The hotel group Scandic says it has negotiated rent reductions of approximately 500 MSEK (£44 million) from its landlords for the period 2020 to 2022 but, for many of its hotels, rent costs currently exceed the hotels’ turnover, which is “not sustainable”.
The company, which operates some 280 hotels with 58,000 rooms in six countries, said that the average occupancy rate in its hotels in November was approximately 20 per cent due to extremely weak demand in all markets.
This compared with 36 per cent during the third quarter and 33 per cent in October. It expects continued low activity levels in December and the average occupancy rate for the fourth quarter is expected to be around 20 to 25 per cent.
It predicts continued low demand in early 2021 and says it will take “several years for market RevPAR and occupancy to return to levels prior to the pandemic”.
The group said that given that rent accounts for as much of 47 per cent of net sales at present, it is unlikely that it would sign any new leases or extend existing leases unless the terms were adapted to lower levels of activity.
Scandic says that is has been forced to reduce staffing by approximately 80 per cent through redundancies and furlough, and that it had halved its cost base, excluding rent.