PPHE Hotel : Unaudited Interim Results for the six months ended 30 June 2023

31 August 2023

PPHE Hotel Group Limited

("PPHE" or the "Group")

Unaudited Interim Results for the six months ended 30 June 2023

Strong Group performance across main markets

PPHE Hotel Group, the international hospitality real estate group which develops, owns and operates hotels and resorts, announces its unaudited interim results for the six months ended 30 June 2023 (the "Period").

Commenting on the results, Boris Ivesha, President and Chief Executive Officer, PPHE Hotel Group said:

"We are very pleased to report a strong performance for the Group across our main markets, with record revenues following significant increases on last year and the pre-pandemic period. This momentum has continued into the second half, giving us confidence in our full-year outlook and longer-term growth.

Our strong performance also enables us to reward our shareholders for their continued trust and support by returning to our historical capital returns policy of distributing approximately 30% of adjusted EPRA earnings, whilst also continuing to support investment in future growth opportunities.

We are now entering a very exciting time for the Group, with our £300+ million pipeline nearing completion. New property openings are afoot in the next nine months, in Belgrade, Zagreb, Rome and London Hoxton and, upon stabilisation of trading, these new hotels are targeted to generate at least £25 million of EBITDA for the Group.

We are encouraged by the strong trading seen over the summer period and are thankful to our teams for delivering such exemplary results and providing our guests with great hospitality across all our destinations."

Financial highlights

• Total revenue was up 59.0% year-on-year at £180.0 million (H1 2022: £113.2 million) and up 15.9%
  on the pre-pandemic levels (H1 2019: £155.3 million) with strong quarter-on-quarter momentum in the Period.
• Revenue growth was led by strong room rate growth. Average room rate was £159.6, up 13.1% compared with H1 2022 and up 31.2% on H1 2019.
• The recovery in occupancy rates continues, with H1 occupancy up to 69.1% compared with 48.0% in H1 2022 and 76.8% in H1 2019.
• RevPAR at £110.3, materially above pre-pandemic levels (H1 2019: £93.4) and last year (H1 2022: £67.8).
• EBITDA of £45.2 million, up 165.7% versus H1 2022 (H1 2022: £17.0 million), and in line with H1
  2019 levels (H1 2019: £45.7 million) with margins improving.
• EPRA NRV per share* at 30 June 2023 was flat at £25.05 (31 December 2022: £25.17), driven entirely by the change in the GBP/EUR currency conversion rate. Revaluations will be completed at the year end, as per usual course of business.

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• Adjusted EPRA Earnings of 106 pence for the twelve months ended 30 June 2023 was up by 112% versus 2022 (31 December 2022: 50 pence).
• Given the strength of trading and confidence in outlook, the Board believes the Company is now in a position to return to its historical capital returns policy of distributing approximately 30% of adjusted EPRA earnings (reported at £1.06 in the twelve month period to 30 June 2023), while continuing to support investment in future growth opportunities. In light of the continued significant share price discount (c60% as at 31 August 2023) relative to EPRA NRV per share, the Board intends to consult with shareholders regarding the most appropriate and effective mechanism for such distributions to take place, including dividends, share buybacks, tender offers or a combination thereof. The Board looks forward to updating the market on this capital return policy in the near future.

1. EPRA NRV and EPRA NRV per share were calculated based on the independent external valuations prepared in December 2022.

Operational highlights

• Strong growth in the Group's key markets - the United Kingdom and the Netherlands - driven by international corporate, leisure and meetings demand and a particularly strong London events calendar, even before the benefit of the coronation of King Charles III.
• The Croatian summer season has enjoyed a solid start and the Group expect to derive further benefits from recently refurbished and relaunched properties. In the smallest region, Germany, trading at the Group's properties started to improve from Q2 onwards.

Strategic highlights

• February saw the full opening of the first art'otel in the UK, art'otel London Battersea Power Station, which is operated by the Group's hospitality management platform.
• Significant progress with the development pipeline, and on track to open four properties between October 2023 and H1 2024.

1. The fourth quarter 2023 will see the opening of the Radisson RED Belgrade in Serbia, which is the second hotel to open under the recently extended partnership with Radisson and the first Radisson RED to be operated by the Group.

• 1. Three premium lifestyle art'otel properties are set to open, starting with art'otel Zagreb in October 2023, then art'otel London Hoxton in Q1 2024 and art'otel Rome in H1 2024.
• Regulatory approvals were obtained for the new €250 million European Hospitality Real Estate Fund, taking advantage of the Group's flexible and scalable in-house hospitality management platform. The Fund enables the Group to capture attractive acquisition opportunities via the use of non-dilutivethird-party capital as well as increasing the number of assets managed on our platform.

ESG highlights

• The Company has taken several measures to increase transparency and stakeholder accountability for its ESG strategy. Management has increased its focus on the Group's strategic approach to sustainability and responsible business, with a view to publication of its strategy, targets and KPIs in the 2023 Annual Report and Accounts. This includes dedicated increased resources including staff hires to ESG as well as retaining external specialist consultancies to advise on carbon foot- printing and reporting to stakeholders.
• Reporting on ESG in a way that is most useful for investors and customers is an ongoing priority. The Group has submitted its annual CDP data for 2023, which CDP expect to publish at year-end, and which will allow year-on-yearprogress-tracking on ESG. Globally recognised and standardised reporting channels such as CDP allow stakeholders to engage with all businesses on ESG.

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• The Group completed a full carbon footprint for scopes 1, 2 and 3. This is for the purpose of analysis of the tonnage of carbon dioxide equivalent (CO2e) emitted both in operations and in the supply chain, and design actions for carbon reduction.
• The Company is in the process of reviewing its water consumption and waste outputs. The objective is to ensure robust data collection on water usage, benchmarking consumption against comparators, and identifying strategic targets and KPIs for minimising consumption and consequent contribution to water stress.

Current trading and outlook

• Entering the strongest half of the year, the previously announced strong trading conditions have been maintained through Q2 and into Q3 across all main market segments of leisure, corporate travel and meetings and events.
• Continued focus on maintaining and driving room rates, to cover inflationary pressures, while continuing to rebuild occupancy.
• The Board remains confident in the Group's longer-term growth, underpinned by the persistent strength of consumer leisure demand internationally, its quality assets, fully-funded development pipeline and strong financial position.
• As previously announced, the Group expects to deliver FY 2023 revenue of at least £400 million and EBITDA of at least £120 million.
• Entering an exciting time for the Group as £300+ million pipeline nears completion, with four new openings afoot in the next nine months, targeted to generate at least £25 million EBITDA on stabilised trading.

PPHE Hotel Group is an international hospitality real estate company, with a £2.0 billion portfolio, valued as at December 2022 by Savills and Zagreb nekretnine Ltd (ZANE), of primarily prime freehold and long leasehold assets in Europe.

Through its subsidiaries, jointly controlled entities and associates it owns, co-owns, develops, leases, operates and franchises hospitality real estate. Its portfolio includes full-service upscale, upper upscale and lifestyle hotels in major gateway cities and regional centres, as well as hotel, resort and campsite properties in select resort destinations. The Group's strategy is to grow its portfolio of core upper upscale city centre hotels, leisure and outdoor hospitality and hospitality management platform.

PPHE Hotel Group benefits from having an exclusive and perpetual licence from the Radisson Hotel Group, one of the world's largest hotel groups, to develop and operate Park Plaza® branded hotels and resorts in Europe, the Middle East and Africa. In addition, PPHE Hotel Group wholly owns, and operates under, the art'otel® brand and its Croatian subsidiary owns, and operates under, the Arena Hotels & Apartments® and Arena Campsites® brands.

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PPHE Hotel Group is a Guernsey registered company with shares listed on the London Stock Exchange. PPHE Hotel Group also holds a controlling ownership interest in Arena Hospitality Group, whose shares are listed on the Prime market of the Zagreb Stock Exchange.

Company websites:www.pphe.com|www.arenahospitalitygroup.com

For reservations:

www.parkplaza.com |www.artotel.com|www.arenahotels.com|www.arenacampsites.com

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BUSINESS & FINANCIAL REVIEW

BUSINESS REVIEW

The first six months of 2023 saw continued strong trading conditions and positive forward booking momentum across the Group's property portfolio and regions and across all market segments of leisure, corporate travel and meetings and events. This enabled the Group to achieve record H1 revenue and a full recovery in EBITDA. When we look at the key metrics of room rate and RevPAR, the Group is now trading consistently and materially above pre-pandemic levels, whilst occupancy continues to recover strongly. We now believe the worst effects of the pandemic have been successfully overcome.

Strategically, the Group continued to take a disciplined rates-led approach across its portfolio, which helped mitigate industry-wide cost inflation and further illustrated the strong international demand for our hotels. In the Period, average room rates were up 13.1% compared with H1 2022, and up 31.2% on pre-pandemic levels reported in H1 2019. Notably, the average room rate in all our operating regions exceeded those achieved in 2019, with average room rates during Q1 up 24.6% and in Q2 up 35.6% on the same period in 2019.

The Group's hotels in the UK and The Netherlands remained the strongest performing across the portfolio, driven by a combination of continuing rate growth and occupancy recovery. Occupancy levels further improved, tracking closer to 2019 levels in the UK and The Netherlands. Meanwhile, the Group's hotel and camping assets in Croatia experienced a solid start to the summer season, supporting confidence in the Group's wider full year outlook. As previously announced, while the German region had a slower start to the year it has seen an improving trend in bookings through Q2 and into Q3.

Additionally, the Group continued to make excellent progress with its development projects with four new hotels scheduled to open during H2 2023 and H1 2024, consisting of two repositioned properties and two new hotels.

As a result, total revenue in the Period increased by 59.0% to £180.0 million, representing an improved performance of 15.9% versus pre-pandemic levels (H1 2022: £113.2m, H1 2019: £155.3m). RevPAR was £110.3 (H1 2022: £67.8, H1 2019: £93.4).

Despite macroeconomic challenges and inflationary pressures, the Group achieved enhanced operational profit in H1 2023 with EBITDA at £45.2 million, compared with £17.0 million in H1 2022. EBITDA was in line with the pre-pandemic H1 2019 of £45.7 million.

Alongside maintaining its disciplined rates-led strategy and growing occupancy, the Group successfully mitigated a number of inflationary and sector-specific issues through the implementation of innovative solutions and forward planning focused on enhancing its sustainability and energy efficiency. For example, staffing is much less of a constraint for the Group due to its proactive approach to investment in people, automation and employer brand. Furthermore, the Group's utility cost hedging has been important in mitigating energy cost increases, alongside a multitude of internal innovations and efforts to reduce energy consumption across our operations.

Given the strength of trading and confidence in outlook, the Board believes the Company is now in a position to return to its historical capital returns policy of distributing approximately 30% of adjusted EPRA earnings (reported at £1.06 in the twelve month period to 30 June 2023), while continuing to support investment in future growth opportunities. In light of the continued significant share price discount (c60% as at 31 August 2023) relative to EPRA NRV per share, the Board intends to consult with shareholders regarding the most appropriate and effective mechanism for such distributions to take place, including dividends, share buybacks, tender offers or a combination thereof. The Board looks forward to updating the market on this capital return policy in the near future.

Strategic progress and development pipeline

Reflecting its strong track record in developing, launching and operating hospitality properties, the Group remained focused on its consistent strategic investment in its portfolio of premium assets.

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