Action Hotels Share Discussion Threads

[dros1] 11/5/2015 10:07

Market Cap: £86m; Current Price: 58.5p


•Finals slightly below but dividend in line
•Revenue was +26% to $38m on the back of a 9% increase in the average daily rate (ADR) to $113, a 5% increase in revenue per available room (RevPAR) to $84 and average occupancy increased by 1% to 78% on a l-f-l basis YoY. Although a commendable performance where Adjusted EBITDA increased by 34% YoY to $11.3m this was c.6.5% below consensus for FY14. Final dividend increased by 126% to 1.45p taking the total to 2.17p and in line with expectations and points to a dividend yield of c.3.7% at the current price.
•1Q15 has started well where ADR was +3% YoY to $111 though marginally below the FY14 ADR of $113 we ascribe this to seasonality and expect ADR to increase throughout the year. Revenue was +22% compared to the same period in the prior year. Consensus is looking for c.57% YoY revenue growth which implies the business has a lot to do in the remainder of the year in order to meet forecasts for FY15.
•The group also appointed a new CFO, Krish Sundaresan, who comes with a wealth of experience in senior finance positions at international companies in the Middle East, Singapore, Japan, Australia and India. These are also key areas of expansion for the group.


NORTHLAND CAPITAL PARTNERS VIEW: The hotel portfolio continues to expand in high growth regions though the share price is not particularly undemanding at c. 18x FY14 EV/EBITDA in our view. Finals are slightly below expectations though the business still produced a strong performance and finally an improving dividend at current price levels implies a yield closer to 4% which should attract attention.

[mach100] 30/4/2015 15:38

Good point MT. The share is certainly struggling to gain traction. I am not a fan of the scale myself. Looking at the trades I wouldn't be surprised to see it squeezed down to 53/56. However there may be a turn on it from that point as we may get some buying into results.

[m.t.glass] 30/4/2015 15:24

The main negative concern for me is the relationship between the listed company and the unlisted holding company. The relationship may be perfectly OK - or may be one in which the holding company creams off money when selling property to the listed company - in which case the listed company doesn't flourish.

[dros1] 30/4/2015 12:18

be carful hear you might end up like ope

[m.t.glass] 30/4/2015 06:31

Mid-range rise reshaping GCC hospitality industry


JEDDAH – Leading experts from the hospitality sector say the rise of the mid-range is reshaping the industry in the region.

“There has been a growing diversification of the hotel industry, largely due to growing demand from price conscious international tourists and business travelers who want something other than the full five-star luxury experience at premium prices,” said Mark Shea, Faithful+Gould’s head of hospitality in the Middle East, who made the forecast ahead of the Arabian Hotel Investment Conference (AHIC) set to take place at the Madinat Jumeirah, Dubai on May 5-7, 2015.

Faithful+Gould, the world-leading leading integrated project and program management consultancy which specializes in the hospitality sector in the GCC, will lead a roundtable discussion on the hospitality sector at AHIC, gathering industry experts who will share their insights on the opportunities and challenges confronting the hospitality sector throughout the region.

Refurbishments and conversions will also be a key focus of AHIC, with Faithful+Gould Project Director Simon Enders leading a presentation on Getting Under the Skin of Refurbishments and Conversions, which will assess the feasibility of doing renovations on existing properties, including achieving maximum results with the least possible spend.

While the upmarket hotel segment has traditionally dominated the Middle East hotel landscape, the rise of the mid-range is reshaping the hospitality industry in the region.

According to Shea, medical and religious tourism are also fueling the growth of the mid-market range, which “could provide profitable long-term investment.”

Saudi Arabia currently offers huge opportunity for mid-range investment. The Kingdom’s 2030 strategy includes a significant focus on tourism, as well as reinforcing provision for existing high numbers of religious tourists.

In recent years, hotel infrastructure build up has seen intense activity in the Gulf, with two mega international events set to take place in the region.

In Dubai, the Department of Tourism and Commerce Marketing (DTCM) estimates that a total hotel room supply of 140,000 to 160,000 rooms will be required by 2020, an increase from the current supply of approximately 90,000 rooms, with a further 10,000-plus rooms being reported as needing refurbishment prior to World Expo 2020.

In Qatar, experts estimate about 45,000 hotel rooms are required to meet FIFA 2022 World Cup capacity requirements, with 21 hotels planned for construction by 2017.

“Each city has its own supply and demand characteristics. Dubai is a mature tourism destination, whereas Doha is emerging and has the challenge of maintaining momentum until the World Cup Qatar 2022. However both markets have room for mid-range provision,” Shea added.

