Skift Take
In the Nordics, the hotel sector’s future is brighter thanks to a growing market for office conversions.
Scandic Hotels Group reported results for the first-half of the year, and the operator of about 280 hotels is now targeting expansion through its Scandic Go brand and conversions of office buildings.
The company opened its first Scandic Go hotel in Stockholm last September. Its second Scandic Go is slated to open this October. The hotel group recently announced two new signings for its Scandic Go brand in Gothenburg and Umea.
The Scandic Go pipeline now totals nearly 900 rooms, representing almost 50% of the overall group’s growth pipeline.
Office conversions
Notably, two of the new Scandic Gos are conversions of office buildings, with planned openings in 2026. In some urban markets, demand for commercial office space has outpaced supply.
“The sentiment among property owners has improved, and there is particular interest in converting office buildings, which suits the Scandic Go brand well,” said CEO Jens Mathiesen on Wednesday.
Scandic Go’s design is meant to reduce costs – it lacks a full-service restaurant or gym, for example. It joins the group’s core brand, Scandic, and its luxury brand, Signature Hotels.
“Right now, there’s a lot of property owners with a lot of office space available, and they need to find alternatives for this,” Mathiesen said. “It’s not always easy to convert into private housing and things like that. So, they’re wondering: should they rent it out for a lower rent, or should they look at alternatives?”
“Hotels have a good future, with it expected that the hotel industry will grow year-on-year, like 3% on average in the Nordics in the coming years,” Mathiesen said.
First-half results
Executives claimed that their sharp focus on cost control and efficiency contributed significantly to Scandic Hotels’ improved margins.
- Net sales increased 0.7% year-over-year to about $977 million (5.87 billion krona).
- Average revenue per available room went up 2% to about $70, or 745 krona.
- Operating profit was about $100 million (1.053 billion krona) — up 2% year-over-year.
Expansion plans
“Based on current bookings, we anticipate a continued good summer and a positive start to the conference season in the fall,” said Mathiesen.
“For the third quarter, we expect occupancy rates to be in line with last year’s and price levels to be slightly higher,” he said. “Household demand for travel and leisure activities remains high, and a more stabilized economy in the Nordics is paving the way for continued positive development in the hotel market.”
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