Pandox AB (publ) (PNDXB) Earnings Call Transcript & Summary

To be honest we are sort of -- we are usually running around SEK 60 million per quarter. So that would be like a normal rate. Then of course, it depends on if we are driving big projects and also some of the holiday season, it was do effect. But I mean, the run rate is basically around SEK 60 million per quarter. So for your forecasting, I would say that, that's a good number. So around SEK 200 million on the full year.

Very good. Finally, RevPAR growth in the leased operations was 6% in Q1, 4% in Q2, quite high strong figures. Would you dare to put out your best guesses for the remainder of the year?

Well, we're, of course, also meeting strong quarters, and it's a lot -- we are in 11 countries, 19 destinations. But I think the expected increase in RevPAR when you look at the other sources is between 2% and 3% blended over our markets. That's everything from, of course, including Germany, Finland, Norway to Sweden, Denmark and Ireland, which have performed even better. So 2%, 3% as a quarter, I think, is the sort of the official forecast going forward. Then, of course, we have our hotel and there are renovation effects in the fact that we have renovated some -- so it doesn't mean that our hotels, we hopefully will do slightly better, but still 2%, 3%.

Yes. On that theme, is there anything that sort of indicates that this outperformance, if you will, is related to Q2 alone? Or should this -- it sounds like based on the based on the wording that we outperformed the markets based on renovations, et cetera, that those year-over-year effects should be able to lap also in the coming quarters?

No, there's -- of course, we do -- as I mentioned in the presentation, we have a sort of active investment portfolio. So there is a parts coming out all the time, basically, which is sort of the outcome of our investments. So we do expect to perform as good as we can in these markets. Then there are variations, but slightly more.

[Operator Instructions] The next question comes from Artem Prokopets from UBS.

I have 3. Firstly, I think you mentioned robust demand in both corporate and leisure segments. I guess, given the weakness in Brussels, how do you assess the relative performance of corporate and leisure demand? Is leisure tracking stronger than corporate.

Leisure is tracking stronger than corporate, even though corporate is sort of picking up pace. We do see that patterns are very much event-driven. And in Brussels and especially, you see that there's a lot of sort of comparable events. So it's very much conference meeting event driven. And also there's some calendar effects depending on when the corporate sort of put the bigger events. But underlying leisure is driving even though business is performing also pretty well.

Understood. Secondly, on outlook, could you please elaborate by market where you see a stronger market and where you expect to see perhaps some weakness going forward?

Well, the Nordic, we are very proud of being in the Nordic and especially Sweden and Denmark. We are -- we have been very strong in the first half in the second quarter, and we do see that going forward as well. U.K., we also see positively on Ireland as well despite a lot of new capacity coming in, in Dublin. We are actually positive also on Germany, but it's coming from a low level. It's, of course, a question mark, but it's always been slightly slower coming out from the recession, et cetera, et cetera. But we do -- we are positive on the German outlook. When it comes to Finland, which is, of course, it's sort of -- it's taken a longer time than expected. It's pretty volatile. And Norway also being an interesting market before, it's coming from -- it has been coming from higher levels. It's more stable or unchanged for the time being.

And just to follow up, what do you think about Brussels going forward?

Brussels going forward, you do see that there's a quite strong booking calendar when it comes to the summer. It's -- so it's -- I would say it's more stable.

Okay. And lastly, do you still expect the revenue from Dalata in 2026 at the same level as before? I think it was EUR 1,130 million.

It's in line with that. That's, of course, with the sort of the currency effects, but we are in line with what -- with the expectation we had at the beginning of the year and just proven again with the quarter that we had 4% increase in U.K. and 3% in Ireland. So it's well in line with our full year expectations.

There are no more phone questions at this time. So I hand the conference back to the speakers for any written questions.

Well, we have one question from Staffan Bulow from SB1 Markets. And it's have your view on RevPAR growth for 2026 changed in Q2 compared to the last quarter?

And I think we said the view hasn't really changed. It's actually been confirmed. It's stable. And it is even more stable despite the fact that there is the geopolitical uncertainty continues, but people tend to -- it tends unfortunately to be a normalized state with more and more uncertainty and people do travel still.

Those were the questions, written ones. So now we turn over to the market presentations, and we will start with Aoife Roche from STR.

