Exhibit 99.1
Exhibit 99.1
ASHFORD HOSPITALITY TRUST
Barclays Capital Conference
Highland Hospitality Update
December 2011
Safe Harbor
In keeping with the SEC’s “Safe Harbor” guidelines, certain statements made during this presentation could be considered forward-looking and subject to certain risks and uncertainties that could cause results to differ materially from those projected. When we use the words “will likely result,” “may,” “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” or similar expressions, we intend to identify forward-looking statements. Such forward-looking statements include, but are not limited to, our business and investment strategy, our understanding of our competition, current market trends and opportunities, projected operating results, and projected capital expenditures.
These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated including, without limitation: general volatility of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy, and the degree and nature of our competition. These and other risk factors are more fully discussed in the Company’s filings with the Securities and Exchange Commission.
EBITDA is defined as net income before interest, taxes, depreciation and amortization. EBITDA yield is defined as trailing twelve month EBITDA divided by the purchase price. EBITDA, FFO, AFFO, CAD and other terms are non-GAAP measures, reconciliations of which have been provided in prior earnings releases and filings with the SEC.
This overview is for informational purposes only and is not an offer to sell, or a solicitation of an offer to buy or sell, any securities of Ashford Hospitality Trust, Inc. and may not be relied upon in connection with the purchase or sale of any such security.
2 |
|
Highland Portfolio
Hilton Parsippany Renaissance Palm Springs The Melrose – Washington, DC Marriott DFW Airport Hyatt Regency Wind Watch
Marriott Plaza San Antonio Boston Back Bay Hilton Hilton Tampa Westshore Renaissance Nashville Marriott Sugar Land
Hyatt Regency Savannah Ritz-Carlton Atlanta Westin Princeton Renaissance Portsmouth The Silversmith—Chicago
3 |
|
Highland Transaction Summary
Transformational 28-hotel, $1.3 billion acquisition with 8,084 rooms
Primarily upper-upscale and luxury full-service assets
Expands Ashford’s presence in key markets (Washington D.C and NY/NJ) and into new markets (Boston and Nashville)
Significant growth potential with affiliate manager Remington taking over management of 19 hotels
2010 EBITDA flows of 18% vs. AHT’s of 104% and NOI 36% below peak
4 |
|
Portfolio Upgrade
Legacy Ashford vs. Highland EBITDA Concentration (TTM Q3 ‘11)
100.0%
90.0%
80.0%
75%
76%
72%
70.0%
68%
62%
61%
60.0%
57%
50.0%
40.0%
30.0%
25%
20.0%
10.0%
0.0%
Top 25 Markets
Luxury / Upper- Upscale
Full-Service
Urban
Legacy Ashford
Highland
5 |
|
Price Per Key Comparison
Highland Purchase Price Per Key Comparison ($ Thousands)
$300
$250
$200
$150
$100
$269
$158
$244
$158
35%
$50
41%
discount to
discount to
2007
$—
recent peer
Highland
acquisitions
purchase
Peer Purchase Avg. -
AHT Highland
2007 Highland
AHT Highland
2009 to Current
Purchase
Purchase
Purchase
Source: Real Capital Analytics & company filings.
