Thank you very much, operator, and good morning, everyone, and thank you for joining this presentation of Scandic's First Quarter Result. I'm here together with our CFO, Jan Johansen and our Head of Investor Relations, Henrik Vigstrom. Please turn to Page 2, where I will start going through a brief summary. As you all know, This was another quarter where the pandemic had a huge impact on hotel demand. Scandic's average occupancy rate was 7.5%.
We expect market to recover soon driven by domestic leisure when restrictions are eased as more people get vaccinated. As we have communicated before, we expect occupancy to exceed last year's level during this summer and we expect to reach positive cash flow in the Q3. We are already today seeing some small positive signs in bookings and occupancy. But our customers act with very, very short lead time. And the bookings are closely connected to announcement of easing of the restrictions.
Scandic is also well positioned for a recovery. We have developed a wholesale offering for broad target groups. And we have put a lot of effort into adapting our customer offering so that we can fully capture the expected increase in leisure demand during the summer and onward. Due to the limited visibility near term, we plan to publish an update on market development on June 15, which is the day before we go silent of our 2nd quarter report. We want to be very transparent to you.
And at that time, we should have a better visibility on what is expected for the summer months. Last month, Scandic did a placing of a convertible bond that improves our liquidity by SEK1.6 SEK1 billion. And we have also agreed with our banks on extension of our credit facilities. And with these measures, we ensure that we cover our liquidity needs until the market becomes more normal again. You will of course hear much more about this when Jerna is taking us through the financial part in a few minutes.
Please turn to Page 3. Market occupancy has been low in all markets in the Q1. In Sweden, we saw a slight positive trend from very low levels in February March with an occupancy rate of around 25%, while Norway and Finland have been around 20%. In Denmark, the market occupancy rate has been as low as 10%. The difference between the markets is to a large extent explained by different regulations related to the pandemic.
Denmark has had the most extensive restrictions and most of our Danish hotels were closed in the beginning of the year. If you turn to Page 4, that shows the market RevPAR trends. There was a Smaller year on year decline towards the end of
the Q1, especially
in Sweden and Norway due to easier comparison as the market fell dramatically in March last year. Obviously, this graph will look completely different in the coming months with very positive year on year changes as we will compare with very weak months from last year. Please turn to Page 5, where you can see an update on Scandic's development so far in April. We have seen some positive signs lately from low levels. The graph to the left shows Scandic's 7 days rolling occupancy.
The level in the beginning of April were pretty much in line with the average seen in the Q1. But there has been a slight pickup lately and it has been 22% in the last week. The graph to the right shows development per country. The biggest improvement has been in Denmark and Finland in April from low levels. These markets have had the most extensive restrictions.
There has been some changes lately in both countries where restaurants have been allowed to open and governments have announced plans to gradually ease the meeting restrictions. This has had an immediate impact on both occupancy and booking activity in these countries. Development has been more or less flat in Sweden where the current restrictions were recently extended until May 17. And there's no public plan for gradual in Sweden right now. But we do expect to see changes from mid May and onwards.
Please turn to Page 6. In the next few months, we expect increased occupancy mainly driven by domestic leisure travel as vacation gain momentum and restriction begin to ease. We believe that the pace of the recovery will gradually increase, but the exact timing is dependent general factors. Crucial to this scenario is, of course, that the infection and death rate decrease as more people get vaccinated, which you also see in the markets right now. We do expect gradual market normalization from the summer and onward when we should see more sports, cultural events, meetings and increased business travel as well.
Initially, demand will be driven by the intra Nordic travel and the domestic travel, which normally accounts for just over 80% of Scandic's total guest mines. With this development, we expect to generate positive cash flow in the Q3. Even though leisure will drive the recovery in the summer, we expect increased business activity from the autumn and onwards. We are seeing a pent up demand for meetings among our corporate customers to reestablish relationship within their own organization and with their customers after a year where most people have been working from home. It is obvious that there will be changes in business travel and meeting behavior in the future.
