Ashford Hospitality Trust ((AHT)) has held its Q1 earnings call. Read on for the main highlights of the call.
Ashford Hospitality Trust’s recent earnings call revealed a generally positive sentiment, marked by strong growth in key revenue metrics and strategic cost reductions. The company demonstrated significant progress towards its financial goals, although ongoing financial losses and challenges in specific segments, such as government travel, remain areas of concern. Overall, the positive developments outweigh the negatives, but financial losses continue to be a focal point for improvement.
Strong Revenue and EBITDA Growth
Ashford Hospitality Trust reported a 3.2% growth in comparable RevPAR, a 3.6% increase in total revenue, and an 8.7% rise in comparable hotel EBITDA. These figures underscore the effectiveness of the company’s strategic decisions, showcasing their ability to drive revenue and profitability in a competitive market.
Successful Hotel Conversions
The conversions of the La Concha Hotel in Key West and the Le Pavillon Hotel in New Orleans to Marriott’s collections have been particularly successful. La Concha experienced a 27% increase in revenue, while Le Pavillon saw a remarkable 78% rise, highlighting the positive impact of aligning with a major hotel brand.
GRO AHT Initiative Progress
The GRO AHT initiative has been a significant contributor to Ashford’s financial improvements, adding over $30 million towards the $50 million run rate EBITDA improvement goal. This initiative has led to substantial cost reductions at both the property and corporate levels.
Capital Structure Improvements
Ashford has made strides in improving its capital structure, notably through the sale of the Courtyard Boston Downtown for $123 million and successful refinancing efforts. These moves have left the company free of corporate debt, positioning it more favorably in the market.
Strategic Cost Reductions
The company has implemented strategic cost reductions, including a 50% cut in cash compensation for Board members and significant reductions in incentive awards. These measures have contributed to the overall financial improvements seen in the recent quarter.
Net Loss Reported
Despite the positive developments, Ashford reported a net loss attributable to common stockholders of $27.8 million, or $4.91 per diluted share, for the quarter. This highlights the ongoing financial challenges that the company is working to address.
Negative AFFO Per Share
The AFFO per diluted share was negative $0.98, despite improvements in total AFFO over the prior year quarter. This remains a critical area for the company to focus on as it seeks to improve its financial standing.
Government Segment Softness
The government segment and related travel continue to pose challenges, particularly affecting the D.C. market. The company is making efforts to backfill this softness with other segments, but it remains an area needing attention.
Debt Structure Concerns
With 77% of Ashford’s debt effectively floating, there are concerns about potential risks in a fluctuating interest rate environment. Although some of this debt is fixed through interest rate caps, it remains a point of caution for the company.
Forward-Looking Guidance
Looking ahead, Ashford Hospitality Trust is focused on enhancing operational efficiencies, controlling costs, and improving its capital structure. The company aims to achieve a $50 million run rate EBITDA improvement through the GRO AHT initiative, with continued emphasis on strategic growth and financial stability.
In conclusion, Ashford Hospitality Trust’s earnings call reflects a company making significant strides in revenue growth and cost management, despite ongoing financial challenges. The positive sentiment is driven by successful hotel conversions and strategic initiatives, although attention is needed to address financial losses and segment-specific challenges. Investors and market watchers will be keen to see how Ashford navigates these challenges moving forward.