THE VALUE WE CREATE - PPHE Hotel Group

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THE VALUE WE CREATE - PPHE Hotel Group
A N N UA L R E P O R T
   A N D AC C O U N T S 2 0 19

T H E VA LU E
W E C R E AT E
THE VALUE WE CREATE - PPHE Hotel Group
INVES TMENT                        OUR
                                                         PROPOSITION                        PUR POSE
                                                         Asset value growth                 Creating valuable memories for
                                                         We develop our own assets and
                                                         have grown our EPRA NAV per        our guests and value for our assets,
                                                         share by 300% over the past        people and local communities.
                                                         decade. EPRA NAV per share
                                                         at 31 December 2019 was £25.46
                                                                                            WHO WE ARE
                                                         Operating earnings
      PAGE 4              PAGE 8           PAGE 10       Adjusted EPRA earnings per share   We are an international hospitality group
     About us           Chairman’s       30 years of     for the 12 months to 31 December
                                                                                            with a strong prime real estate portfolio
                                                         2019 at 128 pence
                        statement     PPHE Hotel Group                                      consisting of 45 properties under operation
                                                         Healthy leverage                   in five countries, that transforms an asset’s
                                                         Net bank debt leverage ratio
                                                         of 29.4% as at 31 December 2019    potential into value and profits.
                                                         and our growth since IPO has
                                                         been funded without diluting
                                                                                            WHAT WE DO
                        THE
                                                         shareholders

                                                         Progressive dividend policy        We have a clear strategy to drive

                       VA LU E
                                                         Dividend has grown with a 16.6%    growth and create long‑term value while
                                                         CAGR over the past five years
                                                         (excluding special dividend of
                                                                                            recognising and developing opportunities

                         WE
                                                         £1 per share in 2016). The total   to help our assets reach their full potential.
                                                         ordinary dividend for the year
                                                         ended 31 December 2019 is
                                                                                            We delight our guests every day, through
                                                                                            engaging service and quality products
                      C R E AT E
                                                         37 pence per share, representing
                                                         a year-on-year growth of 5.7%      in inviting places.
                                                         Attractive pipeline
     PAGE 12                               PAGE 2 2      Attractive development pipeline    HOW WE DO IT
                                                         in Hoxton London, New York City,
    President &                           Driving        Belgrade and Zagreb                By valuing our people, being led by an
 Chief Executive                       organic growth
Officer’s statement                                                                         entrepreneurial Board and through investing
                                                                                            in our portfolio, opportunities with upside
                                                                                            potential and local communities.

     PAGE 24             PAGE 28           PAGE 3 2
    Holmes             Arena Kažela        Pipeline
  Hotel London          Campsite        for the future
THE VALUE WE CREATE - PPHE Hotel Group
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
                              HIGHLIGHTS                                                                                                              T H E VA L U E W E C R E AT E

£357.7m             £122.9m                                          £40.7m
     TOTAL                       E B ITDA                            N O R M ALI SED
   R E VENUE                                                      PRO FIT B EFO R E TA X

                                                                                                               We create memorable guest
                                       107.3
                                               113.2
                                                          122.9                                        experiences by owning, developing and
                    80.1
                               94.1
                                                                                                       operating hotels and resorts in dynamic,
                                                                                                         vibrant cities and leisure destinations.
                                                                                                            Our properties are managed by
                    2015       2016     2017     2018      2019

                                                                                                          experienced teams living our values
 £1.7bn                    £25.46                                      800+
                                                                                                       every day, creating unique experiences.
   PRO PE R T Y              EPR A N AV                                 PI PELI NE
                             PE R SH A R E                               RO O M S                        We create stakeholder value at every
                                                                                                       step of the value chain as our properties
                                                                                                        provide attractive returns, strong cash
                                                                                                             flow generation and long-term
                                                                                                                  capital appreciation.

 4,700+                    £128.5                                     £103.6               S T R AT E G I C R E P O R T
                                                                                           2
                                                                                           4
                                                                                               Financial highlights
                                                                                               About us: creating value
                                                                                                                                               CO R P O R AT E G OV E R N A N C E
                                                                                                                                               90	Non-Executive Deputy Chairman’s
                                                                                                                                                   Corporate Governance Statement
                                                                                                                                                                                                         135	Consolidated statement of cash flows
                                                                                                                                                                                                         137	Notes to consolidated financial
                                                                                                                                                                                                              statements
                                                                                           6   Strategic canvas                                92 Board of Directors
TE A M MEM B ER S           AVE R AGE                                   R E V PA R         8	Chairman’s statement                             94 Leadership Team                                        A PPE N D I C E S
                           RO O M R ATE                                                    10	30 years of PPHE Hotel Group                    96 Corporate Governance                                   175	Subsidiaries included in the Group
                                                                                           12	President & Chief Executive                     111 Nomination Committee report                           178	Jointly controlled entities
                                                                                               Officer’s statement                             113 Audit Committee report                                178	Current and committed projects
                                                                                           18 Our business model and priorities                116 Directors’ Remuneration report                        179	Glossary
                                                                                           20	The value we create                             122 Directors’ report                                     IBC	Contacts
                                                                                           36 Strategy at a glance
                                                                                           38 Managing risk                                    F I N A N C I A L S TAT E M E N T S
                                                                                           42 Principal risks and uncertainties                128 Independent auditors’ report
                                                                                           47	Viability statement                             131	Consolidated statement
                                                                                           48 Key performance indicators                            of financial position
                                                                                           50 Chief Financial Officer’s review                 132	Consolidated income statement
                                                                                           62	Deputy Chief Executive Officer &                133	Consolidated statement of
                                                                                               Chief Operating Officer introduction                 comprehensive income
                                                                                           64 Business review                                  134	Consolidated statement of changes
                                                                                           73 Stakeholder engagement                                in equity
                                                                                           80 Responsible business

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THE VALUE WE CREATE - PPHE Hotel Group
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
                                                          FINANCIAL HIGHLIGHTS

FI N A N C I A L H I G H L I G H T S

TOTAL REVENUE                                                                                                                     DIVIDEND PER SHARE
£m                                                                                                                                Pence                                                                                                                             37
                                                                                                      341.5               357.7                                                                                                                 35
                                                                                  325.1
                                                          272.5                                                                                                                                                           24
                                                                             3.1%                                                                                                                21 CAGR 16.6%
                                                                    CAGR 1                                                                                                 20
                                   218.7

£357.7m                                2015                 2016                  2017                 2018               2019    37p                                   2015                  2016                   2017                   2018                  2019

EBITDA                                                                                                                            O P E R AT I N G H I G H L I G H T S
£m
                                                                                                                          122.9
                                                                                                      113.2
                                                                         107.3                                                    OCCUPANCY
                                                            94.1 CAGR 11.3%                                                       %
                                                                                                                                                                         84.3                                                                79.4                 80.6
                                       80.1                                                                                                                                                    76.0                   77.3

£122.9m                                2015                 2016                  2017                 2018               2019

NORMALISED PROFIT BEFORE TAX
                                                                                                                                  80.6%                                 2015                  2016                   2017                   2018                  2019

£m
                                                                                                                           40.7
                                                                                                        37.7
                                                                                                                                  AVERAGE ROOM RATE
                                                            31.7                   32.1
                                       29.8
                                                                    CAGR 8.1%                                                     £
                                                                                                                                                                                                                     120.2                 123.1                 128.5
                                                                                                                                                                       109.1                 111.0

£40.7m                                 2015                 2016                  2017                 2018               2019

ADJUSTED EPRA EPS
                                                                                                                                  £128.5                                2015                  2016                   2017                   2018                  2019

Pence
                                                                                                                           128
                                                                                                         115
                                                               97                  104                                            REVPAR
                                         96
                                                                           .3%
                                                                    CAGR 7                                                        £
                                                                                                                                                                                                                                             97.7                103.6
                                                                                                                                                                         92.0                                         92.9
                                                                                                                                                                                               84.4

128p                                   2015                 2016                  2017                 2018               2019

                                                                                                                                  £103.6                                2015                  2016                   2017                   2018                  2019

     Read more – pages 48 and 49

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THE VALUE WE CREATE - PPHE Hotel Group
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
                                                                 A B O U T U S : C R E AT I N G VA L U E

