Action to take over three-star hotel in RAK

Hotel owner, developer and asset manager Action Hotels has added a 104-room, three-star property in Ras Al Khaimah to its development pipeline.

The company has signed a 20-year lease agreement on an existing residential development and will undertake a refurbishment and conversion of the interior of the Ras al-Khaimah Hotel, which is expected to be completed and fully operational by September 2015.

Refurbishment costs are expected to hit US $4.8 million and the company said it is in the final stages of agreeing terms with an international partner to manage the hotel, which is located in the heart of the financial district.

"Ras Al Khaimah is a region we know well and believe that its three and four star hotel sector is undersupplied,” said Action Hotels chairman and founder Sheikh Mubarak A. M. Al Sabah.

“It is also exciting to be partnering with a well-known brand in the region and we believe this hotel will be suited to their product offering, targeting intra-regional business and leisure travellers. As we highlighted at the time of our interims results earlier this month, this development underpins our strategy of using both freehold and leasehold models to accelerate growth in room numbers.

“Whilst we have shown to enjoy significant development uplifts on our freehold hotels, leasehold hotels are less capital intensive and which the Board believes will lead to accelerated EBITDA growth."

Action said it had identified a significant opportunity to provide branded economy and midscale accommodation in the Ras al-Khaimah market, which it believes is predominantly serviced by upper-upscale and luxury hotel accommodation.

The property has been developed as a residential property and is owned by Action Real Estate Company, which is now leasing it to Action Hotels. Both companies are controlled by the same parent company.

Action recently signed a deal with Accor for the operator to manage three-star property in Sohar, Oman under its Ibis Styles brand.