Trendy, bespoke hotels are all the rage at present, which might explain the doubling of the share price of PPHE Group PLC (LON:PPH) over the past 12 months.
PPHE already operates the Park Plaza ‘upper upscale’ hotels in the UK, but it’s the roll-out of its art’otel brand into Britain that has caught the market’s imagination.
WATCH: PPHE Hotels putting art'otel brand on the map in London with two new properties
The first two locations are in London and indeed in two of the Capital’s most fashionable addresses: The old Battersea Power Station site and in Hoxton in the East End (ie hipster central).
Robert Henke, executive vice president of corporate affairs, told Proactive that the locations were chosen to put art’otel on the map in London and the website leaves you without any doubt these will be ‘destination hotels’.
Each hotel a piece of art
“Each art’otel is a true piece of art in its own right.
“Originally created by a small group of avid art collectors and entrepreneurs in the early nineties, art’otel is a collection of contemporary hotels that blend unique architectural style with art-inspired interiors.
“Each art’otel is a true homage to a contemporary artist.”
PPHE acquired the brand from its founder 11 years ago but it was the opening of the art’otel in Amsterdam in 2013 that marked its development into a lifestyle brand.
The group took full control of Hoxton in January 2018 with planning permission in place. Preliminary works will start in the next few months.
Battersea Power Station is on a similar timetable with both hotels set for their openings in 2021-2022.
In the meantime, the existing portfolio should keep things ticking over nicely
Portfolio now up to 9,000 rooms
PPHE’s portfolio currently comprises 39 hotels offering a total of nearly 9,000 rooms.
Most of these are Park Plazas, a brand licensed from Radisson Hotel Group for which PPHE enjoys an exclusive licence to develop and operate in Europe, the Middle East and Africa.
Results for 2017 showed revenue rising by 19% to £325mln, with a 10% like-for-like increase.
Underlying profits [EBITDA] increased by 8.7% like-for-like to £101.1mln. Normalised profits were held back by new openings and came in flat at £32.1mln.
Operating metrics improved over the 12 months, with higher occupancy (77.3%) and revenue per room up to £92.9 from £84.4. The annual dividend rose by 14% to 24p.
Plenty of firepower
The group also has hotels in The Netherlands and its 52%-owned subsidiary, Arena Hospitality Group, owns and operates hotels and resorts in Hungary, Germany and Croatia.
Arena refinanced in December to complete a refresh of the whole group’s funding that has left it with plenty of cash for further expansion, says Henke.
“Over the past two years we’ve refinanced our whole portfolio and made some interesting capital restructuring deals, which now gives us a £200mln excess of cash for future development.”
At 1,105p, PPHE is valued at £472mln.