Calculatinga profitable hotel investment

1. UpGrade
Market information from Pandox.
Pandox – Excellence in hotel ownership and operations.
Calculating
a profitable
hotel investment
HOTEL INVESTMENTS ARE OFTEN BASED ON THE WRONG ASSUMPTIONS
on many hotel
markets 4 The sharing
Positive outlook
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economy is
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2. New times
demand new ideas
Economic activity, growth and increased employment levels are important
drivers to increase demand within the hotel industry. And this is why the
­revenue
improvements that we see in the hotel industry today are logical;
an improved macro economic environment and global growth fuels the
hotel industry.
At the same time, we can see how revenue streams increasingly come
from new distribution channels. The majority of hotel bookings are done
online today. Systems and knowledge of how to collect and structure crucial
hotel demand information in order to move efficiently between different
channels are increasingly important in order to achieve an optimal ­revenue
structure.
For the hotel industry, the digital evolution has created a new landscape of
how to market a hotel and acquire customers. And the evolution continues.
What is the next step?
The change within the media industry can help explain the power of the
digital evolution. When I were a teenager, there were two TV channels: TV1
and TV2. News updates was received once every evening, usually at 19.30.
If you missed that broadcast, you had to wait until the next evening.
Today there are hundreds of TV channels. Many are niche stations for
­specific
interests such as history or sports. The large traditional channels are
challenged from all angles and have been forced to adapt programming as
well as technology. News updates are available as events unfold. In addition,
with streaming functionality, you can choose when to consume your media.
A revolution! Today you choose according to your interests. Previously, repre-sentatives
for the state controlled TV channels would choose what you
watched.
The massive structural change within the television arena can serve as a
guide to how the digital evolution is affecting the distribution landscape of
hotel bookings. Just like in the TV example above, previously, there used to
be few channels for booking, most often controlled by established hotel
companies, or brands, as they are often called. Today, there are hundreds of
ways to find, compare and book a hotel.
Who had heard of AirBnB a few years back? Rather few I would guess.
Now, the company lists 700,000 bookable flats across the globe. Accommo-dation
which is offered and booked by people who used to be faithful hotel
guests and generally also loyal to their brands. Thus, changes in behavior as
well as product selection are reflected.
This is what’s on the agenda at the next Pandox Hotel Market Day. What
happens in the new media landscape and what conclusions can we draw for
the hotel industry?
If we study economic cycles, the US is at the forefront. The main driver is
the domestic market which has seen four consecutive years of positive devel-opment
due to a stronger US economy. It follows the normal pattern:
increased demand creates higher occupancy rates which in turn gradually
pushes up the average price for the hotel rooms.
At the moment, a segment transition is taking place in the US where hotels
at large destinations, such as New York and Chicago, are replacing budget
guests with other groups of guests willing to pay more for the same product.
An aggressive pricing strategy in combination with new capacity being added
to the market is likely to have a negative impact on RevPAR growth in New
York at the start of 2015. However, the trend is presently turning – prices are
on the up and profitability is increasing rapidly due to a more efficient ­revenue
structure. This creates fertile ground for value growth from which follows
increased liquidity. The most recent example is the spectacular acquisition of
the classic Waldorf Astoria. The hotel was acquired for 1.95 billion US dollars.
Equivalent to 1.4 million dollar per room. The sum does not include any reno-vation
or development costs. In addition, the hotel is tied to a 100 year man-agement
contract – 4 times as long as the normal management contracts
within the luxury segment. The buyer is a Chinese insurance company.
Europe and the Eurozone is also experiencing a positive trend where the
speed of growth is increased. The transient segment is growing which makes
for good opportunities for a pick up during the autumn months. 2014 will be
a strong hotel year.
The Scandinavian markets are also showing a positive pattern. Best in class
is Copenhagen with a 5 per cent increase, but Stockholm and Oslo have also
had a good start to 2014.
Gothenburg has had a large proportion of new capacity added, representing
a 15 per cent increase since 2008. In a generally positive industry climate, Goth-enburg
is predicted to drop its RevPAR by some per cent. The drop is smaller
than feared due to a very strong September. Another market which faces great
challenges is Malmö. A number of new large hotel projects will be completed
within the next few years. About 1,300 rooms will be added, a 20 per cent
increase in available rooms compared to today. For Malmö to retain todays Rev-
PAR level, it will take an increase of 25 per cent in the number of sold rooms.
One can also note that new capacity is continuing to flow into Stockholm.
So, how come new hotel projects are added in a city which already has over-capacity?
Part of the explanation could be a misinterpretation of visitor num-bers.
Often, there are reports of an increase in the number of sold rooms in a
market, and many then draw the conclusion that profitability has improved as
well. But this is rarely the case. More available rooms usually leads to increased
demand – but also to a revenue per room decrease, often through lower prices.
This has a great negative effect on profitability. Please see UpGrades article on
correct revenue assumptions in new projects on pages 6–7.
A tip to those whose job is to decribe the hotel industry with the goal to
see more hotels: Use relevant key indicators – don’t just look at the number of
sold rooms – look at the whole situation. Include profitability, average price,
segments, total accommodation revenues and, of course, other trends within
the visting industry as parameters.
I tip my cap to Visita, the industry organisation for the hospitality industry,
who ran a well organised campaign – the double whammy (Dubbelstöten) –
during the latest election period and managed to rally a disparate industry
behind some important questions. Well done!
On the sports front, we note that Skåne again takes the gold in football –
for men as well as women! On the handball front, there is much to be happy
about. Sweden’s handball ladies have qualified for the European Champion-ships
in Croatia and Hungary. Matches start on the 7th of December and the
team certainly have got something special going. The men’s handball team
has a World Championship in January, played in Qatar, to look forward to. Sun
and handball – almost sounds like the Åhus Beach Handball festival.
Yours sincerely,
Anders
Just a word
Address:
Pandox AB (publ)
P.O. Box 15
SE-101 20 Stockholm, Sweden
Tel.: +46 (0) 8 506 205 50
E-mail: info@pandox.se
Visiting address:
Vasagatan 11, 9th floor, Stockholm
Graphic design and production:
Hallvarsson & Halvarsson
Photos: Ulf ­Blomberg,
Peter Hoelstad,
IStock et al.
Printing: TMG Sthlm, November 2014.
May be reprinted only with the
­permission
of Pandox.
Cover: Radisson Blu Bremen.
UpGrade can be ordered from Pandox
at info@pandox.com or read at
www.pandox.com
Pandox UpGrade
Market information from
Pandox – published approxi-mately
three times a year.
