Scandic said “intensified rent negotiations” had seen agreements and offers for rent reductions of around Skr500m.
The company expected that the hotel market would recover slowly with continued low demand at the beginning of 2021 and that it would probably take “several years” for revpar and occupancy to return to levels prior to the pandemic.
In November, Scandic’s average occupancy rate was approximately 20% due to weak demand in all markets. In November, Scandic’s average occupancy rate was approximately 20%, a decline compared with 36% during the third quarter and 33% in October.
Demand has been weak in all markets due to the increased spread of Covid-19 and more comprehensive government restrictions. The situation was particularly critical in the capitals where occupancy is less than one-third of what would be considered normal.
Scandic expected continued low activity levels in December and the average occupancy rate for the fourth quarter was expected to be about 20% to 25%.
The company said: “A number of rent negotiations are still in the early stages and given the very weak market, further rent adjustments will be necessary. It is in the interest of both Scandic and the property owners to find solutions that enable profitable hotel operations.
“During the period January to September 2020, rental costs accounted for 41.6% of net sales and excluding state aid, the share of rent was as high as 47%. For many hotels, rent costs currently exceed the hotels’ turnover, which is not sustainable.
“Given the current market situation, it is unlikely that Scandic will sign any new leases or that existing leases will be extended unless the terms are adapted to lower levels of activity.”