BUSINESS MODEL                                                                                                                                                                                  VALUE SPLIT
                                                                                                                                                                                                BY GEOGRAPHY 1
                                                                                                                                                                                                                                                              HOTELS AND RESORTS
                                                                                                                                                                                                                                                              BY GEOGRAPHY
                                                                                                                                                                                                                                                                                                                        HOTELS AND RESORTS
                                                                                                                                                                                                                                                                                                                        BY OWNERSHIP TYPE
                                                                                                                                                                                                (Excludes managed, operated, leased,                          (Includes franchises, excludes campsites                  (Includes franchises, excludes campsites
At PPHE Hotel Group, we are focused                                                                WE (RE)FINANCE
                                                                                                       TO FUND                                                          WE
                                                                                                                                                                                                franchised and co-owned hotels)                               and pipeline)                                             and pipeline)
on creating value for stakeholders                                                                     FURTHER
                                                                                                    INVESTMENTS
                                                                                                                                                                     PURCHASE

through developing, owning and
operating hospitality real estate
with upside potential.
We own or co-own most of our portfolio and our proven business
                                                                                                                                 Creating
model is centred around delivering asset value appreciation,                                                                   stakeholder
generating attractive operating returns and creating valuable                                                                     value
memories for our guests. We are proud of our track record.
Our experienced senior leadership team identifies and acquires                                                                                                                                            £969m                         £145m                          10 hotels                 8 hotels                           18 hotels               2 hotels
properties which we believe have significant upside potential.                                                                                                                                            United Kingdom                Croatia hotels                 3,681 rooms               1,271 rooms                        6 resorts               242 rooms
We then embark on transforming these assets through (re)                                                                                                                                                                                and resorts                    United Kingdom            Germany                            5,925 rooms             Co-owned
                                                                                                                                                                                                                                                                                                 and Hungary                        Freehold
developing, redesigning and continuously improving operating                                          WE BRAND                                                                                            £297m                         £99m
performance through our in-house management platform, and                                            PROPERTIES                                                                                           The Netherlands               Croatia                        6 hotels                  7 hotels                           6 hotels                5 hotels
                                                                                                                                                                        WE
                                                                                                    AND IMPROVE
                                                                                                                                                                      DEVELOP                                                           campsites                      1,073 rooms               6 resorts                          1,623 rooms             1,010 rooms
in doing so create significant value along every part of the value                                   OPERATING
                                                                                                                                                                                                                                                                       The Netherlands           2,775 rooms                        Long leasehold          Managed,
                                                                                                    PERFORMANCE
chain. Through refinancing our properties, we are able to release                                                                                                                                         £94m                          £99m                                                     Croatia                                                    operated,
capital for new investments, enabling further                                                                                                                                                             Germany                       Assets under                                                                                                        leased or
                                                                                                                                                                                                          and Hungary                   development2                                                                                                        franchised
sustainable growth.
     Read more – page 18 and 19                                                                                                                                                                  1 The fair values were determined on the basis of independent external valuations prepared in the summer of 2019.
                                                                                                                                                                                                 2 Includes the development sites in Hoxton, London and nearby Waterloo Station.

PR IME LOC ATIONS                                                                                                                                                                             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
Well-maintained, prime assets, with proximity to major demand generators within leading capital cities, urban markets                                                                         and perpetual licence with Radisson Hotel Group to operate the upper upscale Park Plaza® brand in Europe, the Middle East and Africa
and resort destinations.                                                                                                                                                                      which complements our wholly-owned upper upscale lifestyle brand, art’otel® and Arena Hotels & Apartments® and Arena Campsites®
                                                                                                                                                                                              brands which are operated by Arena Hospitality Group, our Croatian listed subsidiary.

                                                                                                                                                                                                                                                                                                                                      inspiring service, stylish
                                                                                                                                                                                                                                                              Central reservation                                                     guestrooms and versatile meeting
                                                                                                                                                                                                                                                              and distribution                                                        facilities, which are complemented
                                                                                                                                                                                                                                                              system                                                                  by award-winning restaurants and
                                                                                                                                                                                                                                                                                                                                      bars. Our portfolio of vibrant
                                                                                                                                                                                                 Radisson Hotel Group                                                                     Park Plaza                                  city-centre hotels and tranquil
                                                                                                                                                                                                 Radisson Hotel Group has seven                                                           Park Plaza is an upscale and                beachside resorts in Croatia
                                                                                                                                                                                                                                                               owerful online and
                                                                                                                                                                                                                                                              P                                                                       already presents a wide choice
                                                                                                                                                                                                 distinctive hotel brands with more                           mobile platforms            upper upscale contemporary
                                                                                                                                                                                                 than 1,400 hotels in operation and                                                       hotel brand featuring individually          of locations and accommodation,
Park Plaza Westminster Bridge London             Park Plaza London Waterloo                    Park Plaza London Riverbank                 Holmes Hotel London                                   development in destinations across                                                       designed hotels in vibrant                  and we are committed, with our
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,      the globe. Its portfolio of hotel                                                        city-centre locations and select            partner Radisson Hotel Group,
                                                                                               American Embassy                            Marylebone Station and Baker Street Station           brands includes: Radisson                                    Radisson RewardsTM         resort destinations. The Park Plaza         to bringing Park Plaza to even
1,019 rooms                                      494 rooms                                     646 rooms                                   118 rooms                                             Collection™, Radisson Blu®,                                   programme with             brand is renowned for creating              more locations.
                                                                                                                                                                                                 Radisson®, Radisson RED®, Park                                24 million members         memorable moments through
                                                                                                                                                                                                 Plaza® and Park Inn® by Radisson®.
                                                                                                                                                                                                 Country Inn & Suites by Radisson.
                                                                                                                                                                                                 Radisson Hotel Group is part of Jin                          Global sales,
                                                                                                                                                                                                 Jiang and together they form the                             marketing
                                                                                                                                                                                                 world’s second largest hotel group                           and buying power
                                                                                                                                                                                                 in terms of rooms.

                                                                                                                                                                                                                                                Art and culture are ingrained                                                         Arena Hotels & Apartments
Park Plaza Victoria Amsterdam                    art’otel amsterdam                            Park Plaza Nuremberg                        art’otel cologne                                                                                     in every aspect of the art’otel®                                                      A collection of hotels and
Opposite Amsterdam Central Station               Opposite Amsterdam Central Station            Opposite Nuremberg’s main railway station   Located in the attractive Rheinauhafen area                                                          brand. Knowledgeable and                                                              self-catering apartment
298 rooms                                        107 rooms                                     177 rooms                                   218 rooms                                                                                            passionate team members                                                               complexes offering relaxed
                                                                                                                                                                                                                                                share their enthusiasm while                                                          and comfortable accommodation
                                                                                                                                                                                                                                                simultaneously delivering                                                             within beachfront locations across
                                                                                                                                                                                                 art’otel                                       world-class service, creating             Arena Hospitality Group                     the historical settings of Pula and
                                                                                                                                                                                                 art’otel is a contemporary collection          a superior guest experience.              Our subsidiary Arena Hospitality            Medulin in Istria, Croatia.
                                                                                                                                                                                                 of upper upscale lifestyle hotels that                                                   Group (Arena) is a leading
                                                                                                                                                                                                 fuse exceptional architectural style           art’otel has three exciting               dynamic hospitality group in                Arena Campsites
                                                                                                                                                                                                 with art-inspired interiors. Located in        new projects in the development           Central and Eastern Europe.                 Situated close to the historical
                                                                                                                                                                                                 cosmopolitan centres across Europe,            pipeline. Two are in London, with                                                     towns of Pula and Medulin, each
                                                                                                                                                                                                 each hotel displays a collection of            one hotel set to open in Hoxton and                                                   campsite provides a relaxed
                                                                                                                                                                                                 original works designed or acquired            one as part of the Battersea Power                                                    environment from which guests
                                                                                                                                                                                                 specifically for each art’otel, with           Station development, and a third in                                                   can experience Istria’s areas of
Park Plaza Amsterdam Airport                     Park Plaza Belvedere Medulin                  Park Plaza Histria Pula                     Arena One 99                                          each property offering a unique art            New York City, USA.                                                                   natural beauty and enjoy outdoor
Close proximity to Amsterdam Schiphol Airport    Iconic leisure and sports hotel               Dramatic beachfront setting                 Croatia’s first all-glamping offering                 gallery. art’otel has created a niche for                                                                                            activities from April to October.
342 rooms                                        427 rooms                                     369 rooms                                   193 luxury tents                                      itself in the hotel world, differentiating                                                                                           Each campsite provides a distinctive
                                                                                                                                                                                                 it from traditional hotels.                                                                                                          offering, from traditional camping
                                                                                                                                                                                                                                                                                                                                      to a luxury ’glamping’ offer.
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THE VALUE WE CREATE - PPHE Hotel Group
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
                                                         S T R AT E G I C C A N VA S

OPER ATING ACROSS THE VALUE CHAIN
PPHE Hotel Group operates a highly             control all aspects of its guest offering,
differentiated business model to peers,        whilst retaining all of the economic upside.
who are increasingly focused on either the     By contrast those offering either an asset
property or operational aspects of the         light or asset heavy model relinquish some
hotel value chain. With in-house expertise     control of the guest experience as well as
across the value chain, PPHE is able to        pay away fees to third parties.

