IHG Losing Holiday Inn, Indigo & Crowne Plaza Hotels In Finland?

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Restel has been developing IHG hotels in Finland under Holiday Inn, Indigo and Crowne Plaza flags while operating more hotels under their own brands such as Cumulus.

Hotel Indigo Helsinki

Now, the Finnish Competition and Consumer Authority has approved the purchase of Restel by Scandic, which was briefly owned by Hilton in the early 2000’s but then went private before was publicly listed.

You can access Scandic here.

Scandic today issued a press release in Finnish where they talk about synergies and how they could increase turnover by bringing Restel hotels under Scandic brands.

I tried to get a clarification from the company if this meant that they would in the medium/long-term reflag the Holiday Inn, Crowne Plaza and Indigo hotels in Finland as the franchise agreements run out.

Scandic currently operates three Hilton hotels in Finland under franchise agreement. These could be leftovers from the time the group was part of Hilton.

Here’s the press release (Google translate from Finnish):

Scandic announced that it will purchase Restel’s hotel business on 21 June 2017. The Competition and Consumer Agency (SME) approved the trade on 5 December, 2017 on condition that Scandic sells one hotel in Lahti, one in Pori and one in Kuopio. In addition, the agreement included the condition that Scandic does not participate in certain hotel projects in Lappeenranta and Vantaa.

Pro forma data would have added Scandic’s net sales by EUR 203.4 million and the EBITDA would have increased by EUR 13.7 million if the acquisition was effected on January 1, 2016. The sales of the three hotels sold by 2016 were approximately 8 million and the net profit of approximately 1.7 million euros. Scandic’s estimates of the financial impact of trade were presented in a media release on 21 June 2017.

Scandic believes that in line with its earlier announcement of the expansion of its hotel casing, and the revenue growth of the margin margins over the coming years. It is possible to increase turnover by moving hotels under the Scandic brand and strengthening consumer markets in the Finnish market. In addition, costs are expected to decrease by combining administration and procurement.

Scandic estimates that the profitability of the acquired businesses, excluding the three selling hotels, will exceed the Scandinate EBITDA target of 11 per cent in the future.

Conclusion

IHG’s penetration in the Nordics outside of Finland is beyond sad. They have one Crowne Plaza hotel in Copenhagen and that’s it. If they lose all the Holiday Inn, Indigo and Crowne Plaza hotels in Finland as a result of this purchase, it would be very unfortunate.

Nordics are difficult region for international chain hotels. You have better luck with Nordic Choice, Scandic, Club Carlson (due to Rezidor) and First hotels.

Scandic could continue operate IHG hotels in Finland under franchise agreement like they operate the three Hilton hotels in Finland. Difficult to see them developing more hotels under other than Scandic brand, however. Interesting to see how this play out. It would be sad to see these hotels to leave IHG system.

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