Q4 2019 Earnings Call
Greetings and welcome to the Ashford Hospitality Trust Inc. fourth quarter 2019 results conference call.
At this time all participants are in listen only mode. It brief question answer session will follow the formal presentation.
If anyone should require operator assistant started conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded it. It's now my pleasure to introduce your host Jordan Jottings with Ashford Hospitality Trust. Thank you Mr. settings, you may begin.
Good day everyone.
Welcome to today's conference call.
<unk> for Ashford Hospitality trust for the fourth quarter and full year 2019 to update you on recent development.
On the call today will be Douglas Kessler, President and Chief Executive Officer, Deric, Eubanks, Chief Financial Officer, Jeremy Welter, Chief operating Officer <unk> results as well noted these sensibility. This conference call on a listen only basis over the Internet were distributed yesterday afternoon.
Lisa has been covered by the financial media.
At this time, let me remind you that certain statements that assumption and this conference call contain or are based upon forward looking information and are being made pursuant to the safe Harbor provision at the federal Securities regulation.
Such forward looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated.
These factors are more fully discuss any company filings with the Securities and Exchange Commission.
Forward looking statements included in this conference call Oh, we made out of the date of this call and the company's obligated to publicly update or revise them.
In addition, certain terms used in this call or non-GAAP financial measures reconciliations of which are provided in the companys earnings release, an accompanying tables or schedule, which haven't filed on form 8-K, but the FCC on February 20 to 2020 and May also be accessed the company's website at www dot.
<unk> dot com each listener is encouraged to read either reconciliation provide even the earnings release together with all other information provided in early also unless otherwise stated all reported results discussed an uncle and this call compared to fourth quarter of 2019, what do you fourth quarter of 2018 I will now.
Turning the call every Douglas Kessler. Please go ahead Sir.
Good morning, and welcome to our call I'll begin by give me a brief overview of our fourth quarter 2019 results.
By several highlights of our value added initiatives after that careful review our financial results in Jeremy will provide an operational update.
[laughter] performance benefited from our geographically diverse portfolio, consisting of high quality well positioned hotels cross the U.S., we believe that having a large percentage of our EBITDA managed by Remington provide some distinct advantages with respect to operating performance.
All right for Revpar for all hotels for the quarter increased 3.1%.
Comparable revpar for all hotels increased 0.7%.
Comparable total revpar increased 1.3% for all hotels.
Aligning our focus on growing ancillary revenues.
Additionally.
We reported AFFO per share of 22 cents, an increase of 22% over the prior quarter and adjusted EBITDA Ari at $89.1 million.
We accomplish these results despite tepid industry revpar growth and increasing operating cost pressure.
However, we're far from satisfied and we continue to take steps to outperform operationally.
Turning to our investment approach, we focus on how to best deliver accretive returns.
Cost of capital matters Josh.
Well, we see an increased number of hotels available for sale. We will remain prudent for example, despite the attractive features of our enhance return funding program. We currently do not plan to add to our portfolio unless we can transact accretively, while enhancing our balance sheet.
We strongly believe the ERP improves our projected investment returns yet we are prepared to be patient before accessing more ERP capital for new deals given our current stock price.
Discipline capital recycling through asset sales is another important component of our strategy.
When we evaluate selling a hotel we take into consideration many factors such as the implications for EBITDA leverage Capex Revpar et cetera.
Towards this end during the quarter, we sold 102 room, Springhill suites, Jacksonville, and Jacksonville, Florida for $11.2 million.
Sales price inclusive of the buyers estimated capex of $2.5 million represented a trailing 12 month cap rate of 5.9% on net operating income and a 14.3 times hotel EBITDA multiple as of October 31st 2019.
The hotel was unencumbered and the net proceeds of approximately $10.8 million from the sale will be used for general corporate purposes.
This sale resembled similar transactions, we completed in 2019, whereby we sold at lower Revpar hotels in our remaining portfolio, but at higher EBITDA multiples than where we currently trade. We strongly believe this is indicative of a greater intrinsic value of our assets when compared to current market metrics.
Regarding asset management I will provide some highlights the Jeremy will cover in more detail.
We continue to engage in strategy that we believe will create long term value during the quarter, we announced the sale of a 1.65 acre parking lot adjacent to the Hilton Saint Petersburg Bayfront to a condo developer for total consideration of $17.5 million to be paid over time.
