Event Hospitality & Entertainment to boost earnings with QT Sydney expansion

Event Hospitality & Entertainment Ltd (ASX:EVT) is betting big on tourism in Sydney.

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The Event Hospitality & Entertainment Ltd (ASX: EVT) share price edged higher this afternoon in response to news that the hotel and cinema group will spend $116 million purchasing a prime piece of real estate in central Sydney.

One of the group's big growth drivers over the past few years has been the roaring success of its QT Hotel chains led by its flagship central Sydney hotel and today's deal means it will have the option to expand the hotel as part of a mixed use redevelopment of the 4,700sqm site it has acquired at 458-472 George Street.

The acquisition will be funded with a mixture of cash and debt and is expected to provide an "annualised EBITDA uplift of around 1.5 cents per share", which would equate to around 2% based on FY 2016's 78.4 cents in earnings per share.

On the back of the success of the opening of the QT Sydney Hotel in 2012, Event has now opened copycat hotels in Falls Creek, Canberra, Port Douglas, Gold Coast, Bondi and Wellington, with its September 2016 opening in Melbourne reported to be "performing ahead of expectations".

Event also operates the Rydges and Atura Hotel brands and several resorts in the popular skiing destination of Thredbo. As such it has good leverage to the general growth of inbound tourism Australia is expected to enjoy over the decade ahead.

The group also owns and operates the Event cinema chain in Australia, alongside other similar cinema chains in New Zealand and Germany.

Event shares closed up 1% to $13 this afternoon with a fully franked 4% dividend yield available. They may offer reasonable total returns for investors with a long-term focus.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Event Hospitality & Entertainment. Motley Fool contributor Tom Richardson owns shares of Event Hospitality & Entertainment. You can find Tom on Twitter @tommyr345 The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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