We do, however, believe that a relatively large share of domestic business travel could return to pre pandemic levels quite soon. This applies not least for recommendation related to large projects such as infrastructure and construction, which is relatively important business for Scandic. On one of the other examples It's our leading position as a supplier for recommendations for sports groups that also we think will be pretty unaffected once the pandemic is over. Please turn to Page 7. This is a look at Scandic's occupancy development from 2019 and onward.
We expect average occupancy of around 20% in April and it has been around 22% in the past week. Last year, we went from extremely low levels below 10% in April to just above 40% in July. We are quite convinced that we will see a similar pattern this year. This summer, however, occupancy is expected to be higher than last year, driven by better demand in the big cities. Prior to the pandemic, we have had an occupancy rate of between 70% 80% during the summer month.
If you turn to the next Page 8, the main reason for us believing and expecting a better summer this here than the last year is of course the big cities. The Nordic capital cities together account for more than onethree of our total portfolio. And the average market occupancy in the Nordic capitals were only around 27% in July August last year. Only onethree of what is actually normal in at that time of the year. As societies are gradually opened up, Demand will increase and exceed this very historical low levels from last summer.
Please also turn now to Page 9, where you can see our pipeline. Our total pipeline amounted to around 4,800 rooms in the end of the Q1, which corresponds to 9% of the existing portfolio. We have also in April opened Scandic Grand Central in Helsinki. And we will open 1 hotel in Copenhagen and 1 at Landweta airport in Gondberg here in May. We have continued to do slight adjustments of opening dates in order to adapt to the current market situation.
And the as an example, the opening of Scandic spectrum in Central Copenhagen has been moved from the Q4 this year to March 2022. There might be some additional adjustments to the opening dates for the coming years. And also when it comes to configuration of the hotels where construction has not yet started, this is 2 areas we are still working on quite a lot. And I think with that, I hand it over to Jern, for taking us through the financial part of this presentation.
Thank you, Jens. I think we go directly to Page 11, there we have, yes, Q1, Extremely difficult quarter, as you have heard from Jan. It's complicated to operate the business also here. Has been back and forth with restrictions. And it's also so that there has been quite big difference It's internally between in occupancy levels and so on and also intra week variations.
However, here looking at in Q1. You can see here that we posted a top line of SEK 940,000,000. I know that this is below expectations. I think primarily two reasons for that. One is, of course, that the occupancy came in slightly lower than our initial guidance, but also saw that the F and B part has been very low during the quarter and that is due to meetings.
I think we more or less halved the meeting business here sequentially if we compare with Q4 last year. So that is one explanation for that.
As I mentioned, there
are also big Intraweek variations also Tuesdays Wednesdays has been reasonable during the quarter, while we have struggled a lot during weekends and so on. And that also, of course, makes it a little bit more complicated to operate the business. I think big cities, If you look into relation to last year, maybe 80% to 90% lower than last year, while outside the big cities. We are maybe on 60% to 70% lower. And in certain destinations, actually quite decent development.
Not the big change between the countries. I think the variations you see to the right in the picture here is more a reflection how much of the properties are in the big cities and not in the big cities. And we, of course, also have had the fact that we have had more closed hotels in especially in Copenhagen and Helsinki during the Q1 then. As I mentioned, very complicated and difficult quarter and that is, of course, mirrored into the results, which we will soon before I talk a little bit about next page, where we have here, where we have continued to have state ADA rent discounts, more or less on the same levels as in Q4, slightly more direct stated in the Q1 here and slightly less rent discount. However, that is according to plan.
And we expect the rent discounts to be more or less on the same level in Q2. Direct stated, There are a number of applications in progress here. We expect at least to have the same level as we had in Q1 and maybe a little bit more depending on the outcome of these applications there. It's a consistent system in Norway, where we get up to SEK 40,000,000 depending on revenue every month in coverage of fixed costs and rents and so on. And we are currently following what's the possibilities in the other countries there also.
