Scandic Hotels Group Stock

Welcome to the Scandic Hotels Group Q2 2026 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Jens Mathiesen; and CFO, Par Christiansen. Please go ahead.

Thank you very much, and good morning, everyone, and thank you all for joining us for this Q2 presentation. My name is Jens Mathiesen. I'm the CEO of Scandic. And together with me, I have our CFO, Par Christiansen, as always. Let's dive into the highlights. So please turn to Page 2.

We delivered a good quarter with solid growth. We improved our earnings and also higher profitability. The business is performing well across most of our markets, with Finland remaining the exception. Market conditions were favorable, supported by a busy event calendar, strong leisure travel and stable demand for business travel and meetings. Demand was particularly strong in the capital cities of Sweden, Denmark and Ireland. Finland remained challenging throughout the quarter, while the Norwegian hotel market was affected by a hotel strike lasting more than 6 weeks. The recovery in Finland is taking longer than we had expected, but we remain focused on turning the performance around. We now expect a gradual improvement with a stable second half of the year with a financial performance on same levels as last year.

During the quarter, we expanded the hotel portfolio, continued to grow Scandic Go. We secured a long-term financing framework, and we progressed the Dalata acquisition according to plan with completion expected in the fourth quarter. Looking ahead, the booking situation remains strong. Compared with earlier this year, we now see better pricing conditions across our markets, supporting our expectation of a good third quarter with occupancy broadly in line with last year and higher average room rates.

Please turn to Page 3. Let's take a closer look at the financials for the quarter. I'm pleased with the result, which reflects the strong underlying development. Sweden delivered another strong quarter. Norway also performed well despite the strike. Denmark continued to show strength and Dalata delivered another strong quarter. The positive development was seen across most of the markets, while Finland continued to face a more challenging market. As a result, adjusted EBITDA increased to SEK 796 million, corresponding to a margin of 13.3% compared with 12.5% last year.

High operational efficiency and disciplined cost control continue to support our performance. Please turn to Page 4. Here, let's take a closer look at the market development, starting with the Nordics. Overall, the market development -- developed well during the quarter, supported by a busy event calendar, continued strong leisure travel and also stable demand for both business travelers and the meeting and conference segment. Sweden had another strong quarter, particularly in Stockholm, where high activity in both leisure and corporate demand supported a healthy market. In Norway, the hotel workers strike had a significant impact on the market during the quarter, affecting both occupancy and room rates. Despite this temporary disruption, the underlying market fundamentals remain healthy.

Denmark also continued to show strength with Copenhagen benefiting from high international demand and a strong event calendar. As you can see from the chart, Finland has been the clear exception of this, not only during the second quarter, but throughout the first half of the year. But all in all, the Nordic hotel market is healthy. And based on what we see today, we expect market conditions to remain favorable going forward. Please turn to Page 5 to have a look at the development of Ireland and U.K. Ireland continued to perform strongly with particularly good pricing development across the market. The Dublin market also remained healthy, supported by a solid demand from both business and leisure travelers. The U.K. was stable with both London and the regional markets showing steady and in some areas, improving market conditions. Please note that the market data on this slide covers April and May only as final June market statistics have not been yet published.

Looking at Dalata's performance for the full quarter, it's also encouraging to see that the business continued to perform well relative to the market. Dalata delivered another strong quarter with particularly good performance across Ireland, London and the U.K. overall. These are attractive markets with good long-term fundamentals. Please turn to Page 6. Let me give you a brief update on our hotel pipeline. We continue to expand the portfolio at a good pace. At the end of the quarter, including Dalata's pipeline, we had 20 hotels and more than 4,700 rooms in development across our markets. The pipeline includes a good mix of Scandic, Scandic Go and Dalata hotels with several attractive projects in prime locations. Together, this provides a strong platform for continued growth in the years ahead.

Over the next slides, I'm highlighting some of the most recent openings and signings. So please turn to Page 7. Here, we can highlight some of the recent development for Scandic Go. Since our first quarter presentation, we have continued to expand the Scandic Go portfolio with both new openings and new signings. During the quarter, we opened 4 new Scandic Go hotels, one in Helsingborg, one in Gothenburg and our first 2 Scandic Go hotels in Finland in Turku and Oulu. We also signed a new Scandic Go hotel in Central Stockholm, further strengthening our presence in one of the most attractive hotel locations in the Nordics. Scandic Go is gaining traction. Interest from property owners remain strong, and the concept continues to create attractive growth opportunities in prime city locations while allowing us to reach new customer segments.

Please turn to Page 8. Here are a couple of other activities since the previous quarter. We signed an agreement for our third hotel in Frankfurt, further strengthening our position in one of Europe's most attractive hotel markets. We also signed 2 new franchise hotels, continuing to build a high-quality franchise portfolio in a disciplined way. Franchise is an important complement to our leased portfolio, and it enables us to grow together with strong local partners. So overall, activity remains high, and we continue to see strong interest from property owners across our markets.

With that, I hand it over to Par for the financial update.

Thank you, Jens. Good morning, everyone. I will now go through the Q2 financials. Please turn to Page 10. Looking at the second quarter, we saw organic growth of 1.2%. Overall, good results better than last year in Sweden, Norway and other Europe, including the Dalata. Norway was negatively affected by the 6-week long strike, but results were mitigated by the hard work from the teams as well as the strike-related compensation. The much lower result in Finland compared to last year is explained mainly due to softer prices, rent costs affected by fixed rent agreements and guaranteed levels and the saved hours in operations was offset by higher salary costs. The coming important third quarter looks in line with last year for Finland.

Strong performance from Dalata, the contribution from the management contract gave us SEK 78 million in top line and SEK 66 million on the EBITDA level. Group costs in line with same quarter last year, efficiency improvements balancing the inflation and salary increases. In total, we saw a result of SEK 796 million and a margin of 13.3%, an improvement compared to last year's margin. All in all, a stable result. Please turn to next page.

We had a strong cash flow of more than SEK 2 billion on a rolling 12-month basis. Investments was in line with plan, and we continue to deliver on our portfolio strategy. The free cash flow totaled of SEK 0.9 billion on a rolling 12 basis. Please turn to next page. We have a strong financial position, net debt of SEK 276 million, meaning a leverage of 0.1x compared to 0.3x same time last year. We are in a good position to support the portfolio growth and the planned acquisition of Dalata Hotel operations. All in all, we delivered a solid quarter. Please turn to next page. In the quarter, we signed a new long-term financing framework with the wider Bank Group. SEK 7.5 billion is committed. This supports the planned acquisition of Dalata. The contract is a 3-year tenor with extension options for another 2 years.

I will now hand back to you, Jens, and please turn to Page 15.

Thank you, Par. So here, let me wrap up with a few concluding remarks. Overall, I'm pleased with how the business continues to develop. We see good business momentum across most of our markets with Sweden, Norway and Denmark all performing well. Dalata also delivered another strong quarter and continues to perform ahead of last year. We are not satisfied with the development in Finland during the quarter. The recovery is taking longer than we had expected, but we have had a clear plan in place for some time now and remain fully focused on turning the performance around. Based on what we see today, the booking situation for the second half of the year is stable and broadly in line with last year, giving us confidence that the performance will gradually improve from current levels. At the same time, we continue to develop Scandic at a good pace.

We are expanding the hotel portfolio. Scandic Go continues to gain traction. The Dalata acquisition is progressing according to plan and remains on track for completion in fourth quarter. And our new financing framework that Par just mentioned provides the financial flexibility to support our continued growth. Looking ahead, the booking situation remains strong as we enter the peak season. Occupancy increased by almost 3 percentage points in the third quarter last year compared to the same quarter of 2024. Based on the current booking situation, we expect to maintain those strong occupancy levels this year. Compared with earlier this year, we now see better conditions for driving rates, and we continue to execute on our pricing strategy. Together, this gives us confidence in a good quarter with higher average room rates.

I feel very positive about where Scandic is today. We have good business momentum, a strong financial position and a clear growth strategy. Together, this gives us a strong platform to continue growing the business, improving profitability and further strengthening Scandic's market position.

With that, I hand it back to the operator, and we go to the Q&A. Thank you.

[Operator Instructions]

The next question comes from Alice Beer from ABG Sundal Collier.

I have a couple of questions, but just let me start off with the outlook. You guided for Q3 occupancy in line with last year and higher ARR. Is that rate improvement broad-based across Sweden, Norway and Denmark? Or is it concentrated to a specific city or event?

No, it's a good question. Thank you. Overall, we see a very stable traction when it comes to occupancy. We even mentioned this a bit because last year, we were trying to drive a bit more volumes into the markets. overall. And that's why we increased from approximately 71% to 74% occupancy, 3 percentage points. That was driven by a lot of campaigning. This year, we see a, let's say, more stabilized booking situation, which also gives us more confidence in the ability to drive more rate. So -- and this goes all across the markets, like we even mentioned because it's clear that it was a disappointment in Finland for the quarter, but it's also very clear when we look ahead that the second half looks to be much more in line with last year, which was at a much more normalized level. So we look all over markets, including Finland for a more stabilized second half.

Okay. Perfect. And then just continuing, you commented a bit about this in your closing statement, but if you could just expand on the Finland outlook. I mean, what specific observable data point, whether that's bookings or RevPAR or corporate travel, what gives you confidence that H2 will be broadly in line with last year rather than further down?

It's very much linked to the business on books and let's say, the day-to-day traction on the in booking trends. When we looked at the quarter -- second quarter, we also saw that the quarter was weak, and we were not gaining the same kind of bigger events as we did last year, which we normally have on the books for quite, let's say, a long time before we enter. So we needed to pick up from other segments, and that was simply not something that we could do alone in the market when the market didn't recover. When you look at the second half, we have much more events and, let's say, larger meeting events and 1-year events coming in that are already on the books, and we have a more stabilized corporate development in the second half than what we have seen in the beginning. So all in all, it's -- we're quite good at forecasting, and we were also good at forecasting second half.

The only thing we couldn't really predict was the strike in Norway, which, of course, came in after we announced our expectations for the quarter. But all in all, we have a good booking situation also now we are in the middle of July, and we have seen a very stable beginning and in some markets, very solid beginning. Stockholm has been strong in the beginning with some big concerts from Bad Bunny, and we have had yoga fitness in Stockholm for like 11 days between June and July, which has been so filling all of Stockholm. And of course, Sweden is a major market for us. So July started off very well in our markets.

Great. And moving on then, could you talk a bit about your performance versus the market in the other markets if we exclude Dalata. I mean Denmark market data, for example, is a very strong Q2 print, but we didn't see quite the same performance for your other market segment. Could you just, yes, expand on other markets, excluding Dalata.

I think we were -- if you look at some of these, both in Dalata, we are -- of course, Dalata, we are ahead of even the market. If you look at Norway, we are also ahead of the market. That even includes the fact that we had a higher impact on the Scandic hotels for the strike. Simply more hotels was taken out of Scandic. We had an impact of 52% of our hotels of that strike versus some of our competitors of around 30% and below of their market or their hotels. So -- and even with that, we actually take market shares. But we need to look at this from a longer perspective. Of course, in a single quarter, you can see some quarters we win some, some quarters, you lose some in percentage points versus market. Overall, we deliver, I would say, close to the market in general.

I would like us to drive even more rates in the market going forward when we see a stable environment in occupancy level, and that's also our strategy to secure that going forward. So I think overall, we are delivering quite solid in the market. But of course, you can always look back and say, okay, in this market, we should have been a bit more focused on driving higher prices to gain another percentage point on that, and that's easy to do afterwards. We try to do the best we can to yield the best way we do. And I think what I look at also in looking forward is with that focus in mind. So I'm satisfied with the focus in the company on doing all we can to drive rates.

Okay. Sounds very simple. Just a final question for me then. Could you just provide some commentary on how much Norway's top line was affected by the strike? I mean if I understand it correctly, please correct me if I'm wrong, but the compensation affected earnings, but not top line. So just how should we think about the underlying performance in Norway?

Yes. But I think it's -- in round figures, maybe it's like a SEK 100 million actually. So it's quite a lot of effects from top line during that period of time. So it's quite a lot that it was affected. And I think we mitigated that well, both through some of the salary support we get from a strike, but also to the fact that we had like, I think, like 1,400 people or so out for the strike that were called out for strike, and that meant that every managers and central office, everybody was in operation to support our business. And I'm really proud of the way that period of time that shows strength that we actually can deliver such a strong result even with a 6-week strike. And then if we haven't had that strike, you see enormous uplift in the year-to-date numbers, and that is continuing. So all in all, Norway is a very solid market.

The next question comes from Adela Dashian from Jefferies.

One question on Sweden. We saw a particularly strong profitability here in the quarter. How much of the margin improvement would you say is driven by a heavy events calendar?

Well, it's a good question, Adela, because I think we are definitely supported by that, but we also see -- actually in Sweden, we see quite a healthy development on both the corporate and meeting segments as well. So it's not only event and leisure driven, but even the general leisure is having a big uplift in Sweden overall. So maybe it's because like some journalists reading and writing about this morning that more suites maybe tend to spend more vacation time in Sweden. It's a good environment right now for both the domestic and inter-Nordic traveling, and weather is still good here and people they enjoy it. So it might be that more people are actually having a bit more vacation time as long as weather is also from the Nordic weather this summer yet.

So all in all, I think we had a good -- but it's a good but also event calendar. We had some good events like I mentioned, we have Bad Bunny concerts 2 in a row. We had always witness is also like an event, of course, with so many people attending that, that was filling Stockholm for like 11, 12 days. And of course, that is supporting the result. But it is a very strong result. We're up in Sweden 7.5% on occupancy, and we're up 7.6% on RevPAR itself, and that is throughout the quarter and June especially was very strong.

Okay. Great. And then maybe also on other Europe. Can you -- I don't know if you touched on this maybe already, but can you speak a little bit about why the RevPAR was down during the quarter? And despite this, you managed to deliver a strong margin. So maybe how those 2 coincide?

Yes. I think like you see, we are having -- we have quite a lot of happenings in other Europe. We have also a new hotel in Stuttgart that are still under ramp-up. But all in all, so we have a net sales increase of 7.4% and you even see other Europe totally have a margin increase. So all in all, I'm actually satisfied with that. we will definitely see in the coming years that we have a huge focus on growth, especially in Germany, and we have more openings coming up. And of course, we need to expect that some of these hotels are in a ramp-up and some of them also have a ramped-up lease period of normally 3 years. So we pay less lease in the beginning, et cetera. But it will take some time to set these new hotels in the market.

