DECISIVE ACTIONS AND MAINTAINING A LONG-TERM VIEW - ANNUAL REPOR T AND ACCOUNT S 2020
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A N N UA L R E P O R T
A N D ACCO U N T S 2 0 2 0
DECISIVE AC TIONS
AND MAINTAINING
A LONG -TERM VIEW
S T R AT E G I C R E P O R T S T R AT E G I C R E P O R T C O R P O R AT E G O V E R N A N C E F I N A N C I A L S TAT E M E N T S APPENDICES
INTRODUCTION
The results and commentary presented in this We are fully focused on reassuring our guests,
Annual Report reflect PPHE Hotel Group’s performance team members and local communities of our
over the last year. Since our 2019 report, the whole commitment to upholding an even higher standard
world including our communities have been struck of cleanliness and wellness with our new health and
by the COVID-19 pandemic, which has created safety programme following weeks of dedicated
huge disruption to most aspects of everyday life research, development and testing. 2
and generated an understandable widespread
effect on our market and industry.1 We are pleased to have secured funding to develop
art’otel london hoxton, located in one of London’s
We had a great start to the year but from March our most exciting neighbourhoods. This 27-storey building
operations were impacted by the pandemic, resulting will include 343 hotel rooms and suites, five floors
in lockdowns and property closures. We had to take of office space, a gym, swimming pool and wellness
decisive actions to preserve cash and realign our facilities and an art gallery space. We have also
operational structures. But throughout we have looked strengthened our pipeline through acquisitions
after our communities and we were proud to help in Croatia and Serbia to expand our offer.3
support key workers during these challenging times.
We are committed to play our part to face up to and
overcome the challenges ahead. Together we create
Strategic Report Corporate Governance Appendices
a safe place to be and to enjoy.4
2 Highlights 82 Non-Executive Deputy Chairman’s 178 Subsidiaries included in the Group
4 About us: creating value Corporate Governance Statement 181 Jointly controlled entities
6 Group at a glance 84 Board of Directors 181 Current and pipeline projects
8 Chairman’s statement 86 Executive Leadership Team 182 Glossary
10 Our response to COVID-19 88 Corporate Governance 184 Contacts
12 President & Chief Executive 99 Nomination Committee report
Officer’s statement 106 Audit Committee report
18 A changing climate 111 Directors’ Remuneration report
20 Our business model and priorities 119 Directors’ report
22 Reassuring Moments
24 Strengthening our long-
term pipeline Financial statements
26 Our road to recovery 125 Independent auditors’ report
28 Strategic progress in 2020 128 Consolidated statement
31 Managing risk of financial position
34 Principal risks and uncertainties 129 Consolidated income statement
41 Viability statement 130 Consolidated statement of
42 Financial KPIs comprehensive income
44 Financial review 131 Consolidated statement of changes
58 Deputy Chief Executive Officer in equity
1. Read more about 2. Read more on our 3. Read more about 4. Read more on our
& Chief Operating Officer’s 132 Consolidated statement of our response to ‘Reassuring Moments’ Strengthening our road to recovery
statement cash flows COVID-19 on pages programme on long-term pipeline on pages 26 and 27
60 Business review 134 Notes to consolidated financial
68 Stakeholder engagement statements 10 and 11 pages 22 and 23 on pages 24 and 25
72 Responsible business
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INTRODUCTION CONTINUED
H I G HLI G HT S
Despite our strong start to the year, in which we had anticipated to
benefit from our recently completed £100m property repositioning
proven to be resilient and we are ready for the recovery which we
anticipate to build momentum in 2021. Our decisive actions have We create memorable guest experiences by
programme, 2020 will always be remembered for the pandemic. resulted in protecting the Group, whilst we have also been able
Our Board and Executive Leadership Team took decisive and swift
actions to preserve the cash position of the Group, whilst retaining
to extend our future pipeline which is filled with great potential.
We encourage readers of this report to review our responses to
owning, developing and operating hotels and
a long term view. As part of our 30-year track record we have
managed through economic cycles and although the severity of
the pandemic and the progress made against our longer-term
strategic agenda and priorities. resorts in dynamic, vibrant cities and leisure
destinations. Our properties are managed by
the pandemic is unprecedented, our markets have previously
experienced teams living our values every
Financial KPIs Operating KPIs
day, creating unique experiences. We create
stakeholder value at every step of the value
chain as our properties provide attractive
Total revenue Normalised loss before tax Occupancy
returns and long-term capital appreciation.
£101.8m £89.8m 28.0%
Our Strong Foundation
Full value Diversified portfolio Independent operator
Adjusted EPRA EPS Property Value Average room rate chain approach in key cities with brand flexibility
Value creation through development, New and renovated property Integrated owner / operator model
repositioning, operations and brand portfolio of 46 prime assets in with access to brands, global
(123)p £1.7bn £105.1
ownership and access; resulting in operation; consisting of hotels, distribution and marketing
a 30-year track record of NAV resorts and campsites
growth and industry-leading
EBITDA margins
Track record of
EBITDA EPRA NRV per share RevPAR Sources Planned capex in active successfully managing
of funding pipeline of £200m+ through the cycles
Asset backing used as source Attractive projects in London, Pula, Experienced developers and
£(10.1)m £22.08 £29.4
of funding and longstanding Zagreb and Belgrade operators managing through
banking relationships economic cycles
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INTRODUCTION CONTINUED
U N DE R S TA N D I N G O PE R ATI N G ACROSS
PPHE H OTEL G ROUP THE VALUE CH A I N
PPHE Hotel Group operates a highly differentiated business all aspects of its guest offering, whilst retaining all of the economic
Our purpose
model to peers, who are increasingly focused on either the upside. By contrast those offering either an asset-light or asset-
property or operational aspects of the hotel value chain. With heavy model relinquish some control of the guest experience
in-house expertise across the value chain, PPHE is able to control as well as pay away fees to third parties.
