PPHE told us that it was seeing a “strong pickup” in London after some caution in the fourth-quarter, as the UK capital continued trade strongly.
The group has started work on its latest hotel in the city, a 27-storey Art’otel in Hoxton, with the group also taking over development at its New York site.
Daniel Kos, PPHE CFO, told us: “London is almost like a separate country within the UK and a separate country which has separate regions. We’re very present on the South Bank, so we’re exposed to leisure and conferencing.
“We outperformed STR - we’ve renovated our hotels which gave us a rate advantage. We saw a little dip in conferencing in the fourth quarter because of Brexit - in the summer we saw that foreign bookers wanted to see what was going to happen. That was completely compensated for with leisure demand.
“January is normally the quietest month; everyone is doing Dry January and not travelling, but we are seeing good pickup. We have a couple of very good conferences at our hotels and it’s looking healthy in all our regions.”
The comments were made as the company released a trading statement for the year to 31 December,
with reported group room revenue up by 5.9% to £250m, like-for-like revpar for the year growing 5.1% to £103.7, driven by like-for-like occupancy growth of 130 basis points to 80.7% and like-for-like average room rate growth of 3.4% to £128.
Reported revpar for the year grew 6.0% to £103.6. Occupancy increased by 120 basis points to 80.6% and average room rate improved by 4.4% to £128.5
The group said that it expected to deliver full-year results in-line with board expectations following a “solid performance” through the final quarter. The company said that the trading benefits from the £100m-plus multi-year investment and repositioning programme were “starting to come through”, following the launch of Holmes Hotel London in May, and the reopening of Park Plaza Vondelpark, Amsterdam and Park Plaza Utrecht in October.
Boris Ivesha, president & CEO, PPHE said: “We are well positioned for future growth as we drive the performance of our well-invested estate and build out our more than £300m planned development pipeline across the UK, Europe and the US.
Kos added: “Our largest cost is employment and this is going up, but it has been calculated into our long-term model. As long as the rates grow we are able to sustain our margins.”
The group’s expansion includes both London and New York.
Kos said: “Just before Christmas we bought a site in the South Bank next to our Waterloo hotel, but we don’t have planning yet. We also just bought out our joint venture partner in New York, allowing us to control the development there.
“The most exciting project is in Hoxton, which is a new area for us and our first Art’otel for London. That will be an eye catcher - it’s in a low-rise area, with 27 storeys and the views will be amazing.”
Russell Pointon, director of consumer & media at Edison Group, commented: “PPHE has delivered a good trading update for the full year, such that expectations for the full year will be met. Room revenue, which makes up about two-thirds of revenue grew by 6.3% LFL to £249m and compares with 8% at the interims. This was driven by LFL improvements in occupancy of 130bp to 80.7% and the average room rate of 3.4% to £128.5.
“There is no commentary on country performance beyond highlighting that results are being helped by the investment programme and launch of Holmes Hotel London in May and the reopening of Park Plaza Vondelpark Amsterdam and Park Plaza Utrecht, which should also help to drive growth further into 2020.
“Our existing forecasts are for 3% revenue growth and 9% Ebitda growth in FY19.”
This year is set to a see a record number of hotel rooms open in London, with 7,995 hotel rooms across 65 new hotels, adding to 158,956 existing hotel rooms and marking the largest number of openings London has ever seen in one year.
New hotel room openings have soared from 3,222 in 2010 to 7,995 planned for 2020, according to data from STR. This means that in 10 years (2010-2020), London’s overall hotel room capacity has increased by 41%.
Insight: London, about to be freed from what many in power see as the shackles of the EU, is roaring ahead and there are many who hope that, once the chop comes at the end of January - with the real cut at the end of the year - it will continue to operate as a separate, wildly-successful state to the rest of the UK.
This will largely depend on how much London diverges from the wider EU. Threats of a deluge of chlorinated chicken combine with the efforts of Paris and Frankfurt to take over as Europe’s financial capital, but all is currently speculation. What is certain is that the pound is weak and the borders haven’t closed yet. Come while you can.
For those looking to plant their flag in the capital, take a number and join the queue. London is due to enjoy a record number of opening-night parties, many of them in the luxury sector, so buy shares in lobsters now. For everyone else, PPHE’s model of corporate mixed with leisure is a good hedge. Just stay away from the South Bank, that’s their manor, geezer.