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Pandox redovisning av affärsverksamheten 2010


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Pandox - Ett av de ledande hotellfastighetsbolagen i Europa

Pandox - Ett av de ledande hotellfastighetsbolagen i Europa

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  • 1. Pandox Report on business operations 2010one of the leadingh o t e l p r o p e r t y c o m pa n i e s i n e u r o p e
  • 2. The CompanyThe Business model . . . . . . . . . . . . . . . . . . . 2The Development . . . . . . . . . . . . . . . . . . . . . 4Success factors . . . . . . . . . . . . . . . . . . . . . . 6Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Value-growth . . . . . . . . . . . . . . . . . . . . . . 10 Types of agreements . . . . . . . . . . . . . . . . 10 Business processes . . . . . . . . . . . . . . . . 11Success stories . . . . . . . . . . . . . . . . . . . . . . 12Operated by Pandox . . . . . . . . . . . . . . . . . . 14Market communication . . . . . . . . . . . . . . . . 15Hotel property market . . . . . . . . . . . . . . . . . 16Pandox’ hotels and partners . . . . . . . . . . . . .18Hotel propertiesList of hotel properties . . . . . . . . . . . . . . . . . 40Other informationCEO commentary 2010 and ahead . . . . . . . 44Board of Directors and auditors . . . . . . . . . . 48Senior managers and executives . . . . . . . . . 50Team Pandox . . . . . . . . . . . . . . . . . . . . . . . . 52FinancesFinancial overview . . . . . . . . . . . . . . . . . . . . 58Sensitivity analysis . . . . . . . . . . . . . . . . . . . . 62Valuation and fiscal situation . . . . . . . . . . . . 64Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 65Ten-year overview . . . . . . . . . . . . . . . . . . . . 66Quarterly data 2009–2010 . . . . . . . . . . . . . . 68Financial statements 2010Report of the Board of Directors . . . . . . . . . 70Income statement and comments . . . . . . . . 72Balance sheet and comments . . . . . . . . . . . 74Changes in equity . . . . . . . . . . . . . . . . . . . . 76Cash flow statement . . . . . . . . . . . . . . . . . . 77Accounting principles . . . . . . . . . . . . . . . . . . 78Notes to the accounts . . . . . . . . . . . . . . . . . 79Proposed disposition of earnings . . . . . . . . . 84Auditors’ report . . . . . . . . . . . . . . . . . . . . . . 85
  • 3. Pandox completedthe world’s largesthotel property transaction in 2010with the acquisition of Norgani, a portfolio of 73 hotels .Pandox thereby becameone of the leadinghotel property companies in Europe .Pandox strengthenedits positionon the Nordic market .Pandox continued to expand in Brussels andacquired one of the city’s largest and best-known hotels – now called The Hotel . an internationalPandox is alsochallenger present in ten countries, includingNorth America with two large hotels in the centre of Montreal .Pandox has uniquecollaboration with 19 brands,creating an extensive network .
  • 4. The business model the business model is chosen with consideration to the local prerequisites in order to obtain a situationadapted strategy. the procedure is based on a well-developed methodology with several models are used in Brussels. hotel Bloom! and the defined structures, known as the pandox model, which enables hotel are independent hotels operated by pandox, and the crowne pandox’ skilful employees to focus on development and the plaza Brussels city centre is operated with a franchise agree- creative process. ment, while the hilton Brussels city is operated under a manage- ment agreement and the scandic grand place through a lease. Development 4 pandox has achieved constant progress in size, cash flow and value-growth – and consequently has a stronger market position. the portfolio value has increased from seK 800 million to more than seK 22 billion, while cash flow has improved by 45 times since the company was formed in 1995. read more on page Success factors pandox has developed rapidly since starting in 1995. the success factors are a combination of the company’s strategy, expertise, flexible busi- ness model and industrial owners.2 | PANDO x 2010
  • 5. Knowledge, network and individual capital one of pandox’ most important cornerstones is to constantly develop the company’s expertise and competences. in order to inspire our employees, an informal leadership style has been developed to give each individual considerable freedom and development opportunities. the corporate culture includes an interactive discussion with an extens- ive network, which provides valuable input in both large and small issues. Consistent strategy pandox has a well-defined strategy that is thoroughly embodied with the Board of directors, senior executives and banks – a strategy that has been consistently followed since the company was formed 15 years ago. the point of departure is to acquire under-performing large hotels in strong loca- tions, where the company’s specialist exper- tise can be used to develop the assets. this in turn creates prerequisites for long-term value development and a strong more on page 6 read more on page 8 PANDO x 2010 |3
  • 6. The Development From financial crisis to successful hotel property company When Pandox started in 1995, the company consisted of 18 hotels with 3,000 rooms located in nine swedish towns and cities. the business model was new and untried. the company had weak profitab- ility and limited capital. The road to success has since gone via transactions embracing 170 hotel properties to a total value of seK 20 billion. With a consistent strategy, pandox has shown durable and profitable growth, along 299 with a greater geographic spread. At the end of 2010, pandox had 120 hotels with a total of 24,800 rooms 272 266 267 located in 59 towns and cities in 10 different countries in the nordic region, the rest of europe, and north america. pandox thereby is one of the leading hotel property companies in the european market. 228 Pandox’ development 1995–2010 Number of hotels 46* 46 44 45 44 Cash flow SEK M * acquisition of hotellus with 16 hotels. *hotellus förvärvas med 16 hotellfastigheter. 119 97 31 28 20 18 14 53 21 12 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1990 – Swedish financial 1999/2000 and property crisis IT and financial crisis Acquisitions totalling SEK 20 billion . Founded in 1995. Pandox has its origins in the financial and property crisis Stock-exchange listing. Pandox was floated on the Stockholm Stock in the beginning of the 1990s . The Company was formed in 1995 by Secu- Exchange in 1997 with a new and untried business concept . The Company’s rum and Skanska . The mission was to take over and restructure the hotel portfolio was valued at SEK 1 .3 billion and the market capitalisation was SEK portfolio, and prepare it for sale . 520 million . The listing gave 4,000 new shareholders . The original hotel property portfolio. In the beginning, Pandox consisted Further to the listing, Pandox expanded substantially with acquisitions of of 18 hotel properties and three small operating units . All of the hotels were large hotels in strong locations, while smaller hotels were sold . in Sweden, and most of them were small with weak locations and in poor Internationalisation. In 2000, Pandox enlarged its geographical strategy to condition . northern Europe through the acquisition of Hotellus with 16 hotel properties . Privatised again in 2004. Pandox is bought out from the stock market in 2004, with new industrial owners through Eiendomsspar AS and Sundt AS .4 | PANDO x 2010
  • 7. 700 Average annual return 19% 445 446 389 120* * acquisition of norgani with 73 hotels. 318 301 44 45 46 36* 39 Key indicators 2010 Pandox proforma including Norgani * sale of 12 hotels to norgani. (before acquisition costs) Mkr 2010 Number of hotels 120 Number of hotel rooms 24,800 Property revenues, SEK M 1,700 Cash flow, SEK M 700 2005 2006 2007 2008 2009 2010 2007/2008 Global finance crisisTransactions covering 170 hotels .Stronger in Europe. The transaction tempo increased further to the privat- Further to the acquisition, Pandox became one of the leading pure hotelisation, and several large hotels were acquired in Berlin, Brussels, Basel, property companies in Europe with regard to geographic spread and numberCopenhagen, Stockholm and Malmö – thus strengthening Pandox as one of hotels and brands . Since starting in 1995, Pandox has carried out acquisi-of the leading hotel property players in Europe . tions for a total of SEK 20 billion representing transactions of 170 hotels .Expansion to North America. In 2007–2008, Pandox continued its inter- The value of the Company’s hotel property portfolio amounts to approxi-national expansion with two acquisitions in Montreal . mately SEK 22 billion further to the acquisition of Norgani – which impliesLeading in Europe. In August 2010, Pandox announced the acquisition that the value has increased about 20 times . This has been achievedof Norgani Hotels with a portfolio of 73 hotels in Sweden, Finland, Norway through a good hotel market, active ownership, sound expertise andand Denmark . profitable acquisitions . PANDO x 2010 |5
  • 8. Success factors Short and rapid decision-making paths Pandox’ shareholders and Board of Directors possess industrial expertise in the Company’s three most important areas: hotel operations, properties and business development . Their knowledge and experience create confidence, which enables us to take rapid decisions within, for example, different acquisition questions . This is a competitive advantage in a significantly slower surrounding world . clarion collection hotel Bastion, oslo Well-defined and consistent strategy Pandox has a well-defined strategy within geography, types of hotel and yield require- ments that have been consistently followed since the Company was formed . Flexible business model Depending on local prerequisites, Pan- agement agreements where a partner pendent distribution system . The busi- dox is able to choose between four runs the daily operations on behalf of ness model provides excellent opportu- operational strategies: through leases Pandox; by managing one’s own opera- nities to create a situation-adapted strat- with professional operators where Pan- tions through a franchise agreement egy “asset by asset” . dox remains as a strategic partner; man- under a well-known brand or via an inde- Expertise and network International network provides access to unique expertise pandox has a small management considerable individual freedom. in actively to attract people into the net- organisation, and all members are order to maintain all business proc- work, which is a precondition for the based at the office in stockholm. in esses in motion, the organisation is company’s rapid growth. the model addition, one of the company’s exec- supplemented by a national and inter- places demands on both visionary utives is based in Brussels where the national network composed of people and operative leadership, as well as largest operational activities are with specialist expertise within mar- an ability to create forms of collabora- located. the model provides major ket, management, hotel operations, tion with individuals with different benefits with rapid decision-making property development, brand names, backgrounds. paths, a high level of interactivity, and finance and taxes. pandox works6 | PANDO x 2010
  • 9. hyatt regency, montreal Corporate culture Pandox Spirit pandox has established an informal leadership style where a high level of expertise is combined with minimum Acquisition strategy bureaucracy and effective monitoring methods. the catchwords are inspira- pandox primarily acquires hotels with a potential that can be tion, simplicity, rapidity, expertise and brought out through active measures and where the compa- visible leadership. ny’s areas of expertise can be utilised.Portfolio of the highest qualityThe hotel property portfolio is of very high quality . The hotels are located ininternational and dynamic markets such as London, Brussels, Berlin,Stockholm, Copenhagen and Montreal as well as locations with a high pro-portion of domestic demand, which creates balance in revenues . The hotelshave strong locations and are the right size, which provides a critical massas well as being marketed by the sector’s most prominent brand names .The agreement structure with a combination of leases, management agree-ments and own operations provides good potential with limited risk . Choice of countriesStrategic alliancesPandox actively seeks strategic alliances with strong brand names that and locationshave an interest in forming a partnership that creates benefits for both par- Pandox is establishing in major hotel markets thatties . Pandox currently works with 11 partners under 19 brands . have good potential and stable demand . PANDO x 2010 |7
  • 10. Strategy consistent strategy enables stability and the spreading of risk corner-stones in pandox’ strategy One type of asset – hotel properties Agreement structure Geographical market A hotel property has distinctive features To maximise value-growth in each hotel Focusing on one type of asset requires a and differs from other types of property, requires a flexible business model that creates broad geographic market so as to create which demands specialist expertise to be opportunities for a situation-adapted strategy . growth prerequisites and be able to benefit able to maintain active and successful from changes in the hotel economic cycle . ownership . Pandox therefore invests in Business position: Pandox has a structure just one type of asset: hotel properties . that embraces leases, management agree- Business position: Pandox is currently ments, franchise agreements, as well as agree- located in ten countries, of which Sweden is Business position: Pandox has ments with independent players . The largest the largest market . Major markets outside the 120 hotels with a total of 24,800 rooms . portion concerns leases, which cover 87 domestic market are Brussels, Copenhagen, percent of revenues . Helsinki and Montreal . Pandox is represented in 59 locations that have a mix of national and international demand . Lease structure – Rental revenues Geographical spread, proportion of hotel rooms scandic Kramer, malmö Revenue-based lease, 34% Revenue-based lease with guarantee, 52% Sweden, 51% Management agreements, own operation, 4% International, 49% Franchise agreement, own operation, 4% Own operation, 5% Other, 1%8 | PANDO x 2010
  • 11. Pandox’ vision is to be one of the world’s leading Business concept and strategy hotel property companies with regard to special- pandox’ business concept, based on expertise within hotel properties, hotel operations and business development, is to ist expertise in both hotel and property opera- actively own, develop and lease out hotel properties. tions, and active ownership. Overall goal for the vision to become reality, the company must retain its pandox’ overall goal, through specialist expertise within hotels, specialist expertise regarding the value-growth chain, and that hotel properties and business development, is to achieve optimal the balance between international and national revenues, brand yield and value-growth in the hotel property portfolio. specific names and types of hotel are maintained. another important goals are set each year for the operating net, return on investment, aspect is to constantly develop the business model so as to value-growth in the existing hotel property portfolio, and the adapt to each situation and choose the best strategy in relation equity/assets ratio. the goals are then broken down to each indi- to local conditions. vidual property and act as guidance upon investment decisions. Choice of brandLocation and size Type of hotel names and partnersLarge hotels with strong locations increase The hotels shall belong to the upper- Each hotel shall have the best possible brandpotential and reduce risks, and are attrac- medium and high-price segment . name that strengthens the profile . This requirestive for both partners and guests . Such that Pandox maintains a broad network withhotels have higher liquidity and are easier Business position: The portfolio contains national and international hotel companies .to finance . a mix of upper medium and high-priced hotels . Examples of upper medium-priced Business position: Pandox currently works withBusiness position: All Pandox hotels hotels include many Scandic hotels as 11 partners under 19 well-known brand names,have strong locations with an average size well as the Hotel Berlin, Berlin . High-priced as well as a number of independent distributionof 207 rooms, which is significantly larger hotels include InterContinental Montreal channels, thus providing a unique position andthan the average hotel in Europe . and Hilton Stockholm Slussen . extensive network . radisson Blu hotel, Basel hotel Berlin, Berlin PANDO x 2010 |9
  • 12. Value-growth The value-growth chain in a hotel property forms the basis for Pandox’ vision, strategy and choice of agreement structure . Knowledge of the entire chain is a precondition for success . 10. Financing and taxes 1. Macro economy 9. Agreement structure 2. Hotel economic cycle 8. Asset management 3. Location and size 7. Investments 4. Competition – new capacity – different market positions 6. Operation and management 5. Brand names Types of agreement The value of a hotel property is determined to a considerable degree by how the hotel agreement is formulated . Pandox endeavours to find agreements that create mutual incentives and driving forces for maximum development for both parties . Optimal agreement framework Result-based agreements Franchise agreements Pandox’ active and situationadapted ownership A result-based lease implies that Pandox In Pandox own operation, franchise contracts is reflected in the different types of agreement . receives a share of the hotel operator’s operat- can be entered with a hotel company in order to The design and formulation of agreements are ing net . This type of lease requires that Pandox gain the benefits of a larger system that embraces guided by factors such as anticipated market be informed of and have insight to the operating the hotel’s overall marketing and sales . trends, local competition, planned investments, company’s finances and accounts . This form of as well as choice of operator and distributor . A lease can also have a guaranteed rent . mixture of different types of agreement provides Pandox with a structure that increases cash flow Fixed-fee agreements in good times and, with rental guarantees, pro- Fixed-fee hotel leases are used in mature markets Lease structure – Rental revenues tects in declining markets . and in well-established hotel products . A fixed-fee lease limits the risk but also the potential . Revenue-based lease, 34% Revenue-based agreements Revenue-based lease Revenue-based hotel leases are linked to the Management agreements with guarantee, 52% sales generated by the hotel business . This form A management agreement can be perceived as Management agreements, own operation, 4% of lease provides Pandox with a share of growth kind of agent contract, where Pandox owns the Franchise agreement, in both the market as a whole and in the market hotel business . Through a management agree- own operation, 4% share . To limit the risk, these leases generally ment, a hotel company is assigned to operate Own operation, 5% include a minimum guaranteed rent . and manage the hotel on behalf of Pandox . Other, 1%10 | PANDO x 2010
  • 13. Business processesPandox’ five business processes are implemented to describe the business position,the external and internal driving forces, and how these interact with each other . 1 2 3 Market survey The Pandox Model Asset management the company’s working methodology Daily management plus major invest- Gains knowledge of the market situation increases cash flow and limits the risk ments with the objective of increasing the and change-pattern. for each respective hotel. value of the properties in the long-term. Economic and 4 5 Market financial reporting communication Operations are monitored through estab- Pandox regularly performs marketing lished goals, evaluations and valuations. activities towards target groups. The Pandox Model – and its four phases Market analysis Market strategy Profitability optimisation Agreement optimisation A market analysis is performed A strategic plan for each hotel In view of that the value of a prop- The optimal cash flow of each in order to assess a hotel’s prof- property is established based on erty is influenced by the profitabil- respective hotel property is itability potential and subsequent the respective hotel’s specific ity of the related hotel operations, divided between the operator, ability to pay the agreed rent . prerequisites, the local market, the operator is Pandox’ most Pandox and other related parties . The local market is identified and and its position in the hotel eco- important partner . The hotel Each agreement is formulated in analysed with regard to demand, nomic cycle . The property’s con- operator is constantly assessed such a way that all parties competition and the current and tinued area of use is uncondi- in order to ensure positive devel- involved are given an incentive to future supply . tionally evaluated while prepar- opments of the hotel’s operations continuously improve the hotel ing the strategic plan . and the value of the property . property’s overall profitability . Possibility to Action plan acquire a with concrete hotel property measures market analysis market strategy profitability agreement optimisation optimisation Evaluation of each respective hotel property and the portfolio sales in accordance with the strategy PANDO x 2010 | 11
