Managing a strong portfolio of brands, relationships and ... - Exception!

<strong>Managing</strong> a strong portfolio of brands,relationships and properties.Group Rezidor SAS Hospitality Brands Annual Report Relationships 2002 Properties Financials1

Rezidor SAS GroupEmbarking on an ambitious growth track; from 200 to 700 hotels in 10 yearsHighlights 6 . Letter from the CEO 8Group overview 10 . Strategies 15 . Market overview 19BrandsLeveraging a portfolio of four very strong brands, and developing a fifthRezidor SAS Brands 24 . Brand Concepts 26Brand Operations 28 . Radisson SAS Performance 32RelationshipsBuilding strong relationships with stakeholders by better meeting their needsLeveraging strong relationships 38 . Customers 40 . Owners 43Employees 44 . Suppliers 47 . Corporate citizenship & Environment 48Properties<strong>Managing</strong> a growing collection of properties in 40 countriesRezidor SAS properties 54Some Property Highlights 58FinancialsA solid foundation of good financial performanceStatement of the Board of Directors and <strong>Managing</strong> Director 62Auditors’ Report 63 . Board of Directors’ Report 64Accounting Policies 68 . Income Statement 72Cash Flow Statement 73 . Balance Sheet 74Notes to the accounts 76 . Rezidor SAS Organisation 84Rezidor SAS Organisation with Brands 86Rezidor SAS Locations 883

Rezidor SAS GroupGroupHighlights 6Letter from the CEO 8Group overview 10Strategies 15Market overview 195

Rezidor SAS Hospitality isa hospitality managementcompany. As such, wemanage brands, people,relationships and otherpeople’s properties.Group-widerevenue increasedto MEUR 1,109In spite of a slacking economy and weakdemand, GOP stayed at 33%, occupancyremained high at 65% and RevPARdropped only by 1%.Adding 36 newproperties in 2002,totalling 182And continuing to grow capacity afteryear-end, totalling 199 by March 12,showcasing the power of the newmulti-brand portfolio.6

Four new brandsjoining Europe’sperformance leaderAfter expanding Radisson SAS from 29to 164 hotels in eight years, Rezidor SAStook on three new Carlson brands in anexclusive 30 year Master Franchise deal.On top of that a new lifestyle brand isbeing developed for launch in 2004.GroupConsistent growth incustomer satisfaction andloyalty. And scoring recordhigh satisfaction among13,500 employees.Securing the positionas an industry leader insustainable performanceby widening the scope toResponsible Business.7

LETTER FROM THE CEOGrowing throughmanagementwith heartOver the last couple of years I have talked a great deal about itsnecessity. And now we’re finally there! We’re a multi-brand hospitalitymanagement company with four strong brands now upand running and a fifth on its way...It took a little longer than I had hoped. But, having assessedmany interesting options, we finally decided that the first steptowards achieving multi-brand status, should be the most logicalone – to extend our very successful co-operation withCarlson Hotels Worldwide as a Master Franchisee for theRadisson brand in Europe, the Middle East and Africa.Under the contract that we announced on September 24th2002, we will operate as the Master Franchisee for three additionalCarlson hotel brands: the mid-market Park Inn and Country Innand the top-of-the-line Regent, for a period of thirty years. Underthe exclusive terms of this unique agreement, we intend to expandthe Carlson brands to 700 hotels in the markets we serve withinthe next ten years.To coincide with this agreement we also decided to take theopportunity to rationalise our portfolio by selling our 50% stake inMalmaison, our then lifestyle brand, to our equal partner in thatventure Marylebone Warwick Balfour Group plc (MWB). As a 50%owner, we did not have the freedom to develop the brand, the distributionor the operation as we wanted. However, the two yearswith Malmaison gave us valuable experience of the mechanismsand potential of a niche brand. So we have leveraged that experienceand quickly moved to secure a further new brand to fill thatmarket segment within our portfolio.I am absolutely delighted with our recently concluded jointinitiative with Cerruti, the Italian fashion house, which allows usto develop and operate, under a worldwide license agreement,lifestyle hotels under that very famous brand name. Cerruti is aninstantly recognizable brand name synonymous with Italian styleand we now look forward to developing a new brand reflective ofthose qualities. Contracts for Cerruti hotels have already beenMost companies claim a uniqueculture, but I really think that in ourcase it is true. Ours is a genuinepeople culture. It’s based on honesty,communication, and trust.signed and we now look forward to launching this exciting newbrand in 2004.The brand portfolio we now manage ranges from mid-marketto luxury hotels and has strong potential to fully measure up to thewide and changing spectrum of business and pleasure travel. Imust say that I’m very happy with this solution. We will now beable to secure our commitments to our key stakeholders – fastand focused growth for our owner SAS, broad and efficientbranding for property owners, an attractive choice of strong hospitalityconcepts at various price levels for our customers andexciting, worldwide career opportunities for our employees.WE KNOW THAT A STRONGBRAND MAKES ALL THE DIFFERENCEThe largely un-branded European hotel industry has now startedto rapidly consolidate; major brands are developing astronger presence almost daily. A weak economy will only speedup this development, as larger operators with economies ofscale will be able to outperform smaller operators, simply byoffering more for less.We intend to take a very active part in this development. Ourexperience with Radisson SAS, one of the fastest growingupscale brands in Europe during the last eight years, has shownthat a strong brand can make all the difference if it is coupledwith the right attitude and driven by everyone involved. Brandrecognition and brand awareness are the foundation for gettingbusiness. But committed employees, who understand their brandand deliver consistently on its promises, are the key to turningany brand into a sustainable success.Our own development since signing these new deals illustratesthe leveraging power of our new brand portfolio. As oftoday, we have 199 hotels signed up for the five brands. Now8

we’re re-engineering and creating these brands to adapt to theirnew markets and to fully unleash their potential.Our strategic decision to become a pure hospitality managementcompany, thus divesting our real estate, means that thegrowth in the revenues for the Group, to a larger extent, willcome from management and royalty fees. Consequently, toincrease revenues and profits of the Group, we have to grow ournumber of hotels at a much higher pace than before. We haveset very ambitious targets for our growth and the five brands willhave to assume responsibility and accountability for their growthtargets. We intend to grow with a minimum of 50 new properties inthe Group annually. We will do so by taking over and signing existingportfolios, by acquiring smaller groups, by joint ventures andthrough hotel-by-hotel development.Coupled with our clear business targets and good measuresfor control and follow-up, this expansion will create a solid basefor future growth and increased profitability. Through our tightlymonitored business model, we intend to minimise the impact ofpotential economic downturns. This past year has been a goodexample of this approach, where our RevPAR development outperformedthe industry average. Having said that, given the currentpolitical uncertainty and weak economic situation, 2003 islikely to be another challenging year. Even so, we are committedto achieving our growth targets and ensuring that all brands,hotels, property owners and employees receive the attentionand support they deserve.STAYING NON-BUREAUCRATICWe have always prided ourselves with having a flat, flexible andentrepreneurial organisation, with top management easilyaccessible to business partners, customers and employeesalike. It is a big challenge to keep this non-bureaucratic characterwhen transforming the company to a full-fledged, multibrandoperation. I accept that challenge as one of my mostimportant duties in the years to come, because I truly believethat this managerial style is part of our success formula.As an organisation, we are now in a transitory stage. We havejust passed a phase of orchestrated chaos and entered into a newstructure where roles and responsibilities have been defined anddistributed, horizontally and vertically. Initially, some of us willwear more than one hat. Of course, we are fully aware that buildinga strong multi-brand management organisation is not a hattrick! We will have to establish and fine-tune new structures andsystems and bring new people in, to empower some of theimportant functions at corporate level and in the various brandoperations. Luckily, everyone wants to join a winning team.Until now, there have been two main ways to enter our company– either through a leading hospitality school or a hotel conversion.We have a policy to recruit from within whenever possibleand to grow strong leaders throughout the organisation. In fact,we have had a 97% internal recruitment rate. It’s unlikely that wecan sustain that rate as we go from 200 to 700 hotels in ten years.By then, we will have 50 –70,000 people working for us systemwide,and among them, the best and brightest in our industry.When inviting new talent to our company, it is vital to safeguardthe culture that has proved to be so successful. Mostcompanies claim a unique culture but I really think that, in ourcase, it’s true.Ours is a genuine people culture. It’s based on honesty,communication and trust. We have empowered front line staff toensure customer satisfaction and encouraged all employees tolive their brand’s values in a way they believe is right in each andevery situation. That’s what shapes a truly live brand, a brandthat is recreated every time we deal with someone. And that’swhat a brand must be, especially in the service industry. It’s notjust a definition in a manual; it’s a living organism with a heart –and a heartbeat you can feel!I sometimes refer to our model as “management with heart”.We are lean but not mean. We get involved. As we continue togrow and develop increasingly sophisticated systems and techniques,it is important that we stay personal, that we careenough to really get involved – not only when meeting customers,but in all relationships, inside and out.Yours truly,GroupKurt Ritter,President & CEO, Rezidor SAS HospitalityBrussels, March 12, 20039

REZIDOR SAS GROUP OVERVIEWA five brand operation,geared for rapid growthTaking today’s portfolio of close to 200 hotels to 700 in ten years, by growingfive clearly focused brands, will be less of a miracle than growing 29 hotels to 200,which is what we have accomplished in the last eight years!On September 24th 2002, Rezidor SAS Hospitality announced aunique deal with the US-based Carlson Hotels Worldwide tobecome the Master Franchisee for three additional Carlsonbrands in Europe, the Middle East and Africa. The agreementmeans Rezidor SAS now has exclusive rights to operate or licensehotels under the Regent, Country Inn and Park Inn brandsfor the next 30 years.This expanded partnership was established on a firm foundationof proven success; since 1994, Rezidor SAS (formerlySAS International Hotels) has grown Radisson SAS into one ofthe major up-market hospitality brands in these regions under asimilar franchise agreement with Carlson.Our vision is to become oneof Europe’s leading hospitalitymanagement companies, witha focused collection of highperformingprofitable brandsin various market segments.In addition to the Carlson deal, in 2002 Rezidor SAS also sold its50% joint venture share in the lifestyle brand Malmaison to theirpartner in the venture, Marylebone Warwick Balfour plc (MWB).The sale was deemed necessary, as the nature of the joint venturewas proving restrictive in terms of managing the brand’s development,its distribution and its operation. The experience gainedhowever has proved useful to Rezidor SAS in relation to operatingniche brands. Since selling Malmaison, Rezidor SAS has agreedupon a joint initiative with the Italian fashion house Cerruti todevelop and roll out hotels of the same name worldwide.The multi-brand portfolio is the next step in transformingRezidor SAS into a major player in its field. The operation beganmore than 40 years ago in Scandinavia by operating SAS hotels.We are now operating in 40 countries, most of which are notserved by the airline. In line with the strategic decision taken sixyears ago to specialise in hospitality management, we have alsodivested our real estate, apart from tactical holdings.As a hospitality management company, we manage brands,people, relationships and other people’s properties. Our visionis to become one of Europe’s leading hospitality managementcompanies, with a focused collection of high-performing profitablebrands in various market segments.Since closing the multi-brand deal, the Rezidor SAS portfoliohas grown at a much higher pace than beforehand, totalling 199hotels by March 12, 2003.FIVE STRONG BRANDSFROM MID-MARKET TO LUXURYWith its four brands now in operation and a fifth lifestyle brandon the launching pad, Rezidor SAS can meet customers’ andproperty owners’ needs over a wide spectrum from mid-marketto luxury hospitality.Radisson SAS Hotels & Resorts offers hospitality services,predominantly in the full-service range, providing Fresh, Hostand Easy hospitality services in a “Yes I Can” spirit.Country Inn is a mid-market alternative for business and pleasuretravellers who want a cosy stay at a comfortable price.Cerruti is a lifestyle brand for a stylish, metropolitan audience. Itwill initially be developed in continental Europe but has worldwidepotential.Park Inn offers easy-to-use, value-for-money accommodationfor the frequent traveller, on business and on pleasure.Regent is a deluxe brand and a luxury legend, known all overthe world for its highly personalised service and as the epitomeof sophistication.10

AN EIGHT YEAR TRACK-RECORDOF CONTINUOUS GROWTH2002 was the eighth consecutive year of growth for the Group,both in the number of hotels and business volume. By the end ofthe year, 133 hotels were in operation and 49 were under construction,making a total of 182 (160) hotels in 40 (38) countries.The number of rooms in the entire system increased to 40,000(35,000), including hotels under development.Of the 182 hotels in the Group, 2 are owned, 42 are leased,92 are managed and 46 operate as sub-franchises. While leaseand management operation is the core business of RezidorSAS, franchising plays an important role in quickly reaching criticalmarket coverage. In 2002, franchising agreements contributedwith 13 new properties to the system.BY LARGE, A SUSTAINABLEOPERATIONAL PERFORMANCESystem-wide revenues – including owned, leased, managed andfranchised hotels – reached MEUR 1,109 (1,090) in 2002.In spite of the weak economy, occupancy for comparableunits remained relatively high at 65 (67)%. Average room rates(ARR) dropped marginally to EUR 104 (105) and Revenue PerAvailable Room (RevPAR) to EUR 69 (70). The GOP marginremained at 33 (33)% in 2002.The departure of premium performing Malmaison from the systemand the arrival of mid-market Country Inn contributed to thisdevelopment. For the Rezidor SAS Group, RevPAR for comparableunits dropped by 1.6% compared to last year, whereas formajor European cities, the total markets saw a drop in RevPAR by3.8%. We thus outperformed local competitors in most markets.In total, 13,500 (12,000) people worked under the four brands,of which 13,100 (11,500) worked for Radisson SAS.Energy consumption per square metre and water consumptionper guest night have continuously been brought down andnow perform on par with the best in the industry.WEAKENED FINANCIAL PERFORMANCEOperating revenue for the Group increased by 2.7% to TEUR389,715 (379,474). Revenues from comparable units decreasedby 3%, following continued soft demand all through the year.Furthermore, the strike in the hospitality industry in Norway during2002 reduced revenues by an estimated MEUR 9.5.84 (82)% of the operating revenue was derived from ownedand leased hotels, and the remainder from management andfranchise agreements and other revenues. Rooms revenueaccounted for 47 (45)% of operating revenue, and revenue fromFood & Beverage for 32 (33)%.EBITDA decreased to TEUR 24,037 (32,892), due to the generalslowdown in the global economy. Proforma EBITDA, adjustedFINANCIAL HIGHLIGHTSRezidor SAS Hospitality A/STEUR 2002 2001Revenues 389,715 379,474EBITDA 24,037 32,892EBITDA Proforma** 24,037 28,733EBITDA Proforma Growth, % –17EBIT 11,068 24,322Income before tax 9,262 21,957Cashflow from operations 7,598 29,040Total assets 279,309 289,887Lease coverage* 1.68 1.72Shareholders’ equity 99,834 104,120ROCE, % 8.4 11.7Total investments 28,883 18,646* Gross Operating Income minus property insurance and tax, in relationto minimum lease payments and management contract guarantees.** Adjusted for changes in the ownership structure.REZIDOR SASORGANISATIONREGENTREZIDOR SASPARKINNCERRUTIBrand & Concept DevelopmentBusiness DevelopmentFinance, IT, LegalPublic Relations, PurchasingResponsible BusinessSales, Safety & SecurityTechnical ServicesCOUNTRYINNRADISSONSASControlling, Food & Beverage, Franchise Services,Human Resources, Marketing, Operations, Public RelationsRevenue DevelopmentGroup11

for the affects of sales, decreased by 17% compared to 2001.Income before taxes was TEUR 9,262 (21,957) and netincome TEUR 3,876 (14,146). ROCE dropped to 8.4 (11.7)%.Total investments in tangible fixed assets and intangible assetsamounted to TEUR 28,883 (18,646).CORPORATE GOVERNANCE AND ORGANISATIONRezidor SAS Hospitality A/S is domiciled in Denmark. RezidorSAS is a fully owned subsidiary of the SAS Group, which is listedon the Stock Exchange in Stockholm, Copenhagen and Oslo.The owner is represented on the board of Rezidor SAS by thechairman Gunnar Reitan (Executive Vice President & DeputyCEO of the SAS Group), Jørgen Lindegaard (President and CEOof the SAS Group) and Benny Zakrisson (Vice President, CorporateAdvisory). Jay Witzel (President of Carlson Hotels Worldwide),Anders Ljung and Leo Renaghan are external board members.Five ordinary board meetings are held annually, while the Chairmanand the CEO have scheduled meetings monthly.The Group is organised to achieve its business and value creationgoals and is governed against clearly set targets, all relatingto the overall target of value growth, measured as EBITDA growth.Performance versus key stakeholders, such as customers, propertyowners and employees, is assessed on a regular basis.Rezidor SAS Group Executive Committee (EC) has eightmembers and supports the CEO in his overall responsibility forthe Group, its performance and development. The ExecutiveCommittee has a joint responsibility for the Rezidor SAS BusinessPlan including new projects, financial objectives and majorinvestments. The EC members carry both operational functions,like finance, concept development and business development,as well as brand functions, with the Chief Operating Officers(COOs) of Radisson SAS, Park Inn and Country Inn.Risks are managed in various functions on different levels.The EC is responsible for business risks on a strategic level,both related to current operations, investments and futuredevelopments. Operational risks are managed by the COOs,who sit on the EC. Safety & Security for guests and staff is anoperational responsibility, as is the execution of the ResponsibleBusiness programme. The EC, of which all but one are based inBrussels, meets bi-monthly.Support and control functions, such as Brand & ConceptDevelopment, Finance, Legal, Responsible Business, TechnicalServices, Purchasing, IT and Public Relations are organised ascentral functions.Fast growth being a key strategy, Business Development ismanaged as one entity common to all brands structuredaccording to geographical regions.To secure cross brand synergies, especially with regard tocorporate clients and Customer Relationship Management(CRM), a central Sales function has also been organised.Each brand has a COO, reporting to the CEO. The responsibilitiesof the COOs include profitability on a brand level, conceptdevelopment and marketing as well as managing the brandaccording to set values and criteria.Brand operations are organised with their own resources forMarketing, Brand Services, Human Resources and Food & Beverage,see page 11. Before reaching critical mass, the brands mayrely on some headquarter resources.Each hotel property is managed by a General Manager, andsupported by a Regional Director and corporate staff. The sizeof each hotel’s management team and number of employeesvaries, based on the size and business volume of the property.Each property is managed through a balanced scorecard, coveringfinancial, customer satisfaction and staff-related criteria,which is reported monthly.OPERATIONAL PROFILESRezidor SAS Hospitality * Rezidor SAS Regent Park Inn Cerruti Country Inn Radisson SASNumber of hotels/in operation** 182/133 2/2 2/0 2/0 12/12 164/119Number of hotels by March 12, 2003/in operation** 199/142 2/2 17/2 2/0 12/12 166/126Number of rooms/currently trading** 39,680/28,836 340/340 1,176/0 290/0 1,068/1,068 36,806/27,428Number of employees** 13,583 n/a 274 0 209 13,100Occupancy, % 65 – – – 54 65ARR, Euro 104 – – – 73 104RevPAR, Euro 69 – – – 39 68GOP, % 33 – – – 21 33* As of December 31, 2002.** Incl. franchise hotels.12

NUMBER OF PROPERTIES, 2002Rezidor SAS Group, in operation and signedNUMBER OF ROOMS, 1998–2002Rezidor SAS Group, System-wideRadisson SAS 164Regent 2Cerruti 2Park Inn 2Country Inn 1240,00030,00020,000Group10,0000Total: 182 by December 31, 2002.9899000102GROUP OCCUPANCY, 1998–2002Rezidor SAS Group, per centREVENUE PER AVAILABLE ROOM, 1998–2002Rezidor SAS Group, EUR707468667270686466626462606098990001029899000102SYSTEM-WIDE REVENUE, 1998–2002Rezidor SAS Group, TEURGOP PERCENTAGE, 1998–2002Rezidor SAS Group, per cent1,2001,00080060040020035343332310309899000102989900010213

