Chief Executive Officer, Pandox
Fastighetsbolaget Pandox på förvärvsjakt
Hotellfastighetsbolaget Pandox redovisade ett något högre resultat och driftnetto än förväntat under årets andra kvartal och aktien stiger något. Pandox vd Liia Nõu kommenterar i en intervju med EFN att bolaget nu öppnar upp för att göra förvärv på flera olika marknader.
Reporter: Anna Stjernquist
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About Liia Nõu
Liia Nõu, CEO of Pandox, commented on the company’s second-quarter 2024 results in an interview with EFN, noting a 6% like-for-like increase in revenue and a 10% rise in cash earnings compared to the same period the previous year. She attributed the strong performance to a robust hotel market driven by leisure travel, stable business travel, and a full event calendar, citing specific impacts such as a Taylor Swift concert in Stockholm that contributed to a 15% revenue increase in May and the UEFA European Football Championship in Germany that boosted June revenues by over 19%. Nõu stated that Pandox is now open to acquisitions across multiple markets, with particular interest in the UK, Ireland, and the Nordics, and that the financing market has become more willing to support new projects. In a 2021 Hotel Market Day presentation, Nõu said that “the intrinsic value of Pandox has never been higher” and that the company’s business model “performs in good days and it protects in bad times.” She also remarked that the company expects “evolution rather than revolution” in the hotel sector.
Transcript (36 segments)
R
Reporter0:13
Hotel property company Pandox reports a net profit of 1 billion kronor for the second quarter. That is an increase of just over 160% and slightly better than expected. Revenues of just over 1.8 billion kronor were also slightly better than estimates.
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Interviewer0:30
Welcome, Liia Nõu, CEO of Pandox.
L
Liia Nõu0:30
Thank you very much.
I
Interviewer0:35
You increased profits significantly in the quarter. How do you summarize the quarter?
L
Liia Nõu0:41
If we compare with the corresponding quarter last year, we increase revenues and turnover by just over 6% like-for-like and cash earnings by 10%. But we had a great quarter. A strong quarter. Partly we have an Easter effect. We talked earlier about an Easter effect in March, since Easter falls a bit differently from the previous year. Above all, we have an extremely strong hotel market with active leisure travel. Stable business travel and a very full event calendar.
I
Interviewer1:13
I can imagine that. We have the Olympics in Paris and the European Football Championship in Germany.
Does that boost your revenues?
L
Liia Nõu1:19
It boosts a lot.
We had Taylor Swift in May. Just that effect meant Stockholm reported 15% higher revenues in May. Looking at the European Championship, which is a strong contributor in Germany, revenues increased by just over 19% in June alone. Not all of it is due to the European Championship, but maybe 75%. It's a big effect.
I
Interviewer1:47
They say that RevPAR is an important figure for you. Can you tell us? What does it look like and what does it mean?
L
Liia Nõu1:53
'Revenue per available room', that is occupancy times price. There are two drivers in our pricing or our operators' pricing. It's what price you get and how many rooms are sold. There is an optimal balance. In our portfolio, RevPAR is just over 1,000 kronor. It has increased steadily since the pandemic. We previously compared ourselves to 2019. Now we are basically back to the levels we were at in 2019, not entirely in all markets, but basically. Underlying, you could say occupancy generally is around 95% of what it was before the pandemic. While prices are at 120-130% above what prices were before. Obviously driven by inflation, but nevertheless. People are willing to pay. Yes, and they prioritize experiences and travel over material things.
I
Interviewer2:59
How will it look now and how will you navigate pricing now that inflation may come down to 1% by the end of the year according to some forecasts?
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Liia Nõu3:08
It's up to our operators. We own the properties and lease them under revenue-based agreements. They are Scandic, Strawberry, Fattal Group, and so on. There is dynamic pricing all the time. That inflationary pressure is decreasing a bit is good for customers because then there is an even greater willingness to stay at hotels. Even though we have seen that there has been great demand all the time. That the inflation rate is decreasing might mean that the pace of price increases slows down. It has been extreme, but it will probably be maintained.
