annual report pphe hotel group

7/31/2019 Annual Report PPHE Hotel Group

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Annual Report 2011

Delivering onour promise


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Forward-looking statements

This annual report and nancial statements may contain certain forward-looking statements which reect theCompanys and/or the Directors current views with respect to nancial performance, business strategy and futureplans, both with respect to the Group and the sectors and industries in which the Group operates. Statementswhich include the words expects, intends, plans, believes, projects, anticipates, will, targets,aims, may, would, could, continue and similar statements are of a future or forward-looking nature. Allforward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or willbe important factors that could cause the Groups actual results to differ materially from those indicated in thesestatements. Any forward-looking statements in this annual report and nancial statements reect the Groupscurrent views with respect to future events and are subject to risks, uncertainties and assumptions relating to theGroups operations, results of operations and growth strategy.

These forward-looking statements speak only as of the date of this annual report and nancial statements.Subject to any legal or regulatory obligations, the Company undertakes no obligation publicly to update or reviewany forward-looking statement, whether as a result of new information, future developments or otherwise. Allsubsequent written and oral forward-looking statements attributable to the Group or individuals acting on behalfof the Group are expressly qualied in their entirety by this paragraph. Nothing in this publication should beconsidered as a prot forecast.

Contents

01 2011 highlights02 Financial KPIs03 Chairmans statement

04 ChiefExecutiveOfcersstatement06 Strategy and performance: 08 Improvingournancialstructureandperformance

10 Improving our overall performance through innovative revenue generationand marketing

12 Improving operational performance through better service quality14 Utilising our partnership with the Carlson Rezidor Hotel Group to promote

our business and further grow revenues16 Driving revenue growth through expanding our asset portfolio

18 ChiefFinancialOfcersstatement20 Review of 201120 United Kingdom22 The Netherlands

24 Germany and Hungary26 Management and Holdings Operations28 Croatia30 Corporate social responsibility32 Board of Directors34 Directors report38 Corporate governance42 Report of the Remuneration Committee and Directors Remuneration Report44 Consolidatednancialstatements89 Independent auditors report90 Glossary92 Current and committed projects93 Contacts


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PPHE Hotel Group at a glance

Understanding our business model

Welcome to PPHE Hotel Group.

Our primary activities are owning, leasing, developing,operating and franchising full service upscale andlifestyle hotels in major gateway cities and regional

centres predominantly in Europe.The majority of our hotels operate under two distinctbrands, Park Plaza Hotels & Resorts and artotel.

PPHE Hotel Group has an exclusive licence fromCarlsonSM, a global privately owned hospitality andtravel company, to develop and operate Park PlazaHotels & Resorts in Europe, the Middle East andAfrica. The artotel brand is fully owned by PPHEHotel Group.

We have a minority ownership interest in theArenaturist group, one of Croatias leading hospitalitycompanies.

Our portfolio of owned, leased, managed andfranchised hotels comprises 38 hotels offeringa total of 8,376 rooms.

Our development pipeline includes three new hotelsand two mixed-use developments, which together areexpected to add approximately a further 900 rooms

to the portfolio by the end of 2014.pphe.com

Our brands

History of growth

Individual design, city centre locations

and excellent meeting facilities arekey features of the upscale Park PlazaHotels & Resorts brand, making it idealfor both corporate and leisure guests.The hotels modern function spaces areexible for conferences, exhibitions andprivate event use. Park Plaza Hotels& Resorts event facilities are perfectlycomplemented by stylish guest rooms,award-winning restaurants and

artotels are a contemporary collection of

hotels that fuse exceptional architecturalstyle with art-inspired interiors, locatedin cosmopolitan centres across Europe.At the brands core is the art itself. Eachhotel displays a collection of originalworks designed or acquired specicallyfor each artotel, rendering each aunique art gallery in its own right.artotel has created a niche for itself inthe hotel world differentiating it from

Arenaturist is one of Croatias best known

hospitality groups and consisting of eighthotels, ve holiday apartment complexes,eight campsites and 52 food andbeverage outlets, all of which are locatedin Istria. Arenaturist caters primarily fortourists and all properties are located inprime locations by the sea and are only ashort distance from either the 3,000 yearold city of Pula or the touristic Medulin.

Key strengths High quality portfolio with an attractive

geographical spread

Multi-brand approach

Integrated approach of hotel andbrand ownership and operation

Powerful distribution and marketingnetwork through the partnership withCarlson Rezidor Hotel Group

Focus on expanding affordable luxury

market segment

1995

1989

2000

2005

2011

1

1

1

3

4

8

5

18

6

38

Number of countries

Number of hotels


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Our hotelsOwnership of 50% or moreWe wholly own eight hotels and have a 50%or more interest in four hotels. Althoughthis model is capital intensive, owning theunderlying assets enables us to capitalise onincrease in property value and to developagship hotels.

Ownership of less than 50%,or management onlyWe have a minority interest in, or amanagement agreement only for, 14 hotels.We are actively looking to expand sucharrangements as it requires less capital andenables faster growth whilst retaining controlover the assets.

Operating leasesEight of our hotels are leased from thirdparties. This model eliminates the need forupfront capital investment and is largely thepreferred structure of institutional investors.

Franchise

We have four franchised hotels, whereby thirdparty operators have been granted a licence touse our brands and operate them according tothe brand standards. We are actively exploringsimilar new arrangements to accelerate growthof the brands.

Development projectsWe have a controlling interest in three of ourcurrent projects and a 50% interest in the othertwo developments.

Current portfolioUnited KingdomRooms in operation2,893Rooms pipeline352Owned hotelsPark Plaza LeedsPark Plaza NottinghamPark Plaza Riverbank LondonPark Plaza Sherlock Holmes LondonPark Plaza Victoria LondonPlaza on the River LondonPark Plaza Westminster Bridge LondonManaged hotelsPark Plaza County Hall LondonFranchised hotelsPark Plaza BelfastPark Plaza Cardiff

The NetherlandsRooms in operation1,010Rooms pipeline105

Owned hotelsPark Plaza EindhovenPark Plaza Vondelpark, AmsterdamCo-owned hotelsPark Plaza UtrechtPark Plaza Victoria AmsterdamPark Plaza Amsterdam Airport

IsraelRooms in operation182Franchised hotelPark Plaza Orchid Tel Aviv

HungaryRooms in operation

165Leased hotelartotel budapest

GermanyRooms in operation1,258Rooms pipeline175Leased hotelsartotel berlin city center westartotel berlin kudammartotel berlin mitteartotel cologneartotel dresdenPark Plaza Prenzlauer Berg BerlinPark Plaza Wallstreet BerlinFranchised hotelsPark Plaza Trier

CroatiaRooms in operation2,868*Co-owned hotelsPark Plaza Histria Pula3

Park Plaza Medulin3

Guest House RivieraHotel Belvedere

Hotel BrioniHotel HolidayHotel PalmaHotel ParkCo-owned resortsPark Plaza Verudela Pula3

Ai Pini Medulin ResortHorizont ResortSplendid ResortVerudela Beach and Villas Resort

Development pipelineartotel amsterdam, The NetherlandsPark Plaza Nuremberg, Germanyartotel london hoxton, United KingdomMixed-use development in London,

United KingdomMixed-use development inPattaya Bay, Thailand

* Room count excludes Arenaturists campsites.1 These hotels are managed or franchised directlyby Carlson Rezidor Hotel Group.

2 Includes three hotels of the Arenaturist group which,following extensive renovations, will reopen as Park Plazahotels in May 2012.

3 These hotels are currently undergoing extensive renovationsand will reopen as Park Plaza hotels in May 2012.

Hotel portfolio: contract mix artotel portfolioPark Plaza Hotels & Resorts

global brand portfolio

Operated without,or with minority,ownership interest

Ownership of 50%or more

Operating leases

Franchise

agreementsProjects (allownership of 50%or more)

Park Plaza hotelsopen in EMEA

Park Plaza hotelsopen in rest ofworld1

Park Plaza hotelsunder development

in EMEA2

Park Plaza hotelsunder developmentin rest of world1

artotels open

artotels underdevelopment

14

5

4

8

12

19

4

14

18

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2


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2011 highlights

A year of achievements

2011 highlights:

Total Group revenue increased by 44.7%to 202.4 million (2010: 139.8 million)

EBITDAR increased by 61.5% to 75.0 million(2010: 46.5 million)

EBITDA increased by 72.9% to 65.0 million(2010: 37.6 million)

Impressive rst full year performance,and signicant contribution from Park PlazaWestminster Bridge London

Migration from AIM to the Ofcial List ofthe UK Listing Authority (standard listing)and to trading on LSEs main market

Long term renancing of banking facility forPark Plaza Westminster Bridge London

Development nancing for the constructionof artotel amsterdam

Acquisition of sites for mixed-usedevelopments in London, United Kingdomand Pattaya Bay, Thailand

Winner of the 2011 Business Travel BestSmall or Independent Hotel Brand award

Completed extension of 61 rooms at artotelberlin city center west

Signicant refurbishments at Park PlazaVictoria Amsterdam, Park Plaza Eindhovenand Park Plaza Leeds

2012 highlights to date:

Company name changed toPPHE Hotel Group Limited

Completed signicant renovations at artotelberlin city center west and artotel budapest

Residential sales at our Pattaya Bay projectin Thailand commenced, with 85 of the 301apartments contracted for sale

The Board recommends to the AnnualGeneral Meeting to declare the payment ofa nal dividend of 6.0 pence per share forthe year ended 31 December 2011

Total revenue

202.4m

+44.7%

EBITDAR

75.0m

+61.5%

EBITDA

65.0m

+72.9%Occupancy

77.7%+0.3%

Average room rate

119.2+7.6%

RevPAR*

92.6+8.0%* Revenue per available room.

