Action Hotels, an owner, developer and asset manager of branded three- and four-star hotels in the Middle East and Australia has recently signed a Hotel Management Agreement (HMA) giving leading hotel operator, Accor Group, the long term management of Action’s third hotel in Kuwait.
The HMA for the 160-room four-star Novotel property was signed by Action Hotel’s Chairman, His Excellency Sheikh Mubarak Abdulla Mubarak Al Sabah and Christophe Landais, Chief Operating Officer Accor HotelServices Middle East.
Accor is the world’s leading hotel operator with more than 3,600 hotels across 14 trusted brands in 92 countries with 170,000 employees. In the Middle East, Accor operates 66 hotels with over 16,000 rooms in ten countries.
According to Action Hotel’s CEO Alain Debare the construction of the freehold hotel is currently expected to cost approximately US$29million, an average of $181,000 per room, in addition to the $12.3 million already paid to secure the plot of land.
“Construction is scheduled to commence by mid-2015 and we expect the Novotel Sharq to open its doors to Kuwait in 2017, joining the 175-room ibis Salmiya which opened in 2008, and the neighbouring 160-room ibis Sharq, now four years in operation.”
He also confirmed that the new Novotel hotel will complement the strong performance of the existing two ibis hotels in Kuwait.
“Our two operating hotels in Kuwait are currently achieving the highest gross operating margins within our portfolio as a direct result of the strong demand for quality economy and midscale hotels along with the economies of scale associated with commercial synergies and sharing of overheads between the two ibis hotels. With this third hotel, Novotel Sharq joining the same operational cluster we are expecting to generate further benefits,” he said.
Commenting on the new development in Kuwait, Landais said: “This is the first Novotel in Kuwait and confirms Accor’s commitment to bringing world-class mid-market hotels to the region. Our partnership with Action Hotels which started back in 2007 is highly significant in this plan.”
Sheikh Mubarak said: “We are pleased to partner with Accor for the development of Kuwait’s first Novotel. This is a great addition to our growing portfolio of economy and mid-market hotels in the Middle East. We strongly believe that the Novotel brand is at the forefront of the mid-market hotel segment and this will help drive superior returns.”
The Novotel Sharq is an addition to the pipeline of hotels announced at the time of AHCG’s IPO in December 2013. The Company’s current operating portfolio consists of six hotels, of which five are in the Middle East and one in Australia. The pipeline includes another nine hotels that will open by the end of 2016, with new openings in Bahrain and Sharjah expected by the end of 2014.
Debare confirmed Action Hotels will continue to pursue opportunistic prime leasing and acquisition targets across the GCC and remains committed to its target of having 5,000 economy and midscale hotel rooms by 2020.
“Our focus remains on developing a leading economy and midscale hotel business in the undersupplied and high growth markets, with a primary focus on the Middle East where we are well-placed to take advantage of the significant growth opportunities for branded hotels in this category,” Debare concluded.
