Scandic has been on a spending spree in recent years and has added 85 hotels to its chain since 1994, bringing the total to 133 hotels, most of which are in Scandinavia.
The company has reported earnings growth during every fiscal quarter since 1994. Plans are afoot to add a total of 4,000 rooms in the next two years, not including new rooms added because of the acquisition of smaller chains. Scandic aims to expand aggressively in the Baltic states, Poland, northern Germany and the UK in the next few years.
"The Scandic Hotel Vilnius will be the safest hotel in Vilnius," said Anders Lilius, a Scandic vice president. "We treat our guests, staff members and the society we are in with equal respect."
Scandic has a reputation as being one of the most innovative hoteliers in the world, especially on the environmental front. They were the first to introduce waste recycling as well as power and water saving lights and bathroom fixtures. What's more, 97 percent of all room fixtures in their hotels are recyclable.
Scandic also eschews plastics and synthetics in favor of wood and natural products for its room furnishings. They renovate roughly 2,000 rooms every year.
"Where possible, we will use Lithuanian suppliers and contractors for furniture and services," said Lilius, who also believes in investing in local staff. "We will not be sending Scandinavians to take over the Neringa. Instead, we will send Lithuanians to our training centers abroad so that they understand the Scandic vision."
The Hotel Neringa has received something of a facelift in recent years, but it is still a relic from Soviet times. Scandic plans to renovate it so that it will be open for business in April 2001.
The Neringa CafŽ on the ground floor is one of the very few restaurants in Vilnius remaining from before Lithuanian independence in 1990. Scandic will not take over the cafŽ, but has a service agreement with it to provide breakfasts that meet the hotel chain's standards.
Anders Lilius chose not to divulge the cost of the investment to Scandic. He said that this will happen once the results for 2000 have been announced.
Scandic currently operates four hotels in Estonia with a total capacity of 237 rooms. They are also looking for a property in Latvia.
"It just happened that Vilnius came first. We are leaving next week to investigate more properties in Riga," said Lilius.
The newly renovated hotel will target business travelers and tourists. The fifth floor will meet five-star standards while the first four floors will have four-star rooms.
"The Northern European market is too small to have separate business and tourist hotels. You have to provide both under one roof," said Lilius.
He added that if you subtract all weekends and holidays from a 365-day year you are left with about 190 days. This means that 100 percent occupancy during business days really means a 50 percent occupancy rate in real terms.
One of Scandic's chief competitors, Radisson SAS, is unflustered about the new competition.
"The hotel market here is not booming, but it is stable and inching upwards. A 60-room property is not very big, and we have a different business model from Scandic's," said Sanjay Deva, director of the 120-room Radisson SAS Astorija Vilnius.
The Brussels-based Radisson SAS is a wholly owned subsidiary of Scandinavian Airlines System (SAS). It operates four hotels in the Baltic states including a new hotel in the Lithuanian port of Klaipeda with 75 rooms that will open in two weeks.
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