Action Hotels, a leading owner, developer and asset manager of branded three and four star hotels in the Middle East and Australia, has updated DirectorsTalk on its trading performance for the year ended 31 December 2015.
Financial and Operational Performance
The Company’s nine operational hotels performed strongly and in line with expectations, with revenue expected to be up by 16% and operating profit expected to be up by 18% as compared to the previous financial year, resulting in EBITDA growth of approximately 42%. In addition, an increase in reported net asset value is expected as a result of new hotel openings, upward revaluations of existing properties and new additions to the portfolio.
Action Hotels increased its portfolio of operational rooms by 54% in 2015 with the opening of Premier Inn Sharjah, ibis Seef Bahrain, along with the acquisition of ibis Budget Melbourne Airport, taking the total number of operating rooms across the portfolio to 1,561 as at 31(st) December 2015, a 55% increase since IPO.
Premier Inn Sharjah, the Company’s first property in Sharjah, has been trading well since its opening in August, with occupancy in December 2015 of 65%.
The development of Tulip Inn Ras Al-Khaimah and the Company’s largest property so far, the 367-room Ibis Styles Brisbane, are both complete. Formal opening of both these hotels is expected in Q1 2016, with early enquiries encouraging.
Action Hotels continues to progress its fully-funded hotel pipeline and is on track to complete a further 980 rooms across six new hotels during 2016. This will take Action Hotels’ portfolio to 2,537 operational rooms and 15 hotels by the end of 2016.
Discount to Net Asset Value
The Company currently trades at a 45% discount to its net asset value, despite the consistent growth in the Group’s net asset value, EBITDA, net profit and dividend over the period since IPO. Action Hotels’ position as a provider of quality three and four star accommodation puts the Company in a robust position, particularly at times of economic uncertainty, as businesses become increasingly cost conscious and are looking for affordable quality mid-scale hotels which offer better value for money for their employees. The Company’s target market of business and inter-regional travellers means Action Hotels is not dependent on international leisure tourism and therefore remains resilient to any declining trends in international tourism as a result of global or financial events.
Outlook
The Company will announce its audited final results for the year ended 31 December 2015 in April 2016 when the Directors also expect to be proposing the Company’s final dividend.