Editors: Anders Nissen,
Marika Hilldoff
2 MARKET INFORMATION FROM PANDOX

3. NEWS Hotel world
November
Starwood goes keyless. Starwood has launched key-less
room access in 10 of its hotels globally. Keyless
entry via smartphone will be offered to loyalty pro-gram
members, claimed as an industry first. Guests can
wave past the front desk and go directly to their room
using their smartphone. After one year in the making,
SPG has launched the pioneer mobile key experience
that makes key cards optional for travellers at 10 Aloft,
Element and W Hotels around the world. How does it
work? The guest simply needs to open the SPG App
and hold their smartphone in front of the door lock to
enter their room. A solid green light and vibrating buzz
offers sensory alerts to open the door.
Pandox Operations proudly enters a lease with
Grand Hotel Oslo! Pandox Operations has signed a
lease agreement with Norwegian property company
Eiendomsspar AS, who also owns 50 per cent of
­Pandox
AB, to take over operations at Grand Hotel
Oslo from March 1st, 2015. Pandox Operations are
already running operations at 16 Pandox owned
hotels, but is now taking its first step into becoming
an operator of hotels owned by external parties. The
Grand Hotel Oslo is located at the centre of Karl Johan,
the main parade street in Oslo, and is the most famous
and classical hotel in Norway. The hotel was inaugu-rated
in 1874 and has gone through a number of reno-vations
and modernisations since. The Grand Hotel
Oslo hosts 292 rooms, including 54 suites, a large con-ference
area and an exclusive Spa.
New hotel opening in Jönköping. Vox Hotel is about
to open in the city of Jönköping, Sweden, on Novem-ber
1st 2014. The concept of Vox Hotel includes ideas
about the future hotel experience, focusing on design
and comfort. Vox Hotel has 143 rooms including
suites and deluxe rooms.
June – July
Storebrand acquires Clarion Hotel Arlanda. At the
end of a three month sales process, Swedavia signed
an agreement to sell Clarion Hotel Arlanda to SPP
­Fastigheter,
a subsidiary of Storebrand. The price was
SEK 1.1 billion and Swedavia could record a capital
gain of roughly SEK 350 million. Clarion Arlanda was
inaugurated in October 2012 and boasts 414 rooms,
44 meeting rooms as well as two restaurants, all in
direct proximity to the airport terminals.
Balder continues its expansion within the Gothen-burg
hotel market. Previously this year, in March,
­Fastighets
AB Balder acquired the hotel property that
hosts Scandic Opalen in central Gothenburg. The
­purchase
sum was around SEK 550 million and the
property is on a long term leasing contract to Scandic.
In July, Grand Hotel Opera was added.
September
Nordic Choice Hotels goes large in Stockholm City
– with two brand new hotel concepts including
540 rooms. Earlier this year, AMF Fastigheter
launched its mega project for a completely new
cityscape around the Gallerian area in Stockholm
city. The new cityscape – Urban Escape Stockholm –
will be a combination of offices, hotels, retail, restau-rants,
meeting places and service outlets. In Septem-ber,
it became clear that the new operator for the
hotels will be Nordic Choice Hotels which plans to
operate a business hotel with a broader appeal as well
as a boutique hotel, both under new brands. The
hotels will have 340 and 200 rooms respectively.
Connected to the hotels will be a 2,000 sq. m confer-ence
facility which will also contain a Spa and a gym.
The hotels are to be opened in 2017.
October
Hilton to sell Waldorf Astoria to Chinese Firm. Hilton
Worldwide Holdings Inc., the world’s largest publicly
traded hotel operator, agreed to sell the landmark
­Waldorf
Astoria hotel in Manhattan to China’s Anbang
Insurance Group Co. for $1.95 billion. Equivalent to
1.4 million dollar per room. According to a spokes-person,
Hilton decided it was better to sell than take
on the cost of renovations. The hotel is sold with a
100 years management contract – 4 times as long as
the standard within the luxury ­segments.
Two new Comfort Hotel Xpress opens in Norway.
Affordable rates meet urban design. Comfort Hotel
Xpress Youngs­torget
on Möllergata in Oslo was
opened in 2011 as the first in Nordic Choice’s new
chain of budget hotels. In October, hotel number
two and three were launched: Comfort Hotel Xpress
­Central
Station in Oslo (168 rooms) and Comfort Hotel
Xpress Tromsö (192 rooms). Modern technology is an
important part of the Xpress brand and guests can
already from day one check in and open their hotel
room doors using their mobile phone, and mobile solu-tions
will continue to play a large part at the new hotel.
The chain is not yet present in Sweden, but the goal is
to open 15 new hotels across the Nordic countries.
MARKET INFORMATION FROM PANDOX 3

4. Positive outlook
on many hotel markets
Inter Continental, Montreal.
INTERNATIONAL OUTLOOK
The US: Record breaking growth over the
last 6 months
The US economy grew by 3.5 per cent, on an
annual basis, during the third quarter which was
better than expected and the last six months
have been the best for over ten years. The
increase in GDP was broad based with positive
contributions coming from household consump-tion,
exports, investments and the public sector.
The property market has stabilised and prices are
continuing to rise which means that many house-holds
can leave the negative equity trap. Unem-ployment
is on its way down and commentators
predict a first raise of the Fed rate before year end.
Wage development is still lagging though.
Deflation in the Eurozone is all too close – there
are continued worries of weak development
The autumn has so far been dominated by negative
news on the state of the Eurozone economy, but
lately, glimpses of light have been seen. For
instance, there are signals that the German labour
market is improving, with unemployment
already at the lowest for 20 years, and German
GDP growth is expected to come in at around
1.5 per cent during the next two years. However,
the solid development in Germany is not enough
to carry the rest of the Eurozone. A recession
doesn’t seem likely at the moment, but the clouds
are still lingering. Outside the Eurozone, the UK
economy is improving steadily with solid
employment growth and a stronger pound.
Sweden, Norway and Denmark turn positive
while Finland is stuck in recession
Looking at macro data, Sweden stands up well
compared to other countries. Debt is lower, com-ing
in at about 40 per cent compared to an EU
average of 90 per cent, and employment has seen
a steady increase since 2010, partly due to older
people working more. The development is
mainly driven by solid growth in private con-sumption
and high investments in property; how-ever
exports are still stunted by the weak global
economy. The Riksbank predicts that GDP
growth will be 1.9 per cent this year, 2.7 per cent
in 2015 and 3.3 per cent in 2016. Despite that, the
Riksbank still elected to lower its repo interest
rate to zero recently as the inflation target takes
precedence in the near future.