At this price exceeded appraised value.
Net proceeds from the first payment traunch resulted in $8 million of loan repayment.
When finish the project will provide upgraded parking for our hotel guests.
Also in October we entered into a new franchise agreement with Marriott to convert our Crowne Plaza look Contra key west to an autograph collection property by July 2020.
The agreement includes a 13.7 million dollar property improvement plan, which approximately $7.8 million is incremental and we believe should yield a 19% unlevered internal rate of return.
We anticipate the conversion will create a distinctive solve for the hotel that's commensurate with the upper upscale luxury autograft product.
With its prime location in old town key west the up branding. This landmark hotel should elevate the properties performance and is very attractive high barrier to entry high Revpar market.
During the quarter.
We also announced a new franchise agreement for the 252 room Hilton Alexandria old town, whereby the hotel transition from being Hilton managed to being managed by Remington. We believe there's an evaluation premium for franchised hotels and it should be noted that this change did not result in a property improvement plan.
Ill now only Hilton Alexandria, what contour and Hilton Saint Pete are excellent examples of how we go about unlocking embedded value in our portfolio.
As you can see we've been extremely productive with our asset management efforts to create value. We leave no stone unturned when it comes to seeking ways to drive better operating performance.
We also have several value enhancing initiatives underway involving ancillary ancillary income cost controls rebranding and room additions.
Jeremy will provide more details on our efforts later.
As for our balance sheet, we believe in the benefits of an appropriate amount of non recourse property level financing to enhance equity returns.
We have a target range of net debt to gross assets, a 55% to 60% and we anticipate returning to that range over time.
In fact, we are working to make progress given that most of our recent sales proceeds replied to reduce outstanding loan balances.
Our loans are mainly floating rate, which we believe provides a natural hedge to our cash flows and positions us to benefit from recent interest rate movements with LIBOR currently 1.61%.
And a more attractive forward LIBOR curve and 2020 every 50 basis point reduction LIBOR would result in approximately $19 million of annual interest savings based upon our current capital structure. In addition, with all of our recent refinancing activity. We believe we have an attractive well laddered maturity schedule.
We also seek to maintain a high cash and cash equivalents balance between 25% and 35% of our equity market capitalization for financial flexibility.
We're currently well in excess of that target and note that this cash balance can provide a hedge during uncertain economic times as well as the requisite funds to capitalize on attractive investment opportunities.
As of the fourth quarter 2019, our net working capital totaled $331 million equating to approximately $2.67 per share, which represents a significant 120% of our current share price as of yesterday's close.
This is really remarkable when you consider that on top of this net working capital we have a valuable portfolio of 117 high quality predominantly upper upscale hotels.
To help address what we see as an intrinsic value gap, we continue to be active with our investor outreach efforts during the quarter. We held a well attended Investor day in New York and also attended several conferences and had numerous investor meetings.
During 2020, we remain committed to expanding our efforts to get out on the road to meet with investors to communicate our strategy and the attractiveness of an investment in Ashford Trust.
We look forward to speaking with many of you during upcoming events.
We also recently updated our website, where the new and improved Investor section.
The new website is meant to feature our high quality portfolio.
Provide easy to find resources for investors.
Visit our website at Www Dot Ht Ari ITD Dot com and we hope you find it to be a useful research tool.
Lastly, we understand that many investors are focused on the krona virus.
Thus far we calculate an approximate 550000 dollar impact to date. However, this number is increasing.
The virus is not contained and travel patterns change, we would expect a greater impact on our operating performance.
In summary, we remain committed to generating solid operating performance completing opportunistic transactions and proactively managing our balance sheet.
We believe we have multiple core competitive advantages that should lead to outperformance and then make Ashford trusts and extremely attractive long term investment.
For example, our investment focus is predominantly on upper upscale full service hotels, but we also have balance in our portfolio given that we own select service hotels as well.
With respect to our asset management initiatives, we remain diligent and exploring ways to increase profitability and create more value in our existing assets.
Our affiliate companies are high quality service providers that seek to maximize the value of our assets and improved guest satisfaction.
Adding to the list of competitive advantages either is our capital markets execution.
Given that we believe we have proven our financial expertise over multiple cycles.