We have accounted for NOK 97,000,000 in Sweden due into this support program. So going into the result, which we have on this page here, SEK775,000,000 minus in adjusted EBITDA. And just going back 2 years, a normal Q1, we should be around 0. That's the normal level here. And I think around SEK 4,000,000,000 in revenues, if I remember right, from 2019.
And as you can see here, SEK 9.40 1,000,000. If we then think about The sequential development, we reported SEK 282,000,000 in for with an occupancy of 23%. That's a difference of 493 If we adjust for differences in state debt, rent rebates and release of provisions and so on, I think the underlying difference between Q4 is somewhere around SEK 350,000,000 negative. And of course, with the loss of turnover here of a little bit more than SEK400 1,000,000. This leads to a negative conversion of something like 80% to 90%, and that is, of course, extremely negative.
The only positive thing with that is that When occupancy goes in the right direction, we will have the same positive very strong positive conversion here. The problem for us having this is that, of course, when you are on this level as we are right now, it's extremely hard to mitigate The difference on deviations in occupancy with lower cost because 95% of the hotels is actually operating on bare minimum already. And that explains why we have this negative conversion. And on top of this, Q1 is normally a quarter when you have seasonally higher property costs due to energy and stuff like that. So that is the explanation for this really, really bad conversion, which we're having during the quarter.
If we then go to cash, we have SEK 980,000,000 in negative cash outflow, like close to SEK 1,000,000,000 and that is a true reflection of the underlying cash burn at ESOGIFL levels. Few exceptional items. You can see here that the working capital difference in the quarter is very close to 0. Surprisingly enough, we have paid some tax. However, That goes back to 2019 when we are in the lot of money.
Quite low investment as you can see here. But if you normalize that, I would say normal level is around SEK 150,000,000 a quarter and exclude the tax, you will still be around SEK 1,000,000,000. So that's the reason why I say that this is a true reflection of the current cash burn. Total liquid total credit facilities is 6.650 in and the debt sales holds. So on this page, we have Available liquidity of SEK 850,000,000 and make no mistake, the proceeds from the convertible bond is not calculated in here.
So those money were accessed here yesterday actually when it was released from the escrow account. So now you can put 1.6% on top of those money. If we then flip to next stage, We repeat sensitivity analysis and you have probably already realized that the first one here estimated impact on monthly adjusted EBITDA is not really holding in Q1. I think the sensitivity on the SoKje pencil level is actually even higher. You need to go north from the SEK 15,000,000 in order to be in the right neighborhood here.
I would say that when As occupancy improves, which it should do, this will be more and more as a true and accurate picture of the reality. We still believe that we can reach an EBITDA to our breakeven around 40% occupancy. Of course, dependent on price development, of course, depending on where we will have the if it's too uneven, we will have Issue to reach it, but it's still so that's our ambition. And of course, that would require all time high productivity levels in our operations, but it's important that we will still target that level. Estimated cash flow breakeven around 50%.
I'm almost a little bit more sure on that than the 40%, to put some color on my feelings here. Right. And then I think we continue here going into the financing because that is something which We put a lot of ambitions into Q1 because I think we're already at the end of Q4 so that this would be an issue with the cash burn we had. So we invested a lot of time into finding a solution for this. In the end of March, we announced this convertible bond and we had an EGM here just a few days ago actually deciding on this.
The terms which you see to the left is well known for you. We communicated that, as I said, in the end of March. This is no cash from here. That we issued this convertible bond below the par value on 8% to 9%. And of course, it is so that this debt of this convertible bond will continue to increase with 3.25% on yearly basis until maturity, which is done in October 2024.
We the maximum dilution is 17% on the current shares. And parallel to that, we also managed to get an extension of the current credit facilities from the lending banks. We have 3 lending banks. And those facilities was extended until end of December 2023. Of course, there has been adjustments of the terms in order to reflect the increased risk of this business.
We will pay a higher margin. We will pay a 5% margin here on which is higher than before. And of course, there is much more reported requirements and so on in relation to these credit facilities here. And on yes, we need to touch upon the IFRS accounting effects also. It's a big difference now on net result level between non IFRS and IFRS.
