Ashford Hospitality Trust, Inc. (NYSE:AHT) Q4 2025 Earnings Call Transcript

Ashford Hospitality Trust, Inc. (NYSE:AHT) Q4 2025 Earnings Call Transcript February 26, 2026

Operator: Good day, everyone. My name is Janine, and I will be your lead operator for today’s call. At this time, I would like to welcome everyone to the Ashford Hospitality Trust, Inc. conference call this morning. All lines have been placed on mute to prevent any background noise. After today’s presentation, there will be an opportunity to ask a question. To ask a question, please press star 1 on your touch-tone phone. To withdraw your question, please press star 1 again. I will now hand the call over to Chief Financial Officer, Deric S. Eubanks. Sir, please go ahead.

Deric S. Eubanks: Thank you. Good morning, everyone, and welcome to today’s conference call to review results for Ashford Hospitality Trust, Inc. for the fourth quarter and full year 2024 and to update you on recent developments. On the call today will also be Stephen Zsigray, President and Chief Executive Officer, and Christopher Nixon, Executive Vice President and Head of Asset Management. The results, as well as notice of the accessibility of this conference call on a listen-only basis over the Internet, were distributed yesterday afternoon in a press release.

Stephen Zsigray: New growth and 6.2% growth in comparable hotel EBITDA. These results underscore the impact of the strategic decisions our team has made over the past several quarters and the strength of our high-quality, geographically diverse portfolio. Total revenue growth meaningfully exceeding RevPAR growth is reflective of the efforts that our asset management team and property managers have taken to grow ancillary revenues, and that discrepancy widened even further in December. Voyager Street has a prime location in proximity to major demand generators in downtown New Orleans. Post-conversion, we expect the new Tribute Portfolio property to realize a 10% to 20% RevPAR premium compared to pre-conversion. With a really improving transaction and financing market, we look forward to updating you on our progress with GrowAHT and the many opportunities that lie ahead for Ashford Hospitality Trust, Inc.

I will now turn the call over to Deric to review our fourth quarter and full-year financial performance.

Deric S. Eubanks: Thanks, Stephen. For the fourth quarter, we reported a net loss attributable to common stockholders of $131,100,000, or $23.83 per diluted share. For the full year, we reported a net loss attributable to common stockholders of $82,500,000, or $17.54 per diluted share. For the quarter, we reported AFFO per diluted share of negative $2.21, and for the full year, we reported AFFO per diluted share of negative $4.84. Adjusted EBITDAre for the quarter was $45,200,000 and $235,900,000 for the full year. At the end of the fourth quarter, we had $2,600,000,000 of loans with a blended average interest rate of 7.9%, taking into account in-the-money interest rate caps. Considering the current level of SOFR and the corresponding interest rate caps, 77% is effectively floating.

One loan has two additional one-year extension options, subject to the satisfaction of certain conditions, with a final maturity date in December 2027. The 703-room Marriott Crystal Gateway Hotel located in Arlington, Virginia had a final maturity date in November 2026 and a floating interest rate. The new nonrecourse loan totals $121,500,000 and has a three-year initial term with two one-year extension options. During the quarter, we also successfully refinanced our mortgage loan secured by hotels that were used to pay down our strategic financing. The refinancing resulted in approximately $31,000,000 of excess proceeds and $37,000,000 of SOFR plus 4.75%. The loan was extended with no paydown and continues to have an outstanding balance, subject to the satisfaction of certain conditions.

The loan is interest-only. Subsequent to quarter end, we completed the sale of the 115-room Courtyard Boston Downtown located in Boston, Massachusetts for $123,000,000, or $1,070,000 per key. When adjusted for the anticipated capital expenditures, the sale price represented a 5.9% capitalization rate on net operating income for the trailing twelve months ended 09/30/2024, or 12.3 times hotel EBITDA for that same time period. The previous loans had a combined outstanding loan balance of approximately $438,700,000. Subsequent to quarter end, we closed on a $580,000,000 refinancing, and the BAML Pool 3 loan together with the Westin Princeton for the same time period. Excluding the anticipated capital spend, the sale price represented a 6.9% capitalization rate on net operating income for the trailing twelve months ended 09/30/2024, or 14.3 times hotel EBITDA for that same time period.

