PPHE Hotel Group

LN: PPH

£753.6m market cap

1780p last close

PPHE Hotel Group (formerly Park Plaza Hotels) is an integrated owner and operator of four-star, boutique and deluxe hotels in gateway cities, regional centres and select resort destinations, predominantly in Europe.

Investment summary

PPHE has hit the spot yet again with Q4 rate-led RevPAR growth of c 8% (our estimate), which is a marked acceleration on the previous nine months. Driven by a strong holiday season in London, the company’s major profit source, and by encouraging early returns on its key Victoria Amsterdam renovations, this is impressive, given a demanding comparative. On course to meet management’s 2018 expectations (results due c 28 February), PPHE looks also to be coping with Brexit uncertainty (Q119 bookings are good according to management), while longer-term growth reflects a £190m investment programme with key projects in the Netherlands and London well in hand. Expansion remains on the cards, even if management is reluctant to pay up, viz the recent London Grange deal (1,300 rooms) at c £750,000 per key.

Y/E Dec
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2016A 272.5 94.1 34.2 69.9 25.5 9.4
2017A 325.1 107.3 34.5 64.2 27.7 6.6
2018E 340.0 112.0 38.0 68.8 25.9 6.7
2019E 350.0 118.0 44.0 81.6 21.8 6.4
Last updated on 15/02/2019
Industry outlook

Security and Brexit uncertainty are concerns, but the London hotel market has shown admirable resilience (RevPAR up 3% in 2018, per STR) and benefits from increased tourism owing to sterling weakness. Greater measurable worries are room supply, which is above its long-term trend, slower economic growth and rising operating costs. GL, London’s largest hotel owner/operator, continues to “maintain a cautious outlook”, while, per pwc, 2019 market RevPAR may be flat, albeit at a very high level.

Last updated on 15/02/2019
Sector
Consumer
Share price graph
Balance sheet
Forecast net debt (£m) 423
Forecast gearing ratio (%) 94
Price performance
%
1m
3m
12m
Actual 4.1 14.1 59.6
Relative* (0.5) 11.3 60.6
52-week high/low 1795.0p/1105.0p
*% relative to local index
Key management
Eli Papouchado Chairman
Boris Ivesha CEO
Daniel Kos CFO

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