Pandox used its interim results to points to its increased diversification, after adding Novotel-branded hotels to its portfolio.
The results came as Scandic continued to rationalise its estate, exiting two hotels in Finland as it looked to strengthen profitability.
Pandox is to acquire two hotels in the Netherlands and Germany for Eur83m, with Grape Hospitality managing the hotels under long term lease agreements under Accor’s Novotel brand. Pandox said: “The acquisition contributes to a further geographical and brand diversification of Pandox’s portfolio. Both the Hague and Hannover are strong congress and event destinations.”
CEO Anders Nissen said: “The benefits of a larger and more diversified portfolio manifest themselves in a variety of ways. Demand fluctuations are balanced out more effectively and having a presence in more markets provides new business opportunities.
“Pandox and its business partners are actively looking for development projects that can strengthen the growth and profitability potential of the properties. These projects range from renovation and repositioning to expansion and, in certain cases, building new hotels adjacent to existing hotel properties. Pandox sees significant long-term potential in the portfolio for these types of investments.”
The company reported a 9% increase in Ebitda for the quarter, to reach Skr881m (Eur82m), with revpar development “unevenly distributed” between countries and cities. Demand was affected to varying degrees by new hotel supply, trade show and congress calendars, as well as other local conditions. This included a revpar in the UK regions falling by approximately 2% in the quarter, but growing by 9% in Finland.
Looking ahead, Nissen said: “Pandox maintains that the hotel market has growth potential, but that it is in a maturing phase and growth is slowing. In this phase of the hotel cycle revpar is mainly driven by higher average prices. In some submarkets, however, increased hotel capacity puts pressure on revpar in the short and medium term. All in all, Pandox maintains that conditions for growth still exist this year.”
During the second half of the year agreements were signed with Nordic Choice and Scandic on the creation of some 180 new rooms through expansion and conversion.
Scandic’s results were described by the company as its best quarterly results ever, with adjusted Ebitda up by 12% to Skr823m, as the result of increased revenues combined with improved cost efficiency.
In July Scandic Hotels Group said that it was likely to exit 15 hotels which it said “do not contribute financially” and this past quarter saw two Finnish hotels leave the system; the Scandic Lahti and Scandic Riihimäki, with 221 rooms in total.
Jens Mathiesen, president & CEO said that Scandic had “a strong pipeline corresponding to 10.6% of the existing portfolio. With a focus on hotels in attractive locations at prioritised destinations, we expect the pipeline to increase Scandic’s profitability over time. Scandic has initiated a number of measures to strengthen profitability and cash flow. We see, for example, potential to improve profitability in our restaurant and conference operations, which is why we are reviewing modes of operation and offerings across the entire business.”
Looking ahead, he added: “We expect relatively stable market conditions in the fourth quarter, with like for like sales growth of 0% to 1%. In addition, having more rooms in operation is expected to contribute 2% to net sales.”
At PPHE Hotel Group, the company reported 4.3% growth in revpar in the quarter, driven by “good increases in average room rate across a number of properties, and maturing trading and recent openings across several hotels in London and Amsterdam”.
For the three months to 30 September, like-for-like revenue increased by 5.6% to GBP120.2m
Commenting on the results, Boris Ivesha, president & CEO, PPHE Hotel Group said: “We are pleased to report a solid performance during the quarter, as we benefited from the recent completion of several major repositioning projects and maturing properties across our portfolio and strong trading in the United Kingdom.
“Following several years of investment and disruption to operations, all hotels across our UK and NL portfolio are now open and contributing to the group’s performance. Strong trading at Park Plaza Victoria Amsterdam in the Netherlands and Holmes Hotel London demonstrate our investment programme continuing to bear fruit, and we look forward to trading continuing to mature across other recently repositioned hotels in the coming months.”
The company said that it expected to invest approximately GBP300m on its development pipeline, including an art’otel london hoxton and an art’otel at Hudson Yards in New York.
HA Perspective [by Katherine Doggrell]: Creeping recession? What creeping recession? The owners are battening down the hatches, as all that storing up grains and refurbished hotels is set to bear fruit. At Pandox diversification is the plan as it looks to what many feel will be the next phase in the company’s strategy, we muse involving more than just different brands and different locations.
But while we think thoughts about whether Pandox will buy hostels, serviced apartments or Airbnb, we look to the firepower of the likes of PPHE and where they will go. London has been well populated by the company and is currently pricey. There is little sign yet that this will change, although eyes are on the UK is as indulges in more voting and what this might mean for its exit from the UK.
The view of the experts so decried during the EU Referendum campaign seems to be that Boris Johnson will hold onto his digs, but then the experts have been wrong before. Capital is likely to flee if Corbyn gets in, but not if it comes with a soft Brexit. Batten down those hatches indeed.