AHCG Action Hotels

TIDMAHCG

RNS Number : 1571E

Action Hotels PLC

07 April 2014

Action Hotels plc

("Action Hotels" or the "Company")

Maiden results for the year ended 31 December 2013

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 its maiden unaudited results for the year ended 31 December 2013.

All currency amounts are in US $ unless otherwise stated.

Key highlights

-- Successful admission to AIM and fundraising of $50.0m (before costs) from institutional investors to fully fund the opening of an additional eight hotels, 1,500 rooms

-- Opening of Action Hotels' sixth hotel, with Holiday Inn as partner, bringing total room count at year end to 1,004

-- Year-on-year growth in revenues, Average Daily Rate (ADR), occupancy and revenue per available room (RevPAR)

-- Dividend of GBP 0.96 pence per share declared for 2013 with the Board expecting to follow a progressive dividend policy

Financial summary

   --           Total reported revenue increased by 5.4% to $29.8m 
   --           Average Daily Rate (ADR) increased by 5.8% to $105 

-- Revenue per available room (RevPAR) grew by 8.9% to $81 reflecting strong occupancy and average room

rate performance

   --           Operating profit $4.4m (2012: $4.7m) 
   --           Adjusted EBITDA (pre-exceptional items) $9.1m (2012: $8.8m)(1) 

-- Revaluation uplifts (net of deferred tax) of $9.95m on the hotel portfolio (2012: $18.50m)

   --           Net Asset Value (NAV) of $167.1m (2012: $41.4m), NAV per share of $1.13 

Operational highlights

   --     On a like-for-like basis: 

o Year-on-year growth in occupancy (+4%), ADR (+6%), RevPAR (+10%) and revenue (+5%) across the

portfolio

o Occupancy rates for 2013 increased by 4% to 78%

o Continuing to operate at occupancy levels significantly beyond breakeven points - average breakeven

occupancy across the portfolio is 33%

-- Opened our sixth hotel, the only Holiday Inn in Oman, Holiday Inn Seeb, with 185 rooms which has already achieved 66% occupancy for March 2014

-- Secured and fully funded pipeline of a further eight hotels, taking total room count to 2,500 (150% growth) by 2016 (1)

The adjusted EBITDA is reconciled to net loss on page 8.The statutory reported figures below include the impact of exceptional costs relating to restructuring pre IPO. These significant costs have all been included in the financials for the year ended 31 December 2013 and contributed to the net loss at a before and after tax level for the year. Such items are not expected in the financial year 2014.

Commenting on the results, Alain Debare, Chief Executive Officer, Action Hotels said:

"2013 has been a transformational year for Action Hotels with our admission to AIM raising $50m before costs and the opening of our sixth hotel, Holiday Inn Seeb Muscat, our first hotel with Intercontinental Hotels Group.

"2014 has started well with occupancy levels remaining strong across the portfolio and encouraging growth in all of our key metrics. Our newest hotel, Holiday Inn Seeb Muscat, which we opened In December 2013, is showing performance to date ahead of our expectations. We remain on track to execute our pipeline of eight additional hotels whilst maintaining the performance of our existing hotel portfolio."

 
 Enquiries: 
  Action Hotels Company 
 Alain Debare, Chief Executive Officer     Via Redleaf Polhill 
  Katie Shelton, Communications Director 
 
 finnCap 
  Matthew Robinson/Grant Bergman (Nomad)     020 7220 0500 
  Guy Hewitt (Analyst) 
 
 
  Redleaf 
  Rebecca Sanders Hewett                     Tel: 0207 382 4730 
  Dwight Burden/Jenny Bahr/Rachael Brown     actionhotels@redleafpr.com 
 
 

About Action Hotels

www.actionhotels.com

Action Hotels is an owner, developer and asset manager of branded three and four star economy and midscale hotels in the Middle East and Australia. The Group's objective is to become a leading owner, developer and asset manager of branded economy and midscale hotels in key Middle East markets and Australia. Action Hotels has completed six hotels, of which five are in the Middle East and one is in Australia, with a further two hotels under construction (both in the GCC), one hotel expansion and another six Pipeline projects (one in Australia and the remainder in the GCC).

