DALLAS-Ashford Hospitality Trust Inc. is experiencing increased demand from business travelers who are not part of a high-volume corporate contract. These people, known as “transient business travelers” pay higher rates than those with corporate rates.
The REIT’s CEO Monty Bennett made the announcement during the company’s first quarter 2011 earnings call. “While group demand is picking up, a big chunk of our business is transient corporate, maybe 25% of our overall businesses grew, but 75% is transient,” he explained. “And then most of that, a good majority of that is business transient, and that business coming back with their high associated rates is what we're very excited about, and what we think should move the needle across the industry going forward.”
In addition to transient business travel, Bennett noted that group bookings “overall are good.” As a result of increased activity, Ashford’s first quarter proforma performance measurements showed improvement for occupancy, average daily rate (ADR), revenue per available room (RevPAR) and hotel operating profit (or hotel EBITDA).
The REIT’s RevPAR increased 7.6% for all 97 hotels on a 4.3% increase in ADR to $131.94 and a 209 basis point increase in occupancy. Hotel EBITDA increased 15.3% to $62.8 million and Hotel EBITDA margin increased 219 basis points to 29.2%.
“We exceeded the prior quarter's RevPAR growth performance and have gained momentum in driving ADR growth,” Bennett said. “Some of our markets that lagged RevPAR acceleration in earlier periods are now showing growth. This is typical in the first phase of a recovery as markets vary in a response time to economic stimulus.”
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