REZIDOR SAS STRATEGIESFast and focused growththrough five strong brandsApart from fuelling growth, operating brands widely positionedover the price range reduces the total business risk.GroupSecuring continued growth, while trying to keep risks low, hasbeen the basic rationale for turning the company multi-brand. Amulti-brand portfolio allows us to establish a bigger customerbase and to capitalise on our broad country knowledge. Apartfrom fuelling growth, operating brands widely positioned overthe price range reduces the total business risk in the company.Establishing cross-brand sales and operational synergies isa cornerstone of the multi-brand platform. All brands will gainfrom economies of scale in areas such as business development,purchasing, technical, recruitment, information technology,PR. The new group-wide reward programme, Gold Points byRezidor SAS (see page 41), will be a vehicle for customer recognitionand benefits all through the system.However, brand and product differentiation is crucial to success.The integrity of each brand must be guaranteed, in orderfor the brands to realise their full potential. Brand standardshave been established for the individual brands and QualityAssurance inspections will follow up on compliance.Increasingly, brand management skills will be the major successfactor for our company. Apart from managing hotel brands,Rezidor SAS will also build its corporate brand in the capital andreal estate markets. In some applications the corporate brandwill appear as the endorser for the individual hotel brands.FAST AND FOCUSED GROWTHGrowth is an engine for creating value. Rezidor SAS has set itslong-term growth target at 700 hotels by 2012. Radisson SASforms the bulk of the Rezidor SAS portfolio today, but the midmarketbrands will increase their share of the portfolio. RadissonSAS, Park Inn and Country Inn are the three volume brands andaim for heavy penetration in the markets they serve, whereasRegent and Cerruti strive for strong niche positions.Our growth strategy builds on our experience that establishedbrands have an upper hand in the marketplace, not leastthrough the advantage of recognition. Therefore we have chosento grow primarily by operating and expanding established internationalbrands.Our primary area of operation is Europe, the Middle East andAfrica, so we deal with wide cultural diversity. For up-marketbrands: Regent, Cerruti and Radisson SAS, we prefer managementand lease agreements in order to secure brand controland maintain high quality levels in terms of product and servicedelivery. For Country Inn, we will also primarily grow throughmanagement agreements.The principal approach for developing the Park Inn brandwill be through franchises. This will enable fast growth throughbranding a wide range of properties, offering the same standardNUMBER OF HOTELS *Rezidor SAS Hospitality1994 1995 1996 1997 1998 1999 2000 2001 2002Owned 5 5 6 6 6 4 2 2 2Leased 10 11 19 19 21 25 28 40 42Managed 13 24 31 47 56 73 87 92 92Franchised 1 21 24 28 30 25 29 26 46TOTAL 29 61 80 100 113 127 146 160 182* In operation and under development.15

and product quality, however with no restraints on the numberof rooms.To boost growth further, we are prepared to offer shortercontracts, typically ten to fifteen years with an option to terminateafter five years. However, we anticipate that early terminationwill not be exercised due to the good return on investmentthat will be delivered.With this variety of contracts and durations, we feel confidentabout our growth target of 50 hotels per year over the five differentbrands.RAISING THE STANDARDS OF PROFITABILITYThe company has cultivated a high performance culturethroughout all ranks for many years. Brand effectiveness – customers’perception of our service delivery as defined by the variousbrands’ value propositions – is our most important area ofperformance. Yet we must continually improve efficiency andproductivity behind the scenes. Our challenge is to “offer customersmore for less, by doing more with less”.The major focus is at property level. All individual hotels inour system are being compared with each other in terms of theirrevenue and profit building performance. It is of even greaterinterest to measure how well each hotel is doing compared tolocal competitors. Key benchmarks are RevPAR (Revenue PerAvailable Room), ARR (Average Room Rate) and occupancy.Measuring revenue penetration (occupancy, RevPAR and ARR)is one of our most powerful tools for keeping track of, and ultimatelyoutperforming, the competition. Despite a difficult market,we were able to maintain our RevPAR penetration.To drive performance for every owner, Rezidor SAS sets cleargoals for its General Managers and develops meaningful incentives.Sophisticated management tools enable General Managersto deliver on financial performance, market share, andguest and employee satisfaction.<strong>Managing</strong> the day-to-day business in a downturn economyhas been a natural focus in the last couple of years, through theconcept of “50% profit conversion” at the property level. We aimto ensure that at least 50% of the incremental revenue is carriedall the way down to the bottom-line. Correspondingly, when revenuedrops, only 50% should hit the bottom-line.Building flexibility into the cost structure is a key strategy.Transforming fixed costs into variable costs is as important ascutting costs, as variable costs allow flexibility in meeting variationsin the business cycle.Our Core ValuesWe are:A People Company – focusing on individuals,personalities and attitude.Devoted To Creating Value – for owners,customers and employees.Entrepreneurial – relatively flat, hands-on,accessible, making things happen.Opportunity Driven – agile, flexible, positive.Responsible – committed to ResponsibleHospitality.Building On The “Z” Factor – doing things differently,being creative, allowing room for the unexpected.The overall goalTo make Rezidor SAS the most attractive hospitalitycompany to do business with and to work for.Market targets700 hotels by 2012, as a result of growing thenumber of hotels in the Group by at least 50properties yearly throughout the five brands.For each Group brand to achieve and securea level of customer satisfaction and loyalty thatis best in class.To continuously improve RevPAR penetration.Financial targetsA yearly RevPAR growth of 5% as an averageover a business cycle.A yearly EBITDA growth of 15% as an averageover a business cycle.Other targetsFor each brand to achieve a continuous improvedlevel of employee satisfaction (see page 34).To achieve uncontested industry leadership inenvironmental performance by continuing toincrease efficiency per production unit at theproperty, brand and group level (see page 50).The core strategyThe core strategy of Rezidor SAS is to establishand operate a diversified brand portfolio so we canoffer the best possible solution to property owners,a variety of strong brands to guests, and superiorvalue to shareholders by fast and focused growth.By doing so, Rezidor SAS can also offer widercareer opportunities to its staff and contribute moreefficiently to the communities where we operate.16

The VisionOur vision is to become one of Europe’s leading hospitality managementcompanies with a focused collection of high-performing,profitable brands in various market segments.GroupThe MissionWe’re in business to create value for our key stakeholders:We will maximise value for our owners (SAS and their shareholders)by realising our full potential as a leading Europeanmulti-brand hospitality management company. This will beachieved by excellence in managing brands, people, propertiesand relationships.We will maximise value for property owners by operating orfranchising their assets efficiently under one of the Rezidor SASbrands.We will maximise value for guests – corporate and private– by giving them a hospitality experience that will meet andexceed their expectations.We will maximise value for employees by offering them ademanding and rewarding working environment, and excellentcareer opportunities worldwide.We will show due respect for the communities and environmentsin which we operate and create value by being there.17

REZIDOR SAS MARKET OVERVIEWContinued consolidationand emerging mega-brandsDeeper penetration of leading brands will continue– and the potential is huge, especially in Europe.GroupTravel remains the world’s largest industry but 2002 was anotherdifficult year for all travel-related business.The global economic slowdown caused considerable stagnationwhile the hospitality industry in Europe faced a recessiveeconomy in several important markets for the third successiveyear. The first half of 2002 was still badly affected by the aftermathof 9/11. Coupled with war in Iraq, and the threat of further terroristattacks, hopes of a recovery were dampened.Business cycles in different national and regional marketsusually fluctuate within the general development of the globaleconomy. London, Amsterdam and Stockholm, for example,were among the destinations that had seen weakened demandin 2001; not surprisingly, they were all found in over-heated marketsa year earlier.In 2002, the UK market started to recover from its deep dive in2001. Demand continued to weaken throughout Benelux, particularlyin Brussels, which was hit by the demise of Sabena and thesubsequent decrease in conference bookings.France saw some positive movement towards the end of2002 despite having suffered from a lack of US business at thebeginning of the year. But the German market deteriorated,especially after the autumn election. The GDP in Germany hasgrown more slowly than other European countries since themiddle of the 1990s, but it still has a higher level of per capitaGDP than other European countries. As long as Germany continuesto suffer from structural economic problems, it is expectedto fall behind its European neighbours.The Danish and Finnish markets enjoyed fairly stabledemand, although occupancy dropped due to increasing internationalcompetition and new supply, especially in Copenhagen.Demand was also generally stable in Sweden.On a more positive note, Norway is showing signs of recoveryfrom its former troubles, but still suffers from its highly appreciatedcurrency. The Baltic markets are developing steadily andMoscow and St. Petersburg are close to booming.Poland is facing increased international competition in a highsupplymarket, occupancy levels are expected to continue tostay low. Vienna and Prague saw fairly stable demand, howeverweakened in Prague due to a substantial growth in supply,especially in the up-market segments.Lower oil production and the regional security situation led to asignificant slowdown in growth in the Middle East. Security issueshave also had a significantly negative impact on tourism, notably inEgypt, Jordan and Lebanon.Spreading operations throughout many markets helps reducerisks. Rezidor SAS operates in 40 countries worldwide and thereforehas restricted vulnerability to local market setbacks.A strong home market position is another positive stabilisingfactor. Rezidor SAS currently regards the Nordic countries,Germany, UK, Poland and Benelux as home markets.Operating different categories of hotels also reduces risk.Airport and large international conference hotels have experienceda drop in demand, while hotels catering for domestic individualpleasure and business travellers have enjoyed an increase.CHANGING PATTERNSIN THE SHORT AND LONG TERMTravel is not only the world’s largest industry; it was also traditionallyperceived as one of the world’s safest investment sectorswith a steady global growth of, on average, 5%. But theaftermath of 9/11 has seriously challenged that perception.Air travel, in particular, was hit dramatically and traffic volumesare not expected to pick up to previous levels until 2004 or2005 at the earliest. Over-capacity, squeezed corporate travelbudgets and increased fuel costs have already begun to changethe fundamental structure of the airline industry and swiftprogress is being made with long over-due consolidation. Withmany of the world’s largest airlines operating in the red, a war inIraq may deal a final blow to the existing structure.A new breed of low cost operators has challenged the estab-19

lished airlines. And new travel patterns have been created by theavailability of cheap fares and increased demand from budgettravellers for accommodation. The low and mid-market segmentsshow stronger development than up-market segments.Frequent travellers, who still favour branded accommodationbut have had to review their accommodation priorities, arelargely responsible for these changes.This shift in accommodation priorities is likely to continueafter the economy recovers and the recently added Park Inn andCountry Inn brands give Rezidor SAS a strong platform to meetthese new priorities.CONTINUED CONSOLIDATION IN THE HOTEL SECTORConsolidation within the European hospitality industry has beena key phenomenon over the past years, as operators andinvestors strive to achieve both maximum exposure in marketsand economies of scale in operations.Several major international brands like Hilton, Marriott and theAccor brands are increasingly entering Northern European marketslike Scandinavia, Germany and Poland.Sale and leaseback has become the predominant vehicle fortransactions in the hotel sector. By divesting real estate in returnSpreading operations throughoutmany markets helps reducerisks. Rezidor SAS operatesin 40 countries worldwide andtherefore has restricted vulnerabilityto local market setbacks.for leases or management contracts, hotel operators releasecapital for acquisitions, developments and refurbishment. Largeinstitutional investors, like pension funds, have been seekingalternatives to volatile and badly performing stock markets.Many have moved into hotel real estate to achieve a more diversifiedinvestment portfolio, and this trend has further fuelled theconsolidation process in the industry.Investment and transaction activity has been notably weakerall through 2002, but is expected to improve in 2003, when deterioratingindustry performance facilitates take-overs and createsother business opportunities.Investment activity is becoming increasingly creative; flexibleand innovative financing structures are crucial in the competitionfor contracts and will also speed up the consolidation process.EMERGING MEGA-BRANDSThe travel industry, even if brought to a temporary slowdown, isstill a major driving force for globalisation.The industry is developing towards a globally networkedstructure, with global mega-brands accounting for an increasingproportion of business. For several years, a major trend in thehotel industry has been the shift from independent business tochain operation.A few dominant multi-brand hotel companies have emergedas major global players, offering property owners and guests aspectrum of brands and corresponding products, covering abroad price range and matching the potential of different propertiesand market situations.A dozen mega-brands, including Radisson SAS, are nowpenetrating the European markets – especially the big cities – ata fairly fast pace. This development is most evident in the upperand mid-market segments, which cover the bulk of businesstravel. Increasingly, the major chains are growing by the acquisitionof smaller groups and by portfolio transactions, ratherthan by case-by-case development.The driving factors behind the growth of the major chainsinclude: the increasing importance of brand recognition andreward programmes, increasing business shares from GlobalDistribution Systems (GDS) and Central Reservation Systems(CRS), increasing business shares from corporate accounts, anacceptance of franchise agreements instead of voluntary marketing,and reservations co-operation and partnerships with airlinesand travel agents/tour operators.The transparency and commercial possibilities provided bythe Internet and refined information technology only add tothese developments.Consolidation of the industry through deeper penetration ofleading brands will continue. And the potential is huge, especiallyin Europe. As the world’s largest market with 39% of totalroom capacity, approximately 70% of the 150,000 hotels inEurope are still “unbranded”, compared to 30% in the US.In Europe, domestic chains still dominate national markets,and continuous consolidation has resulted in a complicatedbrand map with double, or even triple, branding. It is likely thatthis is just a temporary phase in the development of a consolidatedand easier to understand “brandscape”.20

GroupIncreasingly, the majorchains are growing bythe acquisition of smallergroups and by portfoliotransactions, rather thanby case-by-case development.21

BrandsRezidor SAS Brands 24Brand Concepts 26Brand Operations 28Radisson SAS Performance 32Brands

Full-service with satisfaction guaranteed.Radisson SAS offers full-service hospitality. It aims to be the strongest up-market hotel andthe market leader in the markets it serves by providing Fresh, Host and Easy hospitalityservices in a “Yes I Can” spirit to all its guests.Popular standardised service concepts are typical of Radisson SAS. These includeSatellite Receptions, One Touch Service, the Grab & Run Breakfast and the choice of a numberof Room Styles. The key differentiator, however, is the 100% Guest Satisfaction programme:if a service delivery problem can’t be made right, the customer won’t have to pay!A cosy stay at a comfortable price.The first thing you see is the lobby fireplace, surrounded by inviting areas to socialise orjust sit. It’s like walking into someone’s living room!Country Inn is a mid-market alternative for business and pleasure travellers who wanta high level of comfort and excellent value for money. The unique Country Culture, withits cosy atmosphere and friendly staff, is crucial to the concept.Our new lifestyle hotel brand.A joint initiative with the major international fashion house of the same name, Cerruti setsout to capture the fast growing, stylish, mid-market. It is buildings of interesting architectureand urban location. Individually designed, contemporary rooms, completed with the bestof everything. High profile bars and restaurants of an Italian genre. Boardrooms, not conferencerooms. Occasional Spas. But most important of all, Cerruti hotels will be accessibleand affordable by concentrating on only select service.Mastering the essentials.Park Inn represents an unconventional option within the international mid-market hospitalitysegment: a contemporary, value-for-money accommodation experience for the frequenttraveller, whether on business or pleasure.It’s an “easy to use” and affordable hospitality product. And the focus is on what reallymatters: a good, comfortable night’s sleep in a fresh, clean, safe environment offeringconsistently executed services with a warm and friendly approach.Luxury for all senses.Regent is a hospitality legend, virtually synonymous with superior, traditional luxury hotelsand resorts. With its roots in the Far East, Regent has set the standard for luxury services,far exceeding the ordinary full-service concept.What constitutes a true luxury experience? The answer to that question evolves withtime. Regent has continuously reinvented the luxury experience for its guests and willcontinue to do so. With Regent, nothing is ordinary. So expect the unexpected!24

Number of hotels164Number of hotels12BrandsNumber of hotels2Number of hotels17Number of hotels2A total of 199 hotels in 5 brands, in operation or under development, by March 12, 2003.25

REZIDOR SAS BRAND CONCEPTSFrom efficient mid-marketto ultimate luxuryRezidor SAS now offers a powerful range of well-defined brands, with highlycompetitive hospitality concepts from mid-market to full-fledged luxury, coveringmost segments in the market.RADISSON SAS:WELCOME TO FRESH, HOST & EASY!Full-service “Fresh, Host and Easy” hospitality through a “YesI Can” service culture – that’s the driving mechanism in thecontinuous success of Radisson SAS, as it aims to become themarket leader in the markets it serves.Fresh, Host and Easy are not just words to describe the differencein the Radisson SAS experience; they are true core values.All Radisson SAS employees are hired by attitude andtrained to understand these values in order to live and deliverthem to our guests every day.“Fresh” is mostly a sensory quality. Our Scandinavian originand heritage bring a naturally fresh approach to everything fromfood concepts to room styles. “Fresh” is about spirit, aboutdoing things differently, being open-minded, innovative, unconventionaland sometimes adventurous. It’s also about fun andhaving a sense of humour whenever and wherever appropriate!“Host” is a question of attitude: welcoming, warm, proactive,responsive, caring and approachable. Being a goodhost is the cornerstone of our success in building strong andsustainable relationships with our guests. Hospitality can neverbe standardised, it always has to be delivered on a one-to-onebasis: personal recognition with a ”Yes I Can” attitude are keyfactors to success.“Easy” focuses on the practical side of our products andservices. The stay at Radisson SAS should always be uncomplicated,convenient, informal, accessible, flexible and imbuedwith common sense. This is ensured by the service from individualstaff and the attitudes that go with it.Popular, standardised service concepts, such as SatelliteReceptions, One Touch Service, the Super Breakfast, the Grab& Run Breakfast and, of course, a wide choice of Room Styles,are typical of Radisson SAS. The 100% Guest Satisfaction programme,however, is the key diffentiator. If a service deliveryproblem cannot be made right, the customer will not have to pay.Radisson SAS targets a contemporary up-market audiencelooking for an efficient and rewarding hospitality experience forbusiness and pleasure.Radisson SAS operates city hotels, airport hotels and resorthotels, all with facilities to match the hotel’s category. City locationsare typically prime; mid centre or strategic locations in differentparts of town.AT HOME, COUNTRY INN STYLEWarm, comfortable and cosy, with traditional hospitality deliveredconsistently every time; that’s what Country Inn is all about.The brand promise is apparent in the way we have designed andfurnished our hotels and it comes alive through our courteous,friendly, and caring staff.Country Inn is a mid-market alternative for business andpleasure travellers who want a high level of comfort and excellentvalue for money. The unique Country Culture, exemplified by thecosy atmosphere and the convivial staff, is crucial to the concept.Regardless of size, every Country Inn has the charm of asmall, family hotel. The properties are converted new buildings,or constructed from scratch, both according to defined guidelines.Locations are typically off city centre or suburban.Service features include coffee makers and ironing boardsin the room, daily newspapers and use of a fitnesscentre/sauna. Fresh coffee, tea and cookies in the room areincluded in the price.CERRUTI: TARGETING ATTITUDESCerruti is our lifestyle hotel concept that targets customers’attitudes, beliefs and social habits, rather than traditional hospitalityindustry market segmented geodemographics. Regardlessof age, they are stylish people, invariably urbanites, independent,well travelled people who know their own fashion but26

are certainly not victims. They appreciate high quality, understandfine fabrics, food and wine, architectural detail anddesign. They love glamour and colour, but want to enjoy it all atthe right price. They are modern but classic, up to date buttimeless, elegant and relaxed. They are part of the new consumermovement and Cerruti hotels are designed to capturetheir hearts and minds.They will initially be developed in new and up coming areasof dynamic European cities, but will have the potential and thecontractual freedom to become a truly global brand within theirown marketplace. They can be new builds or conversions of historicold buildings, but each building will possess a distinctarchitectural character and each Cerruti hotel will be symbolisedby an imposing entrance. They will range in size from between120 and 175 individually designed, highly equipped rooms withbathrooms to match. The hotels’ restaurants and bars will be ofItalian genre – trattorias, Cerruti cafés, Enotecas and wine bars –and will play central roles in establishing each Cerruti as anindependent spirit within its own local market. Each Cerruti willalso offer two or three boardrooms, not conference facilities,along with select fitness and destinational Spas.PARK INN: “BEST BED IN TOWN”Providing a good night’s sleep is basically the core of any hotelproduct – and a good bed is what makes it possible! It’s surprising,therefore, that the quality of the beds usually gets theleast attention in a hospitality concept. Not so at Park Inn! Wepride ourselves on providing “the best bed in town” in the midmarketsegment. Local tastes and traditions vary and so ourbeds are not standardised but we promise they will always offerthe best sleeping experience in the same class locally.Park Inn represents an unconventional option within the midmarkethospitality segment; contemporary, value-for-moneyaccommodation for the frequent traveller, on business and onpleasure. The main focus of the brand promise is to deliver consistentlyon the basics of customer needs; a safe stay and an efficient,uncomplicated experience from the start of the reservationprocess, through the entire stay up until check-out.Being efficient, uncomplicated, practical and hassle free isthe foundation of the Park Inn experience. It’s an “easy to use”and affordable hospitality product that focuses on what reallymatters: a good comfortable sleep in a fresh, clean and safeenvironment, and services that are always delivered with awarm and friendly attitude.Rezidor SAS Brand PositioningMinimumServiceLuxuryFirst ClassLimitedServicePark InnCountry Inn“Hard” BudgetCerrutiMid-Priced economyRegentRadisson SASPark Inn hotels vary in size and locations, from city centre andsuburban to countryside, and the Park Inn experience is upbeat,casual, colourful, warm and fun.The logo says it all!REGENT: REDEFINING LUXURYQuite simply, we’re talking about a touch of magic! Luxurytoday goes far beyond material features, increasingly focusingon the spirit and the senses. By delivering superior, non-materialquality in all of its services, the Regent experience offers luxuryin all senses.Regent is a hospitality legend. It is virtually synonymous withsuperior, traditional luxury hotels and resorts. With its roots inthe Far East, Regent has set the standard for luxury services, farexceeding the ordinary full-service concept. It offers highly personalisedservice, fantastic dining experiences and full banquetingfacilities, plus a very high staff/guest ratio.Rezidor SAS will reinvigorate the Regent brand for majorcities in Europe and the Middle East as well as for resort destinations.Regent has continuously reinvented the luxury experiencefor its guests and will continue to do so.Celebrating the local culture is essential: Regent guests donot want a standard experience. Local flavour will colour everystay at a Regent hotel, making it a memory for a lifetime.Regent typically enjoys superior, strategic locations in premierdestinations. Properties vary from converted palaces to starklymodern buildings, all with inspired period architecture.BrandsCountry Inn combines the amenities and charm of small,family hotels, with consistent high standards of a major hotelchain – all at a down-to-earth price.27