EBITDA margin*

32.1%+5.2%* EBITDA divided by total revenue.

Prot beore tax

10.6m13.6m11 Normalised prot.

Earnings per share

0.370.3322 Normalised EPS.

PPHE Hotel Group Annual Report 2011 1


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Financial KPIs

Our strategy of growing our average roomrate has been successful in deliveringrevenue growth and at 119.2, this was even

an improvement on our pre-nancial crisisaverage room rates achieved.

Due to continued revenue growth andefcient management of our cost base, ourEBITDA margin (EBITDA divided by totalrevenue) increased to 32.1%, a 5.2% yearon year increase.

Earnings per share decreased to 0.37(2010: 1.52). Normalised earnings pershare increased to 0.33 (2010: 0.16).

Our RevPAR increased by 6.9 year on year,due to a sustained occupancy and signicantaverage room rate increase.

Our reported 75.0 million EBITDAR for theyear represents a 61.5% increase year on year.Effectively we have more than doubled ourEBITDAR since 2008.

Our total revenue increased by 44.7% to arecord 202.4 million as we beneted froma strong operating performance, and rst fullyear contributions from our 2010 openingsand acquisitions.

For the second consecutive year, we are proudto report a record EBITDA for the Group.At 65.0 million our EBITDA increased by72.9% year on year.

Occupancy increased by 0.3% to 77.7%, whichwas in line with our strategy of focusing ongrowing average room rates, whilst retaining

our level of occupancy.

Prot before tax decreased to 10.6 million(2010: 60.5 million). Normalised protbefore tax increased to 13.6 million (2010:6.1 million).

Total revenue (in million)

Earnings per shareProt beore tax (in million)

RevPAR

EBITDAR (in million)

Occupancy

EBITDA margin

EBITDA (in million)

Average room rate

2011 Actual 202.4

2011 Like for like 157.4

2010 139.8

2009 80.3

2008 93.4

2011 0.37

2010 1.52

2009 (0.18)

2008 0.19

2011 10.6

2010 60.5

2009 (7.2)

2008 7.9

2011 Actual 92.6


2010 85.7

2009 77.4

2008 90.3

2011 Actual 75.0


2010 46.5

2009 26.1

2008 35.9

2011 Actual 77.7%

2011 Like for like 79.3%

2010 77.4%

2009 79.1%

2008 79.8%

2011 Actual 32. 1%

2011 Like for like 33. 3%

2010 26.9%

2009 20.2%

2008 27.2%

2011 Actual 65.0


2010 37.6

2009 16.2

2008 25.4

2011 Actual 119.2


2010 110 .7

2009 97.8

2008 113.9

2 PPHE Hotel Group Annual Report 2011


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The Board is committed to applying highlevels of corporate governance and has beenparticularly active over the last year. On theBoards recommendation, the Company hasappointed an independent internal auditor whois mandated by the Audit Committee to auditgroup structure and procedures.

The Company changed its name from ParkPlaza Hotels Limited to PPHE Hotel GroupLimited on 29 February 2012. Since otationof the Company in 2007, we have signicantlyexpanded our hotel portfolio with new hotelacquisitions and hotel developments whichhave positioned the Company as an establishedgrowing hotel owner and operator. The Boardbelieves that the name of the Company didnot distinguish it clearly enough from the hotelbrand names which the Group operates undera licence or ownership. Nor did the namefully reect the Groups multi-brand approachfor operating hotels. With several artotelsunder development, the Groups interest in

Arenaturist, and recent acquisitions in Londonand Pattaya Bay, Thailand, this name changewill further position PPHE Hotel Group as amulti-brand operator, better placed for furtherportfolio expansion.

Whilst we have changed our name, our businessprinciples and strategy remain the same. We willcontinue to focus on operating contemporaryhotels in vibrant destinations, offering excellentservice and value to our guests in order to deliverreturns to our shareholders.

The Board is pleased to recommend to theAnnual General Meeting the payment of anal dividend of 6.0 pence per share for theyear ended 31 December 2011. The Board is

very proud of its achievements during 2011and wishes to thank all members of staff fordelivering such a great set of results.

The Board also believes that the recentstrengthening of the Groups seniormanagement team, its strong partnership withCarlson Rezidor Hotel Group, excellent hotelportfolio and developments and the sportsevents and the Diamond Jubilee in London,position it well for the future.

Eli Papouchado

Chairman

Chairmans statement

A continued strong performancewith good achievements

Dear shareholders,I am pleased to report that 2011 has beenanother year of progress for the Company. Ourteam delivered a record trading performance,generating unprecedented revenues andEBITDA. We are now seeing the full yearbenets from our 2010 acquisitions, new hotel

openings and several successfully completedhotel renovation projects.

Reecting on 2011, the headlines were largelydominated by continued global economicunrest, turmoil in the Middle East and NorthAfrica and one Euro crisis after another. Weare proud to have delivered strong results inspite of these macroeconomic challenges.

Company highlights during the year includethe migration of our listing from AIM to thestandard listing segment of the Ofcial List ofthe UK Listing Authority and to trading on theLondon Stock Exchanges main market for listedsecurities in June 2011. The objectives of thismove were to raise our prole both domestically

and internationally, improve liquidity in our sharesand give rise to further funding opportunities inthe future. Since our migration, our share pricehas increased by approximately 35%* and withthis in mind we are considering to move fromstandard to premium listing. We have condencein our business model and took the opportunityto acquire into treasury an additional 800,000shares at 227.5 pence per share in October 2011.

We acquired a mixed-use developmentsite in Thailand, contracted to acquire amixed-use development site in the UnitedKingdom and renanced banking facilities forPark Plaza Westminster Bridge London andartotel amsterdam.

Our high standards of service remain at the heartof our business and we have continued to focuson, and deliver, a great guest experience. Thiscan only be achieved by having an enthusiastic,committed and professional team and I ampleased to report that guest satisfaction wasyet again at a very high level and employeesatisfaction at an all time high this year.

During the year the Companys performancewas recognised with a number of awards. In therst half of 2011, we were awarded the BestSmall or Independent Hotel Brand award byBusiness Travel which was followed by multipleother awards and recognition throughout theyear for hotels, teams and individual employees.

Such recognition is a testimony to our continuedinvestment in service and training.

* As at 31 December 2011.



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Chie Executive Ocers statement

Welcome,The industry in which we operate showedan initial recovery during 2010 which gainedfurther momentum in 2011. However, thisrecovery generally applied to capital cities andother traditional high demand destinations,with provincial destinations trailing due tocontinuing low levels of demand paired with

increased costs and new supply.In such turbulent times, every businessrequires strong and focused management andI believe our teams have really delivered thisyear through the growth and development ofour excellent network of hotels. Our vision isto realise growth potential and I am happy toreport that we delivered on our strategy andpromise. As set out in our 2010 Annual Report,we were committed to focusing on improvingour overall performance, growing ouraverage room rates, managing our expenses,progressing our development projects andadding new projects to our pipeline. To thisend, the Group has broken some signicant

records in the year. Total revenue was up by44.7% and EBITDA was up by 72.9%. Therehave been many other successes of which Iam very proud. We earned some excellentindustry recognition, maintained our very highlevels of guest and employee satisfaction,recorded various operational successes andadded several new exciting projects to ourdevelopment pipeline.

Overall perormanceA large proportion of our revenues aregenerated by our London hotels whichperformed well in 2011. This year was the rstfull year of operation for our largest hotel, ParkPlaza Westminster Bridge London and we are

delighted with its performance.We saw the benets from our rst year assole owner of Park Plaza Sherlock HolmesLondon, Park Plaza Victoria London, ParkPlaza Riverbank London (including Plaza onthe River), Park Plaza Leeds and Park PlazaNottingham. As mentioned, although theLondon hotels performed well, the provincesare more challenging and they will take longerto recover from the economic downturn. Weare, however, condent that with our recentand planned investments into our hotels inthese destinations we can capitalise on ourstrong position in the market.

In The Netherlands, our recent refurbishments

have helped improve the hotels performanceand in particular our hotels in Amsterdamreported strong growth.

Germany and Hungary have been the mostchallenging countries in which we have beenoperating for several years, although thepositive trends experienced in 2010 continuedthis year, albeit at a slower growth rate. artotelcologne, which opened in 2010, reporteda strong growth year on year and artotelbudapest, arguably our worst affected hotel

during the downturn, made a remarkablecomeback. Despite the reported loss forthis region, it contributed positively to theGroups cash ow.

Improved products and new developmentsExtensive renovation works were undertakenand completed at Park Plaza Leeds in the UnitedKingdom and Park Plaza Victoria Amsterdamand Park Plaza Eindhoven in The Netherlands.These hotels have clearly beneted from theseinvestments with average room rates andoverall guest satisfaction increasing.

We completed a 61-room extension at theartotel berlin city center west. In addition,this Andy Warhol and Christopher Makos

dedicated hotel now offers new meetingrooms, leisure facilities and an inviting barand lounge.

Preparations for the construction of art otelamsterdam, which is set to open in 2013, arenow well underway and this hotel will be ourrst artotel in ownership.

During the year, we announced a newmixed-use development project in PattayaBay, Thailand and we contracted to acquire amixed-use development site in London. Wecommenced extensive renovations at three ofthe Arenaturist hotels in Croatia, which will beready for the new season when they reopenin May 2012 as the rst Park Plaza Resorts

worldwide.

Improving our nancial positionFollowing 2009 and 2010 renancing activities,in 2011 we successfully secured new bankingfacilities for Park Plaza Westminster BridgeLondon and the construction of artotelamsterdam. The Group has sound nancialarrangements, with no signicant loans set toexpire within the next few years, a comfortingposition in what still remains an uncertainnancial environment.



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Industry recognitionThe year got off to an excellent start, withour hard work and dedication recognisedin the form of the Business Travel Award forBest Small or Independent Hotel Brand.Winning this award was not an easy featconsidering that we were up against somestrong competition. Winning this prestigious

award was merely the start of many more tocome during the year, including awards forhotels, hotel teams, restaurants and barsand individual members of staff.

Saeguarding our utureTo ensure we continue to deliver on ourstrategy we have strengthened our seniormanagement team during the year andhave optimised our organisational structure.Following his successful tenure at Park PlazaWestminster Bridge London, Andrew Swindellswas promoted to Chief Operating Ofcer anda Vice President Restaurants and Bars and aVice President of Asset Management wereappointed.

Global partnershipsWe have continued to benet from our uniquepartnership with the Carlson Rezidor HotelGroup. In particular, the launch of the newClub CarlsonSM guest rewards programme inthe year was a success. With its substantialbenets for members, as well as theparticipating hotels, the membership basehas grown signicantly and currently hasover eight million members worldwide. Anew programme extension, Club CarlsonSMfor Business, was launched in the secondhalf of the year and this initiative focuseson attracting new business from small tomedium enterprises.

In partnership with Carlson Rezidor HotelGroup, we continued to invest in developinga stronger online presence. This year welaunched brand-wide social media channels,a mobile friendly website, the new ClubCarlsonSM App and a range of onlineadvertising and email marketing initiatives.These activities have helped us to generatemore direct business and increase our shareof brand website bookings.

In the year, Carlson Rezidor Hotel Groupadded six new Park Plaza hotels in Thailandand India, including key markets such asBangkok and New Delhi and has announcedits intent to add a further 14 hotels under

the Park Plaza Hotels & Resorts umbrellaby 2015. These new openings will lead togreater customer recognition and improvedcross marketing and sales opportunities.

Guest experience

Making our guests feel welcome andconsistently offering them a high standardof service and good overall experienceare essential to our success. Our teams arepassionate to achieve this and have deliveredanother outstanding performance throughcontinued focus on delivering a quality service.

Guest and employee satisfaction remainedstrong; in fact employee satisfaction was at anall time high of 83.3, an increase of 2.8% yearon year. This growth is underpinned byour strategy of investing in people.

The hotels collectively generated over 50,000completed guest satisfaction surveys throughour online system. These surveys are invaluablefor us to not only improve satisfaction levels,but also to further improve our policies andprocedures in general. We pride ourselves onlistening to our guests and responding to theirneeds and the guest survey tool enables usto develop and maintain direct relationshipswith each and every guest. Our teams take

this seriously and as a testimony to theirsuccess, 91% of these survey respondentsindicated that they were satised or extremelysatised with their stay. We see a cleartrend of Club CarlsonSM members rating ourperformance better than non-members andshowing a stronger intention to return to, andrecommend, our hotels.

In the year we launched you:niverse, ourbespoke and highly intuitive intranet ande-learning portal which has been developedto improve internal communications andfoster a climate of best practice sharing. Thisportal will serve as our primary platform fore-learning modules which are currently being

developed as part of our proprietary businessschool, you:niversity, which is set to beintroduced in 2012.

Current tradingIn comparison with previous years, ourperformance in January and February 2012has not changed signicantly. RevPAR for therst two months of the year is in line with theBoards expectations in all markets.

The rst quarter is traditionally our weakest andwith the continued uncertainty in the globaleconomy we remain more focused than everon driving top line growth and managing ourcosts. We are optimistic about the benets thesports events in London will bring.

I want to take this opportunity to sincerelythank our Board and all members of staff fortheir hard work, passion and commitment.I am very pleased with the signicantachievements for 2011 and believe that ourfocus on revenue generation, improvedportfolio (including new hotels which areyet to mature), reinforced management

structure, recent renancing activities and theglobal partnership with Carlson put us in anadvantageous position for delivering strongresults in 2012 and beyond.

Boris IveshaPresident and Chief Executive Ofcer

Awards and accoladesBest Small or Independent Hotel Brandby Business Travel (Park Plaza Hotels)

Best Family Friendly Hotel HRS ExcellenceAwards (Park Plaza County Hall London)

AA Rosettes for the restaurants at Park PlazaCounty Hall London, Park Plaza RiverbankLondon (2nd Rosette)

Green Key Silver Award for Park PlazaEindhoven and Park Plaza Utrecht

One of Top-30 Best Employers in Hospitality2011 by Caterer & Hotelkeeper(Park Plaza Westminster Bridge London)

Hotel Restaurant Team of the Year AwardHotel Cateys (Chino Latino at Park PlazaRiverbank London)

Front of House Manager of the Year AwardHotel Cateys (Joanne Alder, Park PlazaVictoria London)

Gold Award Green Tourism(Park Plaza County Hall London)

Best Student Placement Provider 2011

Springboard Awards for Excellence(Park Plaza County Hall London)

We have broken some signicant recordsin the year, including total revenue and

EBITDA, but there have been many other

successes of which I am very proud



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Strategy and perormance

Measuring our success

Perormance

Strong RevPAR growth, balanced mix of market segments, channelshift strategy to generate more direct business, signicant focus ononline marketing.

Perormance

We beneted signicantly from our 2010 acquisitions, completedextensive renovations at several hotels and added 63 rooms to existing

hotels and two new projects to our development pipeline.

Perormance

Launch of Club CarlsonSM and its positive impact on our business such asrecord level of new member enrolments, award stays booked andgrowth of share of occupancy.

Perormance

Continued high levels of guest satisfaction, record number of surveyresponses, highest level of employee satisfaction, launch of you:niverseintranet and e-learning portal.

Perormance

During the year we renanced two banking facilities. No signicantloans are due to expire in the next few years. Record EBITDA Margin.Improved Working Capital.

2Improving our overall performancethrough innovative revenue generationand marketing

5Driving revenue growththrough expanding ourasset portfolio

4Utilising our partnership with the CarlsonRezidor Hotel Group to promote ourbusiness and further grow revenues

3Improving operationalperformance throughbetter service quality

1Improving our nancialstructure and performance



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PPHE Hotel Groups primary objective is to become one of the leading hotel owner/operators in the upscale and lifestyle hotel segments in certain key European markets.We may also invest in selected projects outside Europe with upside potential.

The Group intends to use its established portfolio and network to grow the number ofhotels and brands in its portfolio, increase protability through revenue growth and costmanagement and utilise the Carlson Rezidor Hotel Group partnership as the driver tomarket the Groups business and further grow revenues.

Looking orward

Continue to focus on generating more direct businessthrough our own channels, expand our onlinefootprint, engage with our customers online, increaseconversion and develop new strategic alliances.

Looking orward

Successfully deliver renovation projects in progressat artotel berlin city center west and artotel budapest.

Construction work underway at artotel amsterdam,advance other projects in our committed pipeline.Opening of rst three Park Plaza Resorts in Croatia.Capitalise on new hotel opportunities.

Indicator

6363 rooms added to existing hotels.

Indicator

8.0%8.0% RevPAR increase.

Deployed extensive marketing initiatives, launched mobilefriendly website and Club CarlsonSM App, developedsocial media fan base.

Looking orward

Continue to embrace all marketing, sales anddistribution programmes and opportunities availableto us through the Carlson Rezidor Hotel Grouppartnership. Drive more direct business and increasecustomer loyalty and engagement.

Indicator

8.0m8.0 million Club CarlsonSMmembers worldwide.

83.383.3 employee satisfaction score,up by 2.8%.

+19%19% increase in Club CarlsonSMmembers share of occupancy.

55% increase in award stays.

2Two new projects added todevelopment pipeline.

2Two banking facilities renanced.

Looking orward

Further grow guest and employee satisfaction andloyalty through the continued monitoring of, andresponding to, customer feedback, the delivery oftailored service culture and training programmes andthe launch of the you:niversity business school.

Indicator

91%91% of guest survey respondentsextremely satised or satised.

Looking orward

Continue to grow our EBITDA margin through furtherimproving our nancial structure, asset managementand cost-effective management.

Indicator

5.2%EBITDA Margin increased by5.2% year on year (EBITDAdivided by total revenue).

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We successully improved protability, with ourEDITDA margin increasing 5.2%.

Mandara Spa at Park Plaza Westminster Bridge London

Highlights

SignicantlyimprovedWorking Capital

Signicantrenancing o163.0 million

No major loans dueto expire soon



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StrategyWe are committed to maintaining a solidnancial base which allows us to capitaliseon new hotel opportunities that will enhanceour presence in our market for affordableluxury hotels.

New acquisitions will be considered eitheras outright purchases, utilising our strongrelationship with our nancial providers,or where appropriate through joint

venture schemes.Market penetration may also be increasedwithout signicant capital resource throughcarefully structured management andfranchise agreements.

We seek to continue our investment inour existing portfolio maintaining the highstandards set. This policy is complemented byremaining focused on increasing protabilityby managing operational costs whilstmaintaining our high standards to provide ourcustomers with a quality product and service.

2011 perormanceNotwithstanding continued pressure onnancial markets, we have not only continuedto invest in renovations of several of ourhotels during the year, but we also acquirednew projects and renanced existingbanking facilities.

In June 2011, we announced the renancingof the existing banking facilities for Park PlazaWestminster Bridge London. The renancing

involved seven-year term facilities totaling115.0 million (137.0 million) with BankHapoalim.

This signicant renancing was followed inSeptember 2011 by the renancing of existingbanking facilities with Bank Hapoalim forartotel amsterdam. The 26.0 million facility,which matures in March 2014, is in connectionwith the land acquisition and redevelopmentof an ofce building to artotel amsterdam.

These two renancing agreements, whichfollowed several completed renancingactivities in 2009 and 2010, have signicantlyimproved our nancial position as we haveno major loans due to expire in the next

few years.Due to continued focus on working capitalmanagement and successful renancing, wewere able to improve our working capital toa current ratio* of 1.22 (2010: 0.35).

We were successful in improving our overallprotability by increasing our revenues whilsttightly managing our cost base. This hasresulted in a 5.2% increase in EBITDA marginto 32.1%.

Park Plaza Riverbank London

artotel berlin city center westChino Latino staff

EBITDA Margin year on year

+5.2%

Strategic objective

1Improving our nancial structure

and performance

Record level EBITDA Margin

32.1%

*Current ratio is total current assets divided by totalcurrent liabilities.



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StrategyOur team has always been focused ongenerating revenue whilst carefully managingour expenses and 2011 has been no exception.With early signs of recovery in some of ourmarkets in the second half of 2010, we werequick to respond to increased demand levels.Our primary focus for 2011 was to benet fromthis trend and to grow our average room ratesacross the board.

Generating more direct business throughour own channels is also part of this strategy,including the yielding of all booking channelsand business segments to optimise the revenuestream. In particular electronic distributionchannels such as brand websites, social mediaand the Global Distribution Systems havestarted to play an even more signicant role.

Despite new strategies being adopted and ourgrowth in recent years, our overhead structurehas not changed and we believe that ourefcient management structure can be usedto service a larger portfolio.

2011 perormance

On a like for like basis we delivered a strongRevPAR growth and our overall resultsexceeded Board expectations. Key drivers forRevPAR growth are a balanced mix of businessfrom different market segments and theability to attract more business through directchannels. The direct electronic channels arethe most cost effective for us, and our channelshift strategy heavily focuses on generatingmore revenue through these. To deliver on thisstrategy we have introduced several initiativesacross the organisation and we have createda new e-commerce team.

We have made great strides in directlytargeting our existing and potential customers,through the extensive use of the various loyalty

programmes, targeting frequent travellersthrough our airline partners and in particularthrough new online marketing initiatives.

A new online marketing strategy wasdeployed, focusing on driving more trafcto our direct channels, improving our onlinesales proposition and increasing conversion.We launched several social media campaignsduring the year to increase our online footprintand create more customer engagement,we completed extensive website andbooking funnel redesigns to improve theoverall customer experience, we introduced

new online advertising campaigns to raiseawareness and generate more trafc andimplemented several new languages onlineand hotel videos for all our managed hotels.

Cross channel marketing campaigns werealso introduced during the year to ensure allcustomer touchpoints such as our websites,social media channels, hotels as point-of-sale, public relations and online and printadvertising carried the same message oroffer. The results have been impressive. Oneof our major successes in the year was oursuccessful migration to a highly sophisticatedemail marketing platform, enabling us tocreate tailored email newsletters for differentcustomer groups.

Our partner, the Carlson Rezidor Hotel Group,also launched a brand new mobile websiteplatform and a Club CarlsonSM App, both ofwhich have proven to be of great value to ourbusiness. The mobile devices market, withtablets such as iPads in particular, has grownextensively in the past year in particular, andthe launch of the mobile friendly website andthe Club CarlsonSM App ensure that we arewell prepared to fully take advantage of theserapidly emerging booking channels.

All of these initiatives, paired with increasedcustomer recognition, have helped us togenerate more direct business and increaseour share of brand website bookings.

Park Plaza Victoria London

Passionate chefs

RevPAR increase

+8.0%Social media ans and ollowers

12,000+Airline partners

23

Strategic objective

2Improving our overall performance

through innovative revenuegeneration and marketing



16/98

91% o our guest survey respondents wereextremely satised or satised with their stay.

Highlights

Over 50,000completed guestsatisaction surveys

Launch oyou:niverse, brandnew bespoke andintuitive intranet ande-learning portal

Club CarlsonSMmembers are moresatised and morelikely to return toour hotels

Park Plaza Westminster Bridge London



17/98

Strategic objective

3Improving operational performance

through better service quality

StrategyDelivering a consistently high level of serviceis paramount to our success. In our industry,service excellence is still regarded as the keyto continued success and we have, even indifcult economic conditions, never comprisedon service. Our strategy is to deliver anexcellent customer experience at all times.To ensure we remain fully focused on thisservice delivery and continuously improve,

we actively solicit customer feedback, investin employee training and empower andlisten to our employees.

2011 perormanceOur teams have delivered yet another setof great results during the year. We prideourselves on listening to our guests andresponding to their needs and our online guestsurvey tool enables us to develop and maintaindirect relationships with each and every guest.

Never before have we received so muchfeedback from our guests through our onlinesystem. An impressive 50,000 completedsurveys were received, which is approximatelya 28% increase year on year. The invaluable

data collected through these surveys enablesus to further improve our service levels leadingto greater guest satisfaction and increasedloyalty. Our teams take this very seriously andas a testimony to their success, 91% of thesurvey respondents indicated that they wereextremely satised or satised with their stay.We also see a clear trend of Club CarlsonSMmembers not only rating our performancebetter than non members, but they are alsomore likely to recommend our hotels or returnfor another stay.

Such high results can only be delivered byhaving a passionate and committed teamand we are therefore proud to report thatemployee satisfaction was at an all time highof 83.3 in 2011. This represents an increase of2.8% year on year and the participation ratewas also very high at 96%. The loyalty ratefrom our employees increased by nearly 5%and the most signicant growth was reportedin the areas of Leadership and Personal

Development, underpinning our strategyof investing in people.

Towards the end of 2011 we launched therst phase of you:niverse, our bespoke andhighly intuitive intranet and e-learning portal.This new portal has been created to furtherimprove internal communication and fosteran environment of sharing best practice andsuccess stories. It will also serve as our primaryplatform for e-learning modules which willtake centre stage as part of the proprietarybusiness school currently under development.This new initiative, you:niversity will beintroduced in the rst half of 2012 and willserve as the backbone for all trainings availableand created by the Group.

Plaza on the River London

artotel budapest

Guest satisaction survey respondentswho were extremely satised orsatised with their stay

91%Record level o employee satisaction

83.3



18/98

Highlights

Launch o ClubCarlsonSM newguest rewardprogramme

Launch o ClubCarlsonSM App

Launch o mobilewebsite orPark PlazaHotels & Resorts

Our hotels are among Club CarlsonSMmembers avourite hotels or earningand spending Gold Points.

Chino Latino



19/98

Strategic objective

4Utilising our partnership with the

Carlson Rezidor Hotel Group to promoteour business and further grow revenues

StrategyOur unique and exclusive partnership withthe Carlson Rezidor Hotel Group for the ParkPlaza Hotels & Resorts brand provides us withaccess to their state-of-the-art reservation anddistribution systems and participation in a widearray of sales and marketing programmes.

The Carlson Rezidor Hotel Group is oneof the worlds largest hotel groups and itsportfolio includes more than 1,300 hotels in

80 countries. In a global market where majorcorporations are consolidating their supplierrelationships, being part of such globalnetwork ensures that our hotels remain atthe forefront of corporate travel buyers andit improves our positioning and visibility withglobal travel consortia.

