Sotherly Hotels Inc. Q3 FY2024 earnings call

• Portfolio metrics: Q3 RevPAR, occupancy, and ADR trends; hurricane impacts (Debby, Helene, Milton) affecting operations in Florida and Georgia. - Hotel Alba and Tampa showed commendable results despite hurricane impact. - Urban markets' occupancy improvement; DoubleTree in Philadelphia and Whitehall in Houston had strong occupancy gains. - Corporate activity: Secured loan on DoubleTree in Jacksonville and new franchise agreement for Jacksonville hotel with renovation plans.

For the Composite portfolio, Q3 2024 RevPAR increased 4.1% compared to 2023, driven by 7.8% occupancy growth and 3.4% ADR decrease. Relative to 2019, Q3 RevPAR was up 6.4% due to 10.9% ADR growth but 3.6% occupancy decline. Year-to-date, RevPAR was up 4.6% vs 2023 (6.9% occupancy, 2.2% ADR decrease) and 5.3% vs 2019 (10.6% ADR, 4.9% occupancy decline). Specific hotels: Hotel Alba and Tampa grew RevPAR by 13.6% with 14.5% occupancy gain. DoubleTree in Philadelphia had 11% RevPAR growth (15.7% occupancy gain). Whitehall in Houston saw 51.9% RevPAR growth (60.4% occupancy gain). Hyatt Centric in Arlington had 3.7% RevPAR growth.

• 2024 total revenue projected in range $177.8M - $180.1M (3% increase midpoint). - Hotel EBITDA projected in range $45M - $45.6M (1.1% increase midpoint). - Adjusted FFO projected in range $12.8M - $13.4M ($0.65 - $0.68 per share, 9.8% decrease midpoint).

• Hurricane impacts: Debby, Helene, and Milton causing operational disruptions and physical damage, with financial impact on Tampa asset in Q4. - Economic factors leading to leisure traveler price sensitivity, causing 3% ADR decline in Q3.

Q: Is the portfolio overall back to 2019? Do you think it's exceeding 2019 performance?

A: Dave Folsom states there's still room for occupancy growth; portfolio occupancy is far underperforming 2019.

Q: Explain hurricane damage impact on earnings and insurance recovery?

A: Scott Kucinski and Tony Domalski explain that hotel P&L will reflect impairment from hurricane damage, but business interruption insurance will recover lost revenues, with expectation of no impact on hotel EBITDA, FFO, or adjusted FFO.

Q: Walk through thinking on second mortgage on DeSoto Hotel?

A: Scott Kucinski states it's directly related to exterior restoration project at the property, with dollars from financing going back into the asset for the restoration.