Ashford Hospitality Trust, Inc. (AHT) Earnings Call Transcript & Summary

Okay. We're going to go ahead and get started. So if I could ask everyone to grab a seat. I know we've still got some folks coming in. But welcome to the Ashford Investor Day. I'm Deric Eubanks. I'm the Chief Financial Officer of each of our publicly traded companies. And today, we're going to be talking about Ashford Hospitality Trust, Braemar Hotels & Resorts as well as Ashford Inc. I'd like to thank all of you for being here in the room in person. It's great to be meeting again. And I also want to thank all those that are watching the presentation online. This presentation will be recorded and will be on each of our company's websites for you to go back and watch at your pleasure. So just a quick reminder of the overview of our corporate structure. We've got Ashford Inc., which is traded on the NYSE American as the asset management company. And then we have 2 segments of our business, an advisory platform and an operating platform. In the advisory platform, we've got Ashford Hospitality Trust, which trades under the symbol AHT and currently owns 100 hotels with about $5.5 billion of total assets. And we've got Braemar Hotels & Resorts, which trades under the symbol BHR, currently owns 14 hotels of a little over $2 billion of gross asset value. And then we've got several portfolio companies that are part of Ashford Inc., and we'll be talking about each of those companies today. Our management team is Monty Bennett, who is the CEO of Ashford Inc., and he's the Chairman of all 3 public companies. You've got Jeremy Welter, who's the President and Chief Operating Officer of all 3 companies. Richard Stockton is the President and CEO of Braemar Hotels & Resorts. Rob Hays is the President and CEO of Ashford Hospitality Trust. I'm the CFO of all 3 companies. And then we've also got Alex Rose here, who's the General Counsel of each of our public companies. So the agenda for today is I'll provide a brief introduction, and then we will dive into Ashford Inc. and Monty Bennett and Jeremy Welter, we'll discuss Ashford Inc. We've also got some videos to share with you each of our portfolio companies. We'll have 10 minutes for Q&A, and then we'll have a quick 10-minute coffee break, and the coffee will be right outside the room here. So just right outside the room. Then we'll discuss Ashford Hospitality Trust. Rob Hays will come up to discuss that platform. And then we've also got several members of our asset management team here, who will discuss case studies and our asset management efforts. And so we're excited to share with you just the depth of our team at Ashford. And we're really proud of our asset management team, and we've got several folks here to present. So we're excited about that. And then we'll have another 10 minutes for Q&A for Ashford Hospitality Trust. And then we'll wrap up with Braemar Hotels & Resorts. And Richard Stockton will come up and discuss Braemar. Again, we'll have other members of our asset management team coming to present about our asset management initiatives. We will have additional Q&A related to Braemar. And then after that, we've got a cocktail reception for those of you that can join us. And the cocktail reception is going to be downstairs in the courtyard, right off the lobby. So hopefully, you can hang around for that and join us for that. So before I hand it to Monty to discuss Ashford Inc, I just want to spend a few minutes talking about our guiding principles. These are guiding principles of our organization that really date back to the IPO of Ashford Hospitality Trust back in 2003. And we really wanted to identify what we want to be known for and what we stand for. These principles really guide everything we do. Our associates quickly learn how important these principles are, and we meet as an organization quarterly to recognize the associate that really does the best job exemplifying these principles and our performance reviews are structured around these principles as well. Now I realize the hotel business is a cyclical industry, and we've been through multiple industry cycles. But what we've been through with the pandemic was really like nothing any of us had ever seen before. And these guiding principles were really instrumental in guiding our strategies and our response to what we've been through over the last 18 months in our business. And so the first one is engaging, and this really relates to teamwork within our organization. And I'd say we've been so proud of our associates who just went above and beyond during a very, very challenging time in our business. During the depth of our crisis, it was all hands on deck across our organization from debt workouts to raising much needed capital. Everyone stepped up and stepped in wherever help was needed. We had hotel GMs that were mowing the grass at our hotels or cleaning the rooms. And so we're just very proud of our associates and how they stepped up during very challenging times from an engagement standpoint. The next one is innovative. And there was no playbook for dealing with a global pandemic and really a complete shutdown of the travel industry. We moved quickly to rethink how our hotels were operating. Remington developed a new operating model, we call the 2-2-1 model, which really meant there were 2 associates at the hotel in the morning shift and 2 associates at the hotel in the evening shift and 1 overnight. And it was really unheard of in the hotel business to have that few associates at a property, but it was a model that we successfully implemented at our Remington properties, and we successfully got our other hotel managers to implement as well. And this innovative operating model was really instrumental in our ability to successfully navigate the pandemic during very challenging times in our business. The next one is tenacious. This really means we've got grit. We're relentless. This was never more evident than during the darkest days of the pandemic when our associates were working more hours often for less pay. And -- but we came together and we did what needed to be done at the time. And I know I speak for Monty and our entire executive team when I say how proud we are of our associates and how thankful we are for their hard work during those very challenging days. The next one is profitable. And I would say our structure is meant to maximize the profitability at our properties. By maximizing control of the operations at our hotels, we think we can create more profit for those operations and ultimately, better guest service scores for our guests as well. So that's a very -- the structure is really meant to maximize profits. But I can also say that during the pandemic, we had to quickly cut costs and monitor our cash. And as the CFO of a hotel REIT, I never thought the term cash burn would come into my Lexicon, but we will quickly realize that each of our properties would be burning cash. And so we had to move quickly to minimize cash outflows as much as possible. Our asset managers were approving every payable that our properties were sending out, and we were updating our cash forecast almost daily. And I can say that I believe our relentless focus on profitability helped us weather the pandemic. And then the last one is ethical. We expect our associates to do the right thing. Now we're competitive and we want to win, but we also believe in giving back and helping our communities. And during the pandemic, we partnered with local government agencies, medical staffing organizations as well as hotel brands to provide temporary lodging for first responders, health care professionals as well as other community residents that were displaced for a period of time. So these are our guiding principles. They are what we want to be known for. They're what we stand for. Now today at our Investor Day, we're looking forward, and we're going to share with you where we see these platforms going. But I felt like it was important to also share with you how these guiding principles were put into action over the last 18 months. So with that, I will introduce Monty Bennett to come talk about Ashford Inc.

