American Hotel Income Properties REIT (HOT-UN) Q2 2024 earnings summary

Executive summary

• Portfolio of 63 select-service hotels showed strong demand in Q2 2024, with revenue and RevPAR both up year-over-year, driven by occupancy and ADR growth across leisure, corporate, and group segments.

• RevPAR reached a record $104, up 6% year-over-year, with ADR at $138 and strong performance in extended stay and select service properties.

• Cost control initiatives are ongoing, including reductions in contract labor and insurance premiums, and a focus on further improvements.

• Significant asset sales and capital recycling are underway, with proceeds used to pay down debt and strengthen the balance sheet.

• A dispute with hotel manager Aimbridge Hospitality was disclosed, citing mismanagement and economic harm, but no impact to guest experience or daily operations.

Financial highlights

• Q2 2024 revenue was $73.6 million, with RevPAR at $104, up 6% year-over-year; ADR grew 2% to $138.

• Normalized diluted FFO per unit was $0.10, down from $0.14 in Q2 2023; AFFO per unit (diluted) was $0.10, down from $0.15.

• NOI margin for Q2 2024 was 32.9%, down 60 bps year-over-year; same property NOI margin fell 150 bps to 32.3%.

• Available liquidity at June 30, 2024, was $26.7 million, with $16 million in cash and $10.7 million in credit facility availability.

• Net loss for Q2 2024 was $(1.6) million, compared to net income of $10.7 million in Q2 2023.

Outlook and guidance

• Management remains optimistic for the remainder of 2024, expecting to benefit from cost control, asset sales, and refinancing initiatives.

• July 2024 initial results show occupancy at 73%, ADR at $138, and RevPAR at $100, or 103% of July 2023 levels.

• Further asset sales and refinancings are planned to address near-term debt maturities and improve financial flexibility.

• Management expects continued pressure on hotel operating margins due to elevated labor and operating costs, though cost inflation is decelerating in some categories.