It seems appropriate to compare some metrics regarding Ashford Hospitality Prime to its peers. After all, if Sessa Capital thinks so poorly of AHP management, it stands to reason that AHP management must not be doing so well.
Except AHP stock is performing amazingly well in contrast to its peers.
In 2015, according to PriceWaterhouseCoopers, RevPAR for the entire US hotel industry increased 6.3%. In the upper-upscale and luxury categories, where AHP stock operates, RevPAR increased 4.7% and 4.8% respectively. AHP “only” increased RevPAR by 7.3%.
As of March, insider ownership at AHP stock was 14%. Peer average was a mere 2.2%. Why is this important? Shareholders want management interests to be aligned with their own. The less aligned those interests are, well, then obviously the less inclined management will be to make deals in the best interest of shareholders. Sessa Capital owns less than 10% of the AHP stock.
AHP stock took over Pier House in Key West in May 2013. At the time, RevPAR was $284, total revenue was $19,196,000, RPI was 97.7, and EBITA was $6.03 million. After the takeover, in May of 2014, RevPAR increased 14%, total revenue was up 11%, RPI went to 101.7, and EBITDA increased 38%! The cap rate on acquisition was 6.2%. Now it is 9.8% — an increase of more than 50%.
But Sessa Capital insists AHP stock management doesn’t know what it’s doing.
There are many more metrics to evaluate, but we can actually make a first-hand observation about the Marriott property in Beverly Hills. Ashford was award the 2015 Marriott Full-Service Renovation Excellent Award for this property. We’ve seen this property go through many transitions over the years, each time getting better, but now it has truly become a property of design excellence. That’s what one gets with experienced management at the top.