With our approximately 17% insider ownership, we believe we have tremendous alignment with our shareholders, which encourages us to think and act like owners to maximize long term total shareholder returns.
I'll now turn the call over to Derek to review, our third quarter financial performance.
Thanks Douglas for the fourth quarter 2019, we reported a net loss attributable to common stockholders of $38.8 million or 39 cents per diluted share for the full year 2019, we reported a net loss attributable to common stock holders of $156.2 million or one dollar.
58 per diluted share.
For the quarter, we reported AFFO per diluted share of 22 cents, which represents a 22% increase over the prior year quarter.
For the full year of 2019, we reported AFFO per diluted share of $1.22.
Adjusted EBITDA Ari totaled $89.1 million for the quarter, while adjusted EBITDA are for the full year was $425 million.
At the end of the fourth quarter, we had $4.1 billion of mortgage loans with a blended average interest rate of 5.1%.
Our loans were 9% fixed rate and 91% floating rate.
We focus on floating rate financing as we believe it has several benefits.
As Douglas mentioned, we also believe we have a well laddered attractive maturity schedule with a weighted average maturity of 4.8 years, assuming all loans are fully extended.
Our loans are non recourse and we have no corporate loans when you see loans in our tables that have extension options. Most of those extensions have no tests in order to extend except that we purchased an interest rate cap and that the loan being good standing.
That's why we include another schedule in our earnings release, which shows our maturities assuming all extension options are exercised.
I'll also point out that we have interest rate caps in place on almost all of our loans to protect us I guess any sort of spike in rates.
Additionally, the current forward LIBOR curve shows LIBOR coming down through the remainder of 2020.
Which would potentially lower our interest costs even further.
Looking at our cash and networking capital we ended the fourth quarter with $262 million of cash and cash equivalents and networking capital of $331 million.
As of December 31, 2019, our portfolio consisted of 117 hotels with 24916 net rooms.
Our share count at quarter end stood at 124 million fully diluted shares outstanding which is comprised of 102.1 million common shares shares of common stock and $21.9 million LP units.
With regard to dividends the board of directors declared a fourth quarter 2019 cash dividend up six cents per share or 24 cents on an annualized basis.
In October we entered into a stock purchase agreement with Ashford Inc. under the agreement Ashford Inc. purchased 393077 shares of its common stock, resulting in total proceeds of approximately $11.8 million to the company.
Purchase price reflected a premium of approximately 20% based on the price of Ashford Inc. common stock on October Onest 2019.
On November five 2019, we distributed the remaining 205086 shares of Ashford Inc. common stock on a pro rata basis to Ashford Trust common shareholders and unitholders.
During the quarter the company amended and extended its mortgage loan for the 140 room Hotel Indigo Atlanta in Atlanta, Georgia, which had an existing outstanding balance of $16 million, a floating interest rate of LIBOR, plus 2.9% and final maturity date in May 2022.
The amended nonrecourse loan totaled $16.1 million and as a three year initial term with two one year extension options subject to the satisfaction of certain conditions the loan as interest only for the initial term with 1% annual amortization payments during the extension periods. The loan provides for a floating interest rate of LIBOR plus 2.25 per se.
Yes.
Subsequent to quarter end the company refinanced its mortgage loan for the 226 room left heavy on hotel in New Orleans, Louisiana, which had an existing outstanding balance of approximately $43.8 million a floating interest rate of LIBOR, plus 5.1% and a final maturity date in June 2020, the new non Rick.
Course loan totals $37 million and has a three year initial term with two one year extension options subject to the satisfaction of certain conditions. The loan is interest only for the first four years with $200000 quarterly amortization payments in the fifth year.
The loan provides for a floating interest rate of LIBOR plus 3.4%.
This concludes our financial review and I would now like turn it over to Jeremy to discuss our asset management activities for the quarter. Thank you Derek comparable revpar for our portfolio grew 0.7% during the fourth quarter of 2019.
Variable revpar for those hotels not under renovation grew 1.2%.
This breadth represents eight 0.5 percentage point gain any 0.2 percentage point gain relative to the unites total United States and the upper upscale chain scale nationally respectively.
For full year 2019 comparable revpar for the entire portfolio grew 1.4%.
During the fourth quarter comparable hotel EBITDA decreased 2.2%.
For full year 2019 comparable hotel EBITDA grew $2.4 million.
