Scandic Go Sankt Eriksgatan 20: finding the right concept

When Pandox acquired the former Best Western Fridhemsplan in central Stockholm in early 2023, the property had 221 rooms, a strong location and clear development potential. It also had some distinctive characteristics. Guest rooms were relatively small, public areas were limited and the existing commercial setup between property owner and operator had reached a standstill. 

Rather than viewing these characteristics simply as limitations, Pandox saw an opportunity to rethink the hotel from the ground up. The central question was not how to make the property resemble a traditional full-service hotel, but what type of hotel the building was naturally suited to become. 

A gap in the Stockholm hotel market 

Pandox’s analysis pointed to a relative lack of modern economy lifestyle concepts in Stockholm. At the same time, the characteristics of the property made it particularly well suited to this segment. The hotel had a central location at Fridhemsplan, good accessibility, compact rooms and an efficient footprint with relatively limited public areas. 

Instead of trying to work against these characteristics, Pandox looked for a concept that could turn them into strengths. For guests visiting Stockholm primarily to experience the city – its restaurants, entertainment, events and attractions – a large hotel room and extensive traditional hotel services are not necessarily the main priorities. Location, price, design, convenience and a good night’s sleep can matter more. 

Following an operator search, Pandox reached an agreement with Scandic and its new economy brand, Scandic Go. The concept provided a strong match between the building, the market opportunity and the needs of the intended guest segment. 

A hotel designed around what guests value 

Scandic Go is designed around a simplified hotel experience, focusing resources on the elements its target guests value most. A central location, attractive design and a competitive price are combined with a straightforward guest journey, convenient self-service and food and beverages available throughout the day. 

The rooms follow the same philosophy. Smart solutions and integrated storage make efficient use of relatively compact spaces, with some rooms at Scandic Go Sankt Eriksgatan 20 measuring as little as four square metres. The objective is not to maximise space for its own sake, but to ensure that the space available performs the functions that matter most to the guest. 

For travellers who spend most of their visit outside the hotel, the proposition is straightforward: a well-designed and efficient base in a central location from which to experience Stockholm. 

From a property perspective, this creates an equally important alignment. A building characterised by compact rooms and limited public areas becomes particularly well suited to a hotel concept built around efficient use of space and a simplified service model. 

Making every square metre count 

Pandox and Scandic subsequently carried out a joint refurbishment and repositioning programme to transform the property into Scandic Go Sankt Eriksgatan 20. As part of the project, Pandox also reviewed how the existing building was being used and whether additional revenue-generating space could be created within its existing footprint. 

Previously underutilised areas were converted into 13 additional hotel rooms, increasing the total number of rooms from 221 to 234 without expanding the building. The hotel also includes cabin rooms without traditional windows, allowing parts of the property that would otherwise have limited commercial use to become sellable hotel inventory. 

This represents another dimension of the same underlying idea. Efficient use of space is not only central to the guest proposition; it is also an important part of the property economics. By combining compact room design with the conversion of underutilised areas, more of the existing building can contribute directly to the hotel’s revenue generation. 

Creating a new long-term business case 

The repositioning involved more than the physical transformation of the hotel. Pandox and Scandic also established a new 20-year revenue-based lease with a guaranteed minimum level, creating a long-term commercial framework for the property and aligning the interests of property owner and operator around the performance of the hotel. 

In total, approximately SEK 400 million of capital has been deployed in the property, including the acquisition and subsequent development programme. Following the transformation, the property is valued at approximately SEK 600 million. 

The value creation cannot be attributed to one individual measure. It is the result of several steps working together: resolving the previous commercial situation, understanding the characteristics of the property, identifying an attractive segment, finding the right hotel concept and operating partner, investing in the product and creating additional revenue-generating space within the existing building. 

Together, these measures transformed both the hotel and its long-term business case. 

Working with the building, not against it 

Scandic Go Sankt Eriksgatan 20 illustrates an important principle in active hotel property ownership. Not every hotel needs larger rooms, more extensive public areas or a broader range of services. What matters is that the property, concept, target guest and operating model fit together. 

In this case, characteristics that could initially have been viewed as weaknesses became part of the investment thesis. Compact rooms supported an economy lifestyle concept. Limited public areas were consistent with a simplified service model. Underutilised spaces provided an opportunity to add further rooms. And the central Stockholm location supported a proposition aimed at guests who want to spend their time experiencing the city rather than the hotel itself. 

The most important decision therefore came before the refurbishment started. It was recognising what the building was already well suited to become – and then finding the concept and partner capable of bringing that potential to life. 

Scandic Go Sankt Eriksgatan 20 

Location: Stockholm, Sweden 

Rooms: 234 

Acquired: 2023 

Operator: Scandic Hotels 

Concept: Scandic Go 

Lease: 20-year revenue-based lease with minimum guarantee 

Capital deployed: Approximately SEK 400 million 

Current property value: Approximately SEK 600 million