The Norwegian economy has been a positive
surprise this year, but for 2015 a slowdown is
expected and the more long term future is
plagued by uncertainty. The country is marked by
low unemployment rates in combination with an
expansive financial policy and low interest rates,
but challenges remain in the shape of high wage
levels, falling oil prices, a slowdown in the prop-erty
market and decreasing investments within
the construction and oil industries. A fall in oil
prices has also led to a weaker Krone.
The Danish economy has seen five years of
zero growth, but during this year things have
turned towards the positive. Private consumption
in combination with stronger exports are the
strongest drivers of this. Households keep lower-ing
their debts, while property prices in the larger
cities are pointing upwards. Commentators
believe that the Danish economy will keep grow-ing
at close to the 2 per cent mark during 2016.
Finland still struggles with a strong headwind
and is currently in its third recessionary year with
Focus on the market
The economic reports from the US continue to be positive, but sustained
weak development in Europe coupled with a slowdown in Chinese growth
act as drags on global growth. The inflation rate is near zero in a number of
European countries which have pressed down interest rates to historical
lows. Geopolitical turmoil in the Ukraine and in the Middle East, among
other places, makes predictions uncertain, but despite all this a number of
hotel markets still display positive trends.
4 MARKET INFORMATION FROM PANDOX

5. RevPAR growth development
USA and
Canada, %
FY
2011
FY
2012
FY
2013
YTD
2014
USA, total +8 +7 +5 +8
New York +6 +6 +4 +3
Chicago +9 +10 +4 +6
Washington +2 –1 –2 +4
Montreal +5 –2 +6 +11
Source: STR Global (YTD September).
Europe, % FY
2011
FY
2012
FY
2013
YTD
2014
Europe, total +6 +5 +2 +6
London +8 +2 +1 +3
Brussels +4 –2 +2 +4
Paris +14 +9 +2 +1
Amsterdam +11 +0 +5 +5
Berlin –1 +9 +0 +4
Source: STR Global (YTD September).
Nordics, % FY
2011
FY
2012
FY
2013
YTD
2014
Copenhagen +0 +5 +6 +5
Stockholm +1 –6 +2 +1
Oslo +2 –5 +1 +1
Helsinki +6 +4 –5 +2
Gothenburg +4 –1 –4 –2
Source: Benchmarking Alliance (Copenhagen), Pandox MIS
Sep (Stockholm/Göteborg/Oslo), STR Global (Helsinki).
weak economic development across the board.
The country is reliant on a global recovery to kick
in, for it to gain traction in exports. Commentators
believe that GDP growth will stop at 0.5 per cent
next year.
HOTEL MARKET OVERVIEW
The US and New York
The US remains to be the engine of global growth.
Also the American hotel market continues its
strong development with sustained growth dur-ing
the last four years. This is a result of a stronger
global economy but also due to limited added
capacity. After Q3, US RevPAR growth hit nearly 8
per cent with both volume and price
contributing.
During the year’s first nine months, New York
has shown a relatively modest 3 per cent growth
in RevPAR. An explanation can be the shift in
guest segments which has been ongoing for a
while, where the hotels are replacing budget trav-ellers
with other guests willing to pay more for
the same product. This aggressive pricing strategy
coupled with added capacity in the market has
had a negative impact on RevPAR.
Los Angeles and San Francisco, however, con-tinued
on a previously strong trend line with
increasing prices. Both cities have seen double
digit RevPAR growth during the year. Also in
Miami – one of the world’s most expensive hotel
destinations – price continued to drive growth
and the RevPAR increase reached almost 7 per
cent at the end of Q3.
Europe
Normally, Europe lags the US by 2 to 3 quarters in
the hotel market life-cycle, which gives us hope
for continued growth here as well. RevPAR
growth in Europe after the three first quarters of
this year came in at almost 6 per cent, but with
considerable variation between regions. Hotel
markets in northern Europe saw the strongest
development; central and southern regions were
stable while eastern parts generally experienced
weaker prices.
Top of the class in Europe were Tallinn, Buda-pest
and Dublin which all showed double digit
RevPAR growth at the end of Q3. At the other end
of the spectrum, we find Moscow which lost
nearly 11 per cent in RevPAR as a result of drop-ping
demand.
The Brussels hotel market was stable with Rev-
PAR gaining 4 per cent for the year including Sep-tember.
Growth was mainly driven by volumes
but there was also an upward nudge in prices.
During the third quarter, there has also been a sig-nificant
increase in demand for weekend stays
which can be seen as somewhat of a new trend, as
Brussels traditionally is dominated by the busi-ness
and meetings segments.
The hotel market in Berlin experienced a rela-tively
slow start to the year but picked up during
the second and third quarter. This was mainly
driven by price but there was also a certain
demand increase up until and including Septem-ber.
Like Brussels, RevPAR growth came in at 4 per
cent in the city and even though the number of
larger conferences has been limited, the MICE-segment
still shows a positive trend and the lei-sure
segment continues to grow as before.
The Nordics
The Nordics were led by Copenhagen with a 5 per
cent RevPAR growth at the end of Q3. The strong
growth is mainly attributable to higher average
prices and the fact that, since 2013, the city has
seen little added supply. However, during 2015, a
number of new hotels are expected to open their
doors.
In Stockholm, the leisure segment keeps
showing the best growth numbers. The business
segment has recently joined up in showing simi-lar
growth patterns, while the group and confer-ence
segments segments still show negative
numbers. During the year, another 1,000 rooms
have been added on the supply side, but despite
that, occupancy rates are up and RevPAR growth
was 2 per cent for the first nine months, which
means that the added capacity has been com-pletely
absorbed by the market. Average price
declined, mainly as a result of a larger proportion
of leisure travellers who are mainly staying in the
medium priced hotel segment. Prices at the top
range hotels remain at last year’s levels.
The Oslo hotel market displayed strong Rev-
PAR growth during the first quarter but that was
reversed in the second, due to timing effects
related to Easter and the fact that there was no
NOR/Shipping Event Week this year. At the end
of Q3, RevPAR was up close to 1 per cent and, like
Stockholm, leisure travellers were driving
demand. The trend is that occupancy is driving
a positve RevPAR and that the price is falling.
In Helsinki, the hotel market is showing a
somewhat better picture than the Finnish econ-omy
in general, despite a drop in Russian tourists
and a relatively low level of domestic business
travel. At the end of Q3, RevPAR growth reached
2 per cent, helped by an increase in both demand
and price.