Keyes Pool D loan, together with hotels previously part of the company’s Keyes Pool C loan and Keyes Pool E loan, secured by 16 hotels, has a two-year term with three one-year extension options, subject to the satisfaction of certain conditions, and bears interest at a floating rate of SOFR plus 4.37%. We used approximately $72,000,000 of the excess proceeds to completely pay off the remaining balance on our strategic financing, including the exit fee. The remaining excess proceeds were used to fund transaction costs and reserves for future capital expenditures. We ended the quarter with cash and cash equivalents of $112,900,000 and restricted cash of $107,600,000. The vast majority of that restricted cash is comprised of lender- and manager-held reserve accounts and $2,600,000 related to trapped cash held by lenders.

At the end of the quarter, we also had $21,000,000 due from third-party hotel managers. This primarily represents cash held by one of our property managers which is also available to fund hotel operating costs. We ended the quarter with net working capital of approximately $122,000,000. As of 12/31/2024, our consolidated portfolio consisted of 73 hotels with 17,644 rooms. Our share count at the end of the year consisted of approximately 5,800,000 fully diluted shares outstanding after taking into account our recently completed one-for-10 reverse stock split, which is comprised of 5,600,000 shares of common stock and 100,000 OP units. Additionally, as Stephen mentioned, during the quarter, we announced plans to close the offering of the Series J and Series K non-traded preferred stock on 03/31/2025.

Since launching the offering in 2022, we have raised approximately $195,000,000 of gross proceeds from the sale of our Series J and Series K non-traded preferred stock. While we are currently paying our preferred dividends quarterly or monthly, we do not anticipate reinstating a common dividend in 2025. This concludes our financial review, and I would now like to turn it over to Chris to discuss our asset management activities for the quarter.

Christopher Nixon: Thank you, Deric. In the fourth quarter, we delivered strong performance across our geographically diverse portfolio. Comparable hotel RevPAR increased by 3% over the prior-year period, reflecting solid demand and the impact of our strategic revenue management initiatives. Our Washington, D.C. properties delivered a healthy group performance this period. Group dynamics and corporate transient demand are improving, and we are starting to see accelerating benefits from our GrowAHT initiatives. December was a particularly strong month with a 12% increase in hotel EBITDA over the prior-year period. During the fourth quarter, Embassy Suites Crystal City produced a 22% increase, driven in large part by the successful execution of several GrowAHT initiatives that were in full swing.

Booking activity remained strong, with group pace continuing to accelerate across our portfolio. Group room revenue for the fourth quarter increased by 5% over the prior-year period, demonstrating the resilience of our portfolio and the effectiveness of our strategies. I would now like to go into more detail on some of the achievements completed throughout the quarter. With the presidential election cycle presenting both opportunities and challenges, our team implemented an aggressive strategy to drive results. We focused on targeted marketing to political organizations supporting the election, particularly security and campaign teams. Additionally, booking volumes have been robust. 2025 group room revenue pace for the broader portfolio remains strong, currently pacing ahead by 5% over the prior-year period.

We added over $13,000,000 in additional group room revenue during the fourth quarter for 2025, representing an increase of approximately 6% compared to the prior-year quarter for 2024. Turning to gross operating performance, I am pleased with our results as fourth quarter gross operating margins expanded by approximately 141 basis points relative to the prior-year quarter. Renaissance Nashville delivered a strong fourth quarter gross operating profit increase of 10% on 3% total hotel revenue growth. Ideally positioned near Downtown Music City Center, this property benefited from recent initiatives aimed at enhancing its operating performance. These initiatives included adding a valuable ancillary revenue stream and cutting other operational expenses.

Additionally, our team strategically utilized a supply chain procurement system throughout the year, resulting in over $130,000 in food cost savings for the full year. These efforts underscore our ongoing commitment to operational efficiency and margin expansion, reinforcing our ability to drive sustainable profitability across our portfolio. One hotel that I would like to highlight this quarter is Le Méridien Fort Worth Downtown, which opened during 2024. Thanks to a combination of strategic partnerships, proactive marketing, and early activations, our asset management team has successfully capitalized on the hotel’s incredible amenities, achieving total revenue growth ahead of our initial budget by 21%. A key driver of this early success was our focus on strong community engagement, even before the hotel’s grand opening and ribbon-cutting events.

