Scandic Hotels Group AB (publ) (SHOT) Earnings Call Transcript & Summary

Welcome to the Scandic Hotels Group QT 2025 presentation. [Operator Instructions] Now I will hand the conference over to the speakers, CEO, Jens Mathiesen and CFO, Par Christiansen. Please go ahead.

Thank you very much, operator, and good morning, everyone, and thank you for joining us this morning. As said by the speaker, my name is Jens Mathiesen, I'm the CEO of Scandic. And together with me, I have our CFO, Par Christiansen. Please turn to Page 2. We have, as you know, a packed agenda today, and we will start by presenting the second quarter and then after that, we will turn to the exciting news we announced earlier today that we are pursuing the opportunity to acquire the hotel operations of Dalata Hotel Group. So let's jump into the second quarter, and please turn to Page 4. All in all, we delivered a very good quarter with organic growth and strong cash flow. Net sales amounted to SEK 5.8 billion, corresponding to organic growth of 2% when excluding negative currency effects. We delivered a solid result, although lower compared to the same quarter last year. And this was mainly due to the calendar effects with Easter coming late also currency headwinds and one-off items that had a positive impact on the results in Q2 last year. I also want to highlight that we delivered a strong cash flow in the quarter, significantly improved compared to last year, which we will come back to. Overall, the market development was positive in the quarter. although demand was temporary impacted in April due to the late timing of Easter. We also then saw a good rebound in May and in June, supported by continued strength in leisure travel and also a healthy event calendar across our markets. Norway delivered a strong quarter with organic growth of over 6% and solid results. Sweden's performance was stable with a good recovery following a weak April and the situation in Finland remained challenging, but occupancy is improving, and we believe we are well positioned when the market turns. Denmark shows and showed also solid numbers and Germany remained stable, although facing tough comparables due to last summer's football World Cup. During the quarter, we signed agreements for 3 new hotels. We also opened our 6 Signature hotel. And after the end of the quarter, we signed an agreement for a new hotel in Hamburg. So another important milestone was the launch of our new website, which will further enhance the customer experience and strengthen the guest relationships and drive sales. Looking ahead to the third quarter, bookings are strong and even better than at the same time last year, which is, of course, very pleasing. So please turn to Page 5. Results are on solid levels in the quarter with an adjusted EBITDA amounting to SEK 723 million compared to SEK 841 million last year. This corresponds to a margin of 12.5%. That said, the low result compared to the same period last year was mainly due to calendar effects with Easter falling in April as well as currency headwinds and one-off items. Currency effects had a negative impact of around SEK 22 million on the result. In addition, there was no one-off items this quarter compared to positive one-off items of SEK 31 million in the same quarter last year. We maintained high efficiency and strong cost control throughout the quarter. And apart from the weak development in April, I'm pleased with the overall performance. We performed well and delivered good results in both May and June. Please turn to Page 6. Here, you can see the market occupancy rates for the second quarter this year compared to the same period last year across the Nordic countries. The Easter effect was clearly visible in April with low occupancy across all markets compared to the same month last year. Demand was temporarily impacted primarily affecting business travel around the holidays but we also saw a shift in the leisure segment with more guests choosing to travel later, particularly in May and in June. In May we saw a good recovery following the weak end to April, that said, the growth rate in Sweden was soft, partly due to the tough comparable figures from last year, when major events such as the Taylor Swift, as you remember, concerts in Stockholm and also Eurovision song concert that was held in Malmo. June showed a strong performance with high occupancy levels and continued price growth, leisure travel remained robust, and the event calendar across our markets continued and contributed positively. Scandic's occupancy rate was 65.9%, slightly above the average market occupancy of 65.7%. Please turn to Page 7. This is market data showing average room rates for Sweden, Norway, Finland and Denmark indexed to the corresponding month in 2019. At fixed currency rates, the market average room rate continued to develop positively during the quarter, showing a year-on-year increase of 1.7%. Scandic's average room rate declined slightly compared to last year. And when adjusted for currency effects, the development was more or less flat. This was mainly due to the continued weak price development in Finland with the impact, particularly the evident in Vantaa area where increased capacity compared to last year has put some pressure on rates. Price development was also affected by the already mentioned tough comparables in Sweden in May last year, especially in Stockholm where major events contributed to very strong price levels. Please turn to Page 8. Here, you can see the market RevPAR development indexed to the corresponding month in 2019. At fixed currency rates, the market RevPAR in the quarter grew by 4% year-on-year. Scandic RevPAR increased by 1% compared to last year and at fixed currency rates by 3.2%. So all in all, the market development was positive. Please turn to Page 9. Here, you can see the pipeline. We are maintaining a high pace in the development of our portfolio. During the quarter, we signed agreements for 3 new hotels with around 500 rooms. And after the end of the quarter, an additional hotel in Hamburg with 430 rooms. By the end of the quarter, we had 2,730 rooms in the net pipeline, corresponding to roughly 5% of our portfolio. Please turn to Page 10. A bit more on the latest hotel signings. In Sweden, we signed 2 new hotels, a centrally located Scandic Hotel with 236 rooms in Uppsala, and a new resort hotel in the popular ski destination of Sälen, offering 120 rooms and also 16 apartments. In Finland, Scandic Go continued to grow at a good pace, we have signed a new Scandic Go in Turku with 138 rooms and further expanding our presence in the Finnish market and within the economy segment, which we believe is good. Finally, also in Germany, we signed a large project in Hamburg. The new hotel will have 430 rooms and represent another step in growing our footprint in Germany. Please turn to Page 11. In June, we opened our sixth Signature hotel what we call the Dock by Scandic, it's located in the heart of Tromsø in Norway with 305 rooms, the hotel nearly doubles our room capacity in the city and further strengthen Scandic's position in Northern Norway, a region with growing tourism and increasing demand, so a very positive opening for us. With that, I'd like to hand it over to Par, our CFO. Please turn to Page 12.