Thank you, Deric, and hello, everyone. Thank you for coming to our presentation today. It has indeed been a tough period of time. We were here a couple of years ago and had to finally put the pieces together to our platform and our strategy when we're ready to tariff the world in 2020, and the world had different plans for us. And about, I guess, early March is when we first started feeling the effects of the pandemic, and it just got worse and worse. So all of our best late plans for that year had to change, and we had to adapt. So we adapted. We repaired our balance sheets. We picked up the pieces, and we launched a new here beginning in 2021 and have made some great progress during this past year. So let me walk you through some of the things we've done and where we think we're going. So we are the only publicly traded asset manager and service provider to the hospitality industry. Our core platform is a financial sponsor, an investment manager to these 2 publicly traded REITs. We've got 40-plus years in the hospitality industry, myself and in my family before me. And we believe we've got a best-in-class advisory and asset management shop, along with these best-in-class service providers that we'll go through. And as such, we've got great and deep relationships throughout the entire industry and have had for many years. I think the first thing that we need to talk about and the first thing many of you would think about as you're evaluating, investing in our platforms is what's going on with COVID-19. One of our directors on one of our platforms is a physician, and he is a founder -- the Founder and the Head of the Executive Management program, Executive Health Program at UCLA out in California. It's a very prominent hospital. It's a very prominent program where very wealthy individuals and celebrities and the like come through. And as such, he is in touch with senior members of the administration and the CDC and of course, other networks of doctors around the country. And he's been a little dour about all this for a while. But with this most recent announcement, his attitude has really changed. And I'm talking about the announcement with Merck and their new drug that's come out. You have the vaccinated class and the vaccines have shown that, especially with boosters and the like, the harm that comes to people that are vaccinated is very, very low. All the hospitalizations and all the deaths and everything almost exclusively, the unvaccinated. But there is a sizable vaccine hesitant crowd out there. And what this new Merck drug does is it cuts the hospitalizations in half, and it cuts the deaths in half of that crowd, which is significant to see a drug that operates this quickly so effectively is really very unusual. And [indiscernible] has turned the tide on this, and that we've got much better times ahead for us. Not that we're ever completely out of the woods, the thought is that COVID will become something like the flu, where it will take a few tens of thousands of lives annually throughout the world. That will be a much smaller, much more manageable problem going forward. So very excited about that, especially for our industry because what it's done to the travel sector. So if you look at Ashford Inc. We've got 4 ways we're looking at to grow. The first is just the natural recovery of the hotel industry. Our industry has been hit pretty hard quite a number of times throughout history, and it always comes back. It always comes back. And it's just the timing. Most pundits think that the industry will recover fully to 2019 revenue levels by 2024. And they started to move that up until 2023. But I think of the delta variant coming, they've now settled back about 2024. But a lot of our businesses and platforms receive monies and business from the hospital industry. So as it recovers, so will those businesses. So in your mind, just think about the general recovery of the industry back to these 2024 levels. But at the lower left, you can see about growing assets under management. We've got $6 billion, $7 billion worth of assets under management in these 2 publicly traded platforms, and we're looking to grow those platforms to have other hospitality-related platforms and then perhaps even other real estate types platforms over the longer term. And these are all opportunities for us to grow. And we will be raising for this year maybe a total of $1 billion worth of capital and are well on our way to having raised that. So the opportunities are fantastic for us to continue to raise capital and to expand our assets under management. We want to and will be growing our third-party businesses. We'll talk a little bit more about this as we go. But a couple of our businesses, Remington and Premier, the property manager and the renovation specialists and the like, had never pursued third-party business until just a year ago or so, 2 years ago. And then with COVID, that got put on hold. And so this past year has been our first beginnings of expanding those into third parties. And we've had some great, great successes with those already. And then the last there is service offerings. There's other related businesses that we continue to look at that can have our hotels in our publicly traded platforms to provide business to them. whether they be just total different business lines like we're looking at maybe some insurance businesses or some other similar type of businesses. or maybe bolt-ons to existing platforms. We can do some vertical integrations to the platforms that we have. So there's quite a few ways that we can continue to expand our service offerings to hotels, both ones that we operate and own and ones that we don't. So we've got a number of pads to growth here, and we're trying to exploit every single one of them. So one way to think about it on the left is our advisory business, and that's our advisory platforms. We have 2, and that's Braemar, very high-end hotels around the country, and then Ashford Hospitality Trust, which is select service and upper upscale type hotels around the country. And that's our advisory business, our advisory arm. And then the other column is contained of our operating platforms. And these are all of our related businesses that we've either grown internally or we purchased, and they provide services to these hotels and to third parties. And so we have the income streams, both from the advisory side of the business and then from these operating platforms in these individual companies. So on the advisory side, I think it's important to note how secure and stable that income stream is despite the fact being in the hospitality industry, which has shown some great volatility this past year, our fee income streams on the advisory side has been very stable. Our fee income for 2020 compared to 2019 was down 5%, which considering how far down the entire industry was, is remarkable, and that's how we have our business structured. And then this year, we'll be up. We've got a 70 basis points asset management fee or advisory fee, I should say, on our total market capitalization and notice that that's on the entire market cap, is just not on the equity portion of investment that we received from investors. We've got limits on how much a fee could drop in a year. We've got incentive fees on top of that based upon performance. And we've got -- I think what's very important for people to know is luck, down solid contracts that makes us be the long-term adviser for these public platforms. So the advisory platform is a very stable a solid piece of business for us and 1 that we continue to want to grow. And one way to think about it is this heuristic that we put together for every $100 million in AUM. And remember, it's not just the capital we take in, but this is coupled with any debt with the real estate we have. So it's a 50% leveraged portfolio. Then this would entail $50 million of equity capital that came in, plus $50 million of debt. But with that $50 million of equity capital coming in, we'll be able to grow our incremental revenues by about $1.6 million and then have additional EBITDA of about $1 million. And that's from both the advisory side and from these ancillary businesses, a lot of the big components from the advisory side. So as you look at our models and look at our growth prospects and you try to think about what you think our AUM is going to be, this is a good touristic in order to determine what you think our profitability related to that will be. And as far as the source of the capital for our assets under management, right now, all of it is in these 2 public platforms. and it's permanent capital. So once it raised it's raised. We don't have to have the capital back and with a long-term adviser and operator of that. We've started to work on what we call semi permanent capital, and that's with our Ashford Securities division. And this is where we hired Jay Steigerwald, who's been with us a little bit. He's here at the back, and he just did a fantastic job for W.P. Carey over the years, raising capital from these alternative market sources. And we want to raise that capital and have started raising that capital. And many times, that capital can ultimately be converted to permanent capital. And that's why I call it semi-permanent. We've launched our first vehicle. We are selling perpetual I'm sorry, we're selling preferred into the Braemar platform, and it's a $500 million raise. And we've just launched it, and we're raising about $1 million a week right now in these markets with retail investors. And so got to continue to grow. And the growth trajectory of these types of offerings is pretty low at first and then really starts to accelerate as you sign up more and more dealers. So we plan on have more offerings here. We've got a few in the pipeline that we want to launch, and they've liked all around to the strategies that we've talked about, either helping the existing platforms grow, launching new platforms helping fund some acquisitions and bolt-ons to our other businesses, but to help us expand even into different segments of real estate at some point. So we are launching the semi-permanent capital line. And then the far right column is something that we really haven't pursued very much recently, and that's just straight private capital from institutions and the like. And that's a model that a lot of our competitors have in the asset management of raising big funds from institutions the like. We did a lot of that before we were public, and just haven't done very much at all since we were public. That's another area that we're looking into about what size we think the market is and should we move into it and when we want to get our feet wet a little bit more with Ashford Securities and really build some great traction there. And then we're going to continue to look at maybe raising some private funds depending upon the opportunity. So this is what I was mentioning about Ashford Securities. It's in this alt space with the retail investors. It is a huge market that raises tens of billions of dollars a year. It has held up pretty strong even this past year and continue to do well. The product we're offering is this preferred security with Braemar, and it's being received very well. They're great-looking assets and the mom and pops out there would love to on security that it looks like that. So we're having great success there, and we've got a few others in the pipeline. So very excited about this potential to add even more assets under management for our pipeline. And a few of the larger companies out there have this ability, like Starwood and Blackstone, but not too many other financial sponsors have this avenue into this retail market. So moving over here to the operating platform. So these are these other types of businesses I was mentioning. What we like to do is to find a business that does business with the assets we have under management. So at this point, it's hotels. And we bought a few hotel-related businesses, like J&S Audio Visual, who's providing the audiovisual here today. They've recently rebranded and called themselves Inspire, and that happened just a couple of weeks ago. The CEO, Chuck Bauman, is here. And a great launch. I see everybody's wearing the Inspire gear in the back and ready to go. That's fantastic. But it's a major rebrand to move this forward. So what we do is we buy platforms like that at a good price, that's reasonably well managed. And then we divert all of the business from the assets we have under management to use this provider at market rates that immediately accelerates their business 10, 20, 30, 40, 50, sometimes 100%. So their EBITDA increases dramatically. And then we bring in professional management. A lot of these are smaller mom and pop type businesses. And Chuck, for example, ran sales for Encore, which became one of the largest providers in this space, absolutely enormous. And now he's come in to be our CEO. So to have someone of his caliber and his ability for this platform, it's going to give us great, great growth, and we've already seen it. And so that last portion of the slide there talks about how once we plugged in all of our existing hotel assets into this new service provider we purchased then we really focus on expanding the third-party business with much more professional management, better margins, much more efficient service, you name it. And so we've been able to do that with now Inspire and these other platforms that we purchased. So it's a great model. It's a way to buy something at a very reasonable EBITDA multiple and then be able to plug into our platform and give it a whole bunch of extra business and then to really grow it based upon just better management and all of our industry relationships gets us into the offices of a whole lot of people throughout this industry to expand it. So great success in growing all those. We issued some guidance last year, or I should say, earlier in the year because we wanted to provide some clarity to our investors because with COVID happening and all the terminal in the industry, people we felt needed that. And so we're still climbing out of that, and so we want to be a little cautious. So we gave guidance for 3 years out, 2023 and for 2025. And what this slide here is, it's an update on that guidance. We projected that we thought that in 2023, our EBITDA would be $55 million, in 2025 would be $85 million. And you can see we've upped both those up a little bit because we're seeing success coming in faster and better than we thought. So we are hopeful that this trend will continue, that we'll be able to hit this guidance and even exceed this guidance. But obviously, we're still bullish and excited about what we'll be able to achieve. But these are significant increases over what we've achieved in this past year. And another slide will show a little bit of breakdown, but we're still very bullish and very excited about where we are going as a platform. So this is that breakdown I was talking about. So another way to think about it is if you look at our base business, so strip away the third-party business and everything else, just look at the business from our assets under management, kind of our existing shell. The pro forma business was $62 million in 2019. And we think in 2025, just with the industry recovery, nothing else, we'll be at $54 million. And the reason it's lower is because one of the platforms, Ashford Trust, had to hand back some assets, handed back about a dozen hotels to the lenders. So that's less of a fee source for the platforms. And we also had a surge in 2017, '18 and '19 that we don't think we'll see that as much surge in 2025. And we're also a little conservative that we assume that our expenses grow, but we just got the revenues back to 2019 levels in 2024, a little growth in 2025. So think about just status quo with the existing assets. We're going to go from $62 million to $54 million. And on top of that, you can see where we've added the business. And the first is for additional assets under management. That's assuming that asset managed under management grows at about 5% per year, $350 million per year. I mentioned we've already raised or will raise approximately $1 billion this year. That's not a perfect match in that we'll use some of that money to deleverage. But it still seems imminently reasonable. And I think that if we raise our guidance in the future, it will be around assets under management because we're having great, great success in raising a good amount of capital and then deploying it. So if you just take our existing businesses and we have 5% per year growth in assets under management, that will give us $12 million more in EBITDA. And if you use the math that I use a little bit earlier about how it translates to assets under management, that's about $1.2 billion, $12 billion of EBITDA, about $1.2 billion, which is about the increase in assets that 5% per year would give us for 5 years. So that's where that number comes from, so that you can understand why we have the forecast numbers that we do. And then these other 2 platforms, Robinson and Premier, we've had no third-party business there when we acquired the platforms but have been growing it. And we've got a couple of leaders. Sloan, who's the CEO of Remington, is not here with us today. But Hector Sanches, the Head of and CEO of Premier, is here that you can visit with. And they've both done fantastic jobs of building business. And the amount of third-party business that we've seen come in has really been fantastic, especially considering the environment that we're in. Sloan has had great relationships in the industry, and he's signing up new management contracts right and left and Hector actually came up from outside of the industry. And then on top of that, no one in the hotel industry is doing any CapEx jobs now. So he pivoted, and we're getting some great business lined up for multifamily providers and from student housing. So really expanding the service offerings to these other sectors. And then we fully expect to get a lot more hospitality business as the industry recovers. So that's growing. Fantastically, very happy about that. And then our RED platform, that's something that is our water sports platform and experiential platform. Chris Basser, is CEOs here as well. And they've had great success, especially this past year where a lot of people went to these domestic destinations and the business has just really moved up very, very strongly. We're blowing our numbers away in that platform for this year and having great success in signing up other hotels to offer our services to in other locations in the Caribbean. Just signed up a deal with Evertz Carlton in Turks and Caicos. The business there is going very, very well. And that only doesn't receive business from the hotel, but from anybody else in the market that wants these types of water sports and recreation and the like. And so it continues to grow very well. And then Inspire, the former JSAV, is also continuing to grow. That's a business that has 2 components. It's both for hotels and doing what they're doing here today, but then also a division called Show Services, where many times the company will want to put on even some place in outdoor arena or someone else that just wants onetime events. And we've made great strides into both those segments. And so we believe that the EBITDA from those platforms will be at about those levels increases by then. So that gives you an idea of where our growth will be coming from. And we'll try to answer as much about that detail about that as we can going forward. But that's kind of the general idea of where we are and where we're going. So in summary, I want to emphasize these 4 areas that we've gotten. And that's the natural recovery of the hotel industry, which we're starting to see. It's been business travel and group that have not performed very well. Leisure is at or above prior year's levels. So that's doing well. But the group, especially is starting to come back, albeit slowly, and in corporate travel. And then we've got these other ways of growing, which is growing our assets under management. I talked about the growth we've seen already. We've got other sectors we're looking at getting into as well, either by acquisition or by growing them. We've got our third-party businesses that I just mentioned that continue to do well just from third-party growth and also from the assets under management. And then to expand our service offerings, where we buy another similarly type company that comes alongside our property management company, our renovation company and on down the line that provides services to the hotels that are in our asset management buckets and to other real estate types as we expand into them. So we see the next few years is very strong for us and a great recovery out of what was a difficult time. We've got a great team, some great folks that lead him, and we're in great shape. So with that, I want to hand the platform over to our President and COO, Jeremy Welter, who's done a fantastic job leading the organization through these very difficult times, and he's going to go into a little more detail with a few of these platforms. Jeremy?

