Scandic said that it was planning for a gradual recovery in occupancy during the second half of the year.
Scandic estimated that it would have additional financing needs totalling SKr1bn (€133m) to SKr1.5bn during 2020.
The company said that, since the coronavirus began to spread, occupancy at the group’s hotels had fallen significantly and was 10% to 15% last week.
Scandic said that it had already reduced its staff by more than 7,000, both in hotel operations and support functions. As part of these measures, a number of hotels would also be closed temporarily, including 60 hotels in Norway.
Jens Mathiesen, president & CEO, Scandic Hotels Group, said: “It’s obviously painful to be forced to lay off or terminate team members’ employment, but this has been absolutely necessary given the current situation and we’re working very hard to lower costs and protect cash flow.
“The most substantial reductions are done in Norway, Finland and Denmark while the effect of cost reductions in Sweden is limited by more restrictive labour law regulations regarding layoffs. It is necessary for the Swedish government to introduce additional supportive measures to mitigate the damage that is currently being done to the Swedish hotel industry in the wake of the coronavirus crisis.”
The Scandic hotels that remain open would, the company said, continue to offer good service for guests with more rigorous cleaning and hygiene procedures in place and a more limited offering of food and beverage services than normal.
With these measures in place, Scandic estimated that the company’s costs, excluding rents, will be reduced by more than 60% from April.
The company has also reduced investments and ongoing projects and tax payments have been deferred in line with tax deferral programmes in Scandic’s markets. Scandic has agreed with most of its property owners a temporary rent payment solution that is adapted to the current market situation. In addition, for a certain period, Scandic has also decided not to collect franchise fees from franchisees.
Scandic has credit facilities of SKr5.5bn that extend to 30 June 2022 and available liquidity currently amounts to approximately SK1.3bn. Assuming that occupancy continues to be very low during the second quarter, Scandic estimated that it would have additional financing needs totalling SKr1bn to SKr1.5bn during 2020, most of which related to the payment of deferred rents, taxes and fees at the end of the year.
Scandic expected to have a financing solution in place during the second quarter 2020 for this scenario.