Dialogue with analysts

Question: What has the demand mix been like in 2023 compared with 2019?
“Regional and domestic travel are now at higher levels than before the pandemic, but international travel, large conferences and congresses have not yet fully recovered. Overall, the occupancy rate in 2023 was somewhat below 2019 while average room rates have developed very strongly, as a result of which RevPAR exceeded the 2019 levels.”

Question: Cash earnings decreased somewhat in 2023 despite record revenue and net operating income. How should we view developments in cash earnings going forward?
“For 2024 we anticipate some RevPAR growth in the hotel market, supported by a strong event calendar in Germany with UEFA EURO in June/July, and stable market conditions in other markets. Lower inflation and hopefully also lower interest rates should have a positive effect on household consumption, and should also be able to lessen the effects of a potentially weakened labour market and lower employment.”

Question: How do you see capital allocation over the coming year?
“We have an impressive toolbox for value creation and a clear process for capital allocation based on expected yield. The basis for this is our ongoing joint efforts with our tenants to develop
the hotel products and increase the value of the hotel properties. Portfolio optimisation, through acquisitions and divestments when this is possible, is also an important element. Together these form a basis for growth in cash earnings and create room for a dividend to shareholders in line with our financial policy.”

Question: Why do you only have bank loans?
“Given our business model – exposure to the hotel market, variable rents and some seasonal variation – bank loans secured by property have proved to be the most stable and cost-effective
financing over time. We have a geographically diversified base of banking partners and our refinancing risk is low. In 2023 we refinanced loans of just over SEK 15 billion, with lengthy terms
and stable credit margins.”

Question: What are you doing in the area of sustainability? What investments are you planning? What return might they provide?
“We have increased our focus on sustainability in recent years. During the year our science-based climate targets were approved by the SBTi and we have a clear plan for how to achieve the targets for Scope 1 and 2. This year the Board resolved to invest around MEUR 29 in phasing out the use of oil and gas, the installation of energy-efficient systems and more renewable energy in our Own Operations segment. This investment will take place over three years and the expected return is in double digits. For Scope 3, we are continuing our efforts to add green provisions to leases with hotel operators. The aim is to reduce our climate footprint while also finding a commercial agreement that is profitable for both us and our tenants.”