  • 14. Investments in developm Pandox has developed a large number of hotel properties and hotel operations during the years . A selection of the past years’ successful repositioning and ongoing projects are here presented . Investment program: cad 7.5 million Accomplished: modernisation and improvement of the banqueting hall and other meeting areas. Holiday Inn Brussels Airport Vision – the best! Holiday Inn Brussels Airport was acquired in 2006 when the hotel required substantial Crowne Plaza refurbishment and development . With the vision of creating the best upper-medium- Brussels City Centre priced hotel in the area, the change process has been successfully implemented based Established on the catchwords of full service, attractive design and high efficiency . in Brussels Crowne Plaza Brussels City Centre was acquired in 2003, and has for several years been one of Brussels’ business and meeting hotels – and indeed continues to strengthen its market position year after year . The hotel, which has received several international awards, has the vision of becoming Brussels’ best meeting hotel in the city centre . Investment program: eur 15 million Accomplished: repositioning towards the meeting segment with new concept called “Balanced senses”. upgrading of all rooms, Investment program: eur 8 million as well as new restaurant and bar concept in a classic environment. Accomplished: completely new design for rooms and lobby, new meeting concept, upgrading of general facilities and major organisational development.12 | PANDO x 2010
  • 15. SuCCESSent and repositioning STORIES Hyatt Regency Montreal Outstanding! pandox acquired the hyatt regency montreal in the summer of 2008, and is now investing in the vision of creating montreal’s best meeting and festival hotel. and the hotel is well on the way to becoming outstanding! the first stage is already completed with the Hotel BLOOM!, Brussels upgrading of the hotel’s large banqueting Talk of hall and other meeting rooms. Work is now continuing with the upgrading of the reception and lobby. InterContinental Montreal the town Business Pandox acquired the hotel in 2005, which at the time was considered to be one of the city’s abso- lutely poorest hotels . During more than two and pleasure years, the hotel was refurbished, upgraded and developed, and a new concept was produced . Hotel BLOOM! is a unique hotel with a completely own concept based on art and design . It has Pandox acquired the InterContinental Mon- become a challenger in the Brussels hotel market treal in the summer of 2007 . Extensive devel- and now competes with the major hotels . opment work has since created a completely new hotel concept – and reactions have been nothing less than fantastic with several dis- Investment program: eur 13 million tinctions and awards . Work is now continuing Accomplished: repositioning, upgrading and Investment program: cad 14 million development of the entire hotel. new with the vision of becoming RevPAR-leader in Accomplished: new management, new management, new concept and new name. Montreal . profile and design in all rooms and the lobby, new f&B offer. Hotel Berlin, Berlin Meeting place Since acquiring the hotel in 2006, Pandox has created the meeting place of the future in one of the city’s largest hotels . Extensive re-profiling has Investment program: eur 10 million moved the Hotel Berlin, Berlin back to the top – Accomplished: modernisation and improvement of all rooms and meeting product, as well as and is now established as one of the leading facade, entrance and lobby. new market profile meeting hotels, as well as one of Berlin’s most and new management. creative meeting places . PANDO x 2010 | 13
  • 16. Operated by Pandox crowne plaza Brussels city centre holiday inn Brussels airport hotel Bloom!, Brussels hilton Brussels city the hotel, Brussels crowne plaza antwerp hotel Berlin, Berlin hyatt regency montreal intercontinental montreal pelican Bay, Bahamas A natural part of Pandox’ active ownership operate in an international hotel environment . In recent years, four of the operations that had is to operate its own hotels . Depending on Having one’s own operational competence also been acquired as under-performers and there- the local prerequisites, the best strategy implies possessing specialist knowledge to after redeveloped, were leased with long-term can be to develop operations oneself, and evaluate the hoteloperators, and be able to agreements to well-known operators . In turn, to choose another solution at a later stage . carry out acquisitions that include both the this created prerequisites for new acquisitions . This creates a situation adapted strategy – property and operating company . The philosophy behind Pandox’ operating hotel by hotel . Further to the growing industry trend of hotel companies is to build up each hotel’s strategy companies becoming management companies, and competence locally . This implies that the main Another reason is that business cultures vary it is also natural for Pandox to integrate vertically part of decision-taking is delegated, and report- among different geographical areas . In the and take over operational responsibility . ing is made to a board of directors with, normally, Nordic region, leases dominate while in North At the end of 2010, Pandox’ operating com- external members who are elected for their spe- America the most common form is manage- panies, including management agreements, cialist expertise . To be successful with the busi- ment and franchise agreements . Europe has a embraced ten hotels with total revenues of SEK ness processes requires an ability to attract the mixture of both . It is therefore important to com- 1 .2 billion – located in Berlin, Brussels, Antwerp, best management, and that such persons be mand different strategies in order to successfully Montreal and the Bahamas . given substantial influence over operations . Hotels operated by Pandox City Hotel Brand name No. rooms Location Berlin Hotel Berlin, Berlin Independent hotel 701 Central Montreal Hyatt Regency Hyatt Regency 605 Central InterContinental Montreal InterContinental 357 City centre Brussels Crowne Plaza Brussels City Centre Crowne Plaza 354 City centre Hotel BLOOM! Independent hotel 305 Central Hilton Brussels City Hilton 283 City centre The Hotel Independent hotel 4334 City centre Holiday Inn Brussels Airport Holiday Inn 310 Airport Antwerp Crowne Plaza Antwerp Crowne Plaza 264 Central Bahamas Pelican Bay Independent hotel 184 Central14 | PANDO x 2010
  • 17. MarketcommunicationPandox organises a Hotel Market Day presentations that increase knowledge and situation and its consequences for the hoteleach year, where current topics that insight about the hotel sector’s conditions, and industry, as well as social media and their effectaffect the industry and sector are pre- are given the opportunity to network and obtain on the sector .sented and discussed . The event has a forecast and prognosis for next year . The The speakers are top-quality . In Novemberbeen held every year since 1997 and evening always closes with a dinner in a pleas- 2010, we had the honour of presenting Simoninterest is constantly growing . Recent ant and relaxed environment . The event is held Johnson, Director EMEA from CBRE Hotels,years have seen a full house with around in November at the Hilton Stockholm Slussen, Jan Tissera, CEO of TravelClick International,300 people taking part, of which a large which apart from being owned by Pandox is a and Hermine Coyet Ohlén, Chief Editor ofpart is composed of international guests . conference hotel of the highest class . In recent Swedish Elle . Staffan Olsson, well-known hand- years, themes taken up have included the effect ball profile and Swedish national handball teamThe Hotel Market Day is a dynamic meeting of low-price airlines on the hotel industry, the manager and Stefan Lövgren, handball icon andplace where hotel owners, operators, hotel significance of shopping tourism for a destina- expert commentator for TV4, were also therecompanies, banks, public opinion lobbyists, tion, as well as the signification of the term and talked about the Handball World Champi-construction companies, politicians and media “brand profitability” and the business models it onship 2011 – a mega event .come together . They can listen to interesting offers . The themes for 2010 were the economic Regular information about market trends and acquisitions When Pandox was formed in 1995, the Exchange, the flow of information was Welcome as a subscriber publication of a newsletter was started in maintained to people interested in the hotel Pandox upgrade is free of charge and may order to market the Company vis-à-vis the sector and the hotel property market, be ordered from Pandox either by tele- capital market prior to being listed on the which is why Pandox upgrade is still phone at +46 (0)8-506 205 50 or by send- stock exchange . The newsletter later was regularly issued . The newsletter contains ing an email to pandox@pandox .se replaced by the public reports distributed topics such as market trends and current Pandox upgrade is also available on by the Company . In spite of Pandox no Swedish and international hotel market www .pandox .com longer being listed on the Stockholm Stock questions . PANDO x 2010 | 15
  • 18. Development of the hotel property market Historically, hotel properties were perceived banks and other passive owners discovered where companies with a functional strategy as part of the overall property market . Own- that hotels have distinctive features that distin- were formed, and the first pure hotel property ership was often in the hands of institutions guish them from, for example, housing and companies were established . and large property companies that lacked office buildings . The value growth of a hotel At the same time, several of the large hotel hotel expertise and had few contact sur- property is complex in view of that revenues and companies changed their strategies and chose faces with hotel operators . The relationship results are affected by several factors that an “asset light” orientation, implying that they between tenant and landlord was in general demand extensive knowledge of the sector, started to sell their property portfolios . based on long leases with solid guarantee including knowledge of driving forces within the These were the most important driving forces components where the operator/hotel hotel industry, effects of the choice of brand behind greater liquidity in the hotel property mar- company took care of all development, name and type of agreement, as well as different ket . The new companies were active and in gen- maintenance and service of the properties . price and product segments, and much more . eral managed by people with considerable hotel experience – which in turn led to greater dynam- The distinctive features of hotel properties Functional and geographical focus ics in the market with new contact surfaces and became clear Further to this baptism of fire, the capital market the spreading of interest in the new players . During the financial and property crisis in the begin- increased its requirements regarding the strate- ning of the 1990s, it became clear that the owners, gies of property companies . The companies Scandinavia led the changes in Europe often institutions and large property companies, started to specialise, and two principal paths Scandinavia was in the forefront of these develop- lacked industrial competence . The economic crystallised: functional and geographical focus . ments . Pandox was the first hotel property com- downturn hit the hotels, which suddenly could not The majority of property companies chose the pany in Europe to be listed on the stock market . afford to pay their rent – which in turn caused far- latter and concentrated their portfolio around a The listing in 1997 in Stockholm led to a more reaching problems for the property owners . few locations, which also led to them selling transparent hotel market further to the improved The property crisis led to the banks being special properties such as hotels and shopping availability of information, and the confidence forced to take over a number of hotels, and centres . New structures arose from this situation grew within the capital market . Capona was listed 10 largest hotel property owners in Europe intercontinental, montreal Starwood Capital Group Foncière des Murs OCPI Pandox Moor Park Capital Partners Westmont Hospitality Group The Blackstone Group Prupim/Prudential Quinland Private Capital CapMan 0 200 400 No . of hotels Source: The information in the graph is an estimation based on public information and research . Deviations may occur .16 | PANDO x 2010
  • 19. comfort hotel Børsparken, osloon the Stockholm stock exchange at the end of tions in several countries and continents . By the end of the year one could see that thethe 1990s, and was also founded further to the At company level, there are only eight com- trend of the hotel market showed a pattern of areorganisation and industrialisation of the sector . panies that have a European property portfolio very sharp V, with a rapid and strong recovery . Over the years that followed, interest in the with more than 50 hotels . The largest is Starwood The transaction market in Europe had increasedhotel industry grew and the number of players Capital Group that owns close to 1,000 hotel by 150 percent at the end of the year comparedincreased . Private equity companies, institutional properties across the world, and where Europe with 2009 and reached a level of EuR 7 .8 billion .owners, high net worth individuals and various represents just under 40 percent . Another large The transactions completed during the yearkinds of funds took positions in the market . player is Westmont Hospitality Group that owns were mainly domestic or within Europe, and the about 500 hotels in total, of which 16 percent are banks’ continued stringent loan requirementsOnly a few diversified hotel property portfolios in Europe . Pandox is also a significant player with held down the size of the transactions . About 60Even if the hotel property market is now estab- 120 hotels in 10 countries together with 11 part- percent were less than EuR 35 million and onlylished and transactions with gigantic amounts are ners under 19 brand names . 17 percent were over EuR 70 million . The larg-carried out, ownership is still fragmented and est transaction in Europe was Pandox’ acquisi-being restructured . If the point of departure is that Buyers and sellers in 2010 tion of Norgani for just over EuR 1 billion .there have been, and still are, functional focus 2010 proved to be a year of surprises . The trans- The most active buyers in the hotel propertytowards one type of property, the situation should actions market in Europe touched bottom in market in 2010 were high net worth individualshave led to the market’s players owning hotel 2009 and finished at close to 90 percent under and private equity or investment companies .properties in many countries managed by several the peak year of 2007 . The backdrop to the The largest sales group was composed ofbrand names, so as to be able to benefit from the downturn was strong macro-economic factors, receivers, companies assigned by banks to sellchange in the hotel economic cycle and use their which were expected to prevent a rapid recov- distressed assets .specialist competence . But this is not the situa- ery . But after a cautious, albeit positive, start totion today . Few companies have any pronounced 2010 both the underlying hotel market andglobal strategy, and only a minority has opera- transactions within the sector accelerated .Transaction volume on the hotel property market, EMEA1) Buyer and seller net shift analysis, EMEA1) 2010 EUR million25,000 Sovereign Wealth Fund 2.8 REIT 2) −0.120,000 Receiver3) −13.7 Investment fund/Private equity 9.115,000 Institutional investor −4.5 Hotel operator −2.010,000 HNWI 12.8 Developer/Property company −5.3 5,000 Other corporates 0.9 0 % 2007 2008 2009 2010 –15 0 15 Single acquisitions Portfolio acquisitions 1) Europe, Middle East, Africa 2) Real Estate Investment Trust Europe, Middle East, Africa 1) 3) Companies assigned by banks to sell distressed assets Source: Hotel Investment Outlook 2011, Jones Lang LaSalle Source: Hotel Investment Outlook 2011, Jones Lang LaSalle PANDO x 2010 | 17
  • 20. Pandox – 120 hotel prop one congress centre and 19 well-known brand names presented on pages 20–39 Pandox currently works with 11 part- ners under 19 hotel brand names that are active within different price and product segments. our partners are all well-known, established and success- ful. these partnerships strengthen Pandox’ knowledge and network and enable a unique position in the industry. the hotels are spread over 10 countries and a total of 59 towns and cities. Pandox’ most extensive partner- ship is with scandic, who operate 57 of the hotels in Pandox’ portfolio, followed by Quality hotel with 12 hotels. Pandox also works with international brands 120 such as hilton, hyatt, radisson BlU, Crowne Plaza and InterContinental. each hotel is handled and ana- lysed based on its individual prerequi- sites and surroundings. the business model, form of partnership and agree- hotels ment are chosen depending on each situation so as to create optimal pre- 24,800 conditions for maximum development hotel rooms for both parties.18 | Pandox 2010
  • 21. erties, 10 CoUntrIes 59 CItIes 19 Brand names Pandox 2010 | 19
  • 22. Scandic Grand Marina, Helsinki Scandic Ferrum, Kiruna Scandic Hasselbacken, Stockholm Scandic Grand Marina, Helsinki strong hotels in good locations scandic is the leading hotel chain in the nordic has 57 hotels and one congress centre under the city-centre hotels, Pandox’ portfolio includes for region, and currently has 160 hotels in nine countr- scandic brand name, representing 49 percent of example scandic Park on Karlavägen and scan- ies. Pandox and scandic have a long business revenues in the total Pandox portfolio. dic hasselbacken at djurgården in stockholm, relationship and have collaborated closely ever scandic has two principal product segments: scandic Grand marina and scandic Continental since Pandox was established. today, Pandox city-centre hotels and highway hotels. of the in helsinki as well as scandic Kna in oslo.20 | Pandox 2010
  • 23. scandic rosendal, scandic Kna, oslo tammerfors Scandic Star, Lund Scandic KNA, Oslo Scandic Park, Stockholm CItY Centre hasselBaCKen sCandIC ParK Grand marIna ContInental sCandIC Kna sKoGshÖJd FerrUm rosendal malmen Scandic Malmen, Stockholm starScandic Highway City centre Resort No. hotelssweden 25 17 42norway 1 1 2Finland 1 6 2 9denmark 1 1 and othersGermany 1 1Belgium 1 1 2TOTAL 57 Pandox 2010 | 21
  • 24. 30 well-positioned highway hotels the original scandic hotels are classic highway approach, scandic Backadal by the e6 at hotels that were opened so as to offer car-trav- Gothenburg’s western approach, and scandic ellers overnight accommodation. this hotel Klarälven at Karlstad’s e18 ring road. segment is now established over the whole in scandic and Pandox have created a spe- the nordic region. Pandox’ portfolio contains cific project with a vision of developing the new 30 highway hotels, of which well-known and generation of highway hotels – a process that popular examples include scandic Järva Krog, will start in 2011. located just by the e4 at stockholm’s northern22 | Pandox 2010
  • 25. Scandic Linköping Väst scandic Västerås Scandic Örebro Väst scandic Järva Krog, solna scandic Västerås hIGhwaY hotels ÖreBro VÄst JÄrVa KroG BaCKadalscandic Backadal, Gothenburg norrKÖPInG nord lInKÖPInG VÄst KlarÄlVen VÄsterÅs and others scandic Bollnäs Scandic Norrköping Nord Pandox 2010 | 23
  • 26. Hilton Stockholm Slussen BrUssels stoCKholm london helsInKI Bremen dortmUnd hilton hotels – high class in all locations hilton is a global hotel company, and is to be helsinki and stockholm. Currently a joint refur- found in most major cities across the world. bishment program is in progress at the hilton Pandox has seven hilton hotels in its portfolio. stockholm slussen. the locations include london, Brussels, Hilton Hotels & Resorts Country City No. rooms hilton london docklands UK london 365 hilton stockholm slussen sweden stockholm 289 hilton Brussels City Belgium Brussels 283 hilton helsinki Kalastajatorppa Finland helsinki 238 hilton helsinki strand Finland helsinki 192 hilton Bremen Germany Bremen 235 hilton dortmund Germany dortmund 190 TOTAL 1,79224 | Pandox 2010
  • 27. Hilton London Docklands Hilton, BremenHilton London Docklands Hilton, Dortmund Hilton Helsinki Strand Hilton Helsinki Kalastajatorppa Pandox 2010 | 25
