ASHFORD HOSPITALITY TRUST ANNOUNCES REDUCTIONS IN CORPORATE ADMINISTRATIVE & GENERAL EXPENSES

Rhea-AI Summary

Ashford Hospitality Trust (NYSE: AHT) has announced significant cost-cutting measures as part of its 'GRO AHT' transformation initiative. The company aims to achieve $50 million in annual run-rate EBITDA improvement through various strategic actions.

The latest cost reductions focus on corporate administrative and general expenses, including cuts in legal spend, accounting and consulting fees, subscriptions, office expenses, and bank fee consolidation. These specific measures are expected to generate over $4 million in annual savings.

Combined with previously announced initiatives, these corporate expense reductions are projected to deliver more than $18 million in incremental EBITDA. The company continues to work with property managers and Ashford Inc. to implement additional aspects of the GRO AHT strategy.

Positive

• Expected $4 million annual savings from new cost-reduction initiatives
• Projected $18 million incremental EBITDA from combined cost-cutting measures
• Part of larger $50 million annual run-rate EBITDA improvement plan

Negative

• Significant corporate restructuring and cost-cutting may indicate operational challenges

Insights

Financial Analyst

Ashford Hospitality Trust's announcement of corporate expense reductions represents a significant positive development in their ongoing financial transformation. The specific cost-cutting measures targeting legal spend, accounting fees, consulting services, and other administrative expenses are projected to yield $4 million in annual savings. This isn't just isolated cost-cutting – it's part of the company's structured "GRO AHT" transformation initiative designed to generate $50 million in annual run-rate EBITDA improvements.

What's particularly encouraging is that these new reductions, combined with previously announced initiatives, are expected to deliver over $18 million in incremental EBITDA – representing approximately 36% progress toward their overall $50 million EBITDA improvement target. For a company with a market cap of just $45 million, these improvements could substantially change the company's financial profile.

The methodical approach to expense management demonstrates management's commitment to operational discipline and shareholder value creation. In the capital-intensive hospitality REIT sector, administrative expense efficiency directly impacts bottom-line performance. The structured nature of these cuts suggests this isn't reactive cost-slashing but rather strategic reallocation of resources to optimize financial performance.

While the hospitality sector continues to face challenges, AHT's focus on controllable expenses indicates proper prioritization of factors within management's control. The commitment to providing ongoing updates about the "GRO AHT" initiative also signals transparency with shareholders about progress toward financial targets.

Real Estate Investment Specialist

This expense reduction initiative should be viewed through the lens of REIT-specific operational leverage. Ashford's focus on upper-upscale, full-service hotels means they operate in a segment with higher operational expenses and greater sensitivity to administrative overhead compared to -service properties. By targeting $4 million in corporate cost savings, they're addressing an important efficiency lever in their business model.

What's compelling about these specific reductions is they target non-guest-facing expenses that won't impact service quality or property conditions. For hospitality REITs, maintaining property standards is essential for preserving asset values and competitive positioning. By focusing on legal spend, accounting fees, subscriptions, and bank fee consolidation, Ashford is pruning administrative bloat without compromising the guest experience that drives revenue.

The $18 million in incremental EBITDA from combined initiatives represents a meaningful percentage of their enterprise value. For REITs, which are valued largely on income-generating potential and distribute most taxable income as dividends, EBITDA improvements directly enhance investment value.

The systematic "GRO AHT" approach also suggests a comprehensive operational review rather than arbitrary cost-cutting. This methodical improvement initiative indicates management is taking a strategic approach to value creation, which is particularly important for a smaller-cap REIT competing for institutional investor attention. The concrete metrics and transparent progress updates create accountability and measurability that sophisticated REIT investors look for when evaluating management effectiveness.

DALLAS, March 12, 2025 /PRNewswire/ -- Ashford Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust" or the "Company") today announced reductions in corporate administrative and general expenses as part of its ongoing efforts to enhance EBITDA and improve financial performance. This strategic move is a key component of "GRO AHT," the Company's transformative initiative designed to drive $50 million in annual run-rate EBITDA improvement and significantly increase shareholder value.

The Company's advisor, Ashford Inc., has implemented several corporate cost-saving measures for Ashford Trust, including reductions in legal spend, accounting and consulting fees, subscriptions and dues, general office expenses, and the consolidation of bank fees. In total, Ashford Trust expects these initiatives to deliver over $4 million in annual savings, reinforcing its commitment to operational efficiency and disciplined financial management. Combined with the previously announced initiatives, these reductions in corporate administrative and general expenses are expected to deliver more than $18 million in incremental EBITDA.

The Company continues to partner with its property managers and Ashford Inc. on a number of initiatives as part of the "GRO AHT" strategy and will provide additional updates as the plan is further executed.

Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing predominantly in upper-upscale, full-service hotels.

Forward-Looking Statements

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the federal securities regulations. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature: Implementation of our "GRO AHT" plan; expected EBITDA growth from our "GRO AHT" plan; our business and investment strategy; anticipated or expected purchases, sales or dispositions of assets; our projected operating results; completion of any pending transactions; our plan to pay off strategic financing; our ability to restructure existing property-level indebtedness; our ability to secure additional financing to enable us to operate our business; our understanding of our competition; projected capital expenditures; and the impact of technology on our operations and business. Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. These and other risk factors are more fully discussed in the Company's filings with the SEC.

The forward-looking statements included in this press release are only made as of the date of this press release. Investors should not place undue reliance on these forward-looking statements. We will not publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise except to the extent required by law.

Non-GAAP Financial Measures

The Company prepares its public financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The Company also uses certain non-GAAP measures to help our investors evaluate our operating performance. The Company uses EBITDA, which is defined as net income (loss) before interest expense and amortization of 3 discounts and loan costs, net, income taxes, depreciation and amortization, as adjusted. EBITDA is a non-GAAP measure and we are unable to provide a reconciliation of forward-looking non-GAAP financial measures to their most directly comparable GAAP financial measures because we are unable to provide, without unreasonable effort, a meaningful or accurate calculation or estimation of amounts that would be necessary for the reconciliation due to the complexity and inherent difficulty in forecasting and quantifying future amounts or when they may occur. Such unavailable information could be significant to future results.

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SOURCE Ashford Hospitality Trust, Inc.

FAQ

How much cost savings will AHT's new expense reduction initiative generate annually?

The new corporate cost-saving measures are expected to generate over $4 million in annual savings.

What is the total EBITDA improvement target for AHT's GRO AHT initiative?

The GRO AHT initiative aims to achieve $50 million in annual run-rate EBITDA improvement.

What areas are targeted in AHT's latest cost reduction program?

The program targets legal spend, accounting and consulting fees, subscriptions and dues, general office expenses, and bank fee consolidation.

How much incremental EBITDA will AHT generate from combined cost reduction initiatives?

The combined corporate expense reductions are expected to deliver more than $18 million in incremental EBITDA.