Thank you, Monty. I'm going to spend a little bit more time going into the details on our operating platform. And as Monty mentioned, one of the strategic focuses we have is this new initiative of Ashford Securities. Ashford Securities is our own proprietary capital raising broker-dealer. It was something we created right before COVID. We're ready to go out and launch it and raise capital, and we had an asset during COVID. But it's an important part of our strategy because we are excited to grow our assets under management, and this is a space that is resilient. During all times of the cycle, there's a significant amount of capital is raised in the alternative investment space. And if we just get a small percentage of that capital, it will be very meaningful to our business. We've created a first-class team here that we've recruited. Jay Steigerwald has really done a fantastic job. And I can tell you that he's very, very bullish on the outlook for Ashford Securities, the amount of capital that he believes he can raise for us. And he's raised $7 billion plus of capital in his career. So he's very accomplished, and we're in the midst of our first raise, and we plan to launch additional offerings and additional types of securities to continue to grow our assets under management. So with that, let's start with the Ashford Securities video, please. [Presentation]

As Monty mentioned, those pictures sell well. We've got the best publicly traded portfolio in lodging, which is Braemar. So amazing assets. And it has been very well received by the retail investment committee. So we're going to go through the rest of the bigger operating platforms. We've got videos for each one that I'm going to talk about. . But just to touch on Ashford Securities very quickly, is that, that is one that we incubated. So we created that platform. And when we mentioned there's multiple ways that we deal with our operating platforms and sometimes we create them. Sometimes, we buy them and then add our business to the platform to accelerate the growth. And we'll walk through each one of these platforms like a little bit more detail about it. But one of the things about our platform is I think we've got an exceptional group of companies. It really is. And we've got a fantastic company with great strategies on how to grow and we're executing upon those strategies. And the underlying theme that is common across all of these companies is that we have some of the best of the best running the companies. We've got incredible, incredible CEOs and bench strength at each one of these operating businesses. And if you give the chance during cocktails, some of the CEOs are here. We can't get all of them here from our portfolio companies. And I think it would be great for you guys to meet them because I think I'll be very, very impressed with the caliber of folks that we have within our business. And I do think that, that's one of the things that we pride ourselves at Ashford is attracting some of the best talent and then developing that talent and then retaining it over time. And so we've got great tenure across our team and it's still a relatively young management team. And so we're very, very excited about what we're doing. So we'll talk first on Premier. Premier is a business we bought in 2018. And Premier is -- basically, it's a design, fully integrated design construction company it's unique in that a lot of its competitors are a design firm or an architecture firm or even a purchasing firm. project management as well is typically separate. Premier does all of those services. And so owners can come to us and ask us to renovate their hotel and they can deal with one counter-party. In addition, all of these services stand on their own, and we have gotten contracts where we just do architecture or we just do interior design. And so we have the ability to flex individually at each one of these services. But it is a really unique competitive advantage for us because when we go out and acquire hotels within our REITs, a lot of buyers, the big unknown is how much CapEx you have to put in? What's it going to cost? How long is it going to take? And we can price out CapEx as good as any other organization because we have our own team that does CapEx, and that's all that they do. And Premier has won a lot of awards with the major stay brands. And so they're approved to do a lot of work at stay brands. They've done a fantastic job at the Ritz-Carlton and St. Thomas, if you want to go visit that property. That was all designed by Premier, and it's done in our corporate office in Dallas. And it's just phenomenal, some of the case studies we have and some of the pictures that I can show you of the work they've done. And Marriott has recognized us 3x individually on our design. So we're very, very excited about Premier. And what I like about this business is great cash flow. It's -- we don't have to -- when I'm spending CapEx to the best of the business, it's just a high-margin fee-based business. And for the first time, once we acquired it in 2018, we had to switch out some of the management. We brought in a new CEO, and we commercialized that business to take it to a third-party basis. So Premier historically only did work for Ashford Hospitality Trust,and Braemar. And for the first time, we decided, let's commercialize it and sell it out to other ownership groups. And we've been reasonably successful launching that. We launched that in 2020 and actually signed our first contract in March of 2020, which was the bottom of the hospitality industry. You know what the stock market was doing, but we were able to launch our first or sign our first contract. And we're up to 27 contracts now at Premier. And we've got a robust pipeline. We're very, very excited about the growth that we anticipate that we'll be able to achieve. So with that, we'll go into the Premier video. [Presentation]

So hopefully, you got a taste of the renovation, the quality of the renovations by some of those pictures, the quality of design. And one thing that also I want to point out on Premier before we move on is that we recently expanded into student housing and multifamily. And when you look at the hospitality industry, it could be cyclical on CapEx, and it is a much smaller form of real estate than certainly multifamily. So by us getting into those other industries and other forms of real estate, it expands our total potential market that we can get market share in pretty dramatically. And we have gotten a decent amount of business in multifamily. I think a good amount of those contracts, on the 27 contracts are multifamily. And the way we got our first 1 was actually interesting. There was a guest that owned a high-end multifamily complex in Southern California. She stayed at Ritz-Carlton, St. Thomas. She was impressed with the design. So she asked Ritz-Carlton who did the design, and they led her to Premier. And when you think about the demographics of multifamily, you've got younger groups, younger individuals that are moving into a single-family home much later in line. They're staying in apartment complexes much longer, but they're wealthy. And they're getting married later in life. And they don't want the hassle of a single-family home. And so because of their wealth and because of their preferences, they want that cutting-edge design in multifamily. They want their public space to be activated. And those are all things that are very new. And what I can tell you is that there's no design team that exists, it's more cutting edge than just in the hospitality vertical itself. I mean hospitality is forward thinking and design much more so than other forms of real estate. And that's why we're getting a good amount of business in multifamily so far. Moving on to Remington. Remington is a business we acquired in 2019, and we did that in the fourth quarter of 2019. And then just after that, COVID hit. But this was an affiliate of ours. So this is a business that we've known very well. In fact, I formerly was the Chief Financial Officer of Remington in a previous life. And what I can tell you is that Remington is an incredible asset to us. They do a great job managing our hotels. We've got tons of case studies. You'll hear some of them today at Ashford Hospitality Trust and Braemar about how we can take a hotel that's managed by someone else and just put Remington in and improve the performance pretty significantly, both from a top line and from an operational cost perspective. And they were very, very quick to respond during COVID, as Deric mentioned, it was crazy how fast they responded and how aggressively they responded. But this is another good fee-based service provider. So there's no CapEx that we have to do to invest in the business. We've got good cash flow at Remington. And we just recently did the same thing we did with Premier, which is in 2020, we launched our third-party effort. And we haven't looked to grow Remington before from a third-party perspective. They just do business with Trust and Braemar. And we've had a good amount of success for. 11 new third-party contracts that are signed, then we've got another 5 or so that are verbally awarded that are in process of being contracted. So I'm very excited about the growth prospects at Remington, both within our existing portfolios as we acquire more assets as we have some of our existing assets that maybe have management that becomes available and then our ability to go out and work with other ownership groups because our operating performance at Remington is the top of the top amongst its peers. And they are now sit as the ninth largest hotel property management company. One other thing that we can do to continue to grow is invest a little bit of money to get business, okay? So it would be in the form of maybe key money with third-party owners or sliver equity where we own maybe 5% of the hotel. And the unlevered returns on that investment is typically north of 30%. And a lot of times as high as 70%, 80% in terms of an unlevered return on our capital for that. And so there are ways to accelerate the growth with a little bit of capital, and we're doing that some at Remington as well. So let's go to the video for Remington. [Presentation]

That's Remington. Now we're going to move on to RED. RED is a unique company. It's one that if you went back to the clock maybe 5, 6 years ago and said, "Jeremy, do you think you'll have your own boating company?" I would have looked at you and thought, "What are you talking about?" But it is probably one of the most fun parts of our business. It's a company that came about when we acquired the Ritz-Carlton and St. Thomas, and they were a vendor for Ritz-Carlton. And so they provided concierge services as well as boating services. They manage the nonmotorized boating, which would be like kayaks the guests would use or snorkel gear that guests would use. And so it was a company that Ritz-Carlton had outsourced some of the components, including, like I said, the concierge, which is a very important guest facing part of the hotel. And it's very uncommon for Ritz-Carlton to outsource something like that because they want to have control of the guest. But RED just did a great job that they were able to get Ritz-Carlton to allow them to run the concierge services. So their core business is what we call destination services. So when a guest goes to a market or resort market, RED is there to help facilitate a great experience while they're staying at the resort. And their primary way to do that is through water sports and boating. And so when we bought RED, we were actually under a contract to buy the company. It was a little bit bigger than ultimately what we ended up because it got hit by Hurricane Irma, Hurricane Maria. Those are 2 Category 5 hurricanes and it basically wiped out RED's business. They were down to 1 boat. And so we bought RED, they were done on 1 boat. And we worked together with our CEO there, Chris Batchelor, and rebuilt that business. And I think we rebuilt it much, much better, stronger and is much bigger now. And so we're at 20 boats that we own. These are typically nice, high-end catamarans or other types of vessels. And we provide incredible destination experiences out of the water. And we're not only in the U.S. Virgin Islands, we're now in Key West. And within Key West, we got in that market and started to expand down the keys. And we also entered into Turks and Caicos recently, and that was another Ritz-Carlton contract, but it was by an ownership group that's unaffiliated with us. And so they sought to have this type of experience because Ritz-Carlton recommended it because they knew what we did at St. Thomas. So that partnership with Rich, I think is an opportunity for us to continue to expand. But this business is great cash flow, okay? So 2020, we thought we'd do about $4 million in cash flow, pre-COVID. This year, we're -- the business is on fire. It's the best performance of all our businesses because there is a lot of pent-up demand that you're seeing in leisure. And so we anticipate there are going to be about $6 million of EBITDA for this year, and we do plan to build upon that. We've got a good pipeline of acquisition opportunities with RED. And when we acquire a business, we typically buy it unlevered returns at 30%. And so there's great returns on invested capital for this business, and we have a great plan where we plan to take advantage of a very fragmented market and roll up some of the smaller companies and put in our best practices, which are great revenue strategies for e-commerce strategies. We've got great procedures from a safety perspective. and from a guest experience perspective. So I'm very excited about what we have with RED. [Presentation]

So if anyone is looking to do a due diligence trip in Key West or U.S. Virgin Islands, I can make a very special trip and itinerary for you guys. It's a great business, and we've proven that we can grow it and we're very excited to continue to bolt on. This next one here is Inspire, formerly known as JSAV. JSAV Inspire is, I think, the poster child of our business model. It's a great example of what we can do as we buy new service companies. So we -- I looked at wanting to buy an audiovisual service company because we were really happy with the services we had in our existing hotels. And so we wanted to take more control over it. The only way we thought we could do it is actually buy someone. And so we went in canvas the market to try to find the best AV company that we could find. And coincidentally, we found a company in Dallas that we didn't even know about. They're right in our backyard. And they built up a nice business. They had, I think, about 50 hotels and had done a great job building that business, but they did all from Word. There was no real sales team, no sales effort. It was a father-son business. And so we entered in to acquire that business. And when we bought it, it was just north of $4 million of EBITDA, and that was the fourth quarter of 2017, so call it, beginning 2018, about $4 million run rate, maybe a little bit more. And then in 2020 and 2 years later, we were on pace basically to more than triple the profitability of that organization. And we did that through acquiring or changing out the management team. We brought in a new management team, and we've got a great team there. But we also added all of our hotels because we didn't have any hotels that contracted with Inspire. And so we added our hotels to the extent that we could. Some hotels are not big enough to have an outsourced AV provider. But that's how we were able to grow so significantly. And I think it is a great example of what we can do. Now this business was the most impacted during the pandemic. There weren't a lot of beans, there run a lot of events as you understand. But we're seeing it come back much more aggressively than I would have thought. Every week, we're seeing the pipeline grow in terms of new sales. So we do expect the business to come back, and we are very excited about it because we're up to now 100 hotels that we've got. We've actually grown the company during the pandemic, picked up some new third-party contracts as well. And I think Inspire is very uniquely positioned because there's basically 1 massively large player that's probably everybody else up and then you have Inspire, which is clearly the second largest in hospitality AV, but they're a big distance from the #1 competitor. And I do believe that we'll continue to get more shelf space with the brands as a they currently only have 1 contract that they've got with the existing provider and there's an opportunity for us to contract with the brand and be an offering for them as well. So with that, we'll go to Inspire. [Presentation]

So moving on to OpenKey just our last company we're going to highlight. This is a company that we incubated. So we created it from scratch. It was Monty's idea. He was the brainchild behind this, that having this opportunity to basically have your phone act as a mobile key. And we did it in an open source solution where we basically can work with any lock, any PMS system. And so we have an offering that is really attractive to the independents, as well as they picked up a couple of contracts where they're the exclusive provider for Four Seasons. So we're rolling out OpenKey globally throughout Four seasons as well as another major stay brand that we've signed up a contract as well for. So we're seeing a lot of growth. I think we're probably too early in mobile key. The hotel industry kind of lags adoption of technology. But certainly, during COVID, it's accelerated the growth as the consumer wants to have a contactless check-in. Sorry. We'll go back to the video here. [Presentation]

One last slide, but we'll just go -- we can move into Q&A. I think we'll go into Q&A right now. But point being we're very excited about what we're doing. I bought a lot of stock during the pandemic because I really believe in the story. We definitely are confident that there's a lot of growth that we've got, and we've got an incredible team and incredible collection of companies.