 0%                                                                                                                                                                                                                                                                                                    100%

                                                           Site                Development/                   Hotel               Hotel                          Hotel                          Brand                         Asset                            Extracting                 Reinvestment/
                                                        acquisition            repositioning                ownership           operation                     management                                                   management                            value                    cash recycling

   TOTA L VA LU E CH A I N

                                                                                                           Independence
                                                                                                                                                                                                                           Optimise timing                  (Re) finance with                 Re-invest
                                                     Secure best locations and control over                 and control,                          Ensure consistency of brand standards and guest service
   B US I N E SS M O D E L B E N E FI T S                                                                                                                                                                                   to refurbish                    asset backing to              extracted cash to
                                                         all aspects of the hotel design                     no conflict                                levels are maintained throughout the estate
                                                                                                                                                                                                                           and reposition                     extract value             enable further growth
                                                                                                             of interest

                                                                                                                               Net operating
   S H A R E H O LD E R                                 Value gains through development                  Rental income and       profit from
                                                                                                                                                           Fee-based income as a % of revenue and profit                      Value gains                          Source for funding future growth
   VA LU E PR O P OS I T I O N                                  and repositioning                        value appreciation     rooms, food
                                                                                                                                & beverage

   T Y PI C A L A SSE T- LI G H T
   M O D E L A D O P TE D BY                                                                                                                                    Management             Franchise agreement
   L A R G E H OTE L G R O U P S                                                                                                Asset operated               agreement to earn           (or the usage of a
                                                                                                                              under operational            a fee based income as       brand, income as a %
                                                                                                                               lease agreement                 a % of revenue                of revenue)
                                                                                                                                                                 and profit

   T Y PI C A L A SSE T-
   H E AV Y M O D E L
                                                                                                            Asset owned       Asset owned but
                                                                                                            and leased to       managed by                                                                                                                     Sale of asset
                                                                                                             third party         third party

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THE VALUE WE CREATE - PPHE Hotel Group
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
                         C H A I R M A N ’ S S TAT E M E N T

   E L I PA P O U C H A D O                                    Thirty years in the making                       We own most of the properties we operate,             track record as a Non-Executive Director                  Current trading and outlook
                                                               Thirty years ago the foundations of the          which gives us greater control over our               with companies including FTSE 250                         Trading in 2020 has started well and in
         CHAIRMAN                                                                                               investment strategy, the quality of our               constituent Vistry Group.
                                                               Company were formed with the opening                                                                                                                             line with the Board’s expectations, as we
                                                               of our first hotel in Eindhoven, the             products and our operations.                                                                                    continue to capitalise on recent investment
                                                                                                                                                                      Following appointment and Nigel Jones
                                                               Netherlands in 1989. It is a proud moment for    Control enables us to make swift investment           retiring, following the forthcoming Annual                programmes to reposition properties in

T H E VA LU E
                                                               me personally and a credit to the expertise      decisions and seize opportunities as they arise,      General Meeting, the Board will include three             the UK, the Netherlands and Croatia. In the
                                                               and dedication of the entire team that the       as well as capturing all of the economic upside.      independent Non-Executive Directors.                      coming year, we will continue to ensure we
                                                               Group has consistently grown over the last       By regularly investing in our existing diverse                                                                  have an attractive and well-invested estate
                                                               three decades. Today, the Group has an                                                                 As previously announced, Kevin McAuliffe’s                which delivers memorable experiences for
                                                                                                                portfolio we maintain a high quality estate

W E C R E AT E
                                                               international property portfolio of 45 hotels,                                                         membership of the Audit Committee came                    our guests and returns for our shareholders.
                                                                                                                which increases the value of our portfolio
                                                               resorts and campsites in operation,                                                                    to an end at the Annual General Meeting in
                                                                                                                of assets, inspires our team members, and                                                                       We remain vigilant to ongoing macro and
                                                               predominately trading under the brands                                                                 May 2019 and in November 2019 he stepped
                                                                                                                enables us to delight our guests every day                                                                      geopolitical uncertainty and its potential
                                                               of Park Plaza and art’otel, as well as an                                                              down from the Remuneration Committee
                                                                                                                with excellent guest experiences.                                                                               impact on travel patterns, however the
                                                               exciting £300 million plus development                                                                 after a transitional period.
                                                                                                                                                                                                                                Board believe that recent investments
                                                               pipeline for future growth.                      Responsible Business                                  Improving our transparency and reporting                  across the estate and a balanced
                                                                                                                Our sustainable business strategy                     standards is part of our journey as a
                                                               The quality of our property portfolio was                                                                                                                        £300 million plus development pipeline
                                                                                                                is focused on our people, our places and              Company. We are actively working on
                                                               confirmed in an independent valuation by                                                                                                                         spanning the UK, Europe and the US,
                                                                                                                our planet. Since launching our Responsible           creating greater transparency in our
                                                               Savills and Zagreb Nekretnine Ltd (ZANE)                                                                                                                         combined with a strong balance sheet
                                                                                                                Business programme two years ago, we have             governance activities, as this report
                                                               in summer 2019 at £1.7 billion, translating to                                                                                                                   means the Group is well positioned for
                                                                                                                been embedding this ethos into our culture            will illuminate.
                                                               NAV per share of £25.46.                                                                                                                                         future growth. We will also continue to
                                                                                                                and aligning it to our business strategy. We aim
                                                                                                                                                                            For more see governance page 90                     consider asset acquisitions that align with
                                                               Delivering for shareholders                      to have a target-based sustainable approach
                                                                                                                                                                                                                                our strategic aims and deliver our target
                                                               In 2019, we continued to make financial          and have embed this at all levels across
                                                                                                                                                                      Diversity                                                 returns on investment.
                                                               progress with like-for-like revenue and          the Group.
                                                                                                                                                                      The Board is committed to promoting
                                                               EBITDA up 5.2% and 3.4% respectively.                                                                                                                            I would like to take this opportunity to
                                                                                                                We understand that the way we do                      diversity. As this was our first year in the
                                                                                                                                                                                                                                thank the members of the Board for their
                                                               We have continued to deliver strong              business can have a significant impact                FTSE 250, we now take part in the Hampton-
                                                                                                                                                                                                                                guidance. Additionally, I would like to thank
                                                               returns for shareholders, achieving a Total      on our communities and the world around               Alexander Review. Our leadership, which
                                                                                                                                                                                                                                all our team members for their hard work
                                                               Shareholder Return of 13.8% for the year.1       us and that all of us have an increased               includes the direct reports to the Chief
                                                                                                                                                                                                                                and commitment during 2019.
                                                                                                                level of responsibility in this area.                 Executive Officer and their direct reports
                                                               A further important milestone in the
                                                                                                                In recognition of this, we have assembled             currently consists of 48% women and 52%                   I am confident that PPHE Hotel Group can
                                                               Company’s evolution was reached in 2019 with
                                                                                                                a dedicated team to review our activities             men. This is well ahead of the 33% target                 continue to create and deliver value for all
                                                               the Group’s inclusion in the FTSE 250 Index.
                                                                                                                and refine our Environment, Social and                and 27.9% achieved by the FTSE 250.                       our stakeholders in 2020 and beyond.
                                                               As we continue to grow in size and stature, we
                                                                                                                Governance (ESG) frameworks. We have set
                                                               recognise the need to further strengthen our
                                                                                                                up a programme to appoint a Responsible               Dividend
                                                               financial reporting, corporate communications                                                          The Board is proposing a final dividend
                                                                                                                Business Ambassador from every property
                                                               and our governance, whilst staying true to our                                                         payment of 20 pence per share, bringing
                                                                                                                in our portfolio to promote and enhance
                                                               entrepreneurial roots.                                                                                 the total ordinary dividend for the year ended
                                                                                                                our efforts across our estate.
                                                                                                                                                                      31 December 2019 to 37 pence per share,
                                                               Our approach                                     Governance in action                                  representing a year-on-year increase of 5.7%.             E L I PA P O U C H A D O
                                                               As an owner operator with extensive                                                                                                                              CHAIRMAN
                                                                                                                High standards of governance are
                                                               development expertise we take a different                                                              This is in line with our progressive
                                                                                                                essential to creating long-term value for all
                                                               approach to many of the large global hotel                                                             dividend policy and reflects the Board’s
                                                                                                                of our stakeholders. We are committed to
                                                               companies, by choosing to operate across                                                               confidence in the Group’s operations,
                                                                                                                upscaling our corporate governance and
                                                               the whole value chain.                                                                                 assets and prospects.
                                                                                                                sustainability programmes and recognise
                                                               Our key sources of value emanate from our        their increasing importance to our business.
                                                               real estate and hospitality expertise, our       As part of our ongoing succession planning
                                                               access to global brands and distribution         programme we promoted two senior
                                                               systems, our passionate and highly-trained       company executives into key leadership
                                                               people and our proven financial strength,        positions, while also refreshing the Board
                                                               combined with our ability to secure capital.     with the appointment of two independent                 SEC TI O N 172
                                                                                                                Non-Executive Directors in September 2019               In accordance with the UK Corporate Governance          Information about our stakeholders and on how
                                                               As established hospitality operators we are                                                              Code 2018, which incorporates section 172 of the        the Board has discharged its duties having
                                                               always aiming for operational excellence.        and February 2020 respectively.
                                                                                                                                                                        UK Companies Act 2006, and as a matter of               regard to the provisions of the UK Corporate
                                                               We are continuously seeking out and              We were delighted to welcome Ken Bradley to             good governance, in our decision-making the             Governance Code 2018 is available as follows:
                                                               evaluating new property opportunities,           the Board as an independent Non-Executive               Board considers the interests of the Group’s            •   Team Members
                                                               as well as refurbishing and repositioning        Director on 4 September 2019. Ken, who is a             employees and other stakeholders and                    •   Investors
                                                                                                                                                                        understands the importance of taking into               •   Guests
                                                               our existing assets. With our expertise in       former Chief Country Officer of both RBSI               account their views and considers the impact            •   Local Communities
                                                               development we are able to marry this with       and Barclays Bank, is a member of the Audit             of the Company’s activities on the community,           •   Affiliates
                                                               the aspirations to create new opportunities.     Committee, the Nomination Committee and                 environment and the Group’s reputation. In its          •   Suppliers
                                                               Our owner operator business model enables        the Remuneration Committee.                             decision-making, the Board also considers what
                                                                                                                                                                        is most likely to promote the success of the                 Read more about – How the Board is kept
                                                               us to enhance value through driving the
                                                                                                                We have listened to the views of shareholders           Company for its stakeholders in the long term.               informed of stakeholder views and
                                                               business and gives us greater scope to
                                                                                                                and delivered on our commitment to appoint                                                                           consideration of views of stakeholders in
                                                               maintain all our assets to the level required                                                                                                                         decision-making on pages 73 to 79
                                                                                                                a further independent Non-Executive
                                                               to achieve our aspirations of maximising
                                                                                                                Director. Post the year end, Nigel Keen has                                                                          Read more about – How we manage our
                                                               operational revenue. Furthermore, we have
                                                                                                                been appointed to the role. Nigel has over                                                                           emerging and principal risks on pages 38
                                                               the asset backing to refinance and recycle                                                                                                                            to 41
                                                                                                                30 years’ property expertise with leading
                                                               capital to fund further investments
                                                                                                                blue chip companies and an established                                                                               Read more about – Corporate
                                                               and facilitate future growth.
                                                                                                                                                                                                                                     governance framework on page 90

                                                               1 Source: Bloomberg TSR for the year ended
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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
                                               3 0 Y E A R S O F P P H E H OT E L G R O U P

CELEB R ATING                                                                  Established Park Plaza                                                        Company name                                                                              Transfer to Premium Listing
30 Y E AR S                                                                    Hotels Ltd and floated                                                        changed to PPHE Hotel                                                                     of London Stock Exchange
                                                                                      on AIM, raising                                                        Group to align with its
                                                                                                                                                                                                                                                       Membership of European Public
                                                                                           £85 million                                                       multi-brand strategy
                                                                                                                                                                                                                                                       Real Estate Association, EPRA
                                                                                        for expansion                                                        First three Park Plaza®
                                                                                                                                                                                                                                                       Completion of seven storey
                                                                                 Acquired worldwide                                                          branded hotels open
                                                                                                                                                                                                                                                       extension and repositioning
                                      Group completes several                   art’otel® brand rights                                                       in Croatia following
                                                                                                                                                                                                                                                       of Park Plaza London Riverbank
                                      development projects in                                                                                                redevelopment
                                                                                                                                                                                                                                                       and full repositioning of Park
                                      central London, opening                                                                                                                                                                                          Plaza Victoria Amsterdam
                                               multiple hotels.
                                                                                                                                                                                                            Acquired controlling                       Launch of Arena One 99 an
                                       Expansion into Germany                                                                                                                                                                                          all-glamping product, the
                                        and Hungary, operating                                                                                                                                              interest in Arena
                                                                                                                                                                                                                                                       first repositioning of one
                                             several Park Plaza®                                                                                                                                            Opening of Park Plaza                      of Arena’s campsites
                                                                                                                   Park Plaza Westminster
                                           hotels and art’otels®                                                                                                                                            Nuremberg developed
 Foundations of the                                                                                                  Bridge London (1,019
                                       Entered into a strategic                                                                                                                                            by the Group
 Company were formed                                                                                             rooms) developed by the
 with the acquisition of its           partnership with Carlson                                                    Group opens, as well as                                                                  Start of multi-year
 first hotel in Eindhoven,          (now Radisson Hotel Group)                                                   new openings in Cologne                                                                    repositioning and
 the Netherlands                       for the Park Plaza® brand                                                          and Amsterdam                                                                     investment programme

1989                                                       1999–2002                                 2007                            2010                2012                                            2016                                      2018

        1993–1995                                                              2003–2006                               2008                  2011                           2013–2015                                      2017                                       2019

                                                                                                                                                                                                                                                                          Inclusion in FTSE 250 and
                                                                                                                                                                                                                                                                          FTSE All Share indices
                                                                                                                                                                                                                                                                          Acquisition of first US
                                                                                                                                                                                                                                                                          site in New York City for
                                                        Iconic Park Plaza London                                                                                                                                                  Secondary purchase
                                                                                                                                              Migrate from                                                                                                                art’otel® development
                                                     Riverbank developed by the                                                                                                                                                   offering in Croatia,
                                                                                                                                              AIM to the Main
                                                     Group as well as openings in                                                                                                                                                 raising €106 mio (€91 mio)              Completed repositioning
                                                                                                                                              Market of the London
                                                      Leeds, Nottingham, Cardiff                                                                                                                                                  for expansion and                       programmes at Holmes Hotel
                                                                                                                                              Stock Exchange
                                                               and other markets                                                                                                                                                  property upgrades                       London, Park Plaza Vondelpark,
                                                                                                                                                                                                                                                                          Amsterdam, Park Plaza Utrecht
                Acquisition of iconic                                                                                                                                                                                             Opening of newly
                                                                                                                                                                                                                                                                          and Arena Kažela Campsite
                Victoria Hotel Amsterdam                                                                                                                                                                                          developed Park Plaza
                and hotel in Utrecht.                                                                                                                                                                                             London Waterloo and                     Park Plaza UK awarded ‘Large
                Group’s hotels start using                                                                                                                                                                                        Park Plaza London                       Hotel Group of the Year’
                Park Plaza® brand                                                                                                                                                                                                 Park Royal                              accolade by the AA

                                                                                                 Enters resort segment of
                                                                                                 the hospitality market by
                                                                                             acquiring a minority interest                                                               Opening of new hotels
                                                                                                      in and management                                                                  including the first art’otel
                                                                                                   agreement for (what is                                                                developed by the Group
                                                                                                   known today as) Arena                                                                 (the 5-star art’otel
                                                                                                      Hospitality Group, a                                                               Amsterdam) and a fourth
                                                                                             21-strong property portfolio                                                                Park Plaza hotel in Croatia

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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
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

              BORIS IVESHA                                                              Our 2019 financial results coupled                    of a 115-room hotel in Zagreb, Croatia.                    The annual independent revaluation exercise
                                                                                        with our strategic progress demonstrates              These agreements are in line with Arena’s                  on our property assets was carried out by
   PRESIDENT & CHIEF E XECUTIVE OFFICER                                                 the strength of our business model, the               strategy to expand its presence in the                     Savills and ZANE and valued our portfolio
                                                                                        appeal of our hospitality real estate                 Central Eastern European region and                        at £1.7 billion (as at 30 June 2019), an increase
                                                                                        portfolio and our rigorous focus                      reduce seasonal exposure.                                  of 5% year-on-year. EPRA NAV per share

        C R E AT I N G
                                                                                        on performance, in what has been                      In London, the Group acquired a freehold
                                                                                                                                                                                                         increased by 3.6% to £25.46 per share (as
                                                                                        a year characterised by high levels                   site on the South Bank, with a view to
                                                                                                                                                                                                         at 31 December 2019), adversely impacted
                                                                                        of geopolitical uncertainty.                          developing a hotel (subject to planning).
                                                                                                                                                                                                         by the strengthening of Sterling.
                                                                                                                                                                                                         Adjusted EPRA earnings per share
                                                                                        2019 at a glance

        VA LUA B L E
                                                                                                                                              Further details on our progress are set out                were up 11.7% to 128 pence.
                                                                                        Strategic progress                                    in the Business Review on pages 64 to 72,
                                                                                                                                                                                                         Full details of the financial performance
                                                                                        We demonstrated our real estate expertise,            and additional details of our investment
                                                                                                                                                                                                         are set out in the Financial Review on
                                                                                        completing over £100 million of asset                 programmes and development projects

        MEMORIES
                                                                                                                                                                                                         pages 50 to 61.
                                                                                        upgrade projects over the last three years.           can be found on pages 32 to 35.
                                                                                        The significant repositioning of Holmes Hotel                                                                    Key corporate milestone
                                                                                        London (formerly known as Park Plaza
                                                                                                                                              Financial delivery
                                                                                                                                              It is testament to the team that we delivered              We achieved a key goal with the Company’s
                                                                                        Sherlock Holmes London), Park Plaza                                                                              inclusion in the FTSE 250 and FTSE All
                                                                                                                                              another year of growth in revenue and profit.
                                                                                        Vondelpark, Amsterdam and Park Plaza                                                                             Share Indices. This marked a significant
                                                                                        Utrecht were completed and relaunched.                The Group delivered like-for-like revenue                  milestone in our corporate journey, proving
                                                                                        In Croatia, we finished the first phase of our        up 5.2% to £355.8 million, like-for-like                   the success of our recent corporate activity,
                                                                                        plans to transform Arena Kažela Campsite              EBITDA growth of 3.4% to £117.4 million,                   which has been focused on providing the
                                                                                        into an upscale camping offer.                        and maintained like-for-like EBITDA margin                 Group with the appropriate platform to
                                                                                                                                              at 33.0%. The ordinary dividend for the full               engage with a wider potential investor
                                                                                        These projects have all been completed,
                                                                                                                                              year increasing from 5.7% to 37p per share.                base and improve share liquidity.
                                                                                        and the rooms are now contributing to
                                                                                        Group revenue.                                        This performance reflected an increase                     The foundations of our success
                                                                                                                                              in our key operating metrics, with RevPAR
                                                                                        As trading in these reopened properties                                                                          Controlling the value chain
                                                                                                                                              growth of 6.0% to £103.6, driven by a
                                                                                        continues to build, we are pleased with                                                                          The Group’s strength is centred on our
                                                                                                                                              120 bps improvement in occupancy
                                                                                        their performance.                                                                                               expertise in both real estate development
                                                                                                                                              and 4.4% increase in average room rate.
                                                                                        We have also expanded our pipeline of new                                                                        and hospitality operations, built up over
                                                                                                                                              RevPAR growth was achieved in certain
                                                                                        hotels and projects, extending our footprint                                                                     the last 30 years. This dual approach
                                                                                                                                              regions, with the United Kingdom and
                                                                                        into the USA and Serbia, and added to our                                                                        gives us the flexibility and control to
                                                                                                                                              the Netherlands the stand-out performers,
                                                                                        strong presence in London. The site in                                                                           invest in our hospitality operation and
                                                                                                                                              achieving growth of 7.4% and 2.5%
                                                                                        New York City has been acquired with the                                                                         manage our assets to create maximum
                                                                                                                                              respectively. Both the United Kingdom
                                                                                        intention of developing an art’otel branded                                                                      value for all our stakeholders; team
                                                                                                                                              and the Netherlands benefited from
                                                                                        hotel. Our Croatian subsidiary, Arena                                                                            members, investors, guests, local
                                                                                                                                              our 2017 and 2018 openings and the
                                                                                        Hospitality Group (‘Arena’) entered into an                                                                      communities, affiliates and suppliers.
                                                                                                                                              completion of repositioning projects.
                                                                                        agreement to acquire an 88-room, 4-star                                                                          Property expertise
                                                                                        hotel in Belgrade, Serbia and, post the                                                                          In addition to the considerable property
                                                                                        period end, Arena entered into a 45-year                                                                         and development expertise on the Board,
                                                                                        lease for the development and operation                                                                          we have a dedicated in-house capability
                                                                                                                                                                                                         spanning development and technical
                                                                                                                                                                                                         services. We have the in-house expertise
                                                                                                                                                                                                         to take projects from conception through
                                                                                                                                                                                                         to operation.
                                                                                                                                                                            Park Plaza London Waterloo   The team takes a disciplined and focused
                                                                                                                                                                                                         approach to asset management and identify
                                                                                                                                                                                                         opportunities to deploy capital to optimise
                                                                                                                                                                                                         the value in our existing portfolio, acquire
                                                                                                                                                                                                         further assets to drive growth and, where
                                                                                                                                                                                                         appropriate, extract value to fund longer-
                                                                                                                                                                                                         term sustainable growth.
                                                                                                                                                                                                         In our hospitality operations, we
                                                                                                                                                                                                         are focused on achieving operational
                                                                                                                                                                                                         excellence. We are continually trying to
                                                                                                                                                                                                         identify better ways of working, while also
                                                                                                                                                                                                         looking at how we can raise the already
                                                                                                                                                                                                         high levels of service for our guests.
                                                                                                                                                                                                         Our high Guest Rating Scores and
                                                                                                                                                                                                         healthy profit margins prove that the
                                                                                                                                                                                                         two are interrelated.

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THE VALUE WE CREATE - PPHE Hotel Group
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
           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

                                                                                                             Holmes Hotel
                                                                                                             London
                                                                                                                                                Our people and values                                      Looking after our team                                    In addition to our Croatian region, we have
                                                                                                                                                Our people and our values of Trust,                        We aim to create an open, fun and                         in-sourced housekeeping services at our
                                                                                                                                                Respect, Teamwork, Enthusiasm,                             inclusive working environment where                       UK hotels which has ensured we employ
                                                                                                                                                Commitment and Care are at the heart                       our people feel motivated and empowered.                  the right team members and that our high
                                                                                                                                                of our business success. We foster a high                  Team members are supported in their                       standards of service are maintained at our
                                                                                                                                                performing culture, led by our talented                    professional development and through                      properties. Similar to owning the property
                                                                                                                                                leadership team, in which engaged team                     our bespoke learning and development                      assets, this action was about giving us the
                                                                                                                                                members deliver best in class guest                        platform, you:niversity of which several                  control we need to ensure that the highest
                                                                                                                                                experiences, supported by high quality                     programmes in 2019 won awards and key                     standards are met. Following the success
                                                                                                                                                hotels and resorts.                                        accolades, including Talent Development                   of this strategy, we are reviewing whether
                                                                                                                                                                                                           Team of the Year (Institute of Hospitality)               to extend this approach to housekeeping
                                                                                                                                                We have refreshed our strategic purpose
                                                                                                                                                                                                           and Excellence in Promoting Careers and                   services in our other regions.
                                                                                                                                                to ensure that our strategic objectives and
                                                                                                                                                                                                           Excellence in Learning & Development (HR                  One of the challenges for the wider
                                                                                                                                                business culture are aligned. At the start
                                                                                                                                                                                                           in Hospitality). Our annual team member                   industry is attracting workers into major
                                                                                                                                                of the year we hosted an international
                                                                                                                                                                                                           survey measures the engagement levels                     cities where residential accommodation
                                                                                                                                                leadership summit themed ‘We Are
                                                                                                                                                                                                           of our team members and in 2019, we were                  and travel is costly, such as London.
                                                                                                                                                Creators’, the objective of which was to
                                                                                                                                                                                                           delighted that the engagement index                       To help address this issue, we acquired
                                                                                                                                                present our Company blueprint based
                                                                                                                                                                                                           score for the year was 84.4% (2018: 83.6%).               a property in Chiswick Park (the Old
                                                                                                                                                on our owner/operator business model
                                                                                                                                                to more than 150 senior team members.                      Pressures on the hospitality labour                       Bakery) in summer 2019, which has rooms
                                                                                                                                                We set out how our culture and day-to-day                  market have been well publicised.                         to accommodate about 30 people who
                                                                                                                                                activities need to work together to deliver                Like others operating in the sector,                      then commute to our properties on
                                                                                                                                                our corporate agenda, enhance guest                        having a highly engaged workforce and                     London’s South Bank. We are considering
                                                                                                                                                experience and deliver value to all                        attracting and retaining the right people                 the purchase of further properties to
                                                                                                                                                stakeholders. This Company blueprint                       are key priorities for us and crucial to our              attract and retain the best people.
                                                                                                                                                has been rolled out across three out of                    long-term success. To tackle some of these                On behalf of the Board, I would like to
                                                                                                                                                our four regions, supported by in-country                  challenges, we have progressed several                    thank all our team members for their
                                                                                                                                                training workshops.                                        initiatives, alongside our award-winning                  ongoing hard work and commitment.
                                                                                                                                                                                                           bespoke learning and development
                                                                                                                                                First class leadership team                                programmes, to ensure that we
                                                                                                                                                We have a wealth of talent within the
                                                                                                                                                                                                           can attract and retain the right people.
                                                                                                                                                Group. Our Executive Leadership Team has
                                                                                                                                                decades of experience in the hospitality real

   What we do                          Radisson Hotel Group                                    Through our partnership with Radisson            estate industry, with all of the team rising
                                                                                               Hotel Group, we have benefited, particularly     through the ranks of the Group. They define
                                       partnership – global distribution                                                                        and disseminate the Company’s vision for
                                                                                               over the summer of 2019, from a number of
We identify and acquire                and access to best in class                             technology focused investment programmes         future growth and success.
                                       technology
  properties which we                  Through our exclusive perpetual licence
                                                                                               including the launch of radissonhotels.com in
                                                                                               July 2019. This is a multi-brand and mobile-
                                                                                                                                                Our success and ambition are underpinned
                                                                                                                                                by our strong leadership team and culture
believe have significant               from Radisson Hotel Group (which under
                                       its new Jin Jiang ownership is part of the
                                                                                               first global website giving guests and loyalty   of connecting, inspiring, innovating and
                                                                                               members access to more than 1,100 hotels
    upside potential.                  world’s second largest hotel group in                   worldwide, including PPHE’s portfolio.
                                                                                                                                                empowering colleagues.
                                       terms of number of rooms) we have the
We delight our guests                  rights to develop and operate Park Plaza
                                                                                               The new Radisson Hotels App, which
                                                                                               launched shortly afterwards, provides
   every day, through                  branded hotels and resorts in Europe,                   our guests with an even more personalised
                                       the Middle East and Africa. This strategic
 engaging service and                  partnership gives us many benefits,
                                                                                               user experience.                                 The Kitchen at Holmes
                                                                                               As part of Radisson Hotel Group’s
   quality products in                 including access to Radisson’s central
                                       reservation and distribution systems,                   five-year operating plan, we will benefit
     inviting places.                  powerful online and mobile platforms,                   from a multi-million-dollar technology
                                                                                               investment, which unifies tasks such
                                       global sales, reward programme with
                                       more than 24 million members, marketing                 as reservations, loyalty, sales, property
                                       initiatives and buying power.                           management and more. We look forward
                                                                                               to the full roll-out, which will benefit our
                                       In July 2019, Radisson Hotel Group                      guests and team members alike, while
                                       announced a collaboration with WeHotel,                 further increasing the efficiency of
                                       the global hotel booking platform of new                our business.
                                       owners, Jin Jiang International. As part of
                                       this affiliation, WeHotel Prime, Jin Jiang’s            We operate our own art’otel lifestyle brand
                                       reward programme, is now available for                  (also marketed through our partnership with
                                       high-end Radisson Hotel Group properties.               Radisson Hotel Group), and our majority-
                                       PPHE is delighted to be part of a wider                 owned Croatian subsidiary operates several
                                       global distribution and marketing reach                 of its properties under the Arena Hotels &
                                       as we also continue to grow as a Group.                 Apartments and Arena Campsites brands.
                                                                                               Our multi-brand approach enables us to
                                                                                               develop and operate properties across
                                                                                               several segments of the hospitality market,
                                                                                               and to choose the most appropriate brand
                                                                                               for each property so that we can maximise
                                                                                               returns from our assets.

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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
                           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

Guest experience
The Group’s own dedicated Technology &
                                                       the repositioning project, an increase of
                                                       7 points from 85.1% at the beginning of 2019.
                                                                                                               award is testament to our owner/operator
                                                                                                               approach. The Group was awarded ‘Talent
                                                                                                                                                               Q & A W ITH
Business Solutions division has progressed             Park Plaza Utrecht, which started to see the            Development Team of the Year’ by the            B OR IS IVESHA
a number of guest experience programmes                benefits of the repositioning, increased by             Institute of Hospitality Awards 2019 and
throughout 2019. This included IT security             8.2 points from 78.3% for the first half of 2019,       at the HR in Hospitality Awards 2019
initiatives to support guest safety and                to 86.5% for the final quarter of 2019.                 we won the ‘Excellence in Promoting             Q – What is next for the Group,
security, along with new best practice                                                                         Careers Award’.                                 now that you have achieved one
                                                       Being part of our communities                                                                           of your key goals for 2019 of
policies and dedicated training programmes
                                                       We are committed to making a positive                   Our plans for 2020                              FTSE 250 membership?
for team members (Information Security
                                                       contribution to the communities in which                Our 2019 financial results coupled with our
Awareness training solution).                                                                                                                                  Joining the FTSE 250 index of leading
                                                       we operate through charity initiatives                  strategic progress once again demonstrate
We understand that technology plays a huge             and volunteering, supporting arts and                   the strength of our unique business model,      companies was a proud moment for me
part in our guests’ overall experience when            culture, and providing jobs for those                   the appeal of our hospitality real estate       personally and for the entire team, whose
staying with us. In addition to benefiting             who live near to our properties.                        portfolio and our rigorous focus on             dedication and commitment in recent years
from access to technology programmes                                                                           performance. Over the last three years we       has made it possible. We have come a long
                                                       We bi-annually support breast cancer                                                                    way in the 12 years since listing on AIM.
from our strategic partner Radisson, we are                                                                    completed more than £100 million asset
                                                       and other health related charities. In 2019,                                                            But looking ahead it is now imperative that
ourselves continuing to trial new solutions                                                                    upgrade investment projects, the continued
                                                       team members and guests in the United                                                                   we raise our game even further to reap the
and applications to evolve our offering.                                                                       benefit of which is being reflected in our
                                                       Kingdom, the Netherlands, Germany                                                                       rewards of inclusion and meet our
We recognise that our people make us                                                                           financial performance and a significantly
                                                       and Hungary took part in the globally                                                                   responsibilities in terms of implementing
who we are, and our recruitment strategy                                                                       enhanced guest experience.
                                                       recognised charity, “Movember”.                                                                         further enhancements to our corporate
is centred on building teams of talent who             Our local community charity support                     Whilst we are closely monitoring the            governance. Inclusion brings us access
reach out and engage with guests, making               also includes supporting disadvantaged                  current uncertain macro environmental           to a wider investor community and we
them feel welcome, valued, and inspired                children and their family, elderly people               developments related to the Coronavirus         will continue to take the opportunity to
by the surroundings and excellent service.             and the homeless. We have also                          outbreak and its impact on travel patterns,                                                         Considerable effort will be focused on                    We have a robust process in place
                                                                                                                                                               proactively engage with them in order               our £300 million plus hotel development                   to ensure that the leadership teams are
This commitment to guest experience                    supported the arts through sponsorship                  trading for the two months in 2020 for          to build a long-term, high quality and
has once again been recognised in our most             of young designers and cultural festivals.              our Group has been in line with the                                                                 pipeline with major projects including the                actively engaged with identifying our talented
                                                                                                                                                               supportive share register. The increased            art’otel london hoxton and our first hotel                team members and developing them through
recent online reputation score (as measured                                                                    Board’s expectations.                           transparency and disclosure in this year’s
                                                       Further detail of our Responsible Business                                                                                                                  in the USA, in New York City. The pace of                 our award-winning training and learning
using ReviewPro’s Guest Rating Score), which                                                                                                                   Annual Report should be seen as testament
                                                       initiatives is set out on pages 80 to 89 of             Our longer term outlook focuses on growth                                                           work is planned to step up in 2020 in line                programmes, including you:niversity.
increased by 0.7 percentage points to 88.0%                                                                                                                    to our ongoing efforts to step-up our
                                                       the Annual Report 2019.                                 delivery through our well invested portfolio,                                                       with our plans to open these hotels in 2023.
in 2019. These results show that our effort                                                                                                                    governance and communications.                                                                                A prime example of our training and
                                                                                                               the delivery of our more than £300 million                                                          In addition to these projects, our in-house
to incorporate guest feedback into our                 Industry recognition                                    development pipeline of new properties in                                                                                                                     development culture in action was our 2019
repositioning programme and our day-to-day             We were delighted for Park Plaza UK to                                                                  From a strategic perspective we                     team will continue to seek out and evaluate
                                                                                                               London, New York and Eastern Europe and                                                                                                                       leadership summit ‘We Are Creators’ held
service offering has proven successful.                be awarded the ‘AA Large Hotel Group                                                                    have a proven and winning formula of                further development opportunities that
                                                                                                               additional acquisition opportunities.                                                                                                                         in London, which brought together more
                                                       of the Year 2019-20’ accolade at the                                                                    development, ownership and operations               meet our returns criteria and are in line
Furthermore, our Guest Rating Scores                                                                                                                                                                                                                                         than 150 senior team members from each
                                                       22nd annual AA Hospitality Awards in                                                                    which we plan to continue with. While PPHE          with our strategic goals.
at our three newly repositioned hotels                                                                                                                                                                                                                                       of our four European operating regions.
                                                       September 2019. This recognised our                                                                     has come a long way in the past 30 year’s           The challenge for all hoteliers is the                    We introduced our renewed strategy
significantly improved. At Park Plaza                                                                                                                          the future looks equally as exciting, with
Vondelpark Amsterdam the Guest                         commitment and strategic approach to                                                                                                                        hotel cycle and fears of a downturn.                      and our new blueprint, which aims to
                                                       development, as well as our creative and                                                                a strong development pipeline of over               As demonstrated in our financial results we               positively impact the guest experience.
Rating Score increased 6.4 points to 90.1%                                                                                                                     £300 million, which includes the
following the relaunch of the hotel (prior to          learning development programmes, which                                                                                                                      achieved good growth throughout 2019 from                 Our blueprint is ‘the way we do things’
                                                       together enable us to constantly delight                                                                development of our first hotel in the US.           leisure and corporate customers. While not                and enables our Leadership Team to
relaunch the score was 83.7%). Holmes Hotel
London increased to 92.1% following                    our guests. This is one of the most highly              BORIS IVESHA                                    Q – What are the main opportunities                 immune, we are resilient given our well                   develop a high-performing culture where
                                                       regarded events in the industry and the                 PRESIDENT &                                     and challenges you see in 2020?                     invested estate and the strategic position                our teams feel engaged and empowered
                                                                                                               CHIEF E XECUTIVE OFFICER                                                                            of our major assets in London and the                     to create valuable memories for our
                                                                                                                                                               Our primary near-term growth opportunity
                                                                                                                                                                                                                   Netherlands. Notwithstanding the ongoing                  guests and value for our assets, people
Park Plaza Histria, Pula                                                                                                                                       stems from the recent completion of our
                                                                                                                                                                                                                   macro economic and geopolitical uncertainty               and local communities. This blueprint and
                                                                                                                                                               £100 million plus multi-year investment
                                                                                                                                                                                                                   trading in the current year has started well              a supporting dedicated programme of
                                                                                                                                                               programme. These well-invested hotels
                                                                                                                                                                                                                   and is in line with the Board’s expectations.             activities have been cascaded through
                                                                                                                                                               have shown good growth since launching/
                                                                                                                                                                                                                   As an owner/developer we are also able to                 most of our regions during 2019 to embed
                                                                                                                                                               reopening and we see the scope for further
                                                                                                                                                                                                                   seize commercial opportunities that may                   this approach within our business culture.
                                                                                                                                                               top-line growth and margin accretion
                                                                                                                                                               in 2020. Our teams will be focused on               arise from any cyclical downturn as well as               Reporting to the Board is our eight-strong
                                                                                                                                                               ensuring that these hotels continue to              control the timing of further investment                  Executive Leadership Team, all of whom
                                                                                                                                                               build towards their return targets.                 projects in our hotel estate.                             have progressed through the business.
                                                                                                                                                                                                                                                                             We have recently strengthened the
                                                                                                                                                                                                                   Q – This remains a founder-led and
                                                                                                                                                                                                                   listed business. What are you doing                       leadership team, with Greg Hegarty
                                                                                                                                                                                                                   to ensure long-term success?                              appointed to the new position of Deputy
                                                                                                                                                                                                                                                                             Chief Executive Officer as well as retaining
                                                                                                                                                                                                                   The foundations of our past and future                    his position as Chief Operating Officer and
                                                                                                                                                                                                                   success are solid; they are our people.                   Inbar Zilberman promoted to the role of
                                                                                                                                                                                                                   We employ over 4,700 team members,                        Chief Corporate & Legal Officer.
                                                                                                                                                                                                                   including an Executive Leadership Team
                                                                                                                                                                                                                                                                             In short, we have a strong track record of
                                                                                                                                                                                                                   of eight. Supporting and encouraging all
                                                                                                                                                                                                                                                                             training and developing talent throughout
                                                                                                                                                                                                                   team members to develop and grow their
                                                                                                                                                                                                                                                                             all levels of the business and this gives me
                                                                                                                                                                                                                   careers within the business is a priority for us.
                                                                                                                                                                                                                                                                             confidence that we can maintain our track
                                                                                                                                                                                                                                                                             record through the next 30 years.

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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
                                     OUR BUSINESS MODEL AND PRIORITIES

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 – pages 18 and 19                             Read more – pages 36 and 37        Read more – pages 36 and 37                            Read more – pages 50 to 61                                Read more – pages 73 to 79

OU R PU R P OSE                                 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
                                                                                                                                                                                                                                                           employment opportunities for
our guests and value for our assets,
                                                                                                                                                                                                                                                           over 4,700 team members
people and local communities.                                                                            Property                            Property                                              Property
                                                                                                                                                                                                                                                           with continuous investment

WHO WE ARE                                            4                           1                                                                                                                                                                        in training programmes.
                                                                                                         Disciplined, focused                Deliver all ongoing projects
We are an international hospitality                                                                      capital deployment                  and expand pipeline                                   EPRA NAV
real estate group, with a prime                                    Creating                                                                                                                                                                                Guests
property portfolio consisting of                                 stakeholder
                                                                    value                                                                                                                                                                                  We offer memorable hospitality
45 properties in operation in five
                                                                                                                                             Deploy capital in projects                                                                                    experiences in vibrant destinations with
countries, that transforms an asset’s                                                                    Optimise the value of the
potential into value and profits.                                                                        existing portfolio
                                                                                                                                             and new properties meeting                            EPRA EPS                                                our high quality products and services.

                                                      3                            2                                                         our yield profile
W H AT W E D O                                                                                                                                                                                                                                             Investors
                                                                                                                                             Mature recent openings and
We have a clear strategy to drive                                                                                                            repositioned and renovated
                                                                                                         Extract value from portfolio
growth and create long‑term value
                                                                                                         to fund further growth              properties to generate targeted                       Net investment yield                                    Our shareholders benefit from
                                                                                                                                                                                                                                                           the attractive industry dynamics

                                                  1
while recognising and developing                                                                                                            yield profile                                                                                                 of the markets in which we operate
opportunities to help our assets                       We purchase                                                                                                                                                                                         as well as our flexible business
reach their full potential. We delight              e typically acquire properties
                                                   W                                                                                                                                                                                                       model, developments and operating
our guests every day, through                      which we believe have significant                                                         Implement target-based                                Net return on                                           skills, in the form of progressive
                                                   upside potential                                      Long-term sustainability            sustainable business strategy
engaging service and quality                                                                                                                                                                       shareholder capital                                     dividend payments.
products in inviting places.

H OW W E D O IT
By valuing our people, being led
                                                  2     
                                                        We develop
                                                   We (re)develop and redesign our
                                                                                                         Operations                          Operations                                            Operations
                                                                                                                                                                                                                                                           Local communities
                                                                                                                                                                                                                                                           We care about our neighbourhoods and
by an entrepreneurial Board and                    acquired assets, drawing on the                                                           Develop a high performing                                                                                     make positive contributions to our local
through investing in our portfolio,                skills of our experienced senior
                                                                                                         Consistently deliver the            culture, where engaged teams                          EBITDA and                                              communities and the people who work
                                                   management team, with specialists
opportunities with upside potential                in every relevant discipline                          refreshed intended guest            are empowered to create                               EBITDA margin                                           and/or live there through fundraising
and local communities.                                                                                   experience across our properties    valuable memories for our                                                                                     activities, employment opportunities,

                                                  3
                                                                                                                                             guests and value for our assets                                                                               volunteering and local resourcing
                                                        We brand properties
                                                                                                                                                                                                                                                           partnerships and charities.
Key sources of value                                     and improve operating
                                                         performance                                                                         Improve the overall guest                             RevPAR
                                                   We brand properties and strive for                                                        experience through creating
– Prime property portfolio                         operational excellence, creating                      Maintain high operating             valuable memories                                                                                             Affiliates
                                                   significant value at every point                      margins                                                                                                                                           Our partnership with Radisson Hotel
                                                   in the value chain
                                                                                                                                             Focus on total revenue                                                                                        Group gives us access to global
– In-house management                                                                                                                       generation with solid                                 Employee engagement                                     distribution systems, powerful online
   platform
                                                   4    We (re)finance to fund
                                                         further investments
                                                   Through refinancing our properties,
                                                                                                                                             profit conversion                                                                                             and mobile platforms and global sales,
                                                                                                                                                                                                                                                           marketing and buying power.
                                                                                                         Leverage our scale and
– Our people                                       we are able to release capital for new
                                                                                                         inter-regional synergies            Implement target-based
                                                   investments, enabling the further
                                                                                                                                             sustainable business strategy                         Guest Rating Score (GRSTM)
                                                   growth of our Group                                                                                                                                                                                     Suppliers
– Multi-brand approach                                                                                                                                                                                                                                     As an owner/operator, long-term
                                                                                                                                                                                                                                                           sustainability and ethical operations
                                               Underpinned by our people, values and culture                                                                                                                                                               are high on our agenda including
                                                                                                                                                                                                                                                           supply chain management and the
– International network                                                                                                                                                                                                                                    development of long-term relationships
                                               The Group’s leadership culture is one of connecting,                                                                                                                                                        with strategic partners, many of whom
                                                                                                                                                                                                                                                           are local.

– Financial strength
                                               inspiring, innovating and empowering, and we foster
                                               an environment based on:                                                                     Trust      Respect      Teamwork        Enthusiasm Commitment              Care

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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
                                                 T H E VA L U E W E C R E AT E                                                                                                    ALL FUTURE GROW TH

                                                                                                                                                                                                             Holmes Hotel London

                                                                                                                THE THREE PILL AR S
                                                                                                                OF GROW TH

                                                                                                                We have a proven development
                                                                                                                strategy, targeting real estate in prime
                                                                                                                locations with upside potential. We
                                                                                                                are continuously seeking out and
                                                                                                                evaluating new opportunities as well
                                                                                                                as re-developing and repositioning                                                           PAGE 24
                                                                                                                our own assets to benefit all. We                                                            Repositioning projects
                                                                                                                aim always to delight our guests,
                                                                                                                                                                                                             Our owner/operator business paired with our
                                                                                                                empower our team members,                                                                    development expertise provides a major point of
                                                                                                                support strong local communities                                                             differentiation within the hospitality sector. This model
                                                                                                                and affiliates, and create value for                                                         not only gives us full control over the quality of our real
                                                                                                                                                                                                             estate assets, it also gives us the ability to react quickly
                                                                                                                all of our stakeholders.                                                                     and invest in them as necessary, enabling us to fully
                                                                                                                                                                                                             optimise their potential value. Recent investment in
                                                                                                                                                                                                             asset repositioning programmes includes: Park Plaza
                                                  THE VALUE                                                                                                                                                  Vondelpark, Amsterdam; Park Plaza Utrecht; Holmes

                                                  W E CRE ATE                                                                                                                                                Hotel London and Arena Kažela Campsite.

                                 C R E AT I N G                                                                 Park Plaza London Waterloo                                                                   art’otel london hoxton

                                 DY N A M I C
                                   S PAC E S
                                                                                                                PAGE 2 2                                                                                     PAGE 3 2
                                                                                                                Driving organic                                                                              What the future
                                                                                                                growth                                                                                       pipeline holds
                                                                                                                We strive for operational excellence across our portfolio to                                 Our strategy is to build on our success and
                                                                                                                drive organic growth, through both RevPAR improvements                                       further expand our asset portfolio by targeting
                                                                                                                and margin accretion. In addition, we are always looking for                                 real estate opportunities that have significant upside
                                                                                                                opportunities to add more room stock and other income                                        potential, fit our long-term growth strategy and
                                                                                                                generating facilities to our hotels.                                                         create strong shareholder value. We have an exciting
                                                                                                                                                                                                             development pipeline for our wholly-owned art’otel
                                                                                                                Over the last three years, we have added 891 rooms                                           brand, which includes two new hotels in London
                                                                                                                to our already impressive London portfolio. Park Plaza                                       and an art’otel near the Hudson Yards area in New
                                                                                                                London Waterloo and Park Plaza London Park Royal,                                            York City. We have also acquired a site on London’s
                                                                                                                both launched in 2017, together added 706 rooms. The                                         South Bank and entered into agreements to extend
                                                                                                                major repositioning of Park Plaza London Riverbank                                           our footprint in the CEE region. Together these projects
Park Plaza Victoria London                                                                                      was completed in 2018 and expanded the property’s                                            are expected to add approximately 800 rooms by the
                                                                                                                inventory by 40%.                                                                            end of 2023.

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       T H E VA L U E W E C R E AT E C O N T I N U E D

                                                     Completed 2017                                                                                        Repositioning completed July 2018                         Between 2016 and 2018, we invested
                                                                                                                                                                                                                     a total of £20 million in a major
                                                     Park Plaza                                                                                            Park Plaza Victoria                                       repositioning programme.

                                                     London Waterloo                                                                                       Amsterdam                                                 All public areas were completely
                                                                                                                                                                                                                     reconfigured, 298 rooms were fully
                                                                                                                                                                                                                     redesigned, and nine meeting and
                                                                                                                                                                                                                     event rooms were transformed. A new
                                                     Strengthened presence                                                                                 Well-invested property in
                                                                                                                                                                                                                     bar, VIC’s BAR, was opened, and offers
                                                     on London’s South Bank                                                                                the centre of Amsterdam                                   guests fantastic entertainment in the
                                                                                                                                                                                                                     form of guest DJ sets and live jazz nights.
                                                     The former office building located on                                                                 Park Plaza Victoria Amsterdam is
                                                                                                                                                                                                                     A new destination restaurant, Carsten’s,
                                                     London’s South Bank was acquired in                                                                   our iconic property in the heart of
                                                                                                                                                                                                                     led by a celebrity concept chef, opened
                                                     2013 and following a £125 million                                                                     Amsterdam, opposite Centraal Station.
                                                                                                                                                                                                                     in February 2019.
                                                     investment was developed into a high                                                                  Its prime location presented a significant
                                                     quality hotel offering 494 rooms and suites,                                                          opportunity to create value from our                      Since repositioning, guest rating scores
                                                     a swimming pool and luxury spa facilities,                                                            real estate asset as well as inspire                      at the property have increased to 88%
                                                     meeting rooms and an executive lounge, a                                                              our guests through a well-invested,                       in 2019.
                                                     destination all day dining restaurant called                                                          high quality product.
                                                     Florentine, and a bar offering live music.
                                                     In July 2017, following completion of
                                                     construction of the hotel, the Group sold       Repositioning completed 2018                          The hotel was fully repositioned.
                                                     the property for £161 million and agreed a                                                            All public areas were reconfigured and
                                                     199-year leaseback. The leasehold remained      Park Plaza London                                     redesigned, and seven additional floors
                                                                                                                                                           of accommodation added 185 rooms to
                                                     with the Group is valued at £84 million, and
                                                     with the sale and leaseback the Group           Riverbank                                             the inventory, transforming the property
                                                                                                                                                           into a 646-room hotel. A new meeting
                                                     released part of the value whilst retaining a
                                                     long-term lease, control of the operations                                                            room and a 12th-floor Executive Lounge
                                                     and associated profit of the hotel.             Unrivalled hospitality                                were also created, and our award-winning
                                                                                                     real estate presence on                               Chino Latino Restaurant & Bar was
                                                     With the above, the total value created                                                               relocated, giving this destination dining
                                                     from development to the sale and 199-year       London’s South Bank
                                                                                                                                                           spot unrivalled views across the River
                                                     leaseback was approximately £120 million.                                                             Thames. In addition, a spa and swimming
                                                                                                     Park Plaza London Riverbank first opened its
                                                     Guest Rating Scores at the property have                                                              pool have been added to the property,
                                                                                                     doors on London’s South Bank in April 2005.
                                                     been consistently high with a 89.9% rating                                                            giving the hotel an additional offer for
                                                                                                     Since then we have established a strong

DRIVING
                                                     in 2019.                                                                                              leisure guests.
                                                                                                     presence in this now vibrant area of London
                                                                                                     which has been the focus of significant               We invested approximately £54 million
                                                                                                     regeneration in recent years. We seized               in this major, multi-year repositioning

ORGANIC
                                                                                                     the opportunity to transform the hotel by             programme to create value for shareholders
                                                                                                     enhancing the amenities and the overall               through capital appreciation and drive
                                                                                                     quality of our offer and guest experience             operational returns through a high quality

G R OW T H
                                                                                                     to reflect the fantastic rejuvenation of the          product offer and exceptional guest service.
                                                                                                     surrounding area, including Vauxhall and              In 2019, guest rating scores at the property
                                                                                                     Nine Elms, which have seen a massive                  were 88.0%.
                                                                                                     transformation in recent years.

                                                                                                                                                           Repositioning completed 2018                              and completely transformed to offer eight
                                                                                                                                                                                                                     types of all-glamping accommodation
                                                                                                                                                           Arena One 99                                              and premium amenities to reflect the
                                                                                                                                                                                                                     site’s 4-star offer, and was launched
                                                                                                                                                                                                                     in summer 2018. Total investment in the
                                                                                                                                                           Successful new                                            repositioning programme was £8 million.
                                                                                                                                                           all-glamping offer                                        Arena One 99 has received two accolades
                                                                                                                                                                                                                     from the Croatian Tourist Awards programme
                                                                                                                                                           Located in the peaceful village of Pomer,                 for Best Glamping and Best Campsite.
                                                                                                                                                           Pula in southern Istria, Croatia, Arena One               Performance of this site has continued
                                                                                                                                                           99 was formerly a limited service campsite in             to mature in 2019, its second season
                                                                                                                                                           a prime beachfront location stretching more               in operation.
                                                                                                                                                           than four hectares along the Adriatic coast.
                                                                                                                                                           This is a prime hospitality real estate
                                                                                                                                                           location. To capitalise on this, we identified
                                                                                                                                                           an opportunity to launch Croatia’s first
                                                                                                                                                           all-glamping resort. The campsite was
                                                                                                                                                           closed following the summer of 2017

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