Creating valuable memories for
PPHE H OTEL G ROU P
our guests and value for our assets, people 0%
and local communities. Total
Business
Shareholder Typical asset-light model
Typical asset-heavy
value value adopted by large hotel
model benefits model
chain proposition groups
Who we are Site acquisition Secure best
Value gains
locations and
through
We are an international hospitality group with control over
all aspects of the
development and
repositioning
a strong prime real estate portfolio consisting hotel design
Development/
of 46 properties under operation in six repositioning
countries, that transforms an asset’s potential
into value and profits. Independence and
control, no conflict
Rental income and
value appreciation
of interest Asset owned
Hotel ownership and leased to third party
Net operating
What we do Hotel operation
profit from
rooms, food
& beverage
Asset operated under
operational lease
Asset owned but
managed by third party
agreement
We have a clear strategy to drive growth Ensure
consistency of
and create long‑term value while recognising and brand standards
and guest
developing opportunities to help our assets reach Hotel
management
service levels
are maintained
Management agreement
to earn a fee based
their full potential. We delight our guests every day, throughout
the estate
Fee-based income
as a % of revenue
income as a % of
revenue and profit
through engaging service and quality products and profit
in inviting places. Brand Franchise agreement (or the
usage of a brand, income
as a % of revenue)
Optimise timing
How we do it Asset
to refurbish and
reposition
Value gains
management
By valuing our people, being led by an entrepreneurial
Executive Leadership Team and through investing (Re) finance with
asset backing to
in our portfolio, opportunities with upside potential Extracting
value
extract value
Sale of asset
and local communities. Source for funding
future growth
Re-invest
extracted cash
Reinvestment/ to enable further
100% cash recycling growth
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AT A G L A N C E
B USI NE SS M O DEL Value split by geography1 Hotels and resorts by geography Hotels and resorts by ownership type
At PPHE Hotel Group, we are focused (Excludes managed, operated, leased, (Includes franchises, excludes campsites (Includes franchises, excludes campsites
franchised and co-owned hotels) and pipeline) and pipeline)
on creating value for stakeholders through We (re)finance
developing, owning and operating hospitality to fund further
investments
We purchase
real estate with upside potential.
We own or co-own most of our portfolio and our proven business
model is centred around delivering asset value appreciation,
generating attractive operating returns and creating valuable Creating
memories for our guests. We are proud of our track record.
stakeholder
Our experienced senior leadership team identifies and acquires value
properties which we believe have significant upside potential.
We then embark on transforming these assets through
(re)developing redesigning and continuously improving operating £894m £243m 10 hotels 9 hotels 20 hotels 2 hotels
performance through our in-house management platform, and We brand United Kingdom Croatia 3,681 rooms 1,359 rooms 6 resorts 242 rooms
in doing so create significant value along every part of the value properties United Kingdom Germany, 6,040 rooms Co-owned
and improve We develop Hungary Freehold
chain. Through refinancing our properties, we are able to release operating £280m £166m and Serbia
capital for new investments, enabling further sustainable growth. performance The Netherlands Under 5 hotels 5 hotels
development2 6 hotels 7 hotels 1,590 rooms 1,010 rooms
1,073 rooms 6 resorts Long leasehold Managed,
For more see business model £87m operated,
The Netherlands 2,769 rooms
on page 20 Germany, Hungary Croatia leased or
and Serbia franchised
1 The fair values were determined on the basis of independent external valuations prepared in December 2020.
2 Properties under development include: New York, art’otel london hoxton (London), Westminster Bridge Road (London), Hotel Brioni (Pula) and Zagreb.
Prime locations Independent hospitality real estate owner and operator with brand flexibility and access to global brands and distribution network
Within the Group we have the ability and flexibility to select the right brand to complement our hospitality assets. We have an exclusive
and perpetual licence with Radisson Hotel Group to operate the upper upscale Park Plaza® brand in Europe, the Middle East and Africa
Well-maintained, prime assets, with proximity to major demand generators within leading capital cities, urban markets which complements our wholly-owned upper upscale lifestyle brand, art’otel® and Arena Hotels & Apartments® and Arena Campsites®
and resort destinations. brands which are operated by Arena Hospitality Group, our Croatian listed subsidiary.
Radisson Hotel Group art’otel Park Plaza Arena Hospitality Group
Radisson Hotel Group has nine art’otel is a contemporary collection Park Plaza is an upper upscale Our subsidiary Arena Hospitality
distinctive hotel brands with of upper upscale lifestyle hotels that contemporary hotel brand Group (Arena) is a leading dynamic
Park Plaza Westminster Bridge London Park Plaza London Waterloo Park Plaza London Riverbank Holmes Hotel London more than 1,400 hotels in operation fuse exceptional architectural style featuring individually designed hospitality group in Central and
Opposite Big Ben on the thriving South Bank Close proximity to Waterloo Station Between Waterloo Station and Nine Elms/ On Chiltern Street, close to Marylebone Village, and development in destinations with art-inspired interiors. Located in hotels in vibrant city-centre locations Eastern Europe.
American Embassy Marylebone Station and Baker Street Station across the globe. Its portfolio of cosmopolitan centres across Europe, and select resort destinations.
