PPHE Hotel Group Limited (PPH) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the PPHE Hotel Group Limited Interim Results Investor Presentation. [Operator Instructions] Before we begin, we would just like to submit the following poll. And I would now like to play a short introductory video on behalf of the company. Thank you. [Presentation]

And I would now like to hand you over to the team from PPHE Hotel Group, Robert. Good morning, Sir.

Thanks, Jake. Good morning, everyone. Welcome to our half year results presentation. What we showed in the short video that we've just seen is a snapshot of the developments we've delivered this first half of the year and what is ahead. We'll talk through all of these projects in a bit more detail as we go through the presentation. But let me first introduce you to Greg Hegarty, Co-CEO of PPHE Hotel Group; and Daniel Kos, CFO of our group. My name is Robert Henke. I'm the Head of Commercial for PPHE. What we'll do today is we'll spend probably 20, 25 minutes talking through our business model in summary and an introduction to the company if you're not familiar with our story. Greg will talk about the highlights that we've seen in the period and the top level financial performance and pipeline and then Daniel will focus on our financial performance. And at the end of all this, we'll do a Q&A, where we will hopefully be able to answer as many of the questions that are raised today. So moving on to the first slide of the presentation. So as a company, we are unique in our sector and what sets us apart from our competitors is that we are an integrated hospitality real estate business with its own management platform. So typically, we buy plots of land, we buy hotels, we buy [ tired ] hotels. We like opportunities with the development angle. We manage the development process from planning to construction and then opening of the asset and then after a few years of stabilization, we extract some of the value, reinvest in the new opportunity and grow our portfolio. We've been doing this for over 35 years, starting with a single property asset in the Netherlands. And we're currently active in 8 countries with a property portfolio that's valued each year and the last valuation of December last year valued the portfolio at GBP 2.2 billion. Like I said, we also have our operating company, so it's a fully integrated platform in our business. And what it means is that every discipline required to develop, operate and deliver the commercial success of each property is in our control and in our hands. So it's a full value chain approach. Moving on to next slide. What that gives us is a unique business model because it's not -- in our sector, it's quite traditional to have a hotel owner and operator and typically a brand. We have all of this in-house. So we give investors in our business exposure to all sites of this sector, this business. So there are real estate gains with sort of value increasing typically after development and time progressing and operational returns from our platform. We also have a strong management team running the day-to-day business that have worked closely with the founding shareholders who are actively involved in the business today and have about 44% (sic) [ 43% ] of the shares today. So their entrepreneurial DNA sits within the business and has been the case for all of the years that we've been active. So this sort of wheel summarizes what I walked through. We tend to buy, we then develop, we extract the value, reinvest and that is basically facilitating the growth of the business through a variety of investment forms. Daniel, do you want to talk about how we fund our business?

Yes, sure. So as part of our strategy, we unlock capital on the back of our assets in many different ways. We do it by raising regular bank debt, but also raising equity on the back of our assets. And this funding strategy gives us access really to capital on the back of the fair value of our properties. And it also balances the liquidity and market risk, which is attached to this capital structure. If you look at our financials, everything is presented at historical cost, and we try to put on one page how the balance sheet is when we revalue everything at fair value. Our assets would come down to GBP 2.6 billion, externally valued by [indiscernible] yearly. We're about to do that in December this year again. And you'll see that about over 60% of these hotels are in London and Amsterdam. If you look at the way how it's funded, about 61% is funded by equity. And in the U.K., we have entered for a few hotels into something that's called the ground rent structure, whereby we sell the land under a hotel and we lease it back for more than 100 years. That ground rents are typically fixed on very, very low yields. There's a [ linked ] inflation, which is typically kept at 4%, but there's no recourse on this land -- on this obligation and there's no repayment obligation. And then lastly, we have our regular bank debt. All of our debt is fixed rate. We're averaging around the 3.6% level, and we still have a few years in terms of maturity, 30% leverage in terms of bank debt.