Thank you, Jens, and good morning. Please turn to Page 13. We saw a solid performance in the quarter, especially strong in Norway, RevPAR improved by 0.9% and driven by an increased occupancy that was somewhat balanced by a lower average room rate. We had an organic growth of 2% in the quarter, and we reported an adjusted EBITDA of SEK 723 million with a margin of 12.5%. High efficiency and cost control in the quarter we used much fewer hours in the hotel operations. We saw a negative Easter effect in April, and we also saw a slower pickup end of April, mainly for the business-to-business segment affecting the April month. We had negative currency effect of top line of SEK 193 million and on EBITDA of SEK 22 million. One-offs was SEK 31 million last year and 0 this year. In total, adjusted for these 3 areas, we think it's a good result in line with last year. Please turn to next page. We had a very strong cash flow development in the quarter. Operational cash flow amounted to SEK 2.3 billion last 12 months, more rooms sold with advanced payments, rent payments stabilized and decrease in trade receivables was the main contributors. Very strong free cash flow in the quarter of SEK 710 million versus SEK 463 million last year, investments in line with the plan. Please turn to next page. We have a very robust financial position. Net debt of SEK 660 million versus SEK 1.658 billion last year, leverage at 0.3x, an improvement since last year. And now I hand back to you, Jens.

Thank you very much, Par. So with that said about the quarter, of course, we will come back to outlook later on for the third quarter, but now it's time to shift focus a bit to the potential acquisition that we announced this morning, where I will go through the acquisition and provide some background, key information and also the rationale for this potential transaction. So please turn to Page 17. I want to start by highlighting and repeat that Scandic has a very clear 2030 strategy to strengthen the leading position in the Nordics, while selectively growing our business in Germany. Our financial targets focus on profitable growth, a balanced risk profile and shareholder returns. In addition, we allocate capital in a disciplined way to drive growth ensure financial stability and returns via dividends and buybacks. This gives us a strong foundation for long-term value creation. At the same time, we are always open to business opportunities that we believe can create even more value at the right terms. And this is exactly why we want to acquire the hotel operations of Dalata. Dalata is a strong fit for Scandic. They have a proven track record. This is a highly value-creating opportunity to add a growth platform in new and attractive markets. We have agreed on a purchase price of EUR 500 million on a cash and debt-free basis. That represents an attractive valuation that are below Scandic's current valuation. And we have a strong financial position to swap this deal at balanced leverage. Following the announcement of this transaction, the previously communicated share buyback program will not proceed at this time. However, the Board continues to view buyback as an efficient and effective tool for optimizing capital allocation for the future. But at the same time, I can also confirm that we are committed to our existing 2030 strategy as well as our financial targets and our dividend policy. Please turn to Page 18. Some comments on the acquisition structure. We know it's a busy slide here, but try to go through it a bit. Today, Pandox and Eiendomsspar have jointly announced a public cash offer to acquire all shares in Dalata. Subject to the successful completion of the offer, Scandic has signed a framework agreement with an intention to acquire Dalata's Hotel operations from Pandox and Eiendomsspar. The offer has been recommended by the Board and management of Dalata this morning as well. This deal would include the operation of 56 hotels and around 12,000 rooms with a pipeline of around 1,900 rooms. Of the 56 hotels, 31 hotels will be operated under new lease agreements with Pandox and Eiendomsspar. 3 will be operated under existing management agreement, while the remaining will continue to be operated under existing lease agreements with other third-party landlords. Dalata is a high-performing and successful operator, and we complete the -- and if, of course, we complete this acquisition, I should say, then the operations will continue as is -- so this is not a turnaround case. It's a very, very good company. Dalata's shareholders will vote on the offer at a shareholder meeting expected to take place during the autumn of this year, if at least 75% of the shareholders, they vote in favor, then the offer will be approved. The offer is also subject to regulatory approvals and other customary terms. After Pandox and Eiendomsspar have acquired Dalata reorganization period will begin, which we estimate may take around 12 months. The purpose of the reorganization is to separate Dalata's real estate assets from the operating business. During the reorganization, Scandic will operate Dalata's wholesale operations in accordance with an interim management agreement. Scandic will receive a quarterly management fee during the reorganization period calculated on the revenue of Dalata's operating business. Once the reorganization is complete, Scandic intends to acquire Dalata's wholesale operations, it is at this point that Scandic will pay the purchase price. This transaction will be fully financed and with available cash and debt. Please turn to Page 19. This transaction is an opportunity for us to add a growth platform in a new and very attractive market. Dalata is a strong match for Scandic. They have shown good performance over time, financially and operational and their business model and their culture aligns well with ours. An acquisition would give us a leading position in Ireland from day 1 and also an established position