PG any power issues impacting our northern California, California assets in the shift of the Jewish holiday from September 2018 to primarily October 2019 impacted performance during the quarter.
I want to update you on the performance of some of our most recent acquisitions, which were acquired in combination with funds from the enhanced returned funding program with our advisor Ashford Inc.
First is the acquisition of the Embassy Suites, New York Manhattan Times Square in January 2019.
Comparable revpar during the fourth quarter grew 3.7% at this hotel, which represents an increase of 8.6 percentage points relative to the hotels competitors I can see the for the quarter finished at 98% a help healthier mix of sales shifting away from the more cost conscious customer segment.
It's led to bar consortia in corporate growing 18% in occupancy for the quarter.
For full year 2019, comparable Revpar grew 16.5% representing increases of 20 percentage points in 18.8 percentage points relative to the New York market and the upscale change and above hotels in Midtown South Submarket, respectively.
Property manager Remington successfully implemented a number of revenue enhancement initiatives, which led to hotel EBITDA growth.
Of 1.7 million or 24.8%.
We plan to build on the success experienced since the properties opening in early 2018, and it continues to outperform the market in hotels competitors.
Another ERP acquisition success story has been Lapa Saturday, Santa Fe, which is a hotel in Marriott's tribute portfolio that we acquired in October 2018.
During the fourth quarter comparable Revpar grew 17.3%.
We drove retail occupancy at this property seen strong contributions from film cruise, while also limiting discounts in order to drive rate, which grew 11%.
The fourth quarter Revpar growth represents 13.9, and 12.5 percentage point growth relative to the new Mexico, North market and hotels competitors respectively.
For full year 2019, comparable revpar increased 13.9%.
This growth represents increases at 11.7, and 10 percentage points compared to the same benchmarks previously mentioned.
During the fourth quarter. In addition to realizing strong revenue growth. We also saw a 209000 or 22% increase in hotel EBITDA with hotel EBITDA margin increasing 9.9%.
For full year, 2019 hotel EBITDA grew by $850000 or 25.8% with hotel EBITDA margin growing 13%.
Following the favorable performance of our recent acquisitions I want to call attention to the diversity of our portfolio and how we see this mix as a benefit, especially given where we are in the current cycle.
During the fourth quarter industry wide revpar for the top 25 markets grew 0.3%, while revpar growth for all other markets in the United States was up 0.8%, we expect our Revpar performance to continue to benefit from the diversity of our portfolio, especially from those hotels outside the top 25 markets.
I will now highlight a number of specific steps were taken in order to drive ancillary revenue in implement cost saving initiatives.
Following last is meant to be illustrated that not exhausted.
First we have analyzed our hotels competitors to find opportunities in our restaurant and banquet pricing.
With led us to roll out price increases and many of our properties during last summer.
Second we are focused on directing ecommerce spending to various digital programs to increase visibility in advertising to the leisure and group segments.
For example in the group segment, we are working diligently to increased exposure degree plead.
Third we are reviewing our portfolio for additional outdoor advertising antenna revenue opportunities Lastly, we've added historic hotel feed at some properties and has developed a proprietary retail pricing tool.
In terms of cost management, we are utilizing programs to introduce more efficient methodologies of performing work duties to reduce payroll hours.
Save cost to reduce environmental ways, we've added wall mounted setup in check shampoo dispensers in the gas bathrooms of our independent hotels.
Additionally, we have shut down pools, where appropriate and outsource airport transportation.
And lastly, we continue to see complete operational deep dive at our properties to ensure expenses are at the proper levels.
Given all the efforts mentioned above we are proud to say comparable total hotel revenue.
Excluding rooms revenue increased $12.4 million or 4.2%.
During the full year 2019.
During 2019, we also invested opportunistically in our portfolio to maintain competitiveness.
In total we spent approximately $159 million and capital expenditures during the year. This spend is down significantly from what we spent in 2018 in previous years. Looking ahead to 2020, we anticipate spending approximately $125 million to $145 million and capital expenditures during the year exclusive of capital expenditures funded with insurance press.
Seats.
Additionally, we are continuously identifying opportunities to create value through our portfolio, including adding four keys at the Hilton Boston Backbay three keys at the Renaissance Nashville.