Hotel BLOOM!, Brussels.
MARKET INFORMATION FROM PANDOX 5

6. Trends
Correct revenue assumptions
are crucial to assess profitability
in new projects!
An ever increasing number of property owners, without prior experience
of the industry, are showing an interest in, and are investing in, hotels.
Reports from Stockholm Business Region and other organisations are
predicting a future capacity shortage which is attracting new players
into the Stockholm market. What is worrying though, is that many times
there is a lack of comprehensive analysis behind these predictions and
the reports are based on special interests such as the aim to make
­Stockholm
look like an expanding region.
By only looking at growth and demand figures for a destination and,
without any further analysis, then translating those into a need for new
hotels, is to overly simplify the situation – many more factors than just an
increase in demand will decide whether the investment in a new hotel
property will be profit­able.
Pandox UpGrade is here to clarify the situation.
According to Visita, 18,000 new hotel rooms are
required in Sweden up until 2020, mainly in the
larger cities. This prediction is made mainly by
projecting historical demand into the future and
lacks any analysis of the developments of average
price, segments or profitability.
1. Our industry survives not only on demand, but
by a formula that includes average price as well
as demand.
2. In addition, it requires sound knowledge of
how the industry’s different segments will look
in the future to be successful.
3. And finally, it is vital that the future hotel prop-erty
owner has knowledge of what drives
value in these types of properties and under-stands
the differences between a hotel prop-erty
and a traditional property.
Let’s go through these parameters one by one:
1. Profitability is not solely created by
increased occupancy!
Location, location, location is a well known motto
in the property industry. In the hotel industry we
need to add RevPAR, RevPAR, RevPAR (revenue
per available room). Higher visitor numbers and
an increase in demand are obviously indicators of
the attraction of a destination, but an investment
case mainly based on a demand and occupancy
increase misses the necessary average price
parameter. To achieve solid profitability in a hotel
property, it is vital that price and RevPAR also
develop in a positive manner, but it’s not often
that this is brought up when ongoing hotel devel-opments
are discussed.
It is absolutely vital to combine solid occu-pancy
numbers with a high average price to
reach high profitability in a hotel property. Hotel
experts agree that a high price is to be preferred
to a high occupancy rate. A higher price drives
higher profitability. The logic behind the argu-ment
is that an ”averageprice-dollar” to a larger
extent ends up as profit compared to an ”occu-pancy-
dollar” as the latter requires more re-sources
from operations in the shape of variable
costs such as cleaning, staff, laundry, breakfast,
commissions, etc.
A historical review…
Since 2007, new hotel rooms have increased the
total supply by 30 per cent in Stockholm. During
the same period, demand increased by 25 per
cent, which means that the added capacity more
than covers the increased demand and that the
new hotels have not been completely absorbed
by the market. At the same time, we can see that
average nominal price is the same as in 2007.
This means that the average inflation adjusted
price has decreased by almost 7 per cent. The
decrease has also brought about a decrease in
RevPAR. After the first six months of 2014, RevPar
in real terms was more than 10 per cent lower
than in 2007 which is also illustrated in the adja-cent
graph.
Specific hotels may have effectivised their
operations and thus managed to keep profitabil-ity
at the same level as in 2007, but if one looks at
the average numbers, a lower RevPAR means that
the hotels profitability today is lower than it was
in 2007. This important aspect seems to be com-pletely
ignored in the advisory reports about the
industry that have been published recently.
Average price and RevPAR in real terms
Stockholm
Index (2007 = 100)
110
105
100
95
90
80 -07 -08 -09 -10 -11 -12 -13 -14
RevPAR
ADR (real)
RevPAR (real)
Linear trend ADR (real)
85
110
105
100
95
90
85
80
Source: Benchmarking Alliance
Supply, demand, price and RevPAR
(indexed and inflation adjusted)
ADR 12M, index (2007 = 100)
110
105
100
95
90
80 -07 -08 -09 -10 -11 -12 -13 -14
Gothenburg Stockholm Malmö
85
110
105
100
95
90
85
80
Source: Benchmarking Alliance
6 MARKET INFORMATION FROM PANDOX

7. 2. Guest segments are changing in the cities:
it’s not new business hotels that are missing!
During the last years, demand in the Stockholm
market has increased in every segment apart from
the conference segment. The greatest increase can
be found in the leisure segment which is a clear
trend that we have observed for some time. In
contrast, the increase for Group travel was only
marginal. A similar shift in guest segments seem
to be taking place in Gothenburg and Malmö.
These segment changes have brought about a
downward price pressure as an effect of the fact
that leisure guests are more likely to choose lower
priced options. Furthermore, the additional capac-ity
added in recent years has contributed to the
downward pressure as well as increasing competi-tion.
The trend is most obvious in Gothenburg and
Malmö, with weaker growth during the week
while the weekends have seen stronger growth,
thus the negative effects are mainly hitting busi-ness
and conference hotels.
As a hotel property owner, it is vital to have
knowledge of the market in which one operates
and to closely monitor market trends. This is
another important topic which is nowhere to
be seen in the industry reports.
3. The uniqueness of the hotel property
market: demands active ownership and
considerable investments.
There is a real risk that new players in the industry
underestimate the uniqueness of hotel properties.
The property market and the market for hotel
properties are completely different industries with
different drivers and different processes to achieve
value growth. The hotel property market demands
a completely different type of active ownership
than the traditional property market. Simply put,
one can say that the focus in the hotel industry is
to develop hotel operations while in the rest of the
property sector, it’s about building development.
The industries also differ as far as agreement
structures. In the hotel industry, an active cooper-ation
between the property owner and the opera-tor
is needed and it requires both to be highly
engaged. For this to work, turnover based rent
Hyatt, Montreal
agreements, where the two parties share in the
upside as well as in the joint risk for a potential
decrease in value when a hotel does poorly, are
imperative.
It is reasonable to assume larger investment
costs in a hotel property than in an office bulding.
Historically, the operator has shouldered most
of the costs for development and refurbishment
of the hotels but present agreement structures
demand that the property owner takes on more
of the investment costs and share the risk. So
called, ”Triple-Net” agreements where the leasee
is responsible for all the upkeep is practically non-existent
within today’s hotel industry.
In conclusion, we can see that a predicted
increase in demand is not enough to motivate
a decision to invest in a new hotel property.
Detailed knowledge and understanding of aver-age
prices, market development and actual hotel
operations are at least as important and must not
be overlooked. And this is something that most
industry reports published over the last years are
indeed overlooking.