The Carlson Rezidor network has a cross-selling and cross-marketing strategy for allcustomer touchpoints for the different brandswithin the family of brands. This includesreservation call centres, loyalty programmes(for guests, meeting planners and travelagents), Global Distribution Systems, points ofsale, the brand websites and their own global

sales force. These marketing and reservationservices cover the Park Plaza Hotels & Resortsand artotel brands, which are both marketedthrough the Carlson Rezidor Hotel Groupreservation system.

To ensure optimum results and visibility forour hotels and brands we fully embrace allsales, marketing and distribution opportunitiesand channels available to us through thispartnership. We employ specialists in all eldsensuring we continue to generate maximumvalue out of this relationship. From informationtechnology to strategic partnerships, fromloyalty marketing management to direct salesand from e-commerce to distribution, we havefully aligned and activated our organisation.

2011 perormanceOur teams have worked very closely with theCarlson Rezidor Hotel Group teams during theyear and together they have delivered somesignicant milestones.

Most of the notable successes booked in theyear were in the areas of customer loyalty andonline marketing. Our e-commerce and revenueteams ensured that we attracted more directbusiness through our own channels, such as

the brand websites, through direct marketingcampaigns, social media and online advertising.2011 also marked our entry into areas such asmobile friendly websites and apps.

The new Club CarlsonSM reward programmewas introduced in March 2011 and this newprogramme has proven to be a real success.Our hotels are among the members favouritehotels for award stays (Club CarlsonSM membersredeem their Gold Points for free award stays)and for our Group the total number of awardstays increased by 55% year on year. Our hotelsalso signed up a record 56,400 new membersinto the programme, a 19% increase year onyear, with the global membership base at 8.0

million at the end of 2011. This represents a 27%increase year on year and on target to meetingthe programme goal of ten million members bythe end of 2013.

The share of occupancy from Club CarlsonSMmembers staying at our hotels increased by19% year on year and we expect this trendto continue. The global Club CarlsonSM Appwas introduced in the year, as well as a newprogramme extension aimed at small to mediumsize corporations whereby the travel organiseris entitled to earn Gold Points. The CarlsonRezidor Hotel Group now offers loyalty benetsto guests, small to medium sized corporations,meeting planners and travel agents.

Park Plaza Beijing West

Park Plaza Sukhumvit Bangkok

Club CarlsonSM membership

8.0mMembers share o occupancyat our hotels increased

+19%Increase in reward stays or our hotels

+55%PPHE Hotel Group Annual Report 2011 15


20/98

Highlights

Extensiverenovationscompleted atseveral hotels

New developmentprojects in Londonand Pattaya Bay

Construction artotelamsterdam wellunder way

Timely investments are important to saeguardour strong position and we completed signicantrenovations in 2011.

Park Plaza Eindhoven



21/98

Strategic objective

5Driving revenue growth through

expanding our asset portfolio

StrategyOur unique business model combines hotelownership with branding, management andfranchise expertise and services. We believethat this operating diversity is fundamental toour success and puts us in an excellent positionto capitalise on new growth opportunities.

Our owner/branded operator model, incombination with our long-term exclusivelicence in the EMEA region for the Park

Plaza Hotels & Resorts brand and worldwideownership of the artotel brand, allows usto leverage a wide range of opportunitiesto expand our portfolio. Our hotel interestsand contractual arrangements involveownership (and, in some cases, development)and operation through operating leases,management and franchise arrangements.

In our view Park Plaza Hotels & Resorts andartotel both have considerable developmentpotential, particularly amongst our targetmarket of value-minded customers seekingaffordable luxury.

We intend to grow the number of rooms inour portfolio by acquisition either alone or in

joint ventures with third parties. Managementis reviewing several acquisition opportunitiesand we expect that further acquisitionopportunities will arise as a result of ourextensive network of contacts. If availableat attractive prices, we intend to acquirehotels in our target markets which will benetfrom rebranding.

We use our experience of developmentprojects, gained as a result of the Companysparticipation in such projects to exploitdevelopment opportunities. We also lookat opportunities for operating leases,management and franchise agreementsas and when available.

2011 perormanceOur 2010 acquisitions have had a signicantimpact on our bottom line in 2011 and weexpect their contribution to continue to growin 2012 and beyond as these hotels mature.To safeguard our strong position in the marketsin which we operate, timely investments arealso extremely important and during the yearwe completed signicant renovations at ParkPlaza Victoria Amsterdam and Park Plaza

Eindhoven in the Netherlands, and the rstphase of renovations at Park Plaza Leeds inthe United Kingdom.

As a result of the renovations at Park PlazaEindhoven two new rooms were added, andin November 2011 we were pleased to open61 new rooms at artotel berlin city center west.A new extension was built at this hotel andin 2012 a new bar and lounge, two meetingrooms and wellness area were added.

Our development pipeline was expandedwith new mixed-use development projects inLondon in the United Kingdom and PattayaBay in Thailand.

Following the renancing of our banking

facilities for artotel amsterdam we are pleasedto report that construction work is on schedule.We also progressed project planning workfor Park Plaza Nuremberg and artotel londonhoxton during the year.

We are excited with the progress made inCroatia, where three hotels of the ArenaturistGroup are currently undergoing extensiverenovation work. These hotels will reopenin the 2012 summer season as Park PlazaResorts, a rst for the brand.


Chino Latino staff

Total revenues

202.4m2010: 139.8 million

New rooms added to existing hotels

63Park Plaza Resorts soon to open

3PPHE Hotel Group Annual Report 2011 17


22/98

Chie Financial Ocers statement

Record revenue, record EBITDAand an improved nancial

position with no signicantloans due to expire soon

The Group has delivered a recordperformance, once again exceeding theBoards expectations.

In addition to a signicant increase in revenueand EBITDA, during the past years we weresuccessful in renancing several bankingfacilities which have signicantly improved ournancial position with no signicant loans due

to expire in the next several years.

OccupancyAcross the Group, occupancy increased to77.7% (2010: 77.4%), in line with our strategyof focusing on growing average room rates.On a like for like basis, occupancy increasedby 1.9% to 79.3% (2010: 77.4%).

Average room rateManagement has been successful in deliveringreal revenue growth this year by capitalising onincreased demand and growing the averageroom rate. The overall average room rate as aresult increased by 7.6% to 119.2 (2010: 110.7)and on a like for like basis, the average room

rate increased by 9.7% to 121.5 (2010: 110.7).

RevPARThe sustained occupancy level in combinationwith the increase in average room rate, hasresulted in a 8.0% increase in RevPAR which forthe period was 92.6 (2010: 85.7). On a like forlike basis, RevPAR increased by 12.4% to 96.3(2010: 85.7).

Room revenueDuring the year room revenue increased by48.9% to 139.0 million (2010: 93.4 million).On a like for like basis, room revenue increasedby 14.7% to 107.1 million (2010: 93.4 million).

Total revenueTotal Group revenue for the period increasedby 44.7% to 202.4 million (2010: 139.8million). A signicant part of this growthis a direct result of our new openingsand acquisitions in 2010. In particular theperformance of Park Plaza Westminster BridgeLondon has had a great impact on our results.On a like for like basis, total Group revenueincreased by 12.6% to 157.4 million reectinga strong underlying performance, in particularfrom our hotels in London and Amsterdam.

EBITDAOur overall EBITDA increased by 72.9% to65.0 million (2010: 37.6 million). On a like

for like basis, EBITDA increased by 39.2% to52.4 million (2010: 37.6 million), showing astrong underlying performance in the Groupsestablished hotel portfolio.

Due to this improved EBITDA and ourcontinued focus on managing our cost base,

the EBITDA margin increased by 5.2% to 32.1%(2010: 26.9%). On a like for like basisour EBITDA margin increased to 33.3%.

EBITDA primarily beneted from contributionsof the additional hotels in the portfolio and theincreased ownership share of hotels. EBITDAimproved as well due to the recovery in theLondon and Amsterdam hotel markets, which

resulted in a healthy RevPAR growth.All our regions have reported a positive EBITDAresult, apart from our hotels in Germany andHungary. Despite the reported EBITDA loss thisregion still positively contributes in the form ofmanagement fees which are accounted for inthe Management and Holdings Operations.

Prot beore taxThe reported prot before tax was 10.6 million(2010: 60.5 million). The prot relates mainlyto the increased EBITDA contribution of27.4 million from the full year benets of our2010 acquisitions and openings, somewhatoffset by a 6.1 million increase in nanceexpenses and interest expenses guaranteed tounit holders of Park Plaza Westminster BridgeLondon. In addition an income of 2.5 millionfrom the nal settlement of the constructioncontract for Park Plaza Riverbank Londonwas recorded and interest and income fromforfeited deposits relating to the sale of unitsin Park Plaza Westminster Bridge Londonamounted to 0.7 million. The Group faced anadditional nance expense due to revaluationof derivative nancial instruments of 4.7 millionand a one-off 1.5 million expense due to thecosts associated with its migration from AIM tothe Ofcial List was also incurred.

Normalised prot before tax increased to13.6 million (2010: 6.1 million). The 2010

prots mainly related to gains arising fromone-off events amounting to 54.4 million.2011 normalised prot adjustments include fairvalue losses from derivatives (see Note 23 tothe Consolidated nancial statements), one-off(re-)nance expenses (see Note 23) and otherincome (see Note 25).

Earnings per shareBasic and diluted earnings per share forthe year was 0.37 (2010: 1.52). The yearon year decrease was a result of a lower protbefore tax, with our 2010 prot before taxpositively affected by one-off events.Details on the calculation of earnings/lossper share are provided in Note 27 to the

Consolidated nancial statements.

DividendThe Directors are proposing a nal dividendof 6.0 pence per share (2010: None), whichwill absorb 2,460,918 of equity. Subject to



23/98

shareholder approval at the AGM, to be heldon 25 April 2012, the dividend will be paid on27 April 2012 to shareholders on the register at23 March 2012. The shares will go ex-dividendon 21 March 2012.

Debt position and renancingOur net debt as at 31 December 2011 was

387.1 million, a net year on year increaseof 17.2 million (as at 31 December 2010:369.9 million). This includes 31.0 million ofliquid assets (2010: 30.9 million), of whichcash and cash equivalents were 29.5 million(2010: 25.6 million) and other liquid nancialassets of 1.5 million (2010: 5.3 million).

During the period, the movement in net debtprimarily included a 10.5 million increase inloans, an increase due to foreign exchangeof 11.0 million and 5.5 million redemptionof loans (see Note 31f for current and targetedgearing ratio).

Financial structure and investments main developments during the period

Renancing of Park Plaza WestminsterBridge London, UKOn 2 June 2011, we were pleased to announcethe renancing of existing banking facilitiesfor Park Plaza Westminster Bridge London. Therenancing involved seven year term facilitiestotalling 115.0 million (137.0 million) with BankHapoalim. Further details are set out in Note 17to the Consolidated nancial statements.

Acquisition of site in London, UKOn 12 July 2011, we exchanged contracts toacquire a two-acre site on 628 Western Avenuein west London for 6.0 million (7.2 million).

A 10% deposit has been paid and the balanceis payable in cash upon completion which isdue to take place by no later than June 2012.This is a high prole gateway site with primefrontage onto the A40, a major arterial routeinto central London. We have submitted anapplication for planning permission and expectthis to be granted in 2012.

Acquisition of site in Pattaya Bay, ThailandOn 18 August 2011, we completed theacquisition of a site, via a joint venture, locatedin Pattaya Bay, Thailand for 6.8 million. Thisopportunity allows us to expand into Asia withthe development of a 40,000 square metremixed-use development, including a 100-roomupscale apart-hotel.

Since the year end, residential sales at ourPattaya Bay project in Thailand commencedand, to date, 85 of the 301 apartments havebeen contracted for sale.

Renancing of artotel amsterdam,The NetherlandsOn 14 September 2011, we were pleased to

announce the renancing of existing bankingfacilities with Bank Hapoalim for art otelamsterdam. The 26.0 million facility, whichmatures in March 2014, is in connection withthe land acquisition and redevelopment ofan ofce building to artotel amsterdam.Further details are set out in Note 17 to theConsolidated nancial statements.

Purchase of sharesManagement strongly believes in the Groupslong term future and value proposition andunderlined this view in the year by increasingthe number of shares it holds in treasury. On

26 October 2011, we announced the purchaseof 800,000 of our own shares increasing thetotal number of shares held in treasury to1,662,000 (constituting 4.1% of the Companysissued share capital, excluding treasury shares).Further details are set out in Note 15 to theConsolidated nancial statements.

Looking aheadWe have an exciting year ahead of us withour London hotels expected to benetfrom the global exposure and high levels ofdemand, on the back of the summer sportsevents. Construction is underway for our newdevelopment in Amsterdam and we haveseveral extensive refurbishments plannedthroughout the year. These investmentsare necessary to further strengthen ourfoothold within the affordable luxurysegment of the market and safeguard ourrevenue streams.

Despite excellent achievements in 2011, weremain highly vigilant about the current unrestin the nancial markets. As demonstrated in

earlier downturns, our teams are very focusedon generating revenues and operatingas efciently as possible and although noslowdown is yet experienced, we remain onour guard.

Chen MoravskyChief Financial Ofcer

Total revenue

202.4m+44.7%

EBITDA

65.0m+72.9%

Normalised Prot

13.6m+123.7%

Reported Like for like**

Year ended31 December 2011


%change#



%change#

Total revenue 202.4 million 139.8 million 44.7% 157.4 million 139.8 million 12.6%

EBITDAR 75.0 million 46.5 million 61.5% 61.6 million 46.5 million 32.5%

EBITDA 65.0 million 37.6 million 72.9% 52.4 million 37.6 million 39.2%

Occupancy 77.7% 77.4% 0.3% 79.3% 77.4% 1.9%

Average room rate 119.2 110.7 7.6% 121.5 110.7 9.7%

RevPAR 92.6 85.7 8.0% 96.3 85.7 12.4%

Room revenue 139.0 million 93.4 million 48.9% 107.1 million 93.4 million 14.7%# Percentage change gures are calculated from actual gures as opposed to the rounded gures included in the tables.

** The like for like gures exclude Park Plaza Nottingham and Park Plaza Leeds for the rst seven months of 2011, Park Plaza Westminster Bridge London for the rst two months of 2011, ParkPlaza Amsterdam Airport for the rst four months of 2011 and artotel cologne for the rst two months of 2011. The nancial contribution of Park Plaza Sherlock Holmes London, Park Plaza

Victoria London and Park Plaza Riverbank London (including Plaza on the River) in 2011 in the like for like comparison has been calculated on the basis of the ownership interest of PPHE HotelGroup in those hotels during the nancial year ended 31 December 2010.

All nancial information in this report for room revenue and total revenue reects PPHE Hotel Groups interest.



24/98

Our portolio delivered a solidperormance against the market

Hotel operations Euro () GBP ()





Total revenue 140.0 million 81.6 million 121.8 million 69.8 million

EBITDAR 48.9 million 25.6 million 42.5 million 21.9 million

EBITDA 47.5 million 24.5 million 41.3 million 21.0 million

Occupancy 82.1% 81.8% 82.1% 81.8%

Average room rate 145.6 137.9 126.7 118.0

RevPAR 119.6 112.8 104.0 96.5Room revenue 98.6 million 56.5 million 85.8 million 48.3 million




25/98

Review o 2011United Kingdom

In the United Kingdom, our EBITDAhas nearly doubled to 47.5 million

Our perormance2011 was the rst fully operational year for Park Plaza WestminsterBridge London, and our rst full year as sole owners of the establishedLondon hotels (Park Plaza Riverbank London, Park Plaza Victoria Londonand Park Plaza Sherlock Holmes London) and Park Plaza Leeds and ParkPlaza Nottingham.

Although our increased ownership in these hotels is one of the reasonsfor our signicant year on year growth, it is also the result of a strongperformance by most of our London hotels.

RevPAR in the United Kingdom for the year was 119.6 (2010: 112.8),representing an increase of 6.0% year on year. However, this result wasimpacted by the currency exchange rate from Sterling to Euro and inlocal currency RevPAR increased by 7.8% to 104.0 (2010: 96.5).

On a like for like basis, RevPAR increased by an impressive 13.8% to128.3 (2010: 112.8), showing a strong underlying performance of ourestablished London hotels in particular. Like for like RevPAR in localcurrency increased by 15.8% to 111.7 (2010: 96.5).

Most of our portfolio in the United Kingdom delivered a solidperformance against the market, with our hotels outperforming themarket in occupancy by 8.3 points, average room rates by 33.7 andRevPAR by 35.3. Occupancy remained almost at in most hotels, but inlocal currency our average room rates increased by 7.4%, versus 3.8% forthe market and RevPAR increased by 7.8%, versus 4.1% growth for themarket (TRI HotStats, UK Chain Hotels Market Review December 2011).

The majority of our hotels in the United Kingdom outperformed theircompetitor sets in occupancy and RevPAR, mainly driven by a stronggrowth in average room rates, with several of our hotels in Londonreporting a double digit growth (STR Global, December 2011). Thehotels in the provincial destinations, which were acquired on 4 August2010, continued to experience a more difcult trading environment dueto a soft corporate demand.

In the United Kingdom, reported total revenue increased by 71.6% to140.0 million (2010: 81.6 million), on a like for like basis total revenueincreased by 19.1% to 97.1 million (2010: 81.6 million).

EBITDA nearly doubled to 47.5 million (2010: 24.5 million) andon a like for like basis EBITDA increased by 42.0% to 34.8 million(2010: 24.5 million).

DevelopmentsIn March 2011 we launched the Mandara Spa at Park Plaza WestminsterBridge London. The rst of its kind in Europe, the Mandara Spa isnow fully operational and offers 700 square metres of treatmentrooms, a relaxation lounge, Spa boutique, tness centre and indoorswimming pool.

On 12 July 2011, we exchanged contracts to acquire a two-acre site inwest London. This high prole, gateway site has prime frontage onto theA40, a major arterial route into central London and the Company hassubmitted a planning request for a mixed-use development, including

a hotel component. Planning is expected to be obtained in 2012 andthe transaction is due to be completed by June 2012.

