PPHE Hotel Group Outlook

Capital value Travel & leisure

PPHE’s disclosure of a potential release of part of the value of its hotel assets in order 12 November 2012 to fund expansion is exciting, not only in itself but as a clear marker of the company’s Price 230p yawning discount to NAV. Meanwhile, confirmation of bumper Q3 trading, courtesy of Market cap £95m the Olympics, has reinforced our confidence in current year forecasts, which may well £0.81/€ surprise as RevPAR assumptions appear undemanding even in tough times. London 2012 will be a hard act to follow, but should not mask PPHE’s proven ability to Shares in issue 41.5m increase room rate on historically high occupancy and outperform the market. Free float N/A Code PPH

Year end Revenue EBITDA* PBT* EPS DPS EV/EBITDA Primary exchange LSE (€m) (€m) (€m) (c) (p) (x) Other exchanges N/A 12/10 139.8 37.6 6.1 15.0 0.0 13.0 Share price performance 12/11 202.4 65.0 13.6 32.6 6.0** 7.8 12/12e 234.7 75.0 15.0 36.1 12.0 7.7 12/13e 246.0 78.5 16.5 39.8 12.0 7.2 Note: *PBT and EPS are normalised, excluding intangible amortisation and exceptional items. **Initial payment.

Positive IMS: Forecasts maintained PPHE is well on course to meet current year expectations, as 16% growth in overall

RevPAR in Q3 marks a spectacular rebuttal of pre-Games anxiety about potential displacement of regular business and leisure custom in the capital, While the Olympic % 1m 3m 12m effect is not quantified, encouragingly, London – the company’s dominant profit centre Abs 5.5 14.1 (7.0) – may reasonably be assumed to have been the driver (we estimate its RevPAR up at Rel (local) 6.2 14.9 (13.2) least 20% in the period despite a lacklustre July) and importantly, that gain is due to 52-week high/low 245.00p 200.50p rate rather than occupancy, with consequent benefit to the bottom line. Our forecast Business description of modest yield improvement in the capital in Q4 reflects caution ahead of a key trading period, which is understandable but may yet prove overdone. PPHE Hotel Group (formerly Park Plaza Hotels) is an integrated owner and operator of four-star, deluxe and boutique hotels in Proven model gateway cities and regional centres, The company has developed a collection of popular full-service quality hotels, with a predominantly in Europe. good geographic and guest mix and its open-minded approach to ownership provides flexibility for expansion, eg important site acquisitions for mixed-use Next events development in West London and Thailand. PPHE is a multi-brand operator, despite Pre-close update February 2013 highly-valuable distribution, operational and cross-selling benefits from its long-term Finals March 2013 exclusive partnership with Carlson for its Park Plaza brand in the EMEA region. Analysts Valuation: New light on huge discount to NAV Richard Finch +44 (0)20 3077 5700 Jane Anscombe +44 (0)20 3077 5740

More active asset management, as signalled in the IMS, promises welcome [email protected]

recognition of the company’s riches and consequent possible narrowing of a discount Edison profile page to NAV, which is surely excessive at over 50%. Indeed, PPHE owns trophy assets in strong gateway cities such as London and Amsterdam, the lure of which is enduring and should not be underestimated. Operationally, the company is also inexpensive with a prospective EV/EBITDA of just 7x, which is well below that of most of its peers.

PPHE Hotel Group is a research client of Edison Investment Research Limited

PPHE Hotel Group | 12 November 2012

Investment summary: Capital value

Company description: Affordable luxury hotel operator PPHE is an owner and operator of full-service, four-star, deluxe and boutique hotels in gateway cities and regional centres, predominantly in Europe. Its portfolio comprises 25 hotels (c 5,500 rooms), marketed under the brands Park Plaza Hotels & Resorts (exclusive partnership with Carlson Hotels Worldwide in EMEA) and art’otel (owned). There is also a minority interest in Arenaturist, a leading Croatian hospitality business (c 2,800 rooms). While current development projects are set to add c 600 rooms by the end of 2013, sites have been secured for a 160-room hotel in West London and a 100- room hotel in Pattaya Bay, Thailand. PPHE was floated on AIM in 2007 on its formation from a combination of the hotel assets of its two largest shareholders and moved to the Official List last year.

Valuation: Asset considerations to the fore Possible asset sales in the near term should highlight the massive and seemingly ever-widening discount of the share price to net asset value, ie reported NAV at June 2012 was €6.07 per share, compared with €4.91 at December. Moreover, last year’s independent market value reports and continuing strong investor demand for trophy assets indicate substantial hidden value in PPHE. In trading terms, the company’s prospective EV/EBITDA rating of 7x is undemanding with regard to its European-branded peers (an average of 9x for IHG, Millennium & Copthorne, Accor, Meliá, NH Hotels, Rezidor and Whitbread), some discount is justified for their record, the company’s scale of net debt (albeit well within facility) and the presence of effectively a majority shareholder at PPHE with a tendency for related-party transactions.

Sensitivities The hotel industry is highly cyclical and dependent on the health of the global economy. PPHE is competing for a share of disposable consumer income in a very competitive market. Geo-political events and natural disasters can have a significant impact on profitability, so the company maintains a diverse guest nationality mix to minimise risk. The interests of the chairman and chief executive have material control over the company; there is a history of related-party transactions. PPHE is significantly reliant on its relationship with Carlson; termination of its territorial licence by Carlson is possible only in very limited circumstances and in any case the relationship is strong. There is considerable foreign exchange exposure as well as a debt financing and interest rate risk.

Financials With net debt forecast to reduce to €457m by year end despite increased spend on the new art’otel Amsterdam and dividend initiation, PPHE appears to be trading well within its long-term bank facilities, which are over €500m, substantially until 2015-18. The €90m rise in net debt to €477m in the first half is explained by the acquisition of Dutch minority interests and exchange rate movements.

The company seeks to reduce the seasonality of its business by optimising its guest mix (particularly business against leisure) and its impact on profit by securing as flexible a cost base as possible. It also enjoys substantial recurrent revenue through agreements with business travel agencies and large corporates for discounted room rates.

PPHE reports half-yearly, as well as interim management statements in May and November.

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Company description: Affordable luxury hotel operator

Strong portfolio PPHE has developed a collection of popular, full-service, four-star, deluxe and boutique hotels with a good geographic spread and guest mix (c 50% business customers). With a focus on European cities (gateway and regional), there is particular representation in the important lodging markets of London, Amsterdam and Berlin (the bulk of estimated total 2012 EBITDA). The advent of Westminster Bridge has brought a step-change, not only in company financials but in commercial and marketing opportunity as its flagship. Notably, as one of Europe’s leading conference hotels, Westminster Bridge is boosting PPHE’s already significant and lucrative food and beverage operations (likely to be over 25% of estimated 2012 revenue). While the pipeline is set to add c 600 rooms over the next 18 months, sites on attractive mixed-use developments have been secured for a 160-room hotel in West London and a 100-room hotel in Pattaya Bay, Thailand, due to open in 2014/15.

Exhibit 1: Portfolio (Park Plaza brand unless stated otherwise) by rooms UK (owned) Rooms London: • Riverbank* 394 • Plaza on the River* 66 • Sherlock Holmes* 119 • Victoria* 299 • Westminster Bridge** 1,019 Leeds 187 Nottingham 178 In operation 2,260 Pipeline: art’otel Hoxton (opening 2014) 352 Netherlands (owned) Amsterdam: • Victoria* 306 • Vondelpark* 138 Utrecht* 120 Eindhoven 104 Amsterdam Airport* 342 In operation 1,010 Pipeline: art’otel Amsterdam (opening mid-2013) 105 Germany (leased) Berlin (five hotels, of which three art’otels) 716 art’otel Dresden 174 art’otel Cologne 218 In operation 1,108 Pipeline: Nuremberg (opening late-2013) 175 Hungary (leased) art’otel Budapest 165 Managed UK (County Hall, London) 398 Franchised UK (Belfast and Cardiff) 235 Germany (Trier) 150 Israel (Tel Aviv) 182 Associate Arenaturist Croatia (of which three hotels, c 800 rooms 2,868 newly-branded Park Plaza) Total in operation 8,376 Total pipeline 632

Source: PPHE Hotel Group. Note: *Fully owned since December 2010 (UK) and April 2012 (Netherlands). **Assuming continued control of sold rooms (until at least 2016); fully open since September 2010.

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Flexible model Management prides itself on the breadth of interests and contractual arrangements in the hotels, which allows it to maximise opportunities from the varied markets in which it operates and may enter. As can be seen in the table above, ownership accounts for 55% of room stock (excluding minority Arenaturist) and almost the entirety of UK and Netherlands operations. It also applies to each of the company’s current projects (c 630 rooms). Although it is capital intensive, ownership offers scope for asset appreciation. All but one of the company’s hotels in Germany and Hungary are under long-term operating leases (typically, 15 to 25 years), while the sole management contract (Park Plaza County Hall) runs until 2033. Franchise arrangements cover just 7% of overall room stock (four hotels). Revenue comes from brand royalty or licensing fees (typically, 3.5% of hotel revenues), one-off fees on opening under the company’s brands and ancillary services.

Fully branded All of the company’s hotels are branded either Park Plaza & Resorts (83% of rooms excluding Arenaturist) or art’otel. While distinct in terms of customer and size (the former targets the business as well as leisure market and favours larger properties, ie up to 300 rooms), both brands address the growing “affordable luxury” segment (high quality at attractive rates).

Outside Europe, the Middle East and Africa, where the company holds an exclusive right to use the brand in perpetuity under its agreement with Carlson, the Park Plaza brand is being used at some 20 hotels, with a similar number in development, mainly in China and India where last year it was voted “Best mid-range hotel brand” at the Outlook Traveller Awards.

The art’otel brand self-evidently targets those with an interest in art and culture by aspiring to be represented at “key cultural hot-spots throughout Europe” (www.artotels.com) and benefits from the increasing appeal of city breaks afforded by low-cost air travel and enhanced choice spawned by the internet. The 2010 opening in Cologne, the first since acquisition of the brand in 2007, aimed to reinvigorate the brand (existing properties in Berlin, Dresden and Budapest) and spur development (Amsterdam and London Hoxton due to open over the next year). While ownership of the brand is subject to a perpetual licence in favour of the brand founder elsewhere in Europe (France, Germany, Italy, Spain, Austria and Switzerland), there is reassurance that the founder must negotiate with the company in good faith about hotel management.

Bumper distribution Inclusion in the central reservation and distribution systems of Carlson Rezidor Hotel Group (the recent marketing and purchasing alliance between Carlson and Rezidor) should continue to be hugely positive for the company. It provides reliance on a proven and far larger and more sophisticated system than potentially in-house, ie over 1,300 hotels in 80 countries. In addition, there is the signal benefit of access to the alliance’s guest loyalty and travel reward programmes as well as to referral custom from other hotels on the reservation system. In particular, last year’s re-launch of the guest loyalty programme as Club Carlson (formerly goldpoints plus), with an array of new benefits, is an important part of Carlson’s strategic commitment (“Ambition 2015”) to help hotels increase revenue. Membership is newly reported at 8.9m to be “well on track” to exceed the scheme’s 16% growth target for this year, with a further double-digit rise in mind for 2013. Carlson believes that the growth in programme members per room in the five years to 2010 was the highest in the industry, eg more than that of InterContinental and Hyatt. PPHE is satisfied with the 55% increase in reward stays at its hotels in 2011. Exposure to travel agents on Carlson’s “Look to Book” market-leading agent reward scheme may be lucrative for the company, not only for supplementary business but also as room rates from

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members are reportedly much higher than from non-members. Access to Carlson’s systems covers art’otel bookings as well as those for Park Plaza.

Strategy In pursuit of its declared aim to become one of the leading hotel owner/operators in its existing markets, PPHE has declared the following strategy:

• Brand development: Participation in Carlson Rezidor Group’s guest and travel agent loyalty schemes and central reservation system will be used to raise brand awareness. New brands for existing or new hotels will be considered, as will new branding concepts. • Focus on revenue growth: In addition to joining more affiliation programmes with airlines, car rental companies and others, the company aims to build its conference and banqueting income and ancillary activities such as food and beverage branded outlets. Sales and marketing resources will be enhanced. • External growth: Further acquisitions, joint ventures and developments are planned. The recent IMS announced that management was considering how best to fund expansion, including a potential release of part of the value of the hotel assets. The focus is likely to be on European gateway cities, with possible broader representation in the likes of London and Amsterdam, but also in new trading areas such as Spain. Paris is apparently not favoured. Competition will be fierce for scarce quality assets, but its gateway strategy is proven and there should be opportunity to sell advantageously. PPHE does not regard debt as a restriction to growth as long as it can be serviced.

Management PPHE’s senior management (see below), which is based at the company’s head offices in London and Amsterdam, is backed by highly-experienced local management.

• President and CEO Boris Ivesha has almost 50 years’ experience in the hotel industry, including as general manager of the Royal Horseguards Hotel, London and managing director of the Carlton Hotel, Tel Aviv. He established the Yamit Hotel, Tel Aviv in 1984 (now the Park Plaza Orchid, franchised by the company). In 1994, he brought the Park Plaza Hotels & Resorts brand to the company in partnership with the Red Sea Group. • CFO Chen Moravsky joined the company in 2005 from the Red Sea Group, where he was financial director. He was previously an audit manager at Deloitte. • Non-Executive Chairman Eli Papouchado is founder and former chairman of the Red Sea Group, the company’s largest shareholder. He has been actively involved in the development, financing, acquisition and management of PPHE’s leading hotels and the development of shopping malls and large residential projects in the US, Eastern Europe and the Middle East. He is a former chairman of the Israel Hotel Association.

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Gateway resilience

“We’re not seeing any evidence of a post-Olympic hangover in the London hotel sector, and the city’s hotel operators will be cautiously optimistic about the rest of the year. Absolute levels of both room rate and occupancy remain healthy, given the prevailing economic environment.”

Govinda Singh, Director for Hotel & Hospitality Consultancy Services at PKF, October 2012.

Such optimism is echoed by TRI Hospitality, which reported record September occupancy thanks to a late increase in visitors to London as well as Paralympics success. Their measure of less than 1% RevPAR gain (-1%, per PKF) may seem uninspiring, especially compared with August, but is satisfactory in view of a post-Olympic slump endured by previous host cities. We are further encouraged by anecdotal positive news about current trading, with Millennium & Copthorne delivering a rise in yield of almost 7% in October and Accor and IHG, among others, confirming continued brisk activity. As the market settles post-Olympics, we trust that a clear trend will emerge. Exhibit 2 shows the exceptional nature of the capital’s hotels during the Games.

Exhibit 2: Changes in RevPAR in PPHE’s major markets

40

30

20

10 year % change % year - on

- 0

Year -10

-20 2007 2008 2009 2010 H111 H211 H112 July Aug Sept London Amsterdam UK regions Source: TRI Hospitality Consulting

The lure of strong European gateway cities for investment has an obvious downside in terms of potential over-supply. 2011 saw a spate of upscale openings, including the W Hotel, Leicester Square, the Renaissance, St Pancras and the Mint (now Doubletree), Tower Bridge, while Meliá opened recently its ME London, Aldwych and the 256-room InterContinental Westminster is due imminently. Supply growth across the market may even accelerate in 2013 (in July, Jones Lang LaSalle estimated +5% against +2% average between 2003 and 2011) but competition is set to be primarily in the budget segment, which accounts for the bulk of new stock.

Optimism about demand needs also to be tempered by caution about rising costs, eg energy and food, pressures on discretionary spend, eg food and beverage and likely reduced scope for further efficiencies after effective cost control measures in the downturn. In the year to date, gross operating profit per available room (GOP PAR) has risen by 6% (per TRI) on RevPAR up 4%. Given near-capacity occupancy in the market, any supplementary rate-led RevPAR may prove lucrative.

Although not material in overall EBITDA terms (likely under 2% this year), UK provincial continues to struggle, with RevPAR up just 1% and GOP PAR down 3% in the first nine months even after an Olympic boost, if less marked than in London. TRI Hospitality describes the market’s prospects as “not bright.”

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Amsterdam (c 10% of estimated EBITDA) is enjoying strong occupancy almost on a par with London (79% against 81% in the year to date, per TRI) thanks largely to its leisure appeal. There is market confidence that expected significant new supply over the next few years can be absorbed.

Sensitivities

• The hotel industry is highly cyclical and dependent on the health of the global economy. PPHE is competing foir a share of disposable consumer income, which may be eroded by economic downturn. • Geo-political events and natural disasters can have a significant impact on profitability. The company maintains a diverse guest nationality mix to minimise this risk. • Interests of the chairman and chief executive have material control over the company. There is a propensity for related-party transactions, which are subject to arm’s-length terms of relationship agreements. • PPHE is significantly reliant on its relationship with Carlson. However, termination of its territorial licence by Carlson is possible only in very limited circumstances and in any case the relationship remains strong. • Much of the company’s cost base is fixed. This risk can be mitigated by effective yield management and the development of as flexible a business model as possible. • An active development programme may tie up balance sheet capacity and lead to asset write-downs. Growth depends on the availability of suitable sites and access to funding. • There is considerable foreign exchange exposure. There is also a debt financing and interest rate risk. A guaranteed yield to owners of units at Westminster Bridge until 2016 (ie five years after purchase) may not be covered by net income from those units.

Valuation

In terms of the key EV/EBITDA indicator PPHE, at under 8x, is inexpensive at face value compared business models, eg the increasing popularity of “asset-light” and associated low indebtedness, does not make for easy comparison. In any case some discount is justified in view of PPHE’s relatively brief record, its scale of net debt (albeit well within facility) and the presence of effectively a majority shareholder with a history of related party transactions.

Exhibit 3: Peer comparison of prospective EV/EBITDA rating Price EV/EBITDA Market cap Net debt EV PPHE 230p 7.7 €118m €457m €575m Millennium & Copthorne 471p 8.0 £1.5bn £0.1bn £1.6bn Whitbread 2424p 9.9 £4.3bn £0.5bn £4.9bn IHG (InterContinental) 1559p 10.9 $6.8bn $0.9bn $7.7bn Accor €24.39 6.5 €5.5bn €0.1bn €5.6bn Meliá International €5.78 9.8 €1.1bn €0.9bn €2.0bn NH Hoteles €2.85 9.6 €0.7bn €0.9bn €1.6bn Rezidor €23.00 8.0 €0.34bn neg. €0.35bn Marriott $36.00 12.4 $11.4bn $2.6bn $14.0bn Starwood $52.00 9.7 $10.2bn $1.4bn $11.6bn Hyatt $35.00 10.2 $5.7bn $0.5bn $6.3bn Source: Thomson. Note: Prices at 8 November 2012.

Rather more persuasive in our view is the company’s massive and seemingly ever-widening discount of the share price to net asset value, ie reported NAV at June 2012 was €6.07 per share, compared with €4.91 at December. This increase was due primarily to the purchase of minority interests in the Netherlands, including a €47m exceptional gain on revaluation of the three hotels in question.

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Furthermore, this discount may be accentuated by last year’s favourable independent market valuations of the estate, which are not reflected in the accounts. These showed £185m for Westminster Bridge against €160m in the 2010 accounts and £433m for the rest of the estate against €445m in the 2010 accounts. Encouragingly, such confidence in the London market is backed by continued successful upscale transactions over the past 12 months, notably the sales of the Sanderson and St Martins Lane (combined 354 rooms), which sold for £192m (£542,000 per key) and the Cavendish (230 rooms), which achieved £690,000 per key. The MGallery St Ermin’s has been marketed since May at £500,000 per room, while the InterContinental Park Lane has unsurprisingly attracted “a good level of interest” despite not being put up for sale formally until early next year. The new 192-room W Hotel, Leicester Square was sold for almost £200m, albeit including some apartments and retail space. Robert Seabrook, Joint Head of Hotels at Savills confirmed earlier this year: “Lack of debt is more of an issue for the hotel sector, but the lure of the London trophy asset continues to attract overseas investors,” as reflected in the aforementioned transactions. Jones Lang LaSalle Hotels also expected “further strong interest across the market, including for trophy assets.”

Savills has forecast growth in London hotel values of almost 4% this year and 1.5% in 2013. Trophy assets may be expected to outperform as last year (+7%). Exhibit 4 shows impressive buoyancy over the past decade.

Exhibit 4: Annual changes in Savills valuation index (London hotels)

10 8 6 4 2

year % change % year 0 - on

- -2 -4 Year -6 -8 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

2012e 2013e Source: Savills

Amsterdam also offers scope for meaningful asset appreciation, in particular with the company’s esteemed 306-room Victoria property enjoying “trophy asset” status. Earlier this year. HVS London has described the market, which rose in value by 6% in 2011, as “well on the road to further recovery and to reaching pre-recession levels,” ie c +20%, owing to forthcoming major anniversary and conference events and despite material new supply.

We are confident that PPHE’s newly-public consideration of using its prized assets to finance expansion can only draw long-overdue investor attention to the value inherent in the company’s discount to NAV. Encouragingly, a company update is promised in March. Real estate-oriented Millennium & Copthorne, which shuns the asset-light approach of the likes of InterContinental and Accor, stands at a discount of c 33% to net assets at September, with NAV per share of 707p (net assets £2.3bn/324m shares). PPHE’s discount is yet wider and by a margin (over 50%).

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Financials

2012 forecasts maintained Although PPHE did not disclose its regional RevPAR in Q3, we deduce that constant currency yield gain in London, its main profit driver, was at least 20%, reflecting a material boost from the Olympics and Paralympics, offset by inevitable disruption in advance (the leisure and group tour market was subdued in July as tourists stayed away). Expectations for Q4 obviously pale by comparison but notwithstanding economic concerns and caution ahead of a key trading period, our forecast of growth in H2 London EBITDA of 3% constant currency (+5% in H1) should be attainable on a rise in yield of just 1% in the final quarter. The nature of the company’s hotels in the capital, notably the Westminster Bridge, with a record of yield outperformance, suggests that our assumption could well be conservative. Our forecast of slower RevPAR growth in H2 in the Netherlands reflects market caution (RevPAR down 9% in September, according to TRI Hospitality). Although little benefit is expected from a favourable trade fair calendar in Germany owing to PPHE’s predominance in oversupplied Berlin, the capital has shown surprising resilience (RevPAR up 9% in the year to date, per TRI).

H1 saw PPHE consolidate 2011 success with strong trading and margin growth across London and double-digit like-for-like EBITDA gain in the Netherlands in spite of difficult conditions. London was notable for its buoyancy throughout the period (estimated Q2 RevPAR +5% on a par with Q1) and for outperforming the market (+2%, according to TRI). Group-owned and leased EBITDA rose satisfactorily by 6% excluding the change of ownership in the Netherlands from Q2 and currency movement (reported +20%). Provincial UK was, as expected, more subdued but its weakness is attributed to non-room revenue as renovations following acquisition in 2010 led to premium RevPAR improvement. The step-change in Netherlands EBITDA (+57%) reflects full ownership of the Victoria Amsterdam, Utrecht and Amsterdam Airport hotels from Q2 (like-for-like growth was 12%, which is creditable in sluggish conditions, ie RevPAR +2%, per TRI). Germany and Hungary remained in loss on indifferent trading (room rate could not be held) and unfavourable lease rates.

2013 Earnings visibility in the hotel industry is notoriously limited and only compounded by current heightened macro uncertainties. Therefore, at this stage we see no reason to change our longstanding assumption of RevPAR growth of 1% in London (underlying, ie ex-Olympics; reported -2%) as well as 2% in Netherlands and Germany and Hungary, which is very much in line with our projection of performance in H212.

Cash flow The €90m rise in net debt to €477m in H1 is explained predominantly by the acquisition of Dutch minority interests and exchange rate movements. We expect a slight reduction in the current half despite increased spend on the new art’otel Amsterdam (opens mid-2013), continued maintenance capex of 3% on revenue and dividend initiation. A full-year dividend of 12p is in prospect following the interim payout of 6p. 2011 saw dividend initiation with effectively a “final” of 6p. Therefore, the company appears to be trading well within its long-term bank facilities, which are over €500m, substantially until 2015-18. Proceeds from the 2010 sale of rooms at Westminster Bridge to fund its construction appear as an advance payment on the balance sheet (€182m) as the company still controls the sold units (c 50%), if temporarily, under the terms of the sale process. Interest is paid at 5% or 6% on the rooms’ purchase price for five years after completion, ie until 2016.

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Exhibit 5: Analysis of revenue and profit Year End Dec (€m) H111 H211 FY11 H112 H212e FY12e 2013e Revenue London RevPAR £110 £118 £114 £115 £130 £122 £120 Change +5% +10% +7% (2%) Room revenue 37.9 41.3 79.2 39.8 44.9 84.7 83.0 Non-room revenue 16.1 17.5 33.6 16.4 17.5 33.9 35.0 Revenue (£m) 54.0 58.8 112.8 56.2 62.4 118.6 118.0 Leeds and Nottingham 4.3 4.7 9.0 4.4 4.6 9.0 9.4 UK £m revenue 58.3 63.5 121.8 60.6 67.0 127.6 127.4 Exchange rate 1.14 1.16 1.15 1.22 1.23 1.23 1.24 UK €m revenue 66.5 73.5 140.0 73.9 82.4 156.3 158.0 Netherlands* 11.8 13.0 24.8 17.4 20.6 38.0 47.0 Germany and Hungary** 14.3 15.9 30.2 15.4 16.1 31.5 32.5 Owned & leased hotels 92.6 102.4 195.0 106.7 119.1 225.8 237.5 Management and holdings 3.3 4.1 7.4 4.2 4.7 8.9 8.5 Total 95.9 106.5 202.4 110.9 123.8 234.7 246.0

EBITDA London 18.5 21.8 40.3 19.5 22.5 42.0 42.0 Margin 34% 37% 36% 35% 36% 36% 35% Leeds and Nottingham 0.6 0.4 1.0 0.6 0.4 1.0 1.2 Margin 15% 8% 11% 13% 9% 11% 13% UK £m total 19.1 22.2 41.3 20.1 22.9 43.0 43.2 Exchange rate 1.14 1.16 1.15 1.22 1.23 1.23 1.24 UK €m total 21.8 25.7 47.5 24.5 28.3 52.8 53.6 Netherlands * 3.4 4.4 7.8 5.6 6.5 12.1 13.8 Germany and Hungary** (1.0) neg. (1.0) (1.0) 0.1 (0.9) (0.4) Owned & leased hotels 24.2 30.1 54.3 29.1 34.9 64.0 67.0 Management and holdings 5.0 5.7 10.7 6.1 4.9 11.0 11.5 Total EBITDA 29.2 35.8 65.0 35.2 39.8 75.0 78.5 Depreciation (8.7) (9.8) (18.5) (10.4) (11.1) (21.5) (22.5) Trading Profit 20.5 26.0 46.5 24.8 28.7 53.5 56.0 Associate (Croatia) (2.1) (0.4) (2.5) (2.1) (0.4) (2.5) (2.5) Financial expenses (10.9) (12.6) (23.5) (13.5) (14.5) (28.0) (29.0) Financial income 1.8 1.7 3.5 1.7 1.3 3.0 3.0 Interest expenses guaranteed to unit holders (5.2) (5.2) (10.4) (5.5) (5.5) (11.0) (11.0) Pre-Tax Profit / (Loss) – Adj. 4.1 9.5 13.6 5.3 9.7 15.0 16.5 Source: Edison Investment Research. Note: * 50% of Victoria Amsterdam (306 rooms), Utrecht (120 rooms) and Amsterdam Airport (342 rooms) until April 2012, then 100%, art’otel Amsterdam due to open Q213. **art’otel Berlin extension Q112 and Nuremberg (175 rooms) due to open late-2013 including €1.4m one-off item.

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PPHE Hotel Group | 12 November 2012

Exhibit 6: Financial summary €'000s 2010 2011 2012e 2013e Year end 31 December IFRS IFRS IFRS IFRS PROFIT & LOSS Revenue 139,800 202,400 234,700 246,000 EBITDA 37,600 65,000 75,000 78,500 Operating Profit (before amort. and except.) 25,200 46,500 53,500 56,000 Intangible Amortisation 0 0 0 0 Exceptionals 54,400 (3,000) 50,000 0 Operating Profit 79,600 43,500 103,500 56,000 Net Interest (16,700) (30,400) (36,000) (37,000) Associates (2,400) (2,500) (2,500) (2,500) Exceptionals 54,400 (3,000) 50,000 0 Profit Before Tax (norm) 6,100 13,600 15,000 16,500 Profit Before Tax (FRS 3) 60,500 10,600 65,000 16,500 Tax 1,400 4,600 0 0 Profit After Tax (norm) 7,500 18,200 15,000 16,500 Profit After Tax (FRS 3) 61,900 15,200 65,000 16,500 Average Number of Shares Outstanding (m) 40.8 41.7 41.5 41.5 EPS - normalised (c) 15.0 32.6 36.1 39.8 EPS - normalised and fully diluted 15.0 32.6 36.1 39.8 (c) EPS - (IFRS) (c) 151.7 36.5 156.6 39.8 Dividend per share (p) 0.0 6.0 12.0 12.0 EBITDA Margin (%) 26.9 32.1 32.0 31.9 Operating Margin (before GW and except.) (%) 18.0 23.0 22.8 22.8 BALANCE SHEET Fixed Assets 857,900 884,900 1,003,000 1,008,000 Intangible Assets 42,300 40,700 40,000 40,000 Tangible Assets 605,200 610,900 750,000 750,000 Apart-hotel units sold to unit 160,600 168,600 168,000 168,000 holders Investments 49,800 64,700 45,000 50,000 Current Assets 77,400 69,700 78,000 77,000 Construction in progress 0 7,800 11,000 5,000 Restricted deposits 22,000 3,600 4,000 4,000 Stocks 1,400 1,300 2,000 2,000 Debtors 17,200 16,900 18,000 19,000 Cash 31,000 31,000 38,000 42,000 Other 5,800 9,100 5,000 5,000 Current Liabilities (220,000) (57,200) (57,000) (59,000) Creditors (62,500) (50,300) (52,000) (54,000) Deposits from unit holders (18,200) 0 0 0 Short term borrowings (139,300) (6,900) (5,000) (5,000) Long Term Liabilities (512,100) (696,200) (774,000) (765,000) Long term borrowings (261,600) (411,200) (490,000) (481,000) Advance payments from unit (176,500) (194,400) (194,000) (194,000) holders Other long term liabilities (74,000) (90,600) (90,000) (90,000) Net Assets 203,200 201,200 250,000 261,000 CASH FLOW Operating Cash Flow 37,000 43,800 72,500 76,000 Net Interest (21,900) (30,400) (35,000) (36,000) Tax 0 (100) 0 0 Capex (23,100) (11,000) (12,100) (12,500) Acquisitions/disposals 51,600 (6,400) (89,100) (9,300) Financing 0 (13,100) 0 0 Dividends 0 0 (6,200) (6,200) Other (9,600) (11,000) 0 0 Net Cash Flow 43,600 (17,200) (69,900) 12,000 Opening net debt/(cash) 403,900 369,900 387,100 457,000 HP finance leases initiated 0 0 0 0 Other 0 0 0 0 Closing net debt/(cash) 369,900 387,100 457,000 445,000 Source: Company accounts, Edison Investment Research

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PPHE Hotel Group | 12 November 2012

Contact details Revenue by geography

Vinoly Tower, 5th floor Claude Debussylaan 14 % 1082 MD Amsterdam 69% 31% The Netherlands +31 207178600 www.pphe.com UK Europe

CAGR metrics Profitability metrics Balance sheet metrics Sensitivities evaluation

EPS 2009-13e N/A ROCE 12e 8.3 Gearing 12e 183 Litigation/regulatory  EPS 2011-13e 10.4 Avg ROCE 2009-13e 7.0 Interest cover 12e 1.5 Pensions  EBITDA 2009-13e 48.4 ROE 12e 6.0 CA/CL 12e 1.4 Currency  EBITDA 2011-13e 9.9 Gross margin 12e N/A Stock turn 12e 3.1 Stock overhang  Sales 2009-13e 32.3 Operating margin 12e 22.8 Debtor days 12e 28.0 Interest rates  Sales 2011-13e 10.2 Gr mgn / Op mgn 12e 4.4 Creditor days 12 80.9 Oil/commodity prices 

Management team

President and CEO: Boris Ivesha Non-Executive Chairman: Eli Papouchado Almost 50 years in the hotel industry, including general manager of Founder and former chairman of the Red Sea Group, the company’s the Royal Horseguards Hotel, London and managing director of the largest shareholder. Active involvement in development, financing, Carlton Hotel, Tel Aviv. Established the Yamit Hotel, Tel Aviv in 1984 acquisition and management of the company’s leading hotels and (now the Park Plaza Orchid, franchised by the company). In 1994, development of shopping malls and large residential projects in the he brought the Park Plaza Hotels & Resorts brand to the company US, Eastern Europe and the Middle East. Former chairman of the in partnership with the Red Sea Group. Israel Hotel Association.

CFO: Chen Moravsky Joined the company in 2005 from the Red Sea Group where he was financial director. He was previously an audit manager at Deloitte.

Principal shareholders (%)

Red Sea Group 44.5 Molteno Limited 19.1 Aroundtown Property Holdings 9.0

Companies named in this report

InterContinental Hotels, Whitbread, Millennium & Copthorne, Accor, NH Hoteles, Meliá International, Rezidor, Marriott, Starwood and Hyatt

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