OUR BUSINESS MODEL AND GROWTH STRATEGY

The Group operates a highly differentiated integrated ‘Buy, Build, Operate’ business model, which sees it operate across the whole value chain, and in turn drives enhanced value for all our stakeholders. We purchase assets that we believe have significant upside potential, and apply our expertise to (re)develop and redesign these acquired assets. Furthermore, we strive for operational excellence across all portfolio assets, underpinned by our access to a variety of attractive brands. Our financial model enables us to leverage these assets to fund future investments to facilitate further growth. This model is supported by our financial strength and our £2.0 billion property portfolio.

Our proven growth strategy is built across three strategic blocks: (i) our core upper upscale city centre hotels; (ii) our leisure and outdoor hospitality offerings, both of which are asset-backed; and (iii) our hospitality management platform, through which we manage the hospitality assets of our joint venture partners and third party owners. This presents excellent growth potential for the Group, and these three strategic blocks are all reflected within our active development pipeline during the year.

EXTENSION OF OUR STRATEGIC PARTNERSHIP WITH RADISSON HOTEL GROUP

Our long-standing strategic partnership with Radisson Hotel Group (RHG) spans more than 20 years. Through this partnership, the Group has an exclusive and perpetual territorial licence of the RHG-owned Park Plaza brand in Europe, the Middle East and Africa (EMEA), which has been instrumental in the expansion of the brand in the region. Moreover, the Group (including its wholly owned art’otel brand) has access to Radisson’s state of the art central reservation and global distribution systems, its global sales and marketing capabilities, and more than 11 million loyalty programme members.

In May, we were pleased to announce an extension of this successful partnership which provides the Group the opportunity to diversify our market segments and our product offer. Through the extended partnership, the Group has the ability to access and leverage RHG’s full suite of brands, including Radisson Collection, Radisson Blu and Radisson RED. RHG benefits from access to PPHE’s wholly owned art’otel brand and the Park Plaza brand in certain regions within EMEA, which are primarily outside of the Group’s core markets. Through this arrangement, PPHE is entitled to a fee-based income for the use of both brands and will benefit from the portfolio’s growth and the resulting greater brand awareness. The first hotel launched under this new partnership arrangement was Grand Hotel Brioni Pula, a Radisson Collection Hotel.

TWO NEW PREMIUM HOTELS OPENED

We remained highly focused on delivering on our £200+ million development pipeline. Excellent progress was once again made during the year, including the opening of two stunning premium hotels.

In May, we relaunched Grand Hotel Brioni in Croatia, a 5-star upper upscale hotel which offers guests quality services, dining and wellness. The hotel opened on schedule and in time for the summer season following a two-year c. £30 million repositioning project. This is the first of our three planned premium hotels in Croatia, with two further properties expected to open during 2023 and 2024. This involves the conversion of an iconic office building in the centre of Zagreb to become Croatia’s first art’otel, and the repositioning of our hotel in the centre of Pula.

Our second hotel opening in the year was the spectacular art’otel London Battersea Power Station, our first art’otel in the UK, which opened its doors to guests in December. This is a one-of-a-kind hotel experience that fuses art, design and hospitality with fabulous views across London. The interior of the hotel was designed by award-winning Signature Artist Jaime Hayon. The art’otel brand is wholly owned by the Group and the Group operates the hotel under a long-term management agreement through our hospitality operating platform, which we believe offers us significant and further long-term growth opportunities.

Development pipeline update

In the UK, construction of our flagship property, art’otel London Hoxton, continued to plan. We recognise the importance of taking a sustainable approach to development and are pleased to report that this property remains on target to achieve an ‘Excellent’ BREEAM sustainability rating. It will not use any gas for energy supply, save for minimal use in the kitchens for burners. Development of the property remains on track, with opening expected in H1 2024. We also have two further, longer-term development projects in London over coming years, at Westminster Bridge Road and Park Royal.

In Italy, we commenced the planned repositioning of our hotel in the centre of Rome to transform our existing hotel into an upper upscale lifestyle art’otel. The hotel is expected to reopen during Q1 2024.

During the year, we also completed various investments across the rest of our estate to renovate and upgrade properties and enhance the customer experience. This included investments positioning FRANZ Ferdinand Mountain Resort in Austria as a year-round destination, upgrades to Arena Stoja campsite in Croatia, and updates to 88 Rooms Hotel in Serbia.

INVESTING IN OUR PEOPLE

Our people and values drive our success. We have a strong track record of creating memorable guest experiences by delivering consistently high levels of customer service in line with the high quality of our well-invested property portfolio. We recognise the importance of a highly engaged workforce and a strong employer brand to enable us to achieve this.

2022 was a year of rebuilding our teams post COVID. Our long-standing commitment and track record of investing in our team members has clearly benefited the Group at a time when a tight labour market is proving challenging across the hospitality industry.

In the UK and the Netherlands, our centralised approach to recruitment, which sees our recruitment teams working directly to support hotel teams by sourcing and often completing the initial rounds of the recruitment process, drives a more proactive and efficient approach. Year-on-year, we increased our workforce by more than 61% in the UK and the Netherlands.