And that is due to 2 things. One is the rent discounts. During IFRS, these rent discounts are spread over the remaining years of the life length of the leases whilst we take it in the non IFRS accounting as an effect immediately here. And that's the reason and why the difference is increasing here, together with the fact that we have prolonged some leases in conjunction with these negotiations here. And this negative effect, EUR 560,000,000 you might remember that 2019, it was around EUR 200,000,000 will gradually diminish and when it will suddenly or will become positive then in 2027 according to our calculation.
And the convertible bond also area for us accounting and interest margin on The convertible bond is set to a little bit above 10%. And that means that we will have a debt equity split of debt to 78% debt and the equity 22%. And we will also then have a full dilution in the EPS calculation as soon as the EPS becomes positive then. And if it's negative, EPS, of course, there is no dilution then from this. A large proportion going forward, a large proportion of our interest cost is non cash.
So when you calculate the cash impact from our financing is remember to calculate with 5% on our bank debt because that is what which will become payable. And the bank debt is high now in the beginning of Q2. And now we have, as I mentioned, there excess the money from the Escrow account yesterday here, which means that you should calculate with a lower interest burden here going forward. However, it's partly offset by the ramp in net margin increase from 4.5% to 5 So that is the IFRS accounting effect. And that is concludes My part of the presentation, and then I leave the word back to you, Jens.
Thank you very much, Jene. And just to kind of have a picture, let's say, of let's say, a ramp up situation. We believe Scandic is very well prepared for a market recovery. We are well positioned in the market And Scandic has a very broad mid market offering with high focus on domestic and Nordic customers and of course high customer satisfaction. We have measures in place to meet that demand And we have focused a lot on developing our customer offering further adapting towards the leisure segment that we believe will be a driver for growth both near term and of course also long in the long perspective.
We have recently introduced attractive offers for families and we have launched bookable round trips for our customers. And we have further developed our distribution towards the leisure segment just to mention a few examples. So much easier now to kind of book your own tour on the web. As Jern also mentioned, we will enter The recovery with a very low cost base, our costs are currently halved compared to the pre pandemic levels and we have done considerably sustainable cost reductions especially in group functions and in the country support offices that we will benefit from. So we have clearly improved our ability to generate good margins when the market now stabilizes in the time to come.
And with that, I hand it back to operator for the Q and A session.
Thank Our first question is from Adela Deschan from Handelsbanken. Please go ahead.
Hi, good morning. Adela Deschan here from Handelsbanken. Let me start by asking you a general question first regarding your outlook. I agree with you that Vacation will play an important role even this summer and that obviously with easing of restrictions, activity in larger cities will be higher than last And so on. But then for the fall, at least in my forecast, I have Depends the levels coming down again in pace with you becoming more dependent on corporate travelers rather than leisure.
So what are your thoughts on this? Firstly, do you agree with my view? And then secondly, what are you doing internally to prepare for a potentially Weaker Q4 than Q3 coming this year?
We are doing quite a lot in those areas. And I think What we look into is, of course, what's happening around the world right now. And we could be Actually a bit positively surprised by the, let's say, recovery in other markets like U. S. And China.
And if you look at China being well ahead of Europe right now, actually in the last weeks, we have seen occupancy also almost back on 2019 levels even in the major cities. And that's driven not by the leisure but on of corporate demands. So we are actually a bit surprised by, let's say, the speed of the recovery in China, which is almost back on 2019 levels even in the big cities. And if you look at U. S.
That is a bit behind China, but because they still have a lot of restrictions, They are around 60% of 2019 levels and also with fairly okay corporate levels. So when I look at corporate for the autumn looking into that period after the summer to your question, I think we should be aware that for us corporate is everything we kind of contract, meaning that also it includes, for instance, the sports groups. It includes a lot of infrastructure workers that normally after such a crisis is increasing. We see quite high demand for that because of governmental investments in infrastructure buildings where we cover a lot of that demand. So it's actually a bit of a mix.