in U.K. that forms a strong platform for future growth. These are 2 markets with attractive fundamentals, furthermore we expect this transaction to create even more value for our guest, our team members and also for our shareholders. Please turn to Page 20. And now a bit more detail on Dalata as a company. Dalata holds a leading position in Ireland. They have an established position in the U.K. and mainly operates under 2 strong brands, Clayton and Maldron. They also run 4 boutique hotels in Dublin on the independent brands, the Gibson Hotel, the Samuel Hotel in Dublin, Hotel 7 and the Belvedere Hotel. They have a strong culture focused on the guests, team members and on sustainability. As I said earlier, Dalata operates 56 hotels and around 12,000 rooms. Of these hotels, 31 properties are owned, 22 are leased and 3 are under management agreements. On top of that, Dalata has a pipeline of around 1,900 mainly focused on further growth in Ireland and in U.K. If the transaction is completed, Scandic will go from operating around 260 hotels today ourselves to around 320 hotels with approximately 70,000 rooms and a pipeline of around 4,600 rooms. The portfolio is young. It's well invested with limited maintenance needs more or less in line with Scandic of around 4% of net sales annually. Please turn to Page 21. Dalata has demonstrated a proven track record of growth, having grown revenues by nearly 9% per year since 2019 with good margins. They are a highly efficient operator with a good profitability profile, which is in line with Scandic's profitability on adjusted EBITDA level. For the full year 2024, Dalata reported a revenue of EUR 652 million, with an operating profit of EUR 158 million. They have also consistently increased there average room rates over time with occupancy levels around 80% and good RevPAR growth. Altogether, it is a well-run company with a proven track record and also of growth, and profitability and with attractive hotel KPIs. So I want to highlight that this is reported figures for the entire company, and that's also figures that are not fully comparable between Dalata and Scandic since they own these properties. Please turn to Page 22. Let's take a brief look at the -- some of these market dynamics. On this slide, you see the market data for occupancy, average room rates and RevPAR across Dalata's largest key countries and cities as well as for the Nordics. As you can see, the KPIs in Dalata's largest markets are clearly trading at higher levels compared to the Nordics, which are highlighted here in red. Looking at demand in Ireland and U.K. and in the key cities like Dublin and London, the market is more or less back at pre-pandemic levels. Ireland continued to show strong long-term potential, supported by a resilient tourism demand. And meanwhile, the overall wholesale market in the U.K. remains solid with healthy occupancy and room rates. All in all, this would allow us to tap into structurally attractive markets with stronger fundamentals than the Nordics. Please turn to Page 23, we are confident that this will strengthen Scandic long term and that this will be value creating for our guests, team members and shareholders. We expect the positive impact on earnings per share from completion and over time, we also see potential for synergies that will provide additional upside potential. We consider the purchase price to be attractive and expect the acquisition multiple in terms of enterprise value to adjusted EBITDA to be at a discount to Scandic's valuation. Following completion, we expect leverage to temporarily exceed our current target, but it is not expected to go above 2x EBITDA on a full year basis. Lastly, Scandic will continue to deliver according to the existing strategy and financial targets that we presented at the Capital Market Day earlier this year. Please turn to Page 24, the public cash offer follows a specific process and time line in accordance with Irish takeover rules. Dalata's shareholders will vote on the offer at a shareholder meeting expected to take place during the autumn of this year, if at least 75% of shareholders vote in favor. The offer will be approved. And then Pandox and Eiendomsspar will acquire the entire share capital of Dalata provided that the necessary regulatory approvals and other conditions for the offer are met. Pandox and Eiendomsspar will continue to update the market regarding the offer process, and we will also do so if it becomes relevant for our part. Please turn to Page 25. To conclude today's presentation, I would like to summarize it through a couple of important takeaways. So let's move to the last Page 26. We delivered a good quarter despite the weaker market conditions in April, we show organic growth and generated strong cash flow. Results are on solid levels, but the year-over-year development is impacted by weak April driven by Easter, the currency headwinds and also as well as some one-off positively impacted the quarter last year. At the same time, we are moving at a good pace to expand our hotel portfolio. We are consistently executing on our commercial strategy. And looking ahead, the booking situation for the third quarter is strong and even better than at the same time last year. We, therefore, expect a strong quarter with slightly higher occupancy levels and room rates than last year. Scandic stands on a strong platform, which you know about, and we are well positioned for the future. The potential acquisition that we have presented today is a great opportunity to enter new and attractive markets, leverage strong local brands and strengthen our position, all with balanced leverage. Through the acquisition, we are combining 2 leading operators, 2 companies with strong cash flow generation capabilities, which also we will use to grow and invest the company onward and return value to our shareholders. With that, I would like to hand it back to the operator for the Q&A session. Thank you.

