Executives with Ashford Hospitality Trust, a real estate investment trust with 72 hotels, are staying optimistic for the remainder of the year despite weakened government travel hurting the business.
Chris Nixon, Ashford's executive vice president and head of asset management, said hotels were able to capture demand tied to the presidential inauguration and several high-profile events in Washington, D.C., in January. But spending cuts implemented by the Department of Government Efficiency, known as DOGE, has hit the REIT's business, and Ashford's team has been working to backfill group business in D.C. tied to the government sector, Nixon said.
"Group room revenue pace remains positive across the portfolio despite broader macroeconomic pressures," Nixon added. "Starting in February, we observed softness in a few markets, largely attributable to recent policy changes and actions" by DOGE.
The Dallas-based REIT reported a net loss of $27.8 million for the first quarter, or a loss of $4.91 per diluted share. In the prior year's first quarter, Ashford reported a profit of $67.4 million. Even with the quarterly loss, Ashford executives touted several improvements to some of the company's key metrics, including revenue per available room and an increase in occupancy.
President and CEO Stephen Zsigray told investors Wednesday in the first-quarter earnings call highlighted 3.2% comparable revenue per available room growth, 3.6% comparable total revenue growth and 8.7% growth in comparable hotel net earnings.
"As we look at the remainder of 2025, we're encouraged by sustained strength in group demand and remain focused on executing our strategy to drive outsized [earnings before interest, taxes, depreciation and amortization] growth," Zsigray told investors, adding that completely eliminating the REIT's corporate-level debt strengthens the balance sheet.
Paying debt
Ashford paid off the balance of a $200 million loan from Oaktree Capital Management after borrowing the funds in January 2021 to help its financially troubled operations in the wake of the pandemic.
With this so-called strategic financing now being paid off, Zsigray said it shifts Ashford's asset sales focus from higher-value targets expected to make measurable impacts on debt to select-service hotels and some underperforming properties.
"Having flexibility to sell assets that isn’t necessarily tied to where their values were seven or eight years ago has considerably expanded our flexibility across the portfolio to explore assets and be more opportunistic in what we’re looking to sell," Zsigray said, adding that the hotels on the high end of the range have up to $50 million to $75 million of equity value.
Ashford had more than 100 hotels in the U.S. prior to the pandemic, but the REIT has been selling off properties to deleverage its business and optimize operations. In some instances, the REIT has handed back the keys of hotels with maturing loans.
The trust plans to invest in nine of its hotels this year, including Embassy Suites Palm Beach in Florida, the Hilton Garden Inn Downtown Austin in Texas and Hilton Garden Inn Virginia Beach. This was the REIT's first full quarter to report earnings since the conversions of the La Concha Hotel in Key West to Marriott's Autograph Collection and Le Pavillon Hotel in New Orleans to Marriott's Tribute portfolio.
In the first quarter, Ashford completed the sale of its 315-room Courtyard Boston Downtown hotel for $123 million. The company also extended a mortgage loan secured by the 141-room Hotel Indigo Atlanta Midtown with a balance at $12.3 million.
The REIT also closed on a $580 million refinancing deal secured by 16 of its hotels that were previously part of KEYS Pool C, Pool D and Pool E loans, as well as the BAML Pool 3 loan and the Westin Princeton in New Jersey. The prior loans combined to an outstanding loan balance of about $438.7 million. Ashford used $72 million in excess proceeds to pay off its strategic financing, including an exit fee.
The REIT's quarterly results come months after Ashford unveiled an initiative called Gro AHT to drive property-level revenue growth and operations savings and reducing corporate expenses to save $50 million a year. As of March 31, the company had $2.6 billion in total loans with a blended average interest rate of 8.1%.
He did not disclose what markets outside D.C. were impacted by government budget cuts and related travel.
Ashford's largest five hotels by key count ended the first quarter with a 10% increase in group room revenue compared to the prior year's quarter, Nixon said. The REIT's five largest hotels are Marriott Gateway in Crystal City, Renaissance Nashville, Marriott DFW Airport, Hilton Costa Mesa and the Ritz-Carlton Atlanta, Zsigray told CoStar News.
Those five hotel properties "are well-positioned for sustained performance, with group room revenue pace up 6% for the full year 2025 and 6% for 2026," Nixon added.