I think we will see that it takes some time for regular business travelers to come back to the normal levels and we prepare for that. But I think we do see a demand for actually Actually, we have quite a lot of meeting bookings for the autumn that has been moved from the spring into the autumn because People need to meet up and they need to train their people, they need to meet their customers, etcetera. So it will be a mixed picture. And I think you're definitely right when it comes to the individual corporate customers. It will take a bit more time before that market recovers to the normal levels.
But I think we will be surprised in other areas, sports groups, infrastructure buildings, etcetera, that will come back a bit faster.
So are we talking about demand coming from domestic corporate travelers? Are you seeing anything yet as an international travelers? Or is it more structured around your intra Nordic?
Yes. We do focus For this year, we've focused to the full on the, let's say, the domestic and the intranautic business. We do Fact that the borders will be open internautically during the summer and that will support us during the autumn. And as you remember from all the numbers and what we have said, around 80% of our total turnover comes from the InterNordic business. So we're less dependent on the international part.
And I also think that we will be positively benefited from much more people staying at home. But vacation wise, we also have introduced co working, which we think is a big opportunity for us in the years to come when companies decrease their square meters in their offices. So they will be more dependent on working from elsewhere as well as we have introduced hybrid meetings so we can support businesses with digital solutions for having meetings and not travel as long as they normally did. So we are tapping into also the new segments. So I think it will be a mix, but I'm pretty positive to the recovery when I compare with what's happening elsewhere in the world right now.
Okay. Got it. Then if I could also ask on the agreed rent rebate. You previously said that these amounted to around €900,000,000 And when I do my calculations, I see that you have just under €600,000,000 remaining of this with the outflows in Q4 and also Q1. So do you expect any additional discounts from your landlords from here on?
Or should we Stick with the earlier announced numbers for the remainder of the year in 2022?
I think for Forecasting purposes, I suggest that you stay with the numbers which we have communicated.
Okay. And then if I'm correct here, then I assume that rent discounts in the second half of 2021 will amount to just under SEK 100,000,000?
We have communicated a little bit in excess of €500,000,000 for the full year. You have the numbers here for Q1. You will assume the same number, I think, for Q2. And the remainder, I I think, for Q2 and the remainder, I would suggest that you split evenly between Q3 and Q4.
Perfect. Thank you very much.
Thank you.
And our next question is from Karl Johan Bonnivier from DNB Markets. Please go ahead.
Yes. Good morning. First, just looking at CapEx for this year, looking at now pushing Couple of the hotel projects a little into the future as well. What would be your best guess that you need to spend on hotel renovations in the existing platform and then for the new openings? In the existing platform and then
for the new openings? In total, SEK 600,000,000 to SEK 650,000,000 for the full year. We I would say around $150,000,000 $160,000,000 a quarter. It was a little bit less during this Q1 during to some special circumstances. But I think for forecasting and modeling purposes, I think you should assume 1 from $51,000,000 a quarter, a little bit higher now maybe in Q2 than to that we have a few more offerings in Q2.
And then I think but as I said, it is close to SEK 1,000,000,000 in cash burn first quarter, even though investment was a little bit underrepresented. We also had some attacks during this Q1, which compensate for that. So I think this close to SEK1 1,000,000,000 in negative cash flow is quite representative anyway at these occupancy levels. However, of course, we do expect better occupancy levels in Q2. I think you all realize that this is not a bold assumption.
It sounds you sound convinced on that and looking at the trends, it sounds logical as well. And thank you very much for those updated comments you had on the breakeven levels and what kind of occupancies will go. And also, Jens, your comments about the lower cost base going into the future. So if you dare at this time stretch the perspective into, say, a recovery scenario bringing you back to 11% margin. What kind of RevPAR level would that require compared to 2019 to get back to 11% margins, the financial targets?