REZIDOR SAS BRAND OPERATIONSGrowing industry leadersAll brand operations share not only the core values of Rezidor SAS but alsosome basic programmes, such as the Yes I Can! service excellence.The success of Radisson SAS over the last eight years illustratesthe ability of Rezidor SAS to re-interpret brand conceptsand to efficiently establish and grow them in the European, MiddleEastern and African markets.Translating brand concepts into daily routines is the key tocreating strong brands. Building coherent brand values into theproduct and delivering consistently on brand promises are themost important parts of brand management and control. Toguarantee that this happens, brand standards have beenestablished for each Rezidor SAS brand and Quality Assuranceinspections will follow up on compliance.Brand perception and brand loyalty are critical to success,especially in the up-market segments. The strength of the brandis important to owners in positioning their assets for maximumvalue and return. From the guests’ perspective, a strong branddelivers consistently on brand promises that match valuebasedpricing.Research suggests that 65% of hotel business in generalcomes from satisfied customers. A genuine commitment toguest care, delivered by people with shared values and anunderstanding of customer expectations, is the platform onwhich Rezidor SAS customer relations are built. This is why allbrand operations share both the core values of Rezidor SAS(see page 16) and also some basic programmes, such as theYes I Can! service training. Yes I Can! was originally a RadissonSAS service excellence programme, focusing on attitude andempowering staff to creatively solve any service problem toachieve ultimate guest satisfaction. This approach will now beelevated to a cross-brand programme, starting with Park Inn.Other programmes are brand specific, to ensure efficientbrand and product separation.RADISSON SAS LEADING THE WAYIn order to maintain its growth and capitalise on new opportunities,Radisson SAS is committed to continued developmentof its brand.Brand recognition is a basic requirement for success anddepends heavily on presence. One of the main reasons forRadisson SAS to aggressively pursue its growth strategy is toincrease brand awareness.Recognition of the Radisson SAS brand in Europe hasincreased over the last couple of years, at times faster than anyother major hotel brand, according to independent research.Radisson SAS enjoys top brand ranking in the Nordic countries.This includes brand awareness as well as being “firstchoice” for more business travellers than any other brand. Thebrand also has high recognition in the UK and the Middle East.During 2002, new procedures for Quality Assurance wereintroduced. Operating Radisson SAS hotels in 38 countries onthree continents inevitably means coping with diversity. But,while we have secured consistency in the basic elements ofservice delivery, we also see diversity as an asset. Building onlocal traditions will add colour and spice to the quintessentialRadisson SAS experience and provide an exciting hospitalitydelivery, balancing consistency with genuine diversity.Aligning employee and brand values is about recruiting,training and developing people who, at an individual level,identify with the core values of Radisson SAS: Fresh, Host andEasy. All Radisson SAS employees are encouraged toembrace these values within their everyday working lives. Tothis end, a workshop called “Living the Values” was launchedin 2002. Its objective was to make all Radisson SAS employeesunderstand our values so they can strive to live and deliverthem in every way, every day. The interactive nature of theworkshop enables everyone involved to discover and experienceall the attributes of each value and what it stands for.Creating a new level of personalisation has a high priority inthe development of the Radisson SAS guest experience.Personal recognition and attention, with a Yes I Can! attitude,are key factors in building strong and sustainable relationshipswith our guests. Radisson SAS is committed to making everyguest a VIP and each employee is empowered to maximiseguest satisfaction. The unique “100% Guest Satisfaction” programmehighlights communication as the primary tool for creatingan unforgettable guest experience.28

AwardsSome of the awards received during the year:Chef of the YearThe award Chef of the year in Belgiumwas given to Yves Mattagne, Executive Chefof the Sea Grill Restaurant, Brussels, by theprestigious restaurant guide Gault Millau.Easy to dobusiness with“Easy” focuses on the practical side of our productsand services. It starts with booking. After extensiveresearch and development, Radisson SAS willlaunch its new multilingual website early in 2003.It offers extremely easy navigation, showcasesprices including “lowest available rate” up-front andpictures of available rooms. We have eliminated thecredit card guarantee on web bookings to create africtionless booking experience.Rezidor SAS HospitalityCorporate Hotelier of the World 2002 Award to KurtRitter, President and CEO of Rezidor SAS Hospitality,by HÔTELS magazine.Radisson SAS Hotels & ResortsBest Hotel Chain Worldwide by Irish Travel AgentAssociation (Irish Travel News Award 2002, Ireland).Best Hotel Chain Worldwide by “Vuoden Valinta”voted by travel trade professionals in Finland, secondconsecutive year.Best International Hotel Chain in Norway and Swedenby Grand Travel Awards.Grand Business Travel Award for Best Hotel Chainin Sweden.Individual hotelsSpecial Award for unique tourism development atLand Fleesensee in Germany.Radisson SAS Royal Hotel in St Petersburg, Russiawas recognised by the global financial community asthe “Deal of the Year”.Radisson SAS Royal Hotel in Copenhagen rewardedBest Business Travel Hotel in Copenhagen, 2002,by New York based Travel + Leisure Magazine.Radisson SAS Slavyanskaya Hotel in Moscowreceived the GAO Moscow Award “Crystal vessel,2002” – Best Catering service between Moscowhotels.Radisson SAS Alcron Hotel in Prague was awardedthe Best Hotel Development 2002 by the Associationof Real Estate Market Development CzechRepublic.Country Inns & Suites in Timmendorfer Strand wasawarded by both TUI Holly and the NUR Group for thebest guest service in 2002.Radisson SAS Hotel in Galway, Ireland became Hotelof the Year 2002 by the Evening Herald newspaper.Environmental awardsRadisson SAS Bay Point Resort was awarded theIndustry Award for Environment by the Malta Environmentand Planning Authority and the Malta Ministryfor Environment.Radisson SAS Hotel in Malmö was awarded theTetra Pak Hotel of the Year Award for high quality,outstanding service and environmental commitment.Brands29

RE-EVALUATING HOW WE DO BUSINESSRadisson SAS’s vision is to be the market and performanceleader in the markets it serves by delivering consistently on itsbrand promises. With this aim in mind, we have challenged ourselvesto set new industry benchmarks and to redefine whatowners, guests and employees can expect from a contemporaryup-market hospitality operation. Our objective is to bethe best, not just in terms of perception, but also in ways that aremeasurable and meaningful to owners, guests and employees.Radisson SAS has re-evaluated every aspect of how it doesbusiness. Through innovation, investment and team effort, weplan to outperform the rest of the up-market hospitality industrywhen it comes to growth and stakeholder satisfaction. Newchain-wide initiatives aim at raising the bar in real estate optimisation,operational efficiency and marketing delivery.Customer targeting, revenue management, marketing andA genuine commitment to guestcare, delivered by people withshared values and an understandingof customer expectations,is the platform on which RezidorSAS customer relations are built.sales and quality assurance initiatives continue to broaden thebusiness base and increase repeat business. Innovative marketinginitiatives reach the entire spectrum of hotel businessgenerators – from travel agents and corporate travel plannersto frequent individual travellers. These initiatives both increasethe number of room nights sold and help to achieve higher revenuefrom each reservation.Sophisticated business services and state-of-the-art meetingand function facilities will ensure continued success in attractingconference and meetings business. A new “Meetings & Events”concept was launched in 2002 with 10 customer promisesdesigned to turn any meeting into an unforgettable experience.COUNTRY CULTURE MAKES THE DIFFERENCECountry Inn operated 12 properties by the end of 2002. Thisincluded the recently opened Paris Charles de Gaulle property,seven hotels in Germany, two in Vienna and two in London.Through a joint venture, 50 new properties are targeted forRussia within the next 10 years, see more on page 57.All Country Inn hotels have the ambience of a typical countryhome and the friendly service that will make guests feel “athome” instantly. Country Inns offer a combination of environ-ment and atmosphere that is truly special; it starts with theunique architecture and design and continues with the highlymotivated staff trained in Country Culture.Employee satisfaction is high at 4.3 on a maximum 5-pointscale. Customer satisfaction is even higher, scoring at extremelyhigh 9.8 out of a maximum 10.During 2002, revenues from leased and managed propertiesaccounted for 91% of operating revenue, whereas managementand franchise fees accounted for 9%.The Gross Operating Profit (GOP) – total operating revenueless operating expenses – was 43% in 2002 for leased andmanaged hotels.Occupancy was 54%, in spite of the weak global economy.RevPAR (Revenue Per Available Room) for leased hotels wasEUR 59, while for leased and managed Country Inn hotelsRevPAR amounted to EUR 39.For more Country Inn operational data 2002, see table onpage 12.PARK INN – A TOWERING STARTThe first European property to fly the new Park Inn flag was the1,006 room skyscraper on Berlin’s legendary Alexanderplatz –a powerful first step in a very ambitious expansion plan. Somemonths later, a second Park Inn opened in the centre of CapeTown, South Africa, the Park Inn Greenmarket Square.An important third step for the growth of the Park Inn brandwas the addition of 14 Swedish hotels from the Software HotelsGroup in early 2003. Ten of these hotels are mid-market businesshotels with city centre, or suburban locations. The remainingfour are conference hotels, which provide professional conferencefacilities located in, or close to, historical mansions andother heritage properties. Their shared success factors are Joy,Commitment, Personality and Food, their passion for the lattershown through Awards such as “Best Breakfast in Sweden”and “Best Dessert Concept in Sweden”. The hotels will berebranded into Park Inn hotels successively from March, andwill be completely within the Park Inn system from May 1, 2003(see more on page 43).Park Inn will grow while maintaining a strong focus on franchisingservices, thus keeping the needs of its franchisees inmind. Being part of the Park Inn brand will entail more thangaining access to central reservations systems, marketing andsales. It will also mean that the franchisees join a communityof like-minded entrepreneurs, making it possible for them toshare staff, resources and best practice as well as to createbusiness opportunities. The colourful brand logo and brandspecific characters will make the rebranding of existing propertiesa smooth and efficient process.30

31Brands

RADISSON SAS PERFORMANCEYet another year of growthCustomer and employee satisfaction reached new record levels. The customerdelight score increased to 58.6 (56.5)% and employee satisfaction, as measuredin the climate analysis, improved to 80.5 (79.2) on a 100-point scale.2002 was the eighth consecutive year of strong growth, both inthe number of hotels and in business volume for Radisson SAS.By the end of the year, 164 (152) Radisson SAS hotels wereeither in operation or under construction in 38 countries.System-wide Radisson SAS revenues, including owned,leased, managed and franchised hotels, reached MEUR 1,067(1,058) during 2002 – an increase of 2% over 2001. Operating revenuesfor owned and leased hotels increased to TEUR 386,421(378,251). Revenues from comparable units decreased by 3%.Revenues from owned and leased properties accounted for84 (82)% of operating revenue, while management and franchisefees accounted for 16 (18)%. In owned and leased hotels, roomsaccounted for 47 (45)% of revenue, while Food & Beverage operationsaccounted for 33 (33)%. The remainder were other revenues.Motivating and retainingemployees is a critical factorin the service industry.The Gross Operating Profit (GOP) – total operating revenue lessoperating expenses – is our basic indicator for efficiency in theoperation. For owned, leased and managed hotels, the GOPmargin stayed at 33 (33)% in 2002. The GOP has improvedfrom 26% in 1994 and our current performance is better thanthe industry average in our markets.Occupancy for comparable units remained high at 65 (67)%,in spite of the weak global economy. RevPAR (Revenue PerAvailable Room) dropped marginally to EUR 68 (69), while ARR(average room rates) stayed at EUR 104 (104).Room revenue delivered through the Radisson Central ReservationSystem accounted for 23% of rooms revenues in comparableunits. The average house rate (ARR) achieved throughthe Central Reservation System (CRS) was approximately 30%higher than the overall ARR.Web bookings represented slightly more than 4% of all CRSbookings, whereas voice reservations continued to representapproximately 12%.RISING GUEST SATISFACTION SCORESIn 2001, a new customer satisfaction-monitoring programmewas introduced. Based on a larger and more representativesample size, it helps us determine and serve the needs of ourcustomers more accurately. It adds new insights into the developmentof the brand, providing tracking data to compare with historicalperformance and benchmark scores for products andservices across regions. It is an effective operational tool withwhich the General Managers can evaluate the performance ofeach hotel. It will also help the COO assess the development ofthe Radisson SAS brand.Apart from WTR (Willingness To Return) and Delight (the topWTR score only), the data also supports a Loyalty Index and anOverall Satisfaction Index (an average of all questions included inthe survey). The customer delight score increased to 58.6 (56.5)%.In order to secure and leverage brand equity it is importantto make sure that not one property disappoints. In 2002, theRadisson SAS hotels benefited from investments into refurbishmentprojects and renovations of MEUR 36. Some 15 propertiesacross Europe, the Middle East and China have undergonemajor improvements during the year. Overall, Radisson SASinvests about 5% of the operational revenues into refurbishmentand upkeep. Innovations such as the launch of the newrooms design complement both landmark and resort properties,extending the brand’s appeal to new markets.THINK HOTEL, BOOK RADISSON SAS!Radisson SAS’ innovative marketing programmes are aggressive,pro-active and increasingly based on a narrow-castingapproach. They are designed to expand the revenue and profitpotential of our hotels worldwide through advertising, marketingprogrammes, strong partner relationships and targetedsales efforts.The exclusive, Radisson SAS “Look to Book” incentive pro-32

The Culinary AcademyRadisson SAS is committed to offering trainingfor horizontal/professional excellence as well as forvertical/career development. The launchingof the “Radisson SAS Culinary Academy” in 2003will be a strong statement of this policy. ExecutiveChefs of all our hotels will pass through the “AtelierYves Mattagne” in Bièrges (Belgium).Yves Mattagne, Executive Chef of the RadissonSAS Hotel in Brussels is famous for his excellentfish and crustacean creations in the renowned,award-winning Michelin 2-star and 18-points GaultMilleau Sea Grill Restaurant (see more on page 29).CLIMATE ANALYSISof maximum 1008280787674729899000102BrandsGUESTS DELIGHTEDper centGEOGRAPHICAL DISTRIBUTIONOF EMPLOYEES, per cent60Nordic countries 335550Rest of Europe 5045403530Middle East, Africa& China 179899000102PURPOSE OF VISITBusiness mix 2002, per centIndividual business 47.5Crew 6.5Leisure groups 7Individual leisure 20Business groups 19The Service Standards NordicCountries project at Radisson SASThis project is used at the hotel level to furtherdevelop customer focused service standards thathelp the staff manage the quality and consistencyof the service delivery. This project goes beyondthe “Yes I Can” service training, and allows thehotels to go deeper into the organisation enablingeach staff to personally define the service they wantto give to the guests. A first evaluation of the projecthas shown that the hotels included have higherCustomer Satisfaction and work better as a team.33

Radisson SAS’ innovative marketing programmes are aggressive,pro-active and increasingly based on a narrow-casting approach.gramme gives travel agents around the world one more reasonto opt for our Fresh, Host and Easy approach. In 2002, RadissonSAS re-launched its “Free Fridays” programme for travelagents. In addition to enjoying accommodation and breakfast,the travel agents are invited to take a tour of the house so theycan get to know the property and all the services it offers.Instead of just showing hotel rooms, the advertising in 2002encouraged guests to try something different. It urged peopleto escape from their daily routines to new surroundings andshowed how Radisson SAS will take care of the details, turningany stay into a memorable experience. The message was conveyed,with suitable animal magnetism, by Mimi the cat, Fifi thedog, Stinky the skunk and Woody the woodpecker!The unique “Summer Magic” offer in Radisson SAS’ hotelsacross Europe, Middle East, Africa and China made summerbreaks an affordable and attractive proposition for families withchildren, couples and for individual leisure travellers wanting tostay in top style. From June until August, business travellersand their families were offered the unique Summer Magic offer– free accommodation for children under 17 and up to 30% offroom rates. Summer Magic was a big success in 2002 with a60% increase in room nights over 2001.More than 100 hotels offered the “Weekend Magic” programme– special prices for weekend stays, a welcoming gift,free breakfast, a late check-out, a free stay for children in the parents’room, plus an additional 10% reduction on the next visit.Loyalty from current customers is promoted by offers likethe frequent flyer miles with EuroBonus, the customer loyaltyprogramme of our parent company, SAS Airlines, whichrewards loyal customers of SAS Airlines and Radisson SASHotels & Resorts.HIRE BY ATTITUDE, TRAIN TO SKILLThe right people with the right attitude are crucial for building astrong service brand and strong relationships with our customers.That’s why it’s our policy to hire by attitude and train to skill.Training at Radisson SAS has two main focal areas – careerdevelopment and personal development. Traditionally, the focushas been on career development. Increasingly, however, wealso focus on personal development. Surveys indicate that themajority of people working in the hospitality industry do notwant a traditional career: they want to perform better in whatthey’re doing rather than doing something else.In addition, our 5-step training plan is a training and developmentpath whereby all employees can strategically plan theirtraining and development progression.Motivating and retaining talented staff is a critical factor inour business. The Mentor-Mentee Programme is individuallytailored so that the mentee can learn and develop beyond thelimits of a formal training course. The programme is designedto directly support our policy of “promotion from within” whichcreates strong personal motivation for working hard and ultimatelysupports the identification of top talent within the organisation.It also allows employees with potential to progress at apace suitable for them and learn from current General Managersand other senior staff. In 2002, 20 “mentees” joined the programmeand by the end of the year, 70% of them had beenpromoted to General Manager or another senior leadershipposition. The programme went through a total review during2002 and will be re-launched at the beginning of 2003.Radisson SAS opened its Management School in 1996. Theschool is available to employees with supervisory, management,regional and corporate responsibilities. While learningnew skills and techniques, participants meet colleagues fromaround the globe, sharing their experiences and ideas.<strong>Managing</strong> Human Resources is about securing the rightcompetence at the right positions. It is also about securing theright focus, motivation and drive throughout the rank and file.At Radisson SAS, “TEAM” means “The Executive Ability toMotivate”.RECORD EMPLOYEE SATISFACTIONRadisson SAS annually conducts a chain-wide climate analysisto monitor the staff’s attitudes to work conditions, careeropportunities and management on an annual basis.In 2002, 9,968 (9,521) employees at 104 (91) hotels (includingemployees in managed and franchised hotels) participatedin the Climate Analysis, showing an improved overall workingclimate from 79.2 to 80.5 points, out of a possible 100.Employee satisfaction is included in the Managers IncentiveScheme along with Guest Satisfaction and Owner Satisfaction.34

BrandsIn order to secure andleverage brand equityit is important to makesure that not oneproperty disappoints.35

RelationshipsLeveraging strong relationships 38Customers 40Owners 43Employees 44Suppliers 47Corporate citizenship & Environment 48Relationships37

LeveragingstrongrelationshipsThe management of key relationshipsis crucial for business success.Rezidor SAS believes that respectand responsibility are the foundationof all stakeholder management.Since 1997, we have used the Triangle of Excellence as a modelfor its commitment to key stakeholders in the external and internalenvironment. It acknowledges the importance of ensuringsatisfied owners, customers and employees in order to run asuccessful hotel management company.In 2001, the Triangle of Excellence was expanded to includesocial and environmental performance. This resulted in additionalkey stakeholders: suppliers, community, government(legislation) and the environment.The successful management of key relationships is crucialfor business success, as the demands on companies are changing,partly as a result of Enron, WorldCom and other corporatescandals. Companies need to become more transparent, openand honest in their communication. By keeping an open dialoguewith stakeholders, Rezidor SAS can keep abreast of stakeholderdemands and swiftly adapt to the new and continuouslychanging business environment. We fully recognise the importanceof stakeholders for our long-term business success.STAKEHOLDERCustomersInvestors/Property OwnersEmployeesSuppliersCommunitySUCCESS FACTORHigh customer satisfactionHigh rate of returning customersHigh brand awarenessHigh Return on InvestmentHigh Gross Operating ProfitTrusted and recognised brandHigh market penetrationHigh job satisfactionSafe working environmentContinuous training andeducationQuality products forgood-value for moneyLocal employment & trainingLocal purchasingTHE TRIANGLE OF EXCELLENCEEmployeesGovernmentStable and secure tax payerRegulatory complianceEnvironmental PerformanceSocial PerformanceEnvironmentMinimise negative impactInvestors &Property OwnersEconomic PerformanceCustomers38

GOAL/AMBITION ACTIVITY RESULTTo increase customersatisfaction to 90New service concepts: E@syConnectand Meetings & EventsOverall customer satisfactionindex at 87.1Increase unprompted brandawareness in all regionsContinuous service improvementsand facility upgradesTop brand awareness ranking inthe Nordic countriesRenewed communication of100% Guest Satisfaction GuaranteeReceived numerous awardsMaintain high GOPIncrease number of hotelsEBITDA growth of 15% andRevPAR growth of 5% as anaverage over a business cycle50% profit conversionprogrammeRevenue relatedprogrammes8 years of consecutiveeconomic growthRevenues up 2.2%Added 19 propertiesRevPAR dropped (1.6%) lessthan market (3.8%)Increase job satisfaction to95 (out of 100)Zero tolerance for workrelated injuriesInternship programmesMentor programmesRecognising individualperformanceManagement SchoolJob satisfaction at 80.5 (out of 100)440 staff trained in ManagementSchool, in addition to localtraining programmes50 student internshipsStable & long-termrelationshipsResponsible Business SupplierEvaluationEco-labelled detergents26% of electricity purchasedfrom renewable energy sourcesRelationshipsAt least one communityactivity per hotelPartner with researchand Interest organisationsLocal projects include Kids to KidsRun, the Terry Fox Run, moneycollection campaignsProjects with UNESCO and Savethe ChildrenAll hotels have one or morecommunity projects per yearSponsored UNESCO withTEUR 100 in the past 4 yearsLocal charity projects amountedto TEUR 239Ensure all hotelscomply with locallegal frameworkRegional legal database for regulatorycomplianceChecklists for complianceIn legal complianceRiga City Award asBest Taxpayer (2001)Energy efficiencyWater conservationWaste reductionMonthly reportingReduced energy consumptionby 5% and water consumptionby 19% in 3 yearsThe purpose of thematrix is to show howRezidor SAS translatesstakeholder specificsuccess factors intogoals and ambitions,and how we work toachieve them. Thistable represents theresults of Radisson SAS.39

CUSTOMERSStriving for mutual loyaltyAs part of our strategy to keep customer loyalty, our loyalty programmeGold Points by Rezidor SAS, will award members’ points based on their spend.Building coherent brand values into the products offered anddelivering consistently on brand promises are crucial to ensuringcustomer loyalty. All Rezidor SAS brands operate against clearlydefined product and service standards while our Quality Assuranceprogrammes ensure that delivery is continuously secured.Customer satisfaction is assessed through a monitoringprogramme that gives continuous feedback about each hotel’sperformance to the General Managers and the COO’s. The programmeis a valuable tool in fine-tuning brand performance andsecuring customer satisfaction (see page 32).Increased efforts were made in 2002 to inform customersabout the Radisson SAS “100% Guest Satisfaction Guarantee”through guest letters, in-room tent cards and key wallets.Relationship activities aim atdelivering targeted communication,rewarding loyal customersand at linking our brand withother, like-minded brands.gramme represents 60% of these room nights, followed by theloyalty programmes of Lufthansa and British Airways. We alsostrengthened our relationship with key customer partners throughvarious sponsorship events such as the SAS Golf Tour and theVOLVO Ocean Race.A STRUCTURED AND AMBITIOUSSAFETY & SECURITY PROGRAMMEThe International Hotel and Restaurant Association (IH&RA) hasidentified five forces which are likely to define the changes inthe industry during the first decade of 2000. One of them wassafety and security.Safety and security has become increasingly important fortravellers since the market went global. The scale of each safetyor security problem may differ from place to place. But generally,a problem can be found in any location. The laws, whichdetermine how we should work to prevent each problem, alsodiffer greatly from country to country and the interpretation oflaws and regulations can vary on a very local level; cities ormunicipalities have been known to interpret laws in differentways. Rezidor SAS operates in 40 different countries and so itis impossible for us to find a single solution.Our Customer Relationship Management (CRM) activities are importantin building strong relations with customers and partners.The launch of the Rezidor SAS’ loyalty programme in March2003 was an important move to improve our CRM strategy. Theloyalty programme, Gold Points by Rezidor SAS, will awardmembers’ points, based on their spend. For members, theproposition is based on allowing members to get more for theirtime, whether on business or for pleasure. The programme willfollow a largely conventional structure, with members belongingto one of three tiers (more information on page 41).Partners play a key role in building awareness for the brandand also increase the reach of our promotional programmes.Approximately 25% of all room nights are currently sold inassociation with partner programmes; the EuroBonus pro-FROM CONTROL TO SUPPORT– AUDITS AND ASSISTANCEMany local authorities carry out specific safety controls on aregular basis and a growing number of corporate clients makesafety inspections before they sign contracts. Hotels, therefore,are required to keep a documented control of standards andrequirements.Radisson SAS hotels have submitted annual safety andsecurity self-audits since 2000. This self-audit is on-line, makingit easy for hotels to reply and for other departments to extractinformation. In addition, 15 external audits were performed during2002, mainly at hotels that just joined the Rezidor SAS system.All hotels also perform regular safety and security trainingsessions and have access to the Emergency Management BestPractices Binder.40

Our Safety & Securityprogramme is basedon four cornerstonesguest safetyemployee safetyoperational securityaccident and incident preventionHooking up wirelessBy the end of 2002, half of the Radisson SAShotels provided wireless access, the latest technologicalinnovation to enable fast and convenientInternet connections. This easy-to-use technologyis packaged in the company’s EasyConnect serviceconcept. In guest rooms, next to the high speedwired access to the Internet, the concept alsoprovides modem ports in all rooms, easy-to-useinstructions and local supportGold Pointsby Rezidor SASThe new multi-brand loyalty programme, Gold Points byRezidor SAS, launched in March 2003, will be a majorvehicle for customer recognition, benefits and rewardsall through the Group. The programme enables RezidorSAS to communicate directly to customers, and to driveprofitable incremental business by cross-selling, upselling,maximising customer retention and increasingcustomer “share of wallet” by creating a relationshipwith the brand.For the member, the programme is easy to understandand simple to use. The lead proposition is basedaround maximising “premium time” – “value me, valuemy time”. Benefits include services that allow the memberto get more from their time whether travelling onbusiness or for pleasure.The programme will have three tiers: Blue, Silver andGold. Globally, the programme ties in with Carlson’s GoldPoints reward programme, which offers earning andredemption opportunities in hotels, restaurants andretailers throughout North America.Gold Points by Rezidor SAS is not a mass enrolmentprogramme. Coming late into the market has providedRezidor SAS with the opportunity to learn from otherprogrammes and adopt best practice. Most memberswill enrol directly at the hotel into the Blue level, wherethey will be able to earn points immediately and takeadvantage of restaurant discounts and special offers.Benefits vary according to membership level andinclude, at Silver level, bonus Gold Points, best availableroom guarantee, weekend discounts, and at Gold level,extra cards, some services free of charge and a guaranteedroom if booked 72 hours in advance.Rewards include room nights, upgrades and leisurepackages.Relationships41

OWNERSFocusing on maximisingowners’ returnsUnderstanding property owners and their needs is a fundamental successfactor in our industry. With our own history as a property owner, we havean advantage compared to many other hospitality management companies.Many different kinds of owners are involved in the hotel industry.There are owners and investors who focus on the construction,development and management of hotel properties, but do notoperate the business themselves. As a result, they enter into managementcontracts with hotel management companies to operatetheir hotels. Other property owners operate their own business,but under someone else’s brand through franchise agreements.Understanding property owners and their needs is a fundamentalsuccess factor in our industry. With our own history asa property owner, we have an advantage compared to manyother hospitality management companies, having their experienceonly from one side of the table.Rezidor SAS offers solutions for a broad spectrum of owners.To help hotel owners choose Rezidor SAS, it is important thatwe offer both valuable brands and professional hotel managementservices. We must also offer efficient marketing and reservationservices, including centralised reservation services,worldwide sales offices, marketing and advertising programmesas well as IT, Safety & Security programmes and central purchasingservices. Rezidor SAS will strive to be perceived as aserious, flexible and accessible partner operating strong brandsand providing a good return on investments.Rezidor SAS also offers different types of contracts, fromlease and management agreements to franchise agreements,depending on the needs of the individual hotel owner. For upmarketbrands like Regent, Radisson SAS and Cerruti, our mainfocus is primarily on management and lease agreements. Forthe mid-market brands, and especially Park Inn, the strategy ispredominantly to grow through franchise agreements. Theseagreements differ in terms of time commitment, ranging fromrelatively short franchise contracts to longer-term leases.Hospitality is a cyclical business. Normal periods of healthyreturns are inevitably followed by decline. Rezidor SAS staysfocused on maximising owners’ return at all times.RelationshipsFourteen top performers in Swedenflying the Park Inn colours“The proven ability of Rezidor SAS to generate business,was crucial for us when we decided to join the Park Innbrand”, says Börje Nordberg, CEO of Software Hotelswith fourteen properties in mid and southern Sweden.Most of them are business hotels with top locations insecondary cities or suburban Stockholm. Four arecountryside conference and leisure hotels; among themsome of Sweden’s finest.“We also share the same philosophy regarding customersand employees”, continues Nordberg. “Enthusiastic andempowered employees who go out of their way to ensurea satisfied customer have been our success formula,and we understand that Park Inn has the same conviction.Our employees are young, dynamic and are encouragedto create a personal atmosphere. This culture supportswhat Park Inn stands for.”43

EMPLOYEESBuilding employeerelations on respectHuman resources and training are brand-specific, but some resources areavailable cross-brand. The Management School is one such institution.Rezidor SAS is an international company of Scandinavian origin.We operate in 40 countries with a large diversity in cultures, customs,religions and languages.Due to this complexity, each country follows its own set oflocal labour regulations, while sharing the global standardsstipulated in our Human Resource Guidelines, as well as brandspecificvalues. All regions comply with local labour laws andgovernment initiated guidelines.The focus of labour laws varies substantially in the differentregions and consequently different demands are made on thehotels throughout our company. In Scandinavia, the focus is onjob flexibility and equality in the workplace. This has for exampleresulted in projects regarding how to better listen to the needsof senior staff. In Germany and the UK, several projects tookplace in 2002, designed to find suitable tasks and assignmentsfor employees with disabilities. In the Middle East, projectswere initiated to improve staff quarters. These were very differentprojects, but they shared the goal of maintaining diversity inour workplace and improving working conditions.had an increasing focus on personal development. Surveys indicatethat a majority of people working in the hospitality industrydo not want a traditional career: they want to perform better atwhat they’re doing rather than do something else.As a result, we are committed to offering training for horisontal/professionalexcellence as well as vertical/career development,enabling each employee to develop to his or her fullpotential. Human resources and training are brand-specific, butsome basic and advanced resources are available cross-brand.The Management School is one such institution.Each hotel follows its own setof local labour regulations,while sharing our global standardsstipulated in our HumanResource Guidelines.ENSURING HIGH EMPLOYEE SATISFACTIONThe UN Declaration of human rights underlies our relationshipwith all our hotel staff: the cornerstone of the Human Resourcespolicy is that all people are born equal with equal rights. RezidorSAS strives to be an equal opportunity employer and employeesatisfaction is measured yearly. This allows for evaluation andrefinement of the human resources process but, most importantly,focuses on how to manage and lead staff.CONTINUOUS TRAININGAligning employee and brand values is about recruiting, trainingand developing people who, at an individual level, identify withthe core values of the brand. Training has two main focal areas– career development and personal development. Traditionallythe focus has been on career development but we have alsoThe Management School is not simply a training platform; it is amedium through which we convey both our company cultureand an understanding of the industry we’re working in. The programmesoffer enhanced individual and career developmentand they also help to directly reinforce the company’s performanceculture. Over the years, more than 3,500 employees havebenefited from this unique initiative.The Per-Axel Brommesson Scholarship Award, is anotherway in which we encourage and help our top talents to developtheir knowledge bank at universities and educational institutionsaround the world.44

NY BILD KOMMERThe Yes I Can! serviceexcellence programmewill go across all our brands.Relationships45

SUPPLIERSThe momentumof buying powerHotels joining the Group can usually achieve a saving of 10 –15% of their totalpurchasing cost. And on top of that get a better environmental performance.Rezidor SAS is a major customer for a large variety of suppliersand products. The purchasing organisation was established in1992 when the company’s then 32 hotels combined their purchasingpower. One of the first successful projects was the 1994cost saving and revenue-increasing project “WIN”, which resultedin a saving of MEUR 9 and directly improved the bottom line.Any comparison of the agreements and prices negotiated forcurrent Radisson SAS hotels to those of the hotels recently joiningthe Group, shows that our agreements usually achieve a savingof 10–15% of the total purchasing cost. Consequently, oneof the added advantages for a new hotel joining the Rezidor SASsystem is that the purchasing function becomes more efficient.The corporate purchasing organisation takes full advantageof state-of-the-art information technology. All information aboutregional and corporate purchasing agreements is fully integratedin the web-based Purchasing Information Network (PIN) system.The PIN system is available to all hotels and containsmore than 7,000 products: a PIN listing represents a marketingopportunity for our suppliers.SERVICES PROVIDED ON BOTH ACORPORATE AND REGIONAL LEVELThere are six purchasing regions at present as a result of the“Think global, act local” strategy. The purchasing power of theseregions originally focused on food, beverage, printing materials,stationery and disposable items, but it has grown to includelaundry, electricity, telecommunication etc. Increasingly, servicesare also being covered by regional purchasing agreements.Strategically, important supplies and high investment relatedgoods like FF&E (furniture, fittings & equipment) and operatingequipment are negotiated on a corporate level. The purchasingnetwork also supports the opening of new hotels, renovationsand re-branding projects.IMPROVING THE ENVIRONMENTALPROFILE OF THE PRODUCTS PURCHASEDA hotel uses, on average, almost as many products in oneweek as the average household does in one year. Therefore,what we buy and whom we buy from is an important part of theRezidor SAS Responsible Business programme.Strict environmental performance standards have beenestablished for some product groups where Rezidor SAS is alarge consumer and where the negative environmental impactis high. The quality of the products we purchase will always beour prime concern, along with value for money. If we are satisfiedwith these parameters, we can prioritise the supplier/productwith the most advanced Responsible Business profile.Process improvements inpartnership with suppliersOne approach for improving our Responsible Businessperformance is to initiate product and process improvementsin co-operation with our suppliers. In2002, a unique collaboration was launched with ourdetergent supplier ECOLAB.The two companies established a working group todesign a training programme for the Radisson SAShotels, focusing on improving cleaning efficiency andhygiene. The hotels benefit from an extensive audit oftheir back of house operations. They are also givenrecommendations and suggestions of where improvementscan be made and what chemical products arethe most suitable.Environmentally, we benefit from streamlining theuse of detergent and cleaning chemicals throughoutall hotels and by ensuring more efficient and safehandling through automatic dosage equipment.Relationships47

CORPORATE CITIZENSHIP & ENVIRONMENTTurning Responsible Businessinto a competitive advantageRezidor SAS was a pioneer a decade ago with its environmental programme.Now the company has widened its perspective even further to include socialperformance. And it pays off!Taking responsibility for the environment has been an importantpart of Rezidor SAS’ broader commitment to sustainable developmentfor many years. In 2001, this commitment was expandedand placed within the scope of a new programme called ResponsibleBusiness (RB).The foundation of this Responsible Business programme isbuilt upon:Taking responsibility for the health and safety of employeesand customers.Respecting social and ethical issues in the company and in thecommunity.Reducing the hotels’ negative impact on the environment.Several corporate tools were developed to support the hotelsin their efforts to introduce the RB programme in 2002. As a result,many improvements were implemented at the hotel level, mainlyin the Radisson SAS hotels. The new brands will be introduced tothe RB programme and provided with similar tools during 2003.FAST FORWARDEnvironmental and social responsibilities are integrated intocorporate strategies, objectives and operational plans. In addition,specific objectives are linked to each of the seven stakeholdersidentified in the RB programme (see page 38). To makeeach objective measurable, detailed targets, with related performanceindicators, have been developed.In order to implement the Responsible Business programmein each hotel, we have:Assigned RB co-ordinators and support teams to all hotels.They assist the General Managers in the implementation of theResponsible Business objectives at the hotel level.Established RB action plans in most hotels. These cover theseven stakeholders and represent a roadmap for the hotels.Provided hotels with a RB Handbook which contains practicaltools and examples of RB actions to take. The Handbook helpsthe RB team to develop their local action plans.Launched a “train-the-trainer programme” for Responsible Businessat all hotels. The programme aims to provide staff with anunderstanding of how a hotel can impact the natural environmentand local community and what actions employees cantake to make a difference. During 2002, 35 (0)% of our employeeswent through this training.Introduced the monthly reporting of energy, water and waste.As a result, most hotels have become more accurate in detectinginaccuracies and the quality of the data collected hasimproved during 2002.Organised an internal awareness campaign consisting of posters,key wallets, postcards and battery collection boxes placedin 80 Radisson SAS hotels.Environmental and social responsibilitiesare integrated intocorporate strategies, objectivesand operational plans.Rezidor SAS generally improved its RB performance in 2002.The main improvements were linked to the fact that 2002 wasthe first full year of operation for the RB programme. However,there was an improvement of performance for most of the RBtargets, compared to 2001.It’s important to note when comparing environmental performance,that energy and water consumption, as well as wastegeneration, increased in absolute figures, due to the addition of13 Radisson SAS hotels, plus the 16 hotels in the newly addedbrands. The overall environmental impact will continue toincrease as the chain consumes more resources, due to the48

expected strong expansion of all brands. However, when measuredin terms of a production unit such as guest nights, the figuresshow that the hotels are becoming increasingly efficient in theirresource consumption.BEING A RESPECTED CORPORATE CITIZENA growing number of people and organisations are both interestedin, and able to influence, the actions of companies. Therefore,it is important for companies to keep abreast of thedemands and wishes of non-governmental organisations, localcommunities and authorities, as well as public interest groups.There can be no tourism without a healthy local economyand a thriving cultural and natural heritage. To respect this codependencyand to strengthen the community, we support thecommunity in three different ways: we help in restoring our culturalheritage, we sponsor local events and charities and wepartner with research and interest organisations.Since 1999, we have been UNESCO’s partner in their “Memoriesof the Future” programme, designed to enhance and restorekey cultural heritage sites around the world. To date, TEUR 100has been donated in support of various UNESCO projects.Within the Group, some hotels are considered a part of thelocal cultural heritage, such as the Radisson SAS SchwarzerBock Hotel in Wiesbaden. The original hotel, a bathhouse, wasbuilt in 1486 and rebuilt in 1578. And, while after the SecondWorld War large parts of the hotel had to be reconstructed, partsof the roman foundation from the 3rd century are still to be found.The cellar door still wears the inscription 1486, and in the Wintergardenthe glass windows originate from the 19th century. Duringrecent renovations, special care was made not to alter theold historical building where, for example, the Ballroom was renovatedback to its original style.Save the ChildrenpartnershipSince 2001, Rezidor SAS has worked in partnershipwith Save the Children, the world’s largest independentmovement for children’s rights. With programmes inover 100 countries, Save the Children works to findimmediate and lasting improvements to children’slives, always hand in hand with the local communitieswhere the children live.Rezidor SAS’ global network of hotels are encouragingcustomers and staff throughout the world to learnmore about the work of Save the Children and supporttheir fundraising initiatives. To launch this partnership,80 Radisson SAS hotels placed exclusively designedcollection boxes in hotel reception areas and begancollecting funds for Save the Children.Sponsorship and action-oriented charitable schemes are additionalways to support the community and all Radisson SAShotels have successfully organised one or more communityprojects every year.Examples include: hosting and sponsoring events like theTerry Fox and Kids to Kids runs to raise money for children inneed. Many hotels also give furniture and products (e.g. blankets,food, amenities) to homeless children, orphanages and to theRed Cross. In total, Radisson SAS hotels donated TEUR 239 tolocal charity projects during 2002.PARTNERSHIPSFinally, Radisson SAS interacts with the community by providinginternships to students, by supporting research on an undergraduateand graduate level and by research dialogue withHotel Management Schools in Europe. There were 50 (64) studentinternships at Radisson SAS hotels in 2002. In addition, 10(12) different Hotel Management Schools were visited throughoutthe year and several were visited twice. Co-operation withthese Hotel Management Schools was strengthened and ourstaff acted as lecturers, ran workshops and helped adaptcourse curricula to industry demands.Rezidor SAS is also a member of IHEI (International HotelsEnvironment Initiative), a hotel specific section of the Prince ofWales Business Leaders Forum. As a result of this membershipand the partnership with IH&RA and WTTC, tools and systemsare being developed to improve the hospitality industry’s corporatesocial responsibility performance.Relationships49

To decrease water consumption, the Radisson SAS hotels haveimplemented a water management programme worldwide.ENVIRONMENTAL RESPONSIBILITYConcern has increased over the last 30 years about the continueddeterioration of the natural environment, including ozonedepletion, global warming and water pollution. Rezidor SASindirectly contributes to these environmental problems by theproducts we purchase and, in some cases, directly through ourhotels’ operations, such as energy and water consumption andwaste generation.ENERGYIn 2002, the energy consumption per square metre was reducedto 289 (292) kWh/m 2 . Our hotels have, for example installedenergy efficient light bulbs, low-energy consuming mini-bars,outdoor lighting steered by demand and programmable thermostatsto actively reduce energy consumption.The shift to renewable energy sources is another importantpart of the energy programme. At present, 26 (25)% of the electricitysupplied to Radisson SAS hotels originates from renewableenergy sources (mainly hydro power). The higher the share fromrenewable energy sources, the smaller our contribution to globalwarming. At present, 19 (19) hotels use oil for heating; as a consequenceour direct CO 2 emissions amounted to 6,393 (6,126) tons.RETHINK, REDUCE, REUSE AND RECYCLE WASTEWaste sorting is one of the actions taken to reduce the amountof unsorted waste. More than 50% of the Radisson SAS hotelscollect waste in at least nine waste fractions: paper, cardboard,glass, batteries, aluminium cans, metals, plastic, organic wasteand toner cartridges. In Germany and the Scandinavian countries,some Radisson SAS hotels separate as many as 16 wastefractions.Overall, waste generation was 2.13 (2.09) kg per guest night,an apparent increase of 2% compared to 2001. However, thishigher figure is mainly the result of improved data quality andmore accuracy in measuring waste, due to the newly implementedmonthly reporting routines.WATER CONSUMPTIONTo decrease water consumption, the Radisson SAS hotels haveimplemented a water management programme worldwide. Thehotels measure and report on water consumption and haveimplemented routines for the continuous maintenance of waterusingdevices. In 2002, the overall water consumption per guestnight was 423 (436) litres, a reduction of 3% compared to 2001.This reduction was achieved thanks to the installation of watersaving equipment, for example water efficient showerheads,one-grip model water faucets and low flush WCs.More information about the Responsible Business programmeis available at www.RadissonSAS.com/responsiblebusinessThe ins of a hotelENERGYElectricity, gas, oil, steam, petrol etc.MATERIALElectric appliances, Food & Beverage,furniture, toiletries, detergents andcleaning products, fertilisers, officestationary etc.WATERFor irrigation, laundry, swimmingpools,cleaning, drinking etc.The outs of a hotelEMISSIONSCO 2and fossil fuel emissions.WASTEGlass, plastic, paper,organic waste, cardboard,aluminium & metals etc.EFFLUENTS“Grey water” from washing,sewage, biocides, watercontaminated from food,detergents, chlorine,phosphates etc.50

RESPONSIBLE BUSINESS TRAINING, 2002Radisson SAS, per centRENEWABLE ELECTRICITY, 2000–2002Radisson SAS, per centPercentage of employeeshaving received responsiblebusiness training 352625242322n/a000102ENERGY CONSUMPTION, 2000–2002Radisson SAS, kwh/m 2CARBON DIOXIDE EMISSIONS, 2000–2002Radisson SAS, tons3203002802602406,5006,2005,9005,6005,300Relationships2205,000000102000102WATER CONSUMPTION, 2000–2002Radisson SAS, litres/guest nightUNSORTED WASTE, 2000–2002Radisson SAS, kg/guest night550500450400350550500450400350300300000102000102All data represents owned, leased and managed hotels.51

PropertiesRezidor SAS properties 54Some Property Highlights 58Properties

REZIDOR SAS PROPERTIES<strong>Managing</strong> a growing collectionof properties in 40 countriesThe growth since signing the multi-brand agreement has been very fast,even by Rezidor SAS’ standards.In 2002, another 22 hotels were added (net) to the Rezidor SASsystem, taking the total to 182 (160), of which 133 (110) are currentlyin operation. We now operate in 40 (38) countries andhave 40,000 (35,000) rooms in the system.Radisson SAS is the largest brand by far, with a total of 164(152) properties in operation or under development.Twelve Country Inn properties and two Regent propertieswere transferred to Rezidor SAS through the multi-brand agreementwith Carlson Hotels Worldwide in September 2002.Growth has been very fast since signing the multi-brandagreement, even by Rezidor SAS standards! As of March 12,2003 the total number of properties for the five brands was 199,of which 142 are in operation.STREAMLINING OUR BUSINESS PORTFOLIODuring 2002, Rezidor SAS sold its 50% stake in the Malmaisonbrand company to its equal partner, MWB. The transaction waspart of the strategic plan to align the additional three Carlsonfranchised brands under the Rezidor SAS umbrella. The managementagreements for 7 Malmaison properties, 5 in operationand 2 under construction, were terminated at the same time.TWO PROPERTIES IN TRANSITORY OWNERSHIPSince 1998, the strategy of Rezidor SAS has been to divest realestate and focus increasingly on hospitality management. Wehave sold our owned hotels when the time has been right, usuallycontinuing to operate these hotels under lease or managementagreements.Rezidor SAS currently owns one hotel in operation, the 252rooms Radisson SAS Park in Oslo, and one under development,the Radisson SAS hotel at Stansted Airport, scheduledto open in 2004. We are investing approximately MEUR 74 inthe construction of this 500-room hotel. Our owner position istactical, and we will divest as soon as the time is right.CONTINUOUSLY TURNING NEWMARKETS INTO HOME MARKETSMarket coverage has expanded naturally from the originalRezidor SAS home base in Scandinavia, across the Balticregion and Western, Central, Southern and Eastern Europe,spreading all the way down to South Africa.Our growth strategy is based on creating more home marketsalong with continuous deeper penetration of each of those markets.From a business development perspective, a home marketis a country or a region where we have achieved a critical massin the number of properties, including developments, and wherewe are willing to expand into smaller cities. We will continue toexpand in big and small cities in our existing home markets:Denmark (11 hotels), Norway (24 hotels), Sweden (17 hotels),Finland (7 hotels), the UK and Ireland (16 hotels), Germany (31hotels), Poland (6 hotels) and Benelux (8 hotels). As well as continuingto grow in the existing home markets, we will also developnew home markets.TARGETING FRANCE AND RUSSIAFrance has been targeted as a new Rezidor SAS home marketfor some time. With our hotels in Nice, Cannes, Marseilles,Bordeaux, Paris Charles de Gaulle (2), and Paris centre, we nowhave a solid base on which to build. We anticipate that Francewill emerge as our new home market within the next two years.While Russia offers vast opportunities for growth and development,there are not many international hotel operators orbrands in the market. Most of the internationally managedhotels in the country are located in Moscow and St. Petersburgand there are very few mid-market hotels with an internationalbrand name in the entire Federation at present.Rezidor SAS has ambitious expansion plans in Russia. Thecompany currently operates Radisson SAS hotels in Moscow,St. Petersburg and Sochi (3), and is now targeting the mid-marketsegment and regional capitals. Russia has few properties suit-54

Rezidor SAS locations in Europe,Middle East, Africa and ChinaRezidor SAS hotels per country as of December 31, 2002, in operationand under development. For specific locations see page 88.224717541211211623167144213111114Properties1121214 13112China, KasakhstanBahrein, Egypt, Jordan,Lebanon, Kuwait, Oman,Saudi Arabia and theUnited Arab EmiratesSouth Africa55

able for conversion, so new construction will be the maingrowth vehicle. A major share of the new hotels will be brandedas Country Inn.A joint venture with Delta Capital Management Inc.(US/Russia), Sweden’s Swedfund and Denmark’s IØ, part ofthe Investment Fund for Central and Eastern Europe, will be setup to help us swiftly meet our objectives. The target is to have50 hotels in Russia in the next 8 to 10 years, and signing up to8 hotels in the coming 3 years.OPENINGS AND SIGNINGS 2002During 2002, Rezidor SAS signed 36 new properties.Radisson SAS expanded with 19 new additions, where 13new hotels opened for business during the year – in Paris, France(January), in Wroclaw, Poland (May), in Leeds, UK (May), inLimerick, Ireland (June), in Sochi, Russia (June), in Silkeborg,Denmark (August), Moscow, Russia (August) in Warsaw, Poland(September), in Taba, Egypt (November), in Glasgow, UK(November), in Sharjah, UAE (December), in Beirut, Lebanon(December) and in Yanbu, Saudi Arabia (December).The multi-brand deals with Carlson Hotels Worldwide brought14 operating hotels into the system. Of the 12 Country Inns, 7 arelocated in Germany, 2 are in Austria, 2 are in the UK and one is inFrance; the newly opened hotel at Charles de Gaulle Airport. The2 Regents are located in Germany and Kazakhstan.The Nordic home markets saw continued expansion with thesigning of 3 contracts in Norway (Narvik), Sweden (Karlstad)and Finland (Helsinki).The Middle East is a traditional Rezidor SAS stronghold. Wemade 5 additions in 2002; 3 in Saudi-Arabia, one in Lebanon, andone in the United Arab Emirates, making a total of 14 in the region.The market presence in Germany increased during the year,with the addition of the aforementioned 7 Country Inn hotels,plus one Radisson SAS hotel. Moreover, through the conversionof Berlin’s giant 1,006 room Alexanderplatz into a Park Inn,this new brand made a noticeable entrance. Moreover, ourmarket presence in South Africa increased through the signingof a Park Inn in Cape Town.CONTINUED FOCUS ONRESORTS AND AIRPORT HOTELSThe company’s focus has broadened over the years to take inresort and airport hotels. The resort category includes skiresorts, golf resorts, beach resorts and health & spa resorts.Rezidor SAS is actively targeting new resort and spa propertiesbecause the spa segment, in particular, is very dynamic.With 15 (14) airport hotels currently in operation, the companyis also aiming to become the leading airport hotel operatorin Europe.Contract types– definitionsIn OWNED HOTELS, the hotel management companyowns and is fully responsible for the property, its inventoriesand its operations.A LEASE CONTRACT implies that someone else ownsthe property and leases it, complete with inventories,to the hotel management company in return for afixed or variable rent.Under a MANAGEMENT CONTRACT, the hotel owneris responsible for all investments and costs in relationto the operation of the hotel, while the hotel managementcompany is responsible for the day-to-day operationsof the hotel business. This includes hiring, trainingand supervising managers and employees as wellas providing hotel accounting, purchasing and budgetingfunctions and providing for the safekeeping, repairand maintenance of the furniture, fixtures and fittings.The hotel management company receives a base feefor these services, usually linked to gross revenueplus an incentive fee.Through FRANCHISE CONTRACTS, the hotel owner,i.e. the franchisee, receives the right to operate hishotel under a specific brand, provided that a certainquality standard is fulfilled. The contract also specifieswhich service elements must be implemented. Thefranchisee benefits from services such as centralreservations, sales and marketing and advertising.In addition, the franchisee may also utilise otherservices, like central purchasing systems. In turn,the franchisee compensates the brand owner orMaster Franchisor through royalty and other fees.NUMBER OF PROPERTIES 2002Rezidor SAS GroupManaged 92Owned 2Leased 42Franchised 46Total 182Properties57

AALBORG, DENMARKRight in the city centre, justoff the river and oppositethe famous street of “JomfruAne Gade” packed withcafés and charming taverns,the Radisson SAS Limfjordcan be found. It offers 188rooms, including 10 suites.PARIS, FRANCEThe Country Inn & SuitesParis Charles de GaulleAirport offers 180 roomsincluding 8 suites and isideally situated with easyaccess to the centre ofParis and the DisneylandParis Resort.Some Property HighlightsST. PETERSBURG, RUSSIAOn St. Petersburg’s mainboulevard, Nevsky Prospect,the Radisson SAS RoyalHotel is close to all majorcultural and historical attractions,including the Hermitage.The hotel has 164 roomsincluding 17 suites.COLOGNE, GERMANYThe V-shape of the RadissonSAS Hotel beautifully combinesthe boldness of a designerhotel with the eleganceexpected by today’s travellers.There are 393 rooms,some with wonderful viewsof the Cologne Cathedral.SHARJAH, UAEThe Radisson SAS Resort,with its private white sandybeach, swimming-poolsand tennis courts, is ideallylocated offering easy accessto local “Souks”, the businessdistrict as well asDubai’s shopping malls.CAPE TOWN,SOUTH AFRICAAt the waterfront of CapeTown, the luxurious RadissonHotel Waterfront offersbreathtaking views of thecity coastline, as well as themajestic Table Mountain.The hotel includes 182 roomsand suites.LONDON, UKThe Country Inn & SuitesLondon Bloomsbury withits 36 guest rooms, fireplaceand country restaurant islocated in central London,close to subway, museums,Buckingham Palace andthe shopping district.58

BERLIN, GERMANYOur first Park Inn with it’s1,006 rooms, is located onthe historic Alexanderplatz,near the Parliament, theDome, and the Brandenburggate. It is the tallest hotel inBerlin and offers fantasticviews of the city.STOCKHOLM, SWEDENLocated in the heart of thecity, over-looking the beautifulwaterways of Stockholm,with boats heading for thearchipelago, is the RadissonSAS Strand Hotel, offering152 rooms and suites.SVALBARD, NORWAYAt the Radisson SAS PolarHotel, the coastline, snowcovered peaks, polar bearsand the local life ofLongyearbyen are not faraway. The hotel offers 97rooms, including 6 suites.AMSTERDAM, HOLLANDThe Radisson SAS Hotel islocated in the heart of thehistoric centre of Amsterdam,a perfect start for a discoveryof the canals, museums,theatres, and shoppingcentres of the city. Thehotel offers 243 rooms.TASHKENT, UZBEKISTANThe Radisson SAS Hotel,Tashkent, is located on oneof the capital city’s mainboulevards – Amir TemurStreet. The hotel, whichopens in mid 2003, will hold115 rooms and suites.WARSAW, POLANDThis contemporary hotel islocated on the corner ofGrzybowska Street and JanaPawla II Avenue, in Warsaw’snew business centre. TheNational Theatre, the OldTown and the PresidentialPalace are just minutes away.PropertiesPARIS, FRANCEThe Radisson SAS HotelChamp Elysées is wonderfullylocated in the finest area ofParis, just off the Arc-de-Triomphe. This intimate hotelhas 46 exclusive rooms, ofwhich 4 are suites, and is ahaven of luxury and comfort.GALWAY, IRELANDThe Radisson SAS Hotel isonly a few minutes walk fromthe centre of Galway, yetboasts unrivalled views ofLough Atalia and GalwayBay, and also offers easyaccess to the beautiful AranIslands and Connemara.59

FinancialsStatement of the Board of Directors and <strong>Managing</strong> Director 62Auditors’ Report 63 . Board of Directors’ Report 64Accounting Policies 68 . Income Statement 72Cash Flow Statement 73 . Balance Sheet 74Notes to the account 76 . Rezidor SAS Organisation 84Rezidor SAS Organisation with Brands 86Rezidor SAS Locations 88Financials

Statement of theBoard of Directorsand <strong>Managing</strong> DirectorWe have today presented the Annual Report of Rezidor SAS Hospitality A/S for 2002.The Annual Report has been presented in accordance with International Financial Reporting Standards and the DanishFinancial Statements Act. We consider the accounting policies appropriate for the Annual Report to provide a true and fairview of the Group’s and the Parent Company’s assets, equity and liabilities, financial position, results and cash flow.We recommend the Annual Report for adoption by the Annual General Meeting.Copenhagen, March 12, 2003.BOARD OF DIRECTORSGunnar Reitan, Chairman, Jørgen Lindegaard, Jay Stevens Witzel, Leo M. Renaghan,Bo Benny Helge Zakrisson, Anders E. E. LjunghMANAGING DIRECTORKurt Ritter, President and CEO62

Auditors’ ReportThe following Auditors’ Report relates to the official annual report only. The officialannual report is reproduced in its entirety here on pages 62-83.TO THE SHAREHOLDERS OFREZIDOR SAS HOSPITALITY A/SWe have audited the annual report of Rezidor SAS HospitalityA/S for the financial year 2002.The annual report is the responsibility of the Company’sManagement. Our responsibility is to express an opinion on theannual report based on our audit.OPINIONIn our opinion, the annual report gives a true and fair view of theGroup’s and the Parent Company’s financial position at31.12.2002 and of the results of their operations as well as theconsolidated cash flows for the financial year 2002 in accordancewith the Danish Financial Statements Act and InternationalFinancial Reporting Standards.BASIS OF OPINIONWe conducted our audit in accordance with Danish AuditingStandards. Those standards require that we plan and performthe audit to obtain reasonable assurance that the annual reportis free of material misstatement. An audit includes examining,on a test basis, evidence supporting the amounts and disclosuresin the annual report. An audit also includes assessing theaccounting policies used and significant estimates made by theManagement, as well as evaluating the overall annual reportpresentation. We believe that our audit provides a reasonablebasis for our opinion.Our audit has not resulted in any qualification.Copenhagen, March 12, 2003Deloitte & ToucheStatsautoriseret RevisionsaktieselskabStig Enevoldsen, Henrik Z. HansenState Authorised Public Accountants (Denmark)Financials63

Board of Directors’ ReportPRIMARY ACTIVITYThe vision of Rezidor SAS is to become one of Europe’s leadinghospitality management companies, with a focused collection ofhigh-performing profitable brands in various market segments.At year end Rezidor SAS had four brands in its portfolio:Radisson SAS, Park Inn, Country Inn, and Regent. The numberof hotels within the Group was 182 (160), of which 49 (39) wereunder construction. The hotels are located throughout Europe,the Middle East, Africa, and China.All brands have distinctive profiles; Radisson SAS, with itstraditional full service, upmarket hospitality services; Park Innbeing an efficient, innovative mid-market hotel; where CountryInn is the mid-market hotel with a homey and country-like atmosphereadapted to local character; and Regent is the luxury brand.A fifth brand, being designed to compete in the lifestyle hotelmarket is currently under development. These new Cerrutihotels will operate in a niche market and focus on contemporarydesign and new consumer attitudes. Its initial growth will focuson continental Europe.Growth with limited financial commitments is of a majorstrategic importance for Rezidor SAS in order to achieve a criticalmass with regards to the awareness of the Rezidor SASbrands, geographical coverage and economies of scale.Rezidor SAS’ core strategy is to create profitable growthwithin each brand in the portfolio by offering: property ownersthe best possible brand solution for each individual property;corporate and individual guests a collection of strong brands indifferent price categories; superior value to shareholders by fastand focused growth; increased multi-brand career opportunitiescombined with continuous personal development for employees,and; value, through respect and co-operation, to the communitieswhere we operate.Rezidor SAS’ growth strategy is based on creating morehome markets along with continuous deeper penetration ofeach of those markets. Expansion will be in big and small citiesin our existing home markets: Denmark, Norway, Sweden,Finland, the UK and Ireland, Germany, Poland and Benelux. Aswell as continued growth in the existing home markets, we willalso develop new home markets, currently with France andRussia as the main targets.The growth strategy of Rezidor SAS is to have 700 hotels intotal under the five different brands in the current portfolio by2012. Furthermore we will seek opportunities to expand thebrand portfolio. Becoming multi-brand has, and will increasingly,allow Rezidor SAS to grow faster, obtain a larger customerbase, capitalise on investments as well as obtain economies ofscale by sharing already existing know how and resourceswithin the group.In the hotel industry, the importance of being associated witha strong brand is on the increase. While, in the US some 70 percentof the hotels are associated with a hotel management company,in Europe this figure amounts to only some 30 percent.Rezidor SAS therefore believes that there is great growth potentialthroughout the Rezidor SAS brand portfolio.Rezidor SAS aims to grow within all brands, however eachbrand will have specific characteristics related to size (numberof rooms), geographic location, type of contract (managed,leased or franchised) as well as type of hotel and location (citycentre, airport or resort).DEVELOPMENT IN ACTIVITIES AND FINANCESOn September 24th Rezidor SAS announced a master franchiseagreement with Carlson Hotels Worldwide. As a result, threenew brands – Park Inn, Country Inn, and Regent – were added tothe Rezidor SAS brand portfolio. The agreement gives RezidorSAS the exclusive right to operate these brands for the coming30 years.In conjunction with the new master franchise agreement withCarlson Hotels Worldwide, the Malmaison brand and the relatedmanagement contracts were sold back to the joint venture partnerMarylebone Warwick Balfour in September 2002. Workingwith the Malmaison brand was an important step for Rezidor SASas it prepared the company for becoming a multi-brand operator.In order to secure efficient handling of the extended brandportfolio, Rezidor SAS made an extensive reorganisation, bothregionally and centrally.During the year, a total of 36 new and additional hotels weresigned to the Rezidor SAS Group.The Carlson Hotels Worldwide agreement brought 12 existingCounty Inns, in the UK, Austria, France and Germany, as wellas 2 Regent hotels situated in Germany and Kazakhstan. 2 ParkInn hotels, in South Africa and Germany, were then sub-64

sequently signed post agreement. For the Lifestyle brand 1 hotelwas signed during the year and 19 new hotels were signed forRadisson SAS in the same period.In actual trading terms, 13 new Radisson SAS hotels openedfor business – in Paris, France (January), in Wroclaw, Poland(May), in Leeds, UK (May), in Limerick, Ireland (June), in Sochi,Russia (June), in Silkeborg, Denmark (August), in Moscow,Russia (August), in Warsaw, Poland (September), in Taba, Egypt(November), in Glasgow, UK (November), in Sharjah, UAE(December), in Beirut, Lebanon (December) and finally in Yanbu,Saudi Arabia (December).At the year-end 2002, the number of hotels within the RezidorSAS Group numbered 182 (160), of which 164 (152) were underthe Radisson SAS brand, 12 (0) under Country Inn, 2 (0) underthe Park Inn brand, and 2 (0) under the Regent brand. The numberof rooms in the system increased to approximately 40,000(35,000).As the brands within the Rezidor SAS Group mainly cater tointer European customers, the decline in travel from the U.S. hasnot impacted Rezidor SAS’ business as much as it has on someof the competitors. Radisson SAS has a strong position in itsdefined home markets compared with some of its competitorsand has relatively little exposure to the volatility in the U.S. travelindustry. Considering the downward slope in the world economyand the fear of armed conflict in the Middle East, RezidorSAS performed relatively well in 2002.Total operating revenues for 2002 reached TEUR 389,715(379,474), a 2 percent improvement. This increase in operatingrevenues was due to an increase in the number of hotels, as wellas compensation for early termination of management contracts,which was TEUR 11,100 (8,000), offset by lower RevPARthan previous years. Furthermore, the strike in the hospitalityindustry in Norway in 2002 reduced revenues by an estimatedTEUR 9,500.For the group as a whole, RevPAR for comparable unitsdropped by 1.6% compared to the previous year. As a comparison,the RevPAR of the total markets of the major Europeancities dropped by 3.8% in the same period.Despite the continued weak market situation the gross marginremained at 33%, for all owned, leased and managed hotels.EBITDA decreased to TEUR 24,037 (32,892). Proforma EBITDA(adjusted for effects from sale of properties) dropped by 17%.Income before taxes fell from TEUR 21,957 to TEUR 9,262. Inaddition to the impact on earnings from the negative marketdevelopments, income before tax was reduced due to a decreasein capital gains from sale of properties etc. to TEUR 621(6,784).Total investments in intangible and tangible fixed assets for2002 amounted to TEUR 28,883 (18,646).ROCE was 8.4 (11.7)%.GROUP HIGHLIGHTS2002 2001 2000 1999 1998Key figuresOperating revenue 389,715 379,474 369,870 335,837 312,161Operating income before financial income 11,068 24,322 65,923 66,807 36,836Financial items, net –1,806 –2,365 2,667 –5,167 –10,744Net income 3,876 14,146 48,513 52,508 17,119Equity 99,834 104,120 105,138 207,063 132,616Balance sheet total 279,309 289,887 305,690 339,033 356,399Dividends paid 3) 13,799 16,474 94,673 0 0Investments in property, plant and equipment 28,883 18,646 18,521 16,827 59,149RevPAR (EUR) 1) 69 70 74 66 63Systemwide revenue 2) 1,109,000 1,090,000 1,035,000 962,000 815,000Number of Hotels 182 160 146 125 113FinancialsKey ratiosProfit Margin, GOP (%) 1) 33 33 34 33 33Return on capital employed % 8,4 11,7 16,8 13,1 14,51)Including owned, leased and managed hotels. 2) Revenue in owned, leased, managed and franchised hotels. 3) Group Contribution in Norway in 2001 and 2002.65