6 |
|
Replacement Cost per Key
Replacement Cost Per Key Estimate
$350,000
Highland was purchased for
$158,000 per key - a 44%
$300,000
discount to replacement cost
$250,000
$218,000
$281,000
$233,000
$200,000
$150,000
$100,000
$50,000
$—
Legacy AHT
Highland
Total
Source: Estimated based on JP Morgan Research Report
7 |
|
Highland Operational Goals
When we took over the portfolio there were two primary operational goals: Put cost structures in place to achieve maximum operating flow throughs
The portfolio was seriously neglected when we took over
We felt confident that the Remington-managed properties were going to put in significant cost cuts
We also wanted to see significant improvement in the brand-managed properties even though no manager change was occurring
Improve the non-brand managed properties RevPAR Yield Index
The sales forces of the non-brand managed properties were decimated
Remington had to fill nearly 2 dozen sales positions across the portfolio
Our expectation was to see positive RevPAR yield growth sometime in the 4Q ‘11 or 1Q ‘12
8
Highland Portfolio—Year Over Year Comparisons
GOP
Margin Change
BPS
GOP Flow
<95>
8.8%
1st Quarter
Pre-Ashford
Pre-Ashford
218
94.6%
2nd Quarter
Post-Ashford
Post-Ashford
280
78.6%
3rd Quart er
Post-Ashford
Post-Ashford
9
Highland Portfolio – Performance by Manager
GOP Margin Change BPS
GOP Flow
366
93.3%
Remington
Remington
3rd Quarter
199
58.7%
Non-Remington
Non-Remington
10
Highland Portfolio—GOP Flow Comparison
Brand-managed properties have also shown significant flow improvement due to Ashford’s asset management expertise
Brand-Managed GOP Flows by Month
GOP Flow
100%
73.9%
78.2%
80%
69.2%
68.6%
61.4%
60%
36.7%
41.9%
40%
20%
17.3%
0%
-20%
-40%
-60%
-47.7%
-80%
Pre-Ashford Takeover
Post-Ashford Takeover
-75.1%
-100%
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
TOD
Sep-11
11
Remington RevPAR Index Improvement
RevPAR for Remington-managed properties is improving sooner than expected and is beginning to more closely match brand-managed properties
2.0%
1.4%
1.0%
0.9%
0.2%
0.0%
-1.0%
-0.7%
-2.0%
-1.9%
-3.0%
-4.0%
-5.0%
-5.2%
-6.0%
Remington RevPAR Index
Brand-Managed RevPAR Index
Total Highland RevPAR Index
Q2 2011
Q3 2011
12
Highland Portfolio NOI
Highland NOI is exceeding expectations, currently at 88% of first 12 months underwriting growth in only six months’ time
Highland Portfolio Net Operating Income
$88
$86
$84
$82
$80
$78
$76
$74
$79
$82
$86
$87
Mar 2011 TTM
Jun 2011 TTM
Sep 2011 TTM
Underwriting for Mar 2012 TTM
NOI $ (in millions)
13
13
Significant Operational Upside
If Highland’s EBITDA was the same % of its peak level as our legacy portfolio, its EBITDA would be almost $10 million higher
This would equate to about an additional $1.40 in share price at a 12x EBITDA multiple
% of Peak EBITDA Comparison
100%
95%
90%
85%
80%
75%
70%
700 bps
Opportunity
65%
60%
2007
2008
2009
2010
TTM Q3 2011
Legacy
Highland
14
Key Capex Renovations
Property
Project
Scheduled Start Date
Budget
Courtyard Denver
Lobby Bistro
Completed in Q2’11
$875,000
Hyatt Windwatch
Exterior Façade
In progress
$1,400,000
Marriott Omaha
Lobby & Restaurant
Early November
$1,350,000
The Churchill
Lobby & Restaurant
Mid-November
$871,000
The Melrose
Guestrooms & Public Space
Late-November
$8,050,000
Courtyard Savannah
Guestrooms & Bistro Lobby
Early-December
$2,475,000
Marriott San Antonio
Guestrooms & Corridors
Mid-December
$3,815,000
Courtyard Boston Tremont
HVAC
January-February
$5,781,000
Hilton Boston Back Bay
66 Guestrooms & Meeting Space
February
$2,160,000
Ritz-Carlton Atlanta
Meeting Space
February
$757,000
HGI Virginia Beach
Guestrooms & Corridor
Q1 2012
$2,000,000
The Silversmith
Guestrooms & Public Space
Q2 2012
$5,000,000
On Hold for
Marriott DFW
Restaurant Renovation
$750,000
Repositioning
15
Case Study – Crowne Plaza Ravinia
Financial Statistics
TOD 2011
ADR Growth
3.1%
Occupancy Growth
-4.2%
RevPAR Growth
-1.2%
GOP Margin Improvement
775 bps
GOP Flow
238%
Comp Set Rank
5 of 8