Well, we I think instead of looking at just the RevPAR, you can look at Let's say, if you compare with 'nineteen where we exceeded €19,000,000,000 turnover and made the €2,000,000,000 in EBITDA, We definitely don't need to come back to SEK 19,000,000,000 in order to get that same level because we will hit better margins faster than before. And I think you all know that when I took over it together, Jan, we presented already at Capital Market Day different initiatives to actually strengthen our margins onward. And of course, you should never miss a crisis either. So we have Definitely use this crisis also to really change quite a lot when it comes to, let's say, the cost levels above hotel level where approximately onethree of the cost is now removed on those levels. And we think we can work much more and now with the new structure that we have set in place also to secure that we do not bring back a lot of cost when occupancy levels goes up.
So to answer your question, I cannot say whether we will hit this on €16,000,000,000 or €16,500,000,000 or €17,000,000,000 but Definitely way before we hit the €19,000,000,000 in turnover, we will reach that and then you can calculate margins yourself. I expect us to deliver much stronger margins in the future also because we actually focus much more on working within the areas that are with stronger margins such as the room part versus how we handle, for instance, the restaurant part and work with on those areas, which we will continue to focus on in order to improve not only the result but also margins on group.
Excellent. Is there anything you think we should add to our thinking on the operating leverage and how that should develop when you reach breakeven and go over breakeven? Is there any extra cost that we really should put back into the equation to not overdo the operating leverage after reaching the dividend.
Yes. Yes, that's good. I think, Karl Johan, initially here when we are to move from this 18%, 19%, 20%, there will be an extremely good conversion because I mean we can easily accommodate those extra guests without increasing any cost. I mean, maybe spend a little more on breakfast because they need to eat and spend a little bit more on cleaning, but not a lot. But otherwise, I think we will be managing those extra gas within the existing capacity.
However, that conversion will gradually come down over time. So But initially, I think you should expect an extremely good conversion until we maybe reach some 35%, something like that. Because then you come into a situation where you maybe need to man up a little bit more and you will have some extra cost and so on. And then of course, the next step is when you start to pay variable rent. However, given the situation now during the 1st 4 months, I fully think that will happen very late this year.
And then you can also say that normally when we have, let's say, a financial downturn or something like that. When you're hit like we are, of course, we have less CapEx spend because we do less renovation. But it's not that we actually moved into this crisis with, let's say, a very updated portfolio and And you can say with very low occupancy levels, which we have been spreading out at the hotels, you can say the need for that renovation is very limited. So it's not that we have a lot of under invested hotels that we need to catch up with for the time to come. So we are I think there's no big surprises in this.
It's pretty obvious that we will benefit from especially the recovery in the beginning. And it's also very important because it has been a terrible year for us as a whole. So We are very focused on staying very lean to get back very solidly with this recovery. Thanks for the extra color. Thanks.
And our next Question is from Jamie Rollo from Morgan Stanley. Please go ahead.
Thanks very much. Good morning, everyone. Just wondering, Are there any numbers you can share with us for your summer leisure bookings to suggest that it's going to be a stronger period than last year? I appreciate It's early days, perhaps not much visibility, but any other anecdotal or quantitative comments would be helpful. Thank you.
But I think it's a very variable question and that's I will mention maybe 2 things in this because definitely last year was fairly low since the amusement parks was closed, which they are not this year. So that will drive something during the summer. And of course, the visibility is very low. We see the pickup is coming in with days weeks notice. So it's really early stage to put numbers on this for July.
Well, we have started a week ago the summer campaign and there has been more interest into the big cities this year than last year. That's also a small signal. It's very small numbers yet if you compare in totals, but it's a small signal. When I talk to the CEOs of the amusement park, there's quite a high interest in those because they have been missing out and they have a lot of members also willing to visit them. So yes, I think there's a lot of reason why we believe that let's say The big cities should do better than last year.
And we do not have any, let's say, reasons not believing that the rest of the countries will not do as last year, which was pretty healthy because people are not traveling a lot this summer. And if you talk to travel agencies, they are still missing people to book their vacations in the South, etcetera. People are waiting for restrictions to ease. And so if we look at the Nordic market, a lot of people already now expect to stay home. So I think we have a lot of indications of that.