We partnered with Fort Worth Sister Cities International, the Fort Worth Chamber, and Downtown Fort Worth, Inc. to improve awareness prior to the opening. Additionally, the hotel conducted exclusive hard-hat tours for prospective customers and community partners, generating early excitement and demand. To attract business travelers, we introduced Bonvoy room packages and brought on a dedicated business travel sales manager to engage with companies in the downtown area and establish corporate accounts. Simultaneously, to position the hotel as a vibrant social and dining destination, our team launched dynamic food and beverage activations, including live music and happy hours at the upscale lobby restaurant and a stunning rooftop lounge. Further, an aggressive early rate strategy for group bookings, secured through strategic collaborations with our other properties in the area, helped establish a competitive market presence with additional overflow blocks.

By positioning itself as a premier venue for group events and conferences, this upscale boutique property has delivered an exceptionally strong performance right out of the gate, and I am excited about its long-term potential. As Stephen mentioned, this quarter marked the successful completion of our strategic repositioning of Crowne Plaza La Concha Hotel in Key West, Florida, into Autograph La Concha, now part of Marriott’s Autograph Collection. Ideally located on Duval Street in Old Town Key West, this transformation followed a $35,000,000 investment, including upgrades to the lobby, bar, restaurant, exterior, guest rooms, bathrooms, corridors, pool, and meeting space. A key enhancement was the conversion of a previously underutilized spa into premium rooftop suites, offering some of the best views in Key West.

I am equally excited about the conversion of our La Pavion Hotel in downtown New Orleans to a Tribute Portfolio property following a $19,000,000 investment. This renovation included extensive exterior work, upgraded guest rooms and bathrooms, a refreshed restaurant, and a reimagined hotel lobby bar. The new Bar Eighteen O Three pays homage to the rich history of both the hotel and the city, named after the year Emperor Napoleon signed the Louisiana Purchase. These conversions exemplify our ability to unlock embedded value in our portfolio, and looking ahead, we expect La Concha and La Pavion to benefit significantly from Marriott sales distribution and loyalty platforms, enhancing long-term performance and value. As part of our GrowAHT initiatives, we implemented strategic measures during the fourth quarter to drive hotel EBITDA, focusing on food and beverage, parking, and labor expenses to enhance profitability while maintaining service standards.

We conducted audits of revenues of all outlets and gift shops to optimize offerings and improve margins. Parking fee and a store preservation fee adjustments will provide additional revenue streams. We also partnered with Remington to reduce allocated expenses. We launched a day-use hospitality program, monetizing hotel amenities. On the labor front, we refined staffing models, optimized schedules, and leveraged technology to improve efficiency while preserving guest service. As we move into 2025, we will continue identifying opportunities to further drive hotel EBITDA and maximize value. Turning to capital expenditures, in 2024, we completed the extensive guest room and public space renovation at Embassy Suites Dallas and began the guest room renovation at Embassy Suites West Palm, which is on track for completion during 2025.

Additionally, renovations at Residence Inn Evansville and Courtyard Bloomington are progressing well. At Hilton Garden Inn Austin, a restaurant and meeting space renovation will modernize the property and capitalize on its prime downtown location. In 2025, we will execute several PIPs to support brand franchise agreement renewals while enhancing guest experience. Later in the year, we plan to embark on public space renovations at Hampton Evansville and Westin Princeton. These initiatives underscore our commitment to asset excellence and delivering superior guest experience. In total, we expect to spend between $95,000,000 and $115,000,000 in 2025 as we continue to enhance and elevate our portfolio. In summary, group business continues to show solid growth.

Demand remains strong across key markets, and our ancillary revenue initiatives are performing well. Looking ahead, we are actively rolling out additional GrowAHT initiatives aimed at enhancing operational performance, all designed to drive efficiency, lower cost, and improve profitability. We remain optimistic about our portfolio’s outlook for 2025 and confident in our ability to unlock additional value. That concludes our prepared remarks, and we will now open up the call for Q&A. Thank you.

Q&A Session

Operator: Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press 1 on your touch-tone phone, and you will hear a prompt that your hand has been raised. If you are using a speakerphone, please lift the handset before pressing any keys. Should you wish to withdraw, please press 1 again. Our first question comes from the line of Jonathan Jenkins from Oppenheimer. Sir, please go ahead.