Converting offices into hotels – a growing trend in Sweden
A trend in the office market in Sweden is that
large companies relocate to premises outside the
city centre to lower their costs. The companies
shy away from expensive, closed office spaces to
more open plan, flexible, space efficient or activ-ity
based solutions. Examples of that in Stock-holm
are Swedbank’s move from the inner city to
northern suburb Sundbyberg and Vattenfall
merging three offices into one at Arenastaden in
Solna. This trend has led to high vacancy rates in
traditional, non-flexible office properties which in
turn has opened up the possibility of converting
offices into hotels; about 40 per cent of the hotel
rooms that have been added in Stockholm city
centre over the last ten years come from office
conversions and the trend is gaining.
Normally, offices are more profitable
than hotels!
To convert a previous office building into hotel
rooms is normally very costly and sometimes
more expensive than building from scratch.
To build a hotel room carries large costs for bath-rooms,
interiors and technology. Compared to
newbuilds, it is often more difficult to manage the
tender process at an early stage which can lead to
a lot of costly additional work. In most cases, it is
also difficult to convert a space as efficiently as
when building from scratch, which also adds to
the total price tag.
A calculation...
A simple calculation shows that an average
­existing
hotel property in Stockholm City
­covering
about 10,000 sq m with 180 rooms has
an ­estimated
value of about 2 million SEK per
room. This is based on assumptions on price
(SEK 1,200 per night on average), occupancy
(72 per cent), property related costs, deductions
for FF & E (4 per cent yearly) and a market-average
yield ­figure.
The equivalent room is
­estimated
to cost 2.5 million if built today, based
on average estimated costs for land, construction,
interiors, etc.
The equivalent ball park value of the average
office property yields a 35 per cent higher num-ber
than a hotel property using a calculation
based on a 6 per cent vacancy rate, SEK 3,750 rent
per year and sq m and yearly running costs of
SEK 300 per year and sq m. The office building is
assumed to be equal to the average hotel prop-erty
in the sample above in terms of size, location
and yield.
It is, in other words, very difficult to make the
financial case for converting an office building
into a hotel. For the conversion to be profitable it
often requires that the original office building has
a much higher vacancy rate than the average.
Another important success factor is that the pro-ject
can include a significant amount of new floor
space or a much more efficient use of the space.
Finally, it is necessary that the property owner
manages to create a new hotel concept which
adds something fresh to the market, such as an
attractive compact hotel.
MARKET INFORMATION FROM PANDOX 7

8. Trends
The Sharing Economy
is here to stay
A growing trend today is the concept of sharing products and services –
rather than purchasing and owning – a concept known as the Sharing Econ-omy.
Fuelled by increasing internet accessibility around the world, a wide
range of new services are taking off, enabling people to, for instance, borrow
or rent a privately owned car or room in a foreign city, share gardening tools
with neighbours or find a local pet sitter. UpGrade has had a closer look at
the Sharing Economy and at how it will affect the hotel industry.
So what exactly is the Sharing Economy? Wikipe-dia
defines it as “a socio-economic system built
around the sharing of human and physical
resources. It includes the shared creation, produc-tion,
distribution, trade and consumption of goods
and services by different people and organisations.”
Since the dawn of time, people have enjoyed
sharing and in recent years the internet has cre-ated
improved possibilities for collaborating and
sharing through a variety of web-based services.
A successful example of this is Uber.com, a car
sharing service founded in 2009 (Lyft.com and
Sidecar.com are others). Rather than renting a car
through a traditional car rental service, users use
the Uber app to get connected to a driver. Cus-tomers
use the app to request rides and track
their reserved vehicle’s location. At the end of
your ride, the costumer can rate the driver and the
driver can rate you – as a customer!
Uber’s tremendous growth clearly demon-strates
the growing interest in sharing rather than
buying and is a typical example of the Sharing
Economy.
The term “the Sharing Economy” is vague
enough to encompass widely diverging activities.
Listed below are a few examples of other services,
all offering a remarkable experience which you
cannot buy for money!
• AirBnb: short-term apartment and room-rental
service from local hosts in 190 countries.
To market your apartment is free. Instead,
AirBnb charge the advertising owner around
3 per cent of the booking fee and the guest
between 6 and 12 per cent depending on the
price for the booking.
• Yerdle: online marketplace for bartering goods
• Zilok: lets people rent their household tools
and goods to strangers,
• JustPark: enables people and companies to
match their empty parking spaces with
demand from drivers.
• DogVacay: finding local pet sitters when you’re
off for vacation
• Coachsurfing: let travellers stay in strangers’
homes for free
• EatWith: invites you to dine in homes around
the world and enjoy homemade cuisine.
• Task Rabbit: an online and mobile marketplace
that allows users to outsource small jobs and
tasks to others in their neighbourhood.
Less status in owning
According to the think-tank LS:N Global, owner-ship
is receding as an ideal across sectors and cate-gories.
To mark value we instead share, rent and
borrow products, creating new systems of value
and worth in the process. This is also happening
in terms of trust, reputation, integrity, even in
terms of how we value and market our privacy
and personal data. The think tank believes that
when we use platforms such as Uber or AirBnb
we are moving from ownership to access, from
established systems to informal contingent rela-tionships.
Below, a few aspects on why sharing is
becoming so popular:
Anti-ownership Society. Today’s adult consum-ers,
who grew up in boom times and have had to
relinquish mass consumerism during the reces-sion,
have developed a stoical attitude towards
ownership.
Always accessible. Today, professionals at all levels
of the economy are expected to be responsive at
a moment’s notice. The boundaries between
home and work have never been less clear. This
has prepared us to see our homes as part of the
economy, creating an opening for Sharing Econ-omy
companies that monetize domesticity.
New rating systems are encouraging consumers
to put more trust in each other rather than com-panies
as providers of goods and services. That’s
why reciprocal rating systems are key! (used by
both Uber and AirBnb).
Exceptional growth thanks to strategic
partnerships and win-win concepts...
Another success factor of the start-ups in the
Sharing Economy in general, and for UBER specifi-cally,
is the cutting edge technology which cre-ates
a platform where drivers, passengers and
companies can partner together. Clearly this fills a
big gap in the market! The company also uses
smart and strategic partnerships in marketing. For
instance, what about these examples taken from
UBER’s own blog where you can shop online and
get free delivery from a private driver or try out
the new hyped Tesla car? You can pick an eco-friendly
car, decide the driving-route yourself, and
share the costs with your friends and, of course,
the best is that the price is far below normal taxi
fares and already indicated before the journey
starts. From the drivers’ perspective, the no-cash
deal limits the risk for robbery and there is no risk
of the costumer running away from the bill. From
UpGrade’s perspective, the advantages seem to be
numerous.
