Ikea cranks up speed on hotel development

Ikea cranks up speed on hotel development
The investment arm of Ikea, which in August unveiled plans for a budget hotel chain, has more than doubled its investment pace, a spokesman said on Tuesday.

“We have more than doubled the pace of our investments. It’s possible thanks to our strong financial position and having an owner who takes a long-term perspective,” Anders Bylund, a spokesman for Inter Ikea, the company which holds the rights to the company brand, told business daily Dagens Industri.

More than four billion kronor ($600 million) will be invested annually, he said without specifying the time period.

“We’re ready to incur losses for several years in our growing operations. We count on getting good long-term returns on our investments,” Bylund said.

In addition to real estate projects in Britain and Germany, the company wants to develop shopping malls in Europe and China. It is also investing in privately held businesses in Sweden.

To avoid the turbulence of global stock markets, Inter Ikea has sold its equity holdings and invested in government bonds with high credit ratings.

The company announced in September it would up the pace of new store openings to between 20 and 25 branches per year, from the current six to 10.

Together with the Interogo Foundation, which is controlled by the family of Ikea founder Ingvar Kamprad, Inter Ikea has access to a 160 billion kronor war chest that will fund future investments, Dagens Industri wrote.

AFP/The Local/at

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