But to be as open towards you as we can. We also announced that we, on the 15th June, will give you an update to secure that you know how we expect the summer to be. So we will come back on that topic in just before next window closes to be as open as we can do that. Okay. Thank you.
And then you talked encouragingly about some of the more resilient parts of your business travel, the sports groups, some of the trade related project related work. Is there any way you can help us understand the rough breakdown of your corporate demand between the different groupings, please?
Yes. That was a good question here. And I think, I mean, A detailed breakdown, we cannot give you here, but that's obviously something which is now part of our analysis going forward here because Jamie, of course, as you realize, we also see that the market will change. And we I mean initially when this crisis came over us here, we maybe thought that this was a bump in the road or something like that and everything should go back. But of course, we also now realize more and more that the market dynamics will change here.
So that is actually part of that exercise that analysis, which we are doing here. But I mean, if you take the normal Oki plans, you could say that Tuesday when this is mainly made up by individual business travelers for different reasons in conjunction with meeting business. And of course, that's when we come back to the force groups and another type of group arrangement that's predominantly something which has been in the hotels during weekends together with ordinary leisure travelers and so on. So and as Jan said, maybe we will see even more of the demand coming into the end of the week and the weekends and so on. So I mean going back a number of years, I would say the Monday, Tuesday, Wednesday was by far the best days for Scandic and that started to level out prior to the pandemic.
And maybe after the pandemic, we will see a shift there where we will see that the weekends actually will be stronger. And we will probably need to work with Mondays and Tuesdays and Wednesdays that try to create demand in certain areas there, especially then the big cities as we see it because we it's probable that some of the corporate traveling will change in nature. And but I think also the kind of hotels, which we have opened the last couple of years, caters for more amount of demand, kind of reason to stay here also. I think you will find more reasons to stay in those hotels than you did maybe on those which we opened 10, 15 years ago. But of course, it will be a commercially complicated task here to work with the sourcing, the gas sourcing here.
So but I cannot give you any details back to your question there, but I cannot give you any details on the customer mix. But we will, of course, come back on that together with our thoughts about how that will develop over time because I think it makes sense when we combine the history with our thoughts regarding the future. And Jamie,
you can also understand we are we don't want to tell the whole world, which is our very strong sites in some of our business mix. But of course, we have a lot of infrastructure workers right now and we also know from historically crisis that all of these governmental investments that will be on the back of a crisis in order to support the economy is good for us because we have a lot of that infrastructure builders working and staying with Scandic during midweeks. And so that will continue. But let's see how this is worked out. I think like Jena, we need to spread it out a bit more.
And I think the good thing is that the last many openings we have done the last years includes much more leisure facilities. We are opening this month in near Copenhagen Airport, but that's actually including a huge spa. So it's kind of a leisure result in the middle of 600 meters from the airport. When we opened downtown Tampa, as also spa and soft brand. And so when you look at some of the latest openings, it is much more taking care of the broad customer mix.
So we have been pretty prepared for this trend that we have seen for the last 10 years that Leisure has been outperforming corporate year on year, but still corporate accounts for more than half of the total. So
Thank you. And then just finally, the trick with the bigs. Yes. That's the trick. Yes.
What did you say, Jefferies?
Sorry, just come with your question. I was just saying just finally, you talked about the loss of some of that meetings market to virtual. Do you have a view on what percent reduction in that sort of either group or transient Business travel might go virtual. What sort of percentage reduction would you have as a guess? All right.
I don't think we have. And I think there's a lot of people guessing right now and maybe too many are guessing of the future to be honest. I think Let's really look into what's happening in other places, what's happening in U. K. Right now, what's happening in U.
S. And China, what's happening in Israel that are ahead of Europe. And I think we will see when the fact is here. But I'm a bit positively surprised when I look into what's happening in China for instance. And China is really up to speed and China is almost on 2019 levels as a whole.