[Operator Instructions] The next question comes from Adela Dashian from Jefferies.

Good morning, gentlemen. I have a question on the potential Dalata acquisition. I think you mentioned here that the brands will remain as is. But does this potentially offer some type of opportunity for the Scandic signs to start showing in Ireland and the U.K. I guess, an entry point for you to more proactively enter that market with your own brand?

Absolutely, what we believe and have communicated this morning is also that they operate under 2 very strong brands, Clayton and Maldron and of course, they are well established in especially Ireland where they are the market leader. So we expect that to continue. This will give us opportunities also to enter with Scandic brand and Scandic Go, both mother brand of Scandic and Scandic Go in the future. And we expect that, of course, to be established in especially the U.K. market and over time, maybe also in Ireland, that they operate hotels today, as you see, both in London, in Manchester and in Liverpool, Edinburg, et cetera, lots of cities in the U.K. And we will, together with the management of Dalata, evaluate whether it makes sense for some of these hotels to continue as is with the current brands over time that some of these would make sense to rebrand to a Scandic. The Clayton -- especially Clayton brand is very similar to the Scandic brand. So these 2 are very comparable. So it's actually only a matter of commercial opportunities for us, whether we would use the 1 brand versus the others in some markets. Then of course, they have a pipeline, and it might also make sense that some of this pipeline will be Scandic. So over time, Scandic will be grown as a brand in these markets for sure.

And let's see, if the potential acquisition didn't go through, would you still be considering to expand Scandic Go into the U.K. and Ireland or other markets generally in Europe?

Absolutely.

Where you're not current active in.

Yes. No, no. But we think Scandic Go is a good opportunity for us to take like a strong position in the economy segment. as well as continue growing with our mid-market brand of Scandic. So I think you should expect both Scandic and Scandic Go to grow in all markets that we are represented in.

And then just on the regional performance here in Q2, I mean Finland continues to underperform well. We are still seeing persistent strength in Norway. Could you just elaborate on what's driving the softness in Finland, when you expect the recovery? And also in Norway, what's driving the outperformance? And how sustainable is it?