MARKET DEVELOPMENTThe travel market has continued to be hesitant and volatile in2002. The general uncertainty regarding the development in theworld economy has created a new level of caution with regardsto economic outlook as well as a lowered willingness to committo long-term investments.General business indicators show no clear trend and anypositive news is still mixed with negative news. However, onecommon understanding in the hotel industry is that the bottomhas not yet been reached. Not surprisingly, the Middle East marketwas hardest hit post September 11 2001, suffering a 4%decline in demand, this by comparison to an overall decline indemand in Europe of 3%.The low cost carriers are presently one of the driving forcesin the travel industry. Through their strongly reduced rates theybring new customers to the market place, which represent anew, price sensitive segment. For the hotel industry, this trendimplies that the hotels in the budget and mid-range segmentsare likely to grow at a faster pace than the luxury segment. Afterthe master franchise agreement with Carlson Hotels Worldwide,Rezidor SAS is well positioned in this market segment.RISK MANAGEMENT OBJECTIVESThe key risk management objectives of Rezidor SAS may besummarised as follows:Ensure that the risks and benefits of new investments andcontingent liabilities are in line with Rezidor SAS’ financialobjectives.Reduce business cycle risks through brand diversity, geographicrepresentation and by ensuring there is a business mixof leased, managed and franchised hotels.Review and assess Rezidor SAS’ insurance programmes, onan ongoing basis.Carefully evaluate investments in high-risk regions, to matchthe potential risks with premium returns on investments.Protect brand values through strategic control and operationalpolicies.OPERATING RISKSRezidor SAS is subject to the operating risks common to theHospitality Industry, including:Changes in general economic conditionsChanges in travel patterns and demandCyclical over supply of hotelsThe financial condition of third party property owners andfranchiseesTypical long term nature of lease and management contractswith guaranteesFINANCIAL EXPOSUREAs a result of Rezidor SAS’ strategy not to own real estate, therisks from financing activities are limited, in fact the net positionon interest bearing assets and liabilities is a net asset of TEUR9,938.Rezidor SAS’ main financing risk is related to the ability tocontrol and meet off balance sheet commitments from fixedleases and management contracts with guarantees. In order tomanage and control the off balance sheet commitments, afinancial policy was implemented some years ago.CURRENCY EXPOSUREExposure to foreign currency fluctuations is mainly related to thetranslation of foreign entities into Euro. Activities in foreign entities,which includes owned and leased hotels, are typically carriedout in local currency. Furthermore, there is an exposure toforeign currency fluctuation in the Danish entities related tomanagement and franchise fees, which are typically invoiced inforeign currency.INTEREST RATE EXPOSURERezidor SAS’ interest bearing position is a net asset of TEUR9,938. Based on the net interest bearing position December 31,2002, an increase of 1% point in the interest level would result inan increase in net interest income of TEUR 100.CREDIT RISKSCredit risks related to financial assets equal the values includedin the balance sheet.In some cases Rezidor SAS has granted loans to hotel ownersin early stages of new projects. In all cases, appropriateinterest rates, repayment schedules and security arrangementshave been agreed upon.CASH FLOW RISKSIt is the policy of Rezidor SAS that the raising of capital andplacement of excess liquidity is managed centrally. Furthermorethe group has objectives for liquidity reserves, such as excesscash and irrevocable credit facilities, that the group at any timeshould have available.INTELLECTUAL CAPITAL RESOURCESThe average number of employees in Rezidor SAS during 2002was 3,117 (3,103). This includes employees in owned andleased hotels. 55 percent of these employees were female. Thegroup-wide average number of employees (including also managedand franchised hotels) was 13,500 (12,000).On an annual basis, both Rezidor SAS centrally and the mainbrand Radisson SAS, conduct a Climate Analysis to monitor the66

staffs’ attitudes concerning work conditions, career opportunitiesand management. Over 9,968 employees (including employeesin managed and franchised hotels) participated in the2002 climate analysis, showing an improved overall workingclimate participation up from 79.2 to 80.5 points out of possible100. As a separate exercise, employee satisfaction at CountryInn was 4.3 out of a possible 5 during 2002.Through the central Management School, four types ofcourses are offered to employees: Revenue and Profit Enhancement,Leadership Development, Personal Development andGuest Satisfaction. Furthermore, education and training is alsocarried out at hotel level. During 2002, the majority of Rezidor SASemployees participated in one or more training programmes.expected. Based on actual achievement over the last years,there is reason to be optimistic, not only as to Rezidor SAS’ continuedlong term expansion in the industry, but also to acceleratedincome generated by the growth.For 2003 it is expected that the low growth rate in the mainmarkets will continue. Furthermore we expect competition in theindustry to remain at a high level throughout the year, puttingcontinued pressure on revenues. For the year revenue isexpected to increase compared to 2002, mainly due to theincreased number of hotels, and the result is expected to be inline with 2002. These expectations are subject to a high level ofuncertainty due to the prevailing uncertain global political situationand uncertain market.RESPONSIBLE BUSINESS PERFORMANCEDuring 2002, Rezidor SAS continued to expand its ResponsibleBusiness (RB) programme launched in 2001. Radisson SAS hasbeen successful in embracing the programme during the year,showing a wide range of improvements. The new brands will beintroduced to the Responsible Business programme in 2003.One of the major achievements during the year was that 88Radisson SAS hotels established their own Responsible BusinessAction Plans, detailing how they will improve their performancewith regards to the 17 different chain-wide RB objectives.To assist the local RB teams, a corporate Responsible BusinessHandbook was developed, containing suggestions of possibleResponsible Business actions to implement, and providing asystematic approach for the implementation process. Moreover,88 Radisson SAS hotels were successful in reporting key environmentalperformance on a monthly basis throughout the year,where energy consumption has been reduced to 289 kwh/m 2(292) and water consumption to 423 litres per guest (436).35 percent (0) of the hotel staff obtained Responsible Businesstraining during the year; achieved through a 2-hour hotel specifictraining programme, educating staff about environmental andsocial issues in the hotel industry. Moreover, in October, aResponsible Business awareness campaign was launched inthe hotels, informing staff and guests through posters, key walletsand postcards about the RB programme and the hotels’achievements.EVENTS OCCURRING AFTERTHE BALANCE SHEET DATENo events have occurred from the balance sheet date up to thisdate that would have a material influence on this Annual Report.PARENT COMPANYRezidor SAS Hospitality A/S is a fully owned subsidiary of SASInvestments A/S, Denmark, which is ultimately owned by SASAB, Sweden. Rezidor SAS Hospitality A/S has no hotel operationof its own. All operations are organised in subsidiaries, co-ordinatedand managed by a central administration function in Brussels,Belgium. The company does not have any employees.The net income for 2002 was TEUR 3,876, which the Boardof Directors recommend be carried forward to next year.A group contribution has been given to other companies inthe SAS Group in Norway in 2001 and 2002 of TEUR 16,474 and13,799 respectively. The group contribution is given directlybetween the Norwegian companies in accordance with localrules. For the group, and in the parent company’s accounts, thegroup contribution is charged directly to equity. The tax effect ofthe group contribution is charged directly to equity, reducing thenet effect on equity.The equity of the company at year-end amounted to TEUR99,834.The shareholder of Rezidor SAS Hospitality A/S has decidedto increase the equity in the company by TEUR 10,000 through acash contribution in 2003 to compensate the net equity effect ofthe group contribution.The accounts of the parent company are included in thegroup accounts presented here.FinancialsOUTLOOKIn 2003 the opening of 30–40 new properties (mainly managedand franchised), as well as the signing of 40–50 new contracts is67

Accounting PoliciesThis Annual Report has been prepared in accordance with currentInternational Financial Reporting Standards (IFRS – formerly“IAS”) and the provisions of the Danish Financial Statements Actgoverning reporting class C enterprises (large).To facilitate the reading of the Annual Report, some of theinformation required by IFRS has been included in the Board ofDirectors’ Report, which in this context is regarded as an integralpart of the Parent Company’s financial statements and theconsolidated financial statements.The Annual Report has been presented applying the sameaccounting policies as were used last year. The description ofthe accounting policies has been adjusted without this implyingany changes in policies applied.REPORTING CURRENCYAs EUR is the functional currency for the Group, the financialstatements are presented with EUR as the reporting currency.GENERAL PROVISION ONRECOGNITION AND MEASUREMENTAssets are recognised in the balance sheet if it is likely thatfuture economic benefits will flow to the Group and the value ofthe assets can be measured reliably.Liabilities are recognised in the balance sheet if the Grouphas a legal or actual obligation as a result of a prior event, and itis likely that future economic benefits will flow out of the Group,and the value of the liabilities can be measured reliably.In the initial recognition assets and liabilities are measured atcost. Measurement after the initial recognition is effected asdescribed below for each item.In connection with recognition and measurement, all affairs andconditions are taken into consideration that arise before the time atwhich the Annual Report is prepared and that confirm or invalidateaffairs and conditions existing on the balance sheet date.Income is recognised in the income statement as and whenearned, whereas costs are recognised at the amounts attributableto the financial period under review. Revaluations of financialassets and liabilities are included in the income statement asfinancial income or financial expenses.CONSOLIDATED FINANCIAL STATEMENTSThe consolidated financial statements include Rezidor SASHospitality A/S (Parent Company) and the group enterprises(subsidiaries) that are controlled by the Parent Company, seegroup chart in note 1. Control is achieved by the Parent Company,either directly or indirectly, holding more than 50% of thevoting rights or in any other way possibly or actually exercisingcontrolling influence. Enterprises in which the Group, directly orindirectly, holds between 20% and 50% of the voting rights andexercises significant, but not controlling influence are regardedas associates.BASIS OF CONSOLIDATIONThe consolidated financial statements are prepared on the basisof the financial statements of Rezidor SAS Hospitality A/S andits subsidiaries. The financial statements used for consolidationhave been prepared applying the Group’s accounting policies.The consolidated financial statements are prepared by combininguniform items and eliminating intercompany income andexpenses, intercompany accounts as well as profits and losseson transactions between the consolidated enterprises. Accountis taken of the tax effect of these eliminations.Shares in subsidiaries are offset at the pro-rata share of suchsubsidiaries’ net assets at the take-over date, with net assetshaving been calculated at fair value.BUSINESS COMBINATIONSFor intra-group acquisitions, any difference between the acquisitioncosts and the equity of the acquired companies are adjustedagainst equity according to the pooling of interest method.Newly established enterprises or newly acquired enterprisesfrom external parties are recognised in the consolidated financialstatements from the time of acquiring or establishing suchenterprises. Divested or wound-up enterprises are recognisedin the consolidated income statement up to the time of theirdivestment or winding-up.The acquisition method is applied in the acquisition of newenterprises, under which identifiable assets and liabilities ofthese enterprises are measured at fair value on the take-overdate. Upon take-over provisions are made for expenses relatingto decided and published restructuring initiatives in the acquiredenterprise. Allowance is made for the tax effect/implication ofthe reassessments/restatements.Favourable differences in amount (goodwill) between cost ofthe acquired share and fair value of the assets and liabilitiestaken over are recognised as “Intangible assets”, and they are68

amortised systematically through the income statement basedon an individual assessment of their useful life usually five years,however, no more than 20 years. Negative differences in amount(negative goodwill), corresponding to an estimated adversedevelopment in the relevant enterprises, are recognised in thebalance sheet as a separate accruals item, and they are recognisedin the income statement as and when such adverse developmentis realised.PROFITS OR LOSSES FROM DIVESTMENT OF SHARESProfits or losses from divestment of subsidiaries and associatesare calculated as the difference between the selling price and thecarrying amount of the net assets at the time of divestment, inclusiveof non-amortised goodwill and estimated divestment expenses.Profits and losses are recognised in the income statementunder “Income from sale of shares and tangible fixedassets”.EXCHANGE RATESOne EUR equals:Year-end rateAverage rateCurrency 2002 2001 2002 2001Denmark DKK 7.43 7.44 7.43 7.45Sweden SEK 9.19 9.42 9.16 9.25Norway NOK 7.30 7.96 7.51 8.05UK GBP 0.65 0.61 0.63 0.62INCOME STATEMENTREVENUEOperating revenue consists mainly of fees from the hotel activities,including management and franchise fees, and sales donein owned and leased hotels. Fee revenue is included in theincome statement for the period it relates to, while revenue fromsales in the hotels are included in the income statement whenthe services have been rendered.TRANSLATION OF ACCOUNTS IN FOREIGN CURRENCYForeign currency transactions are at the initial recognition translatedinto the reporting currency using average monthly rates,which essentially reflect the rate of exchange at the date oftransaction. Receivables, liabilities and other monetary itemsdenominated in foreign currencies that have not been settled atthe balance sheet date are translated using the rate of exchangeat the balance sheet date. Exchange differences that arisebetween the rate at the date of transaction and the one in effectat the date of payment, or the rate at the balance sheet date, arerecognised in the income statement as financial items. Fixedassets purchased in foreign currencies are translated using historicalexchange rates.All foreign subsidiaries and associates are considered independententities. In recognising these entities the income statementsare translated into the reporting currency at averagemonthly rates, which essentially reflect the rate of exchange atthe date of transaction. Balance sheet items are translated usingthe exchange rates at the balance sheet date. Goodwill is consideredto belong to the independent foreign entity, and it istranslated using the exchange rate at the balance sheet date.Exchange differences arising on the translation of foreign entities’equity at the beginning of the period using the exchangerates at the balance sheet date as well as those arising on thetranslation of income statements from using average rates tousing the exchange rates at the balance sheet date are takendirectly to shareholders’ equity.Exchange adjustments of long-term intercompany accountswith independent foreign subsidiaries, which in substanceforms part of the aggregate investment in the relevant subsidiary,are recorded directly in shareholders’ equity.COST OF GOODS SOLDCost of goods sold relates mainly to cost of goods in restaurants(Food and Beverage) incurred to generate revenue.OTHER OPERATING EXPENSESOther operating expenses include expenses related to operatingthe hotels such as heat, light, power, IT and telecommunication,as well as expenses related to sale, marketing and administrationsuch as fee expenses and commissions.FINANCIAL INCOME AND EXPENSESThese items include interest income and expenses, realised andunrealised exchange gains and losses on securities and shares,debts and foreign currency transactions, value adjustments offinancial assets, addition or deduction of amortisation relating tomortgage debt, as well as cash discounts etc.TAXATIONTax for the period, which consists of current tax for the period,changes in deferred tax, non-refundable withholding tax on royaltiesetc as well as additions, deductions and allowances relating tothe Danish taxation-on-account scheme, is recognised in theincome statement at the portion attributable to the profit for theperiod, and charged directly against shareholders’ equity at theportion attributable to entries taken directly to shareholders’ equity.The current tax payable or receivable is recognised in thebalance sheet and has been calculated as the tax chargeable onthe period’s taxable income, adjusted for tax paid on account.Deferred tax is recognised and measured using the balancesheet liability method on all temporary differences between thevalue of assets and liabilities for accounting purposes and taxFinancials69

purposes. The assets’ value for tax purposes is calculatedbased on the planned use of each asset.Deferred tax is measured based on the tax regulations and taxrates of the relevant countries that will be in effect, using the lawsat the balance sheet date, when the deferred tax is estimated tobe triggered as current tax. Changes in deferred tax resulting fromchanged tax rates are recognised in the income statement.Deferred tax assets, including the value for tax purposes oftax losses available for carry-forward, are recognised in the balancesheet at their estimated realisable value, either by offsettingthem against deferred tax liabilities or disclosing them asnet tax assets.The Parent Company is jointly taxed with all of its whollyowned Danish and some of its foreign subsidiaries. The ParentCompany provides for and pays the current Danish income taxfor these companies.BALANCE SHEETGOODWILLGoodwill is amortised straight-line over its estimated useful life,which is fixed based on the experience gained by the ExecutiveCommittee for the particular business area. The period of amortisationis usually five years.The carrying amount of goodwill is assessed currently andwritten down to recoverable amount if the carrying amountexceeds the estimated future net income from the enterprise oractivity to which the goodwill is related.OTHER INTANGIBLE ASSETSAcquired intangible assets in the form of rights are measured atcost less accumulated amortisation. These rights are amortisedover the term of the agreement, but over no more than 20 years.Intangible assets are written down to the lower of recoverableamount and carrying amount.PROPERTY, PLANT AND EQUIPMENTLand, buildings, and fixed installations as well as machinery andequipment are measured at cost less accumulated depreciationand write-downs. No depreciation is effected for land.Cost includes the acquisition price, costs directly related tothe acquisition, and expenses of making ready the asset untilthe time when it is ready to be put into operation.Interest and other finance costs relating to tangible assetsduring the manufacturing period are recognised in the incomestatement, except for interest and other finance cost related toconstruction of new hotel buildings, where these costs are capitalisedand depreciated.The basis of depreciation is cost less estimated residual valueafter ended useful life. Depreciation is provided straight-linewith the following percentages based on an assessment of theassets’ estimated useful lives:Buildings 2,5 %Fixed installations and technical improvements 10,0 %Guest room furniture, fixture and equipment 15,0 %Other FF&E and machinery 20,0 %Assets costing less than TEUR 3 per unit are recognised ascosts in the income statement at the time of acquisition.Tangible assets are written down to the lower of recoverableamount and carrying amount.Profits and losses from the sale of tangible assets are calculatedas the difference between the selling price less sellingexpenses and the carrying amount at the time of sale. Profits orlosses are recognised in the income statement together withdepreciation and write-downs.SHARES IN SUBSIDIARIES AND ASSOCIATESShares in subsidiaries and associates are recognised and measuredusing the equity method, meaning that shares in the balancesheet are measured at the pro rata share of the enterprises’ equityvalue plus or less unrealised intercompany profits or losses.The income statement includes the Parent Company’s shareof the enterprises’ profits or losses after elimination of unrealisedintercompany profits and losses.Subsidiaries and associates with a negative equity value aremeasured at nil, and any receivables from these enterprises arewritten down by the Parent Company’s share of such negativeequity value if it is deemed to be irrecoverable.Net revaluation of shares in subsidiaries and associates istransferred to “Reserve for net revaluation of shares” if the carryingamount exceeds cost.OTHER SHARES AND PARTICIPATIONSOther shares and participations are measured at fair value at thebalance sheet date.INVENTORIESInventories are measured at the lower of cost (using the FIFOprinciple) and net realisable value.RECEIVABLESReceivables are measured at amortised cost, usually equallingnominal value, less provisions for bad debts.SHAREHOLDERS’ EQUITYDividends are recognised as a liability at the time of resolution to70

this effect at the general meeting. The recommended dividendsfor the financial period are disclosed under a separate captionunder “Shareholders’ equity”.MORTGAGE DEBTMortgage debt is at the time of borrowing recognised at cost,equalling the proceeds received less transaction costs incurred,and it is subsequently measured at amortised cost, which isequal to the capitalised value generating from applying theeffective-interest method.OTHER FINANCIAL LIABILITIESOther financial liabilities are recognised at amortised cost, usuallyequalling nominal value.RETIREMENT BENEFIT OBLIGATIONSSeveral companies within the Group have established pensionplans for its employees. The obligations are principally securedthrough different insurance agreements, which vary considerablybetween the countries due to different legislation.Periodical payments to defined contribution plans are includedin the income statement at the due date and any contributionspayable are included in the balance sheet under other liabilities.The present value of the Group’s obligations according todefined benefit plans are calculated on an actuarial basis. Provisionis made in the balance sheet for the present value ofunfunded plans. The present value of obligations which arefunded in independent pension funds is calculated less the fairvalue of the plan assets, and any net obligation is included as aprovision in the balance sheet. If the calculation shows a netasset, that asset is recognised in the balance sheet to the extentthat the Group is able to derive future economic benefits in theway of refunds from the plan or reductions of future contributions.The actuarial assumptions used in above calculations primarilyregard discounts rates used in determining the present valueof benefits, projected rates of remuneration growth, and longtermexpected returns for plan assets. Differences betweenassumptions and actual experiences, and effects of changes inactuarial assumptions are amortised over five years, wherethese differences exceed a defined corridor (+/–10%).THE CASH FLOW STATEMENTThe cash flow statement of the Group is presented using theindirect method. It shows cash flows from operating activities,investing activities and financing activities as well as the Group’scash and cash equivalents at the beginning and the end of thefinancial period. No separate cash flow statement has been preparedfor the Parent Company because it is included in the consolidatedcash flow statement.Cash flows from the acquisition and divestment of enterprises areshown separately under “Cash flow from investing activities”.Cash flows from acquired enterprises are recognised in the cashflow statement from the time of their acquisition, and cash flowsfrom divested enterprises are recognised up to the time of sale.“Cash flow from operating activities” is calculated as operatingincome before tax adjusted for non-cash operating items, increaseor decrease in the working capital and income taxes paid.“Cash flow from investing activities” includes payments inconnection with the acquisition and divestment of enterprisesand activities as well as the purchase and sale of intangible andtangible assets as well as investments.“Cash flow from financing activities” includes changes in thesize or composition of the Group’s issued capital and relatedcosts as well as the raising of loans, instalments on interestbearingdebt, and payment of dividends.“Cash and cash equivalents” includes bank deposits andcash in hand.Cash flows denominated in foreign currencies, includingcash flows in foreign subsidiaries, are translated at averagemonthly rates, which essentially reflect the rates at the date ofpayment. Cash at year end is translated at the rates at the balancesheet date.SEGMENT INFORMATIONThe Group is only engaged in the business segment “Hotel Operations”.Revenue, segment assets and additions to tangible andintangible assets are disclosed within the secondary geographicalsegments. The segment information complies with the Group’saccounting policies and internal financial management.Fixed assets in the geographical segments include those useddirectly in the operation of each segment, including intangibleassets, property, plant and equipment, and investments in associates.The assets are distributed according to their physical location.DEFINITION OF RATIOSThe ratios have been compiled in accordance with “Anbefalinger& Nøgletal 1997” (Recommendations & Ratios 1997) issued bythe Danish Society of Financial Analysts.Gross margin 1) x 100GROSS MARGIN RATIO =RevenueRETURN ON CAPITAL EMPLOYED =Operating income plus financial income x 100Balance sheet total less non-interest bearing debt1)Total revenue less the total departmental and operating expenses.Financials71

Income StatementConsolidated AccountsParent Company(EUR Thousand) Notes 2002 2001 2002 2001Operating revenue 2,3 389,715 379,474 9,616 8,774Cost of goods sold –32,927 –31,033 – –Personnel cost 4,14 –148,149 –143,304 – –Other operating expenses –94,484 –98,779 –8,253 –7,447Gross Operating Income 114,155 106,358 1,363 1,327Rental expense, insurance ofproperties & property tax 5,18 –93,847 –77,345 – –Share of income in associated companies 9,26 3,729 3,879 – –Share of income in subsidiaries – – 4,366 15,660Operating income before depreciation 24,037 32,892 5,729 16,987Depreciation and amortisation 8,25 –13,590 –15,354 –893 –892Income from sale of shares and tangible fixed assets 8,9 621 6,784 – –Operating income before financial items 11,068 24,322 4,836 16,095Financial income 6 3,499 6,519 9,877 10,003Financial expenses 6,23 –5,305 –8,884 –10,269 –14,091Operating income before tax 9,262 21,957 4,444 12,007Tax on ordinary result 7,24 –5,386 –7,811 –568 2,139NET INCOME 3,876 14,146 3,876 14,146Net income attributable to minority shareholders 0 0 – –Proposed distribution of net income:Transfer to reserve for net revaluation of shares – – 4,366 0Retained earnings 3,876 14,146 –490 14,1463,876 14,146 3,876 14,14672

Cash Flow StatementConsolidated Accounts(EUR Thousand) Notes 2002 2001OPERATIONSIncome before taxes 9,262 21,957Depreciation and amortisation 8 13,590 15,354Income from sale of shares and tangible fixed assets and disposals –592 –14,449Tax paid during the year –3,004 –6,568Share of income in associated companies 9 –3,729 –3,878Dividend from associated companies 9 3,883 3,720Other 0 –244Funds provided by the year’s operations 19,410 15,892Change in:Inventories –579 –185Current receivables –9,976 –18,012Current liabilities –1,257 31,345Change in working capital –11,812 13,148CASH FLOW FROM OPERATING ACTIVITIES 7,598 29,040INVESTMENTSGoodwill –511 0Shares and participations –8,834 –789Construction in progress 8 –14,446 –6,682Machinery and equipment 8 –6,318 –8,426Buildings and fixed installations 8 –4 –2,749Total investments –30,113 –18,646Sale of fixed assets and shares 6,775 57,490CASH FLOW FROM INVESTING ACTIVITIES –23,338 38,844FINANCINGLong-term loans –40,860 20,128Financial items net 61,985 –78,456Group contribution, Norway –13,799 –16,474CASH FLOW FROM FINANCING ACTIVITIES 7,326 –74,802Change in liquid funds –8,414 –6,918Liquid funds in sold/acquired companies 596 0Change in liquid funds in the balance sheet –7,818 –6,918FinancialsLiquid funds at the beginning of the year 21,417 28,335Liquid funds at year-end 12 13,599 21,41773

Balance SheetConsolidated AccountsParent Company(EUR Thousand) Notes 2002 2001 2002 2001ASSETSNon-current AssetsIntangible non-current assetsGoodwill 8,25 8,541 749 511 0Other intangible assets 8,25 – – 11,620 12,4958,541 749 12,131 12,495Tangible non-current assetsLand, buildings and fixed installations 8,17 31,093 29,342 – –Machinery and equipment 8 31,653 23,088 – –Construction in progress 8 12,002 10,362 – –74,748 62,792 – –Financial non-current assetsShare of equity in affiliated companies 9 10,435 22,637 – –Share in subsidiaries 26 – – 122,703 123,292Other shares and participations 9 11,187 11,043 – –Pension funds, net 14 10,526 8,473 – –Deferred tax asset 7 13,269 12,961 2,742 3,304Other long-term receivables 11 44,738 63,140 98,665 114,71490,155 118,254 224,110 241,310Total non-current assets 173,444 181,795 236,241 253,805Current AssetsInventory 3,254 2,675 – –ReceivablesAccounts receivable 10 24,773 21,719 156 0Other receivables 64,239 62,281 27 144Other short-term receivables – – 22,463 16,67689,012 84,000 22,646 16,820Bank deposits, cash in hand, etc. 12 13,599 21,417 0 597Total current assets 105,865 108,092 22,646 17,417TOTAL ASSETS 279,309 289,887 258,887 271,22274

Balance SheetConsolidated AccountsParent Company(EUR Thousand) Notes 2002 2001 2002 2001LIABILITIES AND EQUITYEquityShare capital 67,200 67,200 67,200 67,200Share premium account – – 0 36,92067,200 67,200 67,200 104,120Retained earningsReserve for net revaluation of shares – – 4,366 0Other equity 32,634 36,920 28,268 032,634 36,920 32,634 0Total equity 13,27 99,834 104,120 99,834 104,120Minority interest 33 0 33 0LiabilitiesNon-current provisionsPension commitments 14 2,203 2,045 – –Deferred tax 7 13,646 17,924 374 37315,849 19,969 374 373Non-current interest bearing liabilitiesLiabilities to financial institutions 15,17 4,965 39,700 – –Other long-term liabilities 803 6,778 88,716 110,1675,768 46,478 89,090 110,167Current liabilitiesLiabilities to financial institutions 17,734 53 – –Accounts payable 29,180 25,030 2,749 1,179Current tax 7,24 3,558 2,439 – 1,165Other current liabilities 16 107,353 91,798 67,181 54,591157,825 119,320 69,930 56,935Total liabilities 179,442 185,767 159,020 167,102TOTAL EQUITY AND LIABILITIES 279,309 289,887 258,887 271,222FinancialsMortgages and contingent liabilities 17,20Leasing commitments 18Management contract commitments 19Segmental information 2175

NOTES TO THE ACCOUNTSGroup1.Group companies and legal structureRezidor SAS Hospitality A/S owns Rezidor SAS Hospitality Norway AS, Norway, Rezidor SAS Sweden AB, Sweden, SAS Hotels A/S Danmark, Denmark,Hotel Invest UK A/S, Denmark, Rezidor SAS Country A/S, Denmark, Rezidor SAS Park A/S, Denmark, Rezidor SAS Regent A/S, Denmark and Rezidor SASLifestyle A/S, Denmark directly. These eight companies own the following subsidiaries:Registered in Ownership, % Share capitalRezidor SAS Hospitality Norway AS, with the following subsidiaries: Oslo 100 MNOK 102.0SAS Hotel Scandinavia AS Oslo 100 MNOK 1.0AS SAS Royal Hotel Oslo 100 MNOK 11.0Oslo Hotel Holding AS Oslo 100 MNOK 0.0SAS Airport Hotel Oslo AS Gardermoen 100 MNOK 0.5SAS Park Royal Hotel AS Bærum 100 MNOK 1.0SAS Hotels Tønsberg AS Tønsberg 100 MNOK 0.1SAS Royal Hotel AS Bergen 100 MNOK 1.0SAS Royal Hotel AS Bodø 100 MNOK 1.0SAS Royal Hotel AS Tromsø 100 MNOK 1.0SAS Royal Hotel AS Stavanger 100 MNOK 1.0SAS Caledonien Hotel AS Kristiansand 100 MNOK 0.5SAS Royal Garden Hotel AS Trondheim 100 MNOK 0.5SAS Hotel Trondheim AS Trondheim 100 MNOK 0.1SAS Hotel Norge AS Bergen 100 MNOK 0.5SAS Globetrotter Hotel AS Stavanger 100 MNOK 0.5SAS Atlantic Hotel AS Stavanger 100 MNOK 0.5SAS Hotel Ålesund AS Ålesund 100 MNOK 0.1SAS Hotels Service Centre AS Oslo 100 MNOK 0.1SAS Hotel Nydalen AS Oslo 100 MNOK 0.1SAS Hotel Haugesund AS Haugesund 100 MNOK 0.1Rezidor SAS Sweden AB, with the following subsidiaries: Sigtuna 100 MSEK 0.1Rezidor SAS Hospitality Sweden AB Sigtuna 100 MSEK 18.0SAS Hotel Services Sweden AB Sigtuna 100 MSEK 0.5AB Strand Hotel Stockholm 100 MSEK 0.3SAS Park Avenue Hotel AB Gothenburg 100 MSEK 5.2SAS Arlandia Hotel AB Sigtuna 100 MSEK 1.0SAS SkyCity Hotel AB Sigtuna 100 MSEK 1.0SAS Royal Hotel AB Malmö 100 MSEK 1.0SAS Hotels A/S Danmark, with the following subsidiaries: Copenhagen 100 MDKK 210.0SAS Falconer Center A/S Frederiksberg 100 MDKK 1.2SAS International Hotels Management A/S Copenhagen 100 MDKK 2.0SIHSKA A/S Copenhagen 100 MDKK 1.5SAS Scandinavia Hotel Aarhus A/S Aarhus 100 MDKK 0.5SAS Royal Hotel Management A/S Copenhagen 100 MDKK 1.2SAS International Hotels Selection A/S Copenhagen 100 MDKK 5.0SAS Riga Hotel A/S Copenhagen 100 MDKK 0.5Hotel Development South Africa A/S Copenhagen 100 MDKK 1.0SAS Hotel Kiev A/S Copenhagen 100 MDKK 0.5SAS Hotel Investment Egypt A/S Copenhagen 100 MDKK 0.5SAS Hotel Investment France A/S Copenhagen 100 MDKK 0.5SAS Hotel Investment Turkey A/S Copenhagen 100 MDKK 0.5SAS Hotel Investment Spain A/S Copenhagen 100 MDKK 0.5SAS Hotel Investment A/S Copenhagen 100 MDKK 0.5SAS Hotel Personnel S.A. Brussels 100 MEUR 0.1Rezidor SAS Hospitality S.A. Brussels 100 MEUR 0.1SAS Hotel Brussels S.A. Brussels 100 MEUR 0.3SAS Hotel Brussels Leopold S.A. Brussels 100 MEUR 0.1SAS Hotels France S.A. Paris 100 MEUR 0.176

Registered in Ownership, % Share capitalRoyal Scandinavia Hotel Bordeaux S.A. Bordeaux 100 MEUR 0.0Royal Scandinavia Hotel Nice S.A. Nice 100 MEUR 0.0Royal Scandinavia Hotel Marseille S.A. Marseille 100 MEUR 0.0SAS International Hotels (Far East) Limited Hong Kong 100 MHKS 0.0SAS Hotel Amsterdam B.V. Amsterdam 100 MEUR 0.0SAS Hotels Management GmbH Hamburg 30 MEUR 0.2SAS Hotels UK Ltd. London 100 MGBP 0.0SAS Portman (Holdings) Ltd., and subsidiaries: London 100 MGBP 0.0SAS Hotel Manchester Ltd. Manchester 100 MGBP 0.0SAS Hotel Leeds Ltd. Leeds 100 MGBP 0.0SAS Hotel Stansted Ltd Stansted 100 MGBP 0.0SAS Hotel Manchester Airport Ltd Manchester 100 MGBP 0.0SAS Hotels Deutschland GmbH, and subsidiaries: Hamburg 100 MEUR 0.2SAS Hotels Management GmbH Hamburg 70 MEUR 0.2SAS Hotel Merseburg GmbH Merseburg 100 MEUR 0.0SAS Hotel Dresden GmbH Dresden 100 MEUR 0.0SAS Hotel Rügen GmbH Rügen 100 MEUR 0.0SAS Hotel Investitions GmbH Hamburg 100 MEUR 0.0SAS Hotel Hannover GmbH Hamburg 100 MEUR 0.0SAS Hotel Köln GmbH Hamburg 100 MEUR 0.0SAS Hotel Wiesbaden GmbH Hamburg 100 MEUR 0.0SAS Hotel Berlin GmbH Hamburg 100 MEUR 0.0SAS Hotel Lindenpark Berlin GmbH Berlin 100 MEUR 0.0SAS Hotel Frankfurt GmbH Frankfurt 100 MEUR 0.0Hotel Invest UK A/S, and subsidiaries: Copenhagen 100 MDKK 0.5SAS Hotels Management UK Ltd London 100 MGBP 0.0Rezidor SAS Country A/S, with the following subsidiaries: Copenhagen 100 MDKK 0.5Country Inns and Suites FRG Hotel Management GmbH, and subsidiaries Munich 100 MEUR 0.8Country Inn München Frankfurter Ring GmbH Munich 100 MEUR 0.0Country Inn München Ost GmbH Munich 100 MEUR 0.0Rezidor SAS Park A/S, with the following subsidiaries: Copenhagen 100 MDKK 0.5Rezidor SAS Park AB Sigtuna 100 MSEK 0.1Rezidor SAS Regent A/S Copenhagen 100 MDKK 0.5Rezidor SAS Lifestyle A/S Copenhagen 100 MDKK 0.5Group StructureSASSAS INVESTMENTS A/S[DENMARK]REZIDOR SASHOSPITALITY A/S[DENMARK]REZIDOR SAS REGENT A/S[DENMARK]REZIDOR SAS PARK A/S[DENMARK]REZIDOR SAS LIFESTYLE A/S[DENMARK]REZIDOR SAS COUNTRY A/S[DENMARK]REZIDOR SAS HOSPITALITY NORWAY ASREZIDOR SAS SWEDEN ABHOTEL INVEST UK A/SSAS HOTELS A/S DANMARKFinancialsREGENTOPERATIONSPARK INNOPERATIONSCERRUTIOPERATIONSCOUNTRY INNOPERATIONSRADISSON SASOPERATIONSRezidor SAS is a fully owned subsidiary of SAS Investments A/S, Copenhagen.Rezidor SAS Hospitality A/S is consolidated as a subsidiary in the consolidated financial statementsof SAS AB, Stockholm. The financial statements are available at www.scandinavian.net.77

2.Related partiesRelated parties with controlling influence: SAS AB, the ultimate parent company.Other related parties with whom Rezidor SAS has had transactions: TheSAS AB Group and the management of Rezidor SAS.The business relationship with SAS (apart from the ownership-relatedtransactions, see Board of Directors’ Report and note 13 Equity) mainlyinvolved services for the crew and staff of SAS throughout the world, andadministration of parts of SAS’ frequent flyer programme, Eurobonus. RezidorSAS also buys services from SAS Finance.During 2002 Rezidor SAS has made a group contribution within Norway torelated companies within the SAS Group.All transactions with SAS are based on commercial terms and professionalattitude.Rezidor SAS has established a financial grouping of liquid funds, whichutilises the services from SAS Finance.As at year-end, Rezidor SAS had ordinary current receivable claimstowards SAS of TEUR 16,464 (19,113) and ordinary current liabilities of TEUR22,896 (4,621).2.8 % (3.4 % in 2001) of Rezidor SAS operating revenue represents sales toother companies within the SAS Group.Remuneration to the Board of Directors and the Board of Management isdisclosed in note 4 below.3.Operating revenueOperating revenue per area of operation 2002 2001Rooms revenue 185,032 172,031Food & Beverage Revenue 126,587 125,684Fee revenue 49,561 46,891Other revenue 28,535 34,868Total 389,715 379,4744.Payroll cost, number of employees, etcPayroll cost 2002 2001Salaries 116,920 107,572Social security 17,897 20,529Pension costs 2,782 1,618Total 137,599 129,719These costs are included in the line personnel cost in the income statement.The average number of employees in Rezidor SAS during 2002 was 3,117(3,103).Remuneration to the external Members of the Board of Directors amountedto TEUR 32 (36). Salaries and other remuneration to the Board of Managementwas TEUR 2,210 (2,178). Rezidor SAS also covered housing for the Board ofManagement. Part of the remuneration to Rezidor SAS Board of Managementis paid as bonus.In the event that Rezidor SAS decides to terminate the <strong>Managing</strong> Directorfor reasons other than breach of contract or gross negligence, severance paywould amount to three years annual remuneration. For the other three executivesin the Board of Management, severance pay would amount to betweenone and three year’s annual remuneration.5.Rental expense, insuranceof properties & property tax2002 2001Minimum lease payments 58,830 53,015Contingent lease payments 19,804 13,814Other 15,213 10,516Total rent, insurance and tax 93,847 77,3456. Financial items 2002 2001Interest Income Other SAS 558 181Other Financial Income 2,941 5,724Exchange differences 0 614Financial income 3,499 6,519Interest Expense Other SAS –1,437 –5,264Other Financial expense –3,140 –3,620Exchange differences –728 0Financial expense –5,305 –8,8847. Tax on ordinary result 2002 2001Income tax:Denmark 348 3,305Norway 4,255 4,988United Kingdom 5,030 2,029Other countries 1,596 1,55611,229 11,878Deferred tax:Current year –5,843 –4,067–5,843 –4,067Total tax 5,386 7,811Tax is calculated at the below mentioned tax rates. Taxation for otherjurisdictions is calculated at the rates prevailing in the respective jurisdictions.CountryTax rateDenmark 30%Sweden 28%United Kingdom 30%Norway 28%Germany 40%78

The tax charge for the year can be reconciled to the profit per the incomestatement as follows:2002 % 2001 %Operating income before tax 9,262 21,957Tax at the domestic income tax rate of 30% 2,779 30.0 6,587 30.0Tax effect of expenses that are notdeductible in determining taxable income 347 3.8 632 2.9Tax effect of income that is not taxable –576 –6.1 –187 –0.9Effect of different tax rates of subsidiariesoperating in other jurisdictions 1,509 16.4 –538 –2.4Change loss carry forward, not capitalised 51 0.1 0 0.0Withholding taxes 162 1.7 0 0.0Adjustment of prior years taxes 1) 1,114 12.1 1,317 6.0Tax expense and effectivetax rate for the year 5,386 58.2 7,811 35.61) Change in 2002 is due to adjustment of tax calculation for 2001, after issuing the annualreport for 2001. The change is mainly related to the sale of our property in Manchester.Deferred tax in the balance sheet 2002 2001Deferred tax asset 13,269 12,961Deferred tax liability –13,646 –17,924Net position 31.12.2001 –377 –4,963The movements for the year in Rezidor SAS’ net deferred tax position was asfollows:2002 2001Net deferred tax liability as of 31.12.2001 –4,963 –8,791Charged to income for the year –5,843 –4,067Deferred tax in acquired companies –50 0Translation differences –1,307 –239Net deferred tax liability as of 31.12.2002 –377 –4,963The translation difference mainly relates to the appreciationof the Norwegian Kronor.Temporary differences 2002 2001Non current assets –29,924 –39,696Current assets –9,585 4,303Liabilities –6,439 –6,818Tax losses carried forward 44,704 25,116Total –1,244 –17,095The above-mentioned tax losses can be carried forward without time limit.8.Intangible and tangible fixed assetsFixed assets are shown in the accounts at historical cost with deductions for depreciation and write-downs.Goodwill & Buildings & Land and Machinery & Constructionother int. assets installations 1) improvement Equipment in Progress TotalCost at 01.01.02 788 87,590 3,441 90,172 10,362 192,353Investments 8,115 4 0 6,318 14,446 28,883Disposals 0 –7,923 0 –15,677 0 –23,600Reclassifications 0 2,671 0 10,061 –12,732 0Translation adjustment 20 4,534 313 5,254 –191 9,930Cost at 31.12.02 8,923 86,876 3,754 96,128 11,885 207,566Acc.depreciation 01.01.02 –39 –61,689 0 –67,084 0 –128,812Depreciation of the year –342 –3,818 –3 –9,544 117 –13,590Disposals 0 7,923 0 15,648 0 23,571Translation adjustment –1 –1,952 2 –3,495 0 –5,446Acc.depreciation 31.12.02 –382 –59,536 –1 –64,475 117 –124,277Carrying amount 31.12.02 8,541 27,340 3,753 31,653 12,002 83,289Carrying amount 31.12.01 749 25,901 3,441 23,088 10,362 63,541Value of assets pledged 31.12.02 0 0 0 0 0 01)Rezidor SAS Group owns one hotel building; Radisson SAS Park Hotel in Oslo, Norway.Net gain on sale of assets 2002 2001Sales price 0 57,490Book value 0 –43,041Transaction cost 0 –665Gain on sale of buildings 0 13,784Accrual for costs related to new fireprotection regulations, Düsseldorf 0 –7,000Net gain 0 6,784Financials79

9.Ownership in associated companies and other sharesBook value Share ofAssociated companies Registered in Ownership 01.01.02 income Dividend Other TotalCasino Denmark A/S Copenhagen 50% 4,405 2,520 –2,087 32 4,870Casinos Scandinavia AB Stockholm 33,3% 0 0 0 0 0Casino Copenhagen K/S Copenhagen 50% 0 0 0 0 0SAS Amsterdam Hotel BV Amsterdam 50% 2,552 1,952 –1,741 –2,763 0SNR Amsterdam Hotel CV Amsterdam 50% 0 0 0 0 0Royal Viking Hotel AB Stockholm 50% 1,620 –541 –55 11 1,035MWB SAS Hotels Ltd London 50% 9,464 –135 0 –9,329 0TBB Leisure Luxury Hotels Ltd Cape Town 50% 670 0 0 1 671ZAO St-Petersburg St-Petersburg 24,81% 3,926 –67 0 0 3,859Total 22,637 3,729 –3,883 –12,048 10,435Book value Share ofOther shares Registered in Ownership 01.01.02 income Dividend Other TotalCopenhagen International Hotels K/S Copenhagen 11,3% 6,723 0 0 10 6,733Feri Otelcilik ve Turizm A.S Ankara 10% 2,299 0 0 3 2,302Virnich Hotel Kg Vienna 5% 77 0 0 0 77RBS Hotelli AS Tallinn 14,1% 1,901 0 0 3 1,904Others 43 0 0 128 171Total 11,043 0 0 144 11,187Net gain on sale of shares 2002 2001Sales price 12,934 0Book value –12,313 0Gain on sale of shares 621 010.Accounts receivableCurrent receivables are stated net of an allowance for doubtful accounts ofTEUR 7,195 (7,196)12.Cash and bankTEUR 2,722 (420) of the total cash at bank is restricted to meet the liabilityarising from payroll taxes withheld.11. Long-term receivables 2002 2001Loans to parties relating to operation of hotels 39,510 54,959Other 5,228 8,181Total 44,738 63,140In some cases Rezidor SAS grants loans to operators of our hotels, or to ourjoint venture partners in early stages of new projects. The terms for such loansvaries, but in general there is agreed on interest on the loans and the repaymentschedule is based on the project opening and project progress.13. Equity Acc. TranslationShare capital 1) differences Other equity Total equityEquity as of 31.12.00 39,235 31,074 37,271 107,580Change in accounting principles 0 0 –2,442 –2,442Equity as of 31.12.00 39,235 31,074 34,829 105,138Reclass. due to change of parent company –39,168 0 –150,491 –189,659Contribution in kind, parent company 39,169 0 171,891 211,060Write-down of shares toward restr. Funds 0 0 –21,655 –21,655Increase of Share Capital, from restr. Funds 27,787 0 –27,787 0Net profit for the year 0 0 14,146 14,146Group contribution, Norway 0 0 –16,474 –16,474Tax reductions from group contribution 0 0 4,613 4,613Change in translation difference 177 –3,049 –177 –3,049Equity as of 31.12.01 67,200 28,025 8,895 104,120Net profit for the year 0 0 3,876 3,876Group contribution, Norway 0 0 –13,799 –13,799Tax reductions from group contribution 0 0 3,864 3,864Change in translation difference 0 1,773 0 1,773Equity as of 31.12.02 67,200 29,798 2,836 99,8341)Share capital consists of 67,200,000 shares of 1 euro each. The shares have not been divided into classes.80

