Scandic Hotels Group AB (publ)

and thank you for joining us for Scandic's Q3 presentation. My name is Jens Mathisen, I'm the CEO of Scandic, and I will walk you through the quarter and all these recent announcements together with Per Kristansen, our CFO. As you have seen, we have a lot to share with you today, so let's dive in immediately on the highlights if you move to page two. All in all, we deliver a good quarter despite one and a half percent less available rooms than in the same period last year. Revenues were in line with last year's record quarter with a good result. Excluding currency effects and less available rooms on a like-like basis, we actually improved sales. The overall demand was good and our largest markets Sweden and Norway performed well. I also want to highlight that the performance in the quarter was impacted by a weak summer in Gothenburg, as well as a challenging market in Finland. We expect the market in Gothenburg to normalize with attractive events next year and next summer, but it's more uncertain when the economy in Finland will start to recover. The economy in Finland is weak and demand is further impacted by the closed border with Russia. We have optimized the operations in Finland and during this quarter, we took further steps with reorganization. This will make us well positioned once the market turns again. We continue to develop Scandic at a high pace and they have taken several important steps forward. We have recently launched our new loyalty program and announced a strategic commercial partnership with Scandinavian Airlines. Together, these initiatives are strengthening our commercial capabilities and opportunities to drive revenues and guest satisfaction. The portfolio keeps growing as well with more high quality hotels. As mentioned in the last earning course, we signed two new ScandiGo hotels in Sweden, and we now have also opened our second ScandiGo in Stockholm. The expansion in Germany continues, and we also recently signed a new hotel in Stuttgart. We have announced new financial targets for 2025 to 2027, along with initiatives for capital returns to shareholders. The last convertible bonds have been converted, and with our strong financial position, we have lowered the net debt target to below one times adjusted EBITDA. from the previous targets of between two and three times. Our targets for growth, profitability, and dividend policy are all maintained. In addition to ordinary dividends, we want to return at least 1.2 billion Swedish kronor to shareholders between 24 and 26. Scandic is in its best shape ever, and we are also well positioned to selectively invest in growth while delivering good profitability with a more balanced risk profile. At the same time, we are committed to creating strong shareholder value through capital distribution. Pierre will provide further comments on the rationale behind all our targets and capital allocation priorities. Lastly, based on our current bookings, we expect a stable fourth quarter with demand and price levels in line with last year. Please turn to page three, where you can see the quarterly adjusted EBITDA development since the first quarter of 2021. Adjusted EBITDA reached 1,077 million Swedish kroner compared with 1,173 million SEK in the same quarter last year. Excluding 1-0s, we delivered a good result of 1,092 million Swedish kronor, slightly below the result in third quarter last year. This corresponded to a margin of 17.7% compared to 18.1% last year. Lastly, I'm pleased that we continue to improve efficiency on hotel level with less working hours per sold room and that we maintain very good cost control. Please turn to page four. Here you can see the market occupancy in the third quarter of both this year and last year in the Nordic countries. Market demand was good during the summer with high occupancy levels in July and August across all the countries compared to the previous year. This was, however, impacted by the weak summer in Gothenburg, as mentioned. September remained stable in most markets, except in Finland, where occupancy dropped by four percentage points compared to the same period last year. Scandic's occupancy rate increased slightly from 71% in the third quarter last year to 71.4% in this quarter. Scandic's average occupancy levels in July and August were above the market average, but below markets in September. Please turn to page five. This is market data showing average room rates for Sweden, Norway, Finland and Denmark indexed to the corresponding month in 2019. Excluding exchange rate effects, the market average room rates continue to grow positively in the quarter with a year on year increase of around 3%. Scandic's average room rate increased by 2.5% compared with the same quarter last year. Scandic's room rate was slightly below the market average in July and August, but higher than the market in September. Please turn to page six. Here you can see the market red part development index to the corresponding month in 2019. RevPAR developed positively compared with last year, and it's above 2019 levels on most markets. Excluding exchange rate effects, the market's RevPAR in the quarter grew by around 4.5% year on year, while Scandic's RevPAR increased by approximately 3%. The somewhat lower RevPAR growth compared to the market was mainly due to lower occupancy in September. Many competitors lowered the price following the summer, especially in Finland, where we were yielding on higher prices to optimize efficiency. So all in all, we are balancing the business well and based on bookings in October and ahead, we expect a stable fourth quarter. Please turn to page seven. During the quarter, we signed agreements for a new ScandiGo in Gothenburg with 176 rooms and a new ScandiGo in Umeå with 100 rooms, both with planned openings in 2026. By the end of the quarter, we had 2,473 rooms and new rooms in the net pipeline, almost 1,000 more rooms than at the end of the third quarter last year. All in all, I'm satisfied with how we are growing the portfolio, making sure that we are at high quality hotels at good terms in attractive locations. Please turn to page 8. As mentioned, we have now opened our second ScandiGO hotel in Stockholm. The hotel offers 234 rooms and it's located in the central district of Kongsholmen, This is our first hotel in Kongsholmen, a vibrant and centrally located neighborhood in Stockholm. The property has been fully renovated in collaboration with Pandux and is certified by the Nordic Swarm eco label. We are pleased with the first few weeks since opening and are continuously fine tuning the ScandiGo concept to ensure it is optimized for the target audience. There's great interest for our new brand in the economy segment, which makes up to almost 50% of the gross pipeline. And I feel confident in our growth ambitions. Please turn to page nine. We have signed an agreement for a new hotel with 174 rooms in Stuttgart. Stuttgart is one of Germany's largest cities and will be a new destination for Scandic. We are planning to open in Q4 2025, so actually end next year. following a renovation in collaboration with AXA investment managers. The Stuttgart market has seen very steady growth due to increased tourism and demand from business travelers. And we see opportunities for further expansion in the city. Following this addition, we will operate eight hotels with a total of 2,600 rooms in Germany. Please turn to page 10. This quarter, we launched a new loyalty program, which has been completely redesigned to offer more personalized, digital and rewarding member experiences. Scandic Friends, the largest loyalty program in the Nordic hotel industry, currently has 3 million members, and our goal is to double that number by 2030. In 2023, Scandic Friends accounted for about 38% of all room nights sold, and the new program is expected to drive even more member bookings and increase overall revenue. We now have a strong platform in place to enhance the member experiences and have established a foundation to further develop the program. We also plan to introduce exciting new partnerships creating an ecosystem that we can continue to expand over time. Please turn to page 11. A great example of our partnerships is the recently announced commercial partnership with Scandinavian Airlines. By joining forces with SAS, we are creating a unique offering for more than 11 million members across two of the leading loyalty programs in the hospitality industry. Together, we will provide competitive and attractive benefits, delivering more seamless and personalized travel and hotel experiences. The first step in this partnership will be the enabling status matching between Scandic Friends and SAS Eurobonus, along with clear and easy point conversions between the two programs. These benefits will be launched in the first quarter of 2025 with more to follow later in the year. This marks the beginning of something very exciting, and it aligns perfectly with our goals of continuing to create value for Scandic Friends members through our newly enhanced program. With that, I would like to hand over to Per. Please turn to page 13.