  • 28. ClarIon helsInGBorG ÖstersUnd Karlstad ClarIon ColleCtIon CoPenhaGen harstad oslo Clarion Collection Hotel Bastion, Oslo nordic Choice hotels – the portfolio contains all five of the chain’s brands nordic Choice hotels is the fastest growing hotel com- percent of Pandox’ revenues. the hotel company pany in the nordic region and is one of Pandox’ larg- has several brands, and Pandox has all five in its est partners with a total of 22 hotels in the portfolio. portfolio, where Quality is the largest with a total of the hotels within the Choice family represent 19 12 hotels located in norway and sweden.26 | Pandox 2010
  • 29. ComFort oslo CoPenhaGen BerGen QUalItY resort FaGernes Clarion Hotel Grand, Helsingborg ØYer KrIstIansand QUalItY molde lInKÖPInG GothenBUrGQuality Hotel&Resort, Fagernes Clarion Hotel Mayfair, Copenhagen stoCKholm KrIstIanstad Clarion Hotel Plaza, Karlstad sÖdertÄlJe lUleÅ sKÖVde Quality Park Hotel, Södertälje Nordic Choice Hotels Country No. hotels Clarion sweden 3 Clarion Collection norway, denmark 4 Quality norway, sweden 9 Quality resort norway 3 Comfort norway, denmark 3 TOTAL 22Comfort Hotel Børsparken, Oslo Pandox 2010 | 27
  • 30. BrUssels montreal antwerP Centre of attention in the Canadian metropolis InterContinental hotels & resorts is one of the InterContinental montreal was acquired in 2007 world’s largest hotel companies, and owns the and has since then been developed and InterContinental, Crowne Plaza and holiday Inn repositioned. It was named montreal’s best brands. Pandox’ portfolio includes four hotels hotel last year and ranked as one of the 100 located in antwerp, Brussels and montreal. the best hotels in the world. Holiday Inn, Brussels28 | Pandox 2010
  • 31. Crowne Plaza Brussels City Centre, Brussels leading in Brussels Pandox owns two hotel properties operated the Crowne Plaza antwerp, acquired in 2007, under the Crowne Plaza brand name – both is also owned and operated by Pandox under a located in Belgium. Crowne Plaza Brussels City franchise agreement. the hotel has 264 rooms Centre was acquired in 2003 and thereafter and is strategically located by antwerp’s ring underwent an important investment program. road just 10 minutes from the airport. It is cur- the hotel has since become one of Brussels’ rently undergoing an extensive refurbishment leading business and meeting hotels, and is program that will be completed in 2011. owned and operated by Pandox under a fran- chise agreement. Crowne Plaza Brussels City Centre, Brussels BrUssels successful change process the holiday Inn Brussels airport was acquired successfully carried out with the catchwords of in 2006, and needed extensive refurbishment full service, attractive design and high efficiency. and development. with the vision of creating today the hotel is runner-up in its market, and is the best upper-medium-priced hotel in the owned and operated by Pandox under a area, the change process has been franchise agreement. InterContinental Hotels & Resorts Country City No. hotels Crowne Plaza Belgium antwerp, Brussels 2 holiday Inn Belgium Brussels 1 InterContinental Canada montreal 1 TOTAL 4 Pandox 2010 | 29
  • 32. MONTREAL Hotel Country City No. rooms Hyatt Regency Montreal Canada Montreal 605 On the way to something big Hyatt is an American, stock-market-listed hotel Montreal’s exhibition and congress centre. The company with headquarters in Chicago. The hotel is undergoing refurbishment with the company has eight different brands. Pandox’ objective of repositioning as one of Canada’s hotel in Montreal is operated under the Hyatt best leisure and meeting hotels. The Hyatt Regency brand. Regency Montreal has 605 rooms and exten- The Hyatt Regency has a strategically sive meeting and conference facilities for 1,000 important position in central Montreal within people. walking distance to the Palais des Congrès –30 | PAN dOx 2010
  • 33. Radisson BLU Lillehammer Hotel Radisson BLU Lillehammer Hotel LiLLEHAMMER MALMö BOdØ STOCKHOLM BASEL LiNKöPiNg Radisson BLU Hotel, Basel Rezidor Country City No. rooms Radisson BLU Arlandia Hotel Sweden Stockholm 335 Radisson BLU Hotel, Malmö Sweden Malmö 229 Radisson BLU Hotel, Linkoping Sweden Linköping 91 Radisson BLU Lillehammer Hotel Norway Lillehammer 303 Radisson BLU Hotel, Bodø Norway Bodø 191 Radisson BLU Hotel, Basel Switzerland Basel 205 TOTAL 1,354 Radisson BLU Arlandia Hotel, ArlandaSix hotels, three countriesRezidor is the fastest growing hotel company in Europe. With Scandi-navian origins, the company is now listed on the stock market and isheadquartered in Brussels. Pandox has a long relationship with Rezidorand currently owns six Radisson BLU hotels located in Sweden, Norwayand Switzerland. during 2010, the Radisson BLU hotels in Malmö andBasel were developed jointly by Rezidor and Pandox with good resultsand where the companies’ respective competences could be utilised. Radisson BLU Arlandia Hotel, Arlanda PAN dO x 2010 | 31
  • 34. gOTHENBURg JöNKöPiNg Elite Park Avenue Hotel, Gothenburg Elite Park Avenue Hotel, Gothenburg Well-known city profiles Elite Hotels is a privately owned hotel chain with 21 hotels, and has specialised in operating classic hotels. The Pandox portfolio contains the Elite Park Avenue Hotel on gothenburg’s most well-known avenue, and the Elite Stora Hotellet in Jönköping. Hotel Country City No. rooms Elite Park Avenue Hotel Sweden gothenburg 317 Elite Stora Hotellet Jönköping Sweden Jönköping 135 TOTAL 452 Elite Park Avenue Hotel, Gothenburg32 | PAN dOx 2010
  • 35. Rica Hotel Bodø HAMAR BOdØHotel Country City No. roomsRica Hotel Bodø Norway Bodø 113Rica Hotel Hamar Norway Hamar 176TOTAL 289 Rica Hotel Hamar Two Norwegians Rica Hotels has more than 80 hotels in Norway and Sweden, and two of the Norwegian hotels are included in Pandox’ portfolio. The Rica Hotel Bodø is located within walk- ing distance of the town centre, and has 113 rooms as well as conference facilities for 250 participants. The Rica Hotel Hamar is a business and conference hotel located centrally in Østlandet Rica Hotel Hamar with 176 rooms and conference facilities for 600 people. PAN dO x 2010 | 33
  • 36. First Hotel, Linköping First Hotel Royal Star, Stockholm HALMSTAd LiNKöPiNg STOCKHOLM BORÅS Four First hotels First Hotels is represented with 46 hotels in Sweden, Norway and denmark. The Pandox portfolio contains four hotels in Sweden under this brand name, located in älvsjö outside Stockholm and in in Sweden Borås, Linköping and Halmstad. First Hotels Country City No. rooms First Hotel Royal Star Sweden Stockholm 103 First Hotel Linköping Sweden Linköping 133 First Hotel grand Borås Sweden Borås 158 First Hotel Mårtenson Sweden Halmstad 103 TOTAL 497 First Hotel Grand, Borås Best Western Royal Corner MORA växJö vANTAA Best Western Mora Hotel & Spa Central locations Best Western Hotels is a global hotel chain with operations Hotel, other brand names Country City No. rooms in 80 countries. The hotels are owned and operated Best Western Mora Hotell & Spa Sweden Mora 135 privately but marketed under the joint name of Best Best Western Royal Corner Sweden växjö 158 Western. The Pandox portfolio contains three hotels that Best Western Hotel Pilotti Finland vantaa 112 are members of Best Western Hotels, of which the Best ibis Stockholm Hägersten Sweden Stockholm 190 Western Mora Hotell & Spa and the Best Western Royal Omena Hotel Copenhagen denmark Copenhagen 228 Corner in växjö are two centrally located four-star hotels. Rantasipi imatran valtionhotelli Finland imatra 135 The Best Western Hotel Pilotti is located in vantaa, Finland.34 | PAN dOx 2010
  • 37. iMATRA Castle environment in Finland Rantasipi Imatran Valtionhotelli is a spa hotel in a castle environment close to the town of Imatra in Finland. The hotel has 135 rooms, conference facilities for 250 people, and a complete spa centre. COPENHAgEN STOCKHOLMibis – budget Centrally locatedin southern Stockholm in CopenhagenAccor is one of the world’s largest hotel companies with operations in 90 Omena Hotels has ten hotels, of which nine are in Finland and one incountries and 15 different brands in all segments – including the ibis brand denmark. The Pandox-owned Omena Hotel Copenhagen is centrallyname for low-priced hotels represented in 43 countries. The Pandox portfolio located in Copenhagen with 228 rooms and a café.includes the ibis Stockholm Hägersten, located in southern Stockholm, just10 minutes from Stockholmsmässan and 15 minutes from central Stockholm.The hotel has 190 rooms, a restaurant, and several conference rooms. PAN dO x 2010 | 35
  • 38. independent hotels BRUSSELS A unique and own concept Pandox acquired Hotel BLOOM! in 2005, which design. it is a distinct challenger in the Brussels since September 2007 has been totally refur- hotel market, with 305 rooms and large confer- bished and has undergone a complete facelift. ence facilities, in the city centre that competes Today, the Hotel BLOOM! is a unique hotel with the major hotels. Hotel BLOOM! is both product with its own concept based on art and owned and operated by Pandox. Independent hotels Country City No. rooms Hotel Berlin, Berlin germany Berlin 701 The Hotel Belgium Brussels 433 Hotel BLOOM! Belgium Brussels 305 grand Bahama Pelican Bay Bahamas island 184 Airport Hotel Bonus inn Finland vantaa 211 vildmarkshotellet Kolmården Sweden Norrköping 213 Mr Chip, Kista Sweden Stockholm 150 Stadshotellet Princess Sandviken Sweden Sandviken 84 Hotel Korpilampi Finland Espoo 15036 | PAN dOx 2010
  • 39. Hotel BLOOM!, BrusselsHotel BLOOM!, Brussels BRUSSELS Best location in the EU city The Hotel was acquired in 2010 and is one of floors with several conference areas, two res- the largest and best-known hotels in Brussels. taurants, as well as a fitness and spa centre. The hotel property is located on Boulevard Pandox’ vision is to recreate the hotel’s histori- Waterloo next to the city’s most prestigious cally strong position as one of the city’s leading shopping street, Avenue Louise. The hotel, business and meeting hotels in the premiumHotel BLOOM!, Brussels which is a landmark, has 433 rooms on 26 segment. PAN dO x 2010 | 37
  • 40. independent hotels, continued BERLiN Creative meeting place in Berlin Since the acquisition of the hotel in 2006, Pan- lished as one of the leading meeting hotels and is dox has created the meeting place of the future one of Berlin’s most creative meeting places. The in one of Berlin’s largest hotels. A comprehensive hotel has 701 guest rooms and 22 conference repositioning program has brought the Hotel rooms, as well as several restaurants and bars. Berlin, Berlin back to the top. it is now estab- The hotel is owned and operated by Pandox.38 | PAN dOx 2010
  • 41. Complete resortin the CaribbeanThe Pelican Bay Hotel is located in the beautifulBahamas, on grand Bahama island. The hotel hasbeen repositioned since Pandox took over the man-agement agreement, and is now one of the leadingbusiness and meeting hotels in the Bahamas. BAHAMAS KOLMÅRdEN The major family attraction in Sweden Vildmarkshotellet is one of the best-known which most are family-adapted, a large resort and tourist complexes in Sweden. The conference area with capacity for 370 people hotel is located outside Norrköping, about in the largest room, a large restaurant and a 150 kilometres from Stockholm, next to lobby bar. A new family spa centre has Scandinavia’s largest wildlife park, recently been completed with waterway, Kolmården. The complex has 213 rooms, of relaxation areas and treatment room.MR CHIp, KIsTA is strategically located in THe AIRpORT HOTeL bONus INN has 211 rooms THe sTAdsHOTeLLeT pRINCess,central Kista, one of Stockholm’s most and is located just 5 minutes’ drive from Helsinki- sANdvIKeN is located right in the centre ofexpansive areas that is also the centre for vantaaa airport and 30 minutes from Helsinki railway Sandviken with 84 rooms, conference roomleading companies within the iT and telecom station. The hotel is next to the Leija Business Park – with capacity for 80 people, and a restaurant.sectors. The hotel has 150 rooms, conference a shopping and leisure centre.facilities, as well as bar and restaurant,oriented towards business travellers. PAN dO x 2010 | 39
  • 42. Hotel properties Type ofproperty Operator / brand name agreement Country City LocationScandic Antwerp Scandic O Belgium Antwerp Ring roadScandic grand Place, Brussels Scandic O Belgium Brussels City centreScandic Copenhagen Scandic O denmark Copenhagen City centreScandic Continental, Helsinki Scandic Og Finland Helsinki City centreScandic Espoo Scandic Og Finland Espoo Ring roadScandic grand Marina, Helsinki Scandic Og Finland Helsingfors City centreScandic Marina Congress Center, Helsinki Scandic O Finland Helsingfors City centreScandic Jyväskylä Scandic Og Finland Jyväskylä CentralScandic Kajanus, Kajaani Scandic Og Finland Kajaani Exhibition centreScandic Kuopio Scandic Og Finland Kuopio CentralScandic Luosto Scandic Og Finland Luosto Ski resortScandic Rosendahl Scandic Og Finland Tampere CentralScandic Tampere City Scandic Og Finland Tampere CentralScandic Bergen Airport Scandic O Norway Bergen AirportScandic KNA, Oslo Scandic O Norway Oslo City centreScandic Alvik, Stockholm Scandic Og Sweden Stockholm Ring roadScandic Backadal, gothenburg Scandic Og Sweden gothenburg Ring roadScandic Billingen, Skövde Scandic O Sweden Skövde CentralScandic Bollnäs Scandic Og Sweden Bollnäs CentralScandic Bromma, Stockholm Scandic Og Sweden Stockholm Ring roadScandic Crown, gothenburg Scandic O Sweden gothenburg City centreScandic Elmia, Jönköping Scandic O Sweden Jönköping Exhibition centreScandic Ferrum, Kiruna Scandic Og Sweden Kiruna CentralScandic grand, örebro Scandic O Sweden örebro CentralScandic gävle väst Scandic Og Sweden gävle Ring roadScandic Hallandia, Halmstad Scandic O Sweden Halmstad CentralScandic Hasselbacken, Stockholm Scandic Og Sweden Stockholm City centreScandic Helsingborg Nord Scandic Og Sweden Helsingborg Ring roadScandic Järva Krog, Stockholm Scandic O Sweden Stockholm Ring roadScandic Kalmar väst Scandic Og Sweden Kalmar AirportScandic Klarälven, Karlstad Scandic Og Sweden Karlstad Ring roadScandic Kramer, Malmö Scandic O Sweden Malmö City centreScandic Kungens Kurva, Stockholm Scandic Og Sweden Stockholm Ring roadScandic Linköping väst Scandic Og Sweden Linköping Ring roadScandic Luleå Scandic Og Sweden Luleå Ring roadScandic Malmen, Stockholm Scandic Og Sweden Stockholm City centreScandic Mölndal, gothenburg Scandic O Sweden gothenburg City centreScandic Norrköping Nord Scandic Og Sweden Norrköping Ring roadScandic Park, Stockholm Scandic O Sweden Stockholm City centreScandic Plaza, Borås Scandic Og Sweden Borås CentralScandic S:t Jörgen, Malmö Scandic Og Sweden Malmö City centreScandic Segevång, Malmö Scandic Og Sweden Malmö Ring roadScandic Skogshöjd, Södertälje Scandic O Sweden Södertälje CentralScandic Star Sollentuna Scandic Og Sweden Stockholm Ring roadScandic Star, Lund Scandic Og Sweden Lund CentralScandic Sundsvall Nord Scandic Og Sweden Sundsvall Ring roadScandic Swania, Trollhättan Scandic O Sweden Trollhättan CentralScandic Södertälje Scandic Og Sweden Södertälje Ring roadScandic Umeå Syd Scandic Og Sweden Umeå Ring roadScandic Uplandia, Uppsala Scandic Og Sweden Uppsala City centreScandic Upplands väsby Scandic O Sweden Stockholm Ring roadScandic Uppsala Nord Scandic Og Sweden Uppsala Ring roadScandic Winn, Karlstad Scandic Og Sweden Karlstad CentralScandic västerås Scandic Og Sweden västerås Ring roadScandic växjö Scandic Og Sweden växjö Ring roadScandic örebro väst Scandic Og Sweden örebro Ring roadScandic östersund Syd Scandic Og Sweden östersund Ring roadScandic Lübeck Scandic O germany Lübeck Ring roadHilton Brussels City Pandox/Hilton M Belgium Brussels City centreHilton Helsinki Kalastajatorppa Scandic/Hilton Og Finland Helsinki Ring roadHilton Helsinki Strand Scandic/Hilton Og Finland Helsinki CentralHilton London docklands Hilton O Storbritannien London CentralHilton Stockholm Slussen Hilton O Sweden Stockholm City centreHilton Bremen Hilton O germany Bremen City centreHilton dortmund Hilton O germany dortmund Exhibition centreO = Revenue-based, Og = Revenue-based with guaranteed rent, OR = Revenue and result-based, R = Result-based,F = Fixed, iO = internal revenue-based, M = Management agreement, FR = Franchise, AM = Asset management agreement Operated by Pandox (Pandox own hotel operations)40 | PAN dOx 2010
  • 43. Number Total area Of which Tax assesmentof rooms (sqm) hotels (sqm) property designation value (seK M) 204 13,200 13,200 24th div, Borgerhout 1st div, Ar – Pandox market segments 100 4,500 4,500   – 484 31,500 25,200 99943-2 – 512 30,000 91-14-468-3 178.4 Proportion of total 96 5,245 49-54-17-7 43 Sweden number of rooms 462 23,660 91-8-187-8 147.3 Number of hotels 69 0 11,500 0 75.8 Number of rooms 12,455 150 7,360 179-3-52-23 78.9 Property revenues, SEK M 893 191 10,468 205-14-7-5 77.7 51% 137 7,113 297-1-41-6-Li 60.6 59 4,230 758-893-103-1-L159, L37, L188, L189, L195, L212 11.8 213 14,662 837-134-495-1-Li 263 14,457 837-112-187-35,837-112-187-37 131.3 197 9,654 gnr 114 Bnr 213 33.1 Proportion of total 189 11,218 gnr 209 Bnr 275 14.0 Rest of Nordic Region number of rooms 325 12,075 Racketen 9 196 Number of hotels 34 232 9,397 Backa 105:1 53.6 Number of rooms 6,641 Property revenues, SEK M 476 107 7,743 6,844 Fjolner 7 27.6 111 5,150 Sundsbro 10 20.9 27% 144 6,800 3,970 Pundet 1 38.2 338 24,380 21,800 Stampen 5:5 170 220 9,576 Åminne 1 52.2 170 11,100 Hovmästaren 1 19.2* Proportion of total 221 12,900 10,900 Mältaren 1 50.6 Europe number of rooms 201 7,382 valbo-Backa 6:12 28.4 Number of hotels 14 154 7,617 6,813 Erik dahlberg 14 & 15 44.8 Number of rooms 4,107 Property revenues, SEK M 296 112 10,025 Hasselbacken 1 102 237 9,399 Floretten 1 41 17% 215 11,300 11,300 Tanken 2 77.6 148 5,485 Hammaren 4 24.6 143 5,694 Sandbäcken 1:3 26.3 113 6,913 6,373 gripen 1 73.8 Proportion of total 257 11,581 9,456 Radien 112* International number of rooms 150 6,105 Osten 2 27.8 Number of hotels 3 159 5,565 Mjölkudden 3:45 21 Number of rooms 1,146 Property revenues, SEK M 44 327 15,130 gråberget 190 208 11,000 11,000 Laken 1 55.2 5% 150 6,768 Blyet 8 24.2 201 12,290 10,290 Lönnen 30 213 135 10,592 7,961 Balder 6 62.8 288 21,485 14,655 S:t Jörgen 11 222 Proportion of total 161 6,284 Kriseberg 14:95 30.6 Pandox own hotel operations number of rooms 225 14,115 14,115 Yxan 8 46.2 Number of hotels 10 269 18,573 Centrum 12 138* Number of rooms 3,796 Property revenues, SEK M 1,209 196 15,711 15,711 Porfyren 2 102.4 Operating net, SEK M 220 159 4,948 värdshuset 1 23.6 16% 198 10,399 10,399 Svan 7 48.5 131 5,630 Reparatören 2 24.4 162 5,955 Reparatören 4 26 133 5,402 4,611 dragarbrunn 16:4 51.8 150 6,955 6,955 vilunda 6:48 34.6 184 7,518 6,486 Kvarngärdet 3:2 37 199 10,580 10,580 Negern 2 49 174 7,285 Sågen 1 26.1 123 3,982 Kocken 3 21.74 204 7,621 vindmotorn 2 35 129 4,019 Särrimner 1 21.6 158 9,700 8,800 grundbuch Lübeck, Blatt 54545 – 283 13,850 13,850 Saint-Josseten-Noode (1div) 032 – 238 23,291 91-30-1-5,91-30-3-2-Li 164.2 192 10,250 91-11-300-7 146.3 365 22,800 21,500 HM Land Registry: SgL465779 – 289 18,416 15,725 överkikaren 31 365.9 235 21,000 15,100 grundbuch Altstadt iv, Blatt 60 – 190 12,500 11,300 grundbuch dortmund, Blatt 897 – * tax assesment value 2007 PAN dO x 2009 2010 | 41