Yes. So we've got a few minutes for questions, and there's a couple of microphones floating around the room. So if you've got a question, I think back in the corner.

I stayed at a Hilton recently where a guest used that contactless system with his phone to check in, hit -- avoid hitting the elevator button, avoid having a key to get to his room. What's the competition like? I mean I know this you guys, but how many other companies are in that space?

There's not many. Hilton has their own proprietary system that they developed. And it's not available in as many Hiltons as they would like because it requires certain upgrades to the rest of their systems. But they've got their own system. Not anyone else has that. They rely on third-parties. And as far as third-parties goes, we are the dominant provider by far. There's a few other small ones around the world. But I haven't looked at the numbers in the past few months, but we're bigger than probably all the rest of them combined, times 2 or so. So we continue to encourage the brands to sign up with us instead of developing their own product like Hilton did. And we've had some successes as was mentioned earlier. So that's what we're going to continue to do.

And what would you say would be the percentage of use currently? Is it less than 10% of guests using this?

It's about -- it's less than 10%. But at those hotels where it's installed, like in the Hilton's installed, that's been about the usage level, it has increased though from that because of COVID. It continues to increase. It's not a big part of the usage for the guests, but it's growing, and it grows every year.

Any other questions?

Yes, right here.

Tyler Batory from Janney. A couple of questions for me. And first, in terms of the recovery just broadly in terms of hospitality in your businesses, just how are you thinking about the progression in terms of which one of those hospitality businesses kind of starts to return to normal first? Any change over the past couple of months in terms of what you're seeing out there that might have influenced how you're thinking about that versus how you were a couple of months ago?

You're talking about our businesses? Yes. So the fastest rebound, clearly, RED. They rebounded very quickly and they're surpassing anyone's expectations this year. I think that the one that's going to take the longest is going to be Inspire. But I have been surprised with the amount of growth we've had and the recovery that we've had within that platform as well. Remington just kind of -- is going to go, as revenues go up, their fees are going to continue to go up. And there's not a lot of incremental costs that we need to add. And so I'd say the second one that's kind of in the middle is Premier just because we're just starting that third-party effort. And there is going to be some deferral of CapEx still that we're facing with in the hospitality industry is owners have been cash strapped.

And with the Premier, there's a decent lead time that you don't see in the other businesses. That just takes a while to ramp up.

And then clearly, growing the third-party side of things is a key part of the strategy. Just interested in terms of the competitive dynamics out there, if there's more distress or sort of disruption that's perhaps making that opportunity more attractive now than it was pre-COVID days.

Yes. I think that exists a little bit. There's not a time -- the property management companies have been able to survive. So there's a few that maybe we might be able to bolt on and acquire. In the audio digital space, probably more so. But there hasn't been a lot of changeover within the contracts because GMs are really focused on getting their hotels up and running. The last thing they've been focused on is changing out their AV provider. But I think there's an opportunity to take advantage of some of the smaller ones that didn't survive. But the rest of the competition, I think the design and construction companies have done fairly well as well as our -- the other operators within RED.

We got a couple of questions from online viewers. One is, you mentioned one of your growth strategies is to expand your service offerings. Can you provide any examples of what that might be?

Yes. I think that the one that I would like to do is F&B. It's something that within our industry. Traditionally, hotel operators do a terrible job at food and beverage. But if you have a great good beverage offering, it really can change the dynamic of the hotel. And so we're looking at efforts there. There's also the ability to potentially with a parking company, that we outsource a lot of our valet services to third-parties. So there's -- there are some other businesses that we could acquire, in addition to providing insurance or a captive insurance company, because we now are providing insurance for third-party owners, and we need to -- we think there's an opportunity to do a little bit of markup on that as well.

Another question from an online viewer is, what is the governance process that's followed when you sell your products and services companies into your advised REITs?

We've got committees that are set up, related party committees for each of the platforms, and they're made of independent directors. And I'm not on either committee and not involved in the process. And so Jeremy will present the situation, the opportunity. And then the independent committees, the RPT committees of the column will review it and approve it if appropriate.

Any other questions? Not one of them.

So the stock seems so cheap if you hit your targets and there's a way to take care of the preferred and there isn't too much equity dilution. And I was hoping you could comment on how should we as shareholders -- potential shareholders think about that just given it is a large amount of preferred stock that's in front of the equity and the market cap isn't so high. So if there's stock comp, we could get diluted.

I think you're looking at it the right way, and that's how we look at it. This past year, we didn't issue as many shares and options and the like as we've had in past years because of investors talking about it being too big compared to the market cap. So we limited to, I think, what was the number? Was it 5% to the outstanding?

Yes, let's say.

A little less than that. And unless something changes, that's what we continue to like to do. There is a lot of preferred. We've talked internally about what to do with that myself, and my family owned most of that preferred. And we kept looking at different ways to try and deal with it, but it could cause dilution to the common. It's just tough to deal with. Now the good thing is, is that they're -- compared to other creditors out there, my family is offering terms and dealing with it a lot better than they would get otherwise. Meaning, at this point in time, there's a fair reading of the documents that -- because only half has been paid that it should go into the penalty phase of paying 10% instead of 7%, and we're just saying, we're not going to go down that path. It's going to be still be 7% even though it accrues. But with these growth prospects, you're right, the stock is -- appears very, very cheap compared to these numbers. And I think the question that people have is that preferred and maybe the volatility around stock if we don't kind of grow out of it. If there's some other big pandemic, well, then all bets are off. But we feel very good about any reasonably normal operating environment that these numbers we put on the board are very, very solid. And then as the market cap grows, total market cap grows as compared to the preferreds, the -- here leverage is enormous for the stock. And we are very bullish and very excited about it. In fact, what we had to kind of do internally is I have to hold my guys off buying it themselves literally because we'll take it up on the float. There's not a lot of float to begin with. I don't want to take away any more float. But a number of us have doubled down and bought some more. So we're very bullish. In fact, a little bit surprised that it's trading where it's trading right now. But as the industry recovers, we hope that changes.

Yes. I'd add one more thing to that is that, yes, the capital structure is tough right now. But what it does for investors is create a great buying opportunity because we do believe that there's a tremendous amount of intrinsic value to the business that will be realized over time for the common equity shareholders.

I think we've got time for one more. There's one more question. Okay. We'll go ahead and break for 10 minutes to a quick coffee break. And we've also got a ton of Ashford gear out there. So please help yourself and take some Ashford gear with you before you leave, and we'll come back here in about 10 minutes. Thanks.

Thank you, everyone. Appreciate it. [Break]

[Presentation]

Okay. We're going to move on to the next part of the presentation. So if I could ask you guys to take your seats, please. Okay. Great. Thank you all. So now I'd like to introduce Rob Hays. Rob is the President and CEO of Ashford Hospitality Trust, and he'll be talking about Ashford Hospitality Trust. So Rob, thanks.