Thank you, Jan, and good morning, everyone. We deliver a solid financial performance with revenues more or less in line with last year's record quarter and a good result. Net sales reached 6.2 billion SEK, excluding negative exchange effects of 159 million SEK. With that, we improved sales somewhat. We had around 1.5% less available rooms in the quarter compared to last year, and like for like growth was 2.6%. Adjusted EBITDA came in at 1.77 million SEK compared to 1.177 billion SEK corresponding period last year. Excluding one-offs, adjusted EBITDA was almost in the line with last year's performance with a good margin of 17.7% compared to 18.1% in the third quarter last year. The slightly lower result was mainly due to exchange rate effects and phased out rent rebates in Germany. Sweden and Norway continue to perform well with an overall healthy market situation. Sweden delivers a good quarter with net sales and margins in line with last year. However, impacted by the weak summer in Gothenburg, where also capacity has increased. Currency effect had the longest impact on Norway in this quarter. Excluding almost 100 million SEK in FX effect, we improved net sales somewhat. Like for like, Norway grew with almost 6%. The result in Norway was also impacted by one-offs related to additional cost of 15 million SEK from previous year's housing of refugees. I also want to highlight that we had positive one-offs of 11 million SEK in the same quarter last year in Norway. Excluding one-offs, Norway delivers a good result with a margin over 20%. Finland had a solid market during the summer driven by tourism, but was followed by a weak September where business is supposed to start. The market has been challenging for some time. This is no news to us. And over the past year, we have been adjusting the operations to ensure healthy margins and a strong position once the market turns. and demand comes back. During the quarter, we made further adjustments to logization, which had the impact of 18 million SEK related to the restructuring cost. All in all, Finland delivers a solid quarter. Denmark had a good quarter, however impacted by less available rooms compared to last year, as we exited three hotels to optimize the portfolio. I want to remind you that in the Q4 last year, we had one of negatively impacting the adjusted EBITDA of 18 million SEK. Please turn to page 14. The page shows operational and free cash flow per quarter on a rolling 12-month basis. Operational cash flow was 1.9 billion SEK on a rolling 12-month basis. We had increased the mismanagement and free cash flow on a rolling 12-month basis was 940 million SEK. The up-to-date maintenance investment increased to 476 million SEK compared to 251 million SEK last year. This was mainly related to ongoing renovations at hotels in Stockholm, Copenhagen and Gothenburg. With the current investment pace, we expect maintenance COPEX in relation to net sales to be around 3% for the full year. This is the lower end of our guiding of 3-4% maintenance COPEX per year. Year to date, expansion COPEX increased 159 million compared to only 25 million last year. Additionally, we also had higher COPEX for IT, which reflects the overall higher activity level with digitalization and commercial capabilities. Working capital was impacted by repayments of variable rent debts from last year of 435 million SEK. and we do not expect any more rent debts to be paid during 2024. The variable rent debts are now normalizing from the pandemic, which means that next year we won't be impacted as much by retainers as previous years. Please turn to page 15. This is the net debt to adjusted EBITDA on a rolling 12-month basis. Scandic is almost debt-free position with only 36 million SEK in net debt at the end of the quarter, resulting in a net debt to adjusted EBITDA ratio of zero. We have now also paid off the debt of 631 million related to deferred VAT payments and social contributions in Sweden following the pandemic. The original payment plan of the tax debt was scheduled to run until April 2027. Backed by our strong financial position, and as we are now launching initiatives to return capital to our shareholders, we saw it as a natural step to also repay the debt to the government. Lastly, we want just to highlight the last convertibles were converted during the quarter. Now, please turn to page 16 on our update on regional announced financial targets. Looking at page 16, the board has decided on new targets for 2025 to 2027. The targets are based on our solid balance sheet, our strong Nordic position and a well systematically growing presence in Germany. In our view, this makes us well positioned for growth selectively with good profitability and a balanced risk profile. The target for net debt in relation to adjusted EBITDA is reduced from two to three two below one. With our targets for growth, profitability and dividends are maintained and clarified. On the different ownership structures and since the IPO, our approach to debt has varied. Before the pandemic, our net debt in relation to adjusted EBITDA was around two in 2018 and 1.7 in 2019. Today, Scandic is in a significantly stronger position. we generate higher cash flow, we are almost debt-free, and we have a long-term and flexible financial framework in place. Therefore, we can confidently reduce our debt target while maintaining strong financial flexibility and selectively growing for one. And to be clear, a lot of the assignments that will be done during the 2025 to 2027 period will not create debt during this period. It will occur later. Regarding growth and margin targets, I want to highlight that we now consider these as annual baselines over a period of time, whereas previously there were ambitions on achieve as average over a period of time. In both the years leading up to and following the pandemic, Scandic has continuously delivered stable revenue growth and gradually improved margins. Despite significantly cost pressures for the last years, Scandic has continued to deliver improved and good margins. For example, adjusted for one-offs effects, we achieved a margin of 11.1% 2022 and 11.4% 2023. This demonstrates that we have become more efficient and profitable and our investments in new hotels, digitalization and commercial are expected to further support profitability over time. We believe that we have found a good balance in the mid-term targets and that they reflect a positive outlook on future, as well as we continue to achieve solid growth and good profitability at the balance risk level. At the same time, we are committed to reinstating our dividend policy. In combination with lower financing costs and share buybacks, these are activities that are positive for the EPS growth and reflect our priority to increase long-term shareholder value. Please turn to page 17. I want to give some comments on the buyback program and the proposal for extra dividends. In addition to reinstating regular dividends, our intention is to return at least 1.5 billion to shareholders between 2024 and 2026. As a first step, we launched a share buyback program of around 300 million in December this year. This program is intended to run until May 2025. The purpose of the buyback is to optimize our capital structure and thereby enhancing shareholder value. And we plan to propose to the 2025 AGM that the repurchasing shares to be canceled. The buyback program will be carried out through the existing authorization to repurchase up to 10% of Scandic shares until 2025 AGM. We will in the coming days also invite to an extraordinary general meeting to decide on additional dividends of around 550 million. The EGM along with the proposed payment will take place in December 2024. Furthermore, we plan to distribute at least another 350 million either through additional share buybacks or extra dividends. Our capital allocation decisions are always guided by what we deliver to the greatest long-term value for our shareholders at the given time. Going forward, we will therefore intend to use share buybacks and dividends as a tool for optimizing our capital structure and to create shareholder value. With that, I would like to hand back to Jens for closing remarks before we move on to the Q&A.