Thank you. Hospitality real estate sits at the core of our business. And as I have said before, we have our own operating platform, managing the 51 properties in operation today, across these 8 markets. Most of our exposure and portfolio sits in Central London, followed by Amsterdam. We have a large portfolio in Croatia on the coast. And then Germany is our fourth largest market. We are also entering new markets and have been to new markets that we recently opened in Serbia. We are on the verge of opening up in Italy in Rome and we have hotels in Austria and in Hungary. All of these properties are managed in-house. So we have expert teams across every single discipline and that gives us the opportunity to scale up without a lot of additional expenses in the center. So typically, it's a plug-and-play model, especially in home markets like London and Amsterdam and Croatia, where we have the footprint and the team is available. We also have a strong partnership with the Radisson Hotel Group, which basically gives us exclusive rights over using their Park Plaza brand in Europe, Middle East and Africa. That is a long-standing agreement. And more recently, we've started using some of their other brands such as Radisson RED and Radisson Collection. So that helps us to diversify our brand landscape going from sort of upscale all the way to luxury and lifestyle, and that gives us further scope for new development opportunities [Technical Difficulty] without risk and yield profiles. Moving on to the performance of the year. Greg talk us through some of the highlights.

Thanks, Robert. Well, we are pleased to announce another record breaking performance both in revenue and EBITDA. This achievement comes despite a strong comparator in 2023 and the challenging macroeconomical and geopolitical issues we are operating in. Our reported numbers are impacted by the ramping up of our assets due to our GBP 300 million pipeline nearing completion and several properties invest off launch phase. However, if we are looking on a like-for-like revenue, like-for-like revenue increased by 4.3% to GBP 187.8 million. Like-for-like EBITDA rose by 10.9% to GBP 50.2 million. Our EBITDA margin improved to 26.7%, thanks to effective cost control, centralized purchasing and technological implementations. We have seen our business also continue to diversify in 2024, where we start to see a more normalized market segmentation, which we saw prepandemic, no longer reliant on the less demand of 2023. I think what's also worth mentioning is that half 1 2023 was exceptional for PPHE, specifically in our South Bank operation -- sorry, in quarter 2 in our South Bank operation, predominantly driven by the impact of the King's coronation. So replacing that level of business year-on-year has been incredibly positive for the group. However, as we also now look further into 2024, we have diversified with increased market demand coming from our group segment and our meeting and events. So with that in that line, this diversification has led to a rising occupancy of 72% from $69.1 million in half 2023. However, our average rates have decreased by 4.4% resulting in a RevPAR of GBP 109.9 and as I've already alluded to, some numerous factors relating to that. We've made significant progress in delivering our pipeline also. In February, we opened our first Radisson RED property in Belgrade, Serbia. In May, we launched a rooftop restaurant at the art’otel Zagreb, following the hotels opening in Q4 last year. And in April, we opened our currently largest project we are active at the moment, the art’otel London Hoxton, more about that later. In Berlin, we have a stop opening of the Radisson RED Berlin Kudamm in June. And just before the Euro tournament, which was positive for the hotel, and the hotel is on a track for a full completion in September this year. In Rome, we announced our signature artist, Pietro Ruffo, and he -- for the hotel, we are expected to open in Rome in winter 2024 later this year. We are also focused on creating shareholder value and future potential. We were pleased to announce that we won our planning appeal in London, securing commission for a mixed-use development near Park Plaza London Waterloo, which includes a 186-bedroom hotel. As part of our ongoing commitment to shareholder returns, we proposed an increase of an interim dividend of 17p per share, up from 16p in 2023, and we launched a share buyback program of up to GBP 4 million. Moving a little bit more in detail on pipeline progression. This slide summarizes our various projects and potential developments. On the right, we have properties that are still maturing. Their performance is far -- their performance is promising, and we expect further growth as these hotels settle into their respective markets. In the middle are the hotels that have recently opened or about to open. And they are -- in this case, Rome, which I've already mentioned, is expected to open later this year. On the left, we provide an overview of our land sites and the remaining upside potential of our Croatian portfolio. Additionally, our acquisitions team is fully focused on continuing future growth and opportunities as we speak. As we move into a little bit more detail on the art’otel London Hoxton, we were extremely pleased to soft launch this property in April. We acquired this property back in 2008 with a joint venture partner and navigated through the global financial crisis. We then later bought out our joint venture partner to accelerate the project and successfully secured development during the COVID pandemic, thanks to our strong banking relationships. We partnered with Clal Insurance on this GBP 300 million-plus project, retaining a controlling stake and securing the long-term management agreement on this property. The hotel opened in April, and we've been steadily growing room offerings since then. The ground floor, first floor, restaurant and bar spaces are now fully open. The art gallery auditory of indoor pool and spa are also operational. By the end of Q3, we will offer approximately 330 rooms and events space on the 24th floor. By the end of Q4, we will complete the remaining premium suites on the upper floors and the 25th floor restaurant and gym and the -- sorry, the 26th floor gym. In half 1 next year, we'll launch for co-working space and the additional gym area on this property. Client demand so far has been very strong across all market segments since we started operating. We have secured key corporate accounts and have a potential pipeline of inquiries for operating. We've secured many corporate events for the upper floors and the meeting and event space. We have also launched a robust entertainment program called [indiscernible] featuring on the activation of the property ranging from frequent events from small gathering to large ticketed events. The hotel so far has generated incredibly strong positive PR and customer feedback has been excellent. With a 9.4 reviews score on Booking.com, 4.8 score on Google and 5 out of 5 on Tripadvisor and the property is currently ranked 21 out of over 1,200 hotels in London. So currently, we're very, very pleased with the progression of the asset.

