PPHE Hotel Group, which together with its subsidiaries owns, leases, develops, operates and franchises full service upscale and lifestyle hotels in major gateway cities and regional centres, predominantly in Europe, has announced its unaudited interim results for the six months ended 30 June 2014. As the financials below indicate, the Group has enjoyed strong results, with Boris Ivesha, President and Chief Executive Officer, PPHE Hotel Group commenting:
“I am pleased with our trading performance during the first half of the year and expect our full year results to be in line with the Board’s expectations. We have successfully secured financing for the majority of projects in our development pipeline, enabling us to expand our portfolio, particularly in London, one of the world’s most resilient hotel markets. Our renovation projects have progressed well and we recently celebrated the opening of the fully renovated Park Plaza Belvedere Medulin in Croatia. Further renovation projects in several of our hotels in Amsterdam, Berlin and London are expected to commence in the second half of this year, and to support our growth our Chief Financial Officer, Chen Moravsky, was appointed Deputy Chief Executive Officer.”
Financial summary
- Reported total revenue increased significantly, by 12.3%, to €125.4 million (H1 2013: €111.6 million). Like-for-like revenue increased by 10.8% to €120.4 million (H1 2013: €108.7 million). On a constant currency basis, revenue increased by 9.3% to €122.0 million (H1 2013: €111.6 million).
- RevPAR increased by 12.3% to €106.5 (H1 2013: €94.8), driven by a 250 bps increase in occupancy to 80.3% (H1 2013: 77.8%) and 8.7% increase in average room rate to €132.5 (H1 2013: €122.0).
- EBITDA increased by 11.1% to €39.7 million (H1 2013: €35.7 million). Like-for-like EBITDA increased by 9.7% to €39.1 million (H1 2013: €35.6 million).
- Reported profit before tax increased by 106.3% to €19.2 million (H1 2013: €9.3 million). Normalised Profit before tax for the first half of 2014 was €7.7 million (H1 2013: €5.0 million)1.
- Reported EPS was €0.47 (H1 2013: €0.23). Normalised EPS is €0.19 (H1 2013:€0.12), representing a 54.8% increase.
- Increased interim dividend by 50% to 9.0 pence per ordinary share (H1 2013: 6.0 pence per share).
Operational highlights
- Strong first half performance with improved trading across portfolio, delivering year on year revenue growth.
- Entered into a 50:50 joint venture for two freehold hotels in Berlin, Germany, while continuing to manage these hotels under long-term operating agreements.
- Secured several new loan facilities and extensions to existing facilities
- Completed €24.0 million refinancing with Aareal Bank AG of art’otel amsterdam.
- Secured £80 million (€98.1 million) facility from Banque Hapoalim (Luxembourg) S.A. for the development of a 492-room hotel near London Waterloo station.
- Extended an existing facility with Aareal Bank AG by £13.5 million (€16.5 million) for the development of an extension of Park Plaza Riverbank London with no less than 98 rooms.
Ongoing investment in hotel portfolio
- The former Hotel Belvedere reopened as Park Plaza Belvedere Medulin in June 2014, following extensive renovations.
- Extensive hotel renovations planned across key hotels in Amsterdam, Berlin and London, with several of these expected to commence in the second half of 2014.
UK hotel portfolio performance
The hotels in the United Kingdom delivered a strong performance during the period, with total revenue increasing by 6.9% to £67.7 million (H1 2013: £63.3 million). In Euro, total revenue for the region increased by 11.4% to €82.7 million (H1 2013: €74.2 million) aided by the strengthening of Sterling against the Euro.
In local currency, RevPAR increased by 3.9% to £114.2 (H1 2013: £109.9). In Euro, RevPAR increased by 8.2% to €139.5 (H1 2013: €128.9). The growth in RevPAR was predominantly driven by an increase in average room rate of 3.0% to £134.1 (H1 2013: £130.1). In Euro, average room rate increased by 7.3% to €163.8 (H1 2013: €152.6).
Occupancy during the period increased by 70 bps to 85.1% (H1 2013: 84.4%).
In local currency, EBITDA increased by 5.5% to £23.4 million (H1 2013: £22.2 million) and EBITDA growth in Euro was 9.9%, to €28.6 million (H1 2013: €26.1 million).
Strong performance of the flagship hotel, Park Plaza Westminster Bridge London, which significantly outperformed its competitive set in RevPAR. This was achieved through continued solid growth in occupancy and average room rate (source: STR Global, June 2014).
Renovation projects and development pipeline
Significant development activity in the first half of 2014, with the new hotel project near London Waterloo Station and the extension of Park Plaza Riverbank London now both under construction. The new hotel project near Park Royal in London is expected to commence late summer 2014. Construction has started on the new hotel project in London near Waterloo Station, which is expected to add 492 rooms to the portfolio. The hotel will also feature a swimming pool, spa, restaurant and bar. The hotel is expected to open in the first half of 2017.
Works have also started on the extension of Park Plaza Riverbank London which will see the room count increase by 98 rooms. Subject to further planning approval, the room count may increase by an additional 50 rooms, taking the total number of rooms to 609. The extension is expected to be completed in 2015.
The development of a new hotel project on the A40, one of the main roads leading into central London, is expected to start late summer 2014. The 168-room hotel near Park Royal will feature a bar, restaurant, fitness and several meeting rooms. The hotel is expected to be completed in 2015.
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