All right. Good afternoon, everybody. Thank you for coming. I'm Rob Hays, the President and CEO of Ashford Hospitality Trust. I'm going to talk a little bit about the portfolio and what's going on. So this is our agenda. We'll talk about -- I'm going to walk through the portfolio a little bit. And then I'm going to hand it over to Chris Nixon, who is one of our SVP of Asset Management, to talk a little bit more specifics about the assets. And there's a couple other of his team members that are going to go through some case studies of what's happening on the ground in our assets and some of the strategies that we're using in order to maximize value there. I'm going to talk a little bit about the future of growth, acquisition strategies, as we're pivoting at some point from dealing with a little more defensive position in the pandemic to going on the offense in the years to come. Spend a little bit of time talking about the balance sheet and our leverage strategy. And then I'll close with some thoughts on why is it a great time now to own Ashford Hospitality Trust. So let's start. So the simple question you've seen, a lot of different presentations about different companies, their strategies, what they do, what does AHT do? Well, the simple answer is we own assets like these. These are high-quality, institutional quality assets, predominantly full service, all across the United States. And they're everything from slightly more group-focused assets like the Marriott Crystal Gateway, that's right next to HQ2 in Crystal City, Virginia; to business traveler-type hotels, like the Hilton Boston Back Bay or the Marriott or the W in Atlanta, Downtown; or leisure-focused hotels, like our La Concha asset in Key West; One Ocean in Jacksonville; La Posada de Santa Fe; or Lakeway down in Austin, Texas. So we've got kind of a little bit of everything all across the United States. That's what we do. We own an asset managed assets like these. So let's do a little bit of a deeper dive into the portfolio. The first thing to note is that we have scale. We own 100 hotels, which is one of the larger portfolios in the hotel REIT world, representing over 22,000 rooms in 28 states. So it is a portfolio of size and scale. #2 is that we have what we think are the best hotel brands. So if you look at the chart on the upper left hand corner, you can see that over 90% of our hotels are Marriott, Hilton and Hyatt branded, with the majority of those being Hilton and Marriott. We think these are the strongest brands out there. They are great partners. We think they drive the most revenue to our properties. Though we do have a smattering of some independents. But the core of what we do is partnering with these what we think best-in-class brands. After that, and third thing we do is focus on best-in-class managers. So you can see about 60% of our assets are managed by our affiliate, Remington. You got to see a little bit about them, the video that they put together. They're excellent at what they do and have a long track record of driving best-in-class revenues and profitability to our assets. But then we've also paired up with the brands themselves. They operate about 40% of our portfolio. So again, aligning ourselves with the best property managers out there. Fourth, we do have a full service focus. So whether you want to cut it by just simple full-service select service, where we're about 75% full service, or by chain scale. About 75% of our assets are full-service assets by EBITDA. These numbers are all based upon 2019 EBITDA, so pre-COVID, so that we can have some sort of normalized aspect. We also think that this upper upscale part is something -- or the full service aspect is really important as it has some great tailwinds behind us, both from a supply standpoint and a recovery standpoint. And that will be a slide that one of our members of the asset management team will cover as we get a little further into the presentation. Now diversity, geographic diversity. This is something that's very interesting. I'll say, on the heels of COVID, if you look, I guess, at the previous cycle, there was this big emphasis post the great financial crisis, post 9/11 to hyper focus on just a handful of markets, kind of top 5, top 7 markets. That's what institutional investors, Wall Street was telling most hotel REITs to do, just focus on top 5 markets. That was not a position that we took. We always thought, because of the nature of this business, it's a very volatile business, as we've got to experience, that there are great long-term assets and a lot of great markets. And so we've always had a widely diversified portfolio. What's -- and so that will continue. However, there are ways to put yourself in the path of growth. One thing that we think is very important are some of the broader demographic changes that are happening across the country, of which the pandemic obviously accelerated. So this is an interesting analysis that was done over the past several years by, I think, it's called North American Moving Company. So it was looking at where are we shipping people to, from. And so these states in red are places that were net movers of people and the green states where places where people are moving to. And so if you look across, we've looked at this top 17 markets across our portfolio, and you can see them listed here. 12 of them are in these growth markets. And so we're trying to put ourselves into the path of growth. That's not to say that, obviously, San Francisco and Los Angeles and Philadelphia and Boston, we think are great long-term markets. But we do have a focus of trying to play a broader demographic trends. So that's something that we have in our portfolio. And that's why it's been interesting, if you look at a lot of our peers, they have been net selling assets in some of the big urban markets and now buying assets in the markets where, frankly, we already have assets and have assets there already. So you're seeing a lot of our peers try to pivot to do something a little bit more similar to what we've been doing since our inception. We love the mix of our assets. So if you look at where we play, we do focus -- about 75% of our EBITDA historically has come from top 25 markets. And there are some real opportunities in these markets to participate in this recovery. And again, our asset management team will go into a little bit more of these details. But undoubtedly, these are the markets that were hit the hardest. Some of them have recovered, but they still have a long way to go. And so if you're looking for a way to participate in this recovery over the next 3 to 5 or longer years, top 25 markets is likely where you want to be, and that is a dominant part of our portfolio. We're also highly focused on more transient and leisure-focused business. So historically, our group business has been somewhere between 20% to 25% of our business, which is definitely lower than the vast majority of our peers in the hotel REIT space. This is something that we've always felt comfortable with. This is what happens when you're buying a broadly diversified group of assets as opposed to just focusing on maybe big, huge urban assets and just top 5, top 7 markets. So while we have some group exposure, it's materially less than the vast majority of our peers. And so -- and even when we deep dive into our transient business, most of that is also in the leisure space. So the way that this recovery is going to unfold is you're going to have leisure transient, which has been coming back, but still has a ways to go. Then you're going to see the business traveler come back. And then you'll see kind of smaller groups and then bigger groups. And so given that the bigger groups is probably several years out, if you're looking for a way to play this recovery, particularly over the next several years, the way that our portfolio is constructed is a very interesting way to play that. So let's talk a little bit about CapEx. Years ago, when you look at the great financial crisis, where you look at 9/11, there were several of our REIT peers that really put themselves into a bind by -- they hadn't invested in their assets going into a recession. And so what happens is then everyone stops their spending and your assets are tired. And then what happens is it takes several years before you can actually get your assets renovated. And so you completely miss the first several years of the recovery. And you underperform your comp sets, you underperform the industry. Well, that's not the case for us. So we spent a lot of time and a lot of money pre-COVID, obviously, not knowing exactly that this was going to happen, but fortunately, spent a lot of time renovating our assets, bringing them up to speed. And so you can look at the spend that we had, which was anywhere from 13% to 15%, which is more than you would spend over the long term. That number is probably closer to 8% to 10% of revenues over the long run. So 13% to 15% was something where we were really trying to ramp up. We've been buying assets, and a lot of them needed to be renovated and brought up to snuff. So we, in some sense, overinvested in our assets, fortunately, right before COVID. And so our assets are in great positions, which is also nice they haven't really been used much in the past 18 months. So there's not been a lot of wear and tear. So they're in the same great shape that they were 18 months or 2 years ago. But you can look at what we're anticipating from a CapEx spend is that it's going to ramp up, but not anywhere to levels before. So I think we've given guidance this year that CapEx is probably going to end somewhere between $40 million and $50 million. It will likely be a little bit higher next year. We'll probably, as we get closer to the year, give official guidance, but it will likely be plus or minus around $75 million. And it will be probably over $100 million in 2023. So again, those are still being finalized. But you can see there is going to be a ramp up of CapEx. A lot of them are with -- associated with PIPs or repositionings. We do have several assets that are independent, that are going into the autograph collection or tribute collection as well. So we've got some really cool repositionings and rebrandings that we're going to be doing in the next couple of years. All right. In terms of asset management, I do want to bring up our SVP of Asset Management, Chris Nixon, to give you -- one of the things that we're doing today is giving a little bit of little inside baseball on a little stories about the people that we work with. So Chris Nixon is our resident baseball guy. He's married, got 2 kids. And when he's not asset managing hotels, he is asset managing his little league baseball teams with his son and daughter. I think they did well this weekend. They had a good tournament. He said they want to turn it this weekend, so he's a great baseball coach. And he has this interesting thing where every year, he and his family go to a different Major League baseball stadium for opening day. So they travel, doing that baseball trips. So it's kind of cool. So Chris and several members team are going to give an update on some of our properties. And then I'll come back for the next part of it. So Chris Nixon and everybody.

Thank you, Rob. You've all heard throughout the day about some of the competitive advantages that exist within our platform. And with the asset management team, it really starts with our structure. Our structure is unlike anyone else in the industry. If you look at our peers and their asset management department, they are either largely or exclusively staffed by asset managers. And these asset managers are expected to be a jack of all trades and a master of none. And they're left on their own to optimize all areas within a hotel. Where we're unique is that we've got a team of very talented asset managers. And then we support them with discipline-specific experts that are the brightest within their respective fields, that know the ins and outs of detailed nuances of their areas and can drive value that way. It allows us to get more granular when we're assessing a hotel performance when we're trying to find efficiencies and opportunities to drive incremental value. It also frees up our asset managers so then they can focus on hotel operations. They can focus on cost. They can focus on labor and staffing models and finding efficiencies within the operation itself. We think it's a huge competitive advantage for us, but really it's the results that speak for themselves. And so when you look at our performance at Ashford Trust versus our peers, from a RevPAR perspective, we've outperformed them 7 of the last 8 years. This is something we are extremely proud of. It's impossible to grow RevPAR market share into perpetuity. Every year you grow or you outperform your peers, it becomes exponentially harder to grow the next year. And so 7 of 8 years is really unheard of within the industry, but something that we're very proud of. We have a robust revenue optimization team, and they're tasked with optimizing all revenue streams. They oversee everything commercial, from sales strategies, revenue management, digital optimization, websites, marketing, you name it, they're experts. And they're challenging the hotels and the brands that manage our hotels where third-party managers are at a very granular level. Now some of the feedback you all provided us during our last Investor Day is you really liked hearing from some of our asset management team members. And so we're going to do that, as Rob said, this year. We're going to introduce some of our team members to come up. They're the ones that are really the boots on the ground. They're driving the results. They're doing these amazing things so that we can come here and tell you guys the story. And so we thought it would be great if you could hear from them directly. I'm going to introduce Tom Finan. Tom is originally from Iowa. He now lives with his Fiance in Dallas, Texas. He's slated to get married on January 1, 2022. So only a couple of months away. He's an avid basketball player. And in addition to overseeing a number of strategic initiatives across our portfolio, he oversees directly a couple of trusts, larger hotels, including the Ritz-Carlton Atlanta and W Atlanta hotels. So it's my pleasure to welcome to the stage Tom Finan.