Thank you, Greg. Yes. So as Greg alluded to, we reported a total revenue of GBP 191 million, which is up 6.1% versus last year. If we do that on a like-for-like basis, we're basically taking the 2 openings, art’otel Zagreb and art’otel Hoxton, out of the equation, we reported a 4.3% increase at GBP 187.8 million. And that growth is despite a flat RevPAR. If you look at our RevPAR performance on a like-for-like basis, we reported a RevPAR of 109.9, 0.3% down versus last year. Most of the revenue growth this year came from a strong meeting and event calendar, but also extra trading days in Croatia and a leap year benefits the entire portfolio. As I said, RevPAR are flat. If you look at the breakdown of RevPAR, you can see our rates have declined and it's softer compared to last year, 4.4% mainly coming from the U.K. region, where we had quite strong comparables in terms of the coordination that impacts our London hotels -- impacted our hotels quite substantially. We were able, however, to recoup that rate decrease with occupancy increases. Our occupancy increased nearly 3 percentage points. Just to reiterate, we are still 4.8 percentage points behind pre-pandemic levels. So we still have a big way to go to compensate if needed. EBITDA is up 10.9% on a like-for-like basis, GBP 50.2 million. If you include the OpEx, which typically dilutes the EBITDA in the first months of openings, we reported an EBITDA of 48.3% -- a GBP 48.3 million. As you can see, on a like-for-like basis, we've been able to achieve margin growth. Our margins went up 160 basis points, reaching a margin of 26.7% versus 25.1% last year. This margin increase mainly came of the result of many cost initiatives that we launched but also, as we already mentioned in the year-end, utility price decreases, which are expected to benefit us in the next year also. As of this, thanks to this EBITDA increase, our adjusted EPRA earnings also went up the rolling 12 months number, coming at GBP 1.24 which is 5.1% on the reported rolling 12 months number, 6 months ago. And it is despite the negative effect that the openings had. So if I adjust the openings, it's approximately 4p per share, a negative impact on the current reported EPRA earnings. EPRA earnings is also the basis for our progressive dividend policy. We typically pay around 30% of EPRA earnings. So this year, we are proposing to increase the interim dividend from 16p to 17p. Robert, if you want to flip on to 3 slides later. This is just a breakdown of the revenue and EBITDA progression. You can see that revenue was up in every territory. Most slow in the U.K. as discussed. Luckily, the M&E calendar made up for quite a bit. And you can see EBITDA increases in every key territory we reported EBITDA increases. Particularly in the U.K., you can see that even with the GBP 0.2 million revenue increase, we realized GBP 2.2 million extra EBITDA, thanks to the initiatives that have been launched. On the further end, you can see the openings contributing GBP 3.2 million in terms of revenue, however, diluting the EBITDA with GBP 2 million. And then also in the management platform, you can see the EBITDA is down GBP 1.5 million. I can say, the majority of that is due to the investments that we've done to support the openings that we have already done but also the openings that are still coming. Slide cash flow, Robert. In terms of cash flow, we reported a strong operational cash flow of GBP 50 million but also a substantial outflow again this year for CapEx, GBP 53 million in the first 6 months. Of the GBP 53 million, around GBP 9 million relates to the maintenance CapEx that we have annually and the remainder of GBP 44 million was invested in the pipeline. That CapEx number is expected to go down substantially next year where most of the pipeline is delivered. You can also see in the first 6 months, we paid around GBP 48 million in debt service, ground rights and unitholder payments. From this GBP 48 million, GBP 23 million relates to bank loan repayments, either contractual or voluntary repayments, prepayments and about GBP 6 million relates to the variable profit that we paid to the unitholders in Park Plaza Westminster Bridge. Slide 8, Robert. You can see our EPRA NRV. We didn't do valuations semi annually in our industry that doesn't make sense to do it semi-annually, you do it annually, and you take into account future cash flows. So if there's no substantial change in future, cash flows is -- we do an annual valuation round really. So EPRA NRV reported at GBP 26.24, slightly down from the year-end numbers, mainly because of the dividend that we've paid and the foreign exchange really. We will do external valuations again in December of this year, whereby we will also include the 2 newly opened hotels. Greg, over to you for the outlook.

Thank you, Daniel. So half 1, we've seen continued normalization of our business mix and room rates offset by improved occupancy and effective cost control. Excluding the new openings, our like-for-like performance remains in line with expectations. Our Croatian operations are currently in peak season and trading as expected with good levels of strong last-minute bookings. While supply chain issues have delayed the fall openings of the art’otel Hoxton and the art’otel Rome Piazza Sallustio, we do still expect positive EBITDA contribution of at least GBP 25 million upon stabilization. The second half of the year, typically our strongest period has started well, and the Board remains confident with the group's outlook. I believe we're now happy to take some questions. So with that, Robert, I'll let you drive.

Thank you. Greg, this has been a tremendous year for the group with sort of 5 new openings in the space of 15 months. So we have Rome yet to open and Hoxton to be completed and Berlin. That obviously comes with expectations from shareholders, and I'm looking at some of the questions. There's a question around the opening phasing and stabilization, how long that will take for these properties. Do you want to give a bit of color how we sort of approach that?

Yes. usually. So when we open and position a property, especially in a new area or a new territory, we like to phase the occupancy of the rooms at the hotel in, one, to make sure we manage and minimize cost. So with that in mind, we open up the inventory. We test market demand. And as and when that happens, we open up floor by floor to make sure that we fully bring in assets in the most cost-effective way possible. And to make sure, actually, we stress test the operations, making sure that the mechanical engineering, the building operates as it should, the efficiencies of the building are operating in line with our forecasted expectations. So it's better we do that in phases. However, when you're looking at an economic cycle of a hotel, usually, we like our hotel to mature and deliver its full potential within 3 to 6 months of operation. So usually, the third year of operation is one where we see that hotel fully delivering its capability.