Yes. I think first of all, Norway has for quite a long time, if I start with that, shown very, very strong numbers, and they continue to perform extremely well. It's a good economy in the country and lots of activities. Also, as tourism is growing, Norway gets a larger and larger share of that. You see Northern Norway growing a lot with tourism and also Oslo coming in at a very solid level. So we definitely believe that this is not only sustainable, but there's also potential for the future. I think especially some cities like Oslo will have still potential going forward. If you look at Finland, of course, they are still impacted by the war between Russia and Ukraine and also the limitations in airline traffic over Russia, where only it's like Chinese, Air China, that can fly over and European airline companies like Finnair cannot. That has an impact. We also saw that we have positive recovery numbers in Helsinki area, which is good for us since we are the market leader in the city. That is actually positive to see. And we expect that to continue to grow, they're also driven by, I would say, increased focus on getting more and more tourists from other markets where they have a lot of focus as a country. We are negatively impacted by Vantaa area, the airport where we got another 700 rooms a year ago, and it will take some years before that market really bounced back to the levels we saw pre-pandemic, and pre -- let's say, new capacity coming into that area. So it's quite a lot in an area where we had -- we also both operate Hilton Hotel and a strong Scandic in the airport today. So I think Finland, we will see is coming back, but it is slowly the big bounce back probably, we'll wait until we have an end of the war, until then I think we should expect them to grow, but it will be on a slower pace.

And then just lastly on the CapEx plan with what you already invested now in Q2. Can you give some color on what the full year outlook is regarding that?

Yes. But we're actually up in a very high speed of investments. So actually, right now, also, we are actually renovating quite a lot of hotels even in Finland, which is also short term impacting a bit of our rooms out of order in that perspective. But all in all, we are in a good pace in renovational CapEx, and we want to expect that -- we should expect that we like closer to the 4% in this year and the coming years on renovation CapEx, and we have a long-term target to stay between 3.5% and 4%, which we maintain and focus on. But even with now adding a lot of this cash into a new acquisition, which we expect coming, then we create a lot of cash, as we just saw. We had a very positive cash flow of more than SEK 700 million in the quarter. So we also make a lot of cash flow, which is good for us to both keep a good pace of all our targets, both renovation CapEx, dividends and being able to do such an acquisition. I don't know, Par, if you want to add anything to that or it's -- otherwise you just jump in. Anything else from you, Adela?

No, that's all for me. Thank you very much. .

The next question comes from Alice Beer from ABG Sundal Collier.

Just to check, when you said Dalata's profitability profile is in line with Scandic's adjusted EBITDA levels, just to confirm, are you referring to absolute levels or margin profile?

The margin profile, yes.

Margin profile. Okay, great. And then you said Dalata will add bit of 20% to your current hotel portfolio. If the profitability is then in line with yours. What can we expect for it to add to your adjusted EBITDA long term if the acquisition goes through?

I think on a lot of this right now, [indiscernible] all the data on the company 2024, of course, we would like to wait a bit until the acquisition goes through. When it goes through, we will definitely come back to all of you with more specifics on our expectations on the combined company going forward. But we think it's a bit early to come with all these expectations for the future before the transaction is actually approved. So you have to bear with us a bit, and we will come back during the autumn once, hopefully, this deal goes through.

And just a final question on the M&A then. Are the hotels in Dalata sort of turnkey or should we expect, if it through some increased renovation CapEx due to this?

It is turnkey. So you can say that what is important for -- which we also tried to highlight here is, of course, it's 56 hotels on a total. There's like these 22 on current lease agreements with different landlords, there's 3 management agreements, and they are all like a younger portfolio, which is important to say. But then they also own the 31 properties that also will sit with Pandox and Eiendomsspar after these acquisitions. . So which means that we will then do lease agreement with Pandox and Eiendomsspar on these 31 properties where we will operate under conditions that we are well familiar to. We know about. We have been open to say that we have made agreements to operate these under revenue-based leases with a guarantee and also the demarcation lease that we are well familiar with, so that both Pandox and Eiendomsspar and we have a common interest in sharing, let's say, renovation and investments in the properties to keep them up to shape. So that's why we also maintain our targets, both for that portfolio and our own to be on a max of 4% per year.

Moving on, could you quantify how much Easter affected you?

