#United States #Dallas #Ashford Trust #GRO AHT #EBITDA Growth

Ashford Hospitality Trust Launches GRO AHT Initiative

In a significant move poised to reshape its operational landscape, Ashford Hospitality Trust, Inc. (NYSE: AHT) has unveiled the "GRO AHT" initiative, a strategic plan designed to propel substantial EBITDA growth and enhance shareholder value. This initiative is underpinned by three fundamental pillars: general and administrative (GA) reduction, revenue maximization, and operational efficiency. Stephen Zsigray, President and CEO of Ashford Trust, outlined the ambitious nature of this initiative, targeting an additional $50 million in EBITDA, representing more than a 20% increase. This endeavor is not only a response to the pressing economic climate but also a roadmap for future growth and profitability.

Pillar 1: GA Reduction

A core focus of the GRO AHT initiative is to implement significant reductions in corporate overhead expenses. Working in collaboration with their advisor, Ashford Inc., the company plans to undertake several key actions:

• - Management and Board Compensation Cuts: By aligning management compensation with shareholder interests, the initiative aims to foster a culture of accountability and performance.
• - Negotiation of Advisory Fees: The company is in discussions to reduce advisory fees and expenses associated with Ashford Inc. This strategic negotiation is expected to yield substantial savings.
• - Lowering Professional Services Costs: A rigorous review will enable the company to cut back on unnecessary professional services, thereby streamlining costs.

Pillar 2: Revenue Maximization

The second pillar is dedicated to optimizing revenue streams across Ashford's portfolio. Key strategies include:

• - Revenue-Focused Hiring: Ashford has made strategic hires focused on revenue enhancement in collaboration with its property manager, Remington. This move is anticipated to boost occupancy and room revenues substantially.
• - Sales Initiatives: The company aims to increase its room revenue market share by over 200 basis points in 2025. Aggressive sales and marketing efforts will be a focal point in achieving this goal.
• - Enhancing Ancillary Revenue: An audit of pricing strategies related to food and beverage, parking, and other ancillary services is underway. The goal is to bolster these revenue streams significantly.
• - New Revenue Streams: The initiative will also explore the introduction of new ancillary revenue opportunities throughout the portfolio to diversify income sources.

Pillar 3: Operational Efficiency

To maintain robust performance amid market challenges, Ashford is committed to deploying measures aimed at improving operational efficiency:

• - Payroll Optimization: This includes reducing payroll costs through recent workforce restructuring and adjustments to paid time off (PTO) policies.
• - Contract Renegotiation: The company will renegotiate existing contracts and seek competitive bids for managed service agreements (MSAs) to reduce costs.
• - Energy Efficiency Initiatives: Implementing energy-saving technologies, including LED lighting, aims to lower utility costs across the portfolio, enhancing overall profitability.
• - Labor Cost Management: Optimizing the use of overtime and contract labor will be prioritized to further reduce operational costs.

Zsigray emphasized that "GRO AHT is more than a plan, it's a transformative initiative designed to deliver meaningful and sustainable growth in 2025 and beyond." As the company approaches the repayment of its strategic financing, which has been a primary focus of its 2024 efforts, it looks forward to implementing this ambitious initiative.

Conclusion

Ashford Hospitality Trust is dedicated to keeping its stakeholders informed through ongoing updates as progress on the GRO AHT initiative unfolds. With a focused strategy aimed at delivering robust growth and efficiency, the company is poised to navigate the complexities of the hospitality sector and maximize value for its shareholders. As the market evolves post-COVID, Ashford is set to embrace new opportunities and challenges in its quest for operational excellence and financial growth.