Copenhagen has been strong and continues to be strong. I would say Aarhus has been fairly weak. We also have one of our hotels that has undergone a big renovation in Aarhus. But if you look at Copenhagen, that continues to be a very strong market. And of course, our partnership with SAS is very good for us in that market because it drives a lot of new business into Copenhagen. So of course, other Europe, including Denmark, is overall on a good traction.

Okay. And then lastly, just on your -- the new financing framework and your balance sheet and so on. Should we expect, especially now also with Dalata completing in Q4, should we expect you to pursue further expansion opportunities? Or what kind of capital allocation priorities do you have at the moment?

Yes, I can take it. But I think -- I mean, it's a good question. I think with the new finance agreement, we have a platform to firstly, of course, take on the Dalata operations and then have healthy headroom for both market fluctuations over time as well as the in-year fluctuations. Given that we are so cash generating, of course, in a year or 2, there will be opportunities to take on further growth opportunity if that will be the case. And as we said before, we will, of course, balance the capital through expansion, organic expansion, dividend. It could come back also to, of course, buybacks and there might also, of course, be other growth opportunities coming up. But right now, I guess we will focus mainly on the Dalata business and then integrate that successfully. And then I guess, other things might come.

The next question comes from Jamie Rollo from Morgan Stanley.

Just back on Finland and the guidance for flat profits in the second half of the year. What RevPAR are you expecting to deliver that performance? And I know you talked about things getting better, but is that also a flat RevPAR? And also, how much of the Q2 deterioration in Finland was due to weak market demand versus company-specific issues like the renovations and the fixed minimum rents?

Thank you very much, Jamie. Very good questions, I think, because you're totally right. Of course, we -- there's like no excuse. We have, of course, our biggest hotel in Helsinki, which is the Marina Congress Center that is undergoing renovation, as you remember from the last quarter, and that will continue until year-end. Of course, that affects some percentage points on our own business. But that's not an excuse. I think if you look at the market as a whole, the market was weak and both we and the market delivered a weak quarter. When we look ahead, -- we actually -- when we guide for this, it is because when we look at the business trends and the booking trends and we look at the second half as a whole, we expect occupancy level to be close to the same levels as you saw last year, but we also expect to be able to drive some percentage points on rate.

We'll see how much, but we definitely expect to increase rate a bit to also mitigate some of the general cost increases that you always have on salaries, et cetera, and also these fixed leases. So that's why we guide for results close to the same result as last year for the second half, which was actually very solid. You see solid margins above 13% in second half as a whole. So another picture than what you saw in the second quarter. And I think it's important for us to guide a bit on that when that is the picture we see.

Okay. And then just on the rental costs for the group rose about 4% is pre-IFRS 16, of course, in the second quarter. And that was quite a big pickup from the first quarter's 2% growth. The revenue growth of the company was pretty similar Q1 and Q2. So is that just the opening program with Scandic Go? How should we think about the maturity profile then of those new hotels? Or is there something else there on the mix of sort of fixed and variable leases?

Yes. It's really the last one. You can say we are having a much larger share of fixed leases and hitting the guarantee levels in Finland with the current levels. So of course, when Finland is dropping, then it affects the lease right away. So when it's increasing, then you see the opposite. So of course, we expect a much lower normalized level of lease already in this quarter, the third quarter. So it's a bit about the mix because if, let's say, the mix was the same all over, you wouldn't see this increase short term, but it's increasing due to this lease levels in Finland, where we have more fixed leases. That's also why we have said throughout the year, Finland is a very efficient operation. We run the business very efficiently. So it's simply a top line game for us. We need to improve the top line in Finland, and that's why we put in a lot of efforts to strengthen that, which we also see slowly that we gain some result out of when we look ahead.

Okay. I get why that would have a margin impact, but I don't know why that would have an impact on actual rents going up more in the second quarter versus the first quarter. But anyway, okay. And then just finally, you given a little bit of a steer on the second half of the year. So better RevPAR in Q3, flat profits in Finland. In terms of consensus, I know you didn't guide, but I think Visible Alpha is at SEK 2.85 billion adjusted EBITDA this year. Would you expect any changes after today?

We don't guide on that, Jamie, as you know, but we try to give you a precise guidance, and that's mainly -- we do this simply for one reason. We see that the result in Finland was weak in the second quarter, and we think when we have another outlook for the rest of the year, which is more stabilized in Finland and when we have such a good traction where we actually outperform all our other markets even versus expectations in the market, we actually outperform all our markets. then I think it was important to guide a bit on Finland here, especially. That's why we put the guidance, but we don't guide on expected EBITDA levels.

The next question comes from Karl-Johan Bonnevier from DNB Carnegie.

A lot of my questions already answered. But if you look at the Go concept now going outside Stockholm, and you have quite a good, I guess, feedback on how it has developed in Stockholm. Have you any early signs on how it works in other cities for you?

Yes. I think we definitely see that it's a new brand. It's early -- it's still early days for the brand. It's -- it's a much easier when we do openings in the capital cities, of course, where we have lots of international business and lots of OTA business. So we definitely see that it's easier to build up the books of business very fast when it is like in capital cities. When we are -- in some of the smaller markets, we are tapping a bit more into the local environment and other kind of local customers, and that is taking a bit longer time. And that's also something we look at when we sign new hotels going forward, how we secure that we have the local environment in place before we open up.

So you will definitely see that we will continue our focus with Scandic Gos in the major cities. This is not a concept where we expect to go on the countryside because the brand is not mature enough for that, and we cover that well with the current Scandic brand. So that is at least learning. So you should expect us even non-Nordic, if we grow with the brand into like Germany or U.K., Ireland in the future, we will concentrate on the major cities if we do that.

And when you look at the other part of your concept changes so far this year, starting to in a lot of the Nordic market charge for the breakfast. What kind of take rates do you now get for breakfast on your guests?

No, but it actually gives a very, very good feedback. It is a bit different because internationally, for instance, let's say, in Sweden and Norway and Finland, most customers, they buy breakfast. They similarly -- we have very few that doesn't take breakfast. And I think one of our competitors was also out and saying it's a bit of a difference in certain parts of Denmark. In Denmark, we definitely see that all the international guests, they buy breakfast. Some of the Danish, they don't. I don't know why. They are much lower percentage. So that is the only market which is still a bit odd compared to the rest. But in all other markets, it has a very good development and also like we expected.

So of course, this has an impact on the average room rates because now the prices are excluding breakfast on those. And so when you compare us with market, you need to take that into account. Now we soon after July, we started a year ago. So soon in the rest of the third quarter, we have more comparable numbers. So I'm sure. And now we have seen, which is very good, we have seen competition coming after. So some of our competitors have now also launched prices, excluding breakfast. And now they need to spend the coming year on including that into all their pricing. And I think that's good. I think it's right. We are the last part of the world where breakfast was like included. Otherwise, it's excluded in most of the world. So it is natural also when we see the huge increase and the development of international travel.

Looking at your portfolio pipeline, room pipeline, do you feel that you have enough of discussions ongoing to deliver on your old target of adding 10,000 rooms, excluding Dalata up to 2030?

Yes, absolutely. I think we have a very good traction. And the number itself, for me, it's important that we grow with the right hotels in the right markets rather than whether it's 8,000 or 12,000 rooms, eventually, it needs to be the right one that adds value to Scandic. So we are more focused on that than growth itself. We are focused on the healthy growth. And just looking at the last quarter, we opened 4 new hotels. We also signed 4 new hotels. That was actually both 2 franchise hotels and a big one in Frankfurt, as you have seen, the third hotel in Frankfurt and one more Go hotel in Stockholm. So I think we delivered according to this. We have a solid pipeline, as you see, 20 hotels in the pipeline, and we're adding to that all the time as we're also opening new hotels all the time. So we are growing Scandic steady and focused.

I must ask you as well on a more, say, top level, looking at how the market is able to drive room prices in Copenhagen up toward what I would call more international levels, what needs to happen in, say, Stockholm, Oslo and the other big cities in your portfolio to be able to get into that kind of same price dynamics?

Yes, we have talked about this for many years. And I think it starts with all the operators in the market that actually understands that there's a huge potential here. It's not only Scandic alone. We are like 16% of the market. We can, of course, drive rate as much as we try, but the whole market needs to follow. And the Nordic market is a lot of local operators. And sometimes, I think we miss out that the international business, they are so much used to pay much more for nice rooms like we offer in the Nordics. So we need to continue -- we get more and more traction on the international growth. I think our growth with the SAS partnership is good for us because it adds a lot of guests internationally, and those guests are used to paying much more, and they're used to breakfast being excluded and all of that. So of course, we try to yield higher prices with them. And I hope we succeed over time to get into levels that are more comparable with a lot of the big cities in Europe where prices are more than double what you see in the Nordics.

And just give it a try on this one as well. Looking at now, I guess, you have been operationally involved in Dalata for quite some time now. And I guess you have been able to dig into the operating data of the operation. What kind of synergy potential do you see, say, making use maybe of your efficiency models from the Nordic operation and maybe Dalata's pricing models from the Irish U.K. model, I'll say, on the group level at some stage?

But I think Dalata is a very healthy company. They are already today operating extremely good and healthy business. Of course, we are -- they are like now close to 20 years old as a company, we are more than 60. And of course, like you say, we have been well known for having a very strong operational model. And we are very, very efficient here in the Nordics. So there's definitely some potential in that. And -- but we also -- we are not in any stress when it relates to that because I think Dalata is a well-performing company already with margins in line with Scandic despite -- and that's driven by much higher RevPAR, of course. And that's despite that they do have higher cost levels. And I think we, over time, will be able to, let's say, optimize certain of these processes.

They're already looking at Scandic and already today, they have started instead of having some of all the headcount per hotel, they are starting to do clustering of that in the cities so that they maybe have like a revenue center sitting together in Manchester covering 4 hotels, et cetera, et cetera. So they have started to look at our operational model. And I'm sure that once we get full grip of it in Q4, there will be a potential to optimize some of these, let's say, operational processes. On top line, they are really doing good, and they are taking market shares and they grow well the top line. So we don't want to, let's say, destroy what is already very strong. So it's a balance.

Looking forward to hear more comments on that in Q4 and all the best out there.

[Operator Instructions]

The next question comes from Andre Juillard from Deutsche Bank.

Three small questions, if I may. First one about the segmentation. Could you give us some more color and more granularity on the trend you are registering between the MICE, the leisure and the business clientele considering that Q3 is traditionally mainly driven by the leisure trend. And on top of that, could you also give us some more elements about the restaurant trends considering that they have been a little bit at pain compared to the hospitality side during the past few years. Second question about Dalata.

You were mentioning that the group was gaining market share. Are you still convinced by keeping the Dalata brand? Or are you thinking about changing some hotels to Scandic? And last question about free cash flow. H1 was under pressure mainly because of calendar effect on lease contracts. You are mentioning or you are guiding that the fiscal year free cash flow should be in line with last year. But could you also give us some more elements on the H2 effects, which should -- which are expected to compensate the H1 negative ones?

Thank you, Andre. And then starting with the first one, I'll take the first 3, I think, and then Par can talk a bit about the free cash flow trends. Leisure versus corporate, we absolutely see the same trend as we've seen for quite some time. It is leisure driving a lot of the growth. So it's events and leisure that are driven, let's say, driving the growth, and we see that in all markets. I would say corporate has been fairly stable. And then we even see some uplifted trends in some of the markets. We have seen some percentage points up on corporate segment in Sweden, for instance. But we also saw in second quarter that corporate was down in Finland and meeting was down, but that was also linked to some of the big meeting events that we had last year, which we didn't this year.

So looking ahead for second half, we expect a stabilized environment when it comes to corporate overall, and we expect that leisure continues to improve and drive both leisure and, let's say, events drive that. So the trend is continuing also in the Nordics, like your question. If you look at the restaurant sales, we see that overall, it is very stable. We have quite a good sales mix today. Of course, we have an increase in -- let's say, we have isolated the breakfast. So that has an impact on some of the F&B sales. We also see some small trends that people drink a bit less alcohol. That is a trend in all markets.

People tend to drink a bit less alcohol. So we sell more of the nonalcoholic drinks. We also thereby focus more on sales and things that are without alcohol to secure we get the sales still. But it is -- and of course, a lot of the F&B sales is also linked to the meeting and event, which is also, I would say, stable, but isn't really improving. It's on a stabilized level, a bit lower from pre-pandemic levels, but still stabilized. So I think there's not a big -- let's say, there's not a lot of things that we were not prepared for. I think we focus a lot on this about alcohol and non-alcohol because it's something that I think we all need to understand that people are more focused on non-alcoholic drinks even going forward.

If you look at the brands, Dalata, we have communicated that we expect to keep the wholesale grains as is -- that means that if you look at Ireland, #1 brand is Clayton, #2 brand is Maldron in the market. So we actually own kind of the 2 most well-known brands in Ireland, even beating all the international brands. So they are very strong in Ireland, these 2 brands. And even in U.K., they have done really, let's say, improved their brand awareness during the last years. So they have actually a very solid brand awareness and picking up and beating a lot of more international well-known brands. So for sure, I would say, U.K., Ireland, there's no reason to change those brands. So we are a multi-brand operator already with Scandic, Scandic Go and our Signature collection, and now we add Clayton and Maldron into that portfolio. And even we operate a few Hilton hotels and IHG Hotels, as you know. So we are a multi-brand operator, and we'll continue to be that with Dalata.

When we open new hotels in new markets like in, let's say, in Germany, there will be like 2 openings in the fourth quarter in Berlin. That will be one Clayton and Scandic because that was prepared to be that for a long time. But going forward, we focus still on growing the Scandic brand in Germany. So you will see more Scandic growth in the coming years when we sign new hotels until we have like a more solid footprint overall in Germany from that. So that's the plan for the brands.

And then Par, cash flow?

