​Large turnover decline for Nordic Choice Hotels in 2020

The figures for 2020 show that the company has had its turnover reduced by 5.1 billion NOK in 2020 compared with 2019.

Nordic Choice Hotels has experienced a sharp drop in turnover throughout the Nordic region after the countries introduced strict restrictions on hotels and tourism in March. EBITDA in 2020 ended at -1,028 million NOK, compared with 1,041 million NOK in 2019. These figures are after the support from the Nordic Business Compensation Schemes have been taken into account. The result before tax (EBT) in 2020 was -1,931 million NOK, compared with 417 million NOK in 2019. The result also includes January and February 2020, which were good months for the company in terms of turnover.

– In January and February of 2020, we delivered record-breaking results in Norway, Sweden, Denmark, and Finland. We also entered 2020 with 30 hotel projects in the pipeline and a plan to employ 45,000 people over the next five years within the company, says CEO Torgeir Silseth.

The lockdowns have hit all parts of the business hard. Restrictions have been set on conferences, traveling both domestically and abroad, on dining and alcohol, on spas and gyms, and the company has had to close down much of its business due to the absence of guests.

– For example, we have occasionally only had three open hotels in Oslo, compared to the 16 normally open. Some of our hotels have had to remain closed throughout the corona pandemic, even though we have done what we can to secure market share through promotions and good offers for our guests, says Silseth.

The change in hotel turnover from 2019 to 2020 is distributed as follows by country:

Norway: -40.9% (-50.7% if you look at the period March-December)
Sweden: -55.5 (-65.1% if you look at the period March-December)
Denmark: -61.5% (-70.5% if you look at the period March-December)
Finland: - 66.5% (only Q4 19 over Q4 2020)

The CEO says that the losses have had major consequences for the company:

– We have had to lay-off and temporarily lay-off almost 8,000 people in the Nordic region, and we have lost a large part of our specialized expertise that has been built up over several years. Those who are still laid-off are the ones we need when we return to normal again, he says.

The Nordic countries have had different business compensation schemes for companies that are affected by the restrictions. In Norway, the company received about 300 million in compensation in 2020, which constitutes about 13% of operating costs at our hotels in Norway. The other losses are covered by loans and savings.

– The compensation from the authorities has been important to us. We would have never managed to save so many jobs and such large parts of the company were it not for the compensation packages and the fact that we entered the crisis with a healthy economy and liquidity, says Silseth.

The losses for the company have continued into 2021 and contribute to a very weak first quarter. How the rest of the year will be depends on which restrictions the industry is subject to, but Nordic Choice expects a gradual improvement after Easter and a summer season with a lot of national traffic. The autumn of 2021 is expected to be significantly better than the autumn of 2020.

The 2020 figures are not to be considered final until they are adopted in June 2021.