Ashford Hospitality Trust, Inc. Q4 FY2024 earnings call

Highlights of the quarter included strong operating results with 3.1% comparable RevPAR growth, 4.6% comparable total revenue growth, and 6.2% comparable hotel EBITDA growth. Strategic conversions were a key part: the La Concha Hotel in Key West was converted to Marriott's Autograph Collection with an expected 20%-30% RevPAR premium post-conversion, and the La Pavillion Hotel in New Orleans was converted to Marriott's Tribute Portfolio. The Grow AHT initiative has three core pillars: G&A reduction (aiming to lower corporate overhead by cutting management and board compensation, renegotiating fees, etc.), revenue maximization (focusing on boosting rooms revenue, increasing ancillary revenue), and operational efficiency (combating margin pressures by renegotiating vendor contracts, implementing energy-saving measures, optimizing labor) with a goal to add $50 million to the run rate corporate EBITDA. Asset management activities included strong portfolio performance with comparable hotel RevPAR up 3% year-over-year, December hotel EBITDA up 12% year-over-year, successful repositioning of La Concha and Le Pavillion hotels with significant investments, and the Le Meridien Fort Worth Downtown showing strong performance from the start.

In the fourth quarter, Ashford Hospitality Trust saw 3.1% comparable RevPAR growth, 4.6% comparable total revenue growth, and 6.2% growth in comparable hotel EBITDA. Total revenue growth exceeded RevPAR growth, with December's total revenue growth of 7.7% outpacing RevPAR growth by 350 basis points. The La Concha Hotel in Key West, after converting to Marriott's Autograph Collection, had 25% year-over-year revenue growth in January. The La Pavillion Hotel in New Orleans, converted to Marriott's Tribute Portfolio, achieved more than 45% year-over-year revenue growth in January. As of December 31, 2024, the consolidated portfolio consisted of 73 hotels with 17,644 rooms.

Plans to close the offering of Series J and Series K non-traded preferred stock on March 31, 2025. Not anticipating reinstating a common dividend in 2025. The Grow AHT initiative is expected to add $50 million to the run rate corporate EBITDA. The company will continue strategic portfolio turnover and ongoing deleveraging.

Forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks that could cause actual results to differ materially from anticipated. There are risks related to interest rate fluctuations and bid-ask spreads in transaction markets.

Q: Can you quantify the benefits seen from the Grow initiative and provide color on the ramp period and cadence?

A: More than half of the initiatives have been fully rolled out and are underway, with impact seen in Q4 and continuing into Q1, and the remaining initiatives will be rolled out throughout 2025.

Q: Regarding the conversions, do the assets have largely stabilized or is there additional ramp period?

A: The converted assets still have additional runway, with the La Pavillion Hotel outperforming underwriting including the impact of the Super Bowl, and the La Concha Hotel outperforming in ADR.

Q: Provide color on the transaction environment?

A: There has been improvement in the financing market driving optimism in transaction markets, but the company will be disciplined, expecting to sell additional assets but being selective due to bid-ask spreads in some markets.

Q: Clarification on floating rate exposure?

A: It is a combination of interest rate caps burning off and SOFR dropping below strike prices on those caps. Historically, the company prefers floating rate financing as it is more flexible, and it is expected to have a mix of fixed and floating rate with a bent towards more floating rate