14. Pension funds, net 2002 2001Pension funds, net, over funded plans 11,374 9,086Pension funds, net, under funded plans –848 –613Total 10,526 8,473When calculating Rezidor SAS’ pension commitments, the year’s pensionearnings and returns, the following long-term economic assumptions apply tothe Rezidor SAS Group which represent a weighted average:2002 2001Discount rate 6.8% 6.8%Long-term rate of return 8.5% 9.0%Inflation rate 3.0% 3.0%Future salary adjustments 3.0% 3.0%Future adjustments of current pension 3.0% 3.0%In the financial statements, the commitments in the Rezidor SAS Group areincluded as specified in the table below. The items “unrecognised amounts”include deviations from estimates, actuarial gains and losses and plan amendments.These are allocated according to two methods. Plan amendments arespread over the average remaining working lives of employees participating inthe plan. Deviations from estimates are amortised over five years when theyexceed 10% of the greater of pension obligations of pension assets.Most pension plans in Scandinavia are defined benefit plans. Most pensionplans are secured through insurance companies. The collective pension plansfor salaried employees in Sweden and for employees in Norway are securedthrough defined benefit pension plans with insurance companies. In Sweden,pension plans are mainly secured with Alecta. For employees in DenmarkRezidor SAS mainly has defined contribution plans.Defined benefit pension plans 2002 2001Pensions earned during the year –970 –1,003Return on pension provisions –1,563 –1,272Expected return on pension assets for the year 2,684 2,285The year’s amortisation of deviationsfrom estimates and plan amendments 123 256Impact on income for the year, net, pertainingto defined benefit pension plans 274 266The cost for defined contribution pension plans amounted to TEUR 2,509(1,352).Several of Rezidor SAS’ pension plans are over-funded. This contributes toreturn on over funded assets for the year exceeding the costs for pensionsearned calculated according to existing parameters.Defined benefit pension plans, assets 2002 2001Status December 31Plan assets 33,505 28,919Pension commitments –25,188 –20,544Difference between plan assets and commitments 8,317 8,375Unrecognised plan amendments, anddeviations from estimates including actual return 2,209 98Book assets 10,526 8,473In some pension plans the actual return has been lower than Rezidor SAS’estimated long-term return of 8.5%, which is reflected in the item unrecogniseddeviations from estimates. The actual return on managed assets in 2001was 2.4%. Information on actual return for 2002 is not yet available.Pension assets, net, including pension commitments, assets under managementand unrecognised plan amendments and deviations from estimatesfor the defined benefit pension plans developed as follows:Pension assets, net 2002 2001Opening balance 8,473 7,177Earnings impact for the year 274 266Paid-in premium 1,283 1,962Utilisation/payment of client company funds in Alecta –326 –417Change in deviations from estimates and pension plans 88 –545Currency effects 734 30Closing balance 10,526 8,473Total pension commitments arising from financing premium payments inSwedish defined benefit pension plans through PRI amount to TEUR 2,203(2,045).15.Non-current interest bearing liabilitiesto financial institutions2002 2001Mortgage loans 0 13,014Other loans 4,965 26,686Total 4,965 39,700The loans fall due for payment as follows:2002 20012002 0 2,3712003 2,373 34,7362004 2,374 2,3742005 218 219Total 4,965 39,700Interest on loans are variable, based on inter bank rates plus 0,5% – 1,0%.16.Liabilities for VAT, social securityand payroll taxesLiability for VAT, social security and payroll taxes is included in other currentliabilities with TEUR 9,216 (21,996).17.Assets pledged and contingent liabilitiesAssets pledged 2002 2001Book value of assets pledged 0 12,193Securities on deposit 2,722 420Total 2,722 12,613Book value of secured loans 0 13,014Contingent liabilitiesMiscellaneous guarantees 5,752 2,494In certain agreements entered into by the members of the group, there areclauses leading to possible changes in business relations and financial structure,if the ownership of Rezidor SAS should become subject to a change.Financials81

18.Leasing commitments20. LitigationAt year-end Rezidor SAS has 37 leasing contracts for hotel buildings, of whichsome also include other fixed assets than buildings.The leasing agreements expire in the following years:YearNumber of leasing agreements expiring2003-2007 72008-2012 42013-2017 102018-2022 62023-2036 10Future leasing expenses for leasing agreements effective on 31st of Decemberare estimated to:YearTotal estimated future leasing expensesWithin 1 year 86,0001 – 5 years 291,000After 5 years 252,000Total 629,00019.Management contract commitmentsThe management agreements can have commitments by Rezidor SAS withrespect to financial liabilities. Rezidor SAS has in some cases guaranteed tothe hotel owners a minimum annual cash flow. In a number of the agreementsthe guarantee is limited to a maximum amount over the term of the agreementas well as a maximum annual amount.As at the end of 2002, Rezidor SAS had granted some kind of financialcommitment in 30 Management contracts.The management contracts containing such financial risk for the groupwill expire as presented in the table below:YearNumber of Management contracts expiring2003-2007 02008-2012 12013-2017 82018-2022 102023-2027 11The total guaranteed annual cash flow according to these managementcontracts is the following:YearTotal guaranteed annual cash flow2003 56,0002004 54,0002005 41,0002006 20,0002007 14,000Rezidor SAS operates in a number of countries around the world and is alwaysinvolved in several complex projects and business relationships where therecan be professional disputes on various issues. Most often these situationsfinds its solution through negotiations and discussions. In some rare situationsthese disputes can lead to major disagreements or claims of violation of law.Proper accounting for possible financial implications has been done.21.Segment informationGeographical – secondary segmentSegment2002 Revenue Assets InvestmentsNorway 170,093 102,288 9,509Sweden 51,751 23,694 2,596Denmark 69,040 81,822 5,388Germany 24,422 36,218 463Other countries 74,409 35,287 10,927Total 389,715 279,309 28,883Segment2001 Revenue Assets InvestmentsNorway 175,146 96,746 10,068Sweden 62,764 28,498 4,999Denmark 59,280 85,996 371Germany 32,057 25,633 275Other countries 50,227 53,014 2,933Total 379,474 289,887 18,64622.Auditors’ feesThe following remuneration was paid to auditors and audit firms for auditassignments and for other assignments.Consolidated Accounts Parent companyParent company 2002 2001 2002 2001Deloitte & ToucheAudit assignments 353 323 14 14Other assignments 517 281 47 28Total Deloitte & Touche 870 604 61 42Other audit firmsAudit assignments 29 2 0 0Other assignments 22 0 0 0Total other audit firms 51 2 0 0TOTAL 921 606 61 42Provisions for obligations related to guaranteed annual cash flow are made if acontract is considered onerous.82

24. Specification of tax expense 2002 2001NOTES TO THE ACCOUNTS – PARENT COMPANY23. Financial items 2002 2001Interest income from group companies 11 20Other financial income 8,270 9,983Exchange effects 1,596 09,877 10,003Interest expense group companies –565 –1,510Other financial expenses –9,704 –11,012Exchange effects 0 –1,569Total –10,269 –14,091IntangibleGoodwill Fixed Assets TotalCost at 01.01.02 0 13,387 13,387Investments 511 0 511Translation Adjustment 0 19 19Cost at 31.12.02 511 13,406 13,917Accum. depreciation 01.01.02 0 –892 –892Depreciation according to plan 0 –894 –894Accum. depreciation 31.12.02 0 –1,786 –1,786Carrying amount 31.12.02 511 11,620 12,131Carrying amount 31.12.01 0 12,494 12,494Taxes payable 0 –1,164Changes in deferred tax –568 3,303Total –568 2,13926. Shares in subsidiaries Book value Share Group Book value01.01.02 of income contribution Other 31.12.02Rezidor SAS Hospitality Norway AS 68,945 4,187 –13,799 5,371 64,704Rezidor SAS Sweden AB –78,560 1,793 0 –144 –76,911SAS Hotels A/S Danmark 134,247 –7,298 0 –2,080 124,869Hotel Invest UK A/S –1,340 5,616 0 5,223 9,499Rezidor SAS Country A/S 0 72 0 273 345Rezidor SAS Park A/S 0 –2 0 67 65Rezidor SAS Regent A/S 0 –1 0 67 66Rezidor SAS Lifestyle A/S 0 –1 0 67 66Total 123,292 4,366 –13,799 8,844 122,70327. Equity ShareShare capital premium fund Other Equity Total equityEquity as of 31.12.00 67 0 –83,528 –83,461Contribution in kind, shares 39,169 171,891 0 211,060Write down of shares towards restricted funds 0 –21,655 0 –21,655Change in accounting principles, effect contributed shares 0 –1,060 0 –1,060Increase of share capital from restricted funds 27,787 –27,787 0 0Change in translation difference 177 0 –3,226 –3,049Net profit for the year 0 0 14,146 14,146Reclassification of equity 0 –84,469 84,469 0Group contribution Norway 0 0 –16,474 –16,474Tax reduction from group contribution 0 0 4,613 4,613Equity as of 31.12.01 67,200 36,920 0 104,120Reclassification of equity 1) 0 –36,920 36,920 0Change in translation difference 0 0 1,773 1,773Net profit for the year 0 0 3,876 3,876Group contribution Norway 0 0 –13,799 –13,799Tax reduction from group contribution 0 0 3,864 3,864Equity as of 31.12.02 67,200 0 32,634 99,834FinancialsA group contribution has been given to SAS in Norway with TEUR 13,799. Thegroup contribution is given directly between the Norwegian companies in accordancewith local rules. For the group, and in the parent company’s accounts, thegroup contribution is charged directly to equity. The tax effect of the group contributionis charged directly to equity, reducing the net effect on equity.The shareholder of Rezidor SAS Hospitality A/S has decided to increase theequity in the company by TEUR 10,000 through a cash contribution in 2003.The decision regarding the increase will be taken at the annual general meeting.Change in share capital in the period August 2000 to 31.12.2002: 2002Share capital at formation in August 2000 67Addition in 2001, contribution in kind 67,133Share capital at 31.12.02 67,20083

84Rezidor SAS Organisation with brands

FinancialsRezidor SAS Executive CommitteeRezidor SAS Board of Directors and CEO85

Rezidor SAS Organisationwith BrandsREZIDOR SAS BOARDOF DIRECTORSGunnar Reitan – Born 21/09/54Position: Executive Vice President& Deputy CEO SAS GroupMember since: April 1994ChairmanJörgen Lindegaard – Born 07/10/48Position: President & CEO SAS GroupMember since: May 2001Bo Benny Helge Zakrisson –Born 02/12/59Position: Vice President,Corporate Advisory SAS GroupMember since: September 1992Leo M. Renaghan – Born 15/07/43Position: Associate Dean for AcademicAffairs, Cornell UniversityMember since: September 1992Anders E.E. Ljungh – Born 21/07/42Position: Senior Advisor to Carnegie& Financial Advisor to the World BankMember since: September 1998Jay Witzel – Born 12/06/47Position: President, Carlson HotelsWorldwideMember since: December 2002REZIDOR SASEXECUTIVE COMMITTEKurt Ritter – President & CEOBahram Sadr-Hashemi – Executive VicePresident Business DevelopmentKnut Kleiven – Executive Vice President& CFOWerner Kuendig – Senior Vice PresidentSpecial Projects, Joint Venture MiddleEast & AfricaAdrian Ort – Senior Vice President & COOCountry Inn, Regent and CerrutiFredrik Korallus – Senior Vice PresidentSales & Marketing & COO Park InnGordon McKinnon – Senior Vice PresidentBrands & Concept DevelopmentMarcus Bernhardt – Senior Vice President& COO Radisson SAS Hotels & ResortsREZIDOR SAS HOSPITALITYHEAD OFFICEPresident’s officeKurt Ritter – President & CEOMajbritt Lester – Assistant to the President& Office ManagerBrand & Concept DevelopmentGordon McKinnon – Senior Vice PresidentRozina Spinnoy – Co-ordinatorBusiness DevelopmentBahram Sadr-Hashemi – Executive VicePresidentEvelyn De Glas – Assistant to theExecutive Vice PresidentArild Hovland – Vice PresidentBernard Hazenberg – Vice PresidentClaes Livijn – Vice President*Wilma Kellermann-Baans – Vice PresidentJean-Charles Donnat – DirectorMichael Wright – DirectorPhilippe Bijaoui – DirectorPuneet Chhatwal – DirectorLuv Mittal – ManagerAideen Flynn – Co-ordinatorMonica Mascaros – Co-ordinatorCorporate Communications& Public RelationsStella Braukmannn – DirectorBritta Jarchow – Co-ordinatorDistribution & CRMJacques Dubois – Vice PresidentJohn Kennedy – Director CRMPeter Enevoldsen – Director E-commerce*Richard Biggs – Director Distribution& Channel ManagementElisa Riva – Manager CRMFinance & ControlKnut Kleiven – Executive Vice President& CFORenate De Wulf – Administrative AssistantAlistair Chambers – DirectorCompensation & BenefitsPreben Vinkler Lindgaard – DirectorFinance & AccountingAlain Wouters – Manager Accounting& SystemsGopal Sawhney – Manager CorporateAccounting*Piet Waterloos – Chief AccountantTibor Nemeth – AccountantLiane Jorissen – Accounting AssistantInformation TechnologyFinn Schulz – Vice President*Johan Westberg – Director*Bart Baetens – Systems ManagerPoul B. Kornmod – Manager*Frank Clausen – Systems Analyst*Kasper Baas – Systems Analyst*Michael Brandt – Systems Analyst*Ole Jørgensen – Systems Analyst*Pål Sjöholm – Systems Analyst*Roger Bergh – Business Analyst*Stefan Eekhout – System AdministratorLegalMarianne Ruhngaard – Vice President& General CounselAndrée Taba – Legal AssistantJuliane Wagner – Director CorporateCounselSimon Biancardi – Director CorporateCounselPurchasingDavid Dreschner – DirectorCarina Augsburg – Director*Freddy Burgener – Manager*86

ReceptionLorena Zanzottera – Assistant toOffice ManagerKarin VonckJanet MorrisJean-Louis PaquayIsabelle NodenotResponsible BusinessPia Heidenmark – DirectorEnvironmental & Social AffairsSafety & SecurityPaul Moxness – Corporate Safetyand Security Advisor*SalesFredrik Korallus – Senior Vice PresidentAgnes Logan – Assistant to the SeniorVice President & COOTechnical DevelopmentWolfgang Wagner – Vice PresidentChristian Petzold – Senior ConsultantCraig Davis – DirectorJim Baillie – Director*Knut Solberg-Johansen – DirectorLuc Parmentier – DirectorMika Koponen – DirectorLuc De Bruyn – ManagerVincent Hazart – ManagerRADISSON SASHOTELS & RESORTSChief Operating Officer’s OfficeMarcus Bernhardt – Senior Vice President& COOMyriam Devaux – Assistant to the SeniorVice President & COORadisson SAS OperationsErik Normann – Area Vice PresidentNorway*Mogens Stendrup – Area Vice PresidentDenmark and Iceland*Thorsten Kirschke – Area Vice PresidentGermany and Switzerland*Christian Gartmann – Regional DirectorPoland*Gaston Gellens – Regional DirectorSweden*Heimo Leitgeb – Regional DirectorEastern Europe*Marcus Bernhardt – BeneluxMichel Stalport – Regional DirectorFrance*Oliver Staas – Regional DirectorBaltics and Russia*Kevin Greenwood – Acting RegionalDirector UK and Ireland*Radisson SAS Operational Team,Middle EastWerner Kuendig – Senior Vice PresidentMiddle East, Africa and China*Jean-Marc Busato – Vice PresidentMiddle East*Finance & ControlTorsten Arvidsson – Vice PresidentCatherine Bauer – Corporate RegionalControllerFuture OpeningsJohn Monhardt – Vice PresidentFuture OpeningsIan Rydin – ManagerUrban Denk – Corporate ChefMichele Somers – Director ofMarketing of New Openings*Human ResourcesMichel Schutzbach – Vice PresidentBruce Harkness – DirectorDieter Buchner – ManagerKirsten Jensen – AssistantMarketingHåkon Flak – Director MarketingHeidi Hermans – ManagerLeisure ProductsAnaïs Tombale – Marketing AssistantRevenue DevelopmentStan Van Roij – Vice PresidentRevenue DevelopmentLars Pahlen – ManagerCustomer Information*Linda De Courcy – ManagerPricing & Proposals*COUNTRY INNAdrian Ort – Senior Vice President & COORenu Snehi – Assistant to the Senior VicePresident & COOChristoph Rosenschild – Director ofFinance & AdministrationJörg Schiffmann – Director of Marketing& OperationsPARK INNFredrik Korallus – Senior Vice President& COOAgnes Logan – Assistant to the SeniorVice President & COOBeathe-Jeanette Lunde – Vice PresidentFranchising ServicesRose Anderson – Marketing ManagerREGENT & CERRUTI BRANDSAdrian Ort – Senior Vice President & COORenu Snehi – Assistant to the Senior VicePresident & COOIan Donaldson – Director of TechnicalServices* Not based at the corporate office.CORPORATE OFFICERezidor SAS Hospitality NVAvenue du Bourget, 44B-1130 Brussels, BelgiumTel: +32-2-702 92 00Fax: +32-2-702 93 00Financials87

Rezidor SAS locations in Europe,the Middle East, Africa and China *HOTELS IN OPERATIONAustriaRadisson SAS: Salzburg,ViennaCountry Inn: Vienna (2)AzerbaijanRadisson SAS: BakuBahrainRadisson SAS: ManamaBelgiumRadisson SAS: Antwerp,Brussels, SpaBulgariaRadisson SAS: SofiaChinaRadisson SAS: Beijing,ShanghaiCzech RepublicRadisson SAS: PragueDenmarkRadisson SAS: Aalborg, Aarhus,Bornholm, Copenhagen (4),Frederikshavn, Koldingfjord,Odense, SilkeborgEgyptRadisson SAS: SharmEl Sheikh, TabaEstoniaRadisson SAS: TallinnFinlandRadisson SAS: Espoo, Helsinki(3), Helsinki (opened in 2003),Oulu, VaasaFranceRadisson SAS: Cannes, Nice,Paris (2)Country Inn: ParisGermanyRadisson SAS: Cologne(opened in 2003), Cottbus,Dresden, Düsseldorf, Erfurt,Fleesensee, Hamburg,Hannover, Lübeck, Merseburg,Neubrandenburg, Rügen,Wiesbaden88Country Inn: Bamberg-Hallstadt, Chemnitz-Hartmannsdorf, Erfurt-Apfelstädt, Münich, Münich-East, Plauen, TimmendorferStrandPark Inn: Berlin (openedin 2003)Regent: BerlinHungaryRadisson SAS: BudapestIcelandRadisson SAS: Reykjavik (2)IrelandRadisson SAS: Dublin, Galway,LimerickJordanRadisson SAS: Amman, AqabaKazakhstanRegent: AlmatyKuwaitRadisson SAS: KuwaitLatviaRadisson SAS: RigaLebanonRadisson SAS: BeirutLithuaniaRadisson SAS: Klaipeda, VilniusMaltaRadisson SAS: MaltaNetherlandsRadisson SAS: Amsterdam (2)NorwayRadisson SAS: Alesund,Beitostølen, Bergen (2), Bodø,Gardermoen, Haugesund,Kristiansand, Lillehammer,Narvik (opened in 2003), Oslo(3), Spitsbergen, Stavanger (3),Tromsø, Trondheim, UlsteinvikOmanRadisson SAS: MuscatPolandRadisson SAS: Szczecin,Warsaw, WroclawPortugalRadisson SAS: LisbonRussiaRadisson SAS: Moscow,St. Petersburg, Sochi (3)Saudi ArabiaRadisson SAS: Yanbu,Jeddah (opened in 2003),Riyadh (opened in 2003)SlovakiaRadisson SAS: BratislavaSouth AfricaRadisson SAS: Cape TownPark Inn: Cape Town (openedin 2003)SwedenRadisson SAS: Göteborg (2),Helsingborg, Linköping, Karlstad(opened in 2003), Malmö,Ronneby, Saltsjöbaden,Stockholm (5), Uppsala,Västerås, Örebro, ÖstersundSwitzerlandRadisson SAS: BaselTurkeyRadisson SAS: Istanbul AirportUnited Arab EmiratesRadisson SAS: SharjahUnited KingdomRadisson SAS: Glasgow,Leeds, London, Manchester,StirlingshireCountry Inn:London–Bloomsbury,London–KensingtonHOTELS UNDERDEVELOPMENTBelgiumRadisson SAS: Brussels (2004),Spa (2004)Czech RepublicRadisson SAS: Marienbad(2005)EgyptRadisson SAS: Al Quesir (2004),Hurghada (2003)FranceRadisson SAS: Bordeaux(2004), Marseille (2004)GermanyRadisson SAS: Augsburg(2003), Berlin (2003, 2005),Blankenburg (2 hotels, 2005),Frankfurt (2004), Pötenitz (2003),Rostock (2003)HungaryRadisson SAS: Budapest(2004), Buk (2003)IrelandRadisson SAS: Letterkenny(2003)LuxemburgRadisson SAS: Luxemburg(2004)NorwayRadisson SAS: Larvik (2004),Namsos (2005), Oslo (2003),Trondheim Airport (2003)PolandRadisson SAS: Katowice (2005),Krakow (2003), Lublin (2005)SpainRadisson SAS: Mijas (2004)SwitzerlandRadisson SAS: St. Gallen(2004), Zürich Airside (2004),Zürich Airport (2005)TurkeyRadisson SAS: Ankara (2004),Istanbul (2004, 2005)UkraineRadisson SAS: Kiev (2004)United KingdomRadisson SAS: Belfast (2004),Birmingham (2005), Limavady(2003), Liverpool (2004),Stansted (2004)2 Cerruti venues are to beannounced.* As of December 31, 2002.Production: Intellecta Corporate and Rezidor SAS Hospitality. Photo: Peter Lavery and RSH Archives. Print: Duro Grafiska, Sweden, 2003 (certified according to ISO standards).