That's great. Thank you, Greg. Daniel, obviously, the development costs have really impacted our balance sheet in the last few years. We've also been taking on debt to finance some of the construction work. What is your sort of typical debt profile that you would see for the business?

Yes. So as I alluded to on the capital slide, we're developing hotels for over 30 years. And you can see the impact on our balance. We currently report a net debt of 30%. And that is really because of the approach of not only raising bank debt, but also partnering with others on the equity side, really. So it's not always debt that we assume when we build. In terms of the debt structure, looking at new bills, we typically aim at a 60% loan to cost. I'm saying loan to cost, which is important because typically, if a hotel matures and stabilizes, the real value of that hotel is typically higher than the cost, bringing our lot values down to below 50% really. Then come refinance, this is really the point in time where we say, has the loan to value come down substantially, and the debt price is cheap, we would typically borrow it extra and use that money to recycle back into the business. If you look at the cycle where we are currently with interest rates, which are quite heavy, it is unlikely we will take extra money out. So we will typically refinance what is there and put it over into a new term facility. All of our loans are amortizing. So typically, over a period of 5 to 10 years, debt maturity of the loan profile, we would have amortized another 15% to 30% already bringing the debt levels down. So that's where we are currently, we have 30% net debt. I do not expect debt to go over 45% in the near future.

Thank you. That's very, very clear. And then in terms of the future sort of business, because obviously, there's an active pipeline. Now there's sites in our ownership, new opportunities that are being considered by the acquisitions team. So maybe touch on the projects in our portfolio, in our pipeline, particularly in New York, there's a question around New York. We've talked about this pre-COVID as a key acquisition for art’otel. It's been on hold since COVID. Where do you see this project?

So as I said, in New York, we bought pre-COVID in 2018. We partnered with somebody to build hotel over there in a brilliant area in Hudson Yards. Just before COVID, we bought out our partner and intending to build a hotel by ourselves, but then obviously, COVID hit. COVID impacted our business plans or our underwriting quite substantially in 2 ways. First, the build cost to build in New York and the real estate market as a whole was turbulent to say the least. So asset prices with increased interest went down substantially, the cost price to build a new hotel went up substantially. So that's one. And on the second part, also the legislation, particularly around unions in New York changed over COVID. So the whole underwriting thing changed for us. So we decided now we're going to [ pause ] this project and it's still in a pause mode. The project currently is in our books for $30 million, which is already down from the acquisition amount. It's in the NAV of $30 million. We would -- like at this moment in time, we will look to recoup the money is in the books for at the moment and not build a hotel. That's the current state.

Thank you [indiscernible] answer the question. On NAV, Daniel, there is quite a big discount between sort of the share price currently and the NAV that we report. As a business, what's your view on the reasons behind that?

I mean as a company, it's [indiscernible] to see that we are so far on the NAV, particularly, I think, because of such a strong pipeline and results coming. I think from an outlook point of view, I think if you screen us, we're not a basic company to understand. We're a complex company to understand. I think now with all the pipeline coming on, the results coming on, I think we're proving that we have a very strong cash flow. I think with refinancing coming on, we will improve the valuation of our hotels. So I hope that in the future, that discount will disappear. Pre-COVID, the discount was substantially less. So I'm hopeful with us proving that we can perform and that we improve the underlying value of our assets that, that will narrow in the future.

So probably to support sort of that argument, the Board has also introduced another share buyback. Can you explain a bit more about the second buyback in this calendar year that has been launched?

Yes. I think I saw the question. I appreciate it doesn't like that substantially move the needle. I think we have to balance the buyback with the liquidity that is out there for us to be able to actually buy back. So far, if we would spend the GBP 4 million that we dedicated, which we expect to spend before year-end, we would have bought back this year, 600,000 shares, which is 1.5% of the outstanding capital. But I think you should really see it as a total shareholder return because on top of the 1.5% that we bought back in terms of shares, we're also suggesting a dividend increase here. And [indiscernible] earnings progress, also the dividend will go up. So I think shareholders should see this as a total shareholder return package.