Thank you, Chris. I think I'm the first one talking into the microphone, so if you can't hear me, please let me know. The first hotel I'm going to talk about is the La Posada in Santa Fe, which we acquired back in 2019. So a really unique property. It's set on 6 acres right in downtown Santa Fe. The original building was actually built in 1881, and it was a primary resident, and that is now where the famous Stab House Bar is located on the property. Checked the ton of boxes for us during the diligence process. It's the only full-service Marriott product in Santa Fe. So it's a really great market position. We already owned the Hilton in Santa Fe, which is located less than a mile away and managed by Remington as well. Super bullish on the leisure demand in that market. And we believe there was a lot of untapped upside from a corporate and group perspective which we thought we could capitalize on for midweek occupancy. Post acquisition, we recognized a lot of opportunities and kind of hit the ground running. We optimized pricing strategies, which helped us shift from discount to a more retail focus. We mentioned the corporate and group demand we captured, which drove midweek demand. And we also -- how to focus on ancillary revenues as well. So resort fee capture was a big opportunity at this hotel, and the asset management team did a great job of driving that at the hotel. We were also able to decrease staffing costs by $350,000 annually. And so part of this was a reduction of unnecessary positions, but it was also consolidating positions with that Hilton Santa Fe. So Jeremy talked about bringing in Remington to take over operations at hotels. This is a great case study for that. And we're able to see some synergies with that Hilton in Santa Fe. So within 12 months, these initiatives led us to grow in RevPAR over 13% and it grew hotel EBITDA over 30%, which we estimate added $12 million in asset value in just such a short amount of time. So just a really great story from an acquisition standpoint. Next hotel is the Marriott DFW. Again, this is another opportunity where we brought Remington in. This was previously managed by Marriott. So another great case study for Remington. The Ashford family of companies knows this hotel really well. We do a lot of corporate meetings here. Inspire does a great job with the AV operations at this hotel, which we certainly appreciate. So in 2017, as I mentioned, we made a couple of decisions. The first was to transition the property to be managed by Remington. As part of that, we brought in a new GM, and he's actually now progressed. He's a Divisional Operation -- Divisional Vice President of Operations at Remington. We also performed a significant renovation where we touched every single part of the hotel. And typically, when we do a significant renovation like this, we're talking about mitigating, displacement and what we did to keep the operations where they were. Amazingly, this hotel grew RevPAR 5.8%, it increased its RevPAR index 2.4% and had an EBITDA flow-through of 119%. This is all during a renovation where every single part of the hotel was touched. So great job by multiple facets of the company, Remington taking over the operations, and Premier with the renovation where we did minimize that displacement and we're able to grow results during what would normally be a really difficult period. And then kind of at the end of this, from 2017 to 2019, we realized a 21% increase in EBITDA. All right. So Renaissance Nashville, we were just there for our off-site, which was a great time. So it's located right in the heart of downtown Nashville. It's walking distance to Broadway, the major kind of leisure destination where you're going to hear the best live music you've ever heard. It's right around the corner from the Ryman Auditorium, which -- it used to be the -- it was the original site of the Grand Ole Opry. It's also a walking distance to Bridgestone Arena, where the Predators play. Before I jump into the case study itself, I want to highlight the financial performance of this hotel. From 2011 to 2019, we grew revenue 84%. And during that same time period, hotel EBITDA grew to 15% CAGR. So you're going to hear from the asset manager, Liz Lloyd, later. But she's just done a phenomenal job alongside the revenue optimization team in supporting this hotel. And just a great story. We could spend probably 30 minutes on this hotel but I won't do that to everybody. So if we rewind all the way back to 2011, this hotel was connected to the convention center, and that was a main demand driver for the hotel. It's also on a ground lease with a $0.5 million payment annually. And we were allowed to use the junior ballroom and meeting space by paying market rates, which at a high point was a $960,000 payment. The city at the same time decided they were going to build the Music City Center, and the convention center was no longer going to be attached to the hotel. So we're in a pretty difficult spot. And the asset management team just was able to get a phenomenal result for this hotel, where we acquired a fee interest in the hotel and eliminated that $500,000 payment. We signed a lease to use that junior ballroom space and the meeting space so we no longer have to pay market rate for that. And we got the right to use the Exhibit Hall, which is 120,000 square feet, and we were named the exclusive F&B provider. Now that Exhibit Hall is now a 6-acre development called Fifth and Broadway, which has residential, retail, a cultural museum and a 385,000 square foot office tower, where AllianceBernstein is actually moving their headquarters right now. So that development really brought the heart of Nashville back to our doorstep, which -- it's just great from both a leisure perspective and then all the new corporate tenants coming into the city as well. Moving on to Lakeway Resort, which is outside of Austin, set right on Lake Travis. This is another one, population growth similar to Nashville has been pretty robust. From 2010 to 2020, population has grown 33% in Austin. So it's become a really popular staycation spot. From a top line perspective, we identified many opportunities that we thought were going to drive results. We implemented a new revenue management system and focused on direct marketing, which similar to La Posada, we are trying to shift away from a reliance on discount and bring it more to a retail focus. We also, similar to La Posada, had a renewed focus on driving ancillary and incremental revenue streams, similar resort fee capture increase. And we improved rates and retention of club memberships. We also increased the premium room inventory and implemented a robust upsell program to capitalize on that. All this, it led to the hotel growing RevPAR in 5 of 6 years and EBITDA margin in 6 in 6 years. So we're really bullish about the future of this property. It's been really strong in the last 18 months, as I mentioned, is a staycation location. And so just really bullish about the future. Last one I'll talk about is the Ritz-Carlton Atlanta, which Chris mentioned is in my portfolio. I want to talk about this hotel. I'd describe it, it's the luxury hotel in Downtown Atlanta. Most of the luxury product in that market is up in Buckhead. It's 20, 30 minutes from this hotel. So it's got a great market position, a strong name with Ritz-Carlton. There's a lot of corporate demand nearby. But also, it's walking distance to everything you would want to do from a leisure perspective in Atlanta, including the Mercedes-Benz Dome, Olympic Park, the Coca-Cola Museum, the Aquarium. So just really an A+ location. So going back to 2016, we did a reconcept and renovation of the restaurant. We added a couple of themed private dining rooms. And in that same year, it was announced that Atlanta was going to host the Super Bowl in 2019. We identified an opportunity to really transform the room product, adds some premium room inventory and a concierge club ahead of that Super Bowl. Premier did a tremendous job here. I've talked to folks that have stayed at this hotel before and after their renovation. They just say it's night and day. So hats off to Hector and his team, just really transformed the property. It was an $18 million renovation. And the year-over-year results in 2019 kind of speak for themselves. We saw a 13.9% revenue growth, an 8.8% AAR growth and EBITDA growth of 36.5%. And so more recently, this year, we actually renovated the ballroom. We're really excited about the growth opportunities from a group perspective in catering at this hotel coming out of COVID. And I think we're really going to be able to leverage that ballroom as a result. So I now have the pleasure of introducing Sunny Brewer, who's a member of our revenue optimization team, supports a multitude of hotels across both the Ashford and Braemar portfolios, including Renaissance Nashville. She's been with Ashford for over 3 years and has nearly 20 years of hospitality experience. She became a mom last year, and her son turns 1 this Thursday. And she's also the dog mother to 2 rescue dogs. So she's not busy at all. Add that to she moved this week. So it's been a busy week for her. But I'd like to introduce us to Sunny Brewer.

Thank you, Tom, and good afternoon, everybody. It's a pleasure to be here with all of you today. Is it on? All right. So I'm thrilled to share the next case study with you. This is a strategic initiative that we rolled out at our Dallas Marriott market suite as a pilot to maximize parking revenue capture. We identified a ton of opportunity where we just weren't capturing those parking charges or we were waiving them. So we leverage the relationship we have with a preferred parking provider. And we were the first hotel in the nation to install cutting-edge technology to automate and streamline the parking fee charges. So as you can see, the results were wildly successful, with a 900% increase in revenue over the same time in 2019 and at a lower occupancy. So we have plans to roll this out at over 20 Ashford hotels in the next coming years. And we think that the upside just in the revenue and profitability is going to be phenomenal. In addition to driving significant ancillary revenue streams, our team has also been successful in delivering expense savings across the portfolio. One area I'm excited to highlight is our success in delivering property tax savings through a focused strategy to minimize tax burden. Chris highlighted, this really shows our in-house subject matter expertise in these disciplines, specifically in tax, which is a significant competitive advantage for us, and it not only sets us apart, but above our peers. With so much volatility in property values, we saw an opportunity to accelerate and be more aggressive with our appeals process. Through this focused initiative, we were able to realize over $4.3 million year-to-date in tax savings across the portfolio. This is up 16% year-over-year. This is yet just another example of how our unique our structure of our asset management team allows us to be the best in the business. Now looking forward, the Ashford Trust portfolio really is poised to outperform the market and the competition through the recovery. When you look at the chain scale class recovery, the high-end classes have yet to fully recover in occupancy relative to 2019. Looking at our portfolio, you can see that we have about 90% of all Ashford Trust rooms in the upscale and upper upscale class segments. As these segments recover, we estimate that there's significant upside. Isolating just the upper mid-scale in the luxury classes within the portfolio, we estimate roughly $30 million in revenue potential when these chain classes recover. As we've seen with leisure, the corporate and group segments have pent-up demand. People are ready to get back on the road and they're ready to meet in person like we are here today. It's also important to highlight that despite these chain scales lagging in the recovery, our teams and our hotel partners are delivering excellent top line results and market share performance is at an all-time high. There is also reduced pressure from new supply. Looking forward to the next 12 months, new supply in the Ashford Trust portfolio is only up 1.8%. And that's down 110 bps from where we were in the supply pipeline pre-COVID, February 2020. So not only is supply decelerating in our markets, new supply growth is also trailing national industry trends. Specifically, in the chain scales that we have the largest exposure with is the upscale and above chain classes, where that growth is expected to be between 2% to 4% over the next 12 months. And then when you look deeper at the stages of development, imminent keys are the keys that are likely to actualize that are in the pipeline. That is also declining. So that's down. Final planning and in construction is down 15% to where we were at pre-COVID level. Further, the actualization rates are lower than they've ever been and with an acceleration of deferred projects. So the facts are that there are real no headwinds for this portfolio. The fundamental relationship of the expected high-end chain scale demand recovery and the relatively low supply pipeline is a reason to be bullish about the recovery in the future of the Ashford Trust portfolio. As we've shown, we will not rest on our laurels. We will find innovative ways and be tenacious about driving additional revenue and profitability across each individual asset within this portfolio. And this is the reason why we should all be really excited about Ashford Trust. I'll now turn it back over to Chris Nixon.

Thank you, Sunny. Those are some really great case studies that highlight some of the really amazing things that our team has been able to do across the Ashford Trust portfolio. We're really proud of our team members. We're really proud of the work that we're doing. But as Sunny said, we're really excited about how the Ashford Trust portfolio is positioned going forward. So if you set our team aside for a second and you look at the chain scale placement in new supply and geography, there is a lot of runway for Ashford Trust ahead. Year-to-date through Q2, from a RevPAR perspective, Ashford Trust is outperforming its peer set. So we've had a great start to the year. But what we're really excited about is when we look ahead. Ashford Trust has more than half of its hotels in top 25 markets. That's compared to roughly 1/3 when you look across the hotel landscape for the total U.S. Why that's significant is , CBRE and Star are expecting those top 25 markets to perform exceptionally well next year. Those top 25 markets are expected to grow at 32% compared to only 13% of all other markets. So we've got half -- more than half of our hotels in markets that are expected to outperform and see over 30% growth. When you couple that with the talent that our team brings, our expertise, our structure, we couldn't be more excited about the outlook for the Ashford Hospitality Trust portfolio. I'm going to turn it over to CEO, Rob Hays.

