Action Hotels has signed a preliminary sale contract to purchase a plot of land in the prime business district of Sharq in Kuwait City, where it will build and develop a new 160-room freehold hotel.
The four-star property is expected to open in 2017 and the company is paying approximately US $12.3 million for the land, including commission and registration fees.
Action said it is already in advanced discussions with a leading hotel operator targeting the midscale segment of the market.
"We are very excited about the prospect of developing another branded hotel in Kuwait. We have secured an excellent plot of commercial land that is in a prime location within the growing business district of Kuwait City,” said Action Hotels CEO Alain Debare.
“Obviously this is a country that we know well having completed two hotels that are performing ahead of our expectations to date.”
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Action currently has two operating three-star hotels in Kuwait City: the freehold ibis Sharq in the Al Hamra business district and the leasehold ibis Salmiya in the heart of the shopping and restaurant district. Both hotels are operated under long-term management agreements with Accor.
April 2014 occupancy figures for ibis Sharq and ibis Salmiya were 91% and 95% respectively, with both hotels ahead of management expectations on all key operating metrics, said Action.
Operational EBITDA (on a like-for-like basis) for ibis Sharq and ibis Salmiya has increased by 23% and 34% respectively in the year to date.
According to Action, the economy and midscale hotel market in Kuwait remains undersupplied and the addition of the four star hotel will provide an opportunity to target a different intra-regional traveller audience to Action's existing three star offerings.
The proposed hotel will be built close to the 77-floor Al Hamra Business Tower, the tallest sculpted building in the world hosting over 70 floors of offices, luxury shopping mall and multiple F&B offerings.
It joins eight hotels already in Action’s committed pipeline, slated for completion by the end of 2016.
Action announced an additional 1,500 rooms at its IPO in December 2013 and this further addition to the pipeline will increase the room count to 2,660. The company will continue to pursue opportunistic prime leasing and acquisition targets across the GCC and remains committed to its target of having 5,000 hotels rooms by 2020.
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