H1 2025 results: revenue growth, softer rates and tighter margins
PPHE Hotel Group delivered a steady first half in a choppy travel market. Reported revenue rose 4.7% to £199.9 million, helped by newly opened and refurbished hotels. As expected, room rates normalised and wage/social security costs rose, which squeezed profitability: reported EBITDA (earnings before interest, tax, depreciation and amortisation) was down 5.7% to £45.5 million and the EBITDA margin slipped to 22.8%.
Occupancy improved as travel patterns settled back towards normal. RevPAR (revenue per available room) increased 1.4% to £109.3, driven by higher occupancy of 72.4% despite a 1.1% drop in average room rate to £151.0.
| Key numbers (six months to 30 June 2025) | H1 2025 | H1 2024 | Change |
|---|---|---|---|
| Total revenue | £199.9 million | £191.0 million | +4.7% |
| Like-for-like revenue | £193.3 million | £191.0 million | +1.3% |
| Occupancy | 72.4% | 70.6% | +180 bps |
| Average room rate | £151.0 | £152.8 | -1.1% |
| RevPAR | £109.3 | £107.8 | +1.4% |
| EBITDA | £45.5 million | £48.3 million | -5.7% |
| Normalised PBT | £(3.7) million | £2.6 million | n/a |
| Adjusted EPRA EPS (LTM) | 119p | 125p | -4.8% |
| EPRA NRV per share | £28.07 | £27.51 | +2.0% |
| Interim dividend | 17p per share | 17p per share | Maintained |
What drove the half-year performance
Two things can be true at once: demand is fine, but pricing power has cooled. PPHE filled more rooms and kept service costs in check, yet margin pressure came through from lower average rates and higher wage and social security charges. Management highlights efficiency initiatives that limited wage cost inflation to less than 3% versus initial expectations of about 7% – a genuine positive in this environment.
The group continues to deliberately stage the ramp-up of certain assets, most notably art’otel London Hoxton, prioritising long-term value over quick wins. That means slower initial profit, but the Board still targets at least £25 million of incremental EBITDA upon stabilisation from the recent openings.
Regional performance: where the growth – and squeeze – showed up
- United Kingdom: revenue up 6.4% to £118.8 million. Occupancy improved to 83.8%, but average room rate fell 3.4% to £169.6, leaving RevPAR fractionally lower at £142.2. EBITDA was broadly flat at £32.3 million as the mix shifted towards occupancy.
- The Netherlands: solid demand but softer comps. Local-currency revenue down 3.6% to €37.1 million; RevPAR down 3.9% to €140.3; EBITDA down 9.3% to €11.6 million.
- Croatia: the standout. Local-currency revenue up 8.1% to €32.1 million; RevPAR up 15.9% to €65.1 as average rates rose 11.6%; EBITDA increased to €1.1 million (up 365.3%).
- Germany: lapping Euro 2024 and fewer trade fairs. Local-currency revenue down 7.8% to €12.9 million; RevPAR down 9.0% to €84.1; EBITDA down 25.3% to €2.8 million. The lease at Park Plaza Wallstreet Berlin ends in September 2025; impact to profits is not material.
- Other markets (Austria, Hungary, Italy, Serbia): reported revenue grew 43.6% to £7.6 million with new openings contributing; EBITDA steady at £0.7 million. art’otel Rome Piazza Sallustio opened in March and is receiving excellent guest feedback.
Strategic moves: London pipeline, freehold upgrade and AHG stake
PPHE leaned into its “buy-build-operate” model with three notable actions:
- City of London development site acquired (via the European Hospitality Fund) for £17.5 million. The project is earmarked for a select service Radisson RED with a minimum of 182 rooms. Total investment is expected to be about £90 million with an anticipated high single-digit unlevered yield at stabilisation. Land completion is expected in September 2025.
- Park Royal freehold secured for £10 million post period-end, moving from a long leasehold to ownership. Management points to a 4.8% unlevered yield, or roughly 8.3% on an inflation-adjusted basis.
