PPHE ‘well-positioned to endure'
PPHE Hotel Group has said it is "well-positioned" to endure the "unprecedented challenges" that the Covid-19 pandemic presents.
In a trading update for the three months ended 31 March 2020, PPHE, which has a European portfolio including nine Park Plaza hotels in the UK, described its liquidity as "robust".
It said that, as at 14 April, the cash position throughout the group amounts to £149.9m, with an additional undrawn overdraft facility of £3.8m.
While trading during January and February was in line with expectations, the coronavirus outbreak in Europe has resulted in the temporary closure of many of its hotels and significantly reduced capacity. In the UK only the Park Plaza Westminster Bridge London remains open to key workers.
The group reported total revenue of £51.4m against £62.5m during the same period last year, with occupancy of 58.5%, down from 76.4%, broadly flat average room rate of £115.1 and revenue per available room (revpar) of £67.40 against 2019's £88.20.
However, total revenue in March reduced by 60.2% and revpar was down 64.5% year-on-year, while occupancy was 29.6%.
Various measures are being taken to significantly reduce payroll, including the furlough of most UK employees, the non-renewal of fixed-term employment contracts, halting of contract labour, shortening of working hours and temporary salary reductions. This includes the chairman and chief executive, who will temporarily be taking no salary or fees, and a 20% salary reduction across the executive leadership team. However, PPHE said it is also "considering further staff reduction measures". The group also said its proposed £8.6m 2019 final dividend has been withdrawn.
The business rates holiday in the UK from 1 April 2020 until 31 March 2021, meanwhile, represents a £1.4m cash saving per month for the group. And the £180m of bank funding announced last week towards its Art‘otel London Hoxton hotel (pictured) entitles the group to temporarily unlock some contributed equity of up to £43m, which can be used to bridge any cash flow needs.
Boris Ivesha, president and chief executive of PPHE, said: "Protecting our team members has been our key priority and we continue to strictly follow all local authority safeguarding measures for those still working at our properties. We are actively engaging with the communities in which we operate to see how we can support them through these challenging times.
"We have taken decisive action to ensure the group is well-positioned to endure the unprecedented challenges that the Covid-19 pandemic presents. This review of operational costs has been carefully balanced with the business's needs for the future to ensure that, as the impact of Covid-19 reduces and a sense of normality resumes, the group is well-positioned for continued success."