Furthermore, we are focused on creating more part-time employment opportunities. In doing so, we can maximise the talent available to the Group by reaching those that may not have previously had the opportunity to work in hospitality, as well as increasing diversity and inclusion in our workforce. Our innovative walk-in Hospitality Career Centre at Park Plaza London Victoria, close to Victoria Station, also enables our recruitment team to attract external talent in an accessible manner and complements our online application process. We welcome around 20 walk-ins per week, and this resulted in 163 hires in 2022.

The Group’s approach to recruitment is supported by its complementary partnerships with universities, colleges, local councils and the government. We believe apprenticeship schemes are an important gateway for school leavers entering the industry and each year we employ between 20 and 30 chefs, property maintenance and hospitality manager apprentices. Our graduate scheme (c. six graduates per year) offers post-graduates an 18-month programme based around five core modules which include a six-month rotation in roles across operations (meetings & events, Food & Beverage and front of house) with a quarterly review with the General Manager. We will be running a ‘sandwich’ placement programme in 2023. Furthermore, in the UK, we work with the Department for Work and Pensions, and have successfully recruited over 100 Jobcentre Plus customers across our London hotels through this partnership since 2021.

In the Netherlands, from next year we will similarly work with universities and offer internships and sandwich-year placements to students. To help address labour shortages, we have also started to recruit candidates from across the European Union, offering them relocation support, including accommodation for six months. In Croatia, a combination of recruiting the full headcount for the start of the season (rather than ramping up recruitment as the season progressed) and scaling overseas recruitment is behind how the brand is future proofing its approach to talent. Through responsible recruitment partnerships in Asia, for instance, more than 250 jobs (with accommodation and catering) were created.

We are committed to taking a holistic approach to supporting our team members. We have refreshed our onboarding process for new team members, as we recognise that many new starters have not worked in the hospitality sector before and require additional training and support from their manager, particularly in the first three months. Alongside offering competitive pay rates, we provide a breadth of financial, social, mental and physical wellbeing support, such as access to Wagestream, a financial wellbeing provider, PPHE BenefitHub, and two free meals a day (even on days off). We also understand the challenges of finding suitable affordable accommodation in city centres, and provide help to address this with 15 bedrooms available for team members in London and 50 across Amsterdam.

The positive results of our ongoing investment in our team members are reflected in the results of our 2022 employee survey, which measures engagement levels including key drivers of engagement, enablement, autonomy, leadership and rewards. More than 2,260 responses were received to the June 2022 survey and we are delighted that the engagement index score for the year was 81%. During the year, we recruited a total of more than 1,400 new team members across the Group.

ONGOING INVESTMENT IN TECHNOLOGIES

A move to embed greater digitalisation and increased automation is being seen across the sector, to support an improved guest experience and drive efficiencies. This is a trend which accelerated during the pandemic, as operators needed to work faster to evolve the ways in which they interacted with customers.

We know that technology plays a huge part in our guests’ overall experience, and we have continued to invest in this area and adapt the ways in which we engage with our guests. Our dedicated apps for Park Plaza and art’otel enable guests to message team members through chat and WhatsApp in real time, to access guest services such as ordering room service. Self-check-in and check-out are now available at all our hotels, giving guests the option for an in-person or contactless experience.

We have also continued to invest in front and back office technologies to improve customer service and drive efficiencies. During the pandemic, we centralised our customer service operations and some of our finance administrative functions and, to facilitate this process, we have introduced one of the market leading contact centre software solutions, resulting in a holistic view of customer profiles and improved workflows and automation. We have also continued to leverage robotics initiatives. In 2023, we will be investing in automation solutions for our engineering, front office and housekeeping functions, with a ticketing system for room status, faults and guests' requests, giving front office colleagues greater visibility and improving internal communications, planning and guest services. Furthermore, we will be continuing our implementation of two revenue management systems across our Group.

OUR TEAM MEMBERS

Across the Group, our people have once again demonstrated their ability to adapt to market conditions, whether in an office‑based role or as part of our operational teams focused on delivering a consistent and best-in-class guest experience. On behalf of the Board, I would like to thank all of our team members for their commitment, professionalism and hard work throughout the year, and I look forward to the year ahead.

CURRENT TRADING AND OUTLOOK

Our room rate focused strategy has continued to deliver into 2023, with average room rates in all our regions exceeding pre-pandemic levels. The forward booking pace continues to be solid, and we are not seeing consumer price resistance or cooling of leisure demand. Demand of business travel and meetings and events is continuing to grow. As previously commented, the widely reported inflationary pressures are likely to impact the Group's margins, albeit modestly due to the offset by room rate increases.

As a result, the Board expects to continue to grow revenue and EBITDA this year.

We look forward to an exciting year ahead, further building on our already strong 2022 recovery performance and preparing for our new openings in Zagreb, Rome and Hoxton in 2023 and 2024.

Boris Ivesha

President & Chief Executive Officer