So our friends in Inspire back here, they have a Chief Operating Officer that is a good friend of mine, who I've known for years, who was a Navy Seal, was a Navy Seal for 9 years. I feel like when I hear our asset management team talk, they're like the Navy Seals of asset management because they -- they're so focused and good at what they do and they're innovative and they make -- they're trying new things. I mean you saw that the parking case study is fascinating. And it's these sort of ideas that this team brings together, some of them are fairly hairbrained, and we blow them up, but most of them are really good. And it's really exciting to know that these are the people that are on the ground every day in our portfolio trying to drive value. And so it gets me excited to work with these people. They're really good at what they do. So let's talk a little bit about this recovery. So you heard about some of these tailwinds we think we have with us, from supply, from the chain scales that we participate in. We think there's a lot of opportunity. And it's hard sometimes to remember that, given the uncertainty that we do have here in the short term, when exactly are we getting back to 2019 levels? Is it 2023? Is it 2024? And this is, I think, data from Smith Travel and Jones Lang LaSalle, where somewhere in there, it's 2023, 2024 is most likely. But as -- if you go back and look to the last several cycles, what tends to happen is you get back to previous levels. And then you've got another 3 to 5 years that the cycle continues and elongates. And so this isn't a 2-year or 3-year or 4-year opportunity, this is an opportunity that can last 7 years, 8 years, 10 years. And I think that's the mentality that as we look to grow this platform and to grow our EBITDA, it's a 10-year, 8- to 10-year opportunity. So that's the mentality that we have, that everyone, I think, should have. So we obviously have been in a position as a company. It's been very difficult at times. We went through, frankly, a real time of distress last year. But it's a new year, and we've come a long way from that. And as we go through these last few months of uncertainty, as people come back to the office, as we get business travel coming back and groups starting to come back, is that we're going to be pivoting from a more defensive balance sheet repair perspective to going back on the offense, which is exciting, and be able to pull all of the levers that you've been hearing about and these teams of people that you've met, this is what they do. This is what we do to create value, and that's really exciting. So what is this going to look like for Ashford Trust when we make that pivot? Well, it's going to be fairly consistent with what we've got today, right? So it's going to be full-service assets predominantly. Right now, again, it's kind of 75% of our asset base now. And again, a continued focus on top 25 and some additional leisure markets. An example of that would be, for example, Santa Fe, where we bought the La Posada assets, so a great non-top 25 market. So assets similar in those sorts of markets, with the same brands that we mentioned, the Marriott, Hilton, Hyatt focused brands, with high exposure to transient business. Again, we -- our portfolio is never going to be a super group heavy company. I mean we do have a handful, a few boxes, a few assets that have large group houses. But that's not our bread and butter. It's going to be transient, business travel and leisure travel focused assets. And I think one other aspect that's interesting is really focusing on who we are buying assets from. We did an analysis looking over the long -- I guess, since our inception of, when we bought assets, who we bought assets from, what kind of assets, and which ones were the most profitable and created the most value. And what we found is that who we bought it from was almost as important as any other factor. And so you'll see us targeting certain types of sellers as we go through an acquisition process. So it's smaller owner operators, smaller funds, families, high net worth families, family-owned, newly developed assets, assets that have not been squeezed down by large private equity funds. It's typically what we found is that those guys are really good at getting numbers down to sell them off. And then you get in there and you find out that there was a bunch of things that you need to catch up on in terms of expenses or operating structure. So we're going to be very focused on who we're buying from. And so to get a sense and feel for what we're talking about is you should look at some of our recent acquisitions, this Hilton in Santa Cruz, the La Posada, the Hilton in Old Town Alexandria outside D.C. Those are the types of assets that we think we can come in, particularly with Remington, as a management company and really extract attractive assets -- extract attractive value from those assets. So let's talk a little bit about the balance sheet. So we have been, as you can imagine, laser focused on cash over the past 18 months. It's something where cash is precious and liquidity has been precious. And we went through a very difficult period of time last year trying to manage our cash. And so it's been very important for us to build up cash balances in order to withstand and deal with whatever the uncertainty is that may occur. Obviously, we had the -- we kind of bottomed out in the early spring. The recovery began. Everyone was getting very excited. Leisure travel was very strong this summer. And there were many people who thought, aha, here we go, this recovery is going straight to 2019. And then you have the Delta variant. And everyone -- it kind of stalled. Unfortunately, it's not really going backwards, but just kind of stalled. And we're hopeful that the recovery then takes hold, and we're off to the races, but we don't know. No one knows. And so we have to maintain at least some prudential decision-making in terms of how are we managing cash and how much cash do we keep. Well, as we sit here, I guess this is as of the second quarter, we have a substantive amount of cash on our balance sheet now in Ashford Trust, to the point where we actually have more cash than the market cap of our company. So if you look at the equity market cap of our company, it's plus or minus $500 million, well, we've got more than that on our balance sheet. So in some ways, you can buy us for the cash on our balance sheet and you get our hotels for free. But there's obviously a lot of cash needs that we are going to have over the next few years. And so those do include things like, we do need to pay off the strategic financing that we recently took. We are going to have to catch up our preferreds. We've got, what, maybe $20 million of preferred dividends that we'll need to pay off in order to get those current. We will have CapEx. I said not as much as we've had historically, but we will have some CapEx that we'll need to fund, of which much of it may be corporate cash because we've utilized a lot of FF&E reserves that normally would be there. And then we've got other extensions that are coming due. So we are very fortunate. As I'll talk in a second, we don't have too many significant final maturities coming up, but we do have extension tests start kicking in, in 2023 and 2024. And depending upon the trajectory of this recovery, those extensions, paydowns could be quite small or they can be somewhat sizable. It really depends. So we've got to have an eye on that, particularly given the fact that most of our assets are still in cash traps. And what we did in this presentation, at least in the back, is we have listed out for you all a lot more detail on exactly what those cash traps are in a portfolio on a pool-by-pool basis so you can take a look and get a sense and feel for what those are. But the reality is that it may be 12 to 24 months till many of our hotels are out of cash traps and we can utilize that cash at corporate. So in some sense, we have to have a mentality of the cash that we need over the next several years is going to have to come from our balance sheet. It's not going to be able to come from the properties. And so in terms of this maturity schedule, it is important to understand when our debt is coming due. And while we have more debt than I'd like and more debt than we have -- we'll have over the long term, we fortunately don't have any significant maturities coming up for the next 3 years. We have the Marriott Crystal Gateway, which comes due later this year, that we hopefully will be soon announcing a solution on that. But when you look over the next several years, it's not really until you get to 2024 and really 2025 where we've got a significant amount of maturities. But what you're going to see us do is address those head on early, right? So this is not something where we're going to be sitting here in 3 years, and I'm going to be up here talking about, we have $2.5 billion of debt due next year, right? So this is something where, as the debt markets heal and they are starting to heal, they're not anywhere back to where they were. But there's plenty of debt capital available from debt funds and other institutional investors. And the CMBS markets are just now starting to reopen. You started seeing some of the bigger deals happen, and those are getting better and better and more robust. So over the next several years, we'll start chipping away at those things and start refine pools of them. I think there's 11 pools -- 11 different pools in 2024 -- or 2025. So we'll be peeling those off and spreading out those maturities. And so we've got a plan in place to address those. So it's going to take some time, but we're very fortunate that we have a lot of runway to deal with throughout this recovery on our debt. Let's talk a little bit about our leverage strategy. So historically speaking, we've been focused on having about 60% to 65% net debt to gross assets. It has been the mantra that we had. That's what we had going into the financial crisis, and we did quite well. Obviously, this -- the level and depth of crisis has taught us new lessons. And frankly, that, that level of debt is probably not what it takes to have a sustainable balance sheet in this industry. And so while we haven't yet set a formal target yet, once we get a little further along through this pandemic and we regroup, we'll kind of try to set something more officially. But it's likely to be sub-50%, right? 40% to 50% is probably where we will end up. And so that's going to be a multistep process. That doesn't happen overnight. But there's a lot of tools that we have in order to get there, whether it's saving up the cash on our balance sheet, buying assets with little to low -- little to no leverage as a means of delevering. We obviously are going to have a lot of EBITDA growth over the next several years. And then we'll look to opportunistically sell some assets. We -- given some of the stipulations and terms and the rescue financing we did, it's difficult to sell assets right now, but it's something that as we potentially pay that off in the years to come and as we get closer to a make-whole date that's part of that, some asset sales become a more viable alternative. So we may sell some assets to the extent that we do. There are likely to be more limited service assets and our lower RevPAR full-service assets. That's probably what we'll be targeting. And we'll continue to try to reduce some of the perpetual preferreds that we've had. We've managed to reduce about 70% of them. We went into this crisis with $562 million of perpetual preferreds. About 70% of those have been converted to common equity. So we really repositioned that and removed a lot of those deferrals that we're building on those. And then as we do refinancings, you'll see us, as the debt markets get healthier, we'll be refinancing those at lower and lower levels. So thus far, over the past year and something, we've managed to delever by over $800 million, a substantive amount, but we still have a little bit more to go. But we've made good progress and obviously in a much better position from a leverage and liquidity standpoint. Floating rate debt. So we have historically been a floating rate debt company. And I imagine we'll continue to be a floating rate company. Typically, when you -- and there are several reasons. First of all is, your going in yields or rates on floating rate debt, 1 typically are lower than if you're doing a fixed rate longer term. Secondly, you get better flexibility in terms of extracting assets and dealing with the lenders. So it provides a lot of flexibility and particularly over the next several years as we're going to look to reposition the portfolio, sell some assets, maybe be a little bit more thoughtful on exactly how we pool some of these assets together. We've got a lot of really big pools of assets. I'm not sure that's a strategy that we want to have going forward. But we want to be very thoughtful and having that footer in debt allows us to a lot more flexibility. But the most important part is that it is a natural hedge to our cash flows. Hotel operating cash flows and short-term interest rates have a very strong related or correlated over time. And so you can see that what the drop in rates has done for us over the past couple of years as we've gone through COVID. It was very, very important. We had a 160 basis point drop, provided $55 million of annual interest expense savings. And that's a lot of cash that we saved even though we couldn't pay it and we had to negotiate with forbearances with all of our lenders, like that saved us a lot of money. Now you can see our interest rate kind of ticked up in the second quarter. That's because the nature of taking fairly expensive rescue financing dollars. So that's the cost of doing business with what we had. But the drop-in rates has saved us a lot of money through the years, and it's something that the flexibility that it provides is something that we'll continue to take advantage of. So a few closing thoughts. Reasons to own AHT. So I think the first one is there is an industry recovery going on. You've heard it being touched on in a variety of different ways. And it's a long industry recovery. This is not an 18-month play or a 2-month or 2-year play. It's a long play with a lot of time left. And it's going to be interesting because it's going to unfold as business travelers come back and then small groups and then bigger groups, and it's going to take some time for this to play. But as a result, there's a lot of attractive upside. There's a lot of EBITDA growth in the years to come, and this is a great way to participate in it. Secondly, this is a portfolio that you want to participate in, is that our -- the top 25 markets we played in, were hit hard. And while they've started to recover, there's a long way to go. And you're going to see the RevPAR growth focused in these upper chains. So these upscale, upper upscale luxury segments are going to do very, very well over the next few years, and the portfolio that we have is one, where over the next several years, because of the relatively low amount of group business we do, I think it's going to outperform relative to most of our peers, particularly on the heels of the quality of our asset management team. So third is that we've obviously done a lot of repairing of our balance sheet. It is a materially better position than it was. Our liquidity is materially different, and we obviously have taken the edge off the distress that we dealt with last year. So we're in a great position from a capital perspective. We have enough to withstand whatever vagaries may happen over the next few years and uncertainties, which gives us a lot of comfort that we'll be able to pivot hopefully soon from being a little bit more defensive and repairing to going on the offense and buying acquisitions. And obviously, we have more cash on our balance sheet right now than the entire equity market cap of the company. So there's clearly, we think, an opportunity for people to take an investment position because of that. And then lastly is we have, what we think, frankly, is the best team in terms of the team of extracting value out of our assets is, we think, second to none in terms of what we have at Remington, what we have in our asset management team and this kind of maybe CEO group over here of all of these different divisions. They are the best at what they do, and they make the jobs for us as a CEO much easier and they make it great because I know that these guys are focused and they are creative and they're extracting value where others couldn't see it. And then when you combine that with all of the other levers that we pull of the these people back in Inspire and the people at Pure and the people at OpenKey and all the very ancillary revenues is that they are the best in the business of what they do. And so at the end of the day, that leads to best-in-class cash production out of these assets. And so with that, I think it's time for Q&A.

Great. So again, we've got microphones coming around. So if there's any questions, feel free to raise your hand. We've got a few online that I'll go ahead and dive into. The first one, Rob, is when do you plan to bring your preferred dividends current and resume paying common dividends?

Good question. So again, so we've got about, what, $180-ish million of outstanding preferreds, which we haven't paid in almost 1.5 years. So the goal and our -- we're currently anticipating trying to make those current by the end of the year. So that's the game plan. It is important to us as that is one of the requirements for us to eventually get our S3 eligibility back, which there's a reason why, as we've raised capital over the past year, we've had to file S11 after S11. There's obviously better ways to do that, but -- and that's to have S3 eligibility, and so that's part of the process for that. So it's going to be likely later this year, but obviously, there's a lot of uncertainty between now and then, but that's the game plan.

Another online question is, with your stock price where it is, are there any plans to institute a stock buyback?

I wish. There's obviously a certain amount of restrictions that exist in our rescue financing that we did that don't allow that sort of, I guess, leakage. So it's not even really a strategic possibility until we're out from underneath that pacing.

Okay. Any questions from the audience? There's one. Yes, it's Brian.

Look, there's a lot of money out there that's been raised to buy hotel assets. We all know that. We saw Condor getting taken out by Blackstone. What would it take for you guys to sell some assets? And which in your portfolio do you think you could get the most bang for your buck for? I know you said select service, more likely than full service. Low RevPAR, full-service next. But I mean, are there a handful of properties that could really make a dent in your capital structure if you were to part with them?

