Joint venture for Tulip Inn Ras Al Khaimah

Action Hotels plc

("Action Hotels", "Action" or the "Company")

Joint venture for upcoming Tulip Inn Ras Al Khaimah

Action Hotels, a leading owner, developer and asset manager of branded three and four-star hotels in the Middle East and Australia, is pleased to confirm that following the announcement on 2 October 2014 relating to Action's acquisition of a leasehold interest in a building in Ras Al Khaimah to be converted into a hotel, Action Hotels has successfully agreed a joint venture with Action Group Holdings to acquire the property on a joint freehold basis (the "Joint Venture") from Action Real Estate Company. The Board believes this transaction will add greater value to the company shareholders.

Under the leasehold arrangements announced on 2 October 2014 (which will cease to have effect) it was envisaged that the Company would be contributing approximately US$4.8 million to the refurbishment and conversion of the interior of the Hotel. Under this new agreement, Action Hotels will acquire 50% of the Joint Venture which will own the freehold of the property (currently planned to be the Tulip Inn Ras Al Khaimah). The land and building is being acquired by the JV for a consideration of approximately AED 24 million (equivalent to approximately US$6.5 million). The total project costs remain on budget and the total cost for Action Hotels' share in the project under the Joint Venture is approximately US$6.3 million. This represents an incremental cost to Action Hotels of approximately US$1.5 million, which will be funded by the Company from its existing cash resources.

Following completion of the transaction, the Joint Venture will be fully consolidated into the accounts of Action Hotels, therefore entitling Action to benefit from any capital appreciation on the completion of the property, should it arise. In addition, Action will be able to recognize all of the assets, liabilities, income and expenses attributable to the Joint Venture on a consolidated basis and will eliminate the rental expense currently forecast.

The Directors expect this to have a positive impact on the Company's income statement and balance sheet. Return on equity and cash on cash returns are expected to be significantly higher at 13.2% and 10.6% respectively at year 3 of operations.

Action will also be in a position to raise new debt against the freehold asset on completion, allowing for monies invested to be utilized towards future growth and new development opportunities.

By reason of Action Group Holding Company being a majority shareholder in Action Hotels, the participation by Action in the Joint Venture constitutes a related party transaction under AIM Rule 13 of the AIM Rules for Companies. The independent directors of the Company, having consulted with the Company's nominated adviser, Zeus Capital Limited, consider that the terms of the Joint Venture are fair and reasonable insofar as its shareholders are concerned. 

Action Hotels CEO Alain Debare stated:

 "The opportunity to partner with Action Group Holdings to take ownership in the Tulip Inn Ras al Khaimah is a great value addition for Action Hotels and our shareholders. Through a minimum cash contribution, we were able to structure a transaction that will contribute favourably to Action's operating profit and enable Action Hotels to participate in the capital appreciation of the property. The hotel is currently in the final stages of conversion with fit out works being completed with formal opening during Q1 2016."

For more information contact:

Notes to Editors

Action Hotels PLC

Action Hotels is a leading owner, developer and asset manager of branded three and four star hotels in the Middle East and Australia. Established in 2005, Action Hotels currently operates nine hotels with 1,561 rooms in aggregate across the Middle East and Australia, with further properties in development in both regions.

More information is available at http://www.actionhotels.com/