PPHE reports London corporate business ‘ramping up’

PPHE Hotel Group – which develops, owns and operates hotels and resorts – has said its UK business is leading the way in recovery, particularly in London, where meetings and events enquiries are “ramping up”.

In its unaudited interim results for the six months ended 30 June 2022, the group said total revenue was up 339.4% year-on-year at £113.2m, representing 73% of the pre-pandemic levels reported in H1 2019. Quarter-on-quarter momentum saw Q2 2022 trading at 87.5% of Q2 2019 levels, compared with 51% of these levels in Q1 2022.

Revenue growth was driven by both strong rate growth as well as a good recovery in occupancy rates. Average room rate was £141.1, up 48.2% compared with H1 2021 and up 16% on H1 2019. Occupancy grew to 48% compared with 12.8% in H1 2021 and 76.8% in H1 2019.

Earnings before interest, tax, depreciation and amortisation (EBITDA) improved to £17m compared to an EBITDA loss of £14m in H1 2021, driven by the recovery in demand. The business said that, notwithstanding the labour market constraints and wage inflation, EBITDA margins were improving year-on-year.

The company has also re-instated its interim dividend at 3p per share.

PPHE said that all its key markets delivered strong growth, with the UK leading the way due to the earlier lifting of pandemic restrictions. As well as a “significant rebound” in leisure travel demand, corporate demand activity was also increasing, and the group said it was experiencing steadily increasing demand for meetings and events spaces.

The company said its rate-led recovery focus resulted in “very strong average room rate performance” across all operating markets, at 16% ahead of pre-pandemic levels in H1 2019, which has allowed it to better navigate the challenging cost environment.

The group has also extended its partnership with Radisson Hotel Group, which it said would “allow further diversification of market segments, increase growth prospects for Park Plaza and Art’otel in multiple new territories, and generate fee-based income”.

PPHE’s London Art’otel hotel in Hoxton (pictured) is due to open in the first half of 2024, preceded by Battersea Power Station later this year.

July and August total revenues were above 2019, mainly driven by strong room rate performance, albeit mainly leisure driven. Forward booking pace continued to be “solid”, with growing numbers of bookings in the corporate, meetings and events segment. However, inflationary pressures, particularly energy prices, were creating margin headwinds into 2023, although this has been mitigated for this financial year through hedging.

Boris Ivesha, president and chief executive of PPHE Hotel Group said: “We are pleased to report a strong first half performance, which has been achieved by our exceptional teams despite the challenging backdrop. As Covid restrictions have been lifted across all of our markets, leisure demand has rebounded strongly due to pent-up demand for travel, and our best-in-class properties have been well-positioned to benefit from this trend. As a result, we are able to recommence shareholder returns by way of an interim dividend and share buyback programme.

“In the UK, we have continued to see a strong recovery in activity across our portfolio particularly in London, where meetings and events enquiries are also ramping up following the previous period of inactivity due to Covid. Since restrictions across our other regions have lifted, it has been encouraging to see business demand across our markets returning…

“Whilst macroeconomic challenges remain, our attractive portfolio, strong financial position and excellent team leave us well-placed to take advantage of the continued recovery across our regions."