Significantly improved flow throughs and bookings due to Remington efforts
Since takeover, property has achieved $567K GOP $ surplus over target flows
Eliminated 6 managerial/supervisory positions
Banquet and catering sales are up significantly (~ $1.0m) due to aggressive selling efforts
Significantly improved bookings due to Remington sales efforts
Definite Bookings 2011 2012
At Takeover <21%> <28%>
As of 11/04/11 <4%> 23%
16
Case Study – Hyatt Savannah
Dramatically improved brand-managed flow throughs due to asset management initiatives
Since takeover, property has achieved $74K GOP $ surplus over target flows
Asset Management team in collaboration with Hyatt has identified ~$375K annualized savings
Eliminated 5 supervisory/management positions since takeover
Increased usage of contract labor
For the month of October, property has achieved 133.7% GOP flow with 745 bps GOP margin improvement
Financial Statistics
TOD 2011
ADR Growth
-4.5%
Occupancy Growth
-0.6%
RevPAR Growth
-3.9%
GOP Margin Improvement
7 bps
GOP Flow
67.9%
Comp Set Rank
1 of 6
17
Case Study – Renaissance Palm Springs
Revenue Statistics
2011 Fcst
ADR Growth
11.1%
Occupancy Growth
9.3%
RevPAR Growth
21.4%
YTD Sep Index Growth
1,070 bps
RevPAR Index
112.4%
Comp Set Rank
3 of 7
Improved bookings through Remington sales efforts
Despite great rooms and meeting space, property had not been meeting booking goals
Excellent renovated room product
$20m renovation completed at the end of 2009
Implemented aggressive upsell program—premium rooms and premium views
Excellent ratio of rooms to meeting space
Connected to Convention Center
Attractive Outdoor Meeting Space
Achieved 124% of Group Booking Goals Since Takeover
Strong E-Commerce
Independent website to attract leisure market from LA
Pay per click campaigns drive Los Angeles business
Expanded spa services
More Treatment Rooms
Cabana Sales
18
Case Study – Ritz Carlton Atlanta
Revenue Statistics
2011 Fcst
ADR Growth
-1.6%
Occupancy Growth
5.5%
RevPAR Growth
3.8%
YTD Index Growth
1,470 bps
RevPAR Index
133.9%
Comp Set Rank
2 of 7
Strong RevPAR index growth due to demand mix optimization
~$20m renovation completed in early 2009
Renowned Chef with Destination Atlanta Restaurant
The property was not achieving desired RevPAR yields
Strong revenue management in a weak environment; citywides are down significantly
Optimizing demand by shifting demand mix to transient to backfill group void
Hotel has limited LRA allowing for higher IBT rates
Implemented premium upgrade sell program—66 City View Rooms, 18 Suites, Club Level
Revenue management initiatives have led to a 13.4% YOY improvement in RevPAR Index from 116.8% to 133.9% YTD September 2011
19
Case Study – Melrose Hotel
Financial Statistics
TTM Q3 2011
ADR
$161.29
Occupancy
75.9%
RevPAR
$122.45
NOI
$3.6m
Peak NOI (2007)
$6.2m
RevPAR Index
84.7%
Comp Set Rank
7 of 7
Significant repositioning upside potential
Last renovation in 2002
RevPAR Index dropped from 101.4% in 2007 to 83.6% YTD September 2011
Outstanding location on Pennsylvania Ave. adjacent to Georgetown and 8 blocks from White House and National Mall
Over sized rooms of average 425 sq. ft. with 35 suites
Good curb appeal despite current condition
Underutilized street-level restaurant and bar space
Planned $8.1m renovation to address all aspects of hotel
20
Highland Transaction Conclusion
We purchased a remarkable portfolio for nearly half of its replacement cost and materially below what our peers are paying for assets
We have made significant progress in achieving operational flow throughs and pushing RevPAR yield index
In only six months’ time our asset management group has managed to achieve nearly 90% of its 1st year NOI target
The Highland portfolio is off its peak substantially more than our legacy portfolio, providing us with additional upside
Our strategic capex will help realize additional upside potential
21
ASHFORD HOSPITALITY TRUST
Barclays Capital Conference
Highland Hospitality Update
December 2011