• Park Plaza makes major market move

Park Plaza Hotels has indicated its ambition by seeking a full listing on the LSE, looking to move from AIM and play with the big boys.

The announcement came as the company refinanced the debt against its 1,019-room Westminster Bridge hotel, adding a further £21.1m, which it said would be used for "working capital, general corporate purposes and projects".

The company's Marlbray Limited subsidiary, the holding company for the Park Plaza Westminster Bridge London, agreed the new facility with Bank Hapoalim, increasing debt from £93.4m to £115m and extending for seven years, maturing in June 2018.

The facility carries an interest rate of 2.65% above LIBOR, increasing by a further 2% on any part of the loan that causes the loan to value ratio to breach 70%. The hotel is security against the loan as well as new debentures provided by Park Plaza companies related to the hotel.

Boris Ivesha, CEO Park Plaza, said: "This agreement builds on our existing relationship with Bank Hapoalim and will enable us to focus on continuing to grow our market share and deliver great customer service."

The group said that, following the acquisitions made in recent years, the directors believed that its position as an "established and growing hotel owner/operator should now be reflected in the market on which its shares are traded". The company said that it believed that a move to trading on the main market could improve the liquidity in its ordinary shares and raise the company's profile "both domestically and internationally".

Park Plaza Hotels owns 25 hotels with 5,600 rooms in the UK, Germany, Netherlands, Hungary, and Israel. The company's revenue rose 74% Eu139.8m in 2010, from Eu80.3m and Ebitda more than doubled to Eu37.6m from Eu16.2m in the same period.

Over the course of the year, trading conditions in all the markets in which the group operated improved with the early signs of recovery seen in the first half gaining momentum in the second half of the year, as demand from both corporate and leisure travellers increased.

The company said that the improved trading environment had continued into 2011 and looking forward, it remained focussed on improving overall performance across the business, "advancing confirmed development projects and actively exploring new opportunities".

The company has spent much of the last year strengthening its financial position, with the refinancing of three of its London hotels and then acquisition of the joint venture interests in, and shareholder loans related to those sites. It also acquired a 342-room conference hotel near Amsterdam Schiphol Airport and the freehold and head lease interests of Park Plaza Leeds and Park Plaza Nottingham.

The move to the main market is due to be completed by the end of June, with, at the time of going to press, the group having a market capitalisation of Eu69m. The group has so far franchised its main brands, pursuing the traditional real estate development model, a move which will make more sense the larger the company becomes, something it is willing to use the market to achieve.

 

HA Perspective: Given the disappearance from the London Stock Exchange of names like Thistle, Macdonald and Jarvis, the emergence of another hotelier will help keep some focus on the hotel industry among institutional investors in the UK.

In reality, Park Plaza is not likely to be a core holding for most stock market investors given its tiny market cap. And it is a different offer to the previous owner operators that came to market.
Park Plaza, with the exception of Art'otel, does not own brands, preferring to license them from Carlson. Rather than an owner-operator, the company is more of a developer-operator. And as such it is more of a specialised property play than a hotel company in the mould of those delisted names.

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