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Interviewer3:53
You also write in the CEO letter that lower interest rates are expected to give better risk appetite among lenders. How are you experiencing that?
L
Liia Nõu4:03
Partly through a refinancing opportunity, but above all for new acquisitions. The banks have been quite restrictive during this time. They have wanted to finance what they have had before, but above all they are willing to go into new projects, which enables new acquisitions for the market.
I
Interviewer4:24
Exciting. Which ones would you be interested in?
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Liia Nõu4:27
We are in eleven countries and are still relatively small in all these countries. We look asset per asset, but the most liquid markets are the UK, Ireland, and we would very much like to be in the Nordics. It has been a bit expensive. Germany, yes. They are a bit slow out of the starting blocks. If we go back to the quarter that has passed.
I
Interviewer4:52
How has demand looked in different markets so far?
You touched on that a bit.
L
Liia Nõu4:56
Do you mean during the second quarter?
Demand has been crazy good in Germany, given the European Championship.
In April and May it was relatively... Now maybe you were wondering about the acquisitions.
I
Interviewer5:11
I was thinking about customer activities.
L
Liia Nõu5:17
In April and May it was a fairly... fairly stable situation, while it picked up steam in June.
Brussels, where we are large with our own operations, has had a big increase. England, UK, and Ireland have done very well. A generally strong increase in all our countries.
I
Interviewer5:42
It has been challenging times for many companies, not least for you who have been so exposed to travel and now economic downturn. How have you navigated your operations?
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Liia Nõu5:57
We had our baptism of fire and our journey during the pandemic. From February 2020, when we were at an all-time high, to three weeks later when our hotels basically had to close. Then we clawed our way back during this journey. After 2022 we have... Even though we read in the press about the recession, we have seen that the appetite for travel has been greater than before. We have managed to navigate very well. It has been a strong underlying market. We have about fifteen relationship banks that have supported us all the way. We only have bank financing, so we haven't had to refinance anything.
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Interviewer6:50
Do you notice a different behavior now?
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Liia Nõu6:54
There was a lot of talk that business travel would decrease. What is a bit surprising... Humans are creatures of habit. They go back to what they did before. What has changed a little is that perhaps... It is actually good from an environmental perspective. Business-wise, people travel fewer times. They don't take the day trip to London, but they stay longer. They travel fewer times and stay longer. Instead of coming on Monday and going home on Wednesday, they come on Friday. They mix family with some Teams calls. So they tend to stay longer and even over weekends. That is perfect for a hotel property company, but maybe not as good for airlines. But longer stays at hotels and a mix of business and leisure travel. But also an extremely strong leisure travel. Then it's not just going on vacation, but the kids' football tournaments or concerts, or whatever it is.
I
Interviewer8:15
Finally, a bit forward-looking. Where is your focus now... the current year? What will you invest in?
L
Liia Nõu8:24
We are happy that the hotel market has come through the pandemic and that it continues to look extremely strong. We look forward to looking at new acquisitions. Partly with the help of the financing market being back in a completely different way. We look forward to developing our portfolio with a billion or so to the existing portfolio. But also look at acquisitions to create additional value for us.
I
Interviewer8:57
That is interesting, because what does the business climate look like right now in the market?
L
Liia Nõu9:03
There has been lower activity recently. During the pandemic, almost no transactions were made at all. Last year, 60% fewer were made than in 2018-2019. Now we are back in most markets, almost at the levels of 2019. There is quite a large pent-up need. We are looking at Ireland, the UK, and also the Nordics. In Germany it takes a bit longer, but we are considering all sorts of things.
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Interviewer9:03
Regarding transactions?
Thank you very much, Liia Nõu.
L
Liia Nõu9:40
Thank you for having me.