  • 44. Hotel properties, continued Type ofproperty Operator / brand name agreement Country City LocationClarion Hotel grand, Helsingborg Choice Hotels/Clarion Hotel Og Sweden Helsingborg CentralClarion Hotel grand, östersund Choice Hotels/Clarion Hotel Og Sweden östersund CentralClarion Hotel Plaza, Karlstad Choice Hotels/Plaza Hotell & Rest Karlstad AB Og Sweden Karlstad CentralClarion Collection Hotel Mayfair, Copenhagen Choice Hotels/Clarion Collection Hotel O denmark Copenhagen City centreClarion Collection Hotel Twentyseven, Copenhagen Choice Hotels/Clarion Collection Hotel Og denmark Copenhagen City centreClarion Collection Hotel Arcticus, Harstad Choice Hotels/Clarion Collection Hotel O Norway Harstad Ring roadClarion Collection Hotel Bastion, Oslo Choice Hotels/Clarion Collection Hotel O Norway Oslo City centreComfort Hotel Excelsior, Copenhagen Choice Hotels/Comfort Hotel Og denmark Copenhagen City centreComfort Hotel Børsparken, Oslo Choice Hotels/Comfort Hotel O Norway Oslo City centreComfort Hotel Holberg, Bergen Choice Hotels/Comfort Hotel O Norway Bergen CentralQuality Hotel & Resort, Fagernes Choice Hotels/Quality Hotel & Resort O Norway Fagernes Ring roadQuality Hotel & Resort Hafjel, Øyer Choice Hotels/Quality Hotel & Resort O Norway Øyer CentralQuality Hotel & Resort Kristiansand Choice Hotels/Quality Hotel & Resort O Norway Kristiansand Ring roadQuality Hotel Alexandra, Molde Choice Hotels/Quality Hotel O Norway Molde CentralQuality Hotel Ekoxen, Linköping Choice Hotels/Quality Hotel Og Sweden Linköping CentralQuality Hotel grand Kristianstad Choice Hotels/Quality Hotel Og Sweden Kristianstad CentralQuality Hotel Luleå Choice Hotels/Quality Hotel Og Sweden Luleå CentralQuality Hotel Park, Södertälje Choice Hotels/Quality Hotel FR Sweden Södertälje City centreQuality Hotel Prince Phillip, Stockholm Choice Hotels/Quality Hotel Og Sweden Stockholm Ring roadQuality Hotel Prisma, Skövde Choice Hotels/Quality Hotel Og Sweden Skövde CentralQuality Hotel Winn, gothenburg Choice Hotels/Quality Hotel Og Sweden gothenburg Ring roadQuality Hotel, Nacka Choice Hotels/Quality Hotel Og Sweden Stockholm Ring roadinterContinental Montreal Pandox/interContinental M Canada Montreal City centreCrowne Plaza Antwerp Pandox/Crowne Plaza FR Belgium Antwerp CentralCrowne Plaza Brussels City Centre Pandox/Crowne Plaza FR Belgium Brussels City centreHoliday inn Brussels Airport Pandox/Holiday inn FR Belgium Brussels AirportHyatt Regency, Montreal Pandox/Hyatt Hotels M Canada Montreal City centreRadisson BLU Hotel, Bodø Rezidor/Radisson BLU O Norway Bodø CentralRadisson BLU Lillehammer Hotel Private O Norway Lillehammer CentralRadisson BLU Hotel, Basel Rezidor/Radisson BLU Og Switzerland Basel CentralRadisson BLU Arlandia Hotel, Arlanda Rezidor/Radisson BLU Og Sweden Stockholm AirportRadisson BLU Hotel, Linköping Rezidor/Radisson BLU Og Sweden Linköping CentralRadisson BLU Hotel, Malmö Rezidor/Radisson BLU Og Sweden Malmö City centreFirst Hotel grand, Borås Private/First Hotels Og Sweden Borås CentralFirst Hotel Linköping First Hotels F Sweden Linköping CentralFirst Hotel Mårtenson, Halmstad First Hotels Og Sweden Halmstad CentralFirst Hotel Royal Star, Stockholm Private/First Hotels Og Sweden Stockholm Exhibition centreElite Park Avenue Hotel, gothenburg Elite Hotels Og Sweden gothenburg City centreElite Stora Hotellet, Jönköping Elite Hotels Og Sweden Jönköping CentralRica Hotel Bodø Rica O Norway Bodø CentralRica Hotel Hamar Rica O Norway Hamar CentralRantasipi imatran valtionhotelli Restel Og Finland imatra CentralBest Western Mora Hotell & Spa Private Og Sweden Mora CentralBest Western Royal Corner, växjö Private Og Sweden växjö CentralBest Western Hotel Pilotti, vantaa Private Og Finland vantaa Airportibis Stockholm Hägersten Accor/ibis Og Sweden Stockholm Ring roadOmena Hotel Copenhagen Omena Hotels F denmark Copenhagen City centreHotel BLOOM!, Brussels Pandox iO Belgium Brussels City centreThe Hotel Pandox iO Belgium Brussels City centreHotel Berlin, Berlin Pandox iO germany Berlin City centre grandPelican Bay, grand Bahama island Sundt gB Management/Pandox AM Bahamas Bahama island Resortvildmarkshotellet, Kolmården Parks & Resorts Scandinavia O Sweden Norrköping ResortMr Chip Hotel, Kista Kista Hotell AB Og Sweden Stockholm Ring roadStadshotellet Princess, Sandviken Private Og Sweden Sandviken CentralAirport Hotel Bonus inn, vantaa Private Og Finland vantaa AirportHotel Korpilampi, Espoo Under construction – Finland Espoo Ring roadO = Revenue-based, Og = Revenue-based with guaranteed rent, OR = Revenue and result-based, R = Result-based,F = Fixed, iO = internal revenue-based, M = Management agreement, FR = Franchise, AM = Asset management agreement Operated by Pandox (Pandox own hotel operations)42 | PAN dOx 2010
  • 45. Number Total area Of which Tax assesmentof rooms (sqm) hotels (sqm) property designation value (seK M) 164 8,555 7,325 Högvakten 8 59.4 176 8,766 8,766 Borgens 6 33.8 131 5,907 5,907 Höken 1 39.6 105 3,805 214 200 7,568 7,568 169 vester Kvarter København – 75 3,540 gnr 61 Bnr 331, Snr 12–22 27.2 99 4,688 grnr 207 Bnr 262 og 265 28.5 99 3,600 212-213 seksjon 1–2 198 7,900 gnr 207 Bnr 343 og 344 101.9 140 5,720 gnr 165 Bnr 1083 Snr 1 og 2 47.2 138 10,310 gnr22 Bnr 177, gnr 25 Bnr 4, 96, 97, 259, gnr 26 Bnr 5 49.8 210 9,540 gnr 17 Bnr 25 57.7 210 9,940 7,075 gnr 63 Bnr 760, 822 og 823 59.9 163 17,033 gnr 24 Bnr 812, 815 og 1312 69.2 190 14,671 12,221 Ekoxen 9 & 11 53.7 149 7,524 Hovrätten 41 39.4 209 12,166 Tjädern 19 61.4 157 10,292 10,110 Herkules 13 35.6 201 7,400 Måsholmen 25 57.4 107 3,687 Liljekonvaljen 14 16.3 121 5,800 Backa 149:l & 866:39 32.8 164 10,830 8,090 Sicklaön 363:2 84.8 357 31,091 31,091     264 18,340 16,780     354 28,095 28,095 – Hotel BLOOM!, Brussels 310 21,072 21,072     605 44,148 29,000 – – 191 15,546 gnr 138 Bnr 3502 52 303 18,000 gnr 59 Bnr 103, 104, 138, 275, 432, 434 , 468 118.9 205 17,800 17,000     335 15,260 15,260 Benstocken 1:5 132.7 91 6,354 4,543 Bolaget 1 50.8 229 18,969 18,969 Carolus 33 123 158 9,593 9,365 Prometeus 3 31.9 133 6,540 6,195 Elden 9 & 10 34.1 103 6,657 6,350 gillestugan 1 41.8 103 4,900 Herrgården 2 26 317 21,998 21,998 Lorensberg 28:4 208 135 11,378 9,379 Alhambra 1 60.6 113 7,981 gnr.138 Bnr 2189 og 2247 31.3 176 9,250 gnr 790 Bnr 228 Snr 2 71.7 135 10,097 153-12-1-1 88.2 135 9,161 7,670 Stranden 37:3 24.1 158 7,112 Elden Södra 17 37.6 112 3,068 92-51-317-1 29.5 Hotel BLOOM!, Brussels 190 8,339 5,700 Fotsäcken 1 55.4 230 8,000 89 Crowne Plaza, Antwerp , 305 23,445 23,445     433 33,000 701 41,093 41,093     184 7,983 7,983 213 10,300 10300 Marmorbrottet 1:18 37.2 150 5,517 5,517 Knarrarnäs 7 50.2 84 7,003 4,890 grillen 8 28.527 211 8,414 92-51-203-4 68.6 150 9,777 49-429-3-216 47.5 PAN dO x 2010 | 43
  • 46. A completely new ballgame CEO commentary on the past year and the future 2010 was a new successful year standard of the hotel products. Continuous flow was negative when the Company was for Pandox with high volume maintenance and product-development pro- formed and access to expansion capital was grams have created modern hotels with strong limited. The growth journey has led to the devel- growth – particularly through the market positions. Furthermore, the hotels are opment of the Company’s size today, which acquisitions made during the year. among those that are profitable in the upper- embraces 120 hotel properties with 25,000 The potential in the Company also medium and high-price segments. Another hotel rooms and operations in ten countries. increased through the acquisi- significant contributory factor to last year’s The portfolio has been restructured several tions, simultaneously as risks increased profitability is lower financing costs. times over the years. All in all, completed declined through having a greater Pandox has been able to benefit from lower transactions have covered 170 hotels with a interest rates by consciously choosing a strat- total value of SEK 20 billion. The most impor- proportion of agreements with egy with short fixed terms. The flexible business tant component is and always has been – large and stable hotel companies. model has also had a positive effect. The model expansion shall be achieved with increased enables us to choose the best operational form profitability. Our acquisitions have therefore Best year so far with consideration to the prevailing conditions in been concentrated on under-performing Property management revenues rose to SEK local markets and make us able to maximise, hotels that need active ownership. In other 923 million, representing an improvement of asset by asset, each hotel’s individual strategy. words, products with high initial risk but also 3.1 percent. For comparable units and Pandox signed an agreement on August best potential. exchange rates, the increase was 5.1 percent. 23rd to acquire the industry-colleague Our acquisition strategy has functioned The operating net rose to SEK 783 million, and Norgani. The purchase price was SEK 9.7 well. Cash flow has increased during the Com- the profit before tax and capital gains amounted billion and was the largest transactions on pany’s all 15 years and the average annual to SEK 313 million, representing a growth of the international hotel market in 2010, and return over the period is 19 percent. Yes! 24 percent. The Company’s most important thereby creating one of Europe’s largest In addition to the Norgani acquisition, two key performance data, cash flow, exceeded and leading companies within the hotel individual acquisitions were completed in the half a billion SEK for the first time and property market. autumn. The first was The Hotel with 433 rooms amounted to SEK 519 million. All in all, 2010 located in the prestigious Boulevard Waterloo was Pandox’ best year ever despite market An exciting growth journey and a landmark in the city, which needs radical conditions being marked by considerable The last 15 years have been an instructive, refurbishment and modernisation of both prod- uncertainty in the beginning of the year. incredibly exciting and relatively short journey. uct and organisation. The second was the well- The good growth is due to several factors. Pandox was a minor company with 18 small run Park Inn Solna, north of Stockholm, with The strategy of owning large full-service hotels in hotels – all located in Sweden with weak loca- 247 rooms, with entry in January 2011. central locations, which has been fundamental tions and outdated products. The Company There are three underlying reasons for since Pandox was established, has been very was initially vulnerable because the business these acquisitions. Right timing, good poten- successful. Another important reason is the high concept was new and untried. Moreover, cash tial and right type of hotel.44 | PAN dOx 2010
  • 47. InterContinental, Montreal Clarion Collection Hotel 27, Copenhagen Right timing. demand in the hotel indus- We have considerable experience of taking over hotel to a more modern and attractive citytry quickly developed in the summer, and the under-performing units – and in Brussels alone hotel – elegant, with a dose of boutique feelingrecovery was at an early stage when we we have completed five similar projects in and a touch of Europe. The hotel has beenstarted to work with the acquisitions. This recent years. well-received and Bernard Chênevert, thepositive trend has since strengthened. hotel’s CEO, is currently establishing it as one Good potential. Most of the acquired Situation-adapted operations of the leading full-service hotels in the are in need of investment and product Pandox currently operates ten hotels with a Another success story is the Holiday Inndevelopment. We believe that the operators total of 3,800 rooms located in Brussels, Brussels Airport. All of the hotel’s 310 roomshave the same interest. This implies that there Antwerp, Berlin, Montreal and the Bahamas. have been upgraded and the conference offerare good prerequisites to find incentives for To operate hotels is a natural part of Pandox’ developed under a concept called “skoj”. Thejoint investments and preconditions for improved active ownership. Sometimes it is important to concept is based on that one shall have fun atprofitability and higher cash flow – to the bene- be able to control all aspects when major the hotel – easy to like and easy to of both Pandox and our partners. development programs are to be carried out. Right type of hotel. A large part of Norga- And sometimes the hotels are in such a loca- Short downturn with quick recoveryni’s hotels are located in places where Pandox tion that no qualified operators are available for The pattern of demand in 2010 had few histori-already has operations and where market con- contractual partnership. cal equals. despite the downturn being dramaticditions are well-known. The agreement structure The agreement structure varies between in most markets and deeper than previous econ-is similar to the one applied in Pandox. All hotels different geographical areas. In the Nordic region, omic slumps, the overall downturn phase washave revenue-based agreements and joint leases dominate while in North America fran- short and the recovery was quick. A very sharpresponsibility for maintenance issues. The hotels chise agreements are most common. Northern V-shaped graph. The downturn in the marketare mainly full-service products and belong to Europe has a mixture of the two. It is therefore started in the autumn of 2008. New York’s vol-Pandox’ prioritised segment in the upper- important for an international hotel property umes started to decline in September and pricesmedium and high-price classes. The operators company to command all operational forms. fell sharply the month after. The RevPAR down-are well-known companies with whom Pandox Our own operations, by Nordic standards, turn continued for 8 months before the fallalready has good business relationships. There are relatively big. Revenues in 2010 of SEK weakened. From top to bottom took 1½ years.are subsequently major similarities between 1,209 million corresponded to a growth of Similar patterns were experienced in mostthe companies, which hopefully will facilitate the 12 percent for comparable units. The gross major hotel markets in Europe, while negativeprocess of merging the portfolios. The same operation profit (GOP) developed well and effects on London were comparatively marginal.applies to the acquisition of The Hotel. Pandox improved with SEK 40 million, further to There is normally a time delay between vari-currently owns and operates six hotels with a stronger demand and higher productivity. ous geographic markets being affected, and atotal of 1,750 rooms in Brussels. The properties Best developments were achieved by the certain time difference between volumes declin-are in similar product segments and we are InterContinental Montreal. The hotel was repo- ing and prices starting to fall. This time, severalwell aware of the challenges that await us. sitioned in 2009 from a traditional business major markets fell in just one four-month period. PAN dO x 2010 | 45
  • 48. Volume and prices basically fell simultaneously. Sweden is the largest sub-market and repre- enable the hotels to reach a requisite standard More dynamics and higher dramatics. The sents 51 percent of revenues. Finland is second to address the needs of tomorrow’s guests. Nordic market also behaved like a roller coaster. largest with 12 percent. All in all, the Nordic We are currently evaluating the prerequisites to The normal pattern with relatively stable region dominates the portfolio. Of the interna- start this process. demand was not present this time. Helsinki was tional markets, Belgium is the most important hit hard and RevPAR fell by more than 30 per- (7 percent), followed by Germany (6 percent) Success requires passion with heart and soul cent during less than 2 years, despite no new and Canada (3 percent). The hotel industry is a fantastic arena in which capacity coming onto the market. Another diffi- The portfolio can be divided into locations to work. Hotels are to be found across the cult market was and is Copenhagen, which that have national and international profiles. world from exciting and exotic cities such as combines an economic downturn with a high Together, the domestic demand, principally New York, Hong Kong and Rio to family hotels proportion of new capacity. To top it all, a price from Nordic regional towns and cities, repre- in small towns. Hotels are important work- war has broken out despite volumes appearing sents 44 percent of revenues. These markets places – they are an active part of a city’s des- to stabilise again. Oslo has managed well in are characterised by stable demand, while tination development. Large hotels become a period with a high proportion of new hotels, more international dynamics are present in meeting places for expansive locations where while Stockholm should be considered as large markets such as London, Brussels, relations are created and future plans realised. being best in class. Prices have been defended Montreal, Berlin and Stockholm. The revenue Exclusive hotels in classical buildings are part with an impressive revenue-management mix is therefore in balance with good potential of a city’s image, and a hotel lobby can give process. and limited risk. The agreement structure is visitors and guests the feeling of being special For 2011, risks are primarily associated composed of 87 percent leases, while 13 and among celebrities. But hotels can also with possible greater financial anxiety in percent comes from own operations. imply hard work with focus on details and Europe. However, 2011 will nonetheless be an The portfolio contains many development investment projects. And above all, a hotel even better hotel year than 2010. Growth in projects that currently include the upgrading of never sleeps, and is always open 24/7. demand is in a phase where the increase is the Scandic Copenhagen with 484 rooms for a Irrespective of whether one owns, operates subsiding, but the improvement will be com- total of dKK 150 million, where Pandox has a or works with the marketing of hotels, success posed to a higher degree of better average 50-percent share. The Hyatt Montreal is being is only achieved through passion with both heart rates – which in turn will increase the efficiency, repositioned towards more of a leisure con- and soul. To choose our sector is to choose a profitability and value of the properties. cept, and the Crowne Plaza Antwerp has lifestyle. For me who have been active within recently opened a new lobby and developed hotels for close to 30 years, my stimulation is Portfolio with high quality and potential its meeting and F&B operations. mainly about the people I have met and still Pandox’ hotel property portfolio is constantly The newly acquired Norgani hotels are meet each day. Individuals who have chosen a being developed, and is of the highest quality. generally in need of refurbishment and product service industry as their career and who live The total product offer consists of 120 hotel development. Pandox estimates that a joint every day in a team. Individuals with talent who properties, of which 10 are own operations, investment is required among the operators make other people feel well, and who take spread over 10 countries and 59 locations. and the Company of about SEK 1.5 billion to care of guests’ questions and needs. The real Enzo moves on in life Pandox is looking for a new, adaptable, creative and well-trained Corporate dog with a pleasant bark and the capacity to lead and inspire.46 | PAN dOx 2010
  • 49. professional who can and wishes to take inspires rather than controls, and where it is Pandox is growing and new employees areresponsibility in the best possible way. important to have fun at work. To be able to being recruited, the Company’s management For Pandox, the individual has always been laugh and be together without organisational system is being introduced and implemented.more important than the system, which has a obstacles. Underlying data for business plans for the newstrong influence on our philosophy. We call this hotels are being prepared. The Company isthe Pandox Spirit. One characteristic is there- Competence and development bubbling with life, and new contact surfacesfore that the Company does not have a large are fundamental are being formed. Banks and partners areoffice full of people who manage the business Pandox’ profile is characterised by five catch- striving for attention. Telephones never stopby giving instructions and orders. It is not our words. Competence is the most important, fol- ringing. A dream existence for all those who arestyle. What we need is the best and real lowed by development, team spirit, passion hungry for challenges and demanding tasks.“doers” with a strong driving force. To give and creativity. We try to show this through vari- I am extremely impressed and proud ofthem a place requires delegated leadership ous activities. The best known is our Hotel belonging to this new-old gang. Nobody com-where one relies on the employees. We conse- Market day that we have arranged for 15 years plains despite long working hours. The attitudequently have fewer and shorter reporting meet- now, always in November and by tradition at is striking. Nothing is impossible. If we were aings, with focus instead on what we call the hot the Hilton Stockholm Slussen. The day has car, the model would be a cross-country vehi-pile – the most decisive and crucial issues. We become an important sector event, and we are cle with four-wheel drive. The same thing inrather aim for the evaluation and improvement very proud of and grateful for the substantial Brussels. The head office in the form of oneof our results from people in our broad interna- attendance and support. person, Aldert Schaaphok, is in the process oftional network than through figures that mostly Another activity is our support of the accelerating the tempo of activities and opera-describe what has happened. Strong people Swedish National Handball Team and Svenska tions. New product, new organisation, newwho give us an outside-in perspective. People Handbollsförbundet (SHF). In collaboration management team, new brand name.who can be questioned. This creates a com- with SHF and the Swedish Olympic Commit- I would like to take this opportunity to raisepany that constantly develop and look for new tee, Pandox has recruited Staffan Olsson, my hat to you all. You are really quite fantastic!ideals. Where driving forces and decisions are who is one of the team managers of the Thank you all for your commitment, yourat a local level as close to operations as possi- national team – thus enabling a handball energy, knowledge and open minds. If you hadble, and where each individual understands the icon to remain in Sweden and develop been handball players, you would all havesignification of the term “to deliver”. Swedish talents in addition to his national played in the World Championship! Another important component is the ability assignment. It is a privilege to actively endorse And thank you also to Pandox’ owners andto give young people responsibility, people who and be associated with supporting young Board of directors. Just think that you gave usperhaps are not quite “ready” – but our point of people and positive sport. We believe that the opportunity to be leaders in Europe.departure is that will beats talent. The focused both examples correspond well with ourstrategy follows thereafter, along with the sys- catchwords, and we have no special Yours sincerely,tematic methodology known as the Pandox thoughts as to what we might gain in return. AndersModel. The peak is an open atmosphere that More heart than brains. “Woof” PAN dO x 2010 | 47
