- Worse than expected performance from a key London asset
- Margins affected by changes in room rates
- Cost inflation bites in first half
Shares in PPHE Hotel Group (PPH) fell more than 13% to £14.16 as the company downgraded earnings expectations in part thanks to a weaker than expected contribution from a key new hotel in London, art'otel London Hoxton.
Earnings are now anticipated to be broadly flat on 2024 levels of £136.5 million, previous guidance was for between £148 million and £158.6 million of EBITDA (earnings before, interest, tax, depreciation and amortisation).
The hotels group also said it remains ‘mindful of other cost factors outside its immediate control that could have an impact in full year 2026’.
The ‘other cost factors’ are the expected industry-wide changes to VAT on hotels in the Netherlands, which may see rates move from 9% to 21% from January 2026, and business rates in the UK, it said.
The company reported a 5.7% fall in EBITDA to £45.5 million for the six months ending 30 June.
On a more positive note, PPHE saw a 1.4% increase in RevPAR (revenue per available room) to £109.3 million and a 4% increase in room revenue to £144 million.
WHAT DID MANAGEMENT SAY?
Greg Hegarty, co-CEO of PPHE said: ‘In the first half, we increased our occupancy levels whilst proactively managing room rate in an industry which continues to be impacted by the volatile macroeconomic and geopolitical environment.
‘The board’s unwavering commitment to delivering high-quality assets in new destinations has meant that it has taken some deliberate actions to delay the ramp-up of some properties, such as art'otel London Hoxton.
‘These decisions are in line with our underlying focus on maximising the long-term financial potential of such assets, rather than focusing on short-term performance.
‘The board reaffirms the target to generate at least £25 million of incremental EBITDA upon stabilisation of trading from the recently opened hotels.’
PPHE which develops, owns, and operates hotels and resorts also said it had made strong progress with the acquisition of a development site near the City of London for £17.5 million
Due to open in 2029, the project involves the construction of a select service Radisson RED lifestyle hotel, with a minimum of 182 bedrooms, a restaurant, bar and gym and office space.
