Hospitality real estate firm PPHE Hotel Group is optimistic that customer demand is set to return in the coming weeks with the UK leading the way in a vaccine-led recovery.
Prime Minister Boris Johnson unveiled the country’s roadmap out of the crisis, late last month. There will be a gradual easing of restrictions. Hotels have been told they can reopen on 17 May at the earliest.
For PPHE, which has 60 percent of its business in the UK, the easing will come as a relief after a torrid 2020.
Total revenue fell 71.5 percent percent to £101.8 million, while RevPAR slumped 71.6 percent to £29.4. The company slipped to an operating loss (earnings before interest, taxes, depreciation, and amortization) of £10.1 million down from a profit of £122.9 million in 2019. The reported loss before tax was 94.7 million.
PPHE also uses the EPRA Net reinstatement Value because of its real estate driven business model. On a per share basis this decreased by 14.8 percent to £22.08 per share.
"Despite the challenges presented over the past 12 months, our well-invested portfolio, agile owner-operator model and strong 30-year track record together provide a solid foundation for success, and we remain excited about the long-term future of the business,” Boris Ivesha, President & Chief Executive Officer, said.
“After the UK government's recovery roadmap announcement last week, we have seen an encouraging early uplift in customer demand. We are optimistic that this positive trend will continue, supported by a calendar of cultural and sport events taking place in the UK during the second half of the year.”
With PPHE’s revenue taking such as hit because of closures during most of the year across its European market, the company took steps to preserve cash by reducing costs, temporarily closing properties where appropriate and utilising available government support initiatives, including job retention schemes.
“During the period we were pleased to progress a number of development projects and complete several new acquisitions in line with our long-term growth strategy, in addition to navigating the impact of the pandemic,” Ivesha said.
These included the completion of property investment projects in Croatia, the continued construction of the art'otel london Hoxton and the acquisition of properties in Croatia and Serbia.
Ivesha added: “I am confident that our high-quality portfolio and strong pipeline, together with our unique owner operator approach and the operational initiatives implemented during 2020 positions the company very well to benefit from the anticipated uplift in domestic and international demand as the global vaccine rollout continues and restrictions ease."
Given PPHE’s modest portfolio and focus on Europe, 2020 was always going to be a tough year with the pandemic raging across much of the continent from March onwards. A loss was to be expected and the company, like everyone else in the hotel industry, will be hoping that the recovery is swift and substantial. Here the company will be helped by its significant UK presence.
After the UK’s initial poor handling the crisis, it has excelled in its vaccine rollout which means things are likely to return to some level of normality faster than in other parts of the world. With some big events set for later in the year and plenty of pent-up demand, PPHE could well be ready to capitalise on tourism and business travel returning.