PPHE has again hit the spot with a “strong” Q3 (like-for-like RevPAR +9%, albeit currency-boosted), driven by Croatia and London. This is all the more encouraging as it is entirely rate-led, the peak trading period of Arena and proof of resilience in the capital despite a market slowdown. There is further reassurance in management’s confidence about Q4, given its significance and a demanding comparative. Development continues apace with openings and renovations on track and the company’s reassertion of its enhanced financial flexibility after the recent Waterloo sale.
PPHE is on course to meet current-year earnings expectations after Q3, notable for “strong trading” by key constituents, Croatia and London. In the absence of detailed regional breakdown, overall 10% higher like-for-like revenue reflects a record summer in Croatia (revenue +8%, per listed subsidiary Arena accounts, plus 6% currency). Apart from the growing popularity of main trading area, Pula, marked by new flight routes and sports and cultural activities, there has been clear pay-off from increased investment, particularly in online campsite booking systems (revenue +16%). As for London, adjusting for the flattering inclusion of the Riverbank extension, assumed low-digit RevPAR gain implies PPHE beats the market, as newly reported by STR (+2%), AccorHotels (+1%) and Millennium (-2%). However, management is typically prudent ahead of its strongest quarter. Concerns persist about room supply, which is set to rise above its long-term trend, and rising operating costs from the National Living Wage and imported inflation. GL, London's largest hotel owner/operator, recently confirmed “a cautious outlook.