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Action Hotels gets off to a flyer in 2017

The hotel developer also updated the markets on its performance in 2016
Saudi man looking out across a river with skyscrapers in the background
Action has 12 operating hotels in its portfolio, with a further six in the pipeline

Middle East and Australia-focused Action Hotels PLC (LON:AHCG) has told investors it has enjoyed a “solid” start to 2017.

Trading since the turn of the year has been strong, the company said, with total revenues 14% ahead compared to the same period last year.

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Action said its eight mature operating hotels have all put in “stable performances” so far, with average occupancy broadly flat with last year at around 76%.

The hotel sector in the Middle East is coming under a little pressure, but Action said its focus on economy and midscale hotels, where demand exceeds supply, “ensures fundamentals will remain solid with revenue growth coming from new rooms”.

Revenues increase by 22% in 2016

As for trading in 2016, Action Hotels told investors it had another year of growth in all of its key performance indicators, including revenue, underlying earnings and asset values.

For the 12 months to 31 December 2016, Action expects to report that total revenues rose by 22% to US$53.1mln (2015: US$43.5mln) when it publishes its full results, likely to be on 2 May.

It also forecasts a 16% increase in adjusted underlying earnings to US$18.5mln, while the value of its hotel assets should come in at US$458mln, a year-on-year increase of 15%.

Action said the growth was driven mainly by solid performances across its operating portfolio along with the addition of three new hotels opening during the year.

The new hotels – the ibis Styles Brisbane Elizabeth Street, Tulip Inn Ras Al Khaimah and Mercure Sohar – boosted the group’s number of operational rooms by almost 40% to 2,181 (2015: 1,561).

Given that the AIM-quoted firm is in the “accelerated growth and development phase”, as it puts it, an overall net loss before tax position is expected.

That’s mainly due to the pre-opening costs of new hotels and finance costs, as well as depreciation and amortisation.

As a result of the finance costs, which relates to the increase in debt required to find the development pipeline, the overall net loss figure will be higher than originally anticipated.

Action Hotels to maintain its progressive dividend policy

Unforeseen delays in opening dates at some of the new hotels did mean that revenues weren’t as high as Action had hoped for or expected, but the developer will still pay out a progressive dividend.

More details on the divi will come when the full results are announced early next month, but Action told investors it intends to pay a final dividend in line with market expectations.

Chief executive Alain Debare hails “robust” performance in 2016

“We are pleased to update the market on our performance which has been robust across the Action Hotels portfolio,” said chief executive Alain Debare.

“We remain focused on driving performance at our operating hotels and our growth reflects the strong contribution from our mature hotel portfolio, as well as the encouraging success of our newest hotels as they gain traction in their respective markets.

“We have a good pipeline of hotels in development and are on track to complete an additional three hotels this year.”

Six more hotels in the development pipeline

Action currently has 12 operating hotels in its portfolio and a pipeline which, at the moment, consists of a further six.

A total of 354 new rooms – from three new hotel openings – are expected to be completed by the end of 2017.

This year also promises to be a big one in that Action will open in its seventh country of operation.

Once the current pipeline of hotel developments has been completed, Action will have a total of 3,184 rooms within its portfolio.

Shares were down 12% in early deals to 41p.

--Updates for share price and additional info--

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Action Hotels PLC Timeline

December 05 2016

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Trading since the turn of the year has been strong, with total revenues 14% ahead compared to the same period in 2016

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