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Action Hotels losses swell on cancelled Saudi projects
Action Hotels warned that losses with be larger than expected after it cancelled one and delayed another hotel in Saudi Arabia.
The company projects a 48% year-on-year increase in loss before tax to approximately $12.2m, despite revenue and EBITDA projected to be broadly in line with market expectations, up 10% to $58.3m and down 18% to $15.2m respectively.
The company attributes the increase in loss to "not being able to capitalise some of the interest costs" in 2017 as well as "a higher than forecast depreciation charge as valuations have increased".
On 22 December the company announced its decision to delay the opening of two of its hotels in Saudi Arabia.
A update on the delays from Action Hotels said: "The previously planned leasehold hotel; Tulip Inn Jeddah, has been removed from the development pipeline and will save anticipated capital costs of circa. $6.4m, which the board can reallocate to other projects that are expected to deliver higher returns on capital employed."
The other delayed project, the Mercure Riyadh Hotel, is expected to open during 2019.
Meanwhile, AIM traded company Action Hotels reports an "encouraging" start to 2018 with revenues up 8.9% on this period the previous year.
"Trading of 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. The ibis Styles Bahrain, 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," said a company statement.
In other developments, Action Hotels is nearing completion of its 347 room flagship hotel in Melbourne Australia with opening expected in April and over A$3m in reservations.
As of 0913 GMT, Action Hotels' shares were down 20.93% at 17.00p.