PPHE Hotel Group H1 Earnings Call Highlights

PPHE Hotel Group reported higher first-half revenue and EBITDA, supported by strong UK trading and growth in meetings and events, while outlining refinancing activity, the sale of a New York development site and plans to pause progress on its UK development pipeline amid operating and economic pressures. Co-Chief Executive Officer Greg Hegarty said the group delivered “good solid first half-year results” and a strong operating performance despite geopolitical and regional market headwinds. Management said current trading remained in line with consensus expectations for the 2026 full year.

First-half revenue and EBITDA rise Chief Financial Officer Daniel Kos said like-for-like revenue increased 4.7% to £208 million in the first six months of 2026. Like-for-like EBITDA rose 8% to £49 million, lifting the EBITDA margin by 50 basis points to 23.5%. Average revenue per available room, or RevPAR, increased 3.1% on a like-for-like basis, driven by a 3.2% increase in room rates. Occupancy was stable at 72.5%.

Kos said the UK was the principal contributor to growth, reporting total revenue growth of 6.8% and RevPAR growth of 5.2%. The ramp-up of art’otel London Hoxton helped performance, while large meetings and events supported trading during the first quarter. UK revenue grew 8.8% in the first quarter and 5% in the second quarter, he said. The group’s Croatian leisure portfolio makes its largest contribution during the second half because of the summer season, Kos noted. Croatia was largely closed during the first six months, meaning its first-half performance was not representative of normal trading.

In Germany, like-for-like revenue was flat year over year, although revenue increased 2.9% in sterling terms. In the Netherlands, revenue declined 5.3% in local currency and 2.4% in sterling terms after the government increased VAT on hotel bedrooms to 21% from 9%. Kos said the VAT change could have resulted in a 12% negative effect on room rates because much of the group’s public pricing includes VAT. The company mitigated the impact, with local-currency room rates declining 3.4%, while occupancy accounted for much of the remaining pressure.

Adjusted EPRA earnings over the rolling 12 months remained flat at £53 million, or £1.25 per share. Higher EBITDA was offset by increased interest costs following refinancing activity over the prior 12 months. The company proposed an interim dividend of 17 pence per share, unchanged from the prior year.

Waterloo freehold acquisition reshapes debt profile PPHE acquired the freehold of Park Plaza London Waterloo for £147.9 million, funded by a new five-year £136.5 million facility. Including purchase expenses, the transaction totaled £156 million, Kos said. The acquisition reversed a 2017 sale-and-leaseback arrangement under which the company sold the asset for £161 million and leased it back for 200 years. At the time, the £5.6 million annual rent represented a 3.2% capitalization rate. The rent had risen to £7.3 million by the time PPHE bought back the freehold.

Kos said the company’s prior expectation that hotel EBITDA would rise at a pace comparable with inflation-linked rent increases had not materialized. COVID-19, labor shortages associated with Brexit, energy costs, national insurance costs and business-rate increases had contributed to the gap, he said. PPHE bought the freehold back at a 4.9% capitalization rate and at a price £13 million below the 2017 sale value. Kos said the deal stopped the erosion of EBITDA caused by rising rent, simplified the balance sheet and provided greater future optionality for the asset. Net debt increased to £932 million at June 30 from £775 million at year-end, primarily because of the Waterloo acquisition. The transaction raised the group’s loan-to-value ratio to 39.5% from