Elsewhere in the region, Muscat, Manama and Kuwait City all have a growing need for mid-market provision. “Locations that maximize the asset’s potential mid-range hotels may be a more lucrative investment if provided as part of a mixed use development, rather than as stand-alone assets.

Considering versatile use of mid-market hotel accommodation can make better use of the building’s footprint. Mid-market hotels generally do not require lavish reception areas, and as a result, the hotel facility can be situated on the upper floors, releasing the ground floor to optimize retail footfall potential. In addition to new build opportunities, some areas have potential for converting old office buildings into mid-range hotels,” Shea further said.

Industry stakeholders looking to take advantage of opportunities in the hospitality segment could gain a lot of insights at the roundtable discussion to be led by Faithful+Gould, and will include experts such as Rawaf Bourisli, Director of Development, Action Hotels & General Manager, Board Member, Action Real Estate Company (KSCC); Paul Diab, Vice President-Operations, Golden Tulip MENA; and Hubert Viriot, CIO–IFA Hotels & Resorts and CEO –Yotel Ltd, UK. They will discuss build up models as well as funding approaches that could prove critical for contractors looking to enter the market for mid-range products. — SG

[m.t.glass] 29/4/2015 07:32

Action to open first hotel in Riyadh


Action Hotels, a leading upscale property developer in the Middle East and Australia, plans to invest $8 million in the opening of its first hotel in Riyadh, Saudi Arabia.

The 130-room property, which will see the conversion of an existing office building into a three-star hotel, is ideally located on Olaya Street in the Olaya district, the fast-growing financial and hospitality heart of Riyadh City.

"There is great potential for Action Hotels in the kingdom, and in Riyadh in particular. Although the Riyadh hotel market is a mature market, there is considerable demand for mid-economy branded hotels from the corporate segment, yet this segment is currently under supplied," said Alain Debare, CEO, Action Hotels.

The conversion project is scheduled to open in the second quarter of 2016.

Moreover, Action Hotels has signed a 20-year operating lease agreement, and is finalising the terms of a long-term management agreement with a leading hotel brand.

The addition of this hotel in Riyadh brings the brands development pipeline to nine hotels with 1,514 rooms and a combined operating hotels and committed pipeline to a total of 3,002 rooms.

Sheikh Mubarak A M Al Sabah, founder and chairman of Action Hotels, said: “Saudi Arabia is an attractive market for us, being the largest country in the region and having recently undertaken a widespread, long-term strategy for non-oil economic diversification driving business travel. This new hotel is a great addition to Action Hotels’ portfolio and the prime location of the property is a very strong statement for our first hotel in Saudi Arabia’s capital city.”

[m.t.glass] 21/4/2015 16:45

Results on May 11 apparently.

[eekorehc] 21/4/2015 13:02

Should hopefully be good taking what they said in January. IMO

Action Hotels, a leading owner, developer and asset manager of branded three and four star hotels in the Middle East and Australia, is pleased to update the market on its operational trading performance for the year ended 31 December 2014.

The 6 operational hotels (including the Holiday Inn Muscat in its maiden year of operation) delivered strong performance with revenue per available room ("RevPAR") for the year increased by 3.7% to $84 (2013: $81).

Both Kuwaiti hotels delivered average occupancy for the period in excess of 80% and across the portfolio occupancy levels continue to be in line with management expectations.

Gross Operating Profit ("GOP") from operating hotels across the portfolio increased by over 20% which reflects the Company's focus on revenue management and increased efficiencies.

Total current operating room count is 1,488, a 32% increase on hotel stock, with a pipeline of a further 8 hotels taking total room count to 2,835 by 2017, a 319 room increase from the stated plan at the time of the IPO in December 2013.

The Company will announce its audited final results for the year ended 31 December 2014 in April 2015 when it will also declare its final dividend.

Fo

[m.t.glass] 05/3/2015 12:42

Shares Magazine devotes a page to AHCG today and labels it a BUY.

[philanderer] 22/1/2015 10:28

22nd jan 2015 FinnCap buy tp 110p

reiterates

[neilgbudd] 22/1/2015 10:02

I'm out; only because of the low liquidity and the fact the share price won't move positively for love nor money. On my watch list, but will need to see some compelling share price progress. Good luck if you hold; got faith in the story overall.

[mach100] 21/1/2015 13:24

Extremely well timed it seems as falls are accelerating and prices are dipping and still the selling continues. Not sure what has caused the flurry of check-outs but there doesn't seem to be a floor for the share price as it spirals down.

[mach100] 21/1/2015 11:23

You might have time that exit well M.T. There are sells today at 59p so people are getting bored. I think you raise some pertinent concerns tbf.I have been to a presentation of this one and saw it as interesting especially in light of the divi. However I am not sold on the business model. If I opened four hotels in Kings x in London, they are sure to be profitable but would they warrant a listing? Those buying in will get a nice discount to the director buy at 69p so a further dip into the market by a director or more falls would make this more interesting.

