Peel Hotels Share Discussion Threads

[skyship] 24/1/2018 16:32

An intriguing trade if correct - a near 9% stake changes hands @ 65p!

[stevenlondon3] 07/12/2017 08:55

I think that the market for hotels has been robust for the last two or three years. What attracted me to Peel Hotels in the first place was the price Dalata Hotels paid for acquisitions. The question continues to be the willingness of the Peel brothers to sell?

[battlebus2] 06/12/2017 20:41

Seems like demand for hotels is robust if PHO ever decided to sell. Since the start of the Brexit negotiations, a rise in costs for the hospitality sector in areas such as energy, national living wage and business rates to name but a few, and the ever increasing challenge when it comes to the supply of workers, with less people coming to the UK from other EU countries. However, we have also seen borrowing remain low with base currently at 0.5% and as a result of the weakened pound we have also witnessed more foreign investment into the UK market. Despite some uncertainty the UK is still seen as a safe place to put your money.

In the North we have seen a limited supply of hotels coming to the market this year. We feel that this is almost certainly down to the uplift in activity of the UK hospitality sector. As the pound has weakened, there are many tourists coming to Britain from Asia, the US and a number of European countries. There has also been an increase in staycations from people not wanting to travel outside of the country. This could be attributed to a number of factors, including the weakened pound, the threat of terrorism and the offering the UK has in general. However, an ever increasing demand from buyers means that when good quality opportunities do become available, there is a backlog of people waiting to get their hands on them. This has resulted in high prices being achieved, in many cases above that of the asking price, with sales such as the Crown Spa Hotel in Yorkshire selling in September off an asking price of £15,500,000 to an Asian investor group.

In the wider market there is demand from many different types of operators, from first time owners to larger corporate buyers. The North has been particularly busy with regional multiple operators who are looking to expand their groups quickly. Operators desire businesses that have a good base in terms of their profitability, but which encompasses an opportunity to add value either through margins or development potential by introducing more bedrooms, or by the addition of spa or leisure facilities.

Moving forward we envisage the hotel market in the UK to remain stable, which will continue to attract interest from both UK based and foreign buyers. After a number of years of the average hotel prices increasing, we feel this will slow towards the end of 2017 and into 2018, but that demand and values will remain strong.

[skyship] 02/12/2017 12:28

Some sudden volume on Thursday (in PHO terms!) kicked these up from 90p-100p to 98p-105p. 16,300 shares bought between 98.7p & 100p. Good to see. News on the way perhaps...

[pugugly] 28/10/2017 18:45

Have had a look here as like apparent discount to NTAV but decided not to as impossible to deal in any worthwhile volume (unless on a lucky day plus spread significantly widened since May/June) OK could build up a holding slowly but if need to liquidate would (imo) take a significant bath - The prospect of a trade sale at closer to NTAV is one reason I may keep watching. (imo dyor etc)

[topvest] 28/10/2017 17:12

Because the Directors wanted it to be! The growth strategy didn't quite play out as they planned 20 years ago. The directors could quite easily have taken advantage of minority shareholders in the last recession, but have played very fair indeed. They also probably like running a public company. There should be more listed companies like this, not less!

[orinocor] 28/10/2017 17:07

Major shareholders
Robert Peel 5,496,900 39.23%
Charles Peel 3,248,471 23.18%

Why is this even listed?

[topvest] 28/10/2017 14:10

Below 100p yes I would be inclined to agree. Only if the directors sell before the next recession though, or else it could be a long wait with no dividends. Not inclined to invest in Value without Quality these days. Other than quality directors, the business is far from quality as the return on assets is very poor. The hotels are also pretty average.

[skyship] 28/10/2017 13:31

Tv....agreed; but the value proposition is that book value is a long way North of the current share price So all in all a good Risk/Reward proposition when bought for under 100p.

[topvest] 27/10/2017 18:17

Hotels are wasting assets and bottomless pits for your money. An example for you. My favourite place Brockencote Hall in Worcestershire was sold to Rigby for less than £3m a few years back. Unbelievably cheap. The capital expenditure is largely backlog wear and tear. Honestly, I don't think you are going to find this is a gold mine and if you employed a management team that took a proper salary it would be break- even. Haven't they also already sold the assets with a developmental angle about 10 years ago. Worth more than a £1 but probably not more than book value in my opinion. Good luck though!

[deswalker] 27/10/2017 09:06

The simple fact is that between last October and this April the wheels fell off but since April they are back on. Debt continues to fall, NTAV continues to rise and the clock continues to tick.

It may be sooner, it may be later but at some point the portfolio will be sold. Whether that is for 140p per share or 200p per share is unclear and must depend on just how much of the considerable annual Capex is actually permanently adding value rather than just fixing ware and tear. Personally I feel any sale price will be closer to the upper figure as the hotels must surely be worth more than historical NTAV (171p). Next year we will have owned Bradford for twenty years ...

