The company operates in the mid-market segment, with hotels either in the city center or on the outskirts with access to airports or major road networks.
Scandic has over 40,000 hotels rooms and mainly operates full-service, leased hotels where the rent is related to Scandic’s revenues from the individual hotel. The restaurants account for almost one third of Scandic’s total revenues, and guests are a mix from the business, conference and leisure markets.
Scandic opened its first hotel in 1963 in Sweden and expanded into Norway and Denmark in 1973. In 1990, the first hotels outside Scandinavia were opened and in 1996, Scandic was listed on the Stockholm Stock Exchange. Scandic was acquired by EQT in 2007 from the Hilton Group whom had owned the company since 2001. In 2014 Scandic acquired Rica Hotels in Norway and further strengthened its position as the leading hotel chain in the Nordic region. In Norway alone, Scandic’s coverage was increased by 65 hotels, thus becoming a nationwide chain.
Market trends and drivers
The key driver for the hotel business is the overall economic growth and business climate. This ultimately impacts both business and leisure travel as well the conference industry.
Changing exchange rates influence leisure travel in particular and can cause fluctuations in the demand for hotel rooms. In difficult economic times there is a consistent trend that business travellers switch from more expensive hotels in the top luxury segment to less pricey accommodation in the three to four star mid-market segment.
Price and quality transparency is steadily increasing by way of price comparison, booking and travel sites on the internet. Today, an overwhelming majority of bookings are made online by corporations and individuals.
When EQT acquired Scandic it was the market leader in the Nordic mid-market hotel segment. Scandic had a stable client base with a high degree of returning customers.
There was a potential for further operational efficiency and accelerated organic growth coupled with selected acquisitions. The measures identified included ramping up the Nordic expansion and opening new hotels in Norway and Finland where Scandic was underrepresented and at the same time taking Scandic's strong brand and operational concept to new markets like Germany and Poland.
The development plan also calls for increasing efficiency by clustering reservations, boosting the yield management system and implementing extensive best-practice across the hotel portfolio.
A sale of selected, non-core real estate is also part of the development plan.