[m.t.glass] 21/1/2015 11:05

I think the prospects for what it is doing are good. It will remain on my watchlist. It is the company structure that concerns me. And the share price behaviour (currently at its alltime low) doesn't justify a place in my portfolio at present.

[fruitninja84] 21/1/2015 10:44

I can't bring myself to dump these! I'm sitting on a 5% loss but it's trading way below its NAV pays a divi, in a growing market, people always need accommodation ect ect. HY interims were a good, I could be wrong and worse case the company delistes. I'm only 0.1% of my portfolio in this but happy with it.

[m.t.glass] 20/1/2015 12:03

Ditched the last of my AHCG this morning (for now at least). I still like the story, but am wary of companies that are a listed subsidiary of an unlisted holdings company that is in a position to cream off profits when acting as middleman on property deals. I don't know if it's fair to think that might be happening here, but I have better uses for my money elsewhere.

[m.t.glass] 24/12/2014 08:57

So, parent company (and largest shareholder) Action Group Holdings has bought the whole plot (26,312 sq ft), sold half to Action Hotels for now, and Action Hotels might buy the other half from AGH later. Presumably at a higher price.

I don't mind the (unlisted) parent planning a profit for itself, and don't mind it doing so from each of its dealings with Action Hotels - as long as they do so in a way that leaves a big enough slice of profits in the Action Hotels account for shareholders.

If they do so in a way that repeatedly screws the Action Hotels shareholders, I shall mind.

[m.t.glass] 24/12/2014 07:59

A further press report of the Dec 16 deal:





Action Hotels : buys $15.7m Dubai Healthcare plot for hotel
Envoyer par mail
12/23/2014 | 07:19am US/Eastern

Hotel owner and developer Action Hotels is to pay US $15.7 million for a freehold plot of land in Dubai's Healthcare, where it plans to build a three-star, 240-room hotel for patients, friends and families.

The company is acquiring the land along with parent company Action Group Holdings directly from the Dubai government in the free zone, which was established in 2002 to meet the demand for heathcare in the emirate.

Action had previously intended to develop the hotel, its first in Dubai, on the plot on a leasehold basis. However, having now considered the location and projected investment value, it said it believed a freehold interest would more positively impact its net asset value and EBITDA levels whilst also giving greater control over the development of the hotel.

It will have an option to acquire the remaining 50% of the 26,312 square foot plot from Action Group Holdings.

"Our ability to source and secure this very much in-demand plot is a testament to our connections and networking within the region to develop our economy and midscale hotels growth strategy across the Middle East,” said Action Hotels CEO Alain Debare.

"This hotel fits with our strategy to provide economy and mid-market hotel rooms in key locations. Dubai Healthcare City has firmly established itself as the regions leading medical hub and drives a strong demand for accommodation.

The strategic location is expected to drive strong demand for branded economy hotel rooms from nearby medical facilities, schools and businesses."

Explaining its plans for the plot, Action pointed out that there are currently no operating three-star hotels in Dubais Healthcare City, meaning it would be able to attract the families and friends of medical patients and address the demand for quality affordable accommodation in the area.

The company is now finalising the financial completion of the acquisition via secured debt finance from a regional bank.

[m.t.glass] 22/12/2014 09:51

With little over a week to go before their trading year ends, nothing in today's news and prior statements to suggest they will fail to move from loss to profit or at least around breakeven for the start of the new year.

68p would take market cap back above £100m

[fruitninja84] 22/12/2014 09:39

Well just dipped my toe in, Been watching on the sidelines here for nearly a year and feel the time is right.

[m.t.glass] 22/12/2014 09:01

That was my little ISA top-up of 780 shares bought near the bid at 64.88p at 8.57am and showing as a sell.

[mach100] 16/12/2014 10:01

Looks good today bhavini. Looks like there could be good growth up to 2020. I think if it falls it would be worth buying for yield alone. Not much seems to budge the share price Unless all the recent trades have been sells, I think the actual spread is 64/65p. If this could fall to 62p I think it would be interesting.

[bhavini4] 16/12/2014 09:45

Despite more good news today, share price still as dull as ever. What will it take to get this moving I wonder? Really like the story here.

[mach100] 26/11/2014 14:36

Someone coughed 15000 shares today at 62,5p which is below the bid price. Not sure if Mr Murray had a holding. TBF there was a chunky director buy at 69p. I am still on the fence with this one.

[m.t.glass] 17/11/2014 09:33

Deal we already know of, but nice to see coverage popping up in a few places today: