PPHE has hit the spot yet again with Q4 rate-led RevPAR growth of 12%, which is on a par with the previous nine months. While currency-boosted, this is impressive, given a demanding comparative and heightened security threats. We are further reassured by confirmation that this year key renovations should not be disruptive and that openings (c 1,000 rooms) remain on track. 2015 results are due in early March (the company will report in sterling from 2016 to reflect the significance of UK earnings)
PPHE is on course to meet 2015 expectations, with a Q4 performance ahead even of that which prompted a significant 2014 pre-close profit upgrade. Although regional performance is not formally disclosed, the company’s main London and Netherlands markets look to have continued to deliver constant currency rate-led RevPAR gain allowing good profit conversion. In London, its major profit source, strong trading in October (Rugby World Cup) and November (conferencing) more than made up for a relatively quiet December in the wake of the Paris attacks. PPHE therefore outperformed the London market (Q4 RevPAR -2%, as reported by STR Global), even if its South Bank focus prevents strict correlation. We understand that growth in the quarter in the Netherlands was higher than in London, which is unsurprising, given its first-half buoyancy (RevPAR +13%).
Security and geopolitical developments late last year (London market RevPAR in December -5%, per STR Global) are necessarily a concern, but current trading is resilient even if January tends not to be representative for PPHE. 2016 will in any case be notable for expansion – two new hotels in London and one in Nuremberg, as well as an extension in London – and refurbishment (c 5% of rooms off in London and the Netherlands). Encouragingly, such investment is on schedule.