Good morning. Thank you very much. So I'm going to provide a high-level or macro overview of European performance, diving into some country-level performance, too. So thank you for your time. So first off, globally, demand has grown by 1.3% year-to-date, which is slightly down on last year. This growth has been softening month-on-month with most of the growth in the APAC region. May was a leisure-dominated month, of course. So Germany did lose its top 5 position. It was replaced by Spain after an excellent performance in Spain during the month of May. So year-to-date, demand growth for Europe is showing just 0.1%, like I said, softening a little in May itself. However, U.K. picked back up with demand growing by 0.8% year-to-date. With demand softening, it is abated somewhat by softer growth in supply. Supply growth has been sitting below the 2% mark through 2025 and 2026, and that actually dropped to 1% growth in May. So this results in positive occupancy growth for most regions with, of course, the exception of the Middle East, which is down 19% on the prior year. So if we look to the Middle East because it does give some context for future European performance. In April, RevPAR was down by 64% on prior year, whereas May has shown great resilience with just a marginal decline of 7.6%. And as you can see from this slide, ADR has actually grown year-on-year. Occupancy has been the primary issue for the GCC countries with ADR holding for the most part. And of course, luxury has taken the biggest hit understandably as international demand was negative. So in terms of luxury, RevPAR is down by 25%. Most of that is occupancy driven with ADR only declining by 1.3%. On the flip side, the economy class has the least impacted with an 18% lift in RevPAR. And again, this is due to a strong domestic demand. So this is where the turning point has been, where domestic demand has grown across all classes, but in particular, the economy and mid-scale segments. So looking forward to the Middle East, we do expect those declines to continue through 2026. But going into 2027, that positivity returned. And like I said, we're already starting to see some of that. So with occupancy gains for most of the world, ADR does have a platform to expand, albeit, as you can see, very muted growth for most regions with Europe growing by 3%. In Europe itself, we have seen RevPAR grow in 6 out of 10 submarkets that we report on. So we do report on 550 submarkets across the region. So 60% of those have seen positive growth. And as you have seen and will see in future slides that most of that is due to ADR growth. So despite that softer demand, the -- it is still outstrip supply growth overall in Europe, which has resulted in positive gains. As you can see, every month up until the month of May, occupancy has grown and rate has grown substantially. May we felt that impact of a very soft demand growth, I mentioned earlier, 0.1% growth in demand. And this, as you can see, is quickly reflected in the occupancy change. So year-to-date occupancy, 0.5% up for Europe and ADR growing by 1% -- 1.7% year-on-year. So going back to occupancy at a more macro level, most countries are seeing some growth, albeit limited. The need as it is a late recovery market. But it's really Sweden and Denmark that are driving that, as Liia mentioned, too. For our sample, Sweden has grown by 7% and Denmark growing by 6.5%, respectively. Growth does tend to be reserved for countries with lower occupancy levels or emerging markets, and you can see that here across the board, particularly for Nordics and Germany, which is still a recovering market. And then on the other side, you can see the U.K. with a very high occupancy, 73%, so little occupancy growth available to that region. In terms of ADR, so leisure destinations and resorts are really underpinning this performance, and they continue to benefit from international leisure demand, which supports that strong rate growth. Of course, we still have Italy right up there with a 12.4% growth on ADR due to the Olympics, but closely followed by Greece, Spain and Ireland, again, attracting that international demand. And Germany and Austria on the other side are sacrificing some rate in return for occupancy, where the Netherlands is seeing a combination of occupancy and rate declines owed primarily to the recent changes in VAT and tourism levies, which -- some of which have been passed on to the customer, but also to the property itself. The U.K., like I said, had a tough start to the year when compared to the average European performance, but a stronger May has pushed year-to-date performance to growing rather than stable, which I would have reported last month. So year-to-date occupancy up 0.2% and