Key facts
- PPHE Group's takeover talks with Fattal Hotel Group failed due to shareholder opposition.
- The company reported a pre-tax profit of £135m for the six months to June, a turnaround from a £10m loss last year.
- Revenue per room increased by 3.9% in the period, slowing from the first quarter.
- PPHE Group criticized recent business rate hikes for hotels, stating they weighed on earnings.
- The company reaffirmed its strategic priority to maximize shareholder value through operational delivery and balance sheet simplification.
PPHE Group, the owner of hotel chains including Park Plaza and Art'otel, has stated it remains focused on its core business despite the collapse of takeover talks with Fattal Hotel Group. The FTSE 250 firm's board had recommended the sale, but opposition from a significant shareholder prevented a deal, concluding its strategic review in July without a buyer.
Despite the failed exit from public markets, PPHE Group's board affirmed its strategic priority to maximize shareholder value through operational performance and balance sheet simplification. The company reported a pre-tax profit of £135 million for the six months ending June, a substantial turnaround from a £10 million loss in the same period last year. However, total revenue and revenue per room saw a slowdown in growth, increasing by 4.7% and 3.9% respectively, compared to 8% and 4.9% in the first quarter.
Growth has been supported by strong trading in its UK hotels and a favorable Euro to Sterling exchange rate. PPHE Group also highlighted that its performance was achieved despite recent increases in UK business rates, which it stated weighed on earnings before interest, tax, and deductibles (EBITDA), which grew by 6.3% to £48.4 million. Hotels were significantly impacted by rising business rates in April, with the average UK hotel's business rates bill expected to increase substantially by the end of the decade.
The company also noted the ongoing conflict in the Middle East, which has created travel uncertainty and shortened booking windows. PPHE Group's recent efforts to strengthen its balance sheet include the £147.9 million acquisition of the freehold rights to its Park Plaza hotel in Waterloo and the February sale of its Manhattan development site for $33.5 million.