Sotherly Hotels Q4 2024: Navigating Hurricane Recovery, Debt Challenges, and Strategic Focus on ADR

These are the key contradictions discussed in Sotherly Hotels' latest 2024 Q4 earnings call, specifically including: Recovery from Hurricane Damage and Financial Impact, Debt Refinancing Strategy, Debt Refinancing and Financial Outlook, and Focus on ADR and Occupancy:



Revenue and EBITDA Growth:
- Sotherly Hotels reported total revenue of approximately $44 million for Q4 2024, representing a 4.3% increase over the same quarter in 2023.
- The growth was mainly driven by strong year-over-year occupancy growth and a balanced approach in managing price declines.

Occupancy and Rate Trends:
- The company's occupancy for the full year 2024 increased by 6.1%, driven by a recovery in urban markets and strong performance in leisure demands.
- Rates experienced a 2.5% decline, which was partially offset by occupancy growth, reflecting a normalization in lodging fundamentals post-pandemic.

Impact of Hurricane Helene:
- Hurricane Helene caused significant damage to Hotel Alba, resulting in operational disruptions and impacting Q4 results.
- Despite these challenges, the hotel remained fully operational due to expedited restoration efforts, and the company anticipates a full recovery by the end of Q2 2025.

Investment in Property Improvements (PIP):
- The company plans to invest in PIP renovations for several properties, including a $11.5 million renovation in Philadelphia and a $14.6 million renovation in Jacksonville.
- These investments are expected to enhance property value and profitability, supported by new 10-year franchise agreements with Hilton.

FFO Decline and Interest Costs:
- Adjusted FFO for the quarter was approximately $2 million, representing a decrease of about $850,000 from the same quarter in 2023.
- The decline is primarily attributed to rising interest costs due to refinancing legacy loans with higher interest rates, despite improvements in revenue and EBITDA.