Yes. Looking at the cash flow, we can see if you look at the second quarter, we -- since we had the strike in Norway and a little bit disappointed in Finland, we're suffering working capital-wise from prepaid rents that will, of course, normalize in the second half. We have the Dalata management fee that we invoiced but have not yet been paid. So of course, that hits a bit the working capital if you compare Q2 versus Q2 last year. And then going into second half, we look at the solid Q3. We also see that we will -- are planning to get contribution from the Dalata in the fourth quarter, owning that business. And looking at CapEx, we have some openings in Q3, but no openings in Q4 and H1 2027 is a little bit lower. So CapEx-wise, it will be a little bit less outflow on CapEx on the second half. So that will give us a solid foundation for cash generation.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much all, and we just thank you for dialing in here and wish you all a fantastic summer and talk to you after the summer break.

Welcome to the Scandic Hotels Group Q1 2026 Report Presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Jens Mathiesen; and CFO, Par Christiansen. Please go ahead.

Thank you very much, and good morning, everyone, and thank you for joining us for this Q1 presentation. Like just said, I'm Jens Mathiesen. I'm the CEO of Scandic. And together with me, we have our CFO, Par Christiansen.

Let's go into the highlights of this quarter. Please go to Page 2. Looking at the quarter, we are off to a good start to this year with stable growth and solid results. Revenue grew by 3%. And adjusting for currency effects, organic growth was close to 5%. We operate with high efficiency and very good cost control, delivering a result and margin in line with last year. Market conditions, they remain positive overall, and we continue to see good demand across our markets, although development varies somewhat. Cash flow improved during the quarter, and our financial position remains strong, giving us a solid foundation going forward.

The second quarter has started well. Business on books are at good levels, supported by strong leisure demand, stable business travel and a solid event calendar. Despite the ongoing geopolitical uncertainty, we do not currently see any direct impact on demand. So all in all, we're entering the peak season with good momentum.

I would also like briefly to comment on the strike that has been underway in the Norwegian hotel sector since Sunday. Based on our current assessment and experience from the similar situations in the past, we do not expect this to have a material impact on our financial performance. All our hotels are open, and we are monitoring development closely and have mitigation plans in place should the situation become more prolonged or extensive.

Please turn to Page 3. We delivered a solid result in the quarter with an adjusted EBITDA of SEK 105 million, corresponding to a margin of 2.2%. The result and profitability were in line with last year, supported by high operational efficiency and good cost control. At the same time, the quarter was impacted negatively by a few factors, including the early Easter and also higher energy costs due to the cold weather in the beginning of the year. Also note that the first quarter last year was supported by a one-off in Denmark of SEK 43 million, which was offset by the contribution from the Dalata management agreement in this quarter. So I'm pleased with the performance in most of our markets.

Looking at Finland, demand improved towards the end of the quarter with more stable occupancy and pricing. At the same time, we are currently renovating our largest hotel and congress center in Helsinki, which was a key reason for the lower result year-on-year. All in all, we delivered solid results while continuing to develop the business at a good pace with high efficiency and disciplined cost control. Of course, Par will take you through more of the financials later on in this presentation.

Please turn to Page 4. You've seen this before. So here, you see the development in occupancy, average room rates and RevPAR for the Nordic markets indexed to 2019. Overall, the Nordic hotel market had a positive start to the year with both occupancy and average room rates increasing, resulting in stable RevPAR growth for the quarter. Again, note that the early timing of Easter had a negative calendar effect in March, particularly in Sweden and in Norway. In Sweden, the market developed well with high occupancy and moderate price growth. Norway also continued to perform positively despite tough comparables from last year when the World Ski Championships were held in Trondheim.

Denmark remains strong, supported by high levels of international travel and a solid event calendar in Copenhagen, resulting in strong growth in both occupancy and room rates. Finland continued to lag with a more cautious market sentiment, although both occupancy and prices improved compared to last year. So overall, the Nordic hotel market remains healthy with stable underlying demand and positive momentum.

Please turn to Page 5. Turning into Ireland and the U.K. Overall market conditions remain positive across both Ireland and the U.K. with continued good demand and a solid start to the year. In Ireland, performance was good with both Dublin and the regions achieving solid RevPAR growth. The U.K. was stable across both London and the regions. Looking ahead, expectations for the second quarter are positive across both Ireland and the U.K. So overall, these markets show stability and Dalata is performing well, broadly in line with or slightly ahead of the market.

Please turn to Page 6. This slide shows our hotel pipeline at the end of the quarter, including Dalata's pipeline. In total, the pipeline comprises 22 hotels and over 5,000 rooms. For the rest of the year, we plan to open 8 new hotels, including several Scandic Go hotels, supporting our expansion in the economy segment. Overall, we are developing the portfolio at a good pace, which creates strong conditions for higher growth going forward.

Please turn to Page 7. Let's take a look at how we continue to develop the portfolio. As you can see on this slide, we continue to expand the Scandic Go brand at a good pace. During the quarter, we opened our first Scandic Go Hotel in Norway, centrally located in Oslo. This is an important milestone as we continue to scale the brand in attractive city locations. We also highlight the agreements for the Scandic Go Hotel that we signed in Tromso and in Stavanger. These hotels were signed earlier and were also communicated in Q4 presentation. So all in all, this just reflects the strong momentum we are seeing in Scandic Go with high interest and a growing pipeline. In addition, through Dalata, we have added a new Maldron Hotel in London with around 370 rooms planned to open in 2029. This will be the seventh hotel in London and further strengthens the position in a very attractive market.

Please turn to Page 8. During the quarter, we took another important step in our sustainability work with our climate targets now validated by the Science Based Targets initiative. This confirms that our targets are aligned with the 1.5-degree pathway and reflects our ambition to reach net zero emissions across the value chain by 2050. It also strengthens our sustainability profile and supports the increasing demand for sustainable solutions from our guests and corporate customers.

Please turn to Page 9. Let me give you a brief update on the Dalata acquisition. The process is progressing well and remains fully on track with completion expected in the second half of 2026. Once the restructuring is complete and provided we exercise the option to acquire Dalata's hotel operations, we expect to operate Dalata's markets using the same COO-led structure already in place across Scandic. This leverages our established structure to drive scale, efficiency and strong local execution. As part of this, the current COO of Dalata will continue to lead the operation in these markets and will be joining Scandic's Executive Committee once the carve-out process is completed, while the current CEO will remain with the business for a transitional period. At the same time, the business will continue to be led by the experienced local teams, ensuring stability throughout the restructuring process. Overall, we see strong collaboration and a very good progress.

With that, I hand it over to Par. Please turn to Page 10.

Thank you, Jens. Good morning, everyone. I will now go through the Q1 financials. Please turn to Page 11. Looking at the first quarter, we saw good organic growth of 4.7%. Top line faced some currency headwinds of minus [Technical Difficulty] good results, better than last year in Sweden, Other Europe, including Dalata. Norway was negatively affected by the early Easter and the World Championships in cross-country skiing last year. The lower results in Finland compared to last year, mainly due to softer prices, cold weather and renovation of our largest meeting and congress hotel.

In the quarter, we saw increased cost for electricity and heating of around SEK 40 million due to the very cold weather that lasted for quite a long period. We have seen a good start for Dalata. The contribution from the management contract was SEK 56 million on top line and SEK 50 million on EBITDA. Group costs in line with same quarter last year, efficiency improvements balancing the inflation and salary increases. And just as a reminder that last year, we had a nonrecurring item in Denmark of SEK 43 million related to government support during the pandemic. In total, we saw a result of SEK 105 million and a margin of 2.2%, in line with last year's margin. All in all, a stable result in line with last year if we exclude currency effect, Dalata and the one-off.

Please turn to next page. We had a strong cash flow of more than SEK 2.2 billion on a rolling 12 basis. Investments in line with plan, we delivered on our portfolio strategy. Free cash flow improved clearly in the quarter and totaled to SEK 1.1 billion on a rolling 12 basis.

Please turn to next page. We have a strong financial position, net debt of SEK 510 million, meaning a leverage of 0.2x compared to last year when the leverage was 0.4x. We're in a good position to support the portfolio growth agenda and also the acquisition of Dalata Hotel operations. All in all, we delivered a solid quarter. We have a good momentum ahead of the larger important coming quarters.

And now I hand back to you, Jens and turn to Page 15, please.

Thank you, Par. Let's move to the next page. Let me briefly sum up and give you a few comments on the outlook. We are off to a good start to the year with stable growth and solid results. Market conditions remain positive, and we continue to see good demand across our markets. Dalata delivered a strong quarter with performance slightly ahead of last year, and the acquisition is progressing according to plan. [Technical Difficulty] collaboration is strong, and we are quite impressed by how well managed the business is. There are clear similarities between the 2 companies, our -- let's say, giving the strong platform that we have, both in Scandic and Dalata, and it's looking positive that we can build on that going forward.

Looking ahead, the second quarter has started well, and the booking situation is good, supported by strong leisure demand, stable business travel and also a solid event calendar. This gives us good visibility into the peak season, and we expect both occupancy and room rates to be slightly higher than last year in the second quarter. Scandic is in a strong position with good momentum, a robust financial position and clear opportunities to drive further growth and profitability.

With that, I hand it back to the operator for the Q&A session. Thank you.

[Operator Instructions] the next question comes from Alice Beer from ABG Sundal Collier.

Congratulations on the start to strong year. Just firstly, you flagged high leisure demand and a stable corporate environment for Q2. Given that several European corporates are beginning to tighten travel budgets and macro uncertainty, could you give us just a sense of the corporate to leisure mix in your current bookings and whether you see any softening on the corporate lead times or cancellation rates?

Yes, absolutely. Thank you for that question. No, I think, we see quite a lot of stability in this area. And there has definitely been a change in corporate traveling for the last, I would say, 10 years or so. We have seen that people -- the inbound airline traffic has gone down. But at the same time, we have been growing our business. And it's clear that people maybe -- they might travel less with the airlines. But once they travel, they also tend to stay longer and thereby also using hotels.

So for us, the stability in the corporate traveling has been fairly strong and stable during the last years. So we do not see a high increase or even no decrease either in the Corporate segment. The growth is more driven still by a larger increase in the Leisure segment, leisure traveling. But it's also more and more difficult to really compare what is corporate, what is leisure because people are using our online channels. They book more directly. So eventually, we really can't see whether it's purely corporate or purely leisure. So that is something we just need to mention. But all in all, I think it's very stable in that segment.

Okay. And then on Finland, I mean, the market RevPAR was up 9%, yet your sales in the region fell 2% on a comparable basis. Is Scandic losing share in Finland? Or this is entirely explained by renovations or Meetings segment weakness? Could you just expand on Finland, please?

More than half of the -- actually almost 2/3 of these results come from one single property that we are renovating at the time being. So we are doing quite a lot of stuff in the -- we actually use this opportunity in the market to invest quite a lot in the strong portfolio we have to be able to even gain further shares in that market once the market rebounces. So we are really preparing ourselves for something which we believe in the future will be another strong market like we have seen in the rest of the Scandinavian countries. So we are preparing for that. So that is partly some of the reason.

Okay. And how long would this renovation go on? How long would this affect do you think?

Yes. If you take the biggest congress center that we are renovating, then we're actually renovating the rooms now in different phases, and that will last until the latter half of the year. So it's like early December until we are totally done with that. So we have simply taken that out. We are taking less rooms during mid-summer. So we are doing most of the rooms now in the spring and in the autumn. And then we'll renovate the congress part of it during the mid-summer where that is congress slow. So we try to not take whole hotel out in the same period, but try to balance so that we have more rooms available during the summer.

Okay. Perfect. And then on Norway, the margin...

No. But I think you can also add to the RevPAR comparison that we are -- no, we have not had 12 months of the breakfast excluded yet. So of course, comparing rates, that could be also a factor that puts a bit pressure on our rates compared to last year because we have the breakfast excluded. So don't forget that part.

That's a good point. And if I move on to Norway then, margin was slightly down year-over-year. Was this due to cost phasing mix or is something more structural? And how confident are you that Norway's margin would recover through the rest of the year?

We think Norway has really been strong the last years. We are facing a comparison with last year where you had the World Cup in cross-country skiing, which, of course, led to a lot of high prices. So looking at the quarter, that had an impact on Norway. Looking ahead, we look into a very stable Q2 and a strong summer. So all in all, that was part of it. And of course, like Par was mentioning, I think, when you look at this result, which we are very satisfied with a strong result, it also included an increased cost of energy and heating of a total of SEK 40 million that we managed to handle in other, let's say, initiatives. So underlying, you can say, if you look away from the SEK 40 million, we're actually doing a better result in the different markets on the results. So yes, we did have some tailwind on the heating cost, and that is not because of the prices, that's because of the consumption.

Okay. Great. And moving on, the buybacks were paused since you did the last announcement and the leverage is set to temporarily spike. At what leverage do you feel comfortable reinstating buybacks? Do you have any framework for resuming these returns?

But I think if you look at the debt situation, we are now in a good position. We will go in and conclude the deal with Pandox around Dalata in the second half of the year. And of course, that will increase the debt during a period. And then I guess coming out from that period, a year or 2 later, I guess we could be starting to discuss buybacks again dependent on how the share price looks at that point. So I think it's too early to give any guidance around when and at what levels we will do buybacks.

And just one final question for me then. Have you learned anything new about the Dalata operations that changes your view on the CapEx needs? Could you expand a bit on the profile of near-term and long-term needed investments there?

No, we think it is exactly like we have said before, it's a very strong young portfolio. So we believe that the CapEx need for -- maintenance CapEx will be lower than Scandic and thereby supporting that we are looking into some years with lower CapEx spend, which is very positive. I think overall, Dalata is just like we see already now, both the quarter was good and the outlook looks positive. And of course, when looking at the future on the Dalata, we are actually more optimistic now than ever. We think there's a lot of good synergies, and we are very optimistic about what lies ahead of us with that transaction. So of course, both Pandox and us are very keen on getting this done with this carve-out process, and we continue with high speed on that. So all in all, it looks very positive.

The next question comes from Jamie Rollo from Morgan Stanley.

I've got a few questions on Dalata and then one on operating costs. Just on Dalata, the statement says strong first quarter with year-on-year improvement. Could you please quantify what its revenues were up and also how those profits perform at the Dalata level, of course, not at your fee contribution?

And then the statement also says, should we seek to exercise an option to acquire its hotel operations, which I -- obviously, we understand there was an option, but you sounded -- or you've not mentioned it before. And just then you sounded very confident this will go ahead. So why have you apparently changed the language? And is there a risk that the deal does not go ahead? And if so, what could cause that?

