Action Hotels is raising £30 million through a listing on the Aim market in London to fund expansion for mid-scale and economy hotels in the Middle East.
The company was due to begin trading this morning with a market capitalisation of around £95 million.
Hotel stock in the Middle East is mainly geared towards luxury and upmarket properties, and the proportion of mid-range accommodation in the region is expected to decline in the next few years, as luxury hotel developments continue.
Chief executive Alain Debare told the Financial Times: “We are being very contrarian. Everybody is focused on luxury hotels.
“But the Middle East is seeing growth in inter-regional travel, increased airport capacity and an expanding middle class.”
The business has six hotels – five in the Middle East and one in Australia – with a total of 1,000 rooms. Revenues last year were $28.2 million, and Action made an adjusted pre-tax loss of $800,000.
Two more hotels, in Sharjah and Manama, are being built and Action is raising cash to help fund other projects as well as further expansion, which will take the portfolio to more than 2,500 rooms.
Five of its hotels are under the banner of Accor’s economy Ibis brand. Action also has a Holiday Inn in Muscat. New projects will be branded with, among others, Whitbread’s budget Premier Inn brand.
Action Hotels is owned by Sheikh Mubarak Abdullah Al Mubarak Al-Sabah, founder of a Kuwaiti petrochemicals company.
Commenting on Action Hotel’s admission to Aim, Debare said: “Over the past eight years we have established a successful and profitable hotel business which is well-placed to take advantage of the significant growth opportunities for branded economy and mid-scale hotels across the Middle East.
“The move to become a listed company is the next logical step for us. It will enable us to solidify Action Hotels’ position in the region and to access capital markets for the development of our hotel pipeline.
“We have high aspirations for Action Hotels and this listing on Aim will provide increased visibility and recognition with our global partners, driving opportunities for continued growth.”