Sotherly Hotels (SOHO) Q2 2024 earnings summary

Executive summary

• Q2 2024 results met expectations, with total revenue up 3.4% year-over-year to $50.7 million and RevPAR up 4.3% to $137.67, driven by a 5.8% increase in occupancy and a 1.4% decrease in ADR; year-to-date revenue reached $97.2 million.

• Net income for Q2 2024 was $4.7 million, down from $5.3 million in Q2 2023; net income attributable to common stockholders was $2.6 million, down from $3.1 million.

• Urban hotels in Atlanta and Houston showed strong occupancy recovery, while group-centric properties delivered robust group and transient leisure revenue.

• Portfolio performance was supported by effective expense controls and strong flow-through, despite softer leisure demand and increased price sensitivity in select markets.

• The portfolio includes ten full-service hotels (2,786 rooms) and interests in two condo hotels, primarily in the southern U.S., managed by Our Town Hospitality.

Financial highlights

• Q2 2024 hotel EBITDA was $15.7 million, up from $14.8 million in Q2 2023; year-to-date hotel EBITDA was $28.1 million.

• Q2 2024 adjusted FFO was $7.5 million ($0.38/share), up from $7.0 million ($0.36/share) in Q2 2023; year-to-date adjusted FFO was $12.7 million.

• Q2 2024 net income per diluted share was $0.13, down from $0.16 in Q2 2023.

• Occupancy for Q2 2024 rose to 74.0% (actual portfolio), with RevPAR up 4.3% to $137.67.

• Food and beverage revenue rose 4.2% in Q2 2024, with gains in banqueting and catering.

Outlook and guidance

• Full-year 2024 revenue guidance is $179–$182.6 million.

• Hotel EBITDA guidance is $46.1–$46.9 million; adjusted FFO guidance is $12.8–$13.8 million ($0.64–$0.69/share).

• Full-year RevPAR is forecasted at 104–106% of 2023 levels, with urban hotels expected to outperform.

• Management expects to maintain operations and routine capital expenditures with current cash and hotel cash flows.

• Management remains cautiously optimistic for H2 2024, citing economic, interest rate, weather, and election uncertainties.