Ashford Hospitality Trust (Ashford Trust) has unveiled the GRO AHT initiative, a plan aimed at EBITDA growth and enhancing shareholder value.
The initiative is built on three foundational pillars, which encompass general and administrative (G&A) reductions, revenue maximisation, and operational efficiency, each targeting specific areas for improvement.
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Ashford Trust president and chief executive officer Stephen Zsigray said: “GRO AHT represents a bold and focused plan to enhance performance and create value for our shareholders.”
“While we expect to benefit from limited supply growth and other industry tailwinds in the coming years, we are targeting an incremental $50m of EBITDA improvement to run-rate corporate EBITDA with this initiative – an increase of more than 20%, which we believe will have a transformative impact on our equity value and leverage metrics.”
The first pillar, G&A reduction, has received backing from the company’s adviser, Ashford Inc.
Among the measures include substantial cuts in management and board compensation to better align with shareholder interests.
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By GlobalDataThe company is also negotiating reduced advisory fees and looking to decrease professional services and other administrative expenses.
Revenue maximisation forms the second pillar of the initiative. Ashford Trust expects to drive top-line performance across its portfolio, with recent strategic hires by Ashford and Remington aimed at enhancing revenue.
The company has set a goal to increase room revenue market share by more than two percentage points by 2025, as measured by the RevPAR Index.
Additionally, Ashford Trust plans to boost ancillary revenues through pricing audits and the introduction of new revenue streams.
The final pillar, operational efficiency, addresses the ongoing challenges of maintaining property-level margins.
Property managers are implementing measures such as workforce reductions, changes to paid time off policies, and renegotiating contracts to achieve cost savings.
The initiative also includes the adoption of energy-saving measures such as LED lighting and the optimisation of overtime and contract labour to further cut labour costs.
Zsigray added: “GRO AHT is more than a plan, it’s a transformative initiative designed to deliver meaningful and sustainable growth in 2025 and beyond.”
“As we near repayment of our corporate strategic financing – the primary focus of our efforts in 2024, we are excited to partner with our adviser and property managers to deliver on this next initiative. We are turning the page on Covid and look forward to beginning the next chapter for Ashford Trust.”