Chairman's statement

It is my pleasure to announce our first set of results as a publicly traded company. For Action Hotels 2013 was a transformational year with the opening of our sixth hotel, our first hotel partnering with Intercontinental Hotels Group, and the successful admission of our shares to trading on the London Stock Exchange AIM market in December 2013. During the IPO process we were very pleased to raise $50m before costs and secure a number of new institutional shareholders.

Our vision of being the market leading developer, owner and manager of economy and midscale hotels primarily focused on the Middle East is well on-track. We anticipate growing our current portfolio of just over 1,000 hotel rooms to 5,000 hotel rooms by 2020. The Group will achieve this ambition by owning and leasing hotels, which will create a strong balance of asset-backing with an ability to scale in a timely manner.

The funds raised at the time of IPO have enabled us to fully fund our current hotel pipeline which will increase our number of rooms by 1,500 by the end of 2016, taking the total to 2,500 rooms (150% growth). We are always looking for additional opportunities that meet the criteria of our strategy, and we hope to be able to update the market on this in due course.

Our current portfolio of six hotels continues to perform well and our low cost base enables us to break-even at lows levels of occupancy. Our hands-on approach to working with our chosen hotel operators has ensured our portfolio of hotels maintain year-on-year growth in our key metrics of occupancy, ADR, RevPAR and revenue.

Middle East

The Middle East hotel market continues to be focused on upper scale and luxury creating further opportunities for us to work with in our core middle market segment with leading brands that have high growth aspirations for the region. The region's current announced pipeline of economy and midscale hotels represents less than 20% of the overall branded hotel supply. This dynamic is well below the levels seen in Europe and North America.

We consider that our contrarian approach to the market, alongside our substantive expertise and regional know-how gives us our major point of differentiation to other hotel groups. Our strategy continues to prove successful as evidenced by the increasing demand for our hotel offering from GCC, Levant and other intra-regional travellers.

Australia

As a region Australia is a more mature hotel market; but for Action Hotels, Australia remains opportunistic and highly attractive. We have been working alongside Accor since 2006 and our ibis Glen Waverley in Melbourne has shown consistent performance year-on-year, as well as having the lowest break-even occupancy level in our current portfolio.

We have already started work on our next hotel in Australia, ibis Brisbane, a 368 room hotel situated in a prime central location. We believe this will be the largest midscale hotel in the region and will be an extremely attractive asset. We look forward to opening this by the end of 2015.

Operating metrics (like for like basis)(2)

 
                     Year ended   Year ended   % movement 
                      31-Dec-13    31-Dec-12 
 Total room count           819          819          Nil 
 Occupancy                  78%          75%           4% 
 ADR                       $106         $100           6% 
 RevPAR                     $82          $74          10% 
 Total Revenue             $30m         $28m           5% 
 (2)    The additional 185 rooms for Holiday Inn Seeb Muscat are not included in the above as they opened during December 2013. 

Dividends

The cash flow profile of our business enables us to pay an attractive dividend even during our aggressive growth phase. The declared dividend for 2013 of GBP 0.96p will be paid on 30 May 2014. In accordance with the admission document, Action Group Holdings, whose holding in Action Hotels represents 64.7% of the share capital, has waived its entitlement to this dividend.

As per the Company's progressive dividend policy, we are expecting to pay a higher total dividend in 2014 to be paid as an interim and final dividend.

Employees

On behalf of the Board, I would like to thank all of our dedicated employees for their contribution to the business over the last year, especially with the demands required to get us to our successful AIM admission. We look forward to working with you all in this coming year.

Outlook

The financial year 2014 has started well. Occupancy levels continue to remain strong across the portfolio, and we have already seen encouraging growth in ADR, RevPAR and revenue on 2013 figures.

Our latest hotel, Holiday Inn Seeb Muscat, has shown strong performance in its first three months since opening. For March 2014 occupancy rates averaged at 66% with an ADR of $137, and achieved 100% occupancy for the first time on 17 March 2014.

We reported earlier this year that our ibis Amman, Jordan had been awarded the 'Innovative Award for Tourism 2013' prize by the Jordanian Society of Tourism and Travel and was also ranked first by number of guests in the three star category and fourth overall by all hotels in Jordan. This really does underpin our strategy and demonstrates that we are first movers filling in the gaps within the hotel market in the Middle East.

I would like to take this opportunity to thank the Board for their guidance and all our employees and others involved with the business of Action Hotels plc for their loyalty and hard work during a very busy and challenging year.