AHCG.L Regulatory News (AHCG)

Action Hotels plc

("Action" or the "Company")

Kuwait hotels trading ahead of expectations and announcement of a new four star hotel in Kuwait

Action Hotels plc, a company focused on developing and managing branded economy and midscale hotels in the undersupplied markets of the Middle East and in Australia, is pleased to announce that it has signed a preliminary sale contract to purchase a plot of land in the prime business district of Sharq in Kuwait City where it will build and develop a new 160 room freehold hotel. This hotel is in addition to the existing pipeline and is expected to open in 2017.

Action has secured the prime plot and is in advanced discussions with a leading hotel operator targeting the midscale segment of the market. The total price for the land, including commission and registration fees, is approximately $12.3 million.

This four star offering is strategically complementary to the existing two hotels in Kuwait. Action currently has two operating three star hotels in Kuwait City, the freehold ibis Sharq in the Al Hamra business district and the leasehold ibis Salmiya in the heart of the shopping and restaurant district. Both hotels are operated under long-term management agreements with Accor and enjoy high occupancy and the highest gross margins of the all the operating portfolio.

April 2014 occupancy figures for ibis Sharq and ibis Salmiya were 91% and 95% respectively with both hotels ahead of management expectations on all key operating metrics (average daily rate, revenue per available room, gross operating profit). Operational EBITDA (on a like-for-like basis) for ibis Sharq and ibis Salmiya has increased by 23% and 34% respectively in the year to date.

Action believes that the economy and midscale hotel market in Kuwait remains undersupplied and the addition of a four star hotel is an opportunity to target a different intra-regional traveler audience to Action's existing three star offerings.

The proposed hotel will be built close to the 77-floor Al Hamra Business Tower, the tallest sculpted building in the world hosting over 70 floors of offices, luxury shopping mall and multiple F&B offerings. 

This hotel is a new addition to Action Hotel's committed pipeline of eight further hotels by the end of 2016 and completion is expected in 2017. The Company intends to fund the development from existing resources.

Action announced an additional 1,500 rooms at its IPO in December 2013 and this further addition to the pipeline will increase the room count to 2,660. The company will continue to pursue opportunistic prime leasing and acquisition targets across the GCC and remains committed to its target of having 5,000 hotels rooms by 2020.

Alain Debare, CEO, said: "We are very excited about the prospect of developing another branded hotel in Kuwait. We have secured an excellent plot of commercial land that is in a prime location within the growing business district of Kuwait City. Obviously this is a country that we know well having completed two hotels that are performing ahead of our expectations to date. "

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