1,019 rooms 494 rooms 646 rooms 118 rooms hotel brands includes: Radisson each hotel displays a collection of The Park Plaza brand is renowned Arena Hotels & Apartments
Collection™, Radisson Blu®, original works designed or acquired for creating memorable moments A collection of hotels and self-
Radisson®, Radisson RED®, specifically for each art’otel, with each through inspiring service, stylish catering apartment complexes
Radisson Individuals, Park Plaza® property offering a unique art gallery. guestrooms and versatile meeting offering relaxed and comfortable
and Park Inn® by Radisson®, Country art’otel has created a niche for itself in facilities, which are complemented accommodation within beachfront
Inn & Suites by Radisson and the hotel world, differentiating it from by award-winning restaurants and locations across the historical
Prizeotel. Radisson Hotel Group is traditional hotels. bars. Our portfolio of vibrant settings of Pula and Medulin
part of Jin Jiang and together they city-centre hotels and tranquil in Istria, Croatia.
form the world’s second largest Art and culture are ingrained beachside resorts in Croatia already
hotel group in terms of rooms. in every aspect of the art’otel brand. presents a wide choice of locations Arena Campsites
Knowledgeable and passionate team and accommodation, and we are Situated close to the historical towns
Park Plaza Victoria Amsterdam art’otel amsterdam Park Plaza Nuremberg art’otel cologne committed, with our partner
Central reservation and members share their enthusiasm of Pula and Medulin, each campsite
Opposite Amsterdam Central Station Opposite Amsterdam Central Station Opposite Nuremberg’s main railway station Located in the attractive Rheinauhafen area Radisson Hotel Group, to bringing
distribution system while simultaneously delivering provides a relaxed environment from
298 rooms 107 rooms 177 rooms 218 rooms Park Plaza to even more locations.
world-class service, creating which guests can experience Istria’s
a superior guest experience. areas of natural beauty and enjoy
owerful online and
P outdoor activities from April to
mobile platforms art’otel has three exciting October. Each campsite provides a
new projects in the development distinctive offering, from traditional
pipeline. Two are in London, with camping to a luxury ’glamping’ offer.
Radisson RewardsTM one hotel set to open in Hoxton and
programme with one as part of the Battersea Power
24 million members Station development, and a third in
New York City, USA.
Park Plaza Amsterdam Airport Park Plaza Belvedere Medulin Park Plaza Histria Pula Arena One 99
Global sales, marketing
Close proximity to Amsterdam Schiphol Airport Iconic leisure and sports hotel Dramatic beachfront setting Croatia’s first all-glamping offering and buying power
342 rooms 423 rooms 369 rooms 193 luxury tents
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C H A I R M A N ’ S S TAT E M E N T
anything I have ever witnessed during my This crisis underscored the key role that The Board will continue to review
decades-long career. As the co-founder we as community members can play in the Group’s dividend policy and will
of a hospitality business, but also as a helping to fill the gaps in support and resume dividend payments when it
global citizen and a member of many care, caused by the pandemic. As a is deemed appropriate.
communities and groups professionally and business, we are proud of the vital role
personally, I am humbled by the challenges our team members played in addressing For further details on dividend please
and struggles faced by many in 2020. local community needs by leveraging their see the Financial Review on page 44
skills, hospitable expertise and our
A thirty-year This is my 31st year paving the path of our collective resources. Looking ahead
Group’s growth and it has been without a After years of negotiations, the UK
doubt the most testing year. We could not For more information on our Government and the European Union
track record
control whether the pandemic impacted our Responsible Business programme, finalised their new partnership agreement
business, but we were able to control the please see page 72 at the end of December, marking the end
damage caused and are focussed in our of the Brexit transition period. The main
swift and healthy recovery. As Chairman of
Governance and Board changes areas of impact for our Group of this new
The governance programme has continued partnership are expected to be centred
the Group, I focus this statement on the
to evolve with the 2020 year, and in some around employment and the delivery of
steps taken in 2020 to chart the way toward
ways benefited from the tests presented food, drinks and products. Since the
an eventful and expeditious recovery
by the diverse and unanticipated business outcome of the Brexit referendum, our
and leave the reader to see, please see
changes felt in 2020. In keeping with our teams have been very proactive to mitigate
the financial review on page 44, how our
Board succession plans, the 2020 year the potential risks where possible and
inherent tenacity and ability to make
Our resilient model macro challenges we consistently monitor provided the opportunity to diversify our we have taken many steps to improve
good decisions without delay, carried us
2020 will always be remembered as our development projects and adapt where Board by integrating new Non-Executive our employer value proposition and
through 2020.
the year in which the COVID-19 pandemic deemed appropriate. During 2020, we Directors, whose varied skills, background conducted a full supply chain analysis.
impacted the world, its citizens and the continued to progress several development and interests facilitated the continued However, the full economic impact of
The Group has a strong 30-year
global economies. Notwithstanding the projects and, as we discuss throughout the evolution and growth of our governance this new partnership is yet unclear and
track record of navigating markets and
major challenges this presented, our report, the business has expanded and programme. This was further enhanced by is currently masked by the pandemic.
economic cycles, and this experience
long-term development ambitions remain diversified its approach to development. the changes our Nomination Committee
stood us in good stead in the face of the
strong. Transforming properties and Chairman, Kenneth Bradley, implemented 2020 was truly the year of adversity for
unprecedented disruption caused by the
spaces and evolving our product offering We were able to progress with several with regard to our approach toward the hospitality industry, but both adversity
onset of COVID-19 and provided us with
to remain current and responsive to our developments and acquisitions through nominations and induction programmes and challenge bring opportunities to
a strong and resilient foundation from
markets has always been at the centre of securing new funds or using resources for new Board Members. improve, strengthen and ultimately,
which to steer the business through the
our success. The strength and value driven earmarked specifically for such investments. challenges presented by the pandemic. succeed. Through cycles of challenge and
from our repositioning programme is a We were delighted to welcome Nigel Keen opportunity the sector has time and again
testament to how well our hospitality Following the successes of 2019, the as an independent Non-Executive Director demonstrated its ability to bounce back.
It is during these difficult months that our
offering satisfies the needs and trend Group was progressing with the continued on 20 February 2020. Nigel’s wealth The European travel market, the largest in
unique owner and operator model – which
appetites of the market at any given time. aim of delivering another year of record of property experience will be invaluable the world, has delivered sustained growth*
enables the Group to maximise revenue,
Our development goals, our drivers and growth. We were set to progress against as the Group’s property capability and for more than 70 years, despite cycles of
drive value through its assets and provides
our strategic objectives and drive value for development pipeline grows. Nigel sits downturns and upticks.
