Ashford Hospitality Trust(AHT) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q4 2025, the company reported a net loss attributable to common stockholders of $78.3 million, or $12.33 per diluted share, compared to a full year net loss of $215 million, or $35.99 per diluted share [12] - Adjusted EBITDA for Q4 was $40.4 million and $221.3 million for the full year [12] - The company ended Q4 with $2.6 billion in loans at a blended average interest rate of 7.7%, with approximately 5% fixed and 95% floating [12][13] Business Line Data and Key Metrics Changes - Comparable hotel RevPAR decreased by 1.8% in Q4 2025, primarily due to a federal government shutdown impacting demand [16] - Full year total revenue increased by 0.8%, driven by a 12.9% growth in other revenue [17] - Hotel EBITDA increased by 2.4% for the full year, with EBITDA margin expanding by over 40 basis points [17][20] Market Data and Key Metrics Changes - Government room nights declined by 27.9% in Q4 2025, significantly affecting performance in Washington, D.C., which represents over 14% of the total key count [16] - Group revenue for the full year declined by 1.1%, but excluding Washington, D.C., it increased by 1.6% [18] - The company anticipates strong group demand in 2026, supported by events like the Super Bowl and the FIFA World Cup [19][20] Company Strategy and Development Direction - The company formed a special committee to explore strategic alternatives to maximize shareholder value, including potential transactions [5] - Opportunistic dispositions will remain a core strategy in 2026, with 18 additional hotels currently being marketed or negotiated for sale [10] - The GRO AHT initiative aims to improve hotel EBITDA and overall portfolio profitability through diversified revenue generation and operational efficiency [21] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing pressures in the lodging industry, including negative RevPAR growth and margin compression, but noted positive growth in comparable total revenues and hotel EBITDA [6][7] - The company expects continued focus on performance and strategic low cap rate dispositions to strengthen the portfolio and pursue growth opportunities [11] - Management remains optimistic about the portfolio's outlook, driven by operational improvements and upcoming events [25] Other Important Information - The company completed the sale of six hotels generating approximately $145 million in proceeds, which were primarily used to pay down mortgage debt [9] - The company invested approximately $71 million in capital expenditures in 2025 and anticipates spending between $90 million and $110 million in 2026 [24] Q&A Session Summary Question: What are the expectations for group demand in 2026? - Management indicated that group demand is gaining momentum, with group room revenue pacing ahead 1% in Q1 and 3.3% in Q2 of 2026 compared to the prior year [19] Question: How is the company addressing the challenges posed by the government shutdown? - Management noted that the shutdown had a significant impact on demand, particularly in Washington, D.C., but emphasized the overall positive performance for the full year [16] Question: What is the strategy for capital expenditures moving forward? - The company plans to continue investing in capital expenditures, with a focus on enhancing competitive positioning through renovations and brand conversions [24]