Following our acquisition of Park Plaza Leeds and Park Plaza Nottinghamin August 2010, we approved a refurbishment plan for these properties.In 2011 we completed the rst phase of extensive renovations at ParkPlaza Leeds. During this phase half of the rooms were fully renovatedand several of the public areas. The second phase of this renovation isdue to be completed by the second quarter of 2012.

At Park Plaza Nottingham we have renovated several public areas duringthe year and further renovations are planned for 2012.

In early February 2010, we received planning consent for the UnitedKingdoms rst artotel, to be located in Londons Hoxton area. Theapproval followed over two years of design work, undertaken in closecollaboration with Hackney Councils Design Review Panel, the GreaterLondon Authority and several local community groups in Shoreditch.We are currently in the process of fur ther optimising the plans for thisdevelopment to include a lifestyle artotel, as well as an art gallery,restaurants, bars and possibly a number of loft style apartments.

Park Plaza Leeds



26/98

Our hotels reported a 3% increase in RevPARdriven by average room rates

Hotel operations Euro ()



Total revenue 24.8 million 22.8 million

EBITDAR 7.8 million 7.6 million

EBITDA 7.8 million 7.6 million

Occupancy 74.9% 77.9%

Average room rate 109.4 102.2

RevPAR82.0 79.6

Room revenue 17.8 million 16.2 million

Park Plaza Victoria Amsterdam



27/98

DevelopmentsDuring the year we focused on the repositioning of Park PlazaAmsterdam Airport and several soft refurbishments were completed.Under the leadership of a new management team a signicantrenovation programme commenced in February 2012. As part of thisprogramme, all public areas on the ground oor will be redesignedcreating different environments for the different customer audiences.This repositioning will enable us to better market this hotel as a premierconference destination, providing easy access to many Europeandestinations given its proximity to Schiphol Airport.

Extensive renovations were also undertaken and completed in theyear at Park Plaza Victoria Amsterdam (164 guestrooms) and Park PlazaEindhoven (47 guestrooms, including the creation of two additionalrooms). Both hotels have experienced a year on year uplift in overallguest satisfaction, mainly as a result of improved product ratings.

The construction of artotel amsterdam, located adjacent to Park PlazaVictoria Amsterdam in the heart of the city, is now well underway andthis hotel is scheduled to open in 2013.

The Netherlands

Total revenue and EBITDA increasedfor the region with Park Plaza Victoria

Amsterdam our star performer

Our perormanceThe Dutch market was one of several Euro-zone countries reportinga recovery from the economic crisis in 2011. For the hospitality sector,Amsterdam showed one of the strongest rebounds which is in starkcontrast with the provincial cities which showed limited signs of recovery.

Against this background, our hotels in The Netherlands delivered agood overall performance, with a total RevPAR increase of 3.0% to82.0 (2010: 79.6). Our overall occupancy decreased, but the averageroom rates increased at a faster rate than our competitor sets leadingto an increased RevPAR. It is worth mentioning that key performance

indicators such as occupancy, average room rates and RevPAR havebeen negatively impacted since our 2010 acquisition of Park PlazaAmsterdam Airport. Demand for this airport location is much morevolatile, and rates are generally lower than those for our hotels in citycentre locations, which impacts the overall key performance indicatorsfor this region.

On a like for like basis (excluding Park Plaza Amsterdam Airport for therst four months of 2010), our RevPAR growth was therefore much moresignicant at 11.6%, with RevPAR increasing from 79.6 in 2010 to 88.8in 2011.

With two of our hotels located in the city centre of Amsterdam, and onelocated near Schiphol Airport, Amsterdam is a key market for us. Allthree hotels delivered a strong performance with double digit growth inaverage room rates and RevPAR.

Park Plaza Amsterdam Airport delivered a double digit growth inoccupancy. The city centre hotels outperformed their competitor sets inRevPAR (STR Global, December 2011).

Park Plaza Amsterdam Airport was acquired from administratorsin 2010 and it is encouraging to see such signicant growth acrosskey performance indicators such as occupancy, average room rateand RevPAR.

However, our top performer in this region was Park Plaza VictoriaAmsterdam which, despite having half of its room inventory closed forrenovation during the rst quarter in 2011, generated nearly the samerevenue in the full year as it did in 2010.

The provincial hotels, Utrecht and Eindhoven, outperformed theircompetitor sets in occupancy and RevPAR (STR Global and MKGHospitality, December 2011), although these markets proved to bemore challenging than the Amsterdam market.

Reported total revenue increased by 8.6% to 24.8 million(2010: 22.8 million) and EBITDA increased by 2.1% to 7.8 million(2010: 7.6 million). On a like for like basis, EBITDA increased by1.5% to 7.7 million (2010: 7.6 million).

Park Plaza Eindhoven



28/98

Reporting positive signs notwithstandingtough markets

Hotel operations Euro ()



Total revenue 30.2 million 27.7 million

EBITDAR 7.5 million 6.7 million

EBITDA (1.0) million (0.3) million

Occupancy 71.7% 70.4%

Average room rate 70.9 68.8

RevPAR50.9 48.4

Room revenue 22.6 million 20.7 million

artotel berlin mitte



29/98

Germany and Hungary

The region positively contributesto the Groups cash ow

Our perormanceIn Germany and Hungary, the impact from a recovering economy onour hotel performance was not as strong as experienced by the otherregions in which we operate and historically these markets have notbeen as buoyant as the United Kingdom or The Netherlands.

RevPAR increased by 5.0% to 50.9 (2010: 48.4) as a result of a modestgrowth in average room rates and occupancy. On a like for like basis,RevPAR increased by 4.6% to 50.7 (2010: 48.4).

In its rst fully operational year, artotel cologne delivered a goodperformance with a reported double digit RevPAR growth driven bya combination of increased occupancy and average room rate. artotelbudapest, which was arguably our hotel most affected by the economicdownturn, reported a similar positive trend.

Total revenue for the region increased by 9.0% to 30.2 million(2010: 27.7 million). On a like for like basis, total revenue increasedby 5.3% to 29.2 million (2010: 27.7 million).

EBITDAR in 2011 was 7.5 million (2010: 6.7 million).

The EBITDA loss in Germany and Hungary increased to a 1.0 million loss(2010: loss of 0.3 million). The 2010 EBITDA loss was however positivelyimpacted by a one-off rent discount in one of the leased hotels.

Our business model in this region is primarily based on operationalleases. We have reported negative EBITDA in recent years, and 2011is no exception. However, the contribution of this region is still positivein the form of management fees which are included in the segment

Management and Holdings Operations.

DevelopmentsThroughout the year work continued on the 61-room extension atartotel berlin city center west. This hotel, which has Andy Warhol andChristopher Makos as its signature artists, opened these extra roomsin November 2011. The new bar and lounge, two meeting rooms and atness room were opened early 2012. It is expected that this extensionand new facilities will help to improve the hotels market position andoverall performance.

An extensive renovation programme of all rooms and the publicareas at art otel budapest started at the end of 2011 and will continue

throughout 2012.We also made good progress with the project planning for Park PlazaNuremberg and construction is expected to start in 2012 with the hotelopening in 2013.

artotel budapestartotel berlin kudamm



30/98

Inspiring service



31/98

Management and Holdings Operations

Increased revenue and EBITDA

Management and Holdings Operations:

Euro ()



Total revenue beforeelimination 28.5 million 20.7 million

Revenue within theconsolidated group 21.1 million 13.0 million

External and reportedrevenue 7.4 million 7.7 million

EBITDA 10.8 million 5.8 million

Park Plaza CardiffPark Plaza Trier

Our perormanceTotal revenue before elimination for our Management and Holdingsincreased by 37.7% to 28.5 million (2010: 20.7 million). Revenuewithin the consolidated group increased by 62.3% to 21.1 million(2010: 13.0 million) and external and reported revenue slightlydecreased by 3.8% to 7.4 million (2010: 7.7 million).

This resulted in an overall EBITDA increase of 86.2% to 10.8 million(2010: 5.8 million). The main drivers of the reported EBITDA growthare the increased contributions from our newly acquired and openedhotels during 2010 and a one-off fee which relates to previous years.

Reported revenue and EBITDA in Management and HoldingsOperations are derived from the Groups different contractarrangements. Below table outlines the primary responsibilitiesand revenue streams per contract type.