Firstly, I guess we cannot comment on the details on the Dalata top line or the profits given also that we have Pandox and us, both 2 listed companies. We are only commenting on the management contract, the SEK 56 million and the SEK 50 million, but we can say that we have a good start. That's what we can say on that one.

And on the restructuring and the carve-out process, everything goes according to plan. We have the agreement with Pandox to go through with this. But I mean, it's not done yet. So of course, just from a formal perspective, having this sentence in the CEO statement to say that it's, of course, subject that this goes through. But there is no negative or any change than before. So we're still very positive that the deal will go through.

Okay. And so when do we get the FY '25 sort of pro forma base figures for Dalata? Will that be at second half completion?

When we have completed the deal, we will, of course, do consolidate Dalata's result into Scandic, the operational result into Scandic and also give you the pro forma results so you can do good comparisons for the previous period.

And then just on the operating costs, if we adjust for Dalata and the provision last year, it looks like there's about 2% operating cost inflation in the first quarter, that's excluding rent and D&A. But about half of that seems to be the energy costs, which I guess is more winter skewed. So just really wondering what the underlying Scandic level of operating cost inflation is and particularly because currency was about a 2.7% sort of headwind to revenue. So I guess that 2% may be more like 4.5% on constant currency. So how should we be thinking about costs for the rest of the year?

Yes. It's a complex question with a lot of things there. But I think overall, if you look at the operating cost, I think we're on a balanced level on salary increase expectations. Even the strike in Norway is not about the salary levels, it's about other things. So we expect the salary levels to be balanced as well as the inflation. We haven't seen any big changes on the incoming inflation to our operating cost yet. So it will be balanced. So the salary levels will be probably around 3% in average for the Nordics and then inflation between 1% and 2%, I would guess, as an assumption. So no change to that yet. Of course, as Jens said, we haven't seen any effects of the conflict in the Middle East, that could, of course, translate to price increases over time. But right now, we haven't seen anything from that yet.

The next question comes from Adela Dashian from Jefferies.

Just two questions from me. First, if we move back to the Finland commentary, when should we expect Finland to return to becoming a positive contributor again? Like what's the time horizon on that, specifically now after getting comments on the renovation initiatives that were there? Because you did mention that there was improvements towards the end of the quarter. So just wondering when we should start to see an inflection point really.

And thank you for that, Adela. And starting with Finland a bit, I think we do all we can on preparing ourselves for actually a bounce back, you can say. We are renovating hotels still. We believe this is yet to become a strong market. Finland is actually contributing on a year-on-year basis positively to our numbers. So it's a positive result. But of course, it hasn't the same levels as they used to have in Finland. So we are earning less in Finland today than we did prior to the war and pandemic and all of that looking back versus '19, where the rest of Scandic is up a lot, and that's driven by the other markets. So we are preparing for that.

We cannot say it's very much linked to, of course, the war between Russia and Ukraine that has a huge impact, has had that since the beginning. But it is -- we see small signs of Finland recovering. We saw that the last part of Q1 was better than the beginning. We also see that when we look into the summer and of course, how we will benefit from some of these renovations, that also has at least not a negative outlook. So it looks like it has stabilized. And of course, when the market starts to turn, we will have quite a strong conversion of those results due to the impact on the leases right now where we are hitting a lot of the guarantee leases.

It was also important and positive to see a note this morning coming out from Finnair. Finnair, they actually mentioned that they have a growth. They start to see growth in their business, which has been, of course, important for us that you have infrastructure in place. So it's important that Finnair has steadily and slowly started to move business from the Asian market into more other markets, and that is positive for the Finnish hospitality sector that, that infrastructure is in place and very positive to see that they are starting to grow. That will also help us going forward.

Okay. Great. That's good color. And then second question was on the energy costs. You quantified the headwind here in the first quarter of the year. How should we think about the phasing for the remainder of the year?

I think it was purely linked and Par, you can add a few maybe comments there, but it was really linked to -- we have a hedging on the energy costs. So it's not a price issue for us. It was more the consumption. And that was linked to especially Jan and Feb, which was very cold in the Nordics. And we had like minus 20-some degrees in certain parts of the region. And of course, the consumption was higher. Looking ahead, we do not expect any price and cost increases on energy. And we also saw that March was, compared to last year, stable. So I don't know, Par.

No. But as you say, it was a very long and very cold period that put pressure on that. And I guess we want our guests to have a comfortable climate and that had to be balanced with the cost of this. So it was probably one of the longest and coldest winters in a couple of years. So that -- we don't expect it to happen again. But of course, it's not in our control, but we will, of course, try to give guests also a comfortable climate and our coworkers. So I think that was the decision here to make sure that we had a good stay for them and also balancing it. And as Jens said, it's not mainly a price issue, it's a volume issue rather. And so we expect everything to go back to normal once now when we're in normal temperatures in the Nordics.

And of course, there's both energy and heating, you can say. So we are really looking at both. And despite what has happened so far with the Middle East, we haven't had that impact. But of course, we are carefully monitoring what is happening, whether that will change or have an impact on us going forward, but not on the price on the heating.

The next question comes from Andre Juillard from Deutsche Bank.

First one is about revenues. Could you give us some more color between -- the split between room revenues and restaurant revenues, which are slightly down? Is it coming from the different accounting of the breakfast or something else? That's my first question.

Second question is about the cash flow. I was looking at the tax paid, which were positive in Q1 versus largely negative last year and the evolution of the working cap, which are the 2 main differences. Could you give us some more color about the rest of the year?

Yes. But I think on -- thank you for the questions. I think when you look at the -- we definitely -- like Par was mentioning earlier on, we need like a rolling 12 with the breakfast excluded, which we started last summer before we have a full comparison year-on-year. And we are -- it is a very positive story, which I have to say. So we are selling more rooms without breakfast in the room price. And then they buy the breakfast as a separate thing. And that has been really meeting our expectations and also delivering quite a strong -- high conversion into the restaurant still. So we are not losing that business. But of course, it's moving a bit between the 2.

Then, of course, as we mentioned, this is a very small quarter. It is the smallest quarter in the year, as you all know. And then, of course, when you have like changes in some of the meeting between one hotel that are undergoing renovation in Finland, et cetera, it has an impact shortly on that. So meeting business is also part of that. So meeting in overall is slightly down. But when we look on like-for-like comparable numbers, it is really fairly stable. So the growth is more on the room side, and that's driven both by actually a bit of uplift in the corporates, but a lot on the campaigning and leisure segments.

Yes. And then on the tax, we saw a little bit lower tax and also a positive effect from getting some tax back from the Swedish tax authorities regarding the previous year and that was a little bit of opportunity coming into the coming years. So a little bit of -- that's a one-off from the past. We might see a little bit lower tax rates the following year, dependent on the ability to use the accelerated depreciations in some of our properties that we haven't used before. So a little bit positive, maybe not major coming forward. And of course, when we go into the Dalata acquisition, that will be a completely different setup with the Irish business with much lower tax rates. So I think for this year, you can expect a little bit lower taxes in percentage than we have had before. But I think that the cash effect was a little bit of a one-off versus last year where we got a little bit money back from the tax authorities.

When you say slightly lower tax rate, do we talk about 1% to 2% or something more significant?

Probably around 1% if you look at going forward. So...

Okay. Very clear. And regarding the change in working cap, anything specific to mention or...

No, it's more timing -- a positive timing effect. If you compare to the Q4, it probably looked a little bit negative and then now it looks a little bit positive. So more a timing effect than the structural effect.

The next question comes from Artem Prokopets from UBS.

I have three, please. So I think you mentioned that there is no direct impact from the conflict in the Middle East. But do you see any perhaps indirect impact, either positive or negative, maybe in the way airlines behave or rerouting of travel, cost impact, inflation, maybe traveler sentiment, et cetera?

Yes, but it's -- thank you for that question as well. I think you absolutely, if you go really deep into the numbers, you see that there are small effects and changes in some behaviors. We got, for instance, some cancellations from some group business from the Middle East area. We got some cancellations that were -- when this, let's say, conflict started. So of course, we have had some small changes. On the other hand, we also got some other kind of business in because it is maybe that people cannot really fly -- they are not really flying into the Middle East right now. So a lot of the people that were -- tend to go to the Middle East, they really don't go as long as we have this conflict.

I have friends personally living in Dubai, and I know that there's like no tourists in Dubai right now. So of course, then that might also be an opportunity that people -- they shuffle around, and we do get request in for the summer for group business that were intended to go to the Middle East that now looks at alternatives into Europe. So yes, we might see that we are lacking some business from that area, but we're also getting other business. So that's why it is on fairly small numbers. So it's not having a negative impact in total figures.

Okay. And my second question on business rates. Could you please share your estimates of the impact of this increase in business rates in the U.K. in the coming years? Because I'm not sure it is anywhere in the public domain.

No, but I think we mentioned in the last quarter, you mentioned the exact numbers in the last quarter and Par, you have...

But I think -- I mean, what we said is, of course, the increase that comes from 2025 to 2029. And we're going from a level of around GBP 4.5 million to around GBP 9 million when we look at that until 2029. So that's how we have seen it. Of course, there is still a debate around the rates in itself, but this is how we have interpreted the levels. So a little bit from GBP 4 million to almost double until 2029.

Okay. And lastly, on lease liabilities, how do you expect the lease liabilities to increase when Scandic -- and if Scandic acquires Dalata Hotel operations? Would it be in line with room count or differently?

You take [indiscernible]...

Yes, but I think I mean -- yes, it's a little bit -- I mean we will not guide on that at this point. Of course, there is different types of contracts in the deal, some that will be with Pandox and some with the other landlords. So of course, it will be dependent on the rate as well as the duration of these leases. So I think we will come back to that when we are concluding the deal. So I think it's too early to give guidance on that.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much, and thank you all for listening in. And if anything pops up, you know where to find us, so you can always reach out. Otherwise, we wish you all a fantastic day out there. Take care.

Welcome to the Scandic Hotels Group Q4 2025 Report Presentation. [Operator Instructions]

Now, I will hand the conference over to the speakers, CEO, Jens Mathiesen; and CFO, Par Christiansen. Please go ahead.

Thank you, and good morning, everyone. And thank you for joining us here for our Q4 presentation. I'm Jens Mathiesen. I'm the CEO of Scandic. And as usual, I'm here together with our CFO, Par Christiansen. So let's dive into the highlights.

Please turn to Page 2. Looking at the quarter, I'm pleased with the performance. We delivered good organic growth and a solid result with revenues and profitability improving in all segments except Finland. Occupancy increased across the Nordic markets with Norway remaining at solid levels, in line with last year. While price development varies somewhat, the overall price dynamics are healthy.

We also see favorable conditions in both Ireland and the U.K. Revenues grew by 1.6%. And when adjusting for currency effects, organic growth was more than 4%. In Sweden and Norway, our two largest markets, organic growth was around 8%, and in other Europe, around 4%. So on an underlying basis, excluding currency effects, performance was good across most markets.

The acquisition of Dalata is progressing very well and developing as planned. We are looking closely and constructively with the Dalata team, where we really work on this case. And the hotels are performing well under the management agreement and in line with our expectations.

Cash flow development for the year was strong, and our financial position remains very robust. Based on this, the Board has proposed an ordinary dividend of SEK 2.60 per share. All in all, we are finishing the year with solid performance and clear progress.

The year has also started good. Business on books are higher than at the same time last year, and we see indications of a more favorable price dynamic with booking levels coming in at higher pace -- at a higher price point across our markets. Looking ahead, we expect continued growth in occupancy and gradually improved room rates.

Please turn to Page 3. We delivered a solid result with an adjusted EBITDA of SEK 513 million, corresponding to a margin of 9.2%. Adjusted for one-off items and currency effects, the underlying result this year was slightly higher. We managed to grow the business and increase profitability across all segments except Finland. In Finland, the market remains cautious. However, looking at business on books, we see early signs of improved price dynamics in Finland with prices up around 5% year-to-date in 2026. Also, occupancy has improved steadily over the past year. And as demand recovers, we expect pricing to gradually follow. With an efficient cost base, the earnings potential in Finland is strong once the market normalizes.

2025 was all in all a good year, where we kept a high pace and completed several major initiatives. In the fourth quarter, we finalized remaining work related to some of these initiatives, including our new web and app and our loyalty program. This led to somewhat higher central costs in the quarter. With these initiatives now completed, we enter 2026 with a stronger platform, and we expect central costs to decline in 2026 relative to revenues and be broadly stable in absolute terms. Par will come back to this in more details on the financial performance later on.

Please turn to Page 4. Here, you see the development in occupancy, average room rates and RevPAR for the Nordic markets indexed to 2019. Overall, the Nordic hotel market strengthened further in the fourth quarter. Both occupancy and average room rate increased, resulting in market RevPAR growth of around 7.5% for the quarter in local currencies. In Sweden, occupancy improved steadily and price development accelerated during the second half of the year. In Stockholm, in particular, we saw a clear pickup in pricing towards the end of 2025, following a more cautious development in the first half.

Norway remains strong despite tough comparables. Denmark also delivered very strong performance with RevPAR growth of more than 15%, supported by solid international travel and a strong event calendar in Copenhagen. Finland continues to lag somewhat. Occupancy improved further, but pricing remained under pressure, particularly in larger cities where capacity has increased. So overall, the Nordic hotel market remains healthy with gradually strengthened underlying momentum.

Please turn to Page 5. Turning a bit into Ireland and the U.K. Here, you see occupancy, average room rates and RevPAR indexed to 2019 for Ireland, Dublin, for U.K. and London. And overall market development was positive in both countries during the quarter. In Ireland, RevPAR index increased by more than 5%, primarily driven by higher average room rates. Pricing was particularly strong in Dublin, reflecting solid demand and limited new capacity.

In the U.K., RevPAR grew by around 2%. London performed broadly in line with the national average, supported by stable demand across both Leisure and Corporate segments. So overall, both markets show stable demand and healthy underlying fundamentals. With a gradual improvement in the broader economic environment in Ireland and the U.K., we see good potential for further growth over time.

