Pandox (PNDX) Hotel Market Day 2023 summary

Market and demand

• European RevPAR was up 25% and ADR up 30% vs 2019; occupancy still had room to recover as international travel and large meetings lagged.

• New hotel supply was running at 1%-2%, vs historical levels of 4%-5%; Q4 2023 demand was expected to remain stable, with some growth next year.

• European travel had recovered to pre-pandemic levels in 2023, with domestic travel leading and international travel still lagging; hotel demand was fully recovered vs 2019 over the prior 4-5 months.

• Forecasts pointed to positive occupancy and rate growth next year, albeit slower than exceptional 2023; downside risks included persistent inflation, high rates, slower growth and geopolitical shocks.

Business model and portfolio

• Portfolio comprised close to 160 hotels, including 139 leased properties (83%) and 20 operated hotels, across 12 countries and more than 90 destination cities; 80% of demand was local or regional.

• Turnover-based leases share revenue upside, provide minimum guaranteed levels and inflation protection, and align owner and operator incentives.

• Portfolio average yield was 6.1% against an average debt rate of 4.2%; more than 75% of debt was hedged and average lease tenor exceeded 14 years.

• LTV was close to 45%, with more than SEK 3bn cash and SEK 3.3bn in unencumbered assets; financing was bank-based.

Growth and portfolio investments

• Planned investment of approximately SEK 1bn or more annually in existing hotels, including room additions, extensions and repositioning; projects were expected to lift NOI and cash earnings in 2024-2025.

• Nürnberg reopened in September 2023 after a two-year renovation; Glasgow refurbishment was scheduled to reach market in H2 2024.

• Mayfair was signed to a turnover-based lease with Strawberry, with handover planned for H2 next year; the Brussels Citybox project was also scheduled to open in H2 2024.

• Fridhemsplan was planned to reopen in H2 next year as a Scandic Go lifestyle economy hotel after renovation.

• DoubleTree by Hilton Brussels City expansion was planned to add 150 rooms, a 600-sq-m ballroom and a rooftop garden bar and restaurant by end-2025 or January 2026.