Jonathan Jenkins: Good morning. Thanks for taking my questions. First one for me on the Grow initiative. Chris, I think you noted some changes in benefits that you are already seeing here in 4Q. But can you maybe quantify the benefits that you have seen and provide some color on the ramp period and cadence throughout the year and maybe some additional color on potential opportunities that get you to that $50,000,000 target?

Christopher Nixon: Yes. Great question, Jonathan. Thanks for the question. So we have begun rolling out all initiatives. I would say more than half of the initiatives are fully rolled out and underway. Obviously, we have seen the impact of performance that a number of these initiatives started having immediately with the December numbers we have cited. We look ahead to Q1 and January; that outperformance is pulling through, so we are very optimistic. Many of the initiatives will continue to roll out through the course of the year. We are very happy, but we are not satisfied. As we are going through 2025, we are still identifying new initiatives and potential new partnerships and things we can do to build on. I would say roughly half of the initiatives have been fully rolled out, and then the remainder will be rolled out throughout the remainder of the year.

Jonathan Jenkins: I believe you talked about 20% to 30% RevPAR premiums in or above that, which is impressive. And then switching gears to the conversions, Stephen. Think those assets have largely stabilized, or is there additional ramp period from here? And then more broadly, any additional thoughts regarding conversions in the portfolio and how much of an opportunity that could be?

Christopher Nixon: Yeah. Hey, Jonathan. This is Chris. I will take that. We are very encouraged by the performance of the conversions. As Stephen indicated, we underwrote pretty aggressive returns, and both hotels are outperforming that. In La Pavion, the outperformance is north of 40% in January. That continued through February, and that is accounting for normalizing for Super Bowl impact. So when you remove Super Bowl, the hotel is still performing at that level, outperforming underwriting. When you throw an event like Super Bowl in there, it is through the roof. La Pavion was sold out for four straight nights over Super Bowl with a RevPAR which exceeded $900. So extremely strong performance. The hotel continues to ramp. Down in Key West, we are starting to see the broader market soften a little bit in occupancy, so it is great that we are up, which is obviously great news for us.

Occupancy has outperformed the market, but where we have really seen the benefit is on the ADR side, with ADR gains that are significantly outperforming underwriting. We are seeing strong distribution performance, as we expected, from Marriott. But performance at both hotels is kind of blowing our underwriting out of the water. I think there is still some additional runway before that stabilizes.

Jonathan Jenkins: Okay. That is excellent. And then switching gears to the transaction environment, can you provide some additional color there? And has there been any noticeable difference in portfolio deals versus one-offs that are worth calling out? Any changes in bid-ask spreads or pickup or changes in conversations you have been having as of late? Any additional color there would be helpful.

Christopher Nixon: Yeah. We have definitely seen improvement in the financing market, and that has driven improvement in transaction markets, certainly driven optimism that 2025 is going to be a much better year for transactions. From our perspective, I expect that we will continue to sell a handful of additional assets, but I would caveat that and say that we are going to continue to be very disciplined. We want to ensure that we are getting optimal value on our sales. There does remain a bid-ask spread in a handful of markets, and so we need to explore several different opportunities. We are not going to transact on all of them similar to what we have done in prior quarters. But we also expect to continue to deleverage and improve our balance sheet overall.

Jonathan Jenkins: Okay. That is good. And then lastly for me, if I could, just a clarification question on your floating rate exposure. I assume that increased sequentially, just the expiration swaps. Is that the case? And more broadly, is there any additional color you can provide to us on how you are thinking about your fixed versus floating rate exposure? Do you expect to get into swaps to lower that floating exposure?

Deric S. Eubanks: Yeah, Jonathan. This is Deric. I will take that. It is a combination of interest rate caps burning off as well as SOFR dropping back below strike prices on those caps. That is why we are more floating now. Historically, we have always preferred floating-rate financing just because it has more flexibility. We think it is more of a natural hedge to our business, and we believe over time that you will typically pay less floating. Obviously, that has been a challenge for us over the last year or two. But I think you will continue to see us have a mix of fixed and floating, sort of a bent to more floating.

Jonathan Jenkins: Okay. Very helpful. I appreciate all the color, everyone. Thank you for your time.

Operator: That concludes our question-and-answer session. Thank you for joining today’s call, and we look forward to speaking with you all again next quarter. That concludes our conference call for today. Thank you for joining, and you may now disconnect.