Scandinavian hotels group Scandic has signed an agreement to take on a hotel at Stockholm’s Arlanda airport with a revenue-based rent and says it expects more agreements with a similar structure going forward.
The company has signed a 15-year lease for the 150-room hotel in Arlandastad, close to Stockholm Arlanda Airport, automotive centre Drivelab Stockholm and the new international meeting venue Scandinavian XPO.
The hotel has been closed in recent months following the bankruptcy of previous hotel operator First Hotels and will reopen as the Scandic Arlandastad in January 2021.
“The lease agreement for Scandic Arlandastad provides a reasonable distribution of risk between Scandic and the property owner and I’m sure we’ll be seeing more agreements like this going forward. As we all know, 2020 has been a very challenging year for the hotel industry, not least for smaller companies, and I do not rule out that more similar opportunities may come up for Scandic,” said Jens Mathiesen, president & CEO of Scandic.
The new rent model comes as the group announced third quarter earnings of SKr90 million (£7.8 million), compared with SKr823 million (£71 million) in 2019.
It said that occupancy, at 36 per cent, was less than half of last year’s figure.
Mathiesen said, “The level of activity in all Nordic capital cities was extremely low. From the end of August, demand has been driven mainly by domestic corporate customers outside the big cities on weekdays combined with leisure travellers on the weekends.”
He added: “The coronavirus crisis will have a long-term impact on the hotel industry, and it will be several years before occupancy returns to the level prior to the pandemic. Our leases must therefore ensure profitability at lower occupancy levels and provide a balanced risk sharing during periods of low demand. Today, some hotels, especially in the big cities, have rent costs that exceeds their revenues, which is unreasonable. We are now intensifying negotiations with our landlords and will therefore reduce rent payments until new terms have been reached.”