Thank you very much. Greg, we've seen some delayed openings, particularly with Rome and the phase opening with Hoxton and one of the questions is around the supply chain issues that we've talked about in the messaging. Can you elaborate a bit more on what that sort of means?

Yes, sure. I think what we have seen is there's slightly more delays with bringing some of our -- these furniture and fixed costs coming from Europe into a, U.K. and b, into Rome. To Rome has been a complex market to developing, one, due to litigation issues, dealing with permits, dealing with licenses to operate, understanding the demolition process whilst we do have a significant amount of advisers, which support group through this. It's been a process of learning as well. So I think coupled with some of the bureaucracy challenges we've had in other territories or new territories to the company, coupled with some of the supply chain issues, which we've had across Europe, those are the main issues, so to speak. So nothing more than that. These are just purely within the new assets and learning new territories. With that in mind, we do see Rome opening Q4 business year.

Sounds very good news. Which then leads me on to the next question that was raised. Are we looking at maybe opportunities to grow and open up in Paris?

First -- yes, first of all, Paris is a target market for the company. However, Paris is not new to PPHE. We've been looking at it for many years, as you know, Robert. It's an incredibly expensive market to penetrate. When I say that, we are very disciplined investors. We have a certain criteria, which is more, I would say, cautious than some. We like to make sure that we have high levels of incremental rate of return, et cetera, on our investments, and we have good shareholder returns on our investments as well. So our threshold is really to penetrate Paris. So it's very difficult. One with the procurement of an asset; and two, operating of an asset is also very expensive in certain parts of France.

So it sounds like similar to sort of New York. There is an appetite for these markets, but the financials and the operating mechanics have to work for us. And I think that sets us apart from some of the mega brand companies out there today that are sort of growing their portfolios by signing hotels, hospitality real estate is the core driver for us as a business and the new profile has to work financially. So we're not driven by flags in the ground. Hence, the exceptional year this year with 5 hotels, and we're looking to expand but not any sort of given costs.

What you will see is where we are in a territory, we tend to have more than one property. So logically looking at the portfolio, you'll see our presence in London. You'll see our presence in Amsterdam. You'll see our presence in Berlin, Croatia in Histria Pula. We have one hotel in Rome. The appetite is to continue now with the learning and the skill levels and the teams we have now in place in Rome is to grow our scale within Italy, and we do see opportunities coming about in Italy.

Thank you. That would be exciting if we can grow our portfolio there. Daniel, there's a question on the fixed rate debt structure that you referenced 100% fixed rate. Can you explain that in a...

Yes. So let me clarify, we are not doing 100% debt. What I'm saying is our debt at a bank that is 30% versus the value, but all of the debt is fixed rate. So we refinanced over time, and the variable rate risk is 0 as we speak. Also just coming out of COVID and in 2023, we took forward starting just to already fixed loans that are due to mature. So our company at the moment has no interest rate risk at the moment, obviously, upon refinance, then you will have the interest rate that is there. So I hope that explains the question.

Thank you. Greg, I'm going to go back to what you said earlier about the opening up in sort of new territories and that we like to have more than one hotel in one market. Can you sort of outline what some of the benefits are for having such a concentration in a market, take London as an example, where we've opened 2 hotels in the last year?

Yes. So it's a good question. Is London easier to open in? Obviously, we have a team. We have an infrastructure. We have relationships. We know developers, we know financing. So from that aspect, we can bring a property in and it takes all the right boxes for us very quickly. I think, however, one thing to note in London whilst PPHE has grown significant, I would say, we're probably the biggest developer of hotel assets within London recently. It's becoming more and more challenging in London. The planning process is particularly protracted at the moment. We just won a planning appeal recently for our property in Park Plaza next to our property Park Plaza Waterloo on Westminster Bridge Road. And as I've already said, [indiscernible] mixed-use development scheme, which have planning officer approval takes every box for the planners was recommended for approval but was voted down at Committee for reasons which were not really valid. They then went to a planning arbitration on appeal, and we won it. And we won that appeal within 7 days because it was a oven-ready scheme, which generated value for the area -- economic growth of the area and services. So however, so why I am saying in short, we like to invest in London. We look to invest in London. However, we do second guess it at the moment now, especially with the current issues within planning. So areas like Italy, certain areas of Croatia or Eastern Europe, it's a lot easier to develop in and a lot quicker to bring a property to market.

