Ashford Hospitality is in with the inn crowd. A self-administered real estate investment trust (REIT), Ashford owns or has interests in about 125 upscale hotels with more than 26,000 rooms in some 30 states -- primarily on the East Coast, West Coast, and Texas; most operate under nameplates such as Embassy Suites, Hilton, Marriott, and Courtyard. Around half of Ashford's properties are managed by firms owned by company chairman Archie Bennett and his son, CEO Monty Bennett, with the rest overseen by other third-party management companies. In addition to making direct investments in hotels, the REIT also originates loans secured by hotel properties.
Although revenues haven't reached pre-recessionary levels, Ashford Hospitality did see its sales grow 6% to $890 million in 2011. The increase was primarily due to an increase in occupancy rates at the REIT's properties (which also grew 6% that year). Food and beverage earnings at the hotels also increased. "Other" income, which included such as income sources as gains on a litigation settlement and interest rate swaps, also rose in 2011. Due to the cyclical nature of the hotel sector, the REIT expects to once again reach earning highs between 2014 and 2016.
The company made no acquisitions in 2009 and 2010 as it weathered the turmoil in the US real estate market. Further impacting the REIT's bottom line, business travel slowed down as companies watched their discretionary spending, and occupancy at Ashford's properties declined.
However, luxury and upscale lodging is leading the way in economic recovery, and the REIT has already seen its occupancy levels begin to rise again. The company has also found opportunity to expand. It established a joint venture with Prudential Real Estate Investors that acquired a 28-property portfolio formerly owned by Highland Hospitality in 2011. Among the assets gained in that transaction were the Churchill and Melrose hotels in Washington, DC; and the Ritz-Carlton in Atlanta. Highland defaulted on the properties, which the partnership acquired through a $1.3 billion consensual foreclosure. Ashford owns a majority of the investment venture.