PPHE Hotel Group - Managing costs well in tough environment
The travel bans and quarantines due to COVID-19 have had a significant impact on PPHE since mid-March and are likely to continue to do so. We now expect a deeper and longer downturn than previously and a slower recovery, so we reduce our forecasts for occupancy for FY20, while holding our prior EBITDA margin assumptions reflecting cost cutting and a high level of government support on key costs. We downgrade FY20 revenue by c 32% and EBITDA by c 29%. The shares are trading at a c 54% discount to the last-quoted EPRA NAV of 2,546p per share.PPHE Hotel Group is a hospitality company. Through its subsidiaries, jointly controlled entities and associates, Co. owns, co-owns, leases, operates, franchises and develops hotels in cities, regional centers and select resort destinations, primarily in Europe. The majority of Co.'s hotels operate under the Park Plaza or art'otel brands. The art'otel brand is wholly owned by Co. Co. has a licence from Carlson Hotels to develop and operate Park Plaza Hotels & Resorts in 56 countries in Europe, the Middle East and Africa. As of Dec 31 2017, Co.'s portfolio of owned, co-owned, leased, managed and franchised hotels comprised 39 hotels providing a total of nearly 9,000 rooms.
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