  • 50. Board of Directors and LEIV ASKVIG Member of the Board of Pandox since 2004. Other appointments: Chairman of Oslo Børs VPS Holding ASA, Oslo Børs ASA and Alfarveg AS. Board member of Eiendomsspar AS, Verdipairsentralen VPS ASA, Skips AS Tudor, Astrup Fearnley AS and Agder OPS Vegselskap AS. Industrial competence and experience creates confidence and ability to take action In an international hotel property company such as Pandox, competence and experience within the following areas are important: • hotel operations and hotel market • financing • properties and the property sector • business development • brand strategies OLAF GAUSLÅ • development of international companies CFO of Eiendomsspar AS. Member of the Board of Pandox since 2004. The Board of directors of Pandox possesses broad experience and knowledge from these areas. CHRISTIAN RINGNES BENGT KJELL Chairman. CEO of AB Handel och Industri. CEO of Eiendomsspar AS. Member of the Board of Pandox since 1996. Member of the Board of Pandox since 2004. Other appointments: Chairman of Indutrade AB and Hemfosa Other appointments: Fastigheter AB. Chairman of NSV-Invest AS, Sundt AS, Board member of Höganäs AB, Helsingborgs dermanor AS and Mini Bottle Gallery AS. dagblad AB and Skånska Byggvaror AB. Board member of Schibsted ASA, Thor Corporation AS and Oslo By’s Råd for Byarkitektur.48 | PAN dOx 2010
  • 51. Auditors CHRISTIAN SUNdT Board member of Sundt AS. Member of the Board of Pandox since 2008. Other appointments: Owner and Chairman of CGS Holding AS. Board member of Sundt Air Holding AS, Sundt Sepa AS, Sundt Helene AS, Sundt Air AS, Sundt Eiendom II AS and Sundt Eiendom I AS. Work Procedure The Board of directors has adopted Rules of Procedure for its work, directives to the Chief Executive Officer, as well as management instructions with regard to reporting. Pandox’ MATS WÄPPLING Board of directors establishes and docu- President and CEO of SWECO AB. ments the objectives and strategy of the Member of the Board of Pandox since 2003. Company each year. The Board has also adopted a finance policy, an approval policy Other appointments: and guidelines for decision-making, as well as Board member of SWECO AB and Vasakronan AB. a particular strategy regarding acquisitions. The Board of directors of Pandox holds four ordinary meetings each year. The meet- ings follow an established annual agenda with different topics and decisions issues. The AUdITORS The task of the auditors is to examine the meetings review and discuss the external and Company’s accounts, administration and internal reporting of operating results, the financial information. The audit leads to an Company’s financial position, as well as vari- Audit Report where the auditors give an opinion as to whether the annual accounts ous business matters. Other topics that are and financial statements have been pre- reviewed annually include marketing, strategy pared in accordance with the Swedish and budget issues. Related material and doc- Annual Accounts Act and generally accepted accounting principles. umentation is sent to the Board members HELENE SUNdT approximately one week in advance. The Per Gustafsson Board member of Sundt AS. Company’s auditors attend at least one meet- Authorised Public Accountant Member of the Board of Pandox KPMG ing each year to present a report of their audit since 2008. and their review of the Company’s internal Willard Möller Other appointments: control systems. Authorised Public Accountant Owner and chairman of SET Revisionsbyrå AB In addition to their ongoing audit, the Sundt Helene AS. Chairman of dronningen Eiendom AS Company’s auditors were also commissioned and Lanternen Eiendom AS. by the Board to carry out special reviews of Board member of Sundt Sepa AS, major lease agreements during the year. Sundt Christian Gruner AS and Sundt Air Holding AS. PAN dO x 2010 | 49
  • 52. Senior managers and executives ANdERS NISSEN CEO. Employed since 1995. LIIA NÕU Senior Vice President, CFO. Employed since 2007. NILS LINdBERG LARS HÄGGSTRÖM Senior Advisor Senior Vice President Finance & Insurance. Asset Management. Employed since 1995. Employed since 2000. MIKAEL PLANELL Vice President Business Area other Europe, denmark, Finland and southern Sweden. Employed since 2005.50 | PAN dOx 2010
  • 53. ALdERT SCHAAPHOK ERIK HVESSER LEIF KRISTEN OLSENVice President Vice President Vice PresidentOperations Belgium and Canada. Business Area Stockholm, Business Area Norway, GothenburgEmployed since 2004. northern and eastern Sweden. and western Sweden. Employed since 2006. Employed since 2010.JONAS TÖRNER MAGNE RAMLO JOSEFIN BERGQVISTHead of Business Vice President Senior AnalystControl & Intelligence. Property Manager Norway, Acquisition & Investment.Employed since 2005. denmark and part of Sweden. Employed since 2006. Employed since 2010. PAN dO x 2010 | 51
  • 54. Team People who work at Pandox are passionate and committed. Together, we have created a winning team.52 | PAN dOx 2010
  • 55. 2011 ng hotel ProP e di ea mwork •t • rt etwork • a ne of t he le yc • C r ati vity N omPanies in Pandox e Spirit o as e dg x– p sio e N • kNowl eu o d ro Pan Pe #1 PAN dO x 2010 | 53
  • 56. The organisation is growing 09 1. Josefin Bergqvist Senior Analyst, Acquisition and Investment 2. Nils Lindberg 07 Senior Advisor, Finance & Insurance 3. Ann-Sophie Forsmark Property Accountant 4. Jonas Törner Head of Business Control & Intelligence 5. Anette Paulsson Analyst, PR & Marketing 6. Anders Nissen CEO 7. Annelie Sundström Aguilar Executive Assistant 8. Mikael Planell Vice President, Business Area other Europe, denmark, Finland and southern Sweden. 9. Monica Forsén Property Accountant 10. Josefin Nilsson Receptionist 11. Liia Nõu Senior Vice President, CFO 12. Ulrika Norrbrink, Property Accountant 13. Erik Hvesser, Vice President, Business Area Stockholm, northern and eastern Sweden. 14. Aldert Schaaphok, Vice President, Operations Belgium and Canada. 15. Louise Ceder, Property Support 16. Frédéric Sturbois, Property Manager, Belgium 17. Magne Ramlo, Vice President, Property Manager, Norway, denmark and part of Sweden54 | PAN dOx 2010
  • 57. 18 21 17 14 20 1916 05 29 28 06 15 30 31 32
  • 58. 01 13 22 08 24 25 11 10 2303 26 27 12 02 34 33
  • 59. 18. Petter Kristensen, Property Manager, Sweden and Norway 19. Stefan Kornhammar, Property Manager, southern and middle Sweden 20. Christer Juujärvi,04 Facility Manager 21. Petri Jaarto, Facility Manager 22. Lars Häggström, Senior Vice President, Asset Management 23. Leif Kristen Olsen, Vice President, Business Area Norway, Gothenburg and western Sweden. 24. Jan Van Loock, Senior Advisor, Property development, Belgium 25. Taina Koskelo, Vice President, Property Manager, Finland 26. Göran Jedlöv, Property Manager, northern and western Sweden, Stockholm 27. Marjut Mikkola, Property Support 28. Thérèse Blomqvist, Property Support 29. Susanne Jusslin, Property Accountant 30. Tomas Skeppstrand, Property Accountant 31. Anja Sydner, Property Accountant 32. Torbjørn Stensen, Property Accountant 33. Enzo, Corporate dog 34. Staffan Olsson, director of Health, Sports & Coaching PAN dO x 2010 | 57
  • 60. financial overview
  • 61. Finances financial overview . . . . . . . . . . . . . . . . . . . 60 Sensitivity analysis . . . . . . . . . . . . . . . . . . . 62 valuation and tax situation . . . . . . . . . . . . . 64 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 65 Ten-year overview . . . . . . . . . . . . . . . . . . . 66 Quarterly data 2009–2010 . . . . . . . . . . . . . 68 financial statements 2010 . . . . . . . . . . . . . 69 report of the Board of Directors . . . . . . . . 70 income statement and comments . . . . . . . 72 Balance sheet and comments . . . . . . . . . . 74 changes in equity . . . . . . . . . . . . . . . . . . . 76 cash flow statement . . . . . . . . . . . . . . . . . 77 accounting principles . . . . . . . . . . . . . . . . 78 notes to the accounts . . . . . . . . . . . . . . . . 79 Proposed disposition of earnings . . . . . . . 84 auditor’s report . . . . . . . . . . . . . . . . . . . . . 85Hotel BlooM!, Brussels
  • 62. financial overviewWell-weighted risk profileFinancial policy creating an optimal due date structure and fixed Financing strategyThe basic objective of Pandox’ financial opera- interest periods. The long term objective is that In order to gain flexibility and administrative bene-tions is to achieve the lowest possible financing the average fixed interest period be matched with fits, Pandox has centralised when possible allcosts while simultaneously limiting the risks the average point in time when rental revenues, borrowing in the Parent Company. The objectiverelated to interest rates, foreign currencies and based on underlying leases, are estimated to be is to work with long-term framework agreementsborrowings. The interest rate risk is the risk that affected by a change in interest rates. Interest that provide scope for borrowing with varyingchanges in interest rate levels which could nega- swaps are mainly used for extension of fixed inter- maturities and fixed margins. derivative instru-tively affect the Group’s results. Currency risk is est rate periods. ments such as swaps are preferably used forthe risk that the Group’s balance sheet and income the extension of fixed interest rate periods.statement which could be negatively affected by Currency risk/currency risk strategychanges in the value of the Swedish krona. Finally, Pandox is exposed to currency risks due to certain Capital structurethe borrowing risk is the risk that external financing of the Group’s assets being denominated in foreign The objective for the Group’s capital structure ismay become more difficult to find. currencies. Pandox’ policy is to hedge the majority that the equity/asset ratio long term should meet part of its exposure by raising loans in the local cur- internal and external financial strength require-Interest rate risk/interest rate strategy rency of each respective country and by hedging ments in order to enable continued expansion.Pandox’ basic objective is that interest rate expo- with appropriate currency hedging instruments.sure shall be adapted so that increased costs as a Financingresult of reasonable changes in interest rates shall Methodology and systems as of 31 december, the Pandox Group’s interestbe compensated by higher revenue. The interest Pandox has developed and implemented systems bearing liabilities amounted to SEK 7,025.8 Mrate risk must therefore be limited through con- and procedures to enable the continuous monitor- (6,850.5). The loan portfolio has a spread due-tracting periods of varying lengths with the aim of ing and reporting of interest rate risk trends. date structure with an average fixed-capital period clarion Hotel Grand, Helsingborg60 | Pandox 2010
  • 63. of 6.7 years is without financial covenants and has Equity capital Working capitalan average fixed-interest period of 4.5 years (2.3). The Group’s equity capital as per the balance Pandox receives rental revenue in advance andThe average interest rate on loans at 31 decem- sheet at 31 december 2010 amounted to SEK pays most of its operating costs and interestber was 3.3 percent (2.6). The financing of hotel 2,977.5 M of which SEK 1,367.2 M was restricted expense in arrears while hotel operations normallyproperties is raised in each respective local cur- equity and SEK 1,610.3 M unrestricted equity. receive revenues in arrears. altogether the Grouprency in accordance with the financial policy. The The Pandox Group’s cash flow, including 50 normally has a relatively small working capital toGroup’s liquid funds amounted to SEK 385.1 M percent of norgani’s cash flow for the two months finance.(326.4). In addition, there was an unutilised credit Pandox has owned the company, amounted tofacility of SEK 964 M. SEK 518.9 M.inTereST STrUcTUre1), SeK MYear due SEK DKK EUR GBP CHF CAD Total Share,% Interest, %2)2011 687.8 232.3 754.2 270.0 58.6 258.5 2,261.4 32.2 3.02012 225.0 – – – 65.1 – 290.1 4.1 4.22013 75.0 – 180.0 – – – 255.0 3.6 4.42014 350.0 – 360.1 – – – 710.1 10.1 3.22015 100.0 120.8 351.1 – 130.2 – 702.1 10.0 3.72016 and later 1,250.0 289.8 1,017.2 – – 250.1 2,807.1 40.0 3.2Total 2,687.8 642.9 2,662.6 270.0 253.9 508.6 7,025.8 100.0 3.3Share, % 38 9 38 4 4 7 100    average interest rate, % 3.6 2.8 3.0 2.0 3.1 3.7 3.3    average interest rate period, years 4.9 5.4 4.7 0.2 2.4 3.4 4.5    1) Converted to SEK.2) average interest rate in percent. Pandox 2010 | 61
  • 64. SenSiTiviTy analySiSFactors that affect PandoxPandox’ operations and profitability are ciated with variable leases are the hotel property’s efficient operations has increased. For streamlinedaffected by a number of factors, of which the location, market segment and brand name/opera- companies with own expertise in hotel operations,most important are described below. tor. Pandox’ strategy is to operate in a selected hotel properties and business development, and market segment, which in combination with its who are active owners, the potential risk is consid-The hotel market hotels market expertise and systems, limits erably lower than it has been in historic terms.The development of Pandox’ earnings and the Pandox’ agreement risk.value of its hotel properties are dependent upon Decisions by public authoritiestrends within the hotel market, which in turn Partners The hotel market can be affected by decisionsclosely follow general economic developments. Pandox’ agreement structure, with a large propor- made by public authorities. Two examples of such Business travel and conference activities nor- tion of variable leases, means that the Company is decisions are changes in taxation related to claimsmally increase during periods of high economic more dependent on the individual tenant/opera- for travel expenses or rules concerning valueactivity, while there is a corresponding decrease tor’s business than other property companies. The added tax both in general and for the hotel andduring periods of low economic activity. There is Company’s strategy to actively cooperate with the restaurant industry in particular.thus a strong connection between economic market’s most competitive and powerful opera-trends (GdP) and trends within the hotel market. tors with well established brand names, reduces Property taxdevelopments of GdP can be closely monitored, both the related operative and financial risks. Property tax on Pandox’ Swedish propertieswhereas factors that influence local hotel markets Pandox’ largest tenants in terms of revenue are amounts to 1.0 percent of the tax assessmentare significantly more complex. The most impor- Scandic, Hilton, Rezidor, Elite Hotels, InterConti- value. Changes in the tax rate or in the tax assess-tant influential factors are local economic condi- nental Hotels Group, Choice Hotels and First ment value affect Pandox’ earnings. However, antions, the proportion of new hotel capacity in the Hotels, which together accounted for 84 percent increase only has a limited impact on the earningsmarket, how well developed a market is concern- of all rental revenue in 2010. because many lease agreements are formulateding brand names and segments, currency fluctua- so that the property tax be passed on to the ten-tions, aswell as extraordinary events. Leasing level ant. Property tax on properties outside Sweden is The leasing level in Pandox’ wholly owned port- generally less than one per cent of the book value.New capacity folio as of 31 december was 99.8 percent. Vacant about 55 percent of the property tax was debitednew capacity introduced to the market implies an space amounting to 1,430 sqm consisted entirely to tenants in 2010, which means that the net effectincreased risk for local players. depending upon of store and office premises. on Pandox’ earnings amounted to SEK 21.4 M.existing demand, additional hotel rooms through If for any reason a hotel operator shouldthe construction of a new hotel can lead to a rapid choose to terminate its lease agreement, Pandox Site leasehold rentsnegative influence on occupancy rates and aver- may either select a new suitable operator as ten- In the wholly owned portfolio as of 31 decemberage prices. To deal with this risk, Pandox has ant or operate the hotel under its own manage- 2010, Pandox held seven properties via site lease-developed an information system that continually ment. With Pandox’ specialist expertise in the hold rights. Rents on these properties are currentlymonitors planned new constructions within its hotel sector, the risk of vacant hotel space is seen calculated in such a manner that a municipalitymarket areas, and thus enabling Pandox to be as being extremely low. that normally owns the land receives what isprepared and proactive. For other commercial space, which represents deemed to be a reasonable real rate of interest on approximately 8.1 percent of total space in the the estimated market value of the land in question.Agreement structure Company’s properties, Pandox is exposed to the Site leasehold rents generally run for periods of 10Pandox has a large proportion of variable leases, same fluctuations in supply and demand for prem- to 20 years.which represented 94 percent of total rental reve- ises experienced by other property owners.nue in 2010 for Pandox wholly owned properties. Interest rates about 32 percent of variable leases contained Changed risk potential Interest expense is Pandox’ largest single costa guaranteed rent, meaning that 62 percent of Historically, the hotel industry and hotel property item. Fluctuations in interest rates will thereforerental revenues were fully variable downwards. sector have always been associated with high have an impact on Pandox’ earnings. In order toa change in the occupancy rate and the average risk. The market has however changed signifi- limit its financial risk, the Company’s average fixedroom revenue consequently affects Pandox very cantly in recent years. owners have become more interest period is 4.5 years. The full effect of adifferently, depending on the direction of change. professional with restructured companies and change in interest rates is accordingly not felt by The choice of agreement is based on optimal focused strategies, with a greater holistic view and Pandox until after this period.distribution of cash flow between Pandox and the specialised expertise. Reports from public com-operator so that both parties are motivated to panies have substantially improved information Currency riskcontinuously increase the hotel property’s overall about the transparency of the market. The pro- Pandox’ policy is to hedge the major part of itsprofitability. Factors that may influence risks asso- portion of established strong brand names with currency exposure, including shareholders’ equity,62 | Pandox 2010
  • 65. by financing properties in local currencies and by Earnings impact 2010, SEKhedging through means of appropriate currency Change in rental revenueinstruments. Transaction exposure is limited as occupancy rate +5 percentage points +49.3 occupancy rate –5 percentage points –48.7revenue and costs are usually in the same currency. average room rate SEK +50 +34.1 average room rate SEK –50 –34.2Sensitivity analysis other commercial premises +/–5 %1) +/–1.6The table to the right illustrates how Pandox’ Change in other variablesearnings are affected by changes in certain Interest expense during the year +/–1 percentage point +/–22.6key factors. average interest expense +/–1 percentage point1) +/–70.3 Exchange rate fluctuation +/–5 % +/–3.0 operating and maintenance costs +/–5 % +/–3.9 1) The figures in the table are standardised so that the effects of changes in rental revenue and interest rates are immediate, although such changes do not have full impact in reality until leases and loan agreements are renegotiated. crowne Plaza, antwerp crowne Plaza, antwerp Pandox 2010 | 63
