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The lease is key for Pandox

Leases are the dominant agreement model for Pandox. The lease has clear advantages, both for the property owner and the tenant, since the return, risk and investments can be shared between the parties. Pandox applies all operating models in the hotel property market.


Agreement with many advantages Pandox uses revenue-based leases, often with a contractual minimum rent level. This agreement model has several advantages:

• Long-term perspective
• Joint incentives
• Shared investments and shared risk
• Focus on productivity and profitability

How it works
A revenue-based lease is tied to the development of the hotel business, with a percentage of the hotel’s sales paid to Pandox in the form of rent. When the hotel’s sales increase, so does Pandox’s rental income – and vice versa. Hotel property owners and hotel operators thus share both the upsides and downsides, and have clear common incentives to increase the hotel’s profitability and therefore also the hotel property’s value. In many leases there are also contractual minimum levels below which the rental income cannot fall. These cover Pandox’s cost of capital for financing the properties. Pandox also has fixed leases in a few individual cases.

Interest in leases increasing
Over the years, Pandox has acquired, renewed and signed numerous leases in existing and new markets and has seen increased interest in the lease model. One reason for this is increased specialisation within the hotel market and the emergence of strong regional hotel operators that share Pandox’s view of the advantages of leases. The pandemic has further strengthened the argument for revenue-based leases. For Pandox as a hotel property owner, the lease is a key aspect of value creation in the hotel business since it contributes to shared investments and shared risk.

Own Operations

Operated by property owner under a franchise brand
When a hotel property owner owns both the hotel property and the hotel business, a
franchise agreement with a brand owner may be appropriate. as it allows the hotel property owner to benefit from the franchiser’s brand and distribution resources. Normally the franchisee pays revenue-based royalties plus additional fees for access to other services.
Franchise agreements are common within Operator Activities.

Operated by property owner with an independent brand
In some cases it may be better to give the hotel a whole new profile of its own using an
independent brand created by Pandox, for example in a local market where an international brand has a low recognition factor and the costs of rights and distribution cannot be justified.

Management agreement
A management agreement is an agency contract where the hotel property owner
also owns the hotel business, but assigns a hotel operator to run and manage the hotel
on behalf of the hotel property owner. The property owner pays a management fee, often
revenue-based, to the operator for the service. Management agreements are often very
long-term, with the operator undertaking to run the hotel in accordance with established
brand strategies. Under this type of agreement structure, the hotel property owner shoulders all the investments and thus bears financial responsibility for both the hotel’s operation
and the property.