It is a bit difficult to really quantify specifically because what we saw in April, of course, there was like we could probably calculate Easter on an estimate. But also the days just after Easter was fairly weak. Corporate travel came a bit later after Easter. So it took a bit more time before we bounced back with normal activity levels. So it definitely had an effect, which you also see on the numbers, not only with us but in all markets that April was weak, what was then positive was that once it started to bounce back, then we saw both May and June on higher levels than last year. So we are growing the business and also looking on outlook, we look into a very strong third quarter. So -- but April was weak and definitely impacted by Easter. I don't know if we could quantify it. But I'm sure that Par and Rasmus with my team, they probably have some ideas, but it is difficult to put an exact number on. So we should maybe try to look a bit between the different years and calculate it. And of course, on top of that, we mentioned the one-off effects from last year and the currency effects, which had an impact as well. So deducting that from the numbers, we are very pleased with the result underlying.

Just 1 final question then on the removal of the free breakfast. Do you expect this to have an impact on your ARR? And maybe on OpEx if this will alleviate the personnel demand for the restaurants or so, what could we expect as an effect from this?

I think it's very important for me to say that we are a bit isolated here in the Nordic with having rooms, including breakfast in all prices until now, which is a bit, let's say, different from the rest of the world, where breakfast has been excluded from prices for, I don't know, how many years. So Nordics are a bit slow in the area. But we also operate a lot of hotels today, excluding breakfast, both in Germany, Poland and our Signature hotels and our Scandic Go hotels are excluding breakfast. This impact is, of course, mainly due to giving customers flexibility to even book rooms at a lower price when excluding breakfast. This also means that we know exactly who will be eating breakfast, which is easier for us to steer than the food and the manning. And on top, of course, we become more attractive in prices that are excluding breakfast because they are lower compared on OTA, which means that we are more comparable to international chains. So that's kind of the idea. So hopefully, we could see that we then would be able to sell more room, so it could have a positive impact on occupancy, so we could drive a bit more revenue that way. But the whole intention is to create a fair, let's say, price point where you get from what you pay for and don't pay for something you really don't want to have.

The next question comes from Artem Prokopets from UBS.

I have 3, please. So first one, just to follow up on 1 of the earlier questions. I think Dalata, especially with its Clayton Hotel separates more towards upscale segment rather than midscale. How comfortable are you with that? And would you rather expect in particular in Germany and in the U.K. with Dalata or Scandic brands? Because in these countries, they are both unknown basically.

Yes, yes. That's a very good question, Artem. And I think I have to say maybe that also when you see the Scandic, which is what we believe is a mid-market, we are very maybe good quality of a mid-market operator in the Nordics. But when we enter the non-Nordic markets, also in Germany, we are a bit more upscale with Scandic in those markets. So both Scandic and Clayton, you're right, is a bit more maybe in the upper part of the mid-market or even upscale. So we would expect to continue with Clayton and Maldron, especially in Ireland, where the brands are well known. And you're right, outside Ireland, it is a bit less known brands. So we will evaluate hotel by hotel, what makes best sense whether it should be Scandic, it is more from a, I would say, commercial perspective because, of course, Scandic is less known, but everybody knows that Scandic is connected with Scandinavian and thereby also with the values of the Scandinavian market, which is a lot of quality. It's food quality, it's Scandinavian design. It is sustainability. It's less fraud, it's good controls. You know what you get, so high quality. And that is what you referred to and customers refer to when we measure that outside the Nordics. So there's a good comparable to the Scandinavian market with the Scandic brand. So of course, we will evaluate whether that makes sense. We will not jump fast to a lot of conclusions, but of course, we will test the Scandic brand in some of these key markets like London and to see Manchester, Liverpool to see how much Nordic business we can add to the current strong platform of guests. If that adds value, then we will continue that growth. If not, then we stick with the current brands. we will be careful in testing this what makes best sense and before we jump to fast conclusions. But there's a lot of opportunities going forward with the Scandic brand also in these markets.

And on the second one, so it's on this Scandic's pipeline. So given Dalata transaction, do you expect to sign any more hotels this year? And if yes, is that possible the new signings will start operating already, like the new hotels, which are not on the pipeline, but which you might find later this year, is it possible that they may start operating already in 2026 or at least 2027?