Key at the map Bridgewater in two keys at demand Fremont as well as capitalizing on projects to reduce energy consumption.
That concludes our prepared remarks, and we'll now open the call for QNX.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask your question you May Press star one on your telephone keypad a confirmation total indicate your line is in the question Q you May Press Star too if you would like to remove your question from the Q4 participants using speaker equipment, you may be necessary to pick up your handset.
Before pressing the star key.
Our first question comes from the line of Tyler Battery with Janney Capital markets. Please proceed with your question.
Yes. Thanks, good morning, everyone. Thanks for taking my questions here just.
First one for me just specific to the.
Fourth quarter.
Talk a little bit more about how results human versus your budgets and then Jim not sure. If there any trends worth calling out that that surprised you either positive or negative in the quarter.
Sure.
Relative to budget, we don't really look at that so closely as much as just our forecast in the near term and what I'd say is it if you look at the quarter.
We started off a little bit weaker in the first month and then each month picked up with stronger Revpar for for November December.
So that was a trend that we observed.
Alright, and then I appreciate the.
Information that you disclosed crowing buyers impact Tonight, I know it start but still early but.
Can you give any color in terms of your exposure to international travel across your portfolio and then just to take a broader step back.
Maybe acts what's going on with some of those headlines.
Changed here.
On the fundamentals today versus three months ago.
So our international exposure in our portfolios is very limited were mostly.
Business transient and we have very little group business as a percentage of our portfolio relative to some of our peers. Our market locations are diverse and so given that we don't have heavy concentrations in some of the more international.
Destinations within the US we are a little bit insulated now.
That can all change if something becomes.
Different in terms of the spread of it throughout the us, but specifically on the international fraud I think.
We're positioned reasonably well with respect to that which I think which is why when we highlighted the number that we've.
Tabulated so far that that's a relatively.
Minuscule amount now.
Admittedly what we don't know is those are cancellations at specifically mentioned that current virus, but there may be other cancellations that occurred that didn't specifically mentioned that so in terms of anything that we see.
Our view going forward.
Our view is really consistent with the with the industry Revpar forecast and and the.
The increased cost structure and I think some of the things that Jeremy highlighted point to the fact that we have been very aggressive.
Yes.
Managing costs trying to do few things that are guest facing and more things that.
Can improve.
Margins. We also I think in light of the Corona virus, giving little bit more attention to booking distributions and possibly.
They look or aggressive on on on booking too.
To backfill in the case cancellations increase German anything will add to that.
Yes, I think that at the way to look at Tyler is it it's less about international travel for us or inbound foreign travel and it's more at current of Iris does have the broader impact to the overall economy and Thats, where our exposure is.
I'd say one thing that keep in mind, though is if the virus spreads and there's an impact to GDP growth, which I think a lot of the.
Industry experts would anticipate the impact of the supply chains and and a reduction in the growth of the economy. Obviously, we know that that has a spillover effect in lodging demand, but given that our capital structure is 91% floating rate debt we.
We have the benefit of what we see to be very favorable forward curve, where the expectation for three rate cuts forthcoming is has increased and every 50 basis point reduction in rates is approximately $19 million a bottom line.
Savings from an interest rate expense standpoint so.
Again, better positioned with respect to that component of fixed versus floating rate than than our peers.
Okay perfect I'll leave it there thank you.
Our next question comes from the line of Chris Woronka with Deutsche Bank. Please proceed with your question.
Hey, good morning, guys.
Yes.
You talked about a lot of the asset management initiatives each quarter, Richard which is helpful to us.
Notice you still have I think you still have five independent hotels is there anything on the radar in terms of maybe converting those over to a brand or soft brands.
Now, we evaluate the cost and the distribution benefits is really what it comes down to.
The hotels are performing well with our Revpar index in a market.
We have to justify why we would branded we obviously believe in the power of the brands in the distribution capabilities. So that's part of our decision process. What's the return on the capital expended to to brand the asset I think we clearly taken a step with respect to Arlo path property.
So that's that's an asset that we.
Have.
I have decided to the brand that and then we also sit still have looked at rebranding opportunities, which as we said in our prepared remarks regarding the conversion to our property and in key west slow Contra property to an autograph collection. So.
It's it's a decision that we evaluate we evaluate relative also too.
Competition that can come into the market how that changes the landscape, but what we've announced to date is what we think currently our best our best options.
