As of the 2018/19 financial year, the Property Development & Exploitation segment encompasses non-current assets such as land, property and investments in co-owned companies. The focus is on developing and realising value. This is achieved by drawing up long-term development plans for future investments at SkiStar’s destinations. Such investments will create business opportunities through, for example, the sale of land and plots, building for rental, building for sale or to increase value in some other manner. This can either be carried out by SkiStar or in cooperation with other partners. The segment’s revenues mainly comprise capital gains from the divestment of utilised non-current assets. Investment credits have been allocated to the segment where pledged assets are reported. Assets attributable to the segment comprise properties, which are recognised at their carrying amount, as well as an interest in a joint venture for property development. For detailed information about the segment’s earnings and position, please refer to Note 3 in the Annual Report.
In Sweden, SkiStar owns accommodation properties with a carrying amount of SEK 361 million (328) via subsidiaries. In addition, there are holdings in associates that primarily own accommodation properties with a carrying amount in which SkiStar’s share amounts to SEK 139 million (145) and holdings in tenant-owner associations with a total carrying amount of SEK 22 million (25).
In Norway, the subsidiary Fjellinvest Norge AS owns SkiStar Lodge Alpin Hemsedal, with a carrying amount of SEK 72 million (81), along with 50 percent of the Radisson Blu Resort and the Radisson Blu Mountain Resort in Trysil and SkiStar Lodge Suites in Hemsedal via a joint venture in which SkiStar’s share of the carrying value amounts to SEK 466 million (533).
Land development assets and unsold plots total 5.4 million sqm (5.4). Most of the assets were acquired a long time ago and therefore have a low acquisition value. No market valuation of the assets has been conducted, as it is difficult to make a reasonable assessment of the possible exploitation rate of the land assets. Based on our own assumptions and experience, around 50 percent of the land can be built on, which is 2.7 million square metres. If the land is sold as plots, it would mean 2,700 plots, each comprising 1,000 square metres.
Land and Plots for sale
At the end of the financial year, development land was available for sale in Ullådalen, Åre, and two plots in Björnrike, Vemdalen. In the Sadel area in Åre there is an additional detailed development plan in a fifty-percent owned joint venture for continued sales to newly formed housing associations.
SkiStar Vacation Club
SkiStar Vacation Club is a form of accommodation that is customised to meet guests’ demands and requirements. The apartments are divided into weekly units, and guests purchasing one or more of these units are entitled to the additional benefits of membership of the international exchange and placement organisation, RCI, as well as membership of SkiStar Vacation Club. This form of accommodation is cost-effective, simple and flexible for the timeshare owner. Cost-effectiveness is achieved either through the utilisation of a purchased week, compared with the equivalent cost of renting for that week, or by exchanging the week with a trip abroad through RCI. In addition, the timeshare owner can purchase foreign trips through the RCI system. SkiStar Vacation Club also provides timeshare owners with a raft of advantages and benefits during their stay. The simplicity of timeshares comes from the fact that the guest is not responsible for the maintenance of their ownership share. Instead, the tenant-owner association, of which the timeshare owner automatically becomes a part, takes care of the maintenance and development. The apartment is always clean, the beds made up, and it is warm and ready ahead of the guest’s arrival. Flexibility is achieved as the timeshare owners can enjoy RCI’s entire range of over 7,000 destinations worldwide. SkiStar Vacation Club is currently offered in Sälen, Vemdalen and Åre, however, the intention is to roll out the concept to more destinations.
Revenue and Earnings
Revenue from Property Development & Exploitation amounted to SEK 219 (296) million, with a loss of SEK 56 (152) million. During the year, interests in accommodation were sold for a total of SEK 117 million (78), with a profit of SEK 55 million (68). SEK 43 million (33) related to revenue from sales of shares in Vacation Club and SEK 74 million (45) to other interests in accommodation. Profit is broken down as follows: SEK 29 million (23) attributable to Vacation Club and SEK 26 million (45) to other interests. Sales of interests in accommodation other than within Vacation Club are mainly derived from the divestment of apartments in Vemdalen and Hotell Renen in Duved. The Vacation Club increase is due to new cabins or apartments being added in Åre, Vemdalen and Sälen during the year.
During the year, exploitation assets were sold for a total of SEK 59 million (126), with a profit of SEK 50 million (98). SEK 33 million (10) related to revenue from the sale of land, while SEK 26 million (116) was from the sale of plots. Profit is broken down as follows: SEK 26 million (10) to land and SEK 24 million (88) to plots. Sales of plots related to 8 plots (53), including 1 in Åre and 7 in Sälen. The average profit per plot was SEK 3.3 million (1.7). The average profit per plot over time is estimated at around SEK 2.5 million. In a fifty-percent owned joint venture, the sale of land to two tenant-owner associations generated SEK 13 million (16) in share of profit. Other activities within Property Development & Exploitation relate primarily to rental of accommodation to the Operation of Ski Resorts segment.
The investments expected to be used in the Group’s own operations amounted to SEK 366 million during the financial year. In Sälen this involved the completion of the third stage in Solbacken in Tandådalen with a further 24 apartments and a gym, along with the fourth stage comprising 44 apartments to be used for the first time in the 2020/21 winter season. A fifth stage with 30 apartments has been launched with expected completion for the 2021/22 winter season. The construction of SkiStar Lodge Hundfjället is continuing with 153 double rooms and apartments, a restaurant, a bar and a sporting goods outlet, with completion set for the 2021/22 winter season. Redevelopment of the adjacent Hundfjällscenter building got under way during the year, comprising a restaurant and pool/spa. In Åre, planning continues for SkiStar Lodge Åre in the area around the Cable Car (Sw. Kabinbanan).