Covid-19 has reinforced existing trends, especially interest in revenue-based leases that provide a better risk/return balance between property owners and tenants than is the case with fixed leases. This has in turn increased the need for and value of a deeper understanding of hotel operation, which works in Pandox’s favour.
A leading hotel property owner in a market with good potential
Pandox has established itself as a leading hotel property owner in Europe with the help of a business model that covers the entire hotel value chain. The hotel property market is fragmented, with good growth opportunities where Covid-19 has above all strengthened existing trends.
Covid-19 reinforces more than it changes

Good opportunities for Pandox ...
High entry barriers
The entry barriers to the hotel property market are high. Hotel properties have unique characteristics and this requires comprehensive specialist expertise and substantial capital in order to create a portfolio with an attractive risk and return profile. A well-established hotel property in a strategic location has nat-ural competitive advantages that are difficult to replicate. A well-diversified hotel property portfolio is even harder to recreate as this requires a long-term perspective and an international presence.instead tend to be from the financial sector or are national property companies with various property types in their portfolio. Overall, there are a handful of competitors in each market, of which only a few are active in multiple markets.
Large and fragmented market
The hotel property market in Europe is fragmented. Pandox, which is one of the biggest players, has a combined market share of just under 1 percent, measured as the number of rooms in the markets where the Company is established. Competing hotel property companies are rarely international specialists, but
instead tend to be from the financial sector or are national property companies with various property types in their portfolio. Overall, there are a handful of competitors in each market, of which only a few are active in multiple markets.
The need for operational expertise is increasing
As large hotel chains become more brand-oriented, the need for specialised hotel property owners and strong operators increases. This is because the brand promise conveyed in digital channels has to be turned into a positive guest expe-rience in the physical environment at the hotel. This calls for knowledge of how to create an attractive hotel product through a combination of efficient opera-tion and value-adding investments. Here, skilful operator companies have grad-ually advanced their positions. This trend has created opportunities for Pandox to take over operation when the conditions for a profitable lease are not in place.
Flexibility and agility create opportunities
Pandox’s pan-European position and ability to work with all operating models creates clear competitive advantages and growth opportunities. Pandox’s core business is to acquire and improve hotel properties and lease them to strong hotel operators under revenue-based leases, where Pandox’s rental income grows as the operator’s sales grow. Pandox moves freely throughout the hotel value chain and can operate hotels in properties that the Company owns. This reduces risk and creates new business opportunities.
... in a constantly developing hotel market
Changed business models in the hotel market
The international hotel market has gone through an extensive structural
transformation. Large international hotel chains have changed their business models, having sold their hotel properties and outsourced hotel operation to other parties. They have then developed different types of asset-light strate-gies that require less capital with a focus above all on distribution (bookings) and brand development (franchising). The large hotel companies today have relatively little to do with the day-to-day operation of their hotels. This is instead usually handled by specialised, independent operating companies through franchise or management agreements.
Asset-light requires large volumes in order to be profitable
Within an asset-light strategy, revenue is mainly derived from franchise fees and commissions on bookings. This business model requires large volumes in order to be profitable. The main aim is to increase the number of franchisees and room bookings – preferably in their own distribution channels. The busi-ness model not only requires substantial marketing investments, but also a continuous increase in the number of rooms in the portfolio. This has resulted in a search for new franchisees and, in some cases, in consolidation. One factor contributing to this trend is online travel agencies (OTAs) that aggregate offer-ings and match demand using efficient technology and extensive marketing.
Fewer operators but more brands
Consolidation has decreased the number of brand owners, while the number of brands has increased. The reason is that many hotel chains invest substan-tial resources in diversifying their brand portfolios and attracting customer demand in new segments.