PPHE Hotel Group (LON:PPH) reported higher first-half revenue and EBITDA, supported by strong UK trading and growth in meetings and events, while outlining refinancing activity, the sale of a New York development site and plans to pause progress on its UK development pipeline amid operating and economic pressures.
Co-Chief Executive Officer Greg Hegarty said the group delivered “good solid first half-year results” and a strong operating performance despite geopolitical and regional market headwinds. Management said current trading remained in line with consensus expectations for the 2026 full year.
First-half revenue and EBITDA rise
Average revenue per available room, or RevPAR, increased 3.1% on a like-for-like basis, driven by a 3.2% increase in room rates. Occupancy was stable at 72.5%.
Kos said the UK was the principal contributor to growth, reporting total revenue growth of 6.8% and RevPAR growth of 5.2%. The ramp-up of art’otel London Hoxton helped performance, while large meetings and events supported trading during the first quarter. UK revenue grew 8.8% in the first quarter and 5% in the second quarter, he said.
The group’s Croatian leisure portfolio makes its largest contribution during the second half because of the summer season, Kos noted. Croatia was largely closed during the first six months, meaning its first-half performance was not representative of normal trading.
In Germany, like-for-like revenue was flat year over year, although revenue increased 2.9% in sterling terms. In the Netherlands, revenue declined 5.3% in local currency and 2.4% in sterling terms after the government increased VAT on hotel bedrooms to 21% from 9%.
Kos said the VAT change could have resulted in a 12% negative effect on room rates because much of the group’s public pricing includes VAT. The company mitigated the impact, with local-currency room rates declining 3.4%, while occupancy accounted for much of the remaining pressure.
Adjusted EPRA earnings over the rolling 12 months remained flat at £53 million, or £1.25 per share. Higher EBITDA was offset by increased interest costs following refinancing activity over the prior 12 months. The company proposed an interim dividend of 17 pence per share, unchanged from the prior year.
Waterloo freehold acquisition reshapes debt profile
PPHE acquired the freehold of Park Plaza London Waterloo for £147.9 million, funded by a new five-year £136.5 million facility. Including purchase expenses, the transaction totaled £156 million, Kos said.
The acquisition reversed a 2017 sale-and-leaseback arrangement under which the company sold the asset for £161 million and leased it back for 200 years. At the time, the £5.6 million annual rent represented a 3.2% capitalization rate. The rent had risen to £7.3 million by the time PPHE bought back the freehold.
Kos said the company’s prior expectation that hotel EBITDA would rise at a pace comparable with inflation-linked rent increases had not materialized. COVID-19, labor shortages associated with Brexit, energy costs, national insurance costs and business-rate increases had contributed to the gap, he said.
PPHE bought the freehold back at a 4.9% capitalization rate and at a price £13 million below the 2017 sale value. Kos said the deal stopped the erosion of EBITDA caused by rising rent, simplified the balance sheet and provided greater future optionality for the asset.
Net debt increased to £932 million at June 30 from £775 million at year-end, primarily because of the Waterloo acquisition. The transaction raised the group’s loan-to-value ratio to 39.5% from 35%, a level Kos described as acceptable. Following recent refinancing, PPHE’s average debt maturity stood at 4.4 years and its average cost of debt was 4.4%.
- The Waterloo loan has a five-year maturity.
- Its loan-to-value ratio was 70% at acquisition and is expected to amortize to 65% over five years.
- Ninety percent of the loan is fixed for two years at an all-in interest rate of 5.9%.
Rolling 12-month free cash flow was £76 million. The company used cash flow for £17 million of dividends, £26 million of bank-loan repayments and return-on-investment capital expenditure, including freehold acquisitions at Leman Street, Park Plaza London Park Royal and Park Plaza London Waterloo.
New York sale and development pipeline review
Hegarty said PPHE sold its New York development site for $33.5 million in the week before the presentation. He said regulatory changes had made development of the site unviable in the US. The company had acquired air rights to make the property development-ready before the sale, and proceeds will be used first to repay debt associated with the site, with additional funds directed toward other geographic regions.
The group also refinanced art’otel Rome with a €27.6 million five-year facility.
Management said it would launch 5,000 square meters of office space at art’otel London Hoxton under its One Rivington co-working concept. The space is scheduled to open in mid-November and is being marketed to prospective tenants.
However, Hegarty said the company was not currently advancing its UK land-bank development projects, which include sites at Westminster Bridge Road, the A40 and Leman Street. The group is reviewing the pipeline following its strategic review and while it assesses the UK economic outlook.
He cited business rates, national insurance costs, employment-law pressures, supply-chain issues and development-return challenges as factors making UK operations and new projects increasingly complex. “The U.K. is a challenging market to deliver future value for shareholders,” Hegarty said.
Strategic review ends without firm offer
PPHE’s board began a strategic review in November 2025 to consider options to maximize shareholder value. In May 2026, the company received an indicative possible cash offer of £22 per share from Fattal Hotel Group.
Kos said the board and a substantial portion of shareholders consulted viewed the proposal as fair value. But Euro Plaza Holdings, PPHE’s largest shareholder, withdrew its support. Fattal then determined it would not proceed, and the strategic review concluded in July without a firm offer.
Management said the process nevertheless generated discussions that informed the board’s thinking on future shareholder-value creation, operational delivery and balance-sheet simplification. Hegarty said the group continued to see opportunities from maturing assets, including art’otel London Hoxton and the planned co-working launch.
On trading, Hegarty said city locations were performing comparably with first-half trends and in some cases improving through the second half. UK properties remained strong, while Croatia showed gradually improving momentum through the summer season.
About PPHE Hotel Group (LON:PPH)
PPHE Hotel Group (LSE: PPH) is an international hospitality real estate company, with a £2.2 billion portfolio, valued as at December 2025 by Savills and Zagreb nekretnine Ltd (ZANE), of primarily prime freehold and long leasehold assets in Europe.
Through its subsidiaries, jointly controlled entities and associates it owns, co-owns, develops, leases, operates and franchises hospitality real estate. Its portfolio includes full-service upscale, upper upscale and lifestyle hotels in major gateway cities and regional centres, as well as hotel, resort and campsite properties in select resort destinations.