year-to-date ADR up 1.6%. Now regional hotels have fared far better than London itself. RevPAR is flat at 0.1% growth year-on-year. The weaker dollar is definitely impacting this for the London market, and it's particularly noticeable in the luxury class, as you can see on the left-hand side of this graph. This, of course, is compounded by reduced travel from the Middle East. And we know that the Middle East is a relatively small source market, but it can have a huge impact on luxury and premium properties, particularly in markets like London, Paris, the Côte d'Azur. Of course, we have a more value-driven consumer as well, whether that is for leisure or business, and that has influenced shoulder night occupancies, which is noticeable, particularly in the select service hotels and which may point to shorter city breaks or a reduction in city breaks from the international and domestic traveler. So London, 0.2% up on occupancy and no change on ADR overall. So going back to the regions, although they had a slower start than we initially expected, occupancy -- it has been our occupancy forecast. So our full year forecast for 2026 for the regions was 0.5%, but we reforecasted just at the end of May there, and we expect occupancy to grow by just 0.1%. So a slight reduction there. That relatively low supply growth of 1.5%, coupled with the demand growth of 1.7% is allowing for that positive yet muted occupancy growth. However, in the regions, rates are generally very good, unlike London. So it was positive up until the end of April. I'm showing here, like I said, a lower growth in supply, coupled with some markets showing a very strong performance. And those markets, I can name 3 would be Cardiff, Glasgow and Edinburgh. And you will see this in the next slide when we look at our forecast. So these are our forecasted markets for full year 2026 as at the end of May 2026. So RevPAR forecast for 2026 are low with the exception of Glasgow, which is expecting to grow RevPAR by 7.7%. Demand expanded in Glasgow by 9% in Q1. And in 2026 overall, it will grow by 4.5%, where supply is only growing by 1.4%. So that magic demand outstripping supply is what is generating that overall forecast. In addition, there are major events, major concerts and sporting events, including the Commonwealth Games, which is supporting Glasgow's booming year. Edinburgh, on the other hand, will see flat to negative occupancy growth alongside a 0.7% rate change due to significant supply changes there, too. So looking ahead, this is a slide from Tourism Economics, our partner for our forecast. The Tourism Economics expect the Mediterranean to benefit from displacement caused by the conflict. So that is why I presented the Middle East numbers. And this is based on their experience and data from prior destination substitution during similar conflicts. And we are seeing that in business on the books already. But it is certainly a tale of 2 halves in 2026, yet again, not so different to 2025. On the left-hand side, Milan tops the charts with the Olympics driving that strong growth in the first quarter. I mentioned Glasgow, which is a story of demand outweighing supply growth, which is driving those occupancy gains and subsequent rate gains. In the middle, you've got Dublin, which posted a fantastic first half of the year, continuing to attract strong international demand and of course, underpinned by domestic strength. The market success will be somewhat diluted in September due to the non-repeat NFL games, but overall, there is a positive sentiment for Dublin. And at the bottom of the pile, I mentioned Amsterdam with taxes rising to 21% from 9%. It does mean that many hotels are absorbing this fact on behalf of the consumer. So overall, for Europe, Q3 will see a positive return with potential demand substitution for Europe, leisure demand for the most part. Despite the strong start to the year, however, in occupancy and ADR terms, we have a Q4 forecast that is a little bit softer due to the economic volatility, the unknowns and of course, that consumer caution that we are seeing filtered through the numbers. So overall, I would say that demand momentum is decelerating, not necessarily declining. So demand remains positive with consumer sentiment driving shorter booking windows and uneven performance, as you have seen in previous slides. Supply discipline is sustaining occupancy, while ADR, particularly in luxury and Southern European leisure markets is carrying much of the growth. Occupancy gains were front-loaded in H1. So we do remain cautiously optimistic for the remainder of the year, but we do expect a slightly softer, more demand-sensitive second half to the year. Thank you very much, and I will pass back to the team there.