  • 66. valUaTion anD Tax SiTUaTionHotel propertyportfolio valueThe valuation of hotel properties with theirspecific characteristics demands extensiveknowledge and expertise of the hotel marketand hotel operations.Cash flow valuationPandox continuously evaluates all of its hotelproperties in accordance with a valuation modelbased on the properties’ cash flow, and which isadapted to the characteristics specific to thehotel industry. The cash flow calculation is built up fromunderneath, with the property operator’s incomestatement as the point of departure. This in turn is Hotel BlooM!, Brusselsbased on assumptions as to how the underlyinghotel market will develop in terms of occupancyand average rates, as well as how each specificoperator’s respective key ratios and figuresdevelop in this market. The operator company’s The Company’s tax situationresults and forecasts, together with the formula-tion of the agreement, provide underlying data toestimate revenues, which subsequently constitute The Pandox Group’s property holdings are exceeds book depreciation. Tax deduction forthe basis of the cash flow calculation. The value reported for accounting purposes as fixed annual depreciation of properties has normallycalculated is the present value of the next ten assets. The consolidated book value as of been made at the rate of 3 to 5 percent of a prop-years’ cash flow, with a supplement for the pres- 31 december 2010 amounted to SEK erty’s acquisition cost. as a result, the amount ofent value of the hotel properties’ residual value 8,613.4 M excluding equipment, of which fiscal depreciation exceeds that of book deprecia-after ten years. the consolidated surplus values amounted tion, and the difference between the book value The valuation model is based on the following to SEK 1,725.2 M. and the fiscal value of a property increases year onassumptions: year. The deferred tax liability generated by asset• Changes in rental revenue during the calcula- Accounting of deferred tax acquisitions has been calculated using the pres- tion period are based on the formulation of indi- Pandox applies the Swedish accounting Stan- ent value method based on the shortest period of vidual agreements and on underlying factors. dards Board’s general recommendation on ownership estimated for each property, and corre-• Inflation is assumed to amount to an average income tax accounting (BFnaR 2001:1). In short, sponds to an average tax rate of approximately 10 of 2.0 percent annually during the calculation the recommendation implies that both deferred percent. This is based on regulation for assessing period. tax liabilities and tax claims are to be included in deferred tax upon pure intrinsic acquisitions,• operating costs are assumed to increase in the financial statements and that any changes will where the tax effect is taken into consideration line with inflation. affect the income statement as deferred tax. when calculating the acquisition price. The• The rate of interest used in the calculation is Pandox’ consolidated balance sheet as of 31 deferred tax relating to the difference between based on the real interest rate plus a risk pre- december 2010 includes a deferred tax liability in book depreciation and fiscal depreciation is calcu- mium based on location, lease, and form of the net amount of SEK 203.4 M corresponding to lated based on the applicable tax rate. ownership. the difference between a deferred tax liability of The deferred tax claim pertains mainly to defi- SEK 389.1 M and a deferred tax claim of SEK cit deductions. at the end of 2010, there werean internal valuation of Pandox’ wholly owned 185.7 M. The deferred tax liability refers mainly to remaining deficit deductions totalling SEK 513 Mhotel properties in accordance with this method the estimated deferred tax based on the differ- in the Swedish companies. The valuation ofresulted in a total value as of december 2010 that ence between the properties’ consolidated book deferred tax claims is based on their potential utili-substantially exceeds the book value. In accor- value and the fiscal residual value of each respec- sation against future taxable profits, and is calcu-dance with current accounting principles, each tive legal unit. The difference in value has arisen as lated according to the applicable tax rate. Conse-individual property’s recovery value was recon- an effect of surplus value upon acquisitions of quently, minor deficit deductions in non-Swedishciled with its book value, further to which it was property in companies, known as pure intrinsic companies were reported at the end of 2010.noted that no write downs were necessary. acquisitions, as well as fiscal depreciation that64 | Pandox 2010
  • 67. DefiniTionS Hotel BlooM!, Brusselsdefinitions of key dataProperty related key figures Financial key figures Hotel market related key figuresDirect yield Return on equity Occupied roomsoperating net as a percentage of the average Profit after net financial items and paid tax as a number of sold room nights during a given periodbook value of properties and hotel equipment percentage of average equity. of time – normally one year.during the year. Return on total assets Available roomsOperating net Profit after net financial items, plus financial costs available room capacity during a given period ofHotel property revenue less operating and mainte- as a percentage of average total assets. time – normally one year.nance costs, property tax, ground rent and otherproperty costs. Interest coverage ratio Occupancy rate Profit before tax less depreciation and net financial number of occupied rooms as a percentage ofProperty related administration items (EBITda) in relation to net financial items. the number of available rooms.The portion of total administration costs that isdirectly related to the management and develop- Equity/asset ratio Average room ratement of a property. other administration costs Equity at the end of the year as a percentage of Total revenue from sold rooms divided by theinclude central administration and costs for total assets. number of occupied rooms.administration of non-Swedish entities. RevPARTotal property revenue (Revenue Per Available Room)The sum of rental revenue and other property Total revenue from sold rooms divided by therevenue. number of available rooms. Market penetration The performance of an individual hotel in relation to the average of the market. GOP (Gross Operating Profit) net profit in hotel operator companies before depreciation, rent, net financial items and taxes. Pandox 2010 | 65
  • 68. Ten-year overviewCondensed consolidated income statementSEK M 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Property operationsRental revenue 551.1 536.2 535.1 562.7 548.8 605.0 747.5 872.3 850.6 884.2other property revenue 24.0 26.0 26.5 30.2 25.2 29.9 34.7 43.2 44.6 39.1Total property revenue 575.1 562.2 561.6 592.9 574.0 634.9 782.2 915.5 895.2 923.3operating and maintenance costs –96.7 –93.2 –100.1 –118.7 –103.8 –111.5 –126.3 –132.8 –117.0 –140.6Operating net 478.4 469.0 461.5 474.2 470.2 523.4 655.9 782.7 778.2 782.7depreciation –56.2 –63.2 –64.3 –70.3 –78.2 –91.3 –129.3 –163.8 –193.6 –194.3Income from property operations 422.2 405.8 397.2 403.9 392.0 432.1 526.6 618.9 584.6 588.4Hotel operationsoperating revenue 39.7 60.1 81.3 216.8 250.2 420.0 788.8 1,105.3 1,095.0 1,208.6operating costs –39.3 –58.2 –75.7 –204.4 –239.4 –407.7 –768.2 –1,084.5 –1,129.0 –1,202.8operating income hotel operations 0.4 1.9 5.6 12.4 10.8 12.3 20.6 20.8 –34.0 5.8Gross income 422.6 407.7 402.8 416.3 402.8 444.4 547.2 639.7 550.6 594.2administrative costs –33.9 –34.5 –35.5 –39.3 –42.5 –51.9 –55.4 –64.6 –68.3 –72.4other revenue/realisation results 8.6 28.8 7.4 – 444.4 39.9 3.4 6.9 – –Operating income 397.3 402.0 374.7 377 804.7 432.4 495.2 582.0 482.3 521.8non-recurring financial income & costs – – – –56.1 – – – – 79.5 431.2Profit from associate companies – – – – – – – – – 5.7net financial items for current operations –178.1 –171.0 –159.2 –148.4 –137.4 –166.4 –232.4 –294.7 –229.8 –214.0Income after financial items 219.2 231.0 215.5 172.5 667.3 266 262.8 287.3 332.0 222.9deferred tax –28.3 –44.2 –50.3 –47.6 36.8 –33.0 –23.5 34.2 –10.1 –65.7Tax –0.2 –0.1 11.4 –0.2 –15.8 –31.4 –9.3 –22.2 –20.4 –111.2Income/loss for the year 190.7 186.7 176.6 124.7 688.3 201.6 230.0 299.3 301.5 567.866 | Pandox 2010
  • 69. Condensed consolidated balance sheetSEK M, as of 31 December 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010AssetsProperties including hotel equipment 5,036.8 4,961.4 5,276.7 5,262.8 5,477.5 6,907.5 8,223.8 9,212.5 9,348.0 9,200.5other fixed assets 5.4 6.9 7.2 6.9 113.7 172.8 139.0 794.6 843.3 1,170.3Current assets 37.1 29.5 34.6 58.6 201.7 174.4 223.1 241.2 158.4 276.0Cash and bank 86.7 213.2 137.5 58.0 236.4 174.1 272.8 347.7 326.4 385.1Total assets 5,166.0 5,211.0 5,456.0 5,386.3 6,029.3 7,428.8 8,858.7 10,596.0 10,676.1 11,031.9Equity and liabilitiesShareholders’ equity 1,772.1 1,853.9 1,919.2 1,923.0 2,307.7 2,272.3 2,407.7 2,729.2 2,996.7 2,977.5deferred tax liability 37.0 83.5 135.9 184.3 208.5 279.7 352.5 335.2 363.0 389.1Interest bearing liabilities 3,178.5 3,070.6 3,211.9 3,080.4 3,165.3 4,398.5 5,516.8 6,808.6 6,850.5 7,025.8non-interest bearing liabilities 178.4 203.0 189.0 198.5 347.8 478.3 581.7 723.0 465.9 639.5Total equity and liabilities 5,166.0 5,211.0 5,456.0 5,386.3 6,029.3 7,428.8 8,858.7 10,596.0 10,676.1 11,031.9Key dataProperty related key dataBook value of properties includinghotel equipment, SEK M 5,036.8 4,961.4 5,276.7 5,262.8 5,477.5 6,907.5 8,223.8 9,212.5 9,348.0 9,200.5Total property revenue, SEK M 575.1 562.2 561.6 592.9 574.0 634.9 782.2 915.5 895.2 923.3operating net, SEK M 478.4 469.0 461.5 474.2 470.2 523.4 655.9 782.7 778.2 782.7direct yield, % 9.6 9.5 9.3 9.1 8.5 8.1 8.6 9.2 8.4 8.6Financial key dataInterest coverage ratio, multiple 2.6 2.6 2.7 2.2 3.2 2.9 2.7 2.5 4.5 3.5Return on total assets, % 8.0 7.8 7.1 7.0 14.2 5.9 6.1 6.2 5.5 8.9Return on equity, % 11.0 12.6 12.0 12.0 30.8 10.4 11.0 10.8 11.2 22.9Equity/assets ratio, % 34.3 35.6 35.2 35.7 38.3 30.6 27.2 25.8 28.1 27.0Cash flow from current operations, SEK M 267.2 265.8 272.4 298.9 301.4 317.6 389.0 444.5 446.4 518.9Investments excluding acquisitions, SEK M 149.1 67.3 60.8 70.5 165.1 282.6 274.9 269.3 312.5 197.7Property acquisitions, SEK M 141.9 – 370.7 – 661.3 1,327.8 1,063.4 370.9 163.3 332.0 Pandox 2010 | 67
  • 70. QUarTerly DaTaQuarterly dataconDenSeD incoMe STaTeMenTS 2009 2010SEK M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Total property revenue 203.0 230.8 218.1 243.3 201.2 234.4 241.2 246.5operating net 171.0 201.9 188.9 216.4 167.7 199.8 210.4 204.8Income from property operations 125.1 155.3 139.8 164.4 119.9 149.6 161.5 157.4Income from hotel operations –30.7 0.9 –1.6 –2.6 –24.1 14.5 3.9 11.5operating income 77.5 138.6 123.3 142.9 78.7 145.6 148.3 149.2net financial items –74.6 –57.4 6.9 –25.2 –12.0 –50.4 341.3 –56.0Income after financial items 2.9 81.2 130.2 117.7 66.7 95.2 489.6 93.2Income after tax 0.7 57.0 114.5 129.3 55.0 73.6 353.0 86.2conDenSeD conSoliDaTeD Balance SHeeTS 2009 2010SEK M 31 Mar 30 Jun 30 Sep 31 Dec 31 Mar 30 Jun 30 Sep 31 DecAssets                Properties including hotel equipment 9,309.9 9,319.1 9,228.8 9,348.0 9,138.8 9,128.7 9,130.2 9,200.5other fixed assets 1,214.2 1,180.6 869.4 843.3 737.4 724.3 230.7 1,170.3Current assets 166.0 202.6 181.9 158.4 144.0 190.9 197.2 276.0Cash and bank 244.4 313.0 371.4 326.4 472.2 659.2 1,351.1 385.1Total assets 10,934.5 11,015.3 10,651.5 10,676.1 10,492.4 10,703.1 10,909.2 11,031.9Equity and liabilitiesShareholders’ equity 2,700.0 2,771.9 2,798.5 2,996.7 2,906.7 2,715.8 3,045.0 2,977.5deferred tax liability 336.0 352.4 363.2 363.0 376.4 394.9 403.6 389.1Interest bearing liabilities 7,171.8 7,333.2 6,952.6 6,850.5 6,711.1 7,086.5 6,920.6 7,025.8non-interest bearing liabilities 726.7 557.8 537.2 465.9 498.2 505.9 540.0 639.5Total equity and liabilities 10,934.5 11,015.3 10,651.5 10,676.1 10,492.4 10,703.1 10,909.2 11,031.9ProPerTy relaTeD Key DaTa 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4direct yield, % 7.3 8.7 8.2 9.3 7.3 8.8 9.3 8.9financial Key DaTa 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Interest coverage ratio, multiple 1.7 3.7 2.8 6.1 2.5 3.9 3.4 4.2Return on total assets, % 2.9 5.2 7.2 6.4 4.3 5.4 20.2 5.5Return on equity, % 0.2 10.8 18.5 15.2 9.5 13.4 50.7 18.3Equity/assets ratio, % 24.7 25.2 26.3 28.1 27.7 25.4 27.9 27.0Cash flow from current operations, SEK M 48.9 124.0 110.6 162.9 76.1 146.1 139.6 157.1Investments excluding acquisitions, SEK M 86.3 76.8 78.1 71.3 41.3 53.8 45.5 57.1Property acquisitions, SEK M – – 163.3 – – – 332.0 –68 | Pandox 2010
  • 71. Financial statements2010Property revenues and total revenuesPandox’ property revenues for 2010 amounted to SEK 923.3 M (895.2), whichfor comparable units, including adjustment for currency effects, representedan increase of 5.1 percent against 2009. The Group’s total revenue amounted toSEK 1,917.9 M (1,778.5).Cash flowCash flow from ongoing operations, excluding share of profits from associatecompanies and capital gains, amounted to SEK 502.5 M (446.4). When including50 percent of the cash flow from norgani for the two months that Pandox hasowned the company, total cash flow amounted to SEK 518.9 M.acquisitions during the yearon 6 September, Pandox acquired the Brussels Hilton, name changed toThe Hotel. The acquisition price was EUR 29 M, and covers the hotel propertyand its operating activities.on 4 november, Pandox acquired norgani Hotels aS in close cooperationwith its owners. The acquisition price was SEK 9.7 billion. norgani’s portfoliois composed of 73 hotel properties in the nordic region. Pandox’ proportionof ownership amounts to 50 percent, but the Company will manage the wholeproperty portfolio.ProfitsThe pre-tax profit for 2010, excluding capital gains, amounted to SEK 313.5 M(252.5). Profit after tax amounted to SEK 567.8 M (301.5). Pandox 2010 | 69
  • 72. Financial StatementS Report of the Board of directors The Board of directors and Chief Execu- Accounting principles Occupancy and rates increase in USA tive officer of Pandox aB, Swedish corpo- Pandox does not apply IFRS. as an unlisted The recovery in the american hotel market has rate registration number 556030-7885, company, Pandox is not subjected to IFRS been primarily driven by an increase in demand, hereby submit the annual report and reporting requirements. Pandox applies the even if rates have also started to rise. The cur- consolidated accounts of the Company Swedish annual Reports act and generally rent trend is that all segments and areas are for the financial year 2010. accepted accounting principles, as well as the increasing in demand. occupancy rose during recommendations of the Swedish accounting the period by almost 5 percent, while average Standards Board unless otherwise stated. The rates basically stood still. new York, which is Operations and strategy Group’s properties are reported in the balance always early in the economic cycle, showed Pandox is one of Europe’s leading hotel prop- sheet at their acquisition cost less accumulated good developments in both average rates and erty companies. The Company has built up depreciation. occupancy. overall, RevPaR increased by specialist expertise within the key areas of hotel about 13 percent in the city. markets, hotel operations, hotel properties and Ownership situation business development. active ownership, with Pandox is since the beginning of 2004 owned Demand has returned in Europe well developed strategic plans for each hotel, by the norwegian companies Eiendomsspar In Europe, demand returned in the major inter- enables the creation of good prerequisites for aS and Sundt aS through their wholly owned national cities. The autumn was relatively strong stable and improved cash flows, and thereby Swedish company aPES Holding aB. and the short trend is showing improved aver- growth in value for the shareholders. age rates, which will strengthen profitability in Pandox’ strategy is to own one type of The hotel market the sector. London had an unexpectedly low property – hotel properties. Its focus is The global recovery further to the finance crisis and short downturn after the outbreak of the strengthened by a prioritised market segment. continues and surprised positively in the sec- finance crisis, but has now reached a phase Pandox is to own large hotel properties in ond half-year 2010w both in the United States where rates are rising more than occupancy. Sweden, major locations in Europe, as well as and in Europe. However, the american econ- RevPaR increased by 12 percent compared developing regions in Eastern Europe and omy still has problems with high unemploy- with 2009. north america. ment, falling house prices and a budget deficit. The picture in the nordic Region is divided. The hotels should be in central and strong Like in the US, several European countries The market in Copenhagen continues to be locations such as city centres, airports and are wrestling with large deficits in their public tough with a price war that has further contrib- exhibition centres. The hotels should be in the finances, which could restrain growth in the uted to the downturn. RevPaR fell by 14 per- upper medium to high price range and focus on region. However, Europe is showing consider- cent and the trend continues to be negative. the business and leisure segments.The hotels able variations in growth preconditions whereby oslo also trailed behind the recovery in Europe, owned by Pandox are operated and marketed Germany and Sweden are breathing optimism but had a good end of the year. Stockholm by the most powerful players in the hotel mar- while certain countries, particularly in southern showed good growth with an increase in ket, who with well known brands and dynamic Europe, see a tougher future ahead of them. The RevPaR of 8 percent compared with last year. independent distribution channels create strong current trend is that the general pace of improve- developments in Gothenburg were also market positions and thereby stable revenues. ment is continuing, although the overall picture is positive, while trends in Malmö were negative Revenues are created by flexible agree- still split and developments are uneven. during the year as expected. ments related to the operator’s turnover and Within this global environment, Pandox’ results or through management agreements hotel property portfolio performed well. Prop- Pandox’ portfolio where Pandox assigns a third party to manage erty management revenues grew by 3.1 percent Pandox’ hotel property portfolio continued to operations, or alternatively through its own man- during the period, and even 5.1 percent for perform well. all Stockholm hotels improved agement. Irrespective of the form of operation, comparable units and exchange rates. Growth better than the market in general. In Gothen- Pandox contributes via its active ownership to within operational activities was 12 percent, burg, the Elite Park avenue managed better increasing total cash flows and reducing risks. which is partly due to hotels that have under- than its competitors while the Scandic Crown at the end of the year, the Company’s gone major investment programs are now once and Scandic Mölndal developed just under the portfolio contained 120 hotel properties of again being operated with full capacity. The rate market’s average. In Malmö, the Scandic which 46 in the Pandox portfolio and 74 in of improvement was better than the market on Kramer and Scandic S:t Jörgen performed in the norgani portfolio including one conference average, which implies that the hotels in Pan- line with the market, while the ongoing refur- center. Pandox operates ten hotels of which dox’ portfolio in general took market shares. bishment of the Radisson Blu reduced revenue one via an asset management assignment. Profits and cash flows continued to rise. capacity and thereby the possibility to follow Pandox owns and develops assets in Sweden, The driving force is a combination of an the market. Regional towns and cities were denmark, Finland, norway, Belgium, Germany, improved hotel market, the Company’s strat- relatively stable. Switzerland, the United Kingdom, Canada and egy, high quality in the portfolio, lower financing of the international hotels, the InterConti- the Bahamas. costs, and the Company’s active ownership. nental and Hyatt in Montreal performed70 | Pandox 2010