Eli Papouchado our reliable success in developing and
repositioning properties and spaces stakeholders through our existing prime
the asset backing for financial flexibility
– has shown its adaptability and strength.
on the Audit, Remuneration and
Chairman remained untouched by the many forces property portfolio and strong development This model, together with our committed
Nomination Committee. As the COVID-19 vaccines are rolled out,
borders reopen and restrictions are eased,
that otherwise tore through society and pipeline. However, the past year has and experienced team and well-invested
markets in 2020. With the obvious external brought change and challenge unlike We also welcomed Stephanie Coxon to the we expect to see a phased recovery.
property portfolio, positions us well to
Board as an independent Non-Executive
benefit from the market recovery as a
Director on 7 August. Stephanie’s strong Our owner operator model, well-invested
sense of normality resumes. We were
Inbound arrivals by scenario, 2005–25, World capital markets expertise, spanning more portfolio and strong development pipeline
encouraged to see that several of our
than 15 years, will be invaluable as we means PPHE Hotel Group is well-placed
properties outperformed the market
2,000
continue to address the unprecedented to benefit from the market recovery and
during the year despite the challenges
impact of the COVID-19 pandemic to capitalise on future opportunity in line
1,800 we faced, which is testament to the quality
and support our long-term growth in with our growth strategy.
and attractive locations of our assets and
1,600 exploring new development opportunities.
the hard work of our teams.
1,400 Stephanie sits on the Audit, Remuneration * Source: UN World Tourism Organisation, World
and Nomination Committees. Tourism Barometer 2019.
1,200 Unfortunately the Group had to undertake
fundamental changes to its’ workforce by
Millions
1,000
reducing work hours and, unavoidably, Dividend
800 through forgoing contract renewals and In March, the Board took the decision to
600 redundancies. We would like to thank all withdraw its proposed 2019 final dividend
past and present staff for their hard work payment to shareholders to enhance
400
and commitment. financial flexibility. Due to the ongoing
200 uncertainty regarding restrictions on
Eli Papouchado
0 international travel, the Board continued Chairman
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Responsible business
20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20
to take a prudent approach to cash
We aim to play a critical role in the
conservation and did not propose an
communities where we operate.
interim or final dividend for the 2020
The 2020 year saw our communities
Baseline Upside Downside 2019 peak financial year.
hit by the devastation of the pandemic.
(e) Estimate.
* Data for 2020 is preliminary and based on estimates for countries which have not yet reported results.
Source: World Tourism Organization, January 2021.
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O U R R E S P O N S E TO C O V I D -19
How we have navigated through M A RCH – M AY Sudden impact of pandemic Decisive actions
the pandemic in 2020 – International and domestic travel came to a halt – Activated business continuity plans enabling head
Sudden impact and decisive decisions – Unprecedented cancellations and rebookings office and support teams to work from home
On 30 January, the World Health Organization – Mandated lockdowns and property closures – Executed profit protection plans to preserve cash and
– Selected properties remained open to accommodate secured debt covenant waivers and new loan facilities
declared the COVID-19 outbreak a global health
essential workers – Developed ‘Reassuring Moments’ health
emergency and it declared a pandemic on 11 March. – Occupancy bottomed out in April & safety programme and protocols
By 20 April, 100% of worldwide travel destinations – Utilised all available government support schemes
had introduced travel restrictions. Global travel came – Developed takeaway and delivery options for selected
restaurants
to a halt and our Board and Executive Leadership – Prepared operational and commercial plans for reopening
Teams focused on managing this crisis situation. – Accelerated technology initiatives to provide guests with
Contactless Services
– Restructuring progress to ensure the Group’s operational
structure is aligned with guest demand for the short and
medium term
End of summer Reopening and peak L ATE M AY – E A R LY SE P TE M B E R A much welcomed reopening and experienced
– Early September was the transition point from – Started reopening with restrictions an immediate return of demand
the leisure to business travel season – Ramping up to peak leisure months of July-August Reopening and market outperformance
– Started to experience the return of some – Built base quickly, with market outperformance at flagship hotels during summer at flagship hotels
government and corporate demand – Demand driven by last minute, domestic leisure and from
At the end of May, restrictions started easing in
– Weekend leisure demand holding strong neighbouring countries
– Hosted small and medium sized events – Younger than usual guest demographics some of our markets and approximately 84% of
– Restaurants and bars started trading – Health and safety protocols part of booking decision-making our portfolio had reopened by July. Demand was
– However, due to increased infection rates, several process predominately last minute and leisure-focused, from
markets started to reinforce further restrictions – Contactless Services introduced
domestic markets and neighbouring countries. Our
flagship hotels significantly outperformed their
markets during the summer.
A challenging end to the year, M I D SEP TEM B ER – DECEM B ER A volatile year end But well prepared, ready and filled
but optimism boosted by start – Encouraging bookings forecasts for Christmas holidays period with optimism
of vaccinations and pent up Demand severely reduced due to stricter – However, new international, domestic and local measures were – However, most properties stayed open to maintain
demand for travel and hospitality measures, tier systems and (partial) lockdowns introduced to combat the new rise in infections a heartbeat within the estate and allow a rapid
– Quarantine measures, travel guidance and other measures recovery when measures are lifted
The last quarter is best described as highly volatile due to
continue to negatively impact performance – Cost base significantly reduced to minimise losses
extensive and frequent changes in government measures
– Start of vaccination programmes in several of our
and policies in all of our operating markets. Including operating regions
further lockdowns, restrictions and mandated property
closures. Booking trends for our main operating regions
for the Christmas holiday period were very encouraging
but unfortunately this didn’t materialise due to the
government measures introduced.
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P R E S I D E N T & C H I E F E X E C U T I V E O F F I C E R ’ S S TAT E M E N T
Well positioned
to benefit from
market recovery
Boris Ivesha As we entered 2020, the Group was well
positioned for future growth following
The Board and Executive Leadership
Team took swift and decisive actions.
President & Chief completion in 2019 of our multi-year We activated our business continuity plans
£100 million plus investment programme, enabling our corporate and regional office
Executive Officer coupled with a strong pipeline of planned teams to work remotely. We prepared
developments. However, the COVID-19 operational and commercials plans so
pandemic brought unprecedented we were ready to reopen properties when
Holmes Hotel London
challenges unlike anything the hospitality safe to do so. At the forefront of our plans
industry has experienced before. In the face was the safety and well-being of our team
of these difficulties, the Group has been members and guests. We developed
From late May as restrictions were eased November and December were particularly
resilient and has proven its ability to adapt third party accredited health and safety
in some of our markets, we began to challenging months again with further
to the ever-changing market conditions programmes and protocols; ‘Reassuring
reopen properties with new protocols in lockdowns and increased tier restrictions,
underpinned by its well-invested portfolio, Moments’ by Park Plaza and ‘be bold.
place, and operations increased for the eradicating all demand for the remainder
flexible owner operator model and broad be creative. be safe’ by art’otel. At selected
peak leisure months of July and August. of the year. However, most of our hotels
customer appeal. restaurants, we developed takeaway and
By July, 84% of operations had resumed. remained open to allow us to respond and
delivery options and various technology
Nevertheless, restaurants, bars, leisure recover quickly when measures are lifted.
2020 at a glance initiatives across our hotels were
and events facilities remained severely Having taken many actions to significantly
Many hotels of the Group outperformed accelerated to provide guests with a
limited or closed in a number of our realign our operations to demand, we were
the market in January and February prior to contactless experience where desired.
properties. Bookings during this period able to minimise losses in the fourth quarter.
the onset of COVID-19. However, from early were dominated by domestic leisure
March to May the pandemic unmistakably To preserve cash and reduce costs
stays and demand from neighbouring Financial performance
impacted operations. International and and overheads, we secured additional
countries, with high occupancy on The overall financial performance in
domestic travel came to a halt and the new funding, we reduced payroll costs
weekends, often with short-lead time the year was significantly impacted by
whole hospitality industry saw an through utilising government job retention
bookings. Our flagship, well-invested city the dramatic downturn in activity from
unprecedented level of cancellations and schemes available to the business across
centre properties benefited from this March onwards. Reported total revenue
re-bookings. Governments across Europe its operating markets, reduced employee
trend, outperforming the market in the declined by 71.5% to £101.8 million
implemented extensive public health working hours, implemented voluntary
third quarter. Nevertheless, curbs on (2019: £357.7 million) and EBITDA fell
measures including lockdowns and salary reductions and – as a last resort –
international travel and social distancing to £(10.1) million (2019: £122.9 million),
property closures to restrict the movement restructurings and forgoing contract
meant that RevPAR and occupancy resulting in an EBITDA margin of (9.9)%.
of people. Consequently, most of our renewals. We utilised the business
remained subdued compared with
properties were closed for the months rates holiday in the UK and liaised with
the same period last year. The key operating metrics were severely
of April, May and June, with only a small landlords on our rent arrangements.
impacted by property closures and
number of properties remaining open Shareholder dividends were withdrawn.
Early September is typically the transition reduced capacity across the Group’s
to support key workers, such as medical point from leisure to business travel and the operations. RevPAR was down by 71.6% to
personnel at nearby hospitals. Full details of the liquidity and
cash flow measures taken are set fourth quarter is usually the busy quarter for £29.4, reflecting unprecedented low levels
out in the Financial Review on meetings and events. Whilst we saw some of occupancy of 28.0%, compared with
pages 44–57 return of government and corporate 80.6% in 2019 and an 18.2% reduction in
demand and some small and medium sized average room rate to £105.1 (2019: £128.5).
events, activity remained subdued, although
weekend leisure demand held strong. As a result of the decisive COVID-19
Restaurants and bars started trading again. actions taken, the Group finished the year
in a strong financial position with a total
However, by mid-September demand was consolidated cash balance of £114.2 million
once again severely impacted as infection at 31 December 2020. During this period,
rates increased across Europe and stricter the health and safety of team members,
art’otel london hoxton measures, lockdowns, travel restrictions and all stakeholders was prioritised with
For more see page 24 and quarantine measures were reintroduced the utmost importance.
in all our key and secondary markets.
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P R E S I D E N T & C H I E F E X E C U T I V E O F F I C E R ’ S S TAT E M E N T C O N T I N U E D
The annual independent revaluation the Group the ability to temporarily draw
exercise on our operational property assets up to £41.1 million, if required, for any cash
was carried out by Savills and ZANE and flow needs the Group may encounter in
valued our portfolio at £1.7 billion (as at the short term. We took the decision to
31 December 2020). EPRA NRV per share pause our development project in New
decreased by 14.8% to £22.08 per share (as York City, which is earmarked for an art’otel.
at 31 December 2020). The adjusted EPRA Construction of art’otel london battersea
earnings per share were down to (123) power station progressed to plan and this
pence (2019: 128 pence). hotel will be operated by the Group under
a management agreement when it opens
Full details of the financial in 2022.
performance are set out in the
Reassuring Moments
Financial Review on pages 44–57 During the year, the Group secured For more see pages 22–23
planning permission to develop a 29,000
Strategic process
square metre mixed-use scheme, including
We continued to make strategic progress
a 465-key hotel, adjacent to our Park Plaza
despite the disruption caused by the
pandemic. The Board takes a long-term
view, and our owner operator business
London Park Royal property. In 2012,
the Group acquired a significant site
“The safety and well-being of our Experienced Leadership Team
We have a highly experienced Executive
model gives us full control over the scope
and phasing of investment projects and our
opposite Park Royal London Underground
Station, providing easy access to central people continued to be key priority Leadership Team. These talented
individuals have decades of experience
and an impressive track record in
development pipeline. This enabled us to
evaluate and prioritise pipeline projects in
London and Heathrow, for £7 million.
It subsequently developed Park Plaza and in the current environment more the hospitality real estate industry.
London Park Royal, which opened in 2017, They drive the corporate vision and
the current environment.
using approximately only one third of
the overall site. The additional land is
important than ever.” long-term strategy for the Group.
Our largest development project is art’otel
earmarked for light industrial use and As part of the Company’s ongoing
london hoxton. In April, in the midst of the
the Group has now successfully secured succession planning programme, two
pandemic, we secured £180 million of
planning to develop a contemporary select The acquisition of Guest House Riviera Pula Radisson continued to progress its senior company executives were promoted
funding and construction of this mixed-use
service hotel, allowing for differentiation completed and plans to develop and then multi-million-dollar technology investment to key leadership positions in January 2020.
development is underway and will span
and creating further value for the Group. operate (under a 45-year lease agreement) programme which will transform, for all Greg Hegarty was promoted to Deputy
multiple years. The hotel is expected to
a 115-room hotel in Zagreb moved forward. hotels on its reservations system, the core Chief Executive & Chief Operating Officer,
open in 2024. This new facility also offers
Through our Croatian subsidiary Arena booking, selling and marketing capabilities. taking on new responsibilities alongside
Hospitality Group d.d. we continued to Further details on our progress We anticipate that our hotels will start his existing COO role. Inbar Zilberman
invest in Central and Eastern Europe. are set out on pages 24–25, in the benefiting from this transformation from was promoted to Chief Corporate &
In Croatia, committed investment projects business review on pages 60–67, mid-2021. Furthermore, there has been Legal Officer, driving forward the Group’s
at Arena Grand Kažela Medulin and Arena and in the Financial Review on
continued investment to improve the corporate initiatives, including acquisitions
Verudela Beach Apartments in Pula were pages 44–57 and expansion, corporate governance and
radissonhotels.com multi-brand platform.
completed, and work continued on the corporate social responsibility, alongside
approximately £30.9 million investment
Radisson Hotel Group Partnership her existing leadership of the Group’s legal
Since 2002, PPHE Hotel Group has Our people and values and compliance functions.
to reposition Hotel Brioni Pula.
benefited from an exclusive perpetual Our people and our values of Trust,
licence from Radisson Hotel Group Respect, Teamwork, Enthusiasm,
Commitment and Care are at the heart
Our team members
(“Radisson”), giving it the rights to develop
We aim to create an inclusive, open and
and operate Park Plaza branded hotels of everything that we do, whether
fun working environment where our team
and resorts in Europe, the Middle East managing our hospitality assets or
members feel supported, motivated and
and Africa. Radisson is part of the world’s delivering consistent operational
empowered. The safety and well-being
second largest hotel group by number excellence across our portfolio.
of our people continued to be key priority
of rooms. This strategic partnership gives
and in the current environment more
the Group access to Radisson’s central We are proud to create a high performing
important than ever. We adapted the way
reservation and global distribution culture, cultivated by our leadership team.
we communicate with our team members to
systems, its powerful online and mobile This approach, with backing of our bespoke
ensure we maintained strong engagement
platforms, global sales and marketing learning and development programmes,
with all our team members. We launched
capabilities, as well as its loyalty supports our delivery of best-in-class
new internal communications initiatives
programmes with more than 24 million operations and high quality service to
and ‘staying connected’ newsletters.
members. These benefits are also create memorable experiences for guests.
These weekly communications include
extended to the Group’s wholly
video interviews with senior leadership,
owned art’otel brand.
business updates, mental health guidance,
self-learning initiatives and advice on
best practice ways to work from home.
For operational team members, we
provided personal protective equipment
and we introduced temperature and
symptom checks when team members
report to work.
art’otel london hoxton development Arena Verudela Beach Pula
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P R E S I D E N T & C H I E F E X E C U T I V E O F F I C E R ’ S S TAT E M E N T C O N T I N U E D
Convenient, contactless checkout
offer to reduce person-to-person contact. In Germany, we continued to support
Contactless Services available through our local communities tableware
a dedicated Park Plaza App include online donations to a local day care centre and
check-in prior to arrival or self check-in on offering conference rooms free of charge
arrival, digital room keys via smartphone, and donations to the worldwide relief
contactless payment options, new agency – Malteser International.
messaging options for guests such as
a real time messaging through chat or In the early days of the pandemic, our own
WhatsApp and online ordering of room Board took the decision to forgo their own
service. Guests also receive a pre-arrival fees to support Hospitality Action, a charity
email with ancillary services to personalise that supports hospitality sector employees.
their stays, including room upgrades, early
check-in and late check-outs, breakfast and Further details of our Responsible
dinner options or special amenities. We also Business Section are set out on
introduced a new in-room entertainment pages 72–81
system across our hotels, enabling guests to
Reassuring Moments check-in play their own content on the Smart TVs Looking ahead Hotel Brioni Pula
through Chromecast (i.e. Netflix). We will Looking ahead, our flexible owner
continue implementing, and expanding operator model means we are well placed
The significantly lower consumer demand When our properties re-opened, we to benefit from a recovery when it comes. At each phase of recovery, our high quality
upon, these solutions throughout our
enforced property closes and reduced launched our ‘Reassuring Moments’ and ‘be We anticipate there will be a phased portfolio of newly refurbished properties,
portfolio in 2021.
capacity had a direct impact on our bold. be creative. be safe’ guest safety and recovery across the travel and hospitality in superb locations will be extremely well
team members across the business. well-being programmes across all Park Plaza sector. This will be kick started through placed to benefit. Our full value chain
Community engagement approach enables us to rapidly adapt our
Where possible, colleagues worked and art’otel hotels. The programmes are the continued roll-out of the COVID-19
We remain committed to being part offer between guest segments and scale
remotely. We utilised, and continue to designed to uphold enhanced and rigorous vaccines and we expect occupancy levels
of and making a positive contribution our offer to respond to demand. We have a
access, job retention schemes available safety standards and provide effective to recover initially, followed by room rates
to the communities in which we operate. strong development pipeline and have full
across our markets. Nonetheless, the and transparent communications to team as consumer confidence returns.
Below is an overview of some of our control to prioritise and assess projects as
prolonged disruption meant we had to members and guests about our health and
activity during the year, particularly in we see fit.
take the difficult decision to reduce safety procedures. The programmes include In the first phase of recovery, hotel
response to the pandemic.
payroll costs, restructure our operations updates to operating procedures, training room demand is likely to continue to
to ensure they were fit for purpose, and programmes, social distancing protocols, be predominately domestic leisure travel
Among other initiatives, our team
align them to guest demand for the enhanced and high frequency cleaning with as local lockdown measures are gradually
members focused on how we could
short and medium term. As a result, we disinfectant and sanitising chemicals, with a eased. In phase two, as a further easing
provide service, resources and stewardship
significantly restructured our hotel and greater focus on high touch areas, improved of global measures occurs, we anticipate
to those in our community who were most
corporate and regional workforces. air circulation and air purification and an increase in international travel and
in need. We continued our partnership
sanitising stations to name but a few. the gradual return of corporate business
with Oasis Academy on London’s South
2020 was a difficult year for everyone
Bank to provide fresh delivered meals to from small and medium sized domestic Boris Ivesha
and we are proud of the way our teams The Group also implemented a new organisations, and medium scale meetings President &
underprivileged school children as well
responded and adapted to the ever- 20-step protocol for hotels and a 10-step and events. The third phase will be the
changing market dynamics. On behalf protocol for meeting and events operations
as those most in need within the local Chief Executive Officer
community, by cooking, preparing and return to normal and stabilised trading
of the Board, I would like to thank both in partnership with Radisson Hotel Group environments, where large scale,
delivering meals from Park Plaza
present and past team members for their and SGS, a leading inspection, verification, international events are permitted, such
Westminster Bridge London.
commitment, professionalism and hard work testing and certification company. All our as sporting events, large scale meetings
throughout these unprecedented times. Park Plaza and art’otel hotels have received and events and travel by international
In Croatia, our teams prepared packed
SGS accreditation. and large corporates.
lunches for Pula General Hospital
Supporting the safety of our guests personnel, and provided equipment
Our dedicated team members are at We understand the important role that
and hands on support for local partners,
the forefront of creating memorable technology plays in our guests’ overall
including those working in the hospital.
experiences to all our guests, underpinned experience. The roll out of initiatives
by our high quality and well-invested such as Contactless Services were
portfolio of properties. accelerated as we adapted our service
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MARKET OVERVIE W
A N I NTE R N ATI O N AL
H OSPITALIT Y R E AL E S TATE G ROUP
I N A CH A N G I N G CLI M ATE
1 2 3 4 5 6
Domestic and regional Digitalisation is Younger age Health and Safety Supporting our Sustainability and
city breaks and making things easier demographics protocols and communities climate change
staycations accreditation part of
the decision-making
As a result of travel restrictions, quarantine The pandemic has accelerated digital Another emerging trend experienced Health and safety measures have become With the pandemic impacting many Maintaining an exacting watch over the
measures and varying infection rates by transformation across many sectors, by hospitality is the younger guest a much more important factor in travel sectors, from retail, to health care, from ecosystem in which we operate is an
country, consumers have favoured including hospitality. Many consumers demographics of travellers. With the buying decisions. Consumers want to hospitality and travel to the arts and integral element of our business model.
domestic travel and regional travel over want to minimise contact and interactions health risks for this group less significant be reassured that travel providers and culture sector, people have really
international travel. Domestic travel has and self-manage and personalise their stay. than older generations, access to hospitality have taken all necessary gained a real appreciation for their local We build, develop and create experiences
grown substantially and is expected to discretionary spend and the desire for precautions, ensuring their safety and communities. There have been countless throughout our properties. Whether in our
remain strong whilst countries manage We have also brought forward many unique experiences, guest demographics wellbeing. This is where larger hotel great initiatives which were introduced to capacity as an operator, owner-operator,
through the pandemic and roll out their of our planned initiatives and have have changed considerably, at least for the groups and brands may have an edge over support local companies, organisations, or owner-operator and developer of our
vaccination programmes. Consumers have developed and launched Contactless short term. More mature travellers and independent operations, due to significant charity and volunteer work and to simply properties, we are empowered to create a
embraced travelling by car and trains, Services across our property portfolio. retirees are expected to return once amount of time and funds required for be nice neighbours and look out for profitable business which positively impacts
versus flying. Contactless Services is a full suite of the vaccination programmes are research, planning, implementation and one another. the world around us. We are uniquely
technology solutions, aimed to reduce more advanced. constant monitoring and evolution. positioned when it comes to integrating
At PPHE Hotel Group, we are fortunate guest and team member interactions Our Responsible Business programme sustainability into our business, starting
that the domestic and surrounding markets and provide a 24/7 service to our guests We have also experienced a younger We have always had very high health, is designed around three pillars: People, from the point of development all the way
were already our strongest markets for our to personalise and manage their stays. than usual guest profile and have tailored safety and security standards and Planet and Places and our community to day-to-day operations. This, in turn,
properties in the UK, the Netherlands Our current offering includes: Online some of our procedures, payment types protocols, ensuring we provide safe and focused activities are considered part enables us to deliver long-term value for all
and Germany. For example, in July and check-in, contactless payments, guest and our messaging, communications clean places to stay for our guests and work of the Places pillar. Our properties are our stakeholders and long-term profitability.
August 2020, when lockdowns and travel messaging with our guest services teams, and promotions accordingly. Additionally, at for our team members. However, in typically located in the heart of city
restrictions were eased, domestic travel live chat with our reservations teams, we have also introduced additional response to the pandemic we developed centres or in resort locations in Croatia 2020 saw the completion of various
accounted for almost 90% of room revenue online ordering of food and drink and a family rooms and rooms for friends extensive new protocols and measures, and each has played its own role during investment projects aimed at improving
in the UK, 76% in Germany and in the bespoke Services App which integrates travelling together. which have been externally accredited by the pandemic. Our support activities have our energy performance, reducing water
Netherlands 84% of room revenue was all solutions. In 2021 we are planning to SGS – the world’s leading company in this included for example providing shelter to usage, waste and resource consumption
either domestic or from bordering countries. introduce online check out, self check area. Our Reassuring Moments by Park victims of the earthquake in Croatia, to and supporting biodiversity. Amongst them
Our properties are typically located in very in and more. Plaza programme has been developed by accommodating key workers, volunteer were new boilers, air-cooling systems,
close proximity to main train stations and in our senior team, working alongside experts charity lunches for Christmas, donating laundry machines, water efficient shower
city centre locations, ensuring easy access, from the NHS, SGS, Radisson Hotel Group food and drinks to underprivileged families heads and more. Our impact was further
nearby parking and in walking distance to and Clifton and this programme ensures and temporary event space for schools. mitigated by a number of operational
the main sights and attractions in our safety and peace of mind from check-in policies and measures, both existing and
markets. Croatia benefits from being to check-out. newly introduced. Several of our properties
predominantly a car destination, with the were also re-certified in accordance with
majority of guests travelling independently internationally recognised standards.
by car from Germany, Italy, Austria, Slovenia
and the Netherlands to name but a few.
For more information, please see
Our Planet section on pages 78–81
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BUSINESS MODEL
OU R OU R B USI NE SS S TR ATEG I C S TR ATEG I C PE R FO R M A N CE THE VALUE W E
PU R P OSE M O DEL AGE N DA PR I O R ITIE S M A N AGE M E NT CR E ATE FO R OUR
S TAK EH OLDER S
Read more – page 6 Read more – pages 28–30 Read more – pages 28–30 Read more – pages 42–43 Read more – pages 68–71
Our purpose Our integrated model has We have a clear strategy to drive Our focused approach will ensure Our KPIs and targets. Team members
Creating valuable memories for driven significant value. growth and long-term value. that we deliver on our strategy. We offer rewarding international
our guests and value for our assets, employment opportunities for our team
people and local communities. members with continuous investment
Property Property Property
4 1
in training programmes.
Continuously drive pipeline projects
Who we are Disciplined, focused capital and assess projects in line with
We are an international hospitality real deployment market demand EPRA NRV
estate group, with a prime property Guests
Creating Deploy capital in projects and new
portfolio consisting of 46 properties stakeholder
We offer memorable hospitality
in operation in six countries, that value
properties meeting our yield profile experiences in vibrant destinations with
transforms an asset’s potential into Optimise the value of the our high quality products and services.
value and profits. existing portfolio Reopen hotels when markets stabilise EPRA EPS
and continue to optimise asset values
What we do
3 2 Extract value from portfolio
through extensions, repositioning and
alternative use of spaces
Investors
We have a clear strategy to drive Extend pipeline by securing Our shareholders benefit from
growth and create long‑term value
to fund further growth
properties with joint venture partners
Net investment yield the attractive industry dynamics
while recognising and developing and further targeting management of the markets in which we operate
opportunities to help our assets reach
their full potential. We delight our guests
every day, through engaging service and
1
We purchase
e typically acquire properties
W
Pursue growth opportunities
to drive long-term value
agreements
Pursue future growth across different Net return on
as well as our flexible business
model, developments and operating
skills, in the form of progressive
quality products in inviting places. which we believe have significant geographies, market segments shareholder capital dividend payments.
upside potential and brands
Continue to diversify our asset
How we do it portfolio in different segments
Operations Operations Local communities
2
By valuing our people, being led of the hospitality industry
by an entrepreneurial Executive
We care about our neighbourhoods and
We develop Align and further develop our
Leadership Team and through investing organisational structures in line with EBITDA and make positive contributions to our local
We (re)develop and redesign our acquired communities and the people who work
in our portfolio, opportunities with Operations demand and market conditions EBITDA margin
assets, drawing on the skills of our
upside potential and local communities. experienced senior management team,
and/or live there through fundraising
with specialists in every relevant discipline Consistently deliver the refreshed Develop a high performing culture, activities, employment opportunities,
intended guest experience across where engaged teams are empowered volunteering and local resourcing
our properties to create valuable memories for our RevPAR partnerships and charities.
3 We brand properties guests and value for our assets
Key sources of value and improve operating Improve the overall guest experience
performance through creating valuable memories
Maintain high operating margins Affiliates
– Prime property portfolio We brand properties and strive for Employee engagement Our partnership with Radisson Hotel
operational excellence, creating significant Focus on total revenue generation with
value at every point in the value chain solid profit conversion, benefiting from Group gives us access to global
the new Group operating structure distribution systems, powerful online
– In-house management Leverage our scale and inter- and mobile platforms and global sales,
platform regional synergies Guest Rating Score (GRSTM) marketing and buying power.
4
Maintain and continue to evolve our
We (re)finance to fund
Reassuring Moments programme
further investments
(COVID-19 health & safety protocols)
Through refinancing our properties, we are
– Our people Further investment in art’otel brand in for guests and team members,
able to release capital for new investments,
preparation for new openings and including innovative technologies,
Health & Safety Suppliers
enabling the further growth of our Group
future pipeline testing and Contactless Services assessment scores As an owner/operator, long-term
sustainability and ethical operations
– Multi-brand approach are high on our agenda including
supply chain management and the
Underpinned by our people, values and culture development of long-term relationships
with strategic partners, many of whom
– International network are local.
The Group’s leadership culture is one of connecting,
inspiring, innovating and empowering, and we foster
– Financial strength an environment based on:
Trust Respect Teamwork Enthusiasm Commitment Care
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