Thanks, Per. Some concluding remarks. For the rest of the year, we expect the wholesale market in the Nordics to remain stable. We are now entering a seasonally calmer period and based on current bookings, we anticipate a stable fourth quarter with occupancy levels and room rates in line with last year. We expect the Nordic hotel market to gradually improve over the next year with positive breath power growth driven by a better macroeconomic outlook. Overall, we delivered a very good result. and I'm pleased with the progress we are making in building a stronger Scandic. Over the past few years, we have transformed Scandic into a highly efficient operator while also enhancing our commercial capabilities. With the Oracle Hospitality Cloud now implemented, the launch of our new loyalty program and the upcoming release of new web and app We are establishing a robust commercial platform that will drive revenue and more profitable growth in the years ahead. Additionally, our strong cash flow and solid financial position enable us to invest in our portfolio and expand our pipeline. So in summary, Scandic is in the best shape ever. Please turn to page 21. Before we move on to the Q&A, I'd like to take this opportunity to announce that we will be hosting a Capital Market Day on February 19th next year at Scandic Continental in Stockholm in connection with our year-end report. Since our last CMD, we have taken Scandic to new heights and it's now time to focus on the next phase of our journey with a vision for 2030. Please mark your calendars. Formal invitations will be sent out in November. With that, I'd like to thank all of you to join this presentation and looking forward to opening the floor for the Q&A. So over to you, operator.

If you wish to ask a question, please dial pound key 5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key 5. 6 on your telephone keypad the next question comes from Jamie roller from Morgan Stanley please go ahead everyone I'm thanks for taking my questions a free please

Just starting with REVPAR in the third quarter, as you say, it was about 150 basis points sort of weaker than the market. I think a bit more than that in Sweden. Could you just elaborate a bit more on why that was? I think you talked a bit about September and Finland. And also your comment about flat REVPAR in Q4, is that constant currency or actual? So is that really like minus 2%? on a sort of headline basis, including currency. Second question on margins. It sounds like Q4 margins will be down year-on-year given the Rev Park comment, but is there any early indication on 2025 cost inflation and whether year-on-year margins might be up flat or down compared to this year? And then finally, just on the cash return, The 300 million buyback, I think there's a bit of a surprise today that that's perhaps a bit on the modest side. It only offsets about 15% of the compatible dilution. Is that something to do with tax choices with your shareholders or is that a company view on the valuation of the share price? And when do we hear about the remaining 350 million cash return and in what form could that be? Thank you.

Thank you, Jamie. All the good reflections and questions that we will elaborate a bit on here. First of all, I think for the red part, we have since long, and as you know, been building a Scandic that is better than ever in order to really capitalize on the growth opportunities going forward. We have invested quite a lot this year. I don't want to say that we see this as like a middle year between some other years, but it has been a year where we are making a lot of changes in the organization. So we have definitely had a lot of focus of that. and secure that we do not just run for the extra occupancy level at high costs. So for us, it has been to really transform the Scandic operation into a better than ever and from that position of strength, then build a stronger company. So that's kind of part of the reason. If you look at the REFPA growth in the quarter, yes, it was impacted negatively. We have a very large position in Gothenburg. We had a huge benefit of all these events and concerts last year in the summer, which was zero this year. If you look at the whole city of Gothenburg, you know, average room rate were down approximately 400 Swedish kronor in the month of July. So, of course, that had an impact also on Scandic. On the other hand, Stockholm came out much stronger and we came out of the quarter as a whole with positive results even for the whole Swedish market. And there's some challenges in Finland, but we have been aware of them quite long. So that's why we also in Finland, where the whole market and we are impacted, we actually took some decisions to even cut more costs and reorganize the organization. And for that, also build a stronger platform going forward. So we are very satisfied with that progress. When we talk about your questions into 2025 and how we expect that going forward, I think when you look at the REFPA expectations, we see a very stable economy situation with lower inflation all over. That also means lower pressure on cost increases. And for that reason, we see that now we can benefit from all our initiatives on the commercial side and drive both top line and also take more market shares in the years to come. That is our key ambition. Then we have this cash return and maybe you can elaborate a bit on that. Yeah.

