Portsmouth Square Reports $2.585 Million Net Loss Despite Revenue Growth in Hotel Operations

Portsmouth Square, Inc. reported a net loss of $2.585 million for the three months ending September 30, 2025, compared to a net loss of $1.872 million during the same period in 2024. The company's revenue from hotel operations increased to $12.418 million, up from $11.820 million in the prior year, reflecting a 5.1% growth. This increase was primarily driven by higher hotel room revenue, which rose to $10.428 million from $10.110 million, alongside improved food and beverage sales. However, the overall loss was attributed to increased operating expenses, particularly in labor costs due to new union agreements and the absence of a management incentive fee waiver that had previously reduced expenses.

In terms of financial position, Portsmouth Square's total assets decreased to $45.174 million as of September 30, 2025, down from $46.920 million at the end of June 2025. The company’s liabilities increased slightly to $171.879 million, compared to $171.040 million in the previous quarter. The shareholders' deficit also widened to $126.705 million from $124.120 million, primarily due to the net loss incurred during the quarter. The company maintained cash and cash equivalents of $4.337 million, alongside restricted cash of $5.794 million, indicating a slight decrease in liquidity compared to the previous quarter.

Operationally, Portsmouth Square has continued to invest in property enhancements, incurring approximately $974,000 in capital expenditures during the quarter, which included renovations of guest rooms. The company has also been proactive in managing its liquidity, implementing cost control measures and deferring non-essential capital projects in response to ongoing market pressures, particularly in the San Francisco hospitality sector. The hotel’s average daily rate increased to $218, while occupancy slightly decreased to 95%, resulting in a revenue per available room (RevPAR) of $207, up from $202 in the prior year.

Looking ahead, Portsmouth Square's management remains cautious about the recovery of the San Francisco hospitality market, which has been slower than anticipated due to factors such as reduced business travel and broader municipal challenges. The company has access to a related-party revolving credit facility with The InterGroup Corporation, which was recently amended to increase borrowing capacity and extend maturity. Management believes that current liquidity sources and available borrowing capacity will be sufficient to support near-term working capital needs, although they continue to monitor market conditions closely and may consider additional financing options if necessary.