Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Action Hotels PLC makes encouraging start to 2018

The company is to make its dividend policy less generous to free up funds to grow the business faster
the Mercure Riyadh Hotel
The Mercure Riyadh Hotel is expected to open in 2019

Action Hotels PLC (LON:AHCG) said trading for the first two months of 2018 was encouraging, with like-for-like revenues well ahead of 2017.

Excluding the recently opened ibis Styles Bahrain hotel, revenues this year have been 6.4% ahead of 2017 on a like-for-like basis, while trading at the recently opened hotels in Sohar Oman and Brisbane Australia are showing revenue growth year-on-year and good customer feedback as they mature into their relative markets, Action Hotels said.

READ: Action Hotels trading “on track with current expectations”

The ibis Styles Bahrain, which opened in August 2017, is also showing a promising start to trading and the two hotels in Kuwait continue to perform well and combined are 12% ahead of last year revenue.

The improvement in trading has been achieved despite an unhelpful economic climate in the Middle East that is putting pressure on room rates.

In view of this, the board has elected to proceed with only one of the two hotel openings it had lined up; the Mercure Riyadh Hotel is expected to open in 2019 but the previously planned leasehold hotel, the Tulip inn Jeddah, has been removed from the development pipeline, saving anticipated capital costs of around US$6.4mln in the process.

Ass for trading in the year just ended, the board expects results will be broadly in line with market expectations, with revenue of around US$58.3mln and adjusted underlying earnings (Ebitda) of around US$15.2mln.

The loss before tax will be deeper than expected at around US$12.2mln, mainly due to the company not being to capitalise some of the interest costs last year as there were delays in two hotel openings, early repayment fees and a higher than forecast depreciation charge as valuations have increased.

While valuations have yet to be finalised Action Hotels expects an increase in the net asset value for the year compared to that reported for 2016 of US$195mln.

The board also advised shareholders that it has reconsidered its dividend policy and believes that the company’s funds would be best served, in the main, in investing to grow the business, as a result of which future dividends will be significantly reduced.

View full AHCG profile View Profile

Action Hotels PLC Timeline

Related Articles

hotel
April 06 2018
In the meantime, the Australia market remains buoyant with no slowdown in growth

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use