I would like to have some flexibility within our independence and we look at some of the so that tells particularly the ones in DC Malmaison Churchill there's a.
Already has a pretty significant brand presence and so beta independent does in a lot of ways give us we think a competitive advantage.
Okay. That's a that's helpful.
And then just on.
Yes on asset sales would you guys have obviously done accretively.
When you adjust the dividend I mean.
Is there anything prohibiting you or.
Given you hesitation to do larger larger amount of asset sales given what what appears to be still kind of solid pricing environment for for sellers is something like shrinking the EBITDA too much or any other concerned that would would stop larger larger sales.
I think we've been extremely skilled in selling what we sold and going about it the way we've done it we've sold over $400 million of assets, we've sold assets that.
We're priced it much better multiples much higher multiples collectively than where our portfolio trades, which I think highlights the intrinsic value of our assets.
That we contained still in our portfolio. These are assets that we sold also that were at.
Materially lower revpar overall, but our portfolio so.
Net benefits us by elevating the the Revpar of our remaining portfolio, but also shows that.
The trading prices of some of these perceived lower quality assets should indicate the value that we have with our remaining assets that are perhaps better located more strategic higher revpar. We also sold assets that.
Required.
Some more capex that we really didn't think we might get a return on their a lot of reasons why we decided to sell those assets, but in making that decision. We also evaluate a lot of things we do evaluate with what is the impact on EBITDA.
The ability to improve our balance sheet through the reduction of debt or additional pay downs related to specific asset sales, obviously, taking into account market considerations in the future Capex spend on those assets and then what we would use the capital for redeployment.
Given our current share price the acquisition.
Forecast is absent.
Finding external third party capital to two to help us grow accretively and to improve our balance sheet, it's pretty challenging in the market right now given.
The price that were trading at and so we're not inclined as I said in the prepared remarks too.
To be anything other than very prudent with looking at acquisitions. So there is a market for assets today, we think we've got high quality assets, we think of sales that we've demonstrated point too.
The demand for the assets, so we havent our portfolio and typically Chris we don't comment on sales until actually they occur. So I think it at this point you have a general view of our perspective on asset sales, but nothing specific until we announce anything if we announce something in the future.
Alright, very good thanks, guys.
Our next question comes from the line of Matt Boone with B. Riley FBR. Please proceed with your question.
Hey, good morning, just kind of in the same vein the dispositions.
You can't provide too much detail now, but is it fair to say that you're currently marketing additional assets for sale or will that be a little bit more of an opportunistic. Thanks.
We've generally been opportunistic on this strategy of asset sales, sometimes we responded to unsolicited enquiries, sometimes we went out there with a directed marketing efforts, but again, it's something that we don't typically comment on until such time is we can announce that during a transaction.
Got it thank you.
As a reminder, ladies and gentlemen, it is star one to ask your question. Our next question comes from the line of Robin Farley with UBI US. Please proceed with your question.
Hi, Thank you this is arpino for Robin.
So group is a smaller percentage of your portfolio overall, and some have talked about better group and tougher transient business.
Better leisure trends into sort of year, what have you seen so far.
Those buckets.
I have a quick follow up.
Sure. This Gary group is a much smaller percentage of our portfolio than maybe some of our peers fourth quarter was 19%.
Of our mix and then in terms of what we saw in the fourth quarter actually our transient oxy was up transient rate was up.
And we had that a decline in group for the fourth quarter.
But looking at ahead too.
To this year our group pace is essentially flat.
And and dad most of that is actually a decline in the first quarter and that the second third and fourth we do see increased demand in our portfolio for group business and the moving on to 2021, our group room revenues as a percentage of.
Pace and a comparable type vary from last year is up 6%.
That's very helpful. Thank you.
Then revpar was pretty strong for the quarter versus what you were sort of expecting given everything we knew about the quarter, but then flow through was a bit softer when you look at sort of increase in revenue and EBITDA flow through I guess could you talk about drivers and what you're seeing and cost inflation and everything else that causes that thanks.
Yes, I'll comment a little bit and then and then Douglas.
Ben but yet so for for the for the year, we ended up about 3.8% increase in not wage rates at now we were able to to offset some of that by increased productivity actually quite quite a bit of increased productivity. When you look the hours per occupied room across the portfolio.
