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Still Room for Lodging REITs to Recover

12/21/2012 | By Allen Kenney

Monty Bennett, founder and CEO of Ashford Hospitality Trust (NYSE: AHT), joined REIT.com for a CEO Spotlight video interview at REITWorld 2012: NAREIT's Annual Convention for All Things REIT at the Manchester Grand Hyatt in San Diego.

Ashford Hospitality Trust invests in the hospitality industry across all segments and at all levels of the capital structure. Ashford Hospitality's dominant strategy is direct hotel ownership followed by loans and other structured finance investments in lodging. The firm has its headquarters in Dallas.

Bennett was asked about Ashford Hospitality's growth in revenue per available room (RevPAR).

"We're finding that RevPAR growth is strongest among our transient customers, whether it be our corporate transient customers or our leisure transient customers. Those have recovered and exceeded our prior peaks," Bennett said. "What's a little more difficult is the group segment. That segment has still yet to cross the total demand threshold of the last peak."

Bennett discussed the company's efforts to rebalance its capital structure.

"A lot of investors are concerned about debt levels across the entire investing spectrum. We're in great shape on our debt," he said. "All of our debt is non-recourse, which is very important. Secondly, we just refinanced a large loan and pulled out an extra $50 million in proceeds and put those proceeds on our balance sheet in cash and are keeping those. We're looking at some other loans to refinance and do the same and just pull out extra liquidity. Overall, our debt balance is going down over the next few years. If you look at all of our loans, even though a number of our maturities aren't for five years or more, we can refinance every one of our loans right now in today's market. We feel like we're in great shape."

Bennett also commented on the ongoing recovery in the lodging sector as a whole.

"The industry suffered tremendously in this downturn. It's about halfway back to its prior peaks. Since the falloff was so deep, halfway back is not that great," Bennett said. "It's not bad, but it's not great. So, we've still got a lot of running room in this recovery."

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