8 MARKET INFORMATION FROM PANDOX

9. ... but not everybody is happy!
The clash between established institutions and
Sharing Economy start-ups is most likely only at
the beginning. In May 2014, at the Wired Next
Fest in Milan, angry taxi drivers shut down a
planned speech by an Uber representative. Lon-don
taxi drivers protested against unfair competi-tion
from Uber in June and September.
Undaunted, Uber CEO Travis Kalanick told an
audience at the Royal Albert Hall in October that
his company could remove 1 million out of Lon-don’s
3 million cars off the roads if 100,000 Uber
drivers were allowed to take their place.
Obviously, this threatens traditional taxi com-panies.
In Germany and Belgium opponents have
managed to prohibit Uber taxis and the business
is not legal at the moment. Taxi drivers and taxi
companies believe that ride-sharing companies
engage in unfair business practices and compro-mise
passenger safety and the unions calls the
industry “grass-root economy” and “anarchic form
of capitalism”. These actors will most likely con-tinue
to fight back in the foreseeable future and of
course this might be a threat to Uber: If a city wins
one of the lawsuits against Uber for illegal cab
practices, the court precedent could be damning
to the entire business model.
AirBnb has also been met with protests
around the globe. In Barcelona for instance, the
company was fined for breaching local law which
states that any flat rented to tourists must be reg-istered
with the Tourism Registry of Catalonia.
Regional laws also prohibit the renting out of
rooms in private residences. The fine was AirBnb’s
first in Europe.
Impact for the hotel industry
All the indications are that we will see more of the
Sharing Economy and it will be especially inter-esting
to follow the impact of AirBnb on the hotel
industry. The value of the company is estimated
at approximately USD 13 billion according to the
Wall Street Journal in October – higher than most
hotel companies!
Of course, there is some competition with
similar strategies, such as Flipkey, Roomorama
and Homeaway/VRBO but these are not any-where
near AirBnb in size.
Today AirBnb primarily attracts the leisure trav-eller
and only around 10 per cent of the guests
come from the corporate business segment. This
share will most likely increase, particularly since
the company recently entered a partnership with
Concur which has a corporate focus.
With this in mind, and the fact that AirBnb is
expected to grow in the luxury segment, UpGrade
believes it is time for hoteliers to become more
observant to new travel patterns and which kind
of experiences attract which different target
groups. And maybe, if you look carefully, you
might even discover that there is such a thing as a
free ride or lunch!
THE FLAT AGE SOCIETY
Forget everything you thought you knew about being old, or even
about age in general. In the society of the future, age isn’t just a number
– it’s flat! You’re as young as you feel, young at heart… Yet these sayings,
however hackneyed, point to an aspiration that is becoming a reality.
People are living longer. They are retiring later – or not at all. They are
healthier. And also they simply don’t look, act or feel old.
During an interesting trend briefing in London, the consulting group, The Future Laboratory,
­delivered
a study on the Flat Age Society, a group of consumers aged over 50, whose increasing
spending power and prominence means that the hotel sector and the brands should put more
focus on them.
According to the study, the world is now seeing that chronological age is becoming com-pletely
irrelevant. This is about a mind shift that sees the years after 60 as ones of possibility,
where re-engagement, exploration and expertise can be ­re-
interpreted and re-applied.
A world where age doesn’t matter
The youngest Baby Boomers are turning 50 this year, while the first wave of that generation is
reaching their 70s. Baby Boomers represent about a quarter of the population in the US, the UK
and Australia. And that is just the beginning. People are living longer and the proportion of the
population aged 60 and over in developed regions is projected to reach 34 per cent by 2050,
according to the UN.
Today’s 50–70-year olds think very differently about money than previous generations.
­Polling
­suggests
that three out of four Americans aged 57–65 still regard themselves as middle-aged
or younger.
Energetic, optimistic and future-facing, Baby Boomer consumers are creating a world where
age doesn’t matter – the flat age society. Instead they are starting successful businesses and are
moved by their interests, passions and
ambitions, just like everyone else. Mem-bers
of the Flat Age Society are technol-ogy-
savvy, love luxury and are interested
in healthy and organic food. Flat-Agers are
engaged consumers who are more likely
than any other age group to travel, buy a
car or donate to charity. They have it, and
they are used to spending it. In less than
five years, 50+ consumers will have 70 per
cent of the disposable income in the US,
according to the study.
In this world – where Flat-Agers are
­revving
up rather than slowing down – the
term ‘old’ is dead and gone. In its place, a
new age is being born.
A few tools to embrace this new Flat Age society:
Get savvy. Youth isn’t where the growth
is anymore. The Flat Age is where the
­consumers
are.
Value the sustainable. Give Flat Agers the
luxury products that they can feel good
about.
Advance tech. Boomers want devices
that help them to thrive and connect
to the world.
Show beauty. Celebrate 60+ people in
­campaigns,
ads and editorials.
Put design first. Great design is the key to
making products that empower Flat Agers.
Make it easy. Don’t ignore problems like
health issues. Solve them with great ideas.
Embrace romance. Flat Agers are splitting
up and hooking up. Help them to get busy.
Boost wellness. The market for 50+
­mental
and physical wellness is booming.
MARKET INFORMATION FROM PANDOX 9

10. Activities in the Pandox sphere
High investment activity results in many
reopenings in the Pandox portfolio!
Rebranding and repositioning ­projects
­completed
at three hotels in Germany
As the commercial conditions to continue with
the previous operators were not in place, ­Pandox
added three hotels in Germany to its own opera-tions
Radisson Blu Bremen, 235 rooms
The Grand Opening Event for the new restau-rant
and bar “THE L.O.B.B.Y.” at the Radisson
Blu Bremen in April was a big success! Over
350 people, press and celebrities were all
excited about the modernized hotel and the
new, trendy ­restaurant
concept inspired by
the American steak and burger tradition.
The clean lines, warm colours and open-plan
layout summarises a design that creates a
­feeling
of Hanseatic “easy living”.
See also the cover photo.
in 2013. In connection with the takeover,
the three hotels were re-branded to Radisson Blu
­Dortmund,
Radisson Blu Bremen and Holiday
Inn Lübeck.
Since Pandox took charge of operations
much has happened! Detailed development and
restructuring programs, as well as a new busi-ness
plan including a new flexible organization,
were initiated in cooperation with the new
hotel management.
