Finding rooms where there were none – the transformation of Scandic Malmen

How many rooms does a 357-room hotel have? The obvious answer is 357. But in a hotel property, the answer is not always as straightforward as it seems. By looking beyond the existing floor plan and considering how every part of a building is used, it is sometimes possible to create additional capacity – and additional value – within the property that is already there. 

At Scandic Malmen in central Stockholm, Pandox identified underutilised areas that could be transformed into something considerably more productive: hotel rooms. The result was 25 new cabin rooms created within the existing building, as part of a broader renovation and repositioning that strengthened both the hotel product and its commercial performance. 

A strong location with untapped potential 

Scandic Malmen occupies a prime location on Södermalm, one of Stockholm’s most vibrant districts and an established destination for both leisure and business travellers. The hotel therefore had strong underlying fundamentals, but Pandox’s analysis showed that it was not fully capturing the potential of its location. 

Market penetration was relatively weak, parts of the hotel product were in need of renewal, and an upcoming lease expiry provided a natural opportunity to take a broader view of the property. Rather than looking only at individual renovation needs, Pandox and Scandic considered how the hotel could be improved as a whole – operationally, commercially and physically. 

An important part of that analysis was a simple question: could more value be created from the space that was already there? 

Looking beyond the existing floor plan 

Hotels contain many different types of spaces, and their economic contribution can vary significantly. Guest rooms, restaurants and meeting facilities generate visible revenues, while basements, back-of-house areas, storage rooms and other secondary spaces may have a less obvious commercial role. 

At Scandic Malmen, Pandox identified underutilised areas that could be converted into 25 additional cabin rooms. Rather than extending the building or adding new floors, the project created new sellable capacity entirely within the existing property. 

The cabin rooms do not have traditional windows, but are designed around other qualities that are important for a good night’s sleep, including darkness, quiet, good ventilation and an efficient use of space. The concept also makes it possible to offer a differentiated room category in a central Stockholm location where space is inherently valuable. 

From a property perspective, the logic is straightforward: areas that previously generated limited or no hotel revenue were transformed into productive hotel space. The number of sellable rooms increased without acquiring additional land or materially increasing the building’s footprint. 

More than additional rooms 

The transformation of Scandic Malmen was not limited to the new cabin rooms. Existing guest rooms were renovated, while the hotel’s food and beverage outlets and public areas were also upgraded. The ambition was to improve the property as a whole, combining additional capacity with a stronger guest experience and a hotel product better positioned for its market. 

The project, completed during 2024 and 2025, illustrates Pandox’s active approach to hotel property ownership. Creating value is not only about investing more capital in a property, but about understanding where that capital can have the greatest impact – whether through additional rooms, a better room mix, upgraded public areas or improvements that strengthen the hotel’s overall competitiveness. 

When small spaces create meaningful value 

The development following the transformation has been positive. Both average room rates and occupancy increased, while rent in 2025 was 24 percent higher than in 2024. The market value of the property also increased by approximately 18 percent. 

At the same time, Scandic Malmen strengthened its position within the Scandic system and is now considered one of the operator’s “big five” hotels. The 25 new cabin rooms are only one element behind this development, alongside the broader renovation, stronger hotel product and improved commercial performance. 

But the new rooms illustrate an important principle in hotel property ownership: meaningful value creation does not always require a new building, a large extension or an acquisition. Sometimes the opportunity is already embedded in the existing property and can be unlocked by looking at the building differently. 

An embedded source of growth 

Scandic Malmen is one example of a broader pattern across the Pandox portfolio. Between 2015 and 2025, renovations, conversions and extensions across 40 hotels created 764 additional rooms in existing properties – an average of around 69 rooms per year. Approximately half of these rooms were created within existing buildings and half through extensions. 

Put differently, this corresponds to adding the capacity of roughly one small hotel to the portfolio every year, without making an acquisition. In markets where new development can be expensive, complex and time-consuming, the ability to identify additional capacity within existing properties represents an attractive source of embedded growth. 

The individual opportunities are often relatively small. It may be an underutilised basement, former office space, a redundant meeting area or simply a part of the building whose original purpose is no longer the most productive one. Across a large portfolio, however, these opportunities add up. 

At Scandic Malmen, the principle can be seen particularly clearly: understand the property, identify space that is not reaching its full potential, and transform it into something that strengthens both the hotel and the value of the property.