Please turn to Page 6. This slide shows our pipeline at the end of the fourth quarter, now including Dalata's pipeline. In total, there were 20 hotels and more than 4,000 rooms. Of these, 6 hotels come from Dalata. We continue to see solid interest from property owners and financial partners, which supports steady pace in our development. In 2026, we will open 9 hotels in total, including 5 Scandic Go hotels, supporting our expansion in the economy segment. So overall, the pipeline is well balanced and fully aligned with our long-term targets, giving us a strong foundation for continued and disciplined growth.

Please turn to Page 7. Let's take a look at how we have developed the portfolio since last quarter. We continue to grow selectively in Germany, in line with our long-term strategy. During the quarter, we opened Scandic Stuttgart Europaviertel, adding 173 rooms in central Stuttgart. This is our first hotel in this city and expands our presence in a very attractive growth market. With this opening, we are now operating 8 hotels in Germany. We also signed a long-term lease for a new hotel in Central Hamburg with 328 rooms and the planned opening in 2028. This will be our third hotel in Hamburg, and it further strengthens our position in one of Germany's key markets.

Please turn to Page 8. We also continue to grow at good pace in Norway, where the market remains strong. During the quarter, we opened a new 97-room franchise hotel in Floro, further strengthening our presence in regional Norway. And after the quarter, we also signed agreements for 2 new Scandic Go hotels, 1 central hotel in Tromso with 170 rooms and 1 in central Stavanger with 152 rooms, both planned to open in 2028. These additions support our expansion in the economy segment and further strengthen our position in key Norwegian markets.

Please turn to Page 9. Some comments on the Dalata acquisition. Since November 7, we have been operating Dalata's hotels under a management agreement, meaning the transaction has contributed from day 1 through management fees. Performance so far is in line with our expectations. Operations are developing as planned, supported by solid market conditions in Ireland and the U.K. Par will provide more financial details shortly.

The carve-out process is progressing according to plan with no changes to the previously communicated timeline. We remain well on track for the integration in the second half of 2026, at which point, Dalata's hotel operations will be fully consolidated into Scandic. We will continue to update the market as this process moves forward.

With that, I hand it over to you, Par. Please turn to Page 10.

Thank you, Jens. Good morning, everyone. I will now go through the Q4 and full year financials.

Please turn to Page 11. Looking at the fourth quarter, we saw good organic growth of 4.2%. Top line faced currency headwinds of minus SEK 183 million. Good result, better than last year in Sweden, Norway and Denmark. In Finland, demand increased, but prices were soft. All in all, results better than last year if excluding currency effects and one-offs. We saw good contribution from the management contract from Dalata operations of SEK 39 million on top line and SEK 35 million on EBITDA. Higher group costs in the quarter, explained by finalizing some of the initiatives that Jens mentioned before. We saw nonrecurring items in the quarter of SEK 30 million, SEK 5 million related to the Dalata acquisition and SEK 25 million related to the reorganization within the commercial organization to improve efficiency.

Please turn to Page 12. Looking at the full year results for 2025. We saw organic growth of 3.9%. Currency headwinds were more than SEK 500 million on top line. Profitability, more or less in line with target with a margin of 10.9% and EBITDA at SEK 2.425 billion. Good results in Sweden and Norway, other Europe in par with last year and Finland below last year due to the cautious market.

We have good cost control in Finland and high efficiency in our operations. So when the market improves, we expect to get back on strong profitability levels in Finland. Central and group costs were reflected in the investments in commercial and operational capabilities, expected to flatten out 2026 and decrease as a percentage of sales.

Please turn to Page 13. We have a strong cash flow of more than SEK 2 billion. Investments, in line with plan. We saw free cash flow of SEK 914 million, slightly better than last year.

Please turn to Page 14. We have a very strong financial position, net debt of SEK 35 million, meaning a leverage of 0x. We are well positioned to support the portfolio growth agenda, the acquisition of Dalata Hotel operations and our dividend policy. The Board proposed an ordinary dividend of 53% of the net profit and SEK 2.6 per share.

Please turn to Page 15. Good development in 2025 and major initiatives completed. We have a platform in place supporting growth and margin improvement. We see a stable cost outlook with low inflation, meaning low fixed rent increases and salary cost development expected around 3%. With good cost control and focus on efficiency, we have also seen that we use less hours in the operations to support more guests. As I said before, central costs expected to be stable 2026 versus 2025 and decline as a percentage of sales. And as mentioned, we have taken measures in the quarter to improve efficiency in the commercial organizations.

For business rates in U.K., they are not affecting Scandic 2026, but for 2027 and forwards. And they are part of our plan, including mitigating actions to protect our margins. All in all, we are well positioned to drive growth with good margins.

Please turn to Page 17, and I hand back to you, Jens.

Thank you, Par. Then, as a final concluding remarks here, I will sum up a few comments. We delivered good organic growth and solid results with improved profitability across all markets except Finland. Finland remains cautious, but there are indications of an improved market, and the potential is clear. Altogether, the overall performance and momentum in Scandic are strong.

The Nordic hotel market continues to show strength, and we see solid fundamentals in Ireland and U.K. The Dalata acquisition is progressing very well. Operations are performing in line with expectations, and we are working closely together with the Dalata team to get to know the business in depth. Over time, we will update the market on how we see the combined platform developing and the value creation opportunities ahead.

With several key initiatives completed during the year, we enter 2026 with a stronger commercial and operational platform, and we expect central costs to decline in 2026 relative to revenues and be broadly stable in absolute terms. This year has started well. Bookings are ahead of last year. Pricing dynamics are gradually improving. And we expect both occupancy and room rates to increase in the first quarter.

Leisure travel remains very solid, and we expect business travel to develop positively as the economic environment gradually also improves. This supports expectations of a higher pace in price development. We are preparing for what we believe could be a very good year with the spring and summer reaching new record levels. All in all, Scandic is in a very strong position with clear momentum, a robust balance sheet and significant potential as we move forward.

And with that, I hand it back to you, operator, for the Q&A.

[Operator Instructions] The next question comes from Alice Beer from ABG Sundal Collier.

A couple of questions from me. Just starting off, I'm guessing that it's hard to know when Finland will recover. But is there any possibility for you to renegotiate the fixed rental agreements that still stand from the Restel acquisition there?

I think we feel very comfortable with that. The acquisition we did back in 2017, it has been very profitable during the years. Of course, Finland is impacted by the war still in Ukraine, and everybody is waiting a bit for that one. It is a fact that we have higher fixed leases -- percentage of fixed leases and guarantee levels in the Finnish organization. But when we look into how we operate and how we drive the business in Finland, and also, with the light in the tunnel we see right now, we're pretty comfortable that the Finland will recover. And especially once the war ends, we see definitely a good recovery. So it's not that we have bad contracts and we want to get out of a lot of hotels in Finland. There's always a few, and we have already left a few during the last 5, 6 years, but the majority of these hotels will be also in Scandic going forward.

Okay. And also, did you say that prices in Finland are up 5% year-to-date? Could you expand on that?

Yes. But it is -- when we look at the -- we have a slightly increased occupancy level, as you saw in the second half of last year. But prices didn't come. So we were -- we didn't see price increases. And it's pretty normal that prices come a bit later than occupancy, and now, we're seeing that occupancy continues to perform slightly positive. And we also see that, that business on books year-to-date is up approximately 5% on prices. So that's a positive sign, which we didn't see in the latter part of last year.

Okay. Great. Moving on then. ARR growth during the year has been hit by FX, but also in local currencies the growth is quite soft. Could you talk about the ARR growth in Sweden? What needs to happen for the growth to pick up?

I think when you look at Sweden especially, you should also look at that effect, and especially Stockholm, which is such a huge market for us. We actually increased 2 digit last year. We were selling, I would say, more than 10% more rooms than the year before in Scandic. But we also had a lot of new capacity. We had several hotels that were undergoing renovation the year before and closed. So we opened several hotels, and we also opened 2 Go hotels in this period. That means that we have a lot of new capacity in Stockholm. And when we take that into account, we're actually increasing our sales a lot and, like I said, 2 digits. It's actually just above 12% more, so rooms just for the Stockholm region. So we are very -- and now, we don't see new capacity coming in to Stockholm in the same speed and level. That means that there's good room for improvement of that. All in all, Sweden grew by 8% last year. So we are very satisfied with that.

Yes. Okay. And then with -- if we look at Norway segment in the quarter, you had increased room rates and occupancy, but the margin was down year-over-year. Could you talk about the margin development in Norway and what's going on there?

Yes. There's somewhat a measurement between the year before, especially if you look at Q4, you can say we were up against a very tough quarter -- comparable quarter the year before when it comes to that. I think we have seen also that we continue to run the business very stable. And I think also when it comes to pricing and occupancy, that has developed steadily. But you also see that Norway has increased enormously in the last couple of years. And of course, there's a limit for everything. We don't know how much they can actually drive that going forward. I think it's going to be stable. But all in all, it's pretty good.

I don't know, Par, if you can add, and maybe you have the numbers there.

Yes. I'm not sure exactly where you're looking, Alice. But I think when we look at the quarter Q4, we see a slight increase in the adjusted EBITDA margin for Norway, and for the full year, it's almost 1% unit increase in the margin for Norway. So I'm not 100% sure there.

But, of course, they have really delivered strong results, and we see no signs of decline. We see that Norway continues extremely stable. And we had a fantastic opening now in Northern Norway in Tromso with our signature, The Dock, which has had a fantastic start over winter, and definitely, in December and January, it's supporting a very good rate increase. And we also see that we're actually taking market shares in Norway. So all in all, we're doing very good in Norway.

Okay. Fantastic. And then just a final question for me. Are you worried about any unforeseen costs related to the carve-out or integration of Dalata in the future? What's your visibility like on cost there?

No, we have a good visibility, and I think we have a good control over the cost. It's a very technical acquisition with the carve-out, moving the properties. So of course, it takes some time. But it's a step-wise plan, and we're fully in control of that. So we're not expecting any surprises.

Alice, just to be clear, on Norway, margins were up slightly, yes.

[Operator Instructions] The next question comes from Adela Dashian from Jefferies.

Just 2 quick ones for me. First, if we can move back to the Finnish market and outlook there, I think you mentioned here that you already have a pretty lean organization in Finland and there's just that much you can do on the cost side. So what will need to happen here is essentially a full recovery of the markets for our numbers to turn better? Would that be fair to say?

Yes. Let's start with that, Adela. I think a very fair question. The good thing in Finland is that we also see that, that since we are hitting a lot of these guarantee levels and some of the fixed leases in a higher percentage than the other market, we also see that once the market turns that the contribution from that revenue increase will be very strong, of course. And what we see now is that we both increased the occupancy and start to see price increases. That is a very important thing for the profitability in Finland because then we see a strong return on that increase. So that is the major thing.

We don't believe that we need to do more savings or efficiency initiatives. The management team and the operational team in Finland are driving the operation very, very efficient, and they do have a lot of commercial initiatives going on. So for us, it is a top line gain. And we have done quite a lot of initiatives during this winter to support that going forward. And I feel comfortable that we will see a slight growth during this year and also a huge potential going forward when, of course, both the war is ending and we can see like traffic will be normalized a bit more.

Great. That's very clear. And then, I just want to make sure I don't miss anything on the event calendar for 2026. Could you specifically talk about what you're seeing? Is there any sort of seasonal demand in the summer months that we should keep track off versus last year in terms of concerts, like anything like that would be great?

Yes. But all in all, it looks like -- when it comes to concerts and general events like that, it looks like that '26 is a good year. It's like '25 was a fairly good year as well. We have a lot of concerts coming in, both in -- with [indiscernible] in Sweden and The Weeknd and Foo Fighters and a lot of that. So there's a lot of concerts in the Nordic region. What is maybe a bit new this year versus last year is that the -- especially in Stockholm, we see that we have more congresses coming in. This year, we have, I think, 5 planned congresses in the city, whereas last year, it was 0. So that is supporting the Stockholm region during this year. But all in all, I would say it's a stable event year. But what is most important is that we see that people still has a lot of appetite to go out to explore and to travel, and that momentum is kept high.

Great. Just a final follow-up on what you just said there about the congresses. I guess, your pricing power might have been a bit limited, I would assume, post-pandemic, do you feel like you're in a better position today to renegotiate contracts that you have with bigger companies and so on for the meetings and congresses and things like that being held?

Yes. I think, in general, a very good question in general, Adela, because I really do believe when we, for instance, now look at what happens in U.K., Ireland, taking over Dalata, it is a fact that the Nordic region are still fairly cheap when it comes to average room rates. And if you look at pricing in other markets on the European market, prices are higher if you go especially to capital cities. So I think there's more room to drive rate. Of course, the whole market needs to do that. But normally, we need also occupancy levels to come up due to that.

I think we are in a better position. And I think when I look at the commercial and corporate environment right now, it is very good. And I think when I look at the contracting period we have just gone through, we see signs of a motivated customer base. We see a lot of businesses that are doing fairly stable and good. So we do not face a lot of push on the rates. On the opposite, they understand that it costs what it cost, and we also increased pricing together with the inflationary cost increases.

So all in all, I think I've been through this many, many years, and it has been a very good contracting period with a lot of stability and actually a lot of expectation for growth in certain sectors also due to the defense industry, which is growing a lot, a lot of governmental initiatives. It's also a fact that we will have a selection year in both Sweden and Denmark. So for both the Swedish and Danish government, right now, there's a lot of presents beings handed out to the population. And it's going to be a very interesting year because of selection year both in Sweden and Denmark, and that will definitely support the underlying economic from private consumption.

And then, on top of that, I would say we see a lot of new airline routes coming into the Nordics. Ireland is starting to move, and new airline route comes to Ireland. That has lagged behind, but now we see movement. Copenhagen is booming. We see daily flights now from Copenhagen to Dubai, for instance. And Dubai is the world's most busy airport. And just doing that, it opens up the whole world. So you see a lot of new airline routes coming from SAS, especially out of Copenhagen. And that is a good partner to Scandic and definitely supporting the years coming.

On that partnerships -- and I appreciate all the great color here, but on that partnership specifically, would you say it's been a couple of months, almost a year now, if I remember correctly since you launched the partnership? So how would you say that, that has progressed?

No, but it has progressed very well. First of all, we have -- I wouldn't give the exact number, but we have enormous amount of new loyalty members. I think I remember we said we were around 3 million members in the base, and we are getting close to 3.5 million members. So a lot of new members in our loyalty base, but also a much more higher number of activated members.

