Sotherly Hotels Reports $181.9 Million Revenue for Fiscal Year 2024, Net Income Declines 69%

Sotherly Hotels Inc. reported a total revenue of approximately $181.9 million for the fiscal year ended December 31, 2024, marking an increase of 4.6% from the previous year's revenue of $173.8 million. The growth in revenue was primarily driven by an increase in room revenues, which rose by approximately $4.4 million, or 3.8%, to $119.1 million. This increase was attributed to a 4.4% rise in occupancy rates, reflecting higher demand from transient consumers and group business. However, the average daily rate (ADR) experienced a decline of 3.0%, resulting in a revenue per available room (RevPAR) increase of 3.7% to $119.26.

In comparison to the previous fiscal year, Sotherly Hotels saw significant operational changes. The company reported a net income of approximately $1.2 million for 2024, a decrease of 69.0% from the $3.8 million reported in 2023. This decline was largely due to increased operating expenses, which rose by 4.7% to approximately $135.1 million, driven by higher occupancy and gross revenue across ten properties. Notably, interest expenses also increased by 18.7% to approximately $20.9 million, influenced by new mortgage agreements and rising interest costs.

Strategically, Sotherly Hotels has focused on enhancing its portfolio through acquisitions and renovations. As of December 31, 2024, the company owned ten full-service hotels with a total of 2,786 rooms, alongside interests in two condominium hotels. The company has engaged Our Town Hospitality, LLC to manage its properties, which are leased to taxable REIT subsidiaries (TRS Lessees). The management agreements with Our Town are structured to optimize operational efficiency and profitability, although they also present potential conflicts of interest due to shared ownership among key executives.

Operationally, Sotherly Hotels reported an occupancy rate of 67.2% across its portfolio, with significant contributions from properties in Florida and Georgia. The company has also been proactive in managing its capital expenditures, with plans to invest approximately $7.2 million in 2025 for routine maintenance and improvements. As of the end of 2024, Sotherly Hotels had approximately $28.7 million in cash and cash equivalents, indicating a solid liquidity position to support ongoing operations and capital needs.

Looking ahead, Sotherly Hotels remains cautious about market conditions and the potential impact of economic fluctuations on its operations. The company has emphasized its commitment to maintaining its REIT status, which requires distributing at least 90% of its taxable income to shareholders. However, the board has suspended common stock dividends since 2020, with a focus on addressing preferred stock distributions, which are currently in arrears. The company plans to continue evaluating its dividend policy based on future financial performance and market conditions.