Thank you, Aoife. Henrik, the floor is yours, as you say in Swedish.

Thank you very much, and good morning. My name is Henrik. And at Benchmarking Alliance, we provide benchmarking for hotels and other companies in the hospitality industry. We focus at the moment in the Nordics and the Baltics. And over the next few minutes, I will walk you through the latest market data from that region. So let's start with the big picture, how the first 2 quarters of 2026 have played out. And all the data that I will show now include June numbers as well. So it's full Q2 year-to-date numbers. So looking at the country-wide averages, the positive trend from Q1 carries straight into Q2 2026. The RevPAR increasing across nearly every country in the region. The blue boxes show Q2 year-to-date RevPAR development versus last year and the orange boxes show Q1. Finland stands out as the exception here, one of the exceptions where growth has been slower mainly due to weaker demand in Helsinki. Meanwhile, the recovery story in the Baltics continues. After years of lost Russian demand and the broader impact of the war in Ukraine, travelers are generally returning to the region. And then keep an eye on Iceland as well. After many consecutive years of growth, year-to-date shows a drop in both rates and occupancy. So a notable shift in the trend. So what's behind these movements? Let's look at the capitals. In Helsinki, it comes down to fewer congresses compared to May and June last year. Oslo's RevPAR growth in the first half of 2026 is notably more modest. But remember, 2025 was an exceptionally strong year, driven by major events like the Nor-Shipping Conference, which is simply difficult to replace. Stockholm is a different story. The ECCO Congress in February, the EHA Congress now in June and generally stronger demand in May and June are all lifting the city's year-to-date RevPAR. And in Copenhagen, underlying demand has been high for years. In Q1, several major medical congresses shaped both demand and pricing. Q2 was somewhat slower, but the year-to-date development still looks very healthy. Now let's zoom in on the capitals a little bit and see the development in demand and rates. The RevPAR increase of around 10% in both Stockholm and Copenhagen, as you can see, is evenly balanced between demand and rates. Even though slightly higher supply in both cities eats a little into the occupancy gains, it still looks really good in both Stockholm and Copenhagen. In Helsinki, the lost Congress demand appears to have been replaced in volume, but at a much lower rate, which drags RevPAR down. Reykjavik, the decline in Reykjavik shows up in both occupancy and rates. In Tallinn, new rooms entering the market have been absorbed well with only small deviations in rates versus last year. And in Riga, new supply doesn't seem to be holding rates back at all. They're up more than 5%. And then looking at TRevPAR as well, total revenue per available room. If we broaden the lens a little bit here and look at Stockholm and Copenhagen, they follow the same trend as RevPAR. In Oslo, that's more interesting. Other revenue sources have compensated so that TRevPAR is actually increasing even though RevPAR isn't. We see the same kind of compensation in Helsinki and Reykjavik, although both are still down versus last year. Tallinn and Riga sits slightly above last year. The takeaway here is that it's worth looking beyond the rooms department. Total revenue, including food and beverage, meeting and events and other outlets doesn't always move in step with rooms performance, and that's exactly why we captured this data as well to give you the full picture of the hotel performance. So let's now go one level deeper and look at how the different segments are performing. Starting with Stockholm, new supply in the luxury segment is being absorbed well and rates continue to climb at the same time. In fact, the growth in Stockholm can be seen across all segments, though rates are rising a bit faster in mid-scale and budget segments. Copenhagen, the luxury segment has slowed down somewhat, but across the board, both occupancy and rates are up in every segment, with upscale and mid-scale showing the strongest growth. Moving on to Oslo. The luxury segment has seen stronger demand and higher occupancy, but rates are holding at last year's level. Upscale saw less demand in Q1 compared to last year, while mid-scale is up across the board. Budget hotels in Oslo, however, are struggling to keep their rates up. Helsinki segments, the lost congress demand is mainly hitting rates in the upscale and mid-scale segment. Luxury is the only segment showing a RevPAR increase actually. And notably, its rates have remained stable versus last year. Moving on to weekday/weekend patterns for our Scandinavian capitals. We see that weekends are growing in all Scandinavian capitals. Weekdays are also up in Stockholm and Copenhagen. But in Oslo, the business travel that Nor-Shipping brought last year has hardly been replaced. So let's -- in the last slide here, let's look at the future and the one book situation in the different capitals. In Stockholm, the EHA Hematology Congress in June was already on the books at this time last year. On the positive side, Bad Bunny had 2 concerts here in Strawberry Arena in Stockholm last weekend on July 10 and 11, followed by the weekend in August. Beyond that, no major events are driving hotel demand in 2026. But looking further ahead, we have an ESCMID Congress in April, and it's already visible here in the booking data. In Copenhagen, summer bookings are more or less in line with last year, but then things pick up. The World Athletic Road Running Championships in September, we can see in the numbers and then also the IBA Annual Conference in October and already stronger bookings over the winter months add up to the on-the-book demand that is actually 10% ahead of last year. Looking at Oslo, faces a tougher comparison. At this time last year, the Ed Sheeran concert and the European Handball Championships in January were already on the books, which has been somewhat difficult to replace. And this year, there is nothing of that scale actually on the books. As a result, bookings for the next 365 days are down 3.6% compared to last year. Last but not least, Helsinki. The data shows a strong summer and a solid rest of 2026. And looking further out, we also have a CYTO Congress in June next year that we can already see in the numbers. That concludes my presentation for today. If you have any questions about hotel market data in general in the Nordics, feel free to reach out. Thank you very much.

Thank you, Aoife and Henrik, for your hotel market updates. And thank you all for participating in this call. We really appreciate your time and interest in Pandox. And our interim report for January-September 2026 will be published on the 22nd of October. Finally, we would like to wish you the best of summers, enjoy it and idly in our hotels. So safe travels and goodbye.