That's great. That makes a lot of sense. Albeit that for longer-term, we still have these amazing sites to develop.

Yes.

For market...

We are there. We do have a pipeline in London. As I said, Westminster Bridge road, Hoxton [indiscernible] open, and we've got a land site on the A40 next to our Park Road property, which we are looking at how we can optimize.

On the cap rates and the discount rates, Daniel, in sort of the external valuations, we do take into account the soft opening and ramping up with some of these assets.

So one element of discount rate is obviously the risk in the cash flow forecast. So the answer is yes, albeit it's not a massive difference. I would say probably 10, 20 days in the reopening phase versus stabilization, it's mainly to do with the certainty of the cash flows of improving a track record of -- and so if we open a hotel in a new market, that would typically be the case. If we open a hotel in the South Bank, where we already know how the trading pattern looks and the risk is less in the forward, then that wouldn't be the case. But it's a small...

But [ you might do a ] discount following rolling year. It's taken out.

But obviously, valuations are impacted quite substantially with the ramp-up because the cash flows that are coming in the first 1, 2, 3 years are substantially lower than the cash flows that are following the stabilization phase. So you typically see that an asset value grows over the stabilization phase.

Thank you. That's all very clear.

There's a good one there for you, Robert. I'll read it for you. How do you think the overall -- how do you think overall about the balancing between RevPAR versus occupancy, bringing down rates and increase occupancy, given fixed costs, does this not make sense for economic logic?

That's a lovely question. I think the answer is actually somewhere in the middle, to be honest. I think we could fill the hotels every day. So if we talk to investors that own, for example, offices, they focus heavily on occupancy rate. We could fill the hotels 100% every single day. We choose not to do so for 2 reasons because rate gives us better profitability extra euro or pound on the rate is nearly 100% flow through to the bottom line. Whereas for occupancy, we have all the costs that we incur to clean the room, staffing, utilities, water usage, amenities and so on. So we try to find a balance between rate and occupancy and how we get to this sort of balance is based on market demand. And also what is sort of our competitive sets pricing position, what is our business on the book level. And I think if you were to look at our business on a like-for-like basis, you'll see that we've grown occupancy by maybe 3 percentage points year-on-year. So we have demonstrated that we are growing occupancy, but we have to work harder for it. So there has been a stabilization of rates. So it's been against a very tough comparable period last year. We have the benefits of the King's coronation and all depends on the demand, the [ elective ] demand. And mainly what we've seen this year is more market segments coming back into the business, such as groups and meeting and events. So it helps us to give a more evenly [ strat-based ] business on which we can yield. So to fully go for occupancy right now, it's not our desire. We want to go for the most profitable business. So it is that balance between rate and occupancy. We have about probably 4 percentage points to go on an overall basis before we get to sort of '19 levels on a group level. So there's definitely scope and that's on a consolidated level. It varies by region. But there's definitely more occupancy that we can build into the business. But at the same time, you want to be protected about the average rates just to keep the profitability in place.