Unfortunately, there is there's definitely some headwinds and not in were in rates and what we're seeing is that to start is starting to decelerate for the first time in quite some time and we're seeing that happened actually in January of this month, it's come down a little bit.
From that 3.8% level, and we're seeing adapted downward trend going forward.
In terms of other other headwinds insurance certainly has been something has been very challenging for us and in property taxes I. What you see a lot of time does that.
Property taxes don't start to come down until.
Until later in the cycle and so we still start to see some some some increase in property taxes in excess of what our revenue growth is one of the one of the big wins that we did see for the year and if you look at it format from maybe a higher level perspective is that our actual non rooms revenue growth was 7.3.
Percent and so thats been a huge focus for us and our team as to.
In tougher revpar environments, when we're not able to grow.
Rate as much or not able to grow occupancy RCD accuracy pickup that we'd like to see we've made a huge push by our team to continue to find other ways to drive ancillary revenue and you see that in the numbers you certainly see it now and fourth quarter, but for the course, the year, which has given us some some good tailwinds for for the portfolio and I just would add to that.
This is one of the distinct advantages that we feel we have within the Ashford Trust portfolio.
60% of our EBITDA is managed by Remington and Remington time, and time again through cycles proves to be more nimble.
More responsive to changes in market conditions, and more opportunistic to figure out how to drive bottom line results and with this high percentage within our portfolio I think.
Clearly some of the numbers, we shared with you today for the fourth quarter performance are indicative of that groups capability, both on the topline and bottom line when it comes to cost controls and.
It's a very proactive.
Effort that.
Our asset management team in coordination with Remington engages, particularly when.
Market conditions are both tepid on the topline in more pressure on the bottom line given the but the cost situation. So a real advantage for us.
Thank you very much.
Our next question comes from the line of Michael Bolus, Oreo with Robert W. Baird. Please proceed with your question.
Good morning, everyone.
Morning.
Just one quick one on me going back to that $550000 impact that you referenced from the virus that just topline revenues correct or at least a room revenues.
So that that's basically.
An estimate on the canceled room revenue, but.
The one thing that we didnt comment on those prepared remarks is that.
There could still be some offset to that depending upon when the cancellation occurs with respect to a cancellation fees I understanding as of the industry is still.
When applicable applying the cancellation fees so.
Again, thats kind of a headline number that number could be increasing but there could be some offsets also to that number Mike.
And then.
Well one real quick point on that is it one of the things we've gotten to kind of combat that is it we've been more aggressive and over selling our hotels and thats one of the the areas of focus if youve contract.
I read optimization team, we have that had some great gains in Revpar index over the last five six years and one of the things we've always looked down and how they are a property accountable for so AD efficiency, we have some the highest expectations.
Upselling, our hotels and so Thats one thing that we continue to to push for were actually a lot more aggressive on it and taking a little bit more risk because we do expect probably a little more cancellations just because of the.
Because of the.
The virus is going around so.
Yes, that's helpful and then.
More broadly with cancellations I know you can collect cancellation fees later, but what's the typical flow through.
That you guys.
Would experience just trying to kind of ballpark of hotel EBITDA impact using of Fyfifteen revenue impact that you guys gave.
I think that.
That is a.
A difficult question, Mike It's a good question, but because it's cancel doesn't necessarily mean that we don't then back fill it with a new reservation, so I'm not really sure.
Actually how to calibrate that.
But we'll give us some more thought.
Yes, it's actual its actual revenue loss.
Alex I would say, that's probably a good metric would be 50, 55%.
That.
But in most cases there are.
Rebook gains that they can occur and we certainly do have cancellation and attrition fees of his group business, we do enforce attrition fees pretty aggressively.
That are in the contract.
Yes, that's helpful. Certainly different if it's three days out versus 30 days out. So thank you correct, yes, that's right.
So many variables that you can understand so the numbers that we gave you could have been.
Within any time spectrum, so thats why.
Providing more.
Accurate answer is.
As challenging on that question.
Yeah keep in mind the average booking.
Window for our properties about three weeks.
Helpful. Thank you. Thank you.
There are no further questions in the queue I'd like to end the call back to management for closing remarks.
Thank you for joining today's call and we look forward to speaking with you again next quarter.
Ladies and gentlemen, this does conclude todays teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.