Park Plaza owner ‘not distracted’ after sale talks fail
Hotel owner PPHE Group has said it is “not distracted from our core focus” after its takeover by a rival hotel operator fell apart, despite the company reporting slowing revenue growth in the last quarter.
The FTSE 250 firm’s board had backed a sale to Israeli-based Fattal Hotel Group but opposition from a major shareholder meant that its strategic review concluded in July without finding a buyer.
Despite the group’s failed exit from the public market, its board said on Thursday that this review has “reaffirmed our strategic priority to maximise shareholder value through a combination of operational delivery alongside balance sheet simplification”.
The hotel group, which owns chains including Park Plaza and Art’otel, posted a £135m pre-tax profit in the six months to June, off the back of a £10m loss in the same period last year.
PPHE saw total revenue and revenue per room increase by 4.7 and 3.9 per cent in the period, though this growth has slowed since the first quarter, when the group reported progress of eight and 4.9 per cent.
The group said its growth is being driven by strong trading at its UK hotels and a favourable Euro to Sterling exchange rate.
Business rates weighs on growth
PPHE hit out at recent business rate hikes, which it said weighed on its earnings before interest, tax and deductibles, which grew by 6.3 per cent in the period to £48.4m.
Hotels were among the hospitality firms worst hit by April’s rising business rates. On average the business rates bill for a UK hotel has risen by £28,900 this year. The average tax bill will have grown by £111,300, or 115 per cent, by the end of the decade.
Earlier this week, the government said it has appointed a “business rates guru” to lead an official review into how rates are calculated for pubs and hotels.
PPHE said its growth was “achieved despite the recent increase in UK business rates, and the ongoing conflict in the Middle East, which has created travel uncertainty, shortened booking windows and reduced forward-booking visibility.”
Numerous tourism sector leaders, including Wizz Air and On the Beach, have noted in recent months that the Iran war is prompting cautious holidaymakers to book more last-minute than usual, restricting their ability to predict their takings.
PPHE’s efforts to shore up its balance sheet in recent months have included the £147.9m acquisition of the freehold rights to its Park Plaza hotel in Waterloo. The termination of this lease contributed to the sharp jump in reported profit, the group said.
In February this year, PPHE agreed to sell its development site in Manhattan, New York, to a US-based real estate developer for $33.5m.