Shall I ask the 2 funding questions here, Robert. So 1.5 [indiscernible] of cash can be released by the near-term refinance. As I just alluded to, at the moment, do not expect a release of extra funds given where the interest environment is. So the refinances that are coming up at the moment, I expect to refinance the current maturity. So interest come down, we can always -- during the term of a facility, we can always choose to refinance and take out extra cash. But as I said, where the interest rate is currently, we do not expect to release substantial extra money. In terms of the reforms on leasehold and ground brands, the question any risks at all from talk about reforms. We have a contract. The contract dictates a lease, it dictates a term, which is over 100 years. So I think on the less [ lease ] side, there is no risk. We have a contract. I think on the less store side, what is expected is that a lot of these leases will be transacted in the secondary markets. So it depends on the prices that these leases all will be transacted. But obviously, we keep an eye out, if that makes sense in terms of looking to refinance or provide this back.

Thank you, Daniel. Probably a broader question on the U.S. market, where there is a reported sort of drop in tourism and travel following a phase of growth last year. Do we sort of expect something similar to happen within our markets? And if so, would that be a severe impact on us?

Yes. I think I will answer the second question as well. The U.S. dollar currently asset dollar is a little bit under pressure versus the sterling and Euro. I think the U.S. hospitality center is a very, very wide saying. So I think we are very much city driven, a longer Amsterdam, which -- yes, which are recent markets to begin with. We have shown a rate decline in London now in the first half. I think it wasn't helpful that particularly leisure-dominated months. Leisure gives us the high rates really. The leisure-dominated months and early Easter with cold weather, a rainy June that's not helpful comparable with Coronation last year, that's all not helpful. Going into July as always, we didn't see that trend continuing. I mean, the visibility for our bookings is short. The booking lead time is 12 -- 2 to 4 weeks. So at the moment, in our visibility, we don't see this downturn. Dollar moves, so dollar to sterling, dollar to euro, it could impact when the moves are more substantial. So we see if the moves are 10%, 15%, we do see an impact of that. But that's currently not the case. I mean the dollar did move slightly, but not substantially enough to start impacting demand.

To add to that, I think as a business, we have quite a diverse sort of demographic footprints in our hotels. So we're not exposed to a single market and tend to sort of tailor our approaches to whatever market is at any point in time in a downturn or in an upside cycle. So I think our products and our approaches [ aren't ] flexible enough to adjust.

We also have numerous tools when we look at the geographic production. So if you're looking at a market, for example, like America, we look at numerous factors. We have technology, which is allowing us to see actually where booking patterns are coming in? Is that back around last year? Is it the same point at the same pace as last year? It also looks at the number of flights generated into a region from the U.S., for example, but it could be Australia, for example. But we can see actually how many air seats are being sold for London from an area, for example. So we're not seeing a decline. What you do see and what is noteworthy in my experience, whenever there is a presidential election, that we'll see a slowdown of U.S. travelers during this process. So I do actually anticipate a little bit of short-term demand weakening from the U.S. when there's an election, but it rebounds very quickly.

Great. Thank you. Jake, we've run out of time. So hopefully, that was informative session for the audience. Back to you.

Thank you, Greg, Daniel, Robert. Thank you very much indeed for your presentation for addressing all of those questions that came in from investors this morning. Greg, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great.

Thank you, Jake. Yes. So I think as you -- we've demonstrated through the presentation and actually there's a number of presentations we've done on this platform now, we are a well-managed and motivated company. We have very strong assets, really well located in key cities and a very, very well-positioned portfolio. We are starting to see normalized trading patterns come back into our business mix, which is positive prepandemic. We're starting to get back as business as usual. We're starting to see all of those benefits coming into fruition in our cost base with all of our processes we've been doing to reduce costs for the business and generate profits. And I think as you've seen here, looking at our pipeline and where we're going, the new assets are going to generate a significant amount of EBITDA, potentially GBP 25 million upon stabilization, which obviously impacts shareholder returns. So with all of that in mind, I would like to say thank you very much for listening to us and asking us your questions. And if there's any more questions, as Jake said on the chat, we'll come back to them in the future. But thank you very much.

Perfect. Greg, that's great. Thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected for the opportunity to provide your feedback in order the management team can really better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of PPHE Hotel Group Limited, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.