- Further investment in Arena Hospitality Group: PPHE bought 514,947 Arena shares for €18.5 million (about £15.5 million), implying roughly a 10% yield on 2024 AHG EBITDA. The Group now holds 65.5% of AHG.
On the financing side, a new €40 million revolving credit facility with Santander UK (3-year term, 3.0% margin over Euribor) was signed at half-year; €12.0 million was utilised after period end.
Dividend and asset backing: signals of resilience
The interim dividend is maintained at 17p per share, payable on 17 October 2025 to shareholders on the register at 19 September 2025. That returns £7.1 million to investors and underlines confidence in cash generation, even as margins tighten.
For asset-focused investors, EPRA NRV (Net Reinstatement Value) per share rose 2.0% to £28.07, helped by FX movements and AHG transactions. Annual external valuations are due again in December 2025.
Leverage remains reasonable for a property-heavy model. Combined EPRA LTV was 34.5% at 30 June 2025 (33.5% at 31 December 2024). The group has £244 million of loans maturing within 12 months; discussions with lenders have begun and management views refinancing risk as remote. A £100 million interest rate swap executed in 2022 helps mitigate rate volatility.
Outlook and guidance: flat EBITDA year, long-term upside intact
Trading through the summer has been consistent with H1 and modestly improving into H2. The Board expects FY25 EBITDA to be at a similar level to FY24, reflecting current rate dynamics and the slower initial contribution from art’otel London Hoxton. The commitment stands that recently opened projects should add at least £25 million of incremental EBITDA when fully stabilised.
There are industry-level clouds to watch. The Netherlands may shift hotel VAT from 9% to 21% from January 2026, and UK business rates remain a swing factor. Neither is within PPHE’s control, but both could nibble at margins from FY26 onwards.
For context, company-compiled analyst consensus as at 27 August 2025 shows FY25 revenue of £462.9 million to £476.5 million and EBITDA of £147.6 million to £154.0 million.
My take: steady hands, asset-led story, but near-term margin grind
On balance, this is a resilient print. Top-line growth and rising occupancy are encouraging, and the dividend being held at 17p backs up the cash story. The margin compression is the rub: lower average room rates, plus higher wage and social security costs, pushed EBITDA down despite efficiency wins. That is showing up in normalised PBT too, which swung to a £3.7 million loss.
Strategically, the moves make sense. Upgrading Park Royal to freehold at a compelling yield, adding a well-located City of London scheme with high single-digit target returns, and increasing the stake in Arena at about a 10% EBITDA yield all fit the “real estate first” playbook. If PPHE lands the promised £25 million incremental EBITDA from recent openings, that creates meaningful operating leverage into FY26-27.
Positives I’m taking away
- Revenue up 4.7% with RevPAR growth and rising occupancy.
- Dividend maintained at 17p; EPRA NRV per share up to £28.07.
- Attractive capital allocation: Park Royal freehold at a 4.8% unlevered yield and City site targeting high single-digit yields.
- Reasonable leverage with Combined EPRA LTV at 34.5% and refinancing work underway.
Watch-outs to keep on the radar
- EBITDA down 5.7% and margin down 250 bps as rates normalise and costs rise.
- FY25 guidance effectively flat versus FY24; Hoxton phasing delays profit contribution.
- Macro tax/regulatory risks: potential Dutch VAT rise to 21% from 2026 and UK business rates.
- Germany lapping strong events calendar; recovery needs a healthier rate backdrop.
Bottom line
PPHE’s H1 shows a business trading steadily but paying the price for softer room rates and higher labour-related costs. The asset base is strengthening, the dividend is intact, and the pipeline is building in London and across Europe. If management delivers the £25 million stabilised EBITDA from the recent openings and secures refinancing on the terms they expect, the medium-term equity story – asset-backed growth with improving cash yields – remains very much in play.
