your assumptions on that is as good as mine. If we do see strong recoveries and pandemic is over, we might see some small incidents or it might come back with some smaller variant next winter, but it will be like the flu. Eventually, we need to live with that. Yes, that's what I think. There's also. If you look at Scandic as a whole, we are moving out of some smaller hotels, and we are opening quite some larger hotels, et cetera. That will also support. If you look at the size-wise, turnover-wise, Scandic has good chance, at least in 2023, 2024 to be back on pre-pandemic levels, on that.
To your other question, linked to what will happen in the industry, I'm pretty sure that a lot of operators, it's a mixed picture because some are now extremely eager to recover and get back and seek to pay back some of their loans or whatever they sit with. You will also see definitely some that are tired and want to get out of the industry. There will be hotels that will change ownership. I'm sure you will see that the market will open again. I think Scandic, we are always, both before and after, we will be looking for opportunities to grow.
It's very important that we want to grow from a position of strength. We want to secure that our platform is healthy and back to an operational normal. We can build from that. We are very cautious when we sign new contracts. Also, with the last contracts we have signed, we are putting in collapse clauses, et cetera, to cover for future incidents. We are taking care of the learnings from the past two years.
Just a following question in terms of types of contracts. Do you still see, sorry, a large majority of lease contracts in the Nordics, or do you see a trend to see more management contracts in the future?
I don't think we will see booming shift between leases over to management, but I'm sure you will see changed lease contracts where it's more normal to secure a split risk. There will be a focus on securing another type of risk split in the future. You know, I've said it many times before, and I like to say it again, there's a reason for why we operate with these contracts. We really like these contracts.
In a normalized market, and until the pandemic, you know, this has proven to be a very healthy way of operating hotels with full control of all manning and full control of our offers to the guests, and also securing very stable earnings in 95% of our properties. I think this is a model we will definitely continue with to lease hotels, but we are much more careful when signing up new leases that we also secure ourselves for some, let's say, future collapses in market. It might not be a pandemic next time.
It can be war, it could be something else, and then we need to share risk with landlords.
Okay, thanks.
There are no further questions at this time. Please go ahead, speakers.
Thank you very much for joining in this call, and thank you for your time, and I wish you on behalf of Scandic and our team here you all a very good day. Thank you very much.