Financial Performance Overview

Ashford Hospitality Trust, a real estate investment trust (REIT) that owns hotel properties, has released its financial report for the year ended December 31, 2024. The report provides insights into the company’s financial performance, key trends, strengths, weaknesses, and outlook for the future.

Revenue and Profit Trends

Ashford Hospitality Trust’s total revenue decreased by $195.1 million, or 14.3%, to $1.17 billion in 2024 compared to 2023. This decline was primarily due to the sale of several hotel properties and the derecognition of assets related to the KEYS A and KEYS B loan pools, which went into receivership.

The company’s comparable hotel properties, which exclude the sold and derecognized assets, experienced a 1.7% increase in room rates, but a 0.89 percentage point decrease in occupancy. This resulted in a 0.4% increase in revenue per available room (RevPAR) for the comparable hotels.

Despite the revenue decline, Ashford Hospitality Trust’s net loss attributable to the company decreased significantly from $178.5 million in 2023 to $60.3 million in 2024. This improvement was driven by several factors:

• A $167.2 million gain on the derecognition of assets related to the KEYS A and KEYS B loan pools
• A $94.4 million gain on the sale of various hotel properties
• A $53.6 million decrease in interest expense and amortization of discounts and loan costs

Strengths and Weaknesses

One of Ashford Hospitality Trust’s key strengths is its ability to generate significant gains from the derecognition of assets and the sale of hotel properties. The company was able to recognize a $167.2 million gain on the KEYS A and KEYS B loan pools and an additional $94.4 million in gains from the sale of various hotel properties.

However, the company’s reliance on asset sales and derecognition of assets to improve its financial performance could be seen as a weakness. The company’s core hotel operations, as reflected in the performance of its comparable hotels, showed only modest improvement, with a 0.4% increase in RevPAR.

Another weakness is the company’s high level of debt, with a net debt to gross assets ratio of 69.5% as of December 31, 2024. This high leverage could make the company more vulnerable to changes in market conditions and interest rates.

Outlook and Future Strategies

Ashford Hospitality Trust’s management has outlined several key priorities and financial strategies for the future, including:

• Preserving capital and maintaining significant cash and cash equivalents liquidity
• Disposing of non-core hotel properties
• Acquiring hotel properties that are expected to be accretive to the portfolio
• Pursuing capital market activities and implementing strategies to enhance long-term stockholder value
• Accessing cost-effective capital, including through the issuance of non-traded preferred securities
• Opportunistically exchanging preferred stock into common stock
• Implementing selective capital improvements to increase profitability and maintain asset quality
• Implementing effective asset management strategies to minimize operating costs and increase revenues
• Financing or refinancing hotels on competitive terms
• Modifying or extending property-level indebtedness
• Utilizing hedges, derivatives, and other strategies to mitigate risks
• Pursuing opportunistic value-add additions to the hotel portfolio
• Making other investments or divestitures as deemed appropriate by the board of directors

The company’s current investment strategy is to focus on owning predominantly full-service hotels in the upper upscale segment in domestic markets that have RevPAR generally less than twice the national average. The board of directors may change the investment strategy at any time without stockholder approval or notice.

Conclusion

Ashford Hospitality Trust’s financial report for the year ended December 31, 2024 highlights the company’s ability to generate significant gains from asset sales and derecognition of assets, which helped offset the decline in revenue from its core hotel operations. However, the company’s high level of debt and reliance on asset sales to improve its financial performance could be seen as weaknesses.

Looking ahead, the company has outlined several key priorities and financial strategies, including preserving capital, disposing of non-core assets, acquiring accretive hotel properties, and pursuing capital market activities to enhance long-term stockholder value. The company’s ability to execute these strategies and navigate the cyclical nature of the hotel industry will be crucial in determining its future performance.