Holiday Inn Lübeck, 159 rooms
A full renovation of Holiday Inn Lübeck was com-pleted
at the end of May. The hotel has received
a new design concept and an atmosphere of well-ness
with the aim to create a “home away from
home” for the guest. The new restaurant Kochwerk
Lübeck, which opened already in October 2013,
has received a very positive guest response and
the hotel has also received its official rating as a
4 star superior hotel.
During 2014, renovations were completed at all
three hotels. The renovations included a com-plete
upgrade and refurbishment of all rooms
and bathrooms, the reception, conference facili-ties
and public areas, as well as a brand new F&B
concepts. The hotels also enjoyed a boost on
the technical side including a modernization
of IT and TV systems.
Here you can enjoy some inspirational sto-ries
and event pictures from our renovated
­German
hotels!
Radison Blu Dortmund, 190 rooms
Style, simplicity and elegant design characterize
the interior of the new Radisson Blu Hotel,
­Dortmund.
In just five months, more than five
floors with 190 rooms, corridors and guest areas
have been completely refurbished with the hotel
still up and running. The complete renovation
was finalized this summer.
The hotel attracts both business and leisure
travellers and even famous Bundesliga and
­Champions
League football teams stay here on
a regular basis, including star players and coaches
such as Christiano Ronaldo and Carlo Ancelotti of
Real Madrid. You are also welcome to visit and
maybe get a chance to meet the stars! :)
10 MARKET INFORMATION FROM PANDOX

11. Hotel industry meetings
Report from three European events
The Distribution Event
Pandox attended the annual Distribution
Event held in London in September. The
program featured distribution challenges
and opportunities the industry is facing:
• What adds more value to a hotel, a brand or
an OTA?
• How should hotels use big data to enhance
the customer experience?
• How could the development of “the internet
of things” change how hotels operate?
The audience quickly learned from the first speaker
that traditional hotel chains are being outspent by
OTA’s in advertising significantly. Credit Suisse
reported that Priceline spends approximately 6
times as much as IHG on advertising during 2013
and this is about to increase. It was also reported
that OTA’s are far
superior in internet
technology and user
friendliness com-pared
to hotel chains.
Due to this the hotel
brands have to find
different ways in
order to add guest value for them to stay loyal. One
could be that if the reservation is made through the
hotel’s own system or by a member of a loyalty
program, then then free Wi-Fi will be provided.
UpGrade’s view: Free Wi-Fi is crucial and this is not
enough to attract guests through their channels as
this is not a service but a must. Worth mentioning
– Priceline announced that they spent 700 million
USD on marketing in Q3 – it is impossible for hotel
chains to compete at these levels.
The Internet of things covered how smart phones
and wearables could change the hotel experience.
The airline industry has adapted the use of smart
phones apps for boarding and for checking in to a
greater extent than hotels, but the hotel industry is
catching up. Smartphones could in a near future be
considered industry standard as your room key and
your primary contact in handling your check in and
check out. But what if your iWatch measures what
mood you are in and the room lightning and temper­ature
will adjust according to your state of being?
What if your wearable can detect if you are jet-lagged
and the hotel room shower will infuse vita-mins
for your morning shower for you to get back
into the game, your wearable will tell you what to
order on the room service menu depending on
your vitamin balance? For the business traveller,
will manual check out be a sign of poor service if
it is a time consuming process?
UpGrade’s view: UpGrade welcomes the use of
technology in hotel operations but as an owner
one must ask, who will invest the money in the
technical hardware: the brand, the operator or the
owner? The guest will demand more and more
technical solutions but who will sign the check?
If different brand uses different systems, what will
happen at a potential rebrand?
...Now, what is Your view?
Please send your comments to UpGrade:
info@pandox.com
HotCop Copenhagen
Pandox attended the annual industry
meeting HotCOP in Copenhagen earlier
in 2014. Much of the Scandinavian hotel
industry was represented, brands, opera-tors,
consultants, investors and lenders,
and a wide range of topics were covered.
UpGrade has chosen to report on two of
the panel discussions.
The first panel comprised of Motel One, Scandic
and Rezidor discussing “The role of the brands in
the future”. Some of the views were that in an
ever changing distribution landscape the role of
the brand will be more focused on the hotel oper-ating
side, being an efficient operator will be the
most important factor instead of focusing on
being a “topline distributor”. Another view
expressed the importance of a large geographical
brand presence to be able to attract brand loyal
guests and international travellers when they visit
a specific location. The changing demographics
were explained as the main reason to many
brands multi-brand strategy.
UpGrade’s view: The industry is seeing an increas-ing
differentiation between hotel brands and
operators; hotel brands are turning into media
companies focusing on top-line distribution and
operators are overtaking the position of the
“bottom line operator” that hotel brands histori-cally
controlled.
The second panel discussion was “Develop-ment
Trends: Which Seg-ments
will dominate”.
The panel was comprised
of 25 HRS Hotel, Marriot
International and HTL.
The discussion turned
from the original subject
to “Which definitions will
dominate”. What is a lifestyle hotel, a boutique
hotel, or a design hotel? The expression have
been so diluted and used in so many different
contexts so it is hard for the guest to know. This
scenario is elevated when guest reviews use their
own interpretations describing the hotels as they
see it facing the risk of going against the hotel’s
own communication. The panel agreed on that
the emergence of innovative products such as
HTL, Citizen M and 25hrs are due to the changes
in demographics and that there have been room
in the market for these types of products.
UpGrade’s view: If this development trend con-tinues
will this change the hotel landscape where
hotels move either towards more luxury or more
tech-savvy, no thrills hotels (low cost vs luxury)
– what will happen with traditional mid-market
hotels?
LSN Trend Briefing
Pandox attended the semi-annual LSN
Global Trend Briefing in London in
­October.
LSN Global is an insight and
trends network focused on lifestyles and
consumer needs and behaviours. The title
of the half day event was the “ME-conomy”.
LSN Global covered three macro trends:
“The Sharded Self”, “Awakeing Tech” and
“New Value Economy”.
First, “The Sharded Self” gave us insight in how
social media is changing our personalities and
gives us the ability of living multiple online self’s
in multiple digital environments. To some extent
social media have made us all entertainers with a
digital audience. The development makes our
personality stretch and as LSN Global puts it we
become “Elasticated
Personas” – where we
are happy to stretch the
truth and ways of pre-senting
ourselves with-out
believing that we are cheating on others” and
changes the way we live “Continuous Partial
­Living
– where we live multiple lives and personali-ties
offline in a way that is increasingly vicarious
and peripatetic”.
UpGrade’s view: Make it a share friendly hotel!
Provide features that are instagrammable etc!
Second, “Awakening Tech” covered our
increased usage, dependence and border line
obsession with technology and the risk that we
might lose our humanity in the process? How can
we find a way to benefit from technology in our
daily life to a greater extent than airline check in,
news reading and directions and to avoid neck
problems from iphone obsession and instagram
addiction? For example as LSN Global showed
“Emos – where wearable technology extends
beyond calorie-counting to monitoring human
emotion” and “Online Escapism – where brands
offer consumers dream-like digital experiences”.
UpGrade’s view: Should the front desk agent
through his Google glasses be able to see the
mood of the guest on arrival? Would you like
your room service to be delivered by a robot as in
Aloft Cupertino California?
And third, “The New Value Economy” covered
the development of the Sharing Economy and
how we share, rent, borrow and creates new sets
of values and worth across numerous industries.
We do not own our films on Netflix and we do
not own our songs on Spotify, we are paying for
the access to them. New sets of values for “new
currencies” are also developing sometimes
shaped in the form of minutes and hours. How
much is one hour of your profession worth?
Would you be able to trade one hour of your pro-fession
for one hour of carpentry? LSN Global
covered several aspects of this macro trend
including, “The Conspicuous Access Generation –
why accessing a brand, product or service is more
important than owning it” and “Sharenomics –
the value and financial worth of peer-to-peer net-works
in a post-recessionary world”.
UpGrade’s view: Understanding the consumption
behaviors among different lifestyles and ages is
the key to understanding your guest and proba-bly
some of the success factors behind AirBnB,
Eatwith and Über etc.
MARKET INFORMATION FROM PANDOX 11

12. NEWS FROM THE WORLD OF PANDOX
Professional Handball Event
at First Hotel Copenhagen
Over 200 enthusiastic partners turned up at First
Hotel Copenhagen for a professional handball
event with delicious tapas, chocolate fondue ,
beer and champagne. The event boasted a truely
impressive lineup of prominent names, among
others the Swedish national team coach as well as
the Director of Sports at Pandox, Staffan Olsson,
KIF Kolding København stars Kasper Hvidt and
Kim Andersson, the up-and-coming player
­Magnus
Landin, handball icon Louise Svalastog-
Spellerberg from København Håndbold and club
director and CEO Kim Mikkelsen.
“It has been a real top performance. I am happy
to provide the facilities and to create the atmos-phere
that unites handball in Copenhagen for a
night”, says the host of the event hotel GM Bente
Brydegaard Johansen of First Hotel Copenhagen.
On stage: Bente Brydegaard Johansen, GM of First Hotel
Copenhagen and Staffan Olsson in the event in November.
Read more news
at www.pandox.com
13Pulsions – @BLOOM!
Hotel BLOOM! had the pleasure of welcoming
Manuel Murillo, aka 13Pulsions, an Italian/Colom-bian
graffiti artist living in Brussels, when he was
commissioned to design one of the boardrooms
at the hotel. Murillo is a well reputed artist who
expresses himself through paintings, fashion crea-tions
and elements of decoration, using acrylic
colours, sprays and markers. His work is trendy
and full of life which perfectly matches the image
of BLOOM! On the day he completed his work,
the hotel hosted an opening cocktail event,
attracting lots of people from Brussels as well as
a number of our guests. Needless to say, the hap-pening
was a big success!
Hotel Berlin, Berlin
Social day at the Björn Schulz Foundation
The Björn Schulz Foundation offers advice to fam-ilies
with terminally ill children and facilitates
after-care treatments as well as organizing both
medical and social support. This time, the founda-tion
was not a guest at Hotel Berlin, ­Berlin,
but
instead acted as the host at their own premises
with a team from Hotel Berlin Berlin there to visit
and help out. “I wanted to personally get on board
and do something good for this foundation” said
General Manager, Jan-Patrick Krüger and sooner
said than done – 12 area managers from the hotel,
and ­Patrick,
all had their hands full with planting
17 window boxes full with fresh flowers and pro-viding
a new sheen to the garden furniture.
The Hotel, Brussels Finalist in the European
Hotel Design Awards
The Hotel, Brussels is one of five finalists in the reno-vation
category of the 2014 European Hotel Design
Awards, an event held by Sleeper Magazine.
“The overall quality of entries for this year’s
­European
Hotel Design Awards was the highest
I have seen in ten years on the judging panel,” says
Matt Turner, Editor-in-Chief of Sleeper Magazine.
“The voting to select the final five in each category
was very close and the shortlisted entries can all
be proud to have made it this far.”
The winners will be announced on November 25th.
New operating company!
Pandox has expanded its business by establish-ing
its own hotel operating company, Pandox
Operations as a consequence of changes within
the industry. The global hotel industry has gone
through major structural changes over the last
15 years. A majority of international hotel com-panies
have changed their business model and
become pure ”brand companies”. Traditional
hotel companies with a clear focus on operative
issues have become fewer. Another trend is the
fast consolidation taking place within hotel
operations – the large have grown larger.
“We can see the need for greater flexibility and for
having the possibility to choose different strate-gies
for different situations, both as an owner and
as an operator”, says Pandox CEO, Anders Nissen
in a press release. “By establishing a company
100 per cent focused on hotel operations, we
achieve exactly that. Moreover, today we can see
that a number of players are turning back from
the strategies to focus on either brand or opera-tions,
towards a broader business model where
they can control a larger part of the value chain.
This has also lead to new commercial
opportunities”.
The mission for Pandox Operations is obvi-ously
to run Pandox-owned hotels, but also
to enter into lease agreements with external
property owners when commercial conditions
are in place.
Initially, Pandox’ sixteen established hotel opera-tions
has moved to Pandox Operations as well as
the newly signed external lease contract of Grand
Hotel Oslo which creates a hotel portfolio cover-ing
5,245 rooms across seven countries.
A natural step in this process has been to
update and change Pandox’s graphic profile in
order to obtain a clear distinction between
­Pandox
AB and Pandox Operations. With
­different
logotypes, the division of the two
­companies
will be significantly more evident
to our stake­holders.
Pandox Operations:
Number of hotel operations: 17
Countries: Norway, Belgium, Germany,
Denmark, Finland, Canada and the Bahamas
Total number of rooms: 5,245
Employees: Approx. 1,600
Turnover: Approx. 2 billion SEK (Euro 220 M)
12 MARKET INFORMATION FROM PANDOX