Despite macroeconomic headwinds and some concern from investors and analysts, executives at Amsterdam-based PPHE Hotel Group are confident in their business strategy.
Daniel Kos, PPHE's chief financial officer and executive director, remains upbeat about the company's future and the state of the global hotel industry.
“The hotel industry has always gone in cycles. This year the challenge is something else it probably wasn’t last time, but it will turn around. Our [average daily rate] is linked with inflation, and shareholders look at it quarter by quarter,” Kos said in an interview with CoStar News Hotels. “We are operating in confirmed locations, in key centers. The industry dries up in the middle and expands in the middle, so we are perfectly able to rebound.
“Besides, we’re quite a bargain at the moment,” he joked, referring to PPHE's stock price, which as of Friday was £13.24 ($17.75) on the London Stock Exchange. In December, PPHE Hotel Group joined the Financial Times Stock Exchange European Real Estate Association National Association of Real Estate Investment Trusts Global Real Estate Index Series.
As an owner-operator of hotels, PPHE is master franchisee for Radisson Hotel Group's Park Plaza brand and has two hotel brands of its own: Art'otel and Arena Hotels & Apartments. PPHE's subsidiary Arena Hospitality Group owns Arena Hotels & Apartments and Arena Campsites.
In the first half of 2025, PPHE Hotel Group reported total revenue increased 4.7% to £199.9 million and like-for-like total revenue increased 1.3% to £193.3 million, according to an Aug. 28 earnings release.
But what was surprising to Kos and other PPHE executives was the concern external stakeholders expressed about the lower contribution from its 357-room hotel Art’otel London Hoxton, which opened 18 months ago. That lower contribution is one factor why PPHE’s full-year 2025 outlook anticipates earnings before interest, taxes, depreciation and amortization to be at a similar level to 2024.
In essence, analysts and shareholders noted the drop in the company's outlook and voiced some criticism, but Kos said that a number of factors contributed to a slower ramp-up of the Art’otel London Hoxton. Plus, the hotel industry as a whole is facing rising prices, the cost of living continues to go up in the United Kingdom and U.S. tariffs are disrupting everywhere.
“PPHE guidance is based on what we see in the market. Last year, STR was still predicting increases in London, and we are 50% in London. Typically, [the first quarter] is 7% to 8% of our performance for the whole year, so we can have a bad [first quarter], and we were happy with where our forecast was sitting,” he said. “In April, we had a favorable Easter, with average daily rate and occupancy increases. In London, where there is high demand, you can hold up ADR, and, luckily, we had enough headroom with occupancy that we could still show positive revenue per available room for [the first half of 2025]. Most of our competitors did not [show positive RevPAR].”
More recently, there have been some green shoots in regards to the performance of PPHE's hotel portfolio. But based on how guests and groups are booking, that visibility doesn't go beyond six weeks out, Kos said. That makes it a bit difficult to make long-term predictions for any hotel company, which at times conflicts with the certainty investors and shareholders want.
“I am quite surprised by the reaction, the overreaction. We compensated a lot with occupancy, and the industry has been faced with increases in wages, minimum wages and National Insurance contributions,” Kos said. “As the minimum wage goes up, consequentially so do all wages levels. The firm is essentially at the same level as last year, which is pleasing. It could have been a lot worse.”
In hindsight, the 26-floor Art’otel London Hoxton could have been opened in a different fashion, Kos said. Not every floor was opened at the same time as development continued, but a phased opening strategy brings in cash flow. The hotel's last development phase, including the opening of a top-floor restaurant, finished this month.
Now fully open, the Art’otel London Hoxton is projected to bring in between £2 million to £2.35 million of rent per annum via its office and retail space, Kos said.
“[The hotel] is going to ramp up,” he said.
Each Art’otel has a signature artist in the design process, which include touches such as real pieces of art or unique shower curtains.
“In Hoxton, the artist is D*Face. It is street art, which fits the area, and there always is a destination restaurant,” he said.
In June, PPHE acquired for £17.5 million a 140,000-square-foot site near Tower Bridge in London that is earmarked for a Radisson Red hotel with 182 rooms, a £90 million pool of capital investment and an opening date of 2029.
Partnerships and new opportunities
PPHE continues to expand its relationship with Radisson Hotels Group, which now involves two-way distribution, Kos said.
“We are very tied together, for more than 20 years, but for a hotel company like ours it is nice to have the scale behind you for, for example, when you negotiate with [online travel agencies]. Our loyalty customers can now access other Radisson brands, and it is good to have flags in hard-to-penetrate locations,” Kos said.
Between PPHE and Radisson in the South Bank district of London, both companies have 2,500 hotel rooms within a kilometer of one another.
“They all complement each other,” Kos said.
He added that moving forward, PPHE will remain concentrated on quality but in hotels with reduced service levels.
“Profitability needs a certain level, and to get there you are touching your service levels. New hotels will be lower service. Yes, they will be really nice properties with exquisite rooms, but you will not have room service, and honestly in a city such as London, no one needs it,” he said. “There is less need, too, for an all-singing, all-dancing restaurant. Instead, high tech will be aimed at the new generations. Strategically, this is very exciting.”
There is some concern in PPHE’s home city of Amsterdam, where the city’s value-added sales tax is due to increase from 9% to 21% on Jan. 1, 2026. Amsterdam’s central districts also have a moratorium on new hotel development.
“The Netherlands has some turmoil politically. It took time to impose a government, and the first thing it did was to raise VAT, which provoked quite a row. Then that government fell. Part of that VAT increase we can push through to the customer, but not to all of them,” Kos said.
He added Amsterdam is suffering from some of the tourism woes and resultant anger among local communities, which has been seen in other European cities such as Barcelona and Venice.
“The [Dutch] government also wants to move the Red Light District, tackle marijuana use on streets and focus on the type of tourist you will see in Rome, guests who have a little more to spend. The [turmoil] will affect us in the short term, but in the long term, higher room rates will benefit us. In Rome, we see that ADR is now double what it was,” Kos said.
PPHE’s interests in camping and glamping are also making large strides. The firm expanded its ownership in its subsidiary, Arena Hospitality Group, with the acquisition of 514,947 shares from minority shareholders for €18.5 million ($25 million). In its first-half 2025 earnings report, the company said the purchase reflected “a yield of approximately 10% on 2024 AHG EBITDA. Following this acquisition, the group holds 65.5% of the share capital of AHG.”
PPHE set up Arena Hospitality Group in 2008 with Goldman Sachs but bought its partner’s shares in 2016.
“It is a fantastic business,” Kos said, adding the company is expanding what once were purely underinvested campsites favored by Eastern Europeans into sites with hotels, apartments and glamping options.
“We’ve slowly upgraded it all, and that is expressed in rates. Sites now have excellent facilities, power, Wi-Fi, luxury lodges, sea view, gardens, pools and glamping,” Kos said. “In one site, we took a whole camp and all its infrastructure and added 200 sea-view tents with air conditioning, terraces and ample space for four to six people. Cars are banned. In Croatia, nature is pristine, with the same beauty as the south of France.”