PPHE hails encouraging results despite "macro and fiscal" headwinds

PPHE Hotel Group reported a swing to pretax profit on Thursday following the purchase of the freehold of the Park Plaza London Waterloo hotel.

The Guernsey-registered operator of Park Plaza and art'otel hotels pretax profit soared to £135.1 million in the half year period that ended June 30, from a pretax loss of £10.2 million the previous year.

The significant swing in pretax profit follows PPHE's purchase of the freehold of Park Plaza London Waterloo for £147.9 million, largely funded by a new £136.5 million five-year loan from Bank Hapoalim. The acquisition was completed in June.

Back in 2017, PPHE entered into a sale and leaseback transaction, selling the freehold for £161.5 million and leasing the hotel back under a long-term finance lease arrangement. As a result, the lease remained recognised on the group's balance sheet.

For accounting purposes, the acquisition in June was treated as a termination of PPHE's existing lease and acquisition of the underlying freehold interest.

The transaction resulted in a non-cash accounting gain of £145.6 million, making up a substantial part of PPHE's reported pretax profit.

Total revenue increased 4.7% to £209.3 million from £199.9 million a year ago.

Revenue per available room increased 3.9% to £113.5 from £109.3, while room revenue rose 2.2% to £147.2 million from £144.0 million.

Earnings before interest, tax, depreciation and amortisation increased 6.3% to £48.4 million from £45.5 million. The increase reflected PPHE's revenue growth and focus on costs, but was partially offset by higher business rate costs in the UK, the company said.

PPHE declared an interim dividend of 17 pence per share, unchanged from a year ago.

Looking forward, the group said: "Notwithstanding the wider geopolitical volatility and fiscal headwinds impacting FY26 and beyond, the board expects to deliver results for the financial year ending 31 December 2026 in line with market expectation."

Co-Chief Executive Officer Greg Hegarty said: "We have delivered RevPAR growth and materially higher average room rates, leading to an improved Ebitda performance despite continuing macro and fiscal headwinds.

"The conclusion of the strategic review has re-affirmed our strategic priority to maximise shareholder value through a combination of operational delivery alongside balance sheet simplification. Further opportunities remain to enhance value, from within the balance sheet and development pipeline alongside our recently opened hotels as they become increasingly established in their markets."

Share in PPHE were down 0.1% to 1,638.00 pence on Thursday morning in London.

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