Action Hotels has agreed a joint venture for its upcoming property in Dubai Healthcare City and has partnered with AccorHotels' Novotel brand for the development and operation of the property.
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The 220-room hotel, which will be named Novotel Dubai Creek, will be a four star offering in a highly sought-after location in the centre of Dubai Healthcare City.
The area offers mostly luxury to upscale accommodation, with very few economy to midscale options available. This will be Action Hotel's first Novotel branded hotel, which is AccorHotels' upper midscale brand, comprising of over 470 hotels in operations with nearly 90,000 keys and 116 hotels under development that will bring in an additional 28,000 rooms across 60 countries.
It will also be the company's first property in Dubai and the 12th collaboration with AccorHotels.
The land on which the hotel will be situated was acquired directly from Dubai Healthcare City and is currently jointly owned, on a 50/50 basis, by Action Hotels and Sheikh Mubarak A. M. Al Sabah, with the Land previously being held as investment land in Action's consolidated accounts.
The joint venture has been entered into on an equal basis with H.E. Sheikh Mubarak A. M. Al Sabah. Each party to the JV will contribute a 50% stake in the JV for approximately $10.4 million, giving a total contribution of $20.8 million. Profit, losses and distributions will be shared equally.
The joint venture will acquire the Land, on a freehold basis, for a total consideration of approximately $16.0 million. The JV will borrow $35.2 million in order to fund development costs, bringing the total project cost to $56.0 million.
This development is an addition to the announced pipeline, bringing the total pipeline rooms to 837 and total portfolio rooms to 2,869. Construction is expected to begin in Q3 2016, with completion forecast for Q4 2017.
The hotel is expected to become operational in early 2018. AccorHotels' strong presence in Dubai is expected to drive considerable marketing and operational efficiencies for the project. ■
A strong storm that originated over the Pacific has tracked through the Great Basin and is currently transitioning across the Rockies to redevelop across the central High Plains later today into early Saturday morning.