Owned and leased Managed Franchised

Brand provided under licence by PPHE Hotel Group PPHE Hotel Group PPHE Hotel Group

Employees PPHE Hotel Group PPHE Hotel Group supplies GeneralManager and Financial Controller

Third party

Sales, Marketing, Distributionand Revenue Support

PPHE Hotel Group PPHE Hotel Group PPHE Hotel Group

Day to day Sales, Marketing,Distribution and RevenueManagement

PPHE Hotel Group PPHE Hotel Group Third party

Ownership PPHE Hotel Group Third party Third party

Capital for PPHE Hotel Group High Low / none None

Revenue for PPHE Hotel Group All operatingrevenues and prots

Base management fee as percentage of total revenueIncentive fee as percentage of gross operating prot

Franchise fee as percentage of total room revenueMarketing fee as percentage of total room revenueReservation fees and loyalty marketing fees

Franchise fee as percentageof total room revenue

Marketing fee as percentageof total room revenueReservation fees and loyaltymarketing fees



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Results are refecting our investmentand redevelopment progress in 2011

Hotels

Park Plaza Histria PulaPark Plaza MedulinGuest House RivieraHotel BelvedereHotel BrioniHotel HolidayHotel PalmaHotel Park

Resorts

Park Plaza Verudela PulaAi Pini Medulin ResortHorizont ResortSplendid ResortVerudela Beach and Villas Resort

Campsites

Indije Camp & Mobile HomesKaela CampMedulin Camp & Mobile HomesPomer CampRunke CampStoja Camp & Mobile HomesStupice Camp & Mobile HomesTaalera Camp

arenaturist.comarenacamps.comparkplaza.com/verudela

parkplaza.com/histriaparkplaza.com/medulin

Park Plaza Histria Pula



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Croatia

Renovations at three hotels are expected to becompleted for the 2012 summer season and theywill reopen as the worlds rst Park Plaza Resorts

Our relationshipArenaturist group is one of Croatias best known hospitality groupsand consists of eight hotels, ve holiday apartment complexes, eightcampsites and 52 food and beverage outlets, all of which are locatedin Istria. Arenaturist group caters primarily for European tourists andthe majority of accommodation is only operational during thesummer months.

All properties are located in prime locations by the sea and area short distance from either the 3,000 year old city of Pula or thetouristic Medulin.

In 2008, we acquired a 20% stake in Arenaturist, the holding companyof the Arenaturist group, and we were awarded the managementagreement for Arenaturist. Arenaturist d.d. is listed on the Zagreb StockExchange. The Arenaturist group is accounted for as an associate in theConsolidated nancial statements.

Our progressSince we started operating Arenaturist, we have mainly focused onimproving the operational results. We appointed a new board andsenior management and initiated several staff training programmesfocusing on improving overall guest experiences.

We launched new websites and invested in those facilities that wouldprovide an immediate return, whilst continuing to develop our longerterm renovation plans. Several planning applications have since beensubmitted and granted.

In time for the 2011 season, we implemented a new multi-propertymanagement system, which now serves as this groups technologybackbone. This management system has not only led to efciencybut it also provides the team with greater visibility and reporting andforecasting tools.

After the close of the 2011 summer season, we started extensiverenovations at Hotel Histria, Punta Verudela and Hotel Medulin.This project includes 816 rooms and apartments as well as a shoppingarea, childrens playground, spa and leisure centre, tennis courts,conference centre, landscaping and several restaurants and bars.

Renovations at these hotels are planned to be completed in May/June2012 and they reopen as Park Plaza Histria Pula, Park Plaza VerudelaPula and Park Plaza Medulin.

For more information, visit arenaturist.com or the hotel websitesparkplaza.com/histria, parkplaza.com/verudela and

parkplaza.com/medulin

Park Plaza Verudela Pula Park Plaza Histria Pula



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Our CSR policy is a genuine, activeand responsible commitment to ourenvironment and society.

CerticationIt is important for us to know if we are on the right track with our activities and we therefore highly value externalaccreditation. Several of our hotels have worked with the respective authorities in this area and have received therelevant accreditation. We will be reviewing similar initiatives for our other hotels.

Park Plaza County Hall London Gold Award The Green Tourism Business Scheme, UK

Park Plaza Westminster Bridge London Gold Award The Green Tourism Business Scheme, UK

Park Plaza Victoria London Bronze Award The Green Tourism Business Scheme, UK

Park Plaza Nottingham Silver Award The Green Tourism Business Scheme, UK

Park Plaza Victoria Amsterdam Silver Award The Green Key

Park Plaza Eindhoven Gold Award The Green Key

Park Plaza Utrecht Silver Award The Green Key

Considerate Hotels Association United Kingdom

Park Plaza Riverbank London

Plaza on the River London

Park Plaza County Hall London

Sustainable Restaurants Association United Kingdom

Spectrum Restaurant London two gold stars

General Managers and Regional Managers

Vision Mission Values Context Strategy

Corporate Social Responsibility

Managing CSR at PPHE Hotel GroupOur Corporate Social Responsibility policyforms an integral part of our values andcontext and is pro-actively lived by thehotels and its employees.



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Corporate social responsibility

At PPHE Hotel Group corporate socialresponsibility (CSR) is part of our everydayoperations. With 38 hotels in operation acrosssix countries we are fully aware that we playa signicant role and that our activities in thisarea can make a real difference.

In our sector people will always need to travel

and it is important for the hotel, hospitalityand tourism industry to take the lead innding alternate ways of mitigating theirenvironmental impact. We understand thatsustainable environmental practices reectthe expectations and desires of our guests,suppliers, partners and stakeholders andchoose achievable realistic goals to supportour CSR objectives.

During 2011, taking into account all ourhotels, under all types of contract, over 2,500employees were working for PPHE HotelGroup. Alongside the several million gueststhat stay at or visit our hotels each year we canmake a real difference by making sure that our

employees as well as our guests are familiarwith our CSR policy and their contribution toour success in this area. Our CSR policy is agenuine, active and responsible commitmentto our environment and society. We thriveon making a positive contribution to localcommunities, being a good employer andminimising our environmental impact.

Our company culture is based arounddelivering excellent customer value and weencourage our employees to be pro-active indelivering great guest service. As an employerin a highly competitive market we ensure thatour staff can work in an environment wherethere is trust, openness, support and room

for personal development. Part of our servicedelivery to guests also means that we takeresponsibility towards the environment andthe local communities in which we operate.

Engaging our workorceTo ensure our teams are fully familiar with ourCSR policy and procedures, and embrace thesupporting initiatives, these have now beenfully included in our mandatory staff inductionprogrammes. The policy and best practiceexamples are also made available on our newlylaunched you:niverse intranet and e-learningportal and the policy document is available onour company website pphe.com.

Our annual employee satisfaction survey,

which is conducted each November by anindependent third party, also includes severalquestions relating to our CSR activities and

policy. Our 2011 overall survey participationrate was at its highest ever at 96%, and 80%of participants indicated that they are familiarwith our CSR policy, representing an 11.1% perincrease on last year.

The area of Ethical Standards was in fact thebest performing area across the entire survey,

with an overall increase of 2.4% to 84.8. Topicsaddressed as part of Ethical Standards includeenvironmental matters, honesty and ethicalmanagement, tolerance and openness todiversity, safety and honesty and transparency.We are proud to report high marks all round.Overall working conditions were rated 80.9,which represents a year on year increase of2.2%. The growth reported is a real testamentto the success of our hotels hard work inthese areas.

Green teams at workIn the United Kingdom our hotels have createddedicated green teams whose aim is toincrease the positive impact each hotel hason the environment and the local community.

For example, the green team of Park PlazaCounty Hall London consists of a crosssection from all the hotels departments toensure maximum benet to the hotel andenhancement of the guest experience. Theteam meets regularly and their joint effortshave led to notable successes such as industryrecognition and various types of certication.

Key environmental initiativesOur activities to operate more efcientlyand environmentally are wide ranging andwe constantly look for ways to improve ourperformance and minimise our environmental

impact. Some of the activities we constantlyreview and have implemented include:

Switching to energy saving LED lighting;

Reducing waste by minimising packaging forbreakfast and operating a waste separationpolicy;

Treating hotel renovations as an opportunityfor installing more efcient equipment andusing more sustainable materials;

Installation of water saving devices andvalves in the rooms;

Installation of motion detectors for lightingin the lobby, bar and lounge areas;

Installation of osmosis systems in kitchens

to reduce the amount of water and cleaningsupplies used;

Ride2Work cycle scheme;

Encouraging our staff to use public transportor to share cars when attending meetingsor training;

Recycling;

Advising our guests on how they can havea more environmentally sustainable stay;

Introducing new initiatives such as e-folio(eliminating the need to print invoices)and offering guest services directoriesthrough the television system (eliminatingthe need for printing directories).

Charities and communitiesCharitable initiatives and local communitywork play a signicant role in our business.The Company actively endorses andsupports the Willow Foundation. All hotelsare encouraged to actively support andcontribute to their local initiatives. During2011, we supported:

Deutsche Kinderhilfe in Germany, a charitywhich helps children with leukemia and their

family members, through fundraising andproviding assistance with renovating a guesthouse for family members;

Csodalmpa in Hungary, a charity whichaims to fulll wishes from very ill children;

Movember and Sleepsmart/Streetsmartin the United Kingdom. Our hotels raisedmore than 60,000 for Movember, thecharity which is dedicated to testicularhealth and Sleepsmart/Streetsmartwhich is aimed at helping the homelessback into accommodation.

The Springboard CharityA particular highlight is our work with

The Springboard Charity which isa charity helping young, unemployedand disadvantaged people improvetheir prospects for economic well being.The charity provides opportunities forpermanent employment, or excitingcareers in hospitality, leisure and tourism.

In

annual report pphe hotel group

Documents