SOHOB — Sotherly Hotels Inc.

Sotherly Hotels Q2 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Total Revenue: Approximately $48.8 million, down 3.7% year-over-year.
• Year-to-Date Revenue: Approximately $97.1 million, a slight decrease of 0.1% from the same period last year.
• Hotel EBITDA: Approximately $13.9 million for the quarter, down 11.5% year-over-year; year-to-date EBITDA was approximately $26.8 million, down 4.4%.
• Adjusted FFO: Approximately $4.8 million for the quarter, down $2.7 million year-over-year; year-to-date adjusted FFO was approximately $9.3 million, down $3.4 million.
• RevPAR: Decreased 5.4% driven by a 3.5% decline in occupancy and a 1.9% decrease in ADR. Excluding Tampa, RevPAR decreased 5% year-over-year.

2. Strategic Updates and Business Highlights:

• Continued operational disruptions at Hotel Alba in Tampa due to Hurricane Helene, with a full return to normal operations expected soon.
• Hotel Ballast in Wilmington and Hyde Beach House showed strong performance, with RevPAR increases of 1.3% and 12.7%, respectively.
• The company is proactively managing debt maturities and has engaged a consultant for loan negotiations related to The Georgian Terrace Hotel in Atlanta.
• A parking garage sale in Atlanta is planned to help manage debt obligations.

3. Forward Guidance and Outlook:

• Total Revenue Guidance for 2025: Projected between $185.2 million and $188.2 million, indicating a 2.6% increase at the midpoint.
• Hotel EBITDA Guidance: Expected between $45.3 million and $45.8 million, reflecting a 2.6% decrease at the midpoint.
• Adjusted FFO Guidance: Projected between $6.9 million and $7.5 million, or $0.34 to $0.37 per share.

4. Bad News, Challenges, or Points of Concern:

• Overall portfolio performance was impacted by economic uncertainty, reduced government-related travel due to DOGE program spending cuts, and cautious consumer behavior amid inflation.
• Significant declines in RevPAR were noted in markets like Savannah, which saw nearly a 10% decrease year-over-year.
• The hotel industry continues to face challenges in the debt market, with lenders maintaining conservative underwriting practices and higher debt service coverage ratios.

5. Notable Q&A Insights:

• Savannah's performance was affected by a combination of reduced transient travel and unexpected government-related business impacts, particularly due to DOGE funding cuts.
• Group bookings for the second half of the year are expected to improve, despite a 7% decline in total production in Q2.
• The company is exploring additional asset sales to raise liquidity, while also indicating that the mortgage market for hotels remains challenging but may stabilize in the near future.

Overall, Sotherly Hotels is navigating a complex operating environment with a focus on disciplined cost management and strategic asset management to address current challenges while maintaining a cautious optimism for the latter half of 2025.