We also have a lot of linked accounts between us and SAS, where we do new initiatives together with members that are member of both Scandic and SAS. And more is to come. But all in all, we have like a -- I can say we have a 3-digit million in extra turnover just from that -- coming in from that source. So we do have a very interesting development in the partnership. And both we and SAS, if you ask Anko, he will say the same, we are very happy with this partnership. So it is a very positive partnership where we just add value to both companies.

The next question comes from Karl-Johan Bonnevier from DNB Carnegie.

Jens and Par, first of all, I had to excuse myself. I was slightly late into the call. So if this question has already been answered, then you have to excuse me. Looking at central costs, just the level here in Q4 and the scalability that you now bed into this, so what is the outlook for 2026 on this cost level? And what do you get out of the new setup you have compared to what you had before?

Karl-Johan, I think, I mean, we mentioned before that, I guess, we are expecting the cost to flatten out and be in the same level 2026 as in 2025 in absolute terms. So we expect to be able to absorb inflation and salary increases. And as a percentage of sales, it will decrease. The Q4 peaked with a lot of deliverables to the organization, and we choose to finalize that rather than to focus on cost. And then, as you see in the report, we also had a little bit of a restructuring cost for creating more efficiency in the commercial organization that we will have as a lower base going into 2026.

Excellent. And when Dalata now comes into the numbers here, hopefully during the second half, is that -- do you feel that the central level is where it should be, including also Dalata?

Yes. We don't foresee any changes on the Scandic organization in this. Of course, we work very closely with the Dalata organization right now to work on the integration, and we are doing a lot of preparations with them. A lot is going on. But I have to say I'm very, very positively surprised by the flow in this cooperation so far. I think the management team in Dalata, they are all 100% into this together with us. So we have like a very dedicated team in both ends.

I'm actually going over very late tonight, and we'll have meetings in the coming days with them. So we are having a lot of things going on, but it's really progressing well. There's a lot of similarities between the 2 companies. It's a very well-run company, so strong organization with a very high and strong culture like Scandic. So there's a lot of similarities between the 2 organizations. That makes a lot of this integration easier. And we have a very good partnership with Dalata team and with Pandox also in this carve-out process. So I have to say that so far, it's actually very positive.

Excellent. And when I look at the pipeline, how you now describe it, it's obviously a big year for starting up new Go hotels in the Nordic. When you look at the ramping profile you have seen for the Go hotels, you have already started, how does that compare to, say, your normal ramp-up of the classic Scandic hotels?

No, but we definitely see that we are tapping into a new segment. So we have a higher occupancy and slightly lower rates in average, which also was expected. We also see that we have more both online -- direct, online with Scandic, and OTA business in these hotels also expected. We wanted also to secure that we were attracting new customers and not just moving around customers even though, of course, a scandic -- regular Scandic guest is welcome to stay at a Scandic Go as well. But we have seen actually that we attracted a lot of new guests into this segment, and that has been a main priority.

And then, of course, we start to adjust and move from that point of view. But I must say that so far, it looks that we are tapping into something that is needed in the market. And that has also given, I would say, population new opportunities to have like a good place to stay at attractive price levels without the need of a lot of extras like fitness room and a la carte restaurant and meeting rooms, et cetera. So it fits well into these markets that we have opened so far. Now, it's a few openings, and more will come. But so far, I think it's delivering as we hoped and expected.

And in comparison to Scandic hotel -- normal Scandic hotel, is it a ramping profile that is quicker? Or how do you -- what have you experienced?

No, it is good. You could say what -- we have less food and beverage. And of course, normally we pay less -- least on food and beverage, pay higher on rooms. But overall, the efficiency of these square meters in these rooms are also good. So for us, we would look more on the EBITDA margins going forward. And these are supporting a healthy EBITDA margin growth in the long term, and that was the purpose of it.

Excellent. I saw that you also now included the Dalata pipeline in the room pipeline. And when you see that you have 2 hotels coming in Berlin here in Q3, how do you see the integration of the Clayton and Scandic brands when you are in the same cities when you are looking at it? Is it going to be driven like, say, on a total separate basis? Or is there some sort of intracompany integration behind the scene?

There will be like an integrated behind the scene because you can say also -- I will also say it's not only behind the scene, it's also in the front of scene. You will definitely see once the carve-out is being done that we have -- we will have websites where you can actually -- you can find all our different properties and brands. Scandic has gone from a historically single brand operation into a multi-brand operation. And today, we operate with -- you can say, including Dalata, with actually several brands. We have 5 brands plus some individual run hotels. They have like smaller boutique-ish hotels in Ireland as well, and we have our signature collection. So it's different brands. But you will be able to look for all. You will be able to find -- on a Clayton site, you would be able to find a Maldron or a Scandic and vice versa. So we will open up for also -- so this will just give our loyal guests and guests in general more opportunities in these different cities.

And long term, what we do with brands and how we grow, of course, we will come back to more of that. It is natural that we want to probably grow more Scandic hotels in a market like Germany until we have a critical size in that market. We're still a smaller player. We only have 8 hotels in operation today. So we don't want to run too many different brands in the German market. But it's also clear that in Ireland and U.K., both Clayton and Maldron, are -- in Ireland, it's #1 and #2 brand. They are equally strong as we are in the Nordics. So it's also very, very important that we continue to grow with these strong brands in the market that caters for this guest mix, which we do today.

Excellent. Sounds logical. Sounds logical. And when you look at the pipeline, you earlier had this target of adding 10,000 rooms in the Scandic franchise. Is that still a valid target when you're now looking at all the things you have going on, also getting Dalata operations there?

Yes. You could say our target of 5% growth in general in total year-on-year hasn't changed, meaning that some of that comes from organic growth and some of it comes from new capacity coming in. You could say Dalata is some cream on the cake. It's something on top. And this just opens up more markets where we can actually attract and sign up these potential hotels.

So -- and if you look at the trend, since we announced this a year ago, we actually add in average year-on-year what adds up to the target in 2030. So we keep up a good pace. But the most important thing is not necessarily to hit exactly the numbers, it's to hit the right contracts, get the right locations with the right hotels rather than just reaching a certain target. But we feel comfortable with the targets we have announced early on.

Sounds very logical. You mentioned Germany. And if there was a similar kind of transaction as the Dalata transaction landing on your table or an opportunity, would you be maybe going for Germany on a greater scale or something? Would you be ready to do that already at this stage? Or would you like to maybe get the Dalata into the operation for a year or something like that before you take the next maybe bigger move if you are looking at this kind of portfolio opportunity?

Yes. I think -- first of all, I think it's very unlikely that we do anything during this year when we are spending all the energy and focus on securing a very solid integration of Dalata. So we keep all focus on that. There's a lot of individual opportunities in the market. So doing a larger acquisition is really not necessary at the current time. When that is set, Scandic is always looking and being open to good opportunities. Everything is about the business case as such.

When you talk about Germany, I think there's a lot of movements in Germany. It is a fact that Germany has also been lacking behind in the general economic situation in Germany. And now we see that the government is stepping up. They want to invest more in the defense industry than ever. They are putting a lot of money into the infrastructure, buildings, et cetera, in Germany. So it's yet to be seen that all this money comes out and supporting the underlying business in Germany. But we do see that Germany looks more healthy going forward than what we have seen in the last couple of years. But we also feel comfortable with our very focused growth, which we have in Germany right now.

We are very focused on the major cities and strong locations with the right hotels at right terms and conditions. And that will be a focus going forward. And I haven't seen any, I would say, competitors that are highly interested for us because they always have something which is good and maybe something which is less attractive, so as buying a portfolio is not really into our focus right now.

There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Well, thank you so much all, and thank you for joining us. We are looking forward also to follow up on this. We actually think that this is a very exciting year ahead of us. So we are looking forward to really now benefit from all the initiatives that we have created, and looking forward to discuss that further with all of you. But we wish you all a fantastic day, and see you soon out there.

Welcome to the Scandic Hotels Group Q3 Report 2025 Presentation. 

[Operator Instructions]

Now I will hand the conference over to the speakers, CEO, Jens Mathiesen, and CFO, Par Christiansen. Please go ahead. 

Thank you very much, speaker, and good morning, everyone, and thank you for joining us this morning. My name is Jens Mathiesen. I'm the CEO of Scandic, and I'm here, as always, together with Par Christiansen, our CFO. 

Please turn to Page 2. As you probably understand, we have a packed agenda for today. So we will start with the quarter and some updates on that, and then give you an update on the acquisition of Balata afterward. Let's move straight to the highlights of the quarter, and please turn to Page 4. 

We delivered a strong performance with good growth results and strong cash flow development. Net sales reached SEK 6.4 billion. Excluding negative currency effects, organic growth was over 5% in the quarter.

We continue to meet the market with high efficiency and very tight cost control. The Nordic hotel market remained good. Norway, once again, delivered a very strong quarter with organic growth of close to 10% and improving margins.

Sweden performed well, and Denmark showed momentum.

We are developing Scandic at a good pace and continue to grow our portfolio. We have now launched Scandic's new app, which, together with our new website, loyalty program, and the other commercial initiatives that we presented at our Capital Market Day, marks an important milestone.

With all of this, we are building a much stronger commercial platform and are moving past the major investment pace, which means lower investment needs going forward. 

Looking into the fourth quarter, we expect good market conditions. Bookings are good and in line with last year. And as usual, in the autumn, we see an increase in corporate travel and conferences.

Lastly, the acquisition of Dalata, which I mentioned, is progressing very well, and we will take a closer look at that later in this presentation. 

Please turn to Page 5. We report good results with adjusted EBITDA of almost SEK 1.1 billion, which was in line with last year. This corresponds to a margin of 17.1%.

The slightly lower margin compared with last year was mainly due to currency effects and somewhat higher costs related to the overall higher pace of commercial development. Par will give more comments on this later in this presentation. 

Please turn to Page 6. You know this page. Here, you can see the market occupancy rate for the quarter compared with last year. Overall, market development was good with higher occupancy across all countries and each month.

Sweden continued to improve, and the Norwegian market performed very well. Denmark also performed strongly, supported by growing international tourism to Copenhagen. 

In Finland, occupancy was higher, but pricing remained weak due to a soft macro environment and also tough comparables in Finland following a very strong event calendar, especially in July last year.

All in all, the Nordic market shows good momentum. Scandic's occupancy rate was around 74%, in line with the market. 

Please turn to Page 7. This slide shows market data for average room rates in Sweden, Norway, Finland, and Denmark, indexed to the corresponding month in 2019.

At fixed currency rates, the market's average room rate grew by 3% year-on-year. Scandic's average rate for the same market declined slightly compared with last year. But when adjusting for currency, our average rate grew by 2%. 

The slightly lower average rate was mainly due to the weak pricing situation in Finland, where you all know we are holding a large position.

It's positive , though, that the demand is there and increasing. And when purchasing prior also the power returns, the market will be able to charge higher prices also in Finland. So overall, pricing remains solid, supported by good market conditions. 

Please turn to Page 8. Here, you can see the market RevPAR development index for the corresponding month, also in 2019. At fixed currency rates, the market RevPAR grew by 7% year-on-year during the quarter, and Scandic's RevPAR at the same markets increased by 4% compared with last year and 5% at fixed currency rates.

This reflects a continued good demand environment across all markets, supported by solid occupancy and stable pricing. 

Please turn to Page 9. Here, you can see the pipeline. Since the last quarter, we have actually signed agreements for 2 new hotels in Hamburg as well as a franchise agreement for a hotel in Floor, Norway.

In addition, we have decided to open our first Scandic Go in Norway. By the end of the quarter, we had around 3,400 rooms in our net pipeline, corresponding to about 6% of our total portfolio. We continue to grow in a very disciplined way with a well-balanced pipeline in line with our targets. 

Please turn to Page 10. Here, you can see our 2 new hotels and 2 new projects coming up in Hamburg. The first one is located right in the heart of Hamburg with direct access to the city's main bus terminal and train and subway lines. It will offer 325 rooms and is planned to open in 2028.

The second hotel will offer an exclusive experience in downtown Hamburg within walking distance of BerlinNatour. It will have 430 rooms and is scheduled to open in 2030. 

Please turn to Page 11. First, Scandic Go is expanding in Oslo and Norway. We are converting the hotel Scandic Kansen into a Scandic Go, which will open in the first half of 2026. This will be our first Scandic Go in Norway. It's a great location right in the city center.

The second project is Scandic Victoria Flo, a new franchise hotel scheduled to open in December this year 2025.

With that, let me hand over to you, Par, and please turn to Page 13. 

Thank you, Jens, and good morning, everyone. I will now go through the Q3 financials.

We saw a good organic growth of 5.3% in the quarter. Norway and Denmark, with strong performance, and Finland, on the other hand, struggled a little bit with a tougher market situation impacting the pricing.

Sweden had a stable performance. EBITDA ended at SEK 1,088 million versus SEK 1,077 million same quarter last year. 

We saw some currency headwinds affecting the results, and we also had a negative nonrecurring item of SEK 15 million previous year.

Central and group costs are higher than last year due to investments in commercial and IT capabilities. From next year, we expect to have a group cost on a somewhat lower level as a percentage of sales. 

Please turn to Page 14. We saw strong operational cash flow in the quarter of SEK 2.3 billion last 12 months, improved working capital, and investments in line with the plan. 

Please turn to Page 15. We have a very strong financial position, net debt of SEK 62 million, meaning a leverage of 0x. We are well-positioned to support the portfolio growth agenda, the acquisition of Dalata hotel operations, as well as our dividend policy.

I will now hand back to you, Jens, and please turn to Page 16. 

Thank you, Par. As we also mentioned, the Dalata acquisition is getting closer to completion, and we would like to provide a deep dive focusing on why we're actually doing this and what we can expect from it. So let's please turn to Page 18. 

To give you an update on the whole process, on the 11th of September, the shareholders in Dalata voted in favor of this transaction. Subject to a court hearing that is actually in place today, the offer is expected to be completed at the beginning of November.

Building on a long-standing partnership, Scandic and Pandox have together established a plan under which Scandic acquires the operation and Pandox acquires the hotel properties of Dalata. 

We see this as a great opportunity to add a well-managed hotel portfolio with strong brands and positions in attractive markets, with clear value creation for Scandic already from completion.

Once the offer by Pandox and Landa has been completed, a carve-out process will be initiated, expected to be completed during the second half of 2026. 

During the carve-out process, we will assume operational responsibility for all 56 hotels under a profitable management agreement with day-to-day operations continuing to be led by Dalalat's current management team, supporting continuity in the business. 

Scandic will receive a quarterly management fee equal to 4% of the revenue from Dalata's hotel operations starting from the completion date. Please turn to Page 19. 

On this one, we will move into some of the strategic rationale behind the acquisition. Dalata is a well-run business with strong brands, and I can actually say leading brands, especially the Ireland community, are in strong positions, and operating in similar segments as we do, also with the lease model.

The acquisition further gives us a leading position in Ireland from day 1 and also a very established position in the U.K., which forms a strong platform for future growth. These are 2 markets with attractive fundamentals.

Furthermore, the acquisition will be highly value creative for Scandic already from the completion, with additional upside potentially post the carve-out and also in the longer term. Please turn to Page 20. 

Next, we will present Dalata in more detail, highlighting its market position and its performance. So please turn to Page 21. 

As mentioned, Dalata has a leading position in Ireland with around 6,500 rooms in the country, primarily in larger cities such as Dublin, Cork, and Belfast.

In the U.K., the company has also established a solid presence with more than 5,000 rooms, with a focus on the largest cities such as London and Manchester. 

Looking ahead, the pipeline is very attractive with more than 2/3 of planned growth focused on expanding within Ireland and the U.K. Please turn to Page 22. 

Dalata has demonstrated a proven track record of growth, having grown revenues by around 10% per year since 2019, with good margins and estimated profitability in line with Scandic.

For the full year 2024, Dalata reported a revenue of SEK 7.5 billion. 75% of revenues are room revenues with a balanced guest mix of around 55% corporate and 45% leisure. Similar to the markets they operate in, they have a solid year-round demand with overall strong occupancy levels. 

Looking at the portfolio, we have agreed on variable lease agreements with Pandox, which will create an attractive contract mix. With rent levels below Scandic's current levels, altogether, these 56 hotels will have a balanced mix of variable and fixed contracts.

In addition, Dalata's portfolio is young and it's well invested with estimated needs for the maintenance CapEx below Scandic's current levels. Please turn to Page 23. 

Dalata has consistently increased its average room rates over time, with occupancy levels around 80%. This translates into attractive RevPAR levels developing at a very good pace.

Altogether, Dalata is a well-run company with a proven track record of growth and profitability with attractive hotel KPIs. Please turn to Page 25. 

On this slide, you see the market data for supply and demand across Ireland and the U.K. and as well as you see the occupancy rates in Ireland, the U.K., and the Nordics.

As you can see, Dalata's key markets are characterized by attractive supply and demand with solid year-round demand. Looking at the demand in Ireland and the U.K., the markets are back at pre-pandemic levels.

Ireland continued to show strong long-term potential, supported by a resilient tourism demand. Meanwhile, the overall hotel market in the U.K. remains solid with healthy occupancy and room rates.

The occupancy rates are also consistently higher than we see in the Nordic throughout the year. Please turn to Page 26. 

As you can see here, both occupancy and average room rates in Dalata's market have outgrown the Nordics over time. This also holds for RevPAR development.

Considering Dalata's strong presence in these regions, we would get an attractive exposure to these markets from day 1. Please turn to Page 27. 

Now I will comment a bit about the value creation of the deal. So please turn to Page 28.

First of all, we expect the acquisition to be highly EPS accretive with an EPS growth of at least 15% just from the management agreement and more than 20% following the carve-out. This is on a pro forma basis based on 2024 numbers, excluding any synergies, of course. 

In addition, the acquisition implies an enterprise value of around 6x 2024 EBITDA, which represents a discount compared to Scandic's current valuation. We will maintain a balanced leverage profile with leverage expected to remain below 2x EBITDA. 

Lastly, we will continue to deliver according to the existing 2030 strategy and financial targets that we presented at our Capital Market Day earlier this year. We are fully committed to our financial targets and also to the dividend policy. So now back to you, Par. Please turn to Page 30. 

Thank you, Jens. Let's start off with a brief process overview. As of the completion date in early November, Scandic will operate Dalata's 56 hotels under a management agreement.

We will communicate and report the managed fees and related costs in Scandic interim reports. A carve-out process of Vallata's hotel operations will be initiated.

Cost to be reported as a nonrecurring item affecting comparability. We will report and provide updates related to the process on an ongoing basis throughout the interim reports.

As you can see from the timeline, the carve-out process is expected to be completed during the second half of 2026. Please turn to Page 31.

Under the management agreement, Scandic will receive a fee of 4% of Dalata's revenues, which will be paid out on a quarterly basis. On this slide, we want to explain and illustrate a combined 2024 on a pro forma basis and excluding one-offs.

Looking at Scandic and Dalata's respective 2024 reported numbers, the management agreement would have generated around SEK 300 million in revenue and around SEK 270 million in adjusted EBITDA.

The adjusted EBITDA impact includes the cost associated with operating the management agreement. This cost is expected to be up to SEK 30 million over a 12-month period. Based on this, the total adjusted EBITDA margin would have increased by around 1% at this point.

On the same basis, EPS would have increased by at least 15%, as mentioned by Jens earlier. The management agreement will remain in place until the carve-out process is completed in the second half of 2026.

Balance sheet and hotel-related KPIs will not be impacted by the management agreement. Please turn to Page 32. We expect to be able to finalize the carve-out process, acquire the operations, and then fully consolidate the business in the second half of 2026.

To illustrate the impact of the acquisition, this slide shows an illustration as if the operations had been acquired for the full year 2024. Based on the combined 2024 reported numbers, revenues would have increased by approximately SEK 7.5 billion with an adjusted EBITDA margin that would have been at least in line with Scandic's current level.

This will translate into earnings per share accretion of at least 20% compared to Scandic's stand-alone. This was calculated before taking any potential synergies and costs into account.

Furthermore, the purchase price of EUR 500 million on a cash and debt-free basis will be paid upon completion of the carve-out process, meaning the second half of 2026.

To conclude, we expect this acquisition to create a lot of value for Scandic shareholders. Scandic's financial position is very strong, and this means that the acquisition can be done with a very balanced leverage.

With that, I would like to hand back to you, Jens, and please turn to Page 33.

Thank you, Par. Now we would like to provide you with some overview of the organization and also the governance structure during the management agreement. Please turn to Page 34.

During the management period, which Par just mentioned, a clear governance structure will be put in place to ensure consistency. During the management agreement, a steering committee will be established and serve as the primary governance body for Dalata's hotel operations.

This committee will include senior leadership representatives from Scandic, Pandox, and Dalata. The steering committee will be involved in key business decisions such as corporate development, hotel performance, CapEx topics, and, of course, also lease agreements.

Dalata's CEO and management team will continue in their current roles, which will ensure operational continuity and also strong performance. Please turn to Page 35.

To conclude this section, I would like to summarize it through a couple of important takeaways. Please turn to Page 36. As mentioned, Dalata holds a leading position in its markets.

They operate well-known brands in the same segment as Scandic, coupled with a proven track record of profitable growth.

Ireland and the U.K. are attractive markets, supported by strong year-round demand, healthy supply-demand dynamics, and high occupancy and room rates. This transaction reflects value-creating capital allocation with an acquisition multiple at a discount to Scandic, where we maintain leverage below 2x, as Par mentioned.

And on a pro forma basis, an immediate estimated EPS accretion of over 15%, increasing to more than 20% post completion. Finally, we have established a robust governance structure based on joint decision-making between Scandic Pandox and Dalata.

With that, I will conclude with some closing remarks for Q3 and the transaction before I hand it back to the operator and the Q&A session. So please turn to Page 38.

We delivered another strong quarter. Scandic continues to perform well with good growth results and cash flows. Our operations are efficient, and we maintain disciplined, good cost control.

Market development was positive across most of the regions. And looking ahead, the outlook is good. The booking situation for the fourth quarter is in line with last year, and we expect occupancy to be on par with last year and price levels to be slightly higher.

The acquisition of Dalata is going well, as you just heard, and it's being made at a very attractive valuation. It's expected to contribute positively to earnings from the start and provide a strong platform for continued growth and improved profitability over time.

So all in all, Scandic stands on a solid foundation with strong momentum, disciplined operation, and record-level leverage.

With that, let's bring it back to you, operator, and start the Q&A session. Thank you.

[Operator Instructions]

The next question comes from Alice Beer from ABG Sundal Collier.

Firstly, on Dalata. Pandox shared that it expects an annual rental income of around SEK 1.2 billion from Dalata. Would you say that the rental agreements for the Dalata hotels are similar to your standing ones with Pandox?

And also, do the agreements differ between Pandox and Eiendomsspar?

Well, I guess the assumptions around Pandox calculations are not fully informed about, but I think it's at a reasonable level that they are informing. And bear in mind that for the total acquisition, we will have 56 hotels, and 31 will be with Pandox.

And the structure of those contracts will be similar to the one we have in the Nordics, with the revenue-based rent and the fixed minimum. So I don't know if that answers your question.

And if you look at the other contracts '22 in the market, they are more on a fixed basis with much lower rents than this one, but also with different responsibilities.

Then also maybe more on the U.K. and Ireland market overall. You comment frequently on the Nordic hotel market data. Have you found a suitable provider for the U.K. and Ireland market data? And will you start sharing that with us?

And then also, from what you have seen, the Scandic hotels generally perform in line with the U.K. and Ireland data? Or is it less comparable than the Nordics?

Yes. It's maybe a quarter too early to compare with Dalata in the market. They have a very, very strong position, especially in their home market in Ireland, and also where they are definitely leading. 

But we will come back and share more market data, also on the U.K., Ireland, and also the performance of Dalata versus that. But we haven't done that for this session.

Then you said that Q4 occupancy is expected to be in line with last year and a bit higher ARR. Could you elaborate a bit on this and why you think that?

Yes. But we look at business in books. And when we look at the business on books, both the first part of the quarter, the fourth quarter, and the last part, meaning October and December, look very solid, and November is more in line with last year.

So all in all, looking at those numbers, we expect these things to happen. Like we said, occupancy levels are close to in line with last year, but prices are slightly higher with normal inflation growth.

Then your ARR growth in the quarter was below the market. Was this only due to Stockholm? Or could you give us some more color on your performance versus the market?

And also, why do you think that Stockholm is struggling with prices compared to, for example, Copenhagen?

No, it's not actually linked to Stockholm as such. If you look at Sweden as a whole, we are actually delivering, I would say, an all-time high result in the quarter versus last year.

So we are actually having a very strong quarter for Sweden as a whole. You're right, Stockholm was somewhat more flattish, if you may, and Gothenburg has recovered after the high impact of new capacity last year.

Now it's more related to actually to Finland. We have a very strong position in Finland, and Finland did have a very weak July compared with last year, where last year was a very strong event calendar with cold play, et cetera, big events and concerts, which meant that the prices in the whole market dropped this year versus last year, and that is impacting the total numbers.

If you take away Finland, we have growth in line with markets, I would say, in almost all other markets.

Then, just on the latter again, could you share any information about how payment of the acquisition will affect your interest expenses after the carve-out period is over?

I think it's a little bit early to say. I think the SEK 500 million will be financed with both our own cash and with our banks. And I guess it's a little bit too early to say.

As you see, we have SEK 62 million in net debt now. So we're coming into this acquisition in a very good position. And then we can share that later on when we know exactly the date of it and exactly how it will be. So we will wait on that one.

As you know, we generate quite a lot of cash here. So, of course, dependent on the timing, it also has an impact on the amount of the loans in the end.

But day by day, we will have a positive cash flow. And so that's definitely supporting the whole deal in a good way.

Just a final question for me then. About the buybacks, do you think that it's possible that we will see buybacks in the future?

Yes. In general, we like buybacks. We like both to have stability in dividend payments. And buyback is a very good tool for creating value once we generate a lot of cash.

We always measure what is best for the shareholders. And this deal with the numbers we have provided you with today shows that this was the best we could do with shareholders' money. And then, of course, then we prioritize that versus buyback.

But definitely, we could foresee buybacks in the future as well once we get on the other side of this deal.

The next question comes from Artem Prokopets from UBS.

Let me also ask them one by one. So first, thank you for the clarification on the Dalata deal. Just wanted to double-check. I think Dalata has 13 hotels in the pipeline, including 1 leased hotel in Madrid. And will it all become a part of the Scandic pipeline?

Yes, they will all become our pipeline, you can say. So you're totally right. They have nearly 2,000 rooms in the pipeline.

It's Dalata hosts today approximately 12,000 rooms, and they have a pipeline of 1,900 rooms that have been at least announced, and they will all be part of our future pipeline. So you're definitely right.

It's also important to say that we have said this before, but it's good for you to know. We do believe that Dalata holds 2 very, very strong brands in their home market, Clayton and Meldron.

We will take over these brands, and we will continue working with these 2 brands. That also means in the future, it's not clear in all of these hotel openings, whether it will open as a Scandic or a Clayton, or a Maldron, or which brand we will use. That's dependent on the market conditions, and looking further ahead once we come into the deal.

But everything is possible when it comes to these brands, but it will be Scandic-branded hotels.

Second question on the restaurant and conference revenue. I think they declined as a percent of room revenue. So they do not seem to recover. Is it perhaps a new norm to spend less on restaurants?

Yes. I think we have been extremely good during the last, I would say, yes, maybe since the pandemic, in prioritizing the initiatives we run and opening hours in restaurants, and also how much we want to drive the different parts of the whole F&B area.

We are very good at running our meeting business, which is very stable. And also our restaurants and Arcades are very prioritized. When I say this, today, we are much better at finding more efficient alternatives on the shoulder days, such as certain marketing on Sundays.

Instead of having a full restaurant open, we might have a bar solution with food. And also, we prioritize how much banqueting we want to run in all the hotels.

So some of this is also, you can say, because of a very, very clear strategy around the F&B, which, as you know, has a much lower margin than the room side.

And on costs, last question. So, could you perhaps provide any indication of cost growth in 2026? And also in relation to central functions, I think central function costs declined as a share of net sales compared to the previous quarter. Do you expect them to remain broadly flat in absolute terms?

I think it's a good question. I think it's a little bit too early to say. I guess we have a clear ambition to lower them as a percentage of sales.

And of course, we, in our cost base, also have inflation and salary increases that push the cost up. So at this point, we're not commenting on the absolute terms, but as a percentage of sales, they're certainly going to come down.

The next question comes from Jamie Rollo from Morgan Stanley.

I've got a few questions just on the quarter and then on Dalata. So I'll ask them separately as well.

The first couple are really follow-ups to the questions just asked. On the food and beverage and other line, which actually grew 1% in the third quarter. So I appreciate it's been under pressure for some time, but that looked like quite a good result to me.

Do you think we're now back to a level where that line can start to grow modestly? Or will it continue to decline as we go into a more corporate-driven period from Q4?

Jamie, thank you for the question. And you're right in your assumptions on this one. We did spend and we have spoken quite a lot on this topic during the last couple of years.

I think we have really spent a lot of time prioritizing and ensuring that we are more efficient in the F&B area. And also, this can be almost a marginal dilution if you do this wrong. And I think we have shown throughout the years that we are very good at prioritizing at Scandic. 

But now we have normalized it, and I believe that we have a lot of initiatives now to start growing and especially because of what we mentioned, both me and Par today, and you know it since the last many quarters that we have spent the last couple of years on a lot of initiatives within the commercial area in order to get a new website, a new app, a new loyalty program.

A lot of new backing systems, et cetera, which also makes us much more capable of selling more, doing more ancillary sales, both into the restaurants, but also into the room part.

So yes, we would expect this steadily to start growing looking ahead. 

On the cost question, the operating costs in the quarter were up nearly 4%, and that was quite a big increase compared to the first half, when they were up 1%.

Obviously, some of that's connected to what we just talked about with more food and beverage revenue. But I know you won't give guidance on costs next year. But maybe talk about margins, excluding Dalata, I mean, should we expect margins next year to come under a little bit of pressure, like in the third quarter?

But I think it's a mix, and Par, you can add a few comments to this as well. First of all, we are concluding most of the commercial initiatives, which, of course, have an impact on some of the cost levels.

And if you look at the hotel level, there is definitely a shift from even more leisure-driven occupancy during the third quarter, meaning more occupancy is increasing, and it is very leisure driven, meaning also more guests and more kids, and more people in the hotels.

That is, of course, pushing more pressure into certain parts of the business. But on the other hand, we managed to save hours. That shows how we work with efficiency to compensate for that. 

So now we go into a more corporate-driven period, you can say, in this quarter and the next. So we expect this to be a bit more normalized. But also the cost level, as I said, linked to these commercial initiatives, they will, of course, start to go down a bit now going forward, since we have concluded most of this.

We still work on optimizing, and we will have more features coming into the app and to the web. So it's not that this job is stopping just by launching a new thing, but it's actually something we will constantly develop, but at a lower, let's say, cost base than what we have seen up to now. 

Yes. And if you look at the other annual on it, I guess, we believe that Norway will be quite strong even next year. And Sweden will also recover better. There are a lot of initiatives coming from the government and relief, and people are experiencing lower interest rates.

I think the little bit question mark is, of course, around Finland for next year, how it will recover, and what will be the trigger of the recovery, whether it will be the macro or whether it will be the end of the Ukrainian war or something else.

There was an interesting deal yesterday with NVIDIA buying part of Nokia. So, of course, they need some positive news in Finland. So I think if you exclude Finland, I think we will see very positive margin development. And I guess the view on Finland needs to be added to that to see the total picture. 

Then I had 2 questions on the acquisition, if I may. So first of all, in the U.K. and Ireland, as you rightly say, very good data on occupancy and RevPAR versus '19.

But in the U.K., there's been quite a lot of cost pressure, and that seems to be continuing, particularly on the wage front and maybe business rates with the upcoming government autumn budget next month.

I'm just wondering what sort of risks you're factoring into your budgets from those inflationary pressures, which seem to be a lot higher in the U.K. than maybe in the Nordics. 

But I think, as we mentioned, you can say, we will operate this on a management fee during the coming period, and we will conclude with the planning for next year in the fourth quarter together with the team in Dalata.

So it's a bit too early to say exactly what the expectation is on the different parts of the region when it comes to next year. When we look at it from outside, it seems that, as you mentioned also that both Dublin and Ireland are extremely stable, still a lot of both corporate and leisure, lots of activities. 

When it comes to the U.K., I would say certain parts of the U.K. also still have a very high activity level. Maybe it has been more like London, which has been a bit flat for a period of time, maybe with the purchasing power also weakening a bit.

But also on the other hand, here, we're talking 5 hotels in that market. So I don't think it will have a huge impact on the total numbers for our deal going forward. And we expect London to also normalize and come back very strongly. It has historically been a very, very strong market. 

Then, on the strategy, I mean, some might say this is a bit of a departure from the organic growth path you laid out at the CMD. But obviously, the numbers are great, and it's a great opportunity.

But do you think this deal could be a blueprint for the company to expand either in new markets or existing markets in a very quick way in the future, in awaiting of property companies to come in and they need an operator like yourselves? 

I think there will be a lot of opportunities going forward. And Scandic has historically started for many, many, many years to concentrate on really fortifying the Nordics and building a stronger platform and position in the Nordics, and we are the #1 operator in the Nordics.

That, of course, gives certain limitations for growth, which also means that we have, for quite a long time, been looking at markets outside the Nordics.

We, of course, waited to talk about other markets than Germany, especially where we have had our focus. But we also said that we are open to looking at alternatives and other opportunities if they come on. 

We have been for quite a long time looking at U.K. and Ireland because we feel it's a really strong market. We think there are a lot of opportunities in that market, with high occupancy and prices.

So it's all dependent on the mix of leases that we can get in such a market. And this deal is actually marking a huge milestone for Scandic because, like Par mentioned, when we go in with this deal, all the 31 leases that we now make with Pandox of the 56 will be on almost Nordic terms. 

We are talking about turnover-based leases with a guarantee, something which we like because then we have a common interest with Pandox in continuing to invest in the properties and securing that these properties are delivering well.

So I think this is actually a good opportunity. With this model, we like to continue to grow. Also, of course, the 22 leases that are on fixed leases are at much lower levels.

So all in all, both the turnover-based leases and the fixed leases are on lower levels than what you see with Scandic's current portfolio, and that makes this deal extra attractive. 

And just finally, quickly, when do you think group leverage will be back to your under 1x target? 

Well, I think you can calculate it almost, Jamie. I know you're good at this. But you can see when you look at our ability to create a lot of cash, which Par also showed you on this one, more than DKK 2 billion in positive cash flow, you can calculate how fast this will come down.

We will continue to generate a very, very strong cash flow. And we have also said that we will continue with our targets for the CapEx part of Scandic. And we also mentioned that we expect the latter portfolio to be on lower levels than ours due to the fact that it's a younger portfolio and it has very well-managed hotels.

So of course, for a certain period of time and the years to come, we expect below the target and the percentage that we use on Scandic. And that also creates a lot of cash for that part of the portfolio. 

The next question comes from Andre Juillard from Deutsche Bank AG. 

Two follow-up questions for me, if I may. First one on price renegotiation. Correct me if I'm wrong, but you must be in the middle of the annual renegotiation with corporates. Could you give us more color about what is going on? 

Secondly, I guess that you are hardly working on the Dalata integration. Could you also give us some more color about potential synergies that you could expect to deliver, and maybe some potential positive effect on the margin that you guide at the moment on a flattish base for next year and the years after? 

Yes. I can start with the first one on the corporate. We have definitely started the corporate contracting period. And it's good to see that it's highly stable in the conversations with the corporate accounts. We haven't seen yet that there is, let's say, a cost focus on related to next year. 

So, when we have these conversations, it's clear that we remember that a lot of the prices are corporate having a discount to the ongoing or running rates, meaning that we can fluctuate that up and down versus the market development on prices.

That means that we have flexibility during the year if prices increase more, then we can follow, and vice versa. 

But right now, it's early because we still negotiate a lot of maybe approximately 10,000 deals or so being negotiated, and a lot of them are being negotiated as we speak, and it will continue until early Jan.

But it seems that it's a very stable environment in the communication with our corporate clients, also expecting stability next year. 

And for the other question, Par? 

Yes, a good question around the synergies of the Dalata. Of course, there will be apparent synergies when we come into, as Jens mentioned before, around certain deals, for example, the OTA business, someone will have a better agreement than the other.

And there will also be other synergies where we can align and combine the IT environment and get scale from that. 

And lastly, of course, there will also be possibilities to work in a different way together as a team. And I guess it's a little bit too early to say exactly how that will play out. And who will do what?

But of course, there are 2 full organizations today, and we could find a way to work together in a smarter way. So, I guess there will be synergies, but we're not guiding on that at this point. 

The last question, I think related to the margins. Then, I guess, given the pro forma we showed you earlier on the slide, it's, of course, expected that the 1 plus 1 will be higher than 2%, as Jens said before, but there will be a period of integration and transformation.

After that, you could expect support from these synergies in the margin. But right now, we will keep the financial target, as we said, with 11% and 5% growth, as well as a leverage below 1 as the first part. And if we change that, we will come back. 

Maybe a follow-up question on the MICE segment. If you're saying that the corporate segment is relatively stable. Do you see any improvement in big events, seminars, conventions, and so on, which are also important for the F&B part of your business? 

Yes, I think it's also a very good question because I think we have discussed quite a lot since the pandemic, about how the recovery would be in this segment. And I think meeting business as a whole is absolutely back on pre-pandemic levels or close to being back. 

The thing that we are still lacking, and which I really don't know if that will come back in the level, we saw pre-pandemic, was kind of the global big congresses where you saw like 15,000 doctors coming to Gothenburg or Copenhagen.

We see less of those. They are there, but they are not as big, maybe as they used to be, and they are not as often. I don't know what we should expect in the future if people would gather these huge amount of people in a city. 

But on a global scale, not now, I'm not talking about Nordics, I'm talking globally, that has not really recovered to the levels we saw pre-pandemic. And I don't have the answer for whether we should include it in our plans.

Meaning also that we operate the business without expecting this to happen. And if it happens, it's just an add-on to the results. And they are there, but they are on a lower level than pre-pandemic.  And I wonder if that ever comes back on these levels.

But the normal MICE market is very stable, I would say. And if we see a growth in the market, we will probably also see a slightly smaller growth in the MICE segment following that. 

Does that mean that in terms of duration, the leisure segment is still slightly above the corporate one? And do you expect that to continue or not really? 

Everything and all trends are absolutely confirming that this will continue. We have seen that during, nearly I've been with Scandic for more than 17 years. And in all that period, leisure is in percentage outgrowing the corporate year-on-year. And it's not yet 50-50, but it becomes closer and closer. And there are no signals that this would change. 

We also incorporate that when building new hotels, we are much more leisure-oriented in securing that we can take our share of that growing segment. So, you will be seeing more and more leisure-focused hotels with those facilities that are catering for that. 

So yes, I would expect that to continue to grow. And it's also individuals versus groups on the leisure side. So much more leisure-driven, much more individually driven, and that's what we are catering for. 

The next question comes from Raymond Ke from Nordea. 

A couple of questions from me as well. First one, just a follow-up on a previous question. I'm not sure if I misheard, but on the Scandic brands with relation to Dalata, was I correct in understanding that you said that hotels in Dalata's pipeline could potentially fall under the Scandic brand?

Or did you say that you have plans to change, for example, the Clayton and Mellotron brands? 

No, thank you for the question, Raymond. No, it's very clear that the current hotels, we have no plan of changing the brands on the current Dalata hotels, meaning that the Clayton and the Mellotron that they have in the markets will stay with these brands.

We will take over and own these brands as part of the acquisition. Then they have a pipeline. And of course, we will overlook that. 

For instance, right now, they are opening a hotel in Berlin next year. And that means next summer, that will be created as a Clayton with internal design and look and feel, and everything from a Clayton. So that will be opened as a Clayton.

But of course, what we will do with a hotel in Madrid coming up later in the years to come hasn't been decided yet. That could be a Clayton, that could be Scandic. So that could be, or even a Mellotron. 

We are looking to grow with all our brands going forward. And we spent quite a lot of time already together with the Dalata team as a pre-work to this deal going through to organize ourselves rightly with the different brands, but you should expect to see growth in all the branded segments. 

Then, on what you wrote there about the market situation when you look into Q4, occupancy is on par with the preceding year, and price levels to be slightly higher in the fourth quarter. Could you maybe provide some more nuance with respect to each geographic market? 

Yes. I think we keep that on a very, very high level because it's a bit too many details, maybe, Raymond.

But I think we expect quite a lot of stability in the markets where you have seen the stability. What is a good thing is that we have seen that we have an increase in occupancy in Finland and especially some of these weak areas like the Vansda airport area of Helsinki, as well as Gothenburg, last year has started to recover. 

So, it's 2 important markets that are starting to recover. And once occupancy is growing, then it's also easier for us to yield on prices. So, of course, we work a lot to start improving prices also in Finland, but it's yet to be seen whether we manage that and whether the market manages that, because the market has been a bit weak in Finland. 

So, it's a bit too early to dare to estimate whether we manage to see those results already in Q4 or whether we need to wait a bit for the beginning of next year before we see them. But it has a positive development on occupancy, and that's always good, that we know that yielding will come. 

And the final one for me, I guess it's too early maybe to talk about integration costs in relation to Dalata, but could you maybe talk a bit about the costs associated with the carve-out process itself, and if you see some extraordinary costs during the carve-out period? 

I think what we mentioned today is that during the management contract, we will, of course, have some costs related to that, and that we gave some guidance on the other parts.

I think we're still discussing, actually, how the carve-out will take place, and therefore, we're a little bit open in the end date. So, there are various ways to do it. 

Therefore, I think it's too early to talk about the cost related to that, and going even further to the integration of that. But we will report in every quarter how this cost has been developing, and I'm not sure whether we will guide on it yet. 

There are no more questions at this time. So, I hand the conference back to the speakers for any closing comments. 

We just want to thank you for listening in and for all your very, very valid and good questions. And if you have any more questions, feel free to contact us. You know where we are. And then we wish you a fantastic day out there. Take care.