European hotel property specialist PPHE has seen revenues fall 18% in the first quarter of the year as a result of forced closures across its hotel portfolio in the UK, the Netherlands, Germany and Hungary due to the coronavirus outbreak.
First quarter revenues fell to £51.4 mln (€58 lmn) at end March 2020, down from £62.5 mln (€71.6 mln) in the same period a year earlier. The quarterly reduction was driven by a 60% revenue drop in March, while for the first two months of the year the group’s revenues were up 8.7%. Occupancy was 29.6%, compared to 76.4% in Q1 2019.
Boris Ivesha, President & Chief Executive Officer, PPHE said: ‘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’ 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.’
The Group said its largest fixed expense is its payroll costs and various measures are being taken to significantly reduce payroll, including furlough of the majority of employees in the UK, the non-renewal of fixed-term employment contracts, halting of contract labour, shortening of working hours and temporary progressive salary reductions.
PPHE is also temporarily cutting 100% of the fees and salary respectively for the Chairman of the Board and the President & CEO as well implementing as a 20% salary reduction across the Executive Leadership Team.
The group is also pausing £100 mln in investment pipeline out of a total of £300 mln.
The remaining £200 mln relates to the Group’s art‘otel london hoxton project, for which £180 mln bank funding has been secured. PPHE said last week that it had obtained a £180 mln (€204 mln) syndicated facility from Israeli lender Bank Hapoalim for the development of the asset.
‘Given the fast-moving nature of the Covid-19 pandemic and the resulting ongoing uncertainty regarding disruption to the hospitality industry and our markets, it is not possible to provide meaningful earnings guidance for the current financial year. However,’ the company said, ‘having taken the measures detailed above, the Group is well positioned to withstand a continued and significant decrease in business activity across our markets during 2020.’
