PPHE stays focused after failed sale to Fattal

PPHE Group, the owner of the Park Plaza and Art’otel hotel chains, announced on Thursday that it remains "not distracted from our core focus" after a proposed takeover by Israel‑based Fattal Hotel Group collapsed. The board had backed the sale, but a major shareholder blocked the deal, leaving the FTSE 250 company to continue its strategic review.

The news matters because PPHE reported a slowdown in revenue growth for the six months to June, even as it posted a pre‑tax profit of £135 million, up from a £10 million loss a year earlier. The group also flagged rising UK business rates and uncertainty from the Middle‑East conflict as headwinds that could dent future earnings.

Financial performance under pressure

Revenue per room rose 3.9 % and total revenue grew 4.7 % in the half‑year, but the pace has decelerated from the first quarter, when growth hit 8 % and 4.9 % respectively. The board attributed the modest lift to strong trading at its United Kingdom hotels and a favourable euro‑to‑sterling exchange rate.

Business rates hikes, which have hit the hospitality sector hard, weighed on earnings before interest, tax and depreciation. The company said the average UK hotel saw its rates bill rise by £28,900 this year, with the overall tax burden projected to more than double by 2030.

"Our strategic priority is to maximise shareholder value through a combination of operational delivery alongside balance sheet simplification," the board said.

Strategic outlook and next steps

Despite the setback, PPHE’s board reaffirmed its commitment to delivering value without distraction. The group recently acquired the freehold of its Waterloo Park Plaza hotel for £147.9 million, a move that boosted profit by removing lease costs. Earlier this year, it also sold a Manhattan development site for $33.5 million.

The company is watching the UK government’s review of business rates, led by a newly appointed "business rates guru", for any relief that could improve margins. Meanwhile, the ongoing conflict in the Middle East continues to compress booking windows and reduce forward‑booking visibility, prompting hotels to lean on last‑minute revenue streams.

Analysts expect PPHE to keep focusing on operational efficiency and may revisit a sale if market conditions improve. For now, the firm aims to navigate cost pressures while leveraging its strong brand portfolio to sustain profitability.

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