Good question. So the answer is, I think, the bang for the buck is probably in some of the select service assets. They actually tended to be a little more higher levered than the rest of the pools in our -- in the company. So in terms of bang for your buck in terms of deleveraging, that's probably where the best -- where it is. And there are several very large funds out there that are pretty aggressively buying select service assets. There's several people really trying to do a big roll-up strategy of them. So I think that, in my dream world, is probably where I would go. The reality is that because of some of the terms of the financing that we have, the strategic kind of rescue financing, it makes it so that I've got to pay and we've got to pay a 2-year make-whole regardless. And any proceeds that we used to sell automatically go towards that. So to the extent that we think values are going up at all over the next, call it, 12 to 18 months, it would make sense to wait a little bit longer before you pull the trigger on that. So I think what you'll see us likely do is hold on to those for now and probably take a more serious look at some of those sometime later next year.

Any other questions? Anyone here? Anyone out here?

For the La Posada, you mentioned you were able to kind of consolidate some of the staffing. Just as kind of we've seen demand come back, what are you seeing in terms of labor cost or stocking needs relative to pre-pandemic?

Do you want to take that one?

Sure. Yes. It's a big disappointment after going through what we went through in COVID, where we had to close down a lot of our hotels and scrambled to cut costs as much as possible. And then to see the pent-up demand that exists in some of our properties, I think, a great example would be Nashville Renaissance that we opened up. And it just didn't really have a lot of demand, and all of a sudden, just all the leisure demand hit. And we had a ton of demand. It was great. We felt great, except that we couldn't get anyone to service a property. And so we had a labor shortage. So it's going to be headwinds that we're going to continue to have. There's definitely a labor shortage that exists. It's by market specifically. And I do think that there's going to be some additional cost because of wage pressures. But I do think that one of the things we did is that we broke these hotels down to the very core of basically a 2:1 model where we had hardly anyone staffing them and then rebuilt them up at a much leaner type of operation. And so hopefully, that more than offsets some of the wage pressures that we have. But a good example would be, as you know, the enhanced unemployment benefits are going away and in certain markets where -- Tennessee would be a great example where we had a labor shortage at National Renaissance. As soon as they got rid of the enhanced benefits, which I think was July 1, that state, about 3 weeks later, 4 weeks later, we saw a lot of labor come back to work. And we were able to fill a ton of open positions that existed before that. And so hopefully, we'll see that throughout the rest of the country and other states given that these enhanced benefits worn off.

And one interesting data point that I heard was one of our managers was talking about how their per hour cost of their employees had gone up between 15% and 20%, which is not insignificant. But the per-occupied room cost of labor were actually lower than they had ever had been before. So you have this weird combo of the people that are coming back, you're paying them more, but your operational efficiencies as of right now are overcoming those.

Okay. That wraps up our time for Ashford Hospitality Trust. So we're now going to move straight into Braemar Hotels & Resorts, and I'm going to ask Richard Stockton, the President and CEO of Braemar, to come up here.

All right. Good afternoon, everybody. My name is Richard Stockton, President and CEO of Braemar Hotels & Resorts. And thank you for coming. We're going to wrap up with this as our final presentation. So just hang in there, the cocktails are only about an hour away. And so we're going to talk about a couple of things -- hopefully. Let's see. Okay. First, we're going to talk about the portfolio. It's a very high-quality portfolio focused on the luxury segment. We'll go over portfolio performance, recent performance, and we've bifurcated that into sub portfolios of urban and resort hotels. We are going to have members of our asset management team come back up and do some case studies for you and talk about some individual initiatives at a couple of different hotels. Then I'll come back on and talk about our cash and liquidity position, balance sheet and then our strategy looking ahead. All right. First, I'll start with the portfolio. It's a geographically diversified portfolio across the United States. So we only invest in the U.S. and U.S. territories. You can see here, those hotels in gold are our resort properties. So we have 8 resort properties out of 14 hotels and 9 of our hotels are luxury out of the 14 hotels. So a heavy concentration in both luxury and resorts. We like the luxury segment and have made that a primary strategy because the luxury chain scale segment has had the highest amount of RevPAR growth over the long term if you look back 30 years versus any of the other chain scale segments. And through the period ending 2019, it averaged about 4% annually versus about 3% for all other chain scale segments. And that's because the luxury sector has higher barriers to entry. It takes more time to build a luxury hotel. It only works in certain locations, it takes more money. It's more complex to develop. So as you look at our portfolio today, we've got about 1.3% supply growth, which is significantly below the long-term average of about 2%. And specifically, we're in some very high barrier to entry markets. So we're in places like Napa Valley, where it's very difficult and expensive to build. We're in Key West, where you can't get planning permission for new hotel rooms. So it's a very strategic portfolio, which I think is incredibly well positioned, particularly where we are now in the early stages of recovery from COVID, where there is definitely a focus on and demand for luxury resorts. A picture of our Ritz-Carlton St. Thomas. I just want to -- I'm going to throw some pictures in here as we go through the slides. Here, you can see a pool on the left was the original pool, but we built the new pool on the right, which is a family pool after Hurricane Irma came through in 2017 as part of the overall renovation of the property. We renovated every single guest room, 180 guestrooms, built a new family pool with a slide. That's my -- one of my personal pet projects, splash pad. And it's been an incredible hit. This property is doing $1,000 RevPAR for the second quarter and expect to do even better than that in the coming festive season. So it's a really gorgeous property, one of the best in the Caribbean. Ritz-Carlton Lake Tahoe sits mid-mountain at North Star in the Lake Tahoe region. It's the only luxury hotel in the entire Lake Tahoe region. So incredibly well positioned, very defensive property and has performed very well for us. Ritz-Carlton Sarasota is another one to take a look at. This is a picture of the beach club. This property really consists of 3 separate parcels. We have a hotel in downtown Sarasota. We have Beach Club on Lido Key, and then we also have 300 acres in Lakewood Ranch, where we have a Tom Fazio golf course. So this is the quintessential luxury resort with all the amenities and services. Really fantastic property that we acquired in, let's see, 2018. So let's look at some data. Here, we're showing RevPAR by location for the industry. So this one is resort versus urban, suburban, et cetera. The gold line is resort RevPAR. So you can see resort RevPAR is exceeding pre-COVID levels at this point. And as I said, with exposure to 8 resorts in our portfolio, we're benefiting from this trend. If you look at performance by chain scale, the gold line represents luxury. And you can see, while luxury certainly had the greatest fall, it is also now rising most quickly in the recovery. And again, with 9 assets that are considered luxury within the portfolio, we're benefiting from this recovery trend. So let's dig into the portfolio statistics a little bit further. Here we have on the top left box 2021 through the second quarter TTM hotel EBITDA by brand. So very heavily focused on Ritz-Carltons. We have the 3 Ritz-Carltons in Lake Tahoe, Sarasota and St. Thomas leading the way, generating $41 million in EBITDA through the second quarter of this year. But then if you also look at EBITDA by chain scale, luxury making up the vast majority of our EBITDA. Looking at the bottom left, the breakdown by demand segment group versus transient versus contracts. Historically, we would have seen about 25% group demand with the pandemic doing what it's doing. We're down to 8% on a trailing basis through the second quarter. That will slowly increase over time. And frankly, I think that's where a lot of the upside is in the portfolio right now given the resorts and, in particular, leisure transient is performing so well. If you look at our room revenue by location through the second quarter, the gold 84% is represented by the resort contribution. Urban at 16%, again, represents a significant upside. So one of the things that's important to me is to be the highest quality portfolio in the traded sector amongst lodging REITs, and that's measured by RevPAR generally. It can also be measured by EBITDA per room. We are certainly 1 of the smaller lodging REITs, but we want to be the best, highest quality, giving investors a reason to own us. And so if you look at the recent statistics, as is 2019 top left, this is hotel EBITDA per room. You can see at $38,000 per room. We lead the pack. If you look through the second quarter 2021 at $12,000, we're literally triple our nearest competitor in terms of EBITDA generation per room. So really great result coming into 2021. On the bottom, same statistics again for RevPAR 2019 and then second quarter -- through the second quarter of 2012 -- sorry, 2021, at $174, significantly higher than our peers. So we like that position. All right. Let's have a look at picture here. This is the Hilton Hoya Torrey Pines. What's interesting about this property, it sits on the 18th hole of the Torrey Pines Golf course in La Jolla right on the water. They recently hosted the U.S. Open in June. So it's a fantastically located property and dare I say, famous for its location on that great golf course. This is a picture of the Pier House Resort and Spa. This is in Key West. This property, you can see literally sits -- part of it literally sits on the pier. So we have a private beach. And then on the other side, because we're at #1 Duval Street, you've got the start of Duval Street in Key West. And for those of you who've been to Duval Street, that's really the place to go in Key West. It's kind of the Bourbon Street of Key West, if you will, except that's a little bit higher class. So lots of restaurant bars and things. Fantastic location in this property, has done almost a $600 RevPAR in the second quarter, so performing extraordinarily well at nearly 90%. So just another prime example of a luxury resort benefiting from the recovery trends. And it's also a property that's managed by Remington. And you've heard a lot about Remington today, and we have 4 properties managed by Remington. And this property as a luxury property in the second quarter this year achieved a 60% margin. And you just wouldn't think that would be possible for a luxury property. But this is the kind of thing that Remington can do with the right property. So let's have a look at the portfolio. We've broken it down here into the resort portfolio, sub portfolio and the urban sub portfolio. The black line in the middle is the combined, right? So occupancy, you can see, has a steady recovery trend. A little bit of seasonality around July, but now coming back. And so the portfolio as of the end of September, doing 56%. As of October, we'll be over 65%. So it's, again, a little bit of seasonality, but steady upward trend. The most encouraging thing here, though, I think, is the gold line, which is that urban portfolio, which is really starting to move up in occupancy, already over 50% occupancy. So hopefully, the dark days are behind us in terms of urban demand. And I would expect, with the resumption of group meetings like this, that portfolio or sub portfolio will certainly benefit. And then similar trends in terms of ADR, again, I'd focus on that gold line. That's been where we've had the issues over the past 18 months a steady improvement in ADRs for the urban portfolio. And then if you look at the resort portfolio, ADRs at about that level, that was pre pandemic. And then resultant data for RevPAR. Again, I think the story there is about a steady recovery in urban. And this is -- some of it's leisure transient, to be fair. But then we're starting to see some more corporate transient and some more group demand there as well. So the very latest performance data that we have, and we just pre-released some numbers for the third quarter, we showed a 56% occupancy for September. RevPAR growth was minus 21%. But if you look at the third quarter overall, RevPAR growth of minus 7% versus 2019 pre-pandemic is quite an impressive result. And I can say that our portfolio is certainly recovering more quickly than the rest of the industry as a whole. And so when you hear about those industries prognosticators talking about 2023 or 2024 recovery, dare I say, we're going to get there before they do. And it's a function of the strength of that portfolio. So with that, I'm going to hand it back over to Chris Nixon. One thing you've learned a little bit about Chris so far. One thing you didn't know is that he also runs a fantasy football league and is a very avid fