2017 Annual Report
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PPHE Hotel Group Corporate Office Viñoly Tower, 5th floor Claude Debussylaan 14 1082 MD Amsterdam The Netherlands T: +31 (0)20 717 8602 E: [email protected] pphe.com PPHE HOTEL GROUP ANNUAL REPORT AND ACCOUNTS 2017 ACCOUNTS REPORT AND ANNUAL GROUP HOTEL PPHE ANNUAL REPORT AND ACCOUNTS 2017 BRINGING UNIQUE EXPERIENCES TOGETHER We are an international hospitality WHO company with a strong asset base WE and access to dynamic brands. ARE Our vision is to realise our growth potential. WHAT Our primary objective is to create and realise WE shareholder value by becoming one of the leading hospitality companies in the upscale, DO upper upscale and lifestyle hotel segments in major gateway cities, regional centres and select resort destinations, primarily in Europe. Our portfolio of owned, co-owned, leased, HOW managed and franchised hotels in operation WE comprises 39 hotels offering a total of nearly 9,000 rooms. Our development pipeline includes DO two new art’otels in London. Our core markets are the IT United Kingdom, the Netherlands, Germany and Croatia. Consultancy, design and production www.luminous.co.uk 2017 FINANCIAL HIGHLIGHTS 2017 FINANCIAL HIGHLIGHTS £92.9 £325.1m +10.0% RevPAR +19.3% total revenue £120.2 £116.0m +8.2% average room rate +12.7% EBITDAR 77.3% £31.7m +130bps occupancy (17.1)% profit before tax £32.1m £0.57 +1.1% normalised profit before tax1 (31.0)% reported earnings per share 33% £107.3m (150bps) EBITDA margin2 +14.0% EBITDA £0.24 £0.58 +14.3% dividend per share3 (14.4%) normalised earnings per share 1 See page 45. 2 EBITDA divided by total revenue. 3 Including an interim dividend of £0.11 per share and a proposed final dividend of £0.13 per share. Annual Report and Accounts 2017 1 CONTENTS STRATEGIC REPORT 4 Chairman’s statement 6 Our portfolio and brands 22 President & Chief Executive 6 60 Officer’s statement Our portfolio Responsible 30 Our values, vision and mission and brands business 31 Our business model and priorities 32 Our business model in action 38 Strategy at a glance 40 Key performance indicators 42 Risks 44 Financial and business review 2017 60 Responsible business GOVERNANCE 22 74 Board of Directors President & Chief 76 Corporate governance statement Executive Officer’s 82 Report of the Audit Committee statement 84 Report of the Remuneration Committee and Directors’ Remuneration Report 86 Directors’ report FINANCIAL STATEMENTS 90 Independent auditor’s report 93 Consolidated statement of financial position 94 Consolidated income statement 95 Consolidated statement of comprehensive income 96 Consolidated statement of changes in equity 97 Consolidated statement of cash flows 99 Notes to consolidated financial statements 76 Corporate governance statement APPENDICES 32 146 Subsidiaries included in the Group Our business 148 Jointly controlled entities model in action 149 Glossary 151 Current and committed projects 152 Contacts 44 Financial and business review 2017 2 PPHE Hotel Group Annual Report and Accounts 2017 3 STRATEGIC REPORT CHAIRMAN’S STATEMENT CHAIRMAN’S STATEMENT Well positioned for continued expansion onwards Dear shareholders, We have further extended our presence in is currently facing. Against this backdrop, 2017 has been yet another remarkable the buoyant London hotel market with the full I am delighted to say that our properties year for the Group. We continued to make opening in summer 2017 of Park Plaza London in operation have collectively delivered a significant progress in fulfilling our strategy Waterloo and Park Plaza London Park Royal. In strong performance. Looking ahead, we of realising our growth potential and creating addition, the major renovation project at Park are committed to continuously improving long-term value for our shareholders. Plaza London Riverbank has enhanced the and maintaining the excellent quality of facilities and appeal of the hotel. We now our portfolio and we have several exciting Today, the Group’s portfolio of owned, operate nearly 3,200 rooms in London. renovation projects well under way in co-owned, leased, managed and franchised London and Amsterdam. hotels comprises 39 hotels offering a total Croatia continues to soar in popularity of nearly 9,000 guest rooms in Europe. with both international and domestic The Board is proposing the payment holidaymakers and our properties in the of a final dividend of 13 pence per share, It was a historic year of corporate activities. popular tourist region of Istria are well bringing the total ordinary dividend for the In the first half of 2017, we completed the positioned to further capitalise on this growth. year ended 31 December 2017 to 24 pence successful public offering of new shares in per share. This is in line with our progressive our Croatian subsidiary, Arena Hospitality Our performance is underpinned by our dividend policy and reflects the Board’s Group d.d. (“Arena”), raising approximately strong sales and marketing capabilities, confidence in the strength of the Group. €106 million. The new capital will be used to supported by our long-standing relationship accelerate our growth plans for Central and with the Carlson Rezidor Hotel Group Once again, the team has worked Eastern Europe and enhance the quality of which provides us with significant scale for extremely hard to achieve these results. our existing operations in the region. distribution of our offering and access to The Board would like to sincerely thank powerful international loyalty programmes. all our team members for their continued Furthermore, we undertook a number dedication and, most of all, their passion of strategic transactions which allowed us As previously announced, Chen Moravsky and commitment to outstanding service to free up capital and reshape the business stepped down from his executive roles of and customer engagement. I would also like to pave the way for future redevelopment Deputy Chief Executive Officer and Chief to thank all members of the Board for their and growth opportunities. Financial Officer on 31 December 2017 in contribution, guidance and support during order to pursue new opportunities. We are what has been a milestone year. In July 2017, we completed the sale and delighted that he remains on the Board in leaseback of the brand new Park Plaza his new capacity as a Non-Executive Director We are excited about the year ahead London Waterloo for £161.5 million. and on behalf of the Board, I would like to and remain focused on delivering further thank Chen for his tremendous contribution growth and continually enhancing our The successful debt restructuring activities during his time as an Executive Director. hospitality offering. completed in 2016, and the further debt refinancing of all our Croatian borrowings Daniel Kos was promoted to Chief Financial ELI PAPOUCHADO undertaken in 2017, means that the Group Officer effective as of 1 January 2018 and CHAIRMAN is in a unique financial position and was appointed by the Board as an Executive well positioned to take advantage of Director on 27 February 2018. The Board opportunities which will drive further looks forward to working with him in his growth and shareholder returns. new roles. ELI PAPOUCHADO Alongside the corporate activity, we have We remain ever mindful of the geopolitical Chairman improved our operational activities, thereby environment, increasing cost pressures increasing revenues across the business. and the uncertainties the travel industry 4 PPHE Hotel Group Annual Report and Accounts 2017 5 STRATEGIC REPORT OUR PORTFOLIO AND BRANDS OUR PORTFOLIO AND BRANDS A high quality portfolio with attractive brands Our portfolio Brands See pages 8 – 21 for expanded brand showcases 2 new hotel projects 8 Focus on: Park Plaza® Hotels & Resorts hotels under management and franchise agreements 3 For more information on Park Plaza®, see pages 8 – 11 hotels under 3 operating leases 12 Focus on: AMSTERDAM art’otel® For more information BERLIN on art’otel, see pages LONDON 12 – 15 hotels with 33 an ownership interest CROATIA 16 Focus on: Arena Hotels & 41 Apartments® Total For more information on Arena Hotels & Apartments, see pages 16 – 21 CORE MARKETS 18 Core markets Focus on: Arena Campsites® LONDON AMSTERDAM BERLIN CROATIA For more information on Arena Campsites, 3,188 850 561 2,778 see pages 18 – 21 rooms in operation rooms in operation rooms in operation rooms in operation 6 PPHE Hotel Group Annual Report and Accounts 2017 7 An upscale and upper upscale, contemporary hotel brand featuring individually designed hotels in vibrant city centre locations and select resort destinations. Park Plaza is renowned for Our portfolio of vibrant city- creating memorable moments centre hotels and tranquil through its inspiring service, beachside resorts in Croatia stylish guest rooms and versatile already presents a wide choice meeting facilities which are of locations and accommodation perfectly complemented by yet we are committed, with award-winning restaurants our partner the Carlson Rezidor and bars. Hotel Group, to bringing Park Plaza Hotels & Resorts to even more locations. 24 hotels in Europe 6,637 rooms in operation 8 PPHE Hotel Group Annual Report and Accounts 2017 9 STRATEGIC REPORT OUR PORTFOLIO AND BRANDS MEMORABLE MOMENTS When it comes to choosing a hotel, restaurant, bar or spa, there has never been so much choice available. We proudly rival the toughest competition and provide guests with the quality to suit their rightfully high expectations. Our restaurants and bars are destination-led great views – those from Park Plaza with a separate, dedicated leadership and a Westminster Bridge London are peerless concept creation approach, tailored to each – and meeting and function rooms flexible local market for the local diner based on enough for conferences, exhibitions detailed research. and private event use. The interior design through to the menus Park Plaza team members are encouraged are as individual as each concept itself. This to provide an inspirational service while was reflected in the opening of Florentine showing their individuality and passion.