And if I should build on your outlook for 2025, I think we On the rent price index, we are looking at some 2%. And it's also around 2% when we look at it. Of course, the wages could be between 2 and 3%. And it's the year 2025 with new negotiations with the unions. So that is, of course, a debate before we will see that. But if you look at the 2025, outlook we will have an AGM in May 2025 where we can decide on a normal dividend and then on top of that we have the 350 million that we are talking about in the report that could be either buybacks or extra dividend that's a framework we look at right now and of course dependent on the situation it will be up to the board to propose what to spend it on and there's of course looking at dividends versus buybacks. There are of course different perspectives from different owners. So I think when the board has proposed this mix, there's a consideration on different owners' perspectives and different owners' preferences to land in something that is balanced.

Okay, thank you very much. I don't know if it covered all your questions, Otherwise, let us know.

Yes, thank you very much. Thank you.

The next question comes from Raymond Koo from Nordea. Please go ahead.

Hi, a couple of questions for me. I'll take them one at a time, hope that's okay. Starting with the margin target of 11%, you're setting that as a floor rather than over a cycle. Is it right to interpret this as you're seeing margin upside from here on and what do you see that gives you confidence that you can uphold this from here on?

Yeah, but we can try to answer a bit together, Per and I. But I think we have seen now, like Per mentioned in the call here, that we have been above the 11%. And we feel confident that we can put this as a floor. Before we had a bit of an unclear target, I would say that we should have 11% over a cycle. What is a cycle? You can always question. With this, this gives us a clear indication for the market. We send a clear signal that we think we should achieve as a minimum the 11%. But of course, we have high ambitions. This doesn't make us, it doesn't stay with the 11%. Of course, if we can do 11.5% or 12% going forward, we will definitely strive for that. But we and then over time we can always change. But right now we want to have like a very clear signal to the market that how stable we actually believe this this industry is.

Yeah. And you can build on that to say that also the margin target you can see in combination with the growth target. So, of course, we want to grow and also have a decent market. We could, of course, suffer in one of them to achieve more, but I think this is the balance between the market and the growth target that we have looked at.

Got it. And you write that investments in the pipeline are expected to total 802 million SEC, where 85 have already been made. In terms of timing ahead of launch, how many months or maybe even years, like in general ahead of each launch, should one think you generally start putting money into an expansion? And how does that sort of ramp up cycle look like, if you know what I mean?

Yeah, it's a very good question. I think one that we picked up some discussing also our debt target. And I think you should see during the period here with 25 to 27, if you sign a lease, I mean, the debt will not occur the day after. It will take one to two years, dependent on what type of hotel. A Scandico will probably be much quicker, maybe one to one and a half year. And the beggars can take one and a half to two years from some signing, dependent on On that, and of course, we can also have takeovers where they have a Nuremberg where we have a quicker takeover. But you can see that when we're building up a portfolio now that the debt will follow with quite a lag. And therefore, we're quite confident also with having a one times net debt target and also growing the pipeline as we want.

And we are also, Raymond, we are definitely good at steering this part of the CapEx, you can say. We know when we sign to Pierce Point, we even have a few projects where we sign now and we open in 28 and then we might have the CapEx investments in the end of 27 and into 28 and not before. So with that, we feel it's very balanced and we can control this. On top, we also steer all the investments in current portfolio where we have a very good way of steering it, meaning also that if we see by the end of the year that we need to save a bit because we want to protect the cash, then we can steer it. If we want to increase it a bit, we can do that. So I think we have a very good model to handle this.

Excellent. Just final one. In terms of event schedule, if you compare this year to sort of the next year, how do they compare? And if you just could give us a quick comment there.

We're looking very much forward because next year looks much better. And then we have a lot of, I don't know if it's a lot, but we have quite some concerts taking in, especially in Gothenburg, which is very important for the Gothenburg region. As you recall, last year was a very strong year, maybe extraordinary strong with a lot of concerts. I think we had some 14 concerts in the summer last year. And right now it will be picking up well and concerts are picking in for next year. So we expect that this year's situation in Gothenburg was a bit of a one-off and definitely next year should be much better. The rest of the market has been stable and we had a few concerts this summer in Stockholm that was supporting the result and that's part of the reason why Stockholm came out even better than last year. We are definitely the market leader here with 30 hotels in the Stockholm region, so good for us.

All right, thank you so much. I'll get back in line. Thank you.

The next question comes from Karl-Johan Bonnevir from DNB Markets. Please go ahead.