But what we have seen recently in the last 2, 3, 4 weeks is actually that Beijing, Huaxu, some of the major cities, they are almost back on 2019 levels as well. And that is driven by corporate channeling. If you look at U. S, they are around 60% I think right now versus 2019 levels. And then that's with a lot of restrictions still in place.
So Before we kind of it's very easy to say, yes, corporate travel will not come back. But I have a lot of companies that are extremely interested in meeting up and continuing their work. We have a lot of these infrastructures. We have a lot of people that simply needs to be on the road. So our business mix in the mid market is quite broad, and I expect a fair percentage coming back actually in the coming years.
Okay. Thank you very much.
Thank you.
Our next question is from Anders Vier from Deutsche Bank. Please go ahead.
Good morning, gentlemen. Thank you for taking my questions. Just to come back on the bookings and the corporates, do you have any visibility on the MICE segment and potentially some events which could take place next autumn or even in 2022? First question. 2nd question is regarding the cost structure because you were mentioning that your cost structure was down 50%.
Another way to ask the question compared to the one which have been passed before is how much of this proportion is expected to be permanent. 3rd question about the state helps.
Do you
have any visibility on what could goes on after Q2. I guess it will depend from the level of business you will have, but interested to have your feedback on that. Well, that's all. Thanks.
Okay. Thank you, Anders. If we start with the first one, the MICE, of course, we the visibility is still low. But we have We've seen, let's say, some of the input business that we have had during the spring being postponed until the autumn. And I think also there will probably be quite an immediate demand for meetings to catch up in the beginning.
And then it will find its level probably on a lower level than we saw before at least for the 1st years. So we are preparing for that and that's why we also look at how we can reconfigurate some of the hotels and use some of these square meters for other purposes and work with partners for some of that. But it's not that we don't think it's coming back. We think actually meeting will continue and we have introduced these hybrid meetings and we have introduced co working in some of the same locations where we actually used square meters for other purposes. And we think there might be quite an interesting opportunity within co working since a lot of businesses are lowering their square meters in their offices and want people to work from home or work more co working.
So a lot of these people announcing that they expect levels to go down also announced that they expect people to work more from home. So we think that mice will be on a lower level long term, even shorter long term, But we think and that will be an area that will recover a bit slower than maybe some of the others. But initially, there's initial demand. If you look at the cost structure, we clearly it's difficult to put percentages, but what we tried to do was just To give you a bit of a hunch on this one, we said approximately 30%, 35% of the cost of people above hotel level has been removed during the crisis. And of course, some of these will come back when levels go up, but we definitely will not go back to the same level as before.
So we will keep it a very efficient and lean, let's say cost model when it comes to head office cost and support office cost. So that's especially where we want to continue working with this. We have also been looking over management at hotel level in order to get that even a bit more efficient and will also long term continue to have savings there. We do not foresee savings when it comes to the operational model as such because Scandic has been extremely efficient when it comes to housekeeping efficiency and front efficiency and within waiters and chefs. So in that level, we do not foresee savings onward, but to maintain the very, very lean model we have.
So that was what I could say on the cost structure. And then of course with the state help, it is clearly linked to the restrictions. So as long as we have restrictions, And we also will get different kinds of support. And there's still a lot of discussions going on with the different levels where we might have potential to get a bit more coming in. But we have reported what is known and Jan have clearly reported that we estimate the minimum of the same level for Q2 as Q1.
So you can calculate on that. And then we have no hopes for Q3 and Q4 before we know whether all restrictions are gone or not. But right now, we expect that actually Most of the restrictions will be lifted during now the spring and the summer due to the fact that during the summer all of the adult population will be vaccinated. So then there's no reason to keep restrictions on us. So we have not calculated with a lot of state help for Q3 and onwards.
Okay. Thank you. Thank you.
And there are currently no further audio questions. I will hand the word back to the speakers.
Okay. Then I just want to thank everyone for dialing in. And if you have further comments or questions coming up, Please call Henrik directly. He will be here if you need anything. Otherwise, looking forward to speak to you soon and some even later.
And All of you, we will come back as reported mid June for a new update on the summer. Thank you very much.