PPHE Hotel Group hit by ‘new hotel opening losses’

PPHE Hotel Group has reported a loss before tax amid a phased opening of Art’otel London Hoxton, which resulted in a “slower initial profit contribution” from the property.

In its interim unaudited results for the six months ended 30 June 2025, the company posted a loss before tax of £10.2m, up from a loss of £1.3m over the same period last year. This was despite total revenues rising by 4.7% to £199.9m.

Reported EBITDA (earnings before interest, taxes, depreciation and amortisation) for the group dropped 5.7% to £45.5m as a result of new hotel opening losses, normalising room rates, higher salary costs and increased social security costs.

While Art’otel London Hoxton ‘soft-launched’ in April 2024, the group admitted a full opening “has taken longer than anticipated”, due to the “optimisation of value, particularly around the activation of the leisure and office components”.

The property has continued to build occupancy over the past year and announced last month that acclaimed Newcastle chef Kenny Atkinson will be opening his first London restaurant on the 25th floor of the hotel in September.   

Greg Hegarty, co-chief executive officer at PPHE Hotel Group, said: “The board’s unwavering commitment to delivering high-quality assets in new destinations has meant that it has taken some deliberate actions to delay the ramp-up of some properties, such as Art’otel London Hoxton. These decisions are in line with our underlying focus on maximising the long-term financial potential of such assets, rather than focusing on short-term performance.”

In June, the group entered a £17.5m agreement to acquire a 13,000 sq m mixed-use development site in a central location near the City of London and Tower Bridge.

The site will undergo a £90m transformation to house a 182-bedroom Radisson Red lifestyle hotel with a restaurant, bar, gym and office space.

The group also completed the £10m acquisition of the freehold of its Park Royal hotel and adjacent development site.

Within the UK, PPHE Hotel Group reported a 1.4% drop in revenue per available room (revpar) to £85.50, driven by a 0.8% decrease in average room rate to £114.50 and a 0.6% decrease in occupancy to 74.6%.

The group said the UK is its’ “most significant operating region”.

Hegarty added: “During the first half we have made strong progress on building our future development pipeline further, notably with the acquisition of our first property in the City of London made through a subsidiary of our European Hospitality Fund, and the acquisition of the freehold of our current hotel and development site located at Park Royal in London. Overall, revenue performance in the first half has been solid, although normalising rates and higher social security costs have impacted EBITDA margins.”

PPHE Hotel Group is an international hospitality real estate company with a £2.2b portfolio.