Yes, good morning Jens and Per. First of all, congratulations to clearing the table for all the legacy things from the pandemic. It must be good to be through that part of the cycle. And looking at just one, I probably missed it. Jamie asked you the question about the Q4 REVPAR guidance you're giving. Was that in local currency or was that in Swedish krona? If I missed the answer to that.

That was in local currency.

Local currency, thank you. And turning to the financial targets, you already elaborated very nicely on your ambition may be higher on the profitability target. and tying it to the growth target. On the growth target, could you elaborate a little how you see that organic growth being modeled in the way of room growth and rev par ambitions to drive the market to get to that?

Yeah. We can start with that and thank you. It's very nice that we have now a very clean balance sheet. We have talked about this for years now with the convertible bond now fully handled. We also have a zero debt situation which brings us in a very strong position. We like that position as well, I assure you. But really looking at what you were saying, we think when looking forward and first of all, we think Q4 as a small quarter looks very stable and we expect it to come in as a stable result. And right now it looks to be both occupancy and prices around the same level as last year. And we are in a very good control of the cost level. So I think we will have a decent quarter for that, even though it's a smaller one. But going forward, we have good expectations. Pierre was elaborating a bit on the overall market expectations when it comes to GDP growth. We also think that we are in appreciation now with all the commercial initiatives where we will drive extra top line. There will be a lot of initiatives which we have said during the year will start to be positively hitting us in 2025, especially when we in Q1 will announce the launch exactly timing wise on the new web and app. That will give us a lot of new capabilities to do a lot of ancillary sales and other stuff like that. We also launched in Q1 the new partnership with SAS and there will be a lot of partnering campaigning of that also motivating people to travel even more. So I think we are comfortable with a lot of our initiatives, which will drive extra top line on top of the GDP. And then, of course, we will add new rooms to the market and that should support the growth as well.

And also, if you look at our guest profile, we're still a bit missing the European and intercontinental guests. So I think we have some sort of expectation also of them returning and building occupancy levels for us. So yeah, many factors.

But you see, to sum it up, the commercial initiatives should get you back to where you grow REVPAR quicker than the market. Is that a good base assumption?

Yeah, we have a clear plan and intention to take market shares in the years to come.

Excellent. And looking at the capital structure, as you say, you are now net cash. And when I try to model those extra payouts, getting back to ordinary dividends, it seems like you're basically going to be remaining close to net cash. Or maybe I have too good of a free cash flow generation profile for you. But if you're not singling that, are you basically telling us that we should expect you to drive this company at the net cash position or close to net cash position? going forward?

I think you should see that we will be able to drive our growth plans as we have discussed in terms of both the expansion in terms of hotels and rooms, but also the technical and IT digitalization investments within the framework now of the maximum one times EBITDA. So I think we have a lot of headroom there. And we think by the end of 2027, we might discuss whether we have such a growing profile that we need to look at that. But I think we have a lot of headroom. So I will not say that we will be debt free, but we will be in the guidance that we have now with the new financial targets.

And just elaborately, how did you come up with the target of below one, so to say? For me, it feels like you are maybe not driving the company in an efficient capital allocation policy, being that kind of conservative.

maybe hard to comment on your comment but i think we we we are looking at our business plan and we can see that we we whatever we want to achieve is in in in line with that framework and and we are not mentioning in an m a and other things and of course things could come outside this this uh thing and uh but i think it's it's quite uh with the starting position we have it's it's uh quite logical for us to be you know in this framework uh and the two time three target was was from 2016 when the ipo was done with completely different ownership structure so i think it's probably a double adjustment in this one one that we haven't adjusted for quite a long but also that we with this position we it's very hard to say that we should end up in two to be logical

But I also think I also want to add to that, that it's very important for us to have enough headroom within this framework. And we feel that we have enough headroom both to deliver what the market expects when it comes to dividends and and buybacks, but it's also important that we have enough headroom to cover our, let's say, growing company and our expectation for growing this pipeline. And you mentioned yourself, we might in certain periods be on the low end of the depth here, and that gives us a good headroom also to add to that. if we if we see that let's say there will be opportunities in the market to acquire another company then we take that as a separate thing and and that we do not leave that out of course if something pops up which we feel is good then we look at it but right now we feel very comfortable in in adding hotels in the way we do right now and which is actually also increasing the speed

Excellent. Thank you very much for the extra call and all the best out there.

Thank you.

As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.

Thank you very much. And thank you all for dialing in this morning. Thank you for your good questions. We look forward to the continuing good conversations with all of you. If you have any further questions, just reach out. And if not, looking forward to speak to you again. And we wish you all a great day.