I think it depends on -- when you look at specialty Scandic Go, we have assigned some properties where we take like an office building and convert that into a hotel and that we can do in a fairly short time line of maybe 1 year, 1.5 years. But for new builds, of course, it takes longer, as you know, I would say we are looking at several. I would definitely say that we will be signing more hotels this year. So you will see more signings of more contracts this year. But it is -- we have like a clear target, which we mentioned on the Capital Market Day to add 10,000 rooms between now and 2030 that is maintained. That is like up to maybe even some 10, 12 hotels per year. And that target is maintained independently of this acquisition. So you can actually look at this acquisition to be some pie on the cake that comes on top of very solid business, which is very, very good. So yes, absolutely, we will sign more but whether they are being opened already end of next year, '26 or in '27 is yet to be seen property by property.

And the last one from me. So you have signed several traditional Scandic Hotels this year, but I think only 1 Scandic Go. Does it have anything to do with appetite for conversions? Or are there any particular reasons why there are not so many Scandic Go hotels in new signings?

Yes. But up to now, we have actually in like less than 2 years, we have built a pipeline, we have 50% approximately of our pipeline is on the Scandic Go and that we are very satisfied with. We also said that we will be continuing to have that in mind that we will grow with Scandic Go. But we also have opportunities to grow with the Scandic brand as such. So you could say sometimes we add 2 or 3 years Scandic Go in a row before we add a new Scandic and sometimes we have some Scandic Hotels now we opened a Signature collection hotel, and we signed some Scandic Hotels, even a Scandic kind of resort kind of hotel in a ski area. So it's not that we can control exactly when we sign because we work with these negotiations for a fairly long time. I'm sure that you will see us signing both potentially Scandic Go and Scandic during this year. So we will add to both the Scandic Go and the Scandic pipeline.

The next question comes from Raymond Ke from Nordea.

A couple of questions from me. I'll start on sort of you're right that lower earnings year-over-year are primarily due to calendar currency and one-off items. If you just could elaborate maybe a bit on the one-off items and how much they amounted to?

Yes. We had -- I think we had like a few last year maybe, Par, you can add to them. We had 1 hotel that we left in Denmark in [indiscernible] and by leaving that they paid us out of the existing part of the management agreement and that was amounting, I think it was SEK 23 million for that one. And then we had a few others, which I think we also signed right in the reporting of this. Otherwise, I don't know...

No, it was SEK 31 million in total, and it was, as Jens said, The Reef in Denmark. And then the other part was the refugees in Norway. So that was the total one-off last year, and this way, we had zero.

And that, I guess, explains sort of why we saw most of that in other Europe than..

Exactly.

Yes, and then sort of assuming that the acquisition goes through with Dalata, your debt will increase. Could you help us just understand if you will prioritize taking down debt in the near to medium term and maybe postpone your organic expansion plans? Or would you rather sort of take down leverage over a longer time period and just keep expanding at a fairly even rate across these couple of years until 2030.

But I think, Raymond, we -- on all that, we would like to come back once the deal is being done. You can say we are 2 very solid companies, also bear in mind that Dalata is a very strong company, delivering strong numbers themselves. So of course, once adding that, they will also create a lot of both cash, et cetera. So we expect actually that we have got opportunities to keep up our overall strategy as we have communicated on the Capital Market Day. And then add this portfolio to it. So without saying too much, we clearly want to follow that strategy that we presented on Capital Market Day, and that is still our focus. And then we had this fantastic company on top and it is really 2 great companies that we bring together. And of course, that adds a lot of opportunities and also value to all our shareholders and that's a great opportunity.

Yes, I think you should see it as that the 2030 strategy for Scandic remains with the growth target and the financial target remains at this point so.

Yes. Got it. And just 1 final one, sort of also on assuming that the acquisition goes through, you establish yourself in U.K. and Ireland. I mean, that opens up a new market for you guys. Does that change where you would rather focus your organic growth plans ahead also? Or maybe that's something you also would like to come back to at some later part?

No, it's a fair question. And I don't think we -- of course, we will come back and give you much more flavor with this. It's also clear that the portfolio of Dalata has also growth ambitions in that market today, and they have a pipeline, and we will continue to grow that part of our company going forward. But it is also from new cash that we generate from that portfolio. So you can say we can continue with our current strategy, but also adding opportunities in a new market because we become a much larger company from all angles. So this is just good news on top of good results that we already have.