  • 73. extremely well with increased market shares in Portion of profits from Norgani consequence of the sale of real estate throughboth rates and occupancy. InterContinental, Pandox’ portion of the profits in norgani for the non-Swedish subsidiaries carried out in 2005.which has recently undergone a major develop- almost two months the company has been The decision has been appealed to the countyment program, is now among the RevPaR- owned amounted to SEK 5.7 M before tax, and administrative court. The case has been put onleaders in the city while simultaneously showing are reported under net financial items according hold awaiting the Supreme administrativegood productivity trends during the year. to the equity method. Court’s judgement in another (non-Pandox Further to several years’ successful work, related) case. The Company is of the opinionthe Hotel Berlin, Berlin has achieved a high level Income that all transactions and claims have beenof revenues, productivity and profit. of the The Group’s profit for 2010 before tax and made in accordance with applicable laws andBelgian hotels, Holiday Inn Brussels airport, excluding capital gains amounted to SEK 313.5 therefore no reserves have been booked in thewhich has also undergone a large development M (252.5), and the Group’s profit after tax Groups’ accounting.program, showed the best growth. Hotel amounted to SEK 567.8 M (301.5).BLooM! had strong productivity trends, and Personnelthe Hilton Brussels City took market shares. Financing and cash flow Central administration counted 16 employees In Copenhagen, the Scandic Copenhagen net financial items relating to current opera- as at 31 december. Figures concerning aver-suffered from over-establishment but none- tions for the period January-december 2010 age number of employees, as well as salariestheless defended its market share reasonably amounted to SEK -214.0 M (-229.8). The and other remuneration are set out in note 16.well, while the Clarion Collection Hotel 27 Group’s interest-bearing liabilities amounted aswith its lower sensitivity to economic fluctu- of 31 december 2010 to SEK 7,025.8 M The work of the Board of Directors 2010ations developed better than the market (6,850.5). The loan portfolio has a spread due- The Board of directors of Pandox has beenon average. date structure with an average fixed-interest composed of seven members since the annual period of 4.5 years. The average interest rate General Meeting of Shareholders held in 2009.Revenues and operating net on loans at 31 december 2010 was 3.3 per- during the year, the Board has held four ordi-– property operations cent. Financing of Swedish properties has been nary meetings in accordance with the estab-Property management revenues for the year made in Swedish kronor (SEK), while properties lished annual agenda. The meetings haveamounted to SEK 923.3 M (895.2). For compa- outside Sweden have essentially been financed reviewed and discussed external and internalrable units and currencies, the portfolio impro- in each respective local currency. reporting of operating results and the Compa-ved by just over 5 percent. This increase is mainly available liquid funds, including unutilised ny’s financial position as well as various busi-attributable to a generally better underlying bank overdraft and credit facilities totalling SEK ness matters. other important items that arehotel economic climate and that last year’s 989 M amounted to SEK 1,349 M (1,808). regularly studied and reviewed each year arerefurbishment projects at the InterContinental Cash flow before changes in working capi- markets, strategy, finance, and budget issues.Montreal, Hyatt Montreal and Holiday Inn tal and investments, and excluding capital gains,Brussels airport have now been completed profits from associated companies and tax, Parent Companyand were operated with full capacity this year. amounted to SEK 502.5 M (446.4). Pandox’ Property activities in the Group’s property-own-However, at the hotel property level in each cash flow, including 50 percent of norgani’s cash ing companies are administered by staffrespective submarket, there are relatively large flow for the two months Pandox has owned the employed by the Parent Company, Pandox aB.differences in results depending on the location, company, amounted to SEK 518.9 M. The cost of these services has been invoiced tomarket segment, type of agreement and opera- the Group’s subsidiaries. Invoicing in 2010tor. Property costs excluding depreciation Investments amounted to SEK 57.8 M (51.1). The profit foramounted to SEK 140.6 M (117.0). The rise is The Group’s investments, excluding acquisitions, the year amounted to SEK 56.7 M (–400.0).mainly due to increased maintenance work in the amounted for the period to SEK 197.7 M (312.5).newly acquired The Hotel and in a number of Investments included, among other things, the Outlook for 2011other hotel properties. refurbishment programs at the Crowne Plaza The level of economic activity is expected to The operating net increased overall by SEK antwerp, Scandic Plaza Borås and Radisson improve in most markets where Pandox is rep-4.5 M to SEK 782.7 M (778.2). BLU Hotel, Basel and Malmö, as well as product resented. Scandinavia, Germany and Canada improvements at a large number of properties. are forecasted to have strong growth, whichRevenues and income – hotel operations The net book value of hotel properties will have a positive effect on demand in theTotal revenues from hotel operations amounted amounted to SEK 9,200.5 M (9,348.0). The hotel industry in 2011. Through the acquisitionto SEK 1,208.6 M (1,095.0) where all units market value of the hotel properties significantly of norgani, Pandox will report considerablyincreased their sales compared with 2009. For exceeds their book value. better results in the forthcoming year. also forcomparable units and adjusted for currency comparable units, the Company will strengtheneffects, revenues rose by 12.0 percent with the Taxes its profits and cash flow.InterContinental Montreal and Holiday Inn Brus- The Swedish Tax agency has in a reassess-sels airport contributing most. The overall profit ment notice dated october 2007, decided tofrom hotel operations amounted to SEK 5.8 M increase the assessed income of a number of(loss: -34.0), which includes a market-level rent Pandox’s subsidiaries by in total SEK 430 Mthat is reported under property revenues. (corresponding tax effect of SEK 120.4 M) as a Pandox 2010 | 71
  • 74. Financial StatementS Income statement Group Parent Company SEK M 2010 2009 2010 2009 Property operations Rental revenue note 1, 2, 3   884.2 850.6 – – other property revenue   39.1 44.6 – – Total property revenue   923.3 895.2 – – Property costs   –140.6 –117.0 – – Operating net   782.7 778.2 – – depreciation as per plan note 4   –194.3 –193.6 – – Income from property operations   588.4 584.6 – – Hotel operations operating revenue   1,208.6 1,095.0 – – operating costs –1,202.8 –1,129.0 – – operating income from hotel operations note 1, 2, 16 5.8 –34.0 – – Gross income 594.2 550.6 – – administrative costs note 4, 15, 16 –72.4 –68,3 –71.8 –62.3 other revenue note 5 – – 57.8 51.1 Operating income 521.8 482.3 –14.0 –11.2 Interest income note 6 5.7 25.5 1,044.5 457.8 Interest expense –212.0 –256.5 –177.1 –202.9 Portion of profits from associate companies 5.7 – – – other financial income and costs note 6 423.5 80.7 –787.9 188.1 Net financial items 222.9 –150.3 79.5 443.0 Income before tax 744.7 332.0 65.5 431.8 Tax note 7 –111.2 –20.4 –8.8 25.3 deferred tax note 7 –65.7 –10.1 – –57.1 INCOME FOR THE YEAR 567.8 301.5 56,7 400.0 Specification of external revenue Revenue from property operations 923.3 895.2 of which internal rentals –214.0 –211.7 Revenue from hotel operations 1,208.6 1,095.0 Total external revenue 1,917.9 1,778.572 | Pandox 2010
  • 75. Comments on the income statementRental revenue Maintenance costs Operating netRental revenue pertains to hotel premises, hotel Maintenance costs are costs incurred to main- The operating net for 2010 amounted to SEKfurniture and equipment, and other commercial tain the standards of buildings and equipment. 782.7 M, representing an increase of SEK 4.5 M.premises. Rental revenue for 2010 increased in Pandox’ leases are in most cases structured direct yield amounted to 8.6 percent (8.4).relation to the previous year and amounted to sothat the tenants – the hotel operators – areSEK 884.2 M (850.6). responsible for the greater part of interior main- Hotel operations tenance of the properties. For accounting purposes, the hotel operationsOther property revenue conducted by Pandox are charged with internalother property revenue is primarily comprised Ground rent rent. The internal rent is linked to the operator’sof costs debited for heat, electricity and pro- a total of seven properties owned by Pandox revenue and based on what are deemed to beperty tax. are held under site leasehold rights. The condi- market conditions. The internal rent is debited tions and maturities in all cases are based on to hotel operations and credited to revenue inBReaKDOWn OF OtHeR PROPeRtY ReVenUe prevailing market terms. property management.SEK M 2010 2009 In 2010 Hilton Brussels, name changed toPayment for operating costs 12.6 10.3 Property tax The Hotel Brussels, was acquired. With that,Invoicing of property tax 26.5 34.3 Pandox’ Swedish hotel properties are liable to nine wholly owned hotel operations remains inTotal 39.1 44.6 property tax at the rate of 1 percent of the tax Pandox portfolio at the end of 2010 of which assessment value. Properties located outside five were directly operated by Pandox and fourProperty costs Sweden are subject to varying percentages via management contracts.Operating costs and underlying basis.operating costs are costs that directly pertain Administrative coststo the operation of the properties, such as heat, Other costs administrative costs relate to central adminis-water, electricity, and maintenance. Costs are These costs include costs of legal counsel on tration, as well as foreign hotel property admi-reported gross, meaning that the portion of leasing matters, insurance premiums, and nistration. all central administrative staff iscosts debited to tenants is reported as revenue costs of leasing external premises. based at the Stockholm office. The remunera-under the heading other Property Revenue, tion of staff and auditors is set out in notes 15 BReaKDOWn OF PROPeRtY cOStSand that total costs are reported among costs and 16. SEK M 2010 2009in their full amount. operating costs 24.4 21.9 Maintenance costs 53.8 30.9 Ground rents 7.9 1.5 Property tax 47.9 58.5 other costs 6.6 4.2 Total 140.6 117.0 Pandox 2010 | 73
  • 76. Financial StatementS Balance sheet Group Parent Company SEK M 2010 2009 2010 2009 ASSETS Fixed assets Tangible fixed assets Properties note 8 8,613.4 8,735.8 – – Equipment note 9 588.2 613.5 1.1 1.3 9,201.6 9,349.3 1.1 1.3 Financial fixed assets Shares and participations in subsidiaries note 10 – – 3,310.6 4,270.6 other shares and participations note 11 916.6 610.2 904.3 – amounts due by Group companies – – 3,883.6 3,885.3 other long-term receivables 66.9 15.6 65.9 14.7 983.5 625.8 8,164.4 8,170.6 deferred taxes recoverable 185.7 216.2 – – Total fixed assets 10,370.8 10,191.3 8,165.5 8 ,171.9 Current assets Inventories 8.3 8.2 – – accounts receivables 167.4 99.7 – – Tax receivables 2.2 5.3 – – other receivables 13.5 16.9 2.8 5.6 Prepaid costs and accrued revenue 84.6 28.3 48.4 1.5 Cash and bank 385.1 326.4 447.9 199.3 Total current assets 661.1 484.8 499.1 206.4 TOTAL ASSETS 11,031.9 10,676.1 8,664.6 8,378.3 Comments on the balance sheet Properties and equipment properties. at the end of the year, the book quarterly and monthly in advance, amounts one hotel property was acquired in 2010. value of the properties, including hotel furniture, outstanding at year-end mainly comprise depreciation of properties amounted to SEK fixtures and equipment, amounted to SEK accrued revenue-based rents. 112.0 M (108.8), and the year’s investments to 9,200.5 M. other items consist of administra- SEK 105.0 M (224.1). The book value of equip- tion equipment with a book value of SEK 1.1 M. Other receivables ment, including hotel furniture and fixtures Short-term receivables such as those pertain- amounted to SEK 588.2 M (613.5). deprecia- Other long-term receivables ing to costs that are to be debited to external tion amounted to SEK 82.7 M (85.2) and invest- Pertain to a long-term promissory note and to a parties. ments to SEK 92.9 M (89.4). pledged deposit. The greater part of the book value of furni- Prepaid costs and accrued revenue ture, fixtures and equipment, representing SEK Inventories This item is comprised mainly of prepaid costs 588.2 M, pertains to that used by hotel opera- Relate to stocks of consumables in the hotel for the following year, such as insurance premi- tors. In certain cases, these items are included operations. ums and rents. as an unspecified portion of the revenue-based rent that the operator is being charged. When Trade accounts receivable Cash and bank deposits these items are included in rental revenues, Pandox’ accounts receivable normally consists The liquidity of the Pandox Group is primarily Pandox includes their value in the property of rental receivables and trade receivables in managed by the Parent Company through a value used to calculate direct yield from the hotel operations. Since rent is generally paid central bank account structure where liquidity74 | Pandox 2010
  • 77. Group Parent CompanySEK M 2010 2009 2010 2009EQUITY AND LIABILITIESEquityRestricted equityShare capital 373.5 373.5 373.5 373.5Restricted reserves 993.7 1,051.1 830.0 830.0Total restricted equity 1,367.2 1,424.6 1,203.5 1,203.5Unrestricted equityUnrestricted reserves 1,042.5 1,207.6 134.9 129.1Profit for the year 567.8 301.5 56.7 400.0Total unrestricted equity 1,610.3 1,572.1 191.6 529.1Total shareholders’ equity 2,977.5 2,996.7 1,395.1 1,732.6Provisionsdeferred tax liabilities note 7 389.1 363.0 – –Pension provisions 3.1 – 3.1 –Total provisions 392.2 363.0 3.1 –LiabilitiesLiabilities to credit institutions note 12 7,025.8 6,850.5 4,235.2 4,199.7Trade accounts payable 117.1 87.3 35.7 21.3Liabilities to Group companies – – 2,956.3 2,335.4Tax liabilities 10.2 13.9 1.4 –other liabilities 219.1 98.3 3.3 3.0accrued expenses and prepaid revenue note 13 290.0 266.4 34.5 86.3Total liabilities 8,054.4 7,679.4 7,266.4 6,645.7TOTAL EQUITY AND LIABILITIES 11,031.9 10,676.1 8,664.6 8,378.3Pledged assets note 14 5,071.8 4,961.9 12.2 12.2Contingent liabilities note 14 3.1 2.5 2,647.6 2,675.3is assembled in a joint interest-bearing transac- Deferred tax liabilitytion account. Surplus liquidity can also be In 2010 the deferred tax items are accounted forinvested as a fixed term bank deposit. In addi- on a gross basis. Further details are set out intion, Pandox has unutilised credit facilities for a the Pandox’ Tax Situation section on page of SEK 964 M. Accrued expenses and prepaid incomeLiabilities to credit institutions The amount pertains essentially to accruedas at 31 december 2010, Pandox’ total inte- interest expense and prepaid liabilities amounted to SEK 7,026M, spread over five lenders and six currencies. Pledged assetsBecause financing is arranged mainly through This item refers mainly to property mortgageslong-term credit agreements, the majority of pledged to credit institutions as collateral forthe debt is considered as long-term. as regards loans.fixed interest rates, debt amounting to SEK2,261 M carries a fixed interest rate for a period Contingent liabilitiesof less than one year. Further details are set out The Parent Company’s contingent liabilitiesin the Financial overview section on page 60. refer mainly to guarantees to banks with regard to subsidiaries’ debts. Pandox 2010 | 75
  • 78. Financial StatementS Changes in equity Restricted Unrestricted Profit SEK M Share capital reserves reserves for the year Total Group 2009 opening balance 373.5 1,050.2 1,006.2 299.3 2,729,2 appropriation of profits – – 299.3 –299.3 – other changes – –69.4 69.4 – – dividend – – – – – Group contribution – – – – – Translation differences including tax effect – 70.3 –104.3 – –34.0 Profit for the year – – – 301.5 301.5 373.5 1,051.1 1,270.6 301.5 2,996.7 Group 2010 opening balance 373.5 1,051.1 1,270.6 301.5 2,996.7 appropriation of profits – – 301.5 –301.5 – other changes – 3.1 –3.1 – – dividend – – –373.5 – –373.5 Group contribution – – –88.8 – –88.8 Translation differences – –68.7 –64.2 – –132.9 Equity fund relating to associate companies – 8.2 – – 8.2 Profit for the year – – – 567.8 567.8 373.5 993.7 1,042.5 567.8 2,977.5 Parent Company 2009 opening balance 373.5 830.0 219.4 –161.1 1,261.8 appropriation of profits – – –161.1 161.1 – dividend – – – – – Group contribution – – 70.8 – 70.8 Profit for the year – – – 400.0 400.0 373.5 830.0 129.1 400.0 1,732.6 Parent Company 2010 opening balance 373.5 830.0 129.1 400.0 1,732.6 appropriation of profits – – 400.0 –400.0 – dividend – – –373.5 – –373.5 Group contribution – – –20.7 – –20.7 Profit for the year – – – 56.7 56.7 373.5 830.0 134.9 56.7 1,375.1 The number of shares as at 31 december 2010 amounted to 24,900,000 with one vote per share and a nominal value of SEK 15 per share.76 | Pandox 2010
  • 79. Cash flow statement Group Parent CompanySEK M 2010 2009 2010 2009Current operationsProfit/loss before financial items 521.8 561.7 –14.0 –11.2depreciation 194.7 194.0 0.4 0.4Interest received 5.7 4.6 89.1 457.8Interest paid and other financial costs –216.4 –247.0 –54.0 –88.4Tax paid –80.1 –26.2 – –Cash flow from current operations before change in working capital and investments 425.7 487.1 21.5 358.6Change in working capitalIncrease/decrease (±) in operating receivables –120.7 87.5 –72.3 96.0Increase/decrease (±) in operating liabilities –142.0 –98.8 15.2 1,349.2Total change in working capital –262.7 –11.3 –57.1 1,445.2Cash flow from current operations after change in working capital and investments 163.0 475.8 –35.6 1,803.8Investment operationsChange in shares and participations 147.0 –65.7 –904.3 –434.9Investments in properties and equipment –197.9 –313.5 –0.2 –1.0acquisition of properties and equipment –261.1 –163.3 – –Change in interest-bearing receivables –51.1 – –38.9 –Total investments –363.1 –542.5 –943.4 –435.9Cash flow after investments –200.1 –66.7 –979.0 1,367.9Financing operationsChange in financial fixed assets – – – –920.5Change in interest-bearing loans 649.6 42.0 1,061.1 –359.5dividend –373.5 – –373.5 –Cash flow from financing operation 276.1 42.0 1,227.6 –1,280.0Change in liquid funds 76.0 –24.7 248.6 87.9Liquid funds at the beginning of the year 326.4 347.7 199.3 111.4Exchange rate difference in liquid assets –17.3 3.4 – –Liquid funds at the end of the year 385.1 326.4 447.9 199.3Change in liquid funds 76.0 –24.7 248.6 87.9 Pandox 2010 | 77
  • 80. Financial StatementS accounting principles The annual report and accounts have been revenue and based on what are deemed to be market Leasing prepared in accordance with the Swedish conditions. The internal rent is expensed to hotel ope- Pandox reports all leasing contracts as operational. annual accounts act and generally accepted rations, and carried as revenue in property operations. Leasing contracts entered into concern private cars accounting principles, as well as taking into and office machines. They are not significant in size account the recommendations of the Swedish Tangible fixed assets and do not therefore influence an assessment of the accounting Standards Board if not stated oth- When new construction and additions are carried out, Group’s results and financial position. erwise. Pandox’ accounting and evaluation all direct costs including project costs are capitalised. principles are in general unchanged compared In the case of refurbishments, direct costs related to Revenue with last year. the improvement of properties compared with their Management revenue pertains to rental revenue as original condition are capitalised. well as re-debited operating costs and property tax. Consolidated accounts Costs of repairing a property to its original condi- Revenue and costs related to the operations of hotel The consolidated accounts for the Group include all tion are not capitalised. an exception to this principle operators are reported separately in the consolidated subsidiaries as at financial year-end. involves the costs of measures taken further to neg- income statement. Rental revenue is spread over a The consolidated accounts have been prepared lected maintenance established at the time of an period of time in accordance with the terms of each in accordance with the purchase method, whereby acquisition, and where the acquisition price is lease. This implies that rent paid in advance is repor- assets and liabilities have been taken over at market adjusted accordingly. ted as prepaid rental revenue. value in accordance with an acquisition analysis. The Costs of tenant-related modifications that imply difference between acquisition value and acquired that the rent may be increased are capitalised and Shares and participations shareholders’ equity has been added to land and buil- depreciated over the remaining period of the lease. Shares and participations in subsidiaries and subsidi- dings as surplus value. Surplus value is amortised in depreciation according to plan is calculated on aries of subsidiaries have been stated at acquisition accordance with the same principle used for proper- the acquisition value at the following percentages: value with the exception of holdings that may have ties. Estimated deferred tax liability with respect to % been written down to their estimated actual value. Group surplus value and estimated deferred tax reco- Buildings 1.0 verable are reported net as a deferred tax liability in the Building fixtures 4–6.7 Financial instruments balance sheet. Land improvements 3.5 Interest swaps are used to change underlying financial Equipment 6.7–33 liabilities’ interest-due structure. Revenue and costs Tax related to interest swaps are reported net as interest Pandox applies the Swedish accounting Standards Pandox changed the depreciation rate for buildings costs, and are spread over the duration of each cont- Board’s general recommendation regarding income from 1.5 percent to 1 percent with effect from 2000. ract. tax accounting (BFnaR 2001:1). Briefly, the recom- depreciation according to plan is calculated on mendation implies that both deferred tax liabilities and the acquisition value and a residual value of SEK 0. International subsidiaries tax recoverable shall be included in the financial state- International subsidiaries are stated as per the current ments, and that any changes shall affect the income Associate companies rate method, which implies that the income