PPHE "well-positioned for success" despite COVID-19 impact

Eloise Hanson Eloise Hanson Uploaded 15 April 2020

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Europe: PPHE Hotel Group has announced that the impact of coronavirus on the business has seen a 60.2 per cent reduction in total revenue in March, with RevPAR down 64.5 per cent year-on-year.

Trading during the first two months of the year were reported in line with board expectations. Total revenue grew by 8.7 per cent.

However, from mid-March onwards, when the coronavirus outbreak caused travel in Europe to diminish, the group’s properties in the UK, the Netherlands, Germany and Hungary were either temporarily closed or capacity significantly reduced.

As a result, occupancy rates were at 29.6 per cent, with a 18.8 per cent drop in total revenue like-for-like ending 31 March 2020 compared to last year.

Boris Ivesha, president and chief executive officer at PPHE, said: “Protecting our team members has been our key priority and we continue to strictly follow all local authority safeguarding measures for those still working at our properties. We are actively engaging with the communities in which we operate to see how we can support them through these challenging times.

“We have taken decisive action to ensure the group is well-positioned to endure the unprecedented challenges that the Covid-19 pandemic presents. This review of operational costs has been carefully balanced with the business’ needs for the future to ensure that, as the impact of Covid-19 reduces and a sense of normality resumes, the group is well-positioned for continued success.”

PPHE’s financial liquidity position is robust. As at 14 April 2020, the cash position throughout the group amounts close to £150 million, with an undrawn overdraft facility of nearly four million.

To further protect its balance sheet, the group has reduced its payroll by furloughing the majority of its employees in the UK, the non-renewal of fixed-term employment contracts, halted contract labour, shortened the working hours, and temporarily reduced the salaries of its executive team.

In the UK, only Park Plaza Westminster Bridge London remains open to accommodate key workers, and in the Netherlands four out of six hotels are currently opened and operating at a reduced capacity. 

Operations in Germany and Hungary are significantly reduced, with properties in Croatia currently closed.

Development wise, PPHE has a £300 million investment pipeline, of which more the £100 million is temporarily paused. 

The remaining £200 million relates to the group’s art’otel London Hoxton project, whereby an arranged agreement entitles the group to temporarily unlock some of the contributed equity of up to £43 million.

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