Release Date: April 01, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Total revenue grew by 5% for the year, with RevPar improving by 4.5% over fiscal year 2023.
- AHIP completed the disposition of 16 properties for total gross proceeds of $165.2 million, with additional sales expected to further reduce debt.
- Leverage reduction remains a priority, with debt to gross book value reduced by 610 basis points in 2024.
- Successful refinancing efforts resulted in the full repayment of the senior credit facility, improving liquidity and balance sheet strength.
- Extended stay and select service verticals drove portfolio revenue growth, with extended stay RevPar up 8% versus fiscal year 2023.
Negative Points
- NOI margin decreased by 45 basis points to 30.6% for the year, indicating pressure from high labor and operating costs.
- High levels of employee turnover and inconsistent operating performance negatively impacted the bottom line.
- Revenue growth slowed in the latter half of the year, with RevPar growth at 3.5% versus the first six months of 2024.
- Undistributed expenses, particularly in labor, experienced a sharp increase due to filling vacant positions and high turnover.
- The company faced delays in releasing year-end results and had to restate prior periods due to deconsolidation of subsidiaries.
Q & A Highlights
Q: With your debt refinancing largely executed, what is the reasonable range of additional asset dispositions you are contemplating in 2025?
A: We will look at dispositions opportunistically. We currently have eight hotels under contract with expected closing at the end of April 2025. We are also considering other properties, as the numbers from individual asset sales are compelling compared to our trading price.
Q: Can you discuss the potential margin impact from a global blanket 20% US tariff?
A: It's early to tell, but most of our operating supplies are under firm pricing contracts through our manager. We don't expect significant short-term impacts from tariffs, but we will reassess as contracts expire and need renewal.
Q: What impact, if any, have you seen from reduced leisure or corporate travel to the US due to tariff policy volatility?
A: Our portfolio is more domestic-oriented, so we haven't seen an impact. The effects are more likely in larger US markets or states like Florida and California.
Q: Regarding the $109 million in cash management at year-end, was any of it cleared up with subsequent financing?
A: About $45 million was cleared up by a subsequent sale in Q1, reducing the amount significantly.
Q: If the court sides with your motion regarding the HMAs, where would that leave you in terms of management?
A: We would comply with REIT rules, suggesting an external manager. We would seek a replacement manager if the court or parties decide so, while ensuring hotel management continuity.
Q: What is the nature of the default notices from Marriott, and what would it cost to remedy them?
A: The notices relate to operational deficiencies, such as staff training and headcount standards. These are nonmonetary or technical defaults, typically cured in subsequent quarters.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