[skyship] 27/10/2017 08:16

DW - agreed; and reassured by both today's numbers and the last sentence in the extract below:

"The slowdown in commercial activity experienced in the second half of last year due to uncertainties in relation to Brexit continued in the first 3 (four week) periods of the current year. These periods are historically low trading periods and due to the high operational gearing of our business, together with the impact of two increases in minimum wages and the living wage, our EBITDA decreased GBP220,265 on the previous year, in those periods. This has produced a disappointing interim result in comparison to last year's excellent interim result. However on a positive note EBITDA for the remaining 4 (four week) periods of the half year was broadly neutral in comparison to the previous year."

[deswalker] 27/10/2017 07:52

They had a heart attack for six months and now things are trading as normal. I flagged this up in my long post after the Finals were released. For the last six months they have been trading as normal.

[pugugly] 27/10/2017 07:48

Totally different read of rns -


Sales decreased 5.1% to £8,648,145 (2016: £9,115,526)
Operating Profit decreased 31.3% to £604,556 (2016: £880,119)
Revpar decreased 4.2%. Occupancy down 3.3%, average room rate down 1.0%
Profit before tax decreased 46.1% to £319,293 (2016: £592,807)

Most other hotel groups recently reporing have significantly INCREASED REVENUE AND PROFITS - While new debt is lower cost as previously mentioned at significant risk if substantial increase in LIBOR ?

However (if my maths are correct - could anyone double check me ? ) market cap appears to be at a significant discount to NTAV.

[deswalker] 27/10/2017 07:29

So it looks like things have broadly returned to normal after an extremely challenging six months up to the end of April. This is what Mr Peel told me after the Finals were released and it looks like things have continued satisfactorily since then.

[skyship] 23/10/2017 14:07

Posted a little of the PHO story over on my rather quiet JDT/2017 thread:

[pugugly] 18/10/2017 17:29

SKYSHIP: A good price - Looks as though not much stock about. Seems order had to be split -- Best of luck. Not in yet but potentially hovering.

[skyship] 18/10/2017 16:04

Well, having been one of the lucky ones who cashed in higher up (129p in Jan'17); I've decided to get back in for a few today @ 94.6p. I've always been tempted by asset plays; and the discount once again looks too high.

[pugugly] 16/10/2017 09:43

Still drifting down on low volume - Assets starting to look interesting but v-strong economic headwinds - Continuing to watch but sit on buy fingers (imo)

[cjohn] 15/10/2017 18:15

Given arrangement fees and fees for breaking into the loan there will be scant savings in the first year from the new arrangement.

As they made a slight loss, debt actually went up in the last half; there are a number of price pressures on the hospitality business currently: living wage, food inflation etc. .

[topvest] 14/10/2017 10:52

All I'm saying is that we will all have big big problems in your scenario. Personally, I do think that Peel Hotels is readying itself for a reverse takeover and the founders retiring. What do you think about that? I don't like hotels as an investment and will probably never re-enter Peel after getting out profitably. Will watch with interest though and may be tempted one day to come back.

[pugugly] 14/10/2017 10:45

Des: Thanks for crunching the numbers but I was going shorthand for the scenario that topvest has outlined. Having lived and worked through the periods before and after the 3 day week topvest is possilby understating the downside risk - If one is going to flee if Corb gets it I suspect may need to move fast - Exchange control ? From memory limit was £50 (£1600 todays money) in 1949 and that was p/a and endorsed in your passport.

[topvest] 14/10/2017 07:19

If LIBOR rose sharply to 9% then the economy would be in meltdown and Peel Hotels would be one of the many casualties. I am lucky and don't have any debt, but over 50% of the population are highly leveraged and would become insolvent as they wouldn't be able to afford their mortgages. 20 years ago it was different. This time around capital owed on mortgages is so high that it would decimate the UK. Most of the population have geared up to "ever low" interest rates over the last decade. Even 5% would be really bad for the majority and cost £5-10k more (after tax) per annum on the average mortgage of £100-200k. That's before the significant rise in unemployment. Not sure its likely in the short-term, but the Corbyn factor is a concern in a few years time. A Marxist UK would obviously not be good and many young voters just don't understand what it means. Time to invest in overseas stocks if that happens, but no doubt the prudent would be targeted by such a government...just such an awful scenario its too depressing to think about and probably time to move overseas.

[deswalker] 13/10/2017 19:50

According to the AR last year’s finance expenses were 522k. The new financing will reduce this to 360k for the year starting in February.

The AR also states that current sensitivity is 98k for each 1 percent increase in LIBOR. So if LIBOR rose to 9% finance expenses would rise to 1200k.

Last year’s EBITDA was 2250k. So I would suggest Peel can safely survive on 9% LIBOR. However the rest of the entire economy will be completely destroyed.

Not really fair to suggest PHO would be toast without actually doing the analysis.

The reason for the weakness is no buying but JP Morgan looking to sell as it is too small a position for them.

As battlebus says the big unknown is current trading but we know that the company isn’t leaky so who knows how they are doing. Hopefully results out soon ...

[battlebus2] 12/10/2017 13:29

Options then to sell a property or two, we are far from toast imv. Trading is the main concern for me in the short term.