statement statement as deferred tax. The deferred tax relating to Shares in associate companies are accounted for is restated at the average exchange rate of the period, the difference in book depreciation and fiscal depreci- under the equity method. The book value of shares in and the balance sheet at the exchange rate prevailing ation shall be calculated using the prevailing tax rate. associate companies corresponds to the Group’s on the closing day. The exchange rate difference that acquisitions based on the deferred tax liability share of the equity in the associate companies plus arises as a result of this method is recorded directly relating to asset acquisitions shall be based on the any consolidated surplus or deficit values. In the against the Group’s equity. any companies acquired acquisition price and be calculated from each respec- Group’s income statement ’Portion of profits from during the year are included in the Group at an amount tive property’s shortest estimated period of owner- associate companies’ includes the Group’s share of relating to the period following such acquisition. ship, resulting in an average tax rate of approximately associates’ profits after financial items adjusted for 10 percent. any depreciation of consolidated surplus or deficit Receivables and liabilities expressed in The deferred tax recoverable pertaining to estima- values. The Group’s share of reported taxes are inclu- foreign currencies ted tax recoverable related to deficit deductions in the ded in the consolidated tax expenses. Share of profits Receivables and liabilities expressed in foreign curren- Company are valued based on the estimated potential earned after the acquisition of associate companies cies are restated at the rate of exchange prevailing on utilisation against future taxable profits, and are cal- which have not yet been realized through dividends, balance sheet date. any differences that may arise are culated based on the prevailing tax rate. are allocated to the equity fund that forms part of the either credited or debited to income. When loans or Group’s restricted reserves. forward contracts are entered into to hedge invest- Property operations ments in international subsidiaries, any exchange rate The Group’s properties are reported in the balance Write-down of fixed assets differences that may arise are offset in the Group by an sheet as fixed assets in view of the purpose of the hol- The Group’s properties are continuously valued in amount corresponding to the differences arising from dings being the long-term ownership, management accordance with an internal cash flow model, which the recalculation of the net assets of international sub- and development of the properties. also fulfils the requirement to calculate the utilisation sidiaries. value in accordance with current accounting princip- Hotel operations les whereby the recoverable value, which is the grea- Other receivables and liabilities The hotel operations conducted by Pandox are char- ter of the net sales value and the utilisation value, is Receivables have been stated in the amounts expec- ged with internal rent for accounting purposes. The compared with the property’s book value in order to ted to be received. other assets and liabilities have internal rent is linked to the operating companies’ assess the need for a possible write-down. been stated at nominal values.78 | Pandox 2010
  • 81. notes to the accountsNOTE 1 SEGMENT REPORTINGPrimary segmentPandox’ primary segment is comprised of two operating branches – property operations and hotel operations. Information in accordance with segment reporting is presentedin the consolidated income statement and balance sheet.Secondary segmentYear 2010 Stockholm Gothenburg Öresund Rest of Sweden International Adjustment TotalProperty revenue 206.0 87.2 158.0 133.9 338.2 –214.0 709.3Property costs –37.3 –9.3 –31.5 –20.0 –42.5 – –140.6operating net 168.7 77.9 126.5 113.9 295.7 –214.0 568.7Book value of properties 1,391.8 749.2 1,461.2 1,020.1 4,578.2 – 9,200.5Investments 32.5 7.0 37.5 37.4 83.3 – 197.7operating revenue – hotel operations – – 7.6 – 1,201.0 – 1,208.6operating costs – hotel operations – – –7.6 – –1,195.2 214.0 –988.8operating profit – hotel operations – – 0.0 – 5.8 214.0 219.8Year 2009 Stockholm Gothenburg Öresund Rest of Sweden International Adjustment TotalProperty revenue 167.7 85.2 182.3 120.1 339.9 –211.7 683.5Property costs –26.5 –7.2 –30.7 –15.8 –36.8 – –117.0operating net 141.2 78.0 151.6 104.3 303.1 –211.7 566.5Book value of properties 1,386.2 756.1 1,488.1 998.8 4,718.8 – 9,348.0Investments 50.6 1.8 12.2 13.9 234.0 – 312.5operating revenue – hotel operations 16.1 – 8.9 – 1,070.0 – 1,095.0operating costs – hotel operations –15.4 – –9.2 – –1,104.4 211.7 –917.3operating profit – hotel operations 0.7 – –0.3 – –34.4 211.7 177.7NOTE 2 RENTAL REvENUERevenues from hotel operations pertain to business, of which four are operated under management agreements with Hilton (2), InterContinental and Hyatt respectively, as wellas the five hotels operated by Pandox. Rent and remuneration for other property costs which were paid by these hotel operator companies to the property company arereported gross, i.e. they have not been eliminated in the income statement. This is done to provide a more accurate picture of the operating net generated by the property com-pany and the operating income of the hotel operating company. The elimination of these items would imply that the total management revenue and the operating company’soperating costs would be reduced by SEK 214.0 M for the year 2010 (211.7).NOTE 3 GEOGRAPHICAL DISTRIBUTION NOTE 5 OTHER REvENUE OF RENTAL REvENUE Property activities in the Group’s property-owning companies are administered by staff employed by the Parent Company. The cost of these services has been invoiced% 2010 2009 to the Group’s subsidiaries. Invoicing in 2010 amounted to SEK 57.8 M (51.1).Sweden 54 53denmark 7 8United Kingdom 5 5Germany 12 13 NOTE 6 INTEREST INCOME AND OTHER FINANCIALBelgium 14 15 INCOME AND COSTSSwitzerland 3 2 The interest income of the Parent Company is divided into SEK 86.6 M (77.3) fromCanada 5 4 Group companies, SEK 2.5 M (1.1) from external parties, and SEK 955.4 M (379.4)Total 100 100 from dividends from subsidiaries. of SEK –787.9 M (188.1) in other financial income and cost in the Parent Company, SEK 178.2 M (190.3) pertains to currency effects in valuation of liabilities in foreign currency at closing date exchange rate and SEKNOTE 4 DEPRECIATION ACCORDING TO PLAN 960.0 M to write-down of shares in subsidiaries. of SEK 5.7 M (25.5) in Group inter- Group Parent Company est income, SEK 4.6 M (4.6) refers to external interest income and SEK 1.1 M (20.9)SEK M 2010 2009 2010 2009 refers to dividends from other shares and participations. other finacial and costs in the Group amounts to SEK 423.5 M (80.7) of which SEK 431.2 M (79.5) pertains toBuildings –111.2 –108.0 – – capital gains further to the sale of shares in HoST Hotels & Resorts Inc.Land improvements –0.8 –0.8 – –Equipment –82.7 –85.2 –0.4 –0.4Total depreciation –194.7 –194.0 –0.4 –0.4depreciation amounts to a total of SEK 194.7 M of which SEK 194.3 M (193.6) refers to propertyoperations and SEK 0.4 M (0.4) to administration. Pandox 2010 | 79
  • 82. Financial StatementS NOTE 7 DEFERRED TAx AND ACTUAL TAx Group Parent Company SEK M 2010 2009 2010 2009 Deferred tax expense for the year deferred tax expense relating to temporary differences –24.0 –38.5 – –0.7 deferred tax expense relating to deficit deductions –47.5 –15.9 – –56.4 deferred tax expense relating to other provisions 1.8 44.3   – – deferred tax expense relating to associate companies 4.0 – – – Deferred tax reported in the income statement –65.7 –10.1 – –57.1 Actual tax in the income statement –111.2 –20.4 –8.8 25.3 of which relating to associate companies –5.5 –   – – Difference between reported tax and nominal tax rate Reported profit before tax 744.7 332.0 65.5 431.8 Tax as per applicable tax rate –195.8 –87.3 –17.2 –113.6 Tax effect due to nontaxable income 22.1 36.8 272.7 134.5 Tax effect of nondeductible costs and other tax adjustments –32.3 –21.1 –264.3 –52.7 Tax effect relating to foreign operations 29.1 41.1 – – Reported tax expense –176.9 –30.5 –8.8 –31.8 Deferred tax recoverable deficit deductions 173.4 205.2 – – other deferred tax recoverable 12.3 11.0 – – Total deferred tax recoverable 185.7 216.2 – – Deferred tax liabilities differences between book value and fiscal value of properties 389.1 363.0 – – Total deferred tax liabilities 389.1 363.0 – – Total deferred tax liabilities/recoverable net –203.4 –146.8 – – The Group’s nominal tax rate is estimated at 26.6 percent and in the Parent Company it amounts to 26.3 percent. The effective income tax rate in the Group amounted in 2010 to 23.8 percent (9.2) and in the Parent Company to 13.4 percent (7.4). NOTE 8 LAND AND BUILDINGS Group SEK M 2010 2009 opening acquisition value 9,798.7 9,641.4 Reclassified as equipment –0.6 –5.2 acquisition of properties 320.6 89.4 Investments 105.0 224.1 disposals – – Translation differences – balance sheet –468.5 –151.0 Closing accumulated acquisition value 9,755.2 9,798.7 opening depreciation –1,062.9 –975.6 disposals – – depreciation for the year –112.0 –108.8 Translation differences – balance sheet 33.1 21.5 Closing accumulated depreciation –1,141.8 –1,062.9 Closing residual value 8,613.4 8,735.8 Tax assessment value of Swedish properties 2,900.8 2,521.7 of which land 858.7 707.9 Book value Swedish properties 3,945.2 3,903.580 | Pandox 2010
  • 83. NOTE 9 EQUIPMENT Group Parent CompanySEK M 2010 2009 2010 2009opening acquisition value 1,037.9 900.4 4.6 3.6Reclassified from land and buildings 0.6 5.2 – –acquisition of equipment 11.3 73.9 – –Investments 92.9 89.4 0.2 1.0disposals – – – –Translation differences – balance sheet –87.9 –31.0 – –Closing accumulated acquisition value 1,054.8 1,037.9 4.8 4.6opening depreciation –424.4 –353.0 –3.3 –2.9disposals – – – –depreciation for the year –82.7 –85.2 –0.4 –0.4Translation differences – balance sheet 40.5 13.8 – –Closing accumulated depreciation –466.6 –424.4 –3.7 –3.3Closing residual value 588.2 613.5 1.1 1.3NOTE 10 SHARES AND PARTICIPATIONS IN SUBSIDIARIES Registered Number Percent Corp. Reg. No. office of shares Par value owned Book valueParent CompanyHotab Förvaltnings aB 556475-5592 Stockholm 1,000 100 100 285.1Pandox Förvaltning aB 556097-0815 Stockholm 5,500 100 100 304.7Hotab 6 aB 556473-6352 Stockholm 1,000 100 100 0.1Fastighets aB Grand Hotel i Helsingborg 556473-6329 Stockholm 1,000 100 100 15.9Pandox Fastighets aB 556473-6261 Stockholm 1,000 100 100 0.1Fastighets aB Mora Hotell 556475-9370 Stockholm 1,000 100 75 5.7Fastighets aB Stora Hotellet i Jönköping 556469-4064 Stockholm 1,000 100 100 30.1Pandox Belgien aB 556495-0078 Stockholm 1,000 100 100 4.0Pandox Hotel Management aB 556469-9782 Stockholm 1,000 100 100 0.1Hotellus Holding aB 556475-9446 Stockholm 1,000 100 100 11.5Pandox Luxemburg aB 556515-9216 Stockholm 10,000 10 100 68.3Fastighets aB Porpur 556349-8327 Stockholm 10,000 100 100 0.1Pandox i Halmstad aB 556549-8978 Stockholm 1,000 100 100 8.7Pandox i Borås aB 556528-0160 Stockholm 1,000 100 100 61.5Grand i Borås Fastighets aB 556030-7083 Stockholm 6,506 100 100 10.0Hotell Värmdövägen 84 aB 556286-4826 Stockholm 1,000 100 100 4.3Hotellus International aB 556030-2506 Stockholm 7,480,000 100 100 970.2KB Lorensberg 49:2 916833-3269 Gothenburg – – 100 0.0Hotellus Östersund aB 556367-3697 Stockholm 1,000 100 100 3.0ademrac Holding 1 aB 556683-3371 Stockholm 10,093 100 100 219.4ademrac Holding 2 aB 556683-3363 Stockholm 10,010 100 100 219.6ademrac aB 556426-2748 Stockholm 1,790,042 100 6.6 3.4Le nouveau Palace Sa 446188 Brussels 3,000 – 100 291.4Convention Hotel International aG Basle 14,000 – 100 6.2Hotellus denmark a/S 28970927 Copenhagen 5,000 – 100 66.2Hotel Bloom Sa 0476.704.322 Brussels 68,808 – 100 67.3Pandox Belgium Sa 0890.427.732 Brussels 100,000 – 100 471.6Pandox i Malmö aB 556704-3723 Stockholm 1,000 100 100 142.0Ypsilon Hotell aB 556481-4134 Stockholm 1,000 100 100 39.8Pandox Kolmården aB 556706-8316 Stockholm 100,000 1 100 0.1Hotellus Sverige Ett aB 556778-8699 Stockholm 1,000 100 100 0.1Hotellus Sverige Två aB 556778-8707 Stockholm 1,000 100 100 0.1Total Pandox AB 3,310.6 cont. Pandox 2010 | 81
  • 84. Financial StatementS NOT 10 SHARES AND PARTICIPATIONS IN SUBSIDIARIES, CONT. Corp. reg. no. Registered office Corp. reg. no. Registered office Group Elba Leasehold BVBa – Belgium arlanda Flyghotell KB 916500-8021 Stockholm Elba Freehold BVBa – Belgium Fastighetsbolaget Utkiken KB 916611-7755 Stockholm Holcro nV – Belgium Fastighets aB Hotell Kramer 556473-6402 Stockholm Hotellus Suomi oY – Finland Hotellus nordic aB 556554-6594 Stockholm Hotellus nord oY – Finland Hotellus Järva Krog aB 556351-7365 Stockholm Euro Lifim BV – netherlands Hotellus Mölndal aB 556554-6636 Stockholm Hotellus Europe BV – netherlands Bioeffect aB 556244-5030 Stockholm Pandox Holland BV – netherlands Vestervold KB 916631-9534 Stockholm Pandox Holland 2 BV – netherlands Hotellus Mellansverige aB 556745-4656 Stockholm Hotellus Luxembourg Sarl – Luxemburg Skogshöjd Handels & Fastighets aB 556066-0432 Stockholm Hotellus deutschland GmbH – Germany Hotellus Belgium nV – Belgium atlantis mbH – Germany Grand Hotel Brussels nV – Belgium Pandox Berlin GmbH – Germany Town Hotel Sa – Belgium Hotellus Canada Holdings Inc – Canada Elba Belgium Holding BVBa – Belgium Hotellus Montreal Holdings Inc – Canada NOTE 11 OTHER SHARES AND PARTICIPATIONS other shares and participations of SEK 610.2 M in 2009 referred to the american hotel property company HoST Hotels and Resorts Inc. during 2010 all shares in the com- pany was sold. other shares and participations of SEK 916.6 M in 2010 refers to the shareholding of Sech Holding aB that during the autumn 2010 acquired 100 percent of the shares in norgani Hotels aS. Pandox ownership of Sech Holding aB amounts to 50 percent and is reported according to the equity method. NOTE 12 LIABILITIES TO CREDIT INSTITUTIONS Group Parent Company SEK M 2010 2009 2010 2009 Liabilities that fall due within one year following balance sheet date 810.0 738.9   793.6 562.3 Liabilities that fall due between one and four years following balance sheet date 1,000.7 980.5   700.0 809.1 Liabilities that fall due five or more years following balance sheet date 5,215.1 5,131.1   2,741.6 2,828.3 Total 7,025.8 6,850.5   4,235.2 4,199.7 NOTE 13 ACCRUED ASSETS AND CONTINGENT REvENUE Group Parent Company SEK M 2010 2009 2010 2009 Prepaid rents 50.1 54.7 – – accrued interest expenses 22.9 16.3 18.3 11.0 Property tax 7.8 4.7 – – Unrealised hedge results 3.4 64.1   3.4 61.6 other 205.8 126.6 12.8 13.7 Total 290.0 266.4 34.5 86.3 NOTE 14 PLEDGED ASSETS AND CONTINGENT LIABILITIES Group Parent Company SEK M 2010 2009 2010 2009 Pledged assets for loans from credit institutions Property mortgages 5,052.6 4,942.1 – – Pledged deposit 19.2 22.3 12.2 14.7 Contingent liabilities 3.1 2.5 2,647.6 2,675.382 | Pandox 2010
  • 85. NOTE 15 AUDIT FEES AND REMUNERATION Group Parent CompanySEK M 2010 2009 2010 2009KPMG  audit assignments 3.4 3.5 0.8 1.0other assignments 1.5 1.4 – –SET Revisionsbyråaudit assignments 0.1 0.1 0.1 0.1Otherother assignments 0.1 0.2 – –Total 5.1 5.2 0.9 1.1NOTE 16 PERSONNEL Group Parent Company 2010 2009 2010 2009Average number of employeesMen 509 474 8 9Women 517 468 8 9Total 1,026 942 16 18of whom employed in Sweden 16 31 16 18of whom employed in Belgium 436 341 – –of whom employed in Germany 196 189 – –of whom employed in Canada 378 381 – –Board of directors and senior managers and executivesMen 11 11 10 10Women 2 2 2 2Total 13 13 12 12Wages, salaries and other remuneration, SEK MBoard of Directors and CEOWages, salaries and other remuneration 5.5 5.6 5.5 5.6Social security costs 1.6 1.6 1.6 1.6Pension costs 0.7 0.8 0.7 0.8Total 7.8 8.0 7.8 8.0Other employeesWages, salaries and other remuneration 369.4 355.3 17.0 15.0Social security costs 79.3 69.5 5.3 5.0Pension costs 11.7 11.6 4.1 4.4Total 460.4 436.4 26.4 24.4Wages, salaries and other remuneration per country, SEK MSwedenBoard of directors and CEo 5.5 5.6 5.5 5.6other employees 17.0 19.6 17.0 15.0Belgium other employees 141.9 132.4   – –Germany other employees 44.5 44.9 – –Canada other employees 166.0 158.4 – –Total 352.4 360.9 22.5 20.6Personnel employed in Belgium relate to the operator activities of the Crowne Plaza Brussels City Centre, the Holiday Inn Brussels airport, the Crowne Plaza antwerp,The Hotel, the Hilton Brussels City, and the Hotel BLooM!. Personnel employed in Germany to Hotel Berlin, Berlin and in Canada to InterContinental Montreal andHyatt Regency Montreal. The remuneration of the Members of the Board is established by the annual General Meeting of Shareholders. The remuneration of the Chief Executive officer (CEo) iscomposed of a basic salary, a bonus, a company car, and a retirement pension scheme. The age of retirement of the CEo is 65 years, with the possibility of retiring at the ageof 60. In the case of termination, the CEo shall be given a period of notice of 24 months by the Company, with a deduction clause. Upon resignation by the CEo, a period ofnotice of 6 months shall apply. Sickness absence in the Parent Company amounted to 0.1 percent (0.5). Pandox 2010 | 83
  • 86. Financial StatementS Proposed disposition of earnings The following profits are at the disposition of the forthcoming annual General Meeting of Shareholders: Balance brought forward SEK 134,856,053 Profit for the year SEK 56,742,661 SEK 191,598,714 The Board of directors and Chief Executive officer propose that the accumulated profits be appropriated as follows: dividend to the shareholders, SEK 7.00 per share SEK 174,300,000 amount to be carried forward SEK 17,298,714 SEK 191,598,714 Stockholm, 14 February 2011 Christian Ringnes Chairman Leiv Askvig Christian Sundt Olaf Gauslå Bengt Kjell Helene Sundt Mats Wäppling Anders Nissen Chief Executive Officer our audit report pertaining to this annual report and consolidated financial statements was submitted on 15 February 2011. Per Gustafsson Willard Möller Authorised Public Accountant Authorised Public Accountant84 | Pandox 2010
  • 87. auditor’s ReportTo the annual meeting of the shareholders of Pandox ABCorporate identity number 556030-7885We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board ofdirectors and the managing director of Pandox aB for the year 2010. The company´s annual accounts and the consolidated accountsare included in the printed version on pages 70–84. These accounts and the administration of the company and the application ofthe annual accounts act when preparing the annual accounts and the consolidated accounts are the responsibility of the board ofdirectors and the managing director. our responsibility is to express an opinion on the annual accounts, the consolidated accountsand the administration based on our audit. We conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that weplan and perform the audit to obtain high but not absolute assurance that the annual accounts and the consolidated accounts arefree of material misstatement. an audit includes examining, on a test basis, evidence supporting the amounts and disclosures in theaccounts. an audit also includes assessing the accounting principles used and their application by the board of directors and themanaging director and significant estimates made by the board of directors and the managing director when preparing the annualaccounts and the consolidated accounts as well as evaluating the overall presentation of information in the annual accounts and theconsolidated accounts. as a basis for our opinion concerning discharge from liability, we examined significant decisions, actions takenand circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or themanaging director. We also examined whether any board member or the managing director has, in any other way, acted in contra-vention of the Companies act, the annual accounts act or the articles of association. We believe that our audit provides a reasonablebasis for our opinion set out below. The annual accounts and the consolidated accounts have been prepared in accordance with the annual accounts act and give atrue and fair view of the company’s and the group’s financial position and results of operations in accordance with generally acceptedaccounting principles in Sweden. The statutory administration report is consistent with the other parts of the annual accounts and theconsolidated accounts. We recommend to the annual meeting of shareholders that the income statements and balance sheets of the parent company andthe group be adopted, that the profit of the parent company be dealt with in accordance with the proposal in the administration reportand that the members of the board of directors and the managing director be discharged from liability for the financial year. Stockholm, 15 February 2011 Per Gustafsson Willard Möller Authorised Public Accountant Authorised Public Accountant Pandox 2010 | 85
  • 88. Hotel BlOOm!, Brussels 86 | Pandox 2010
  • 89. Production: Pandox in cooperation with Hallvarsson & Halvarsson. Photo: Ulf Blomberg, Peter Hoelstad and others. Printing: Elanders, Falköping, 2011.
  • 90. Pandox aBcorp. Reg. no.