PPHE group, which operates the Park Plaza chain of high-end hotels, today said build costs on its landmark 27-storey art’otel site in Hoxton were set to come in several million pounds higher than planned after repayments on construction finance soared.
PPHE CFO Daniel Kos said: “There’s only one item that drives [the higher build cost] and that’s the interest cost. We borrowed £180 million in 2020 [to fund the Hoxton site] and since that time the interest rate went up significantly.
“If you want to build something at this moment interest costs are up to 10% and construction costs are up too.”
Kos said he had not gone as far as to halt all future London hotel developments until interest rates cooled, but added: “With any project we need to look at the underwriting in terms of what we can achieve in this market.”