The next question comes from Karl Johan Bonnevier from DNB Carnegie.

And I guess we need to welcome you back to the U.K. as you have a history back into the Scandic around here back in the day as well. Looking at the transaction, just to give -- I guess, a better feeling for exactly what to think. When you talk about adjusted EBITDA, that is your kind of definitions pre-IFRS 16 that we are looking at when we discuss that key ratio.

Yes.

Is the one that is equivalent with your 11% financial targets, so to say, for the Scandic Corporation. And when you look at Dalata, I appreciate that you're still to sign the lease agreements and all these kind of things but is there any reason, given the RevPAR structure of the markets that you now would enter with Dalata to expect that, that target should be lower for the Dalata operation than what you have for your own operation at this stage.

No, I don't think so. I think we expect it to be in line with our performance. But as you said, it's a little bit different profile, but most of that cost items have the same type of variability. Yes, we have. So it's some parts are similar, some parts are a little bit better and some parts are on the same level.

Looking at the Q2 numbers as well. When you look at what happened in other Europe, you mentioned the World Cup, is the main kind of difference when you look at that part of the operations for Q2 in other Europe.

Yes, it's linked to several, like World Cup in other Europe, which was -- other Europe for us also Denmark. So of course, in Germany, and it was the World Cup that had an impact last year, then we have these currency effects, of course, from this market, and we have the one-off items in Denmark. So the combination of all of that I think is kind of the clear difference between the other Europe and the Nordics as such, I think you all calculated exactly and estimated pretty correctly how Denmark and -- sorry, how Sweden, Norway and Finland should be for the quarter because of -- but of course, you could not get in all our currencies effects and one-off effects, but that's linked to that versus last year. but mainly in, I would say, the European World Cup -- sorry, the World Cup in Germany was, of course, in the quarter as such, whereas in Denmark, it was more the impact from April.

Excellent. And then listening to how you discussed the Q3 outlook, do you feel that you are bringing the momentum of May and June into July, August when you are looking at the booking situation?

Yes. I think it's also positive some of the explanation that also both me and Par mentioned this, of course, an extreme strong cash flow. That is also a good correlation with between the booking situation because we have a lot of bookings coming in with prepayments which is helping. And then we have this less leases. You could say we are on a balanced level. Now we don't have any lease that like we had earlier on. So -- and if you look at the quarter that we enter, it is, like we said, a lot of bookings are coming in. We expect actually this growth to be driven more on occupancy than on price. Price will probably increase a bit, but it is definitely clear that we will sell more rooms in the quarter compared to the same quarter last year.

Excellent. And looking at the second half of this year, obviously, Denmark is hosting the presidency of the EU. Do you see that having an impact on your books? Or is that an event that is not really affecting things anymore?

It's a very good question because I think it has been very difficult to get clear expectations out for which meetings are being held and when because they want also maybe security-wise to keep it very close. So it is almost announced same days and weeks as things goes by. They expect a lot of meetings and activities and then we definitely saw it have impact on Finland when they hold it, but we also saw it was less when Sweden did. And we don't expect it to be a lot because we haven't seen it a lot yet but there will definitely be some meetings in -- and whether we benefit from this or not depends on where they hold the meetings. They have an opening in Aarhus. And in Aarhus, we have 3 hotels. So we got some bookings in from that. But if it's in Copenhagen around Bella Center, then there's a lot of other capacity than Scandic around Bella Center, then we will have a lower impact from Scandic. But of course, everything that comes to a city is good for us, then we have either a direct impact, all of our business.

And I guess the data will be better than marketing the opportunity than the sweet part probably so.

Yes, yes. No, I think, as you know, that some of these things, and especially in the ministry, they would like to get a lot of focus into what they're doing on this one, so the presidency, I'm sure they have an ambition to get a lot of focus on Denmark for the 6 months. Whether that leads to a lot of business or just a lot of publicity. I don't know, we'll have to see.

Excellent. Thank you very much, and all the best and good luck and hopefully closing the Dalata transaction, it looks like an interesting opportunity for you.

[Operator Instructions] There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Yes. But then I just want to thank you all for a very good question, and I hope we clarified what you had in mind. Otherwise, as always, you can feel free to contact Par or Rasmus directly here and add that to them. So we are gladly here to help you with whatever questions you have. And then we wish you both a good day and a fantastic summer all and looking forward to speak to you again next time. Thank you very much.