PPHE has again ended the year on a strong note, which is positive given the significance of Q4 and a demanding comparative. Overall rate-led RevPAR buoyancy (we estimate double-digit like-for-like gain in the quarter), driven by continued pickup in London and currency, reinforces confidence that 2016 profit expectations will be met. 2017 should see initial material benefit of transformative investment (c 900 rooms in London) despite the delayed opening of Park Royal (now likely by end Q117).
After a challenging first half to 2016, it is encouraging that the momentum of a “good” Q3 has been maintained. Disclosure of 7% like-for-like RevPAR growth for the full year suggests c 14% improvement in the final quarter, which is ahead of Q3 (+11%). While currency boosted (c 14% weakening of sterling against the euro in Q4), a key factor was London, the company’s main profit source, which looks to have continued to reverse its H1 5% RevPAR decline, thereby clearly outperforming the London market (Q4 RevPAR +2%, as reported by STR), even if its South Bank focus prevents strict correlation. PPHE’s other main contributor in the period, Netherlands, showed further softening after a strong H1 (RevPAR +5%), which is predictable given the impact of sterling weakness on Amsterdam’s important UK feeder market. Newly consolidated Croatia was not significant as Q4 is low season.
Security and geopolitical developments remain a concern but current trading is resilient and short-term y-o-y comparatives are weak post-Paris. GL, London’s largest owner-operator, expects continued volatility but a boost for inbound travel from currency; VisitBritain forecasts UK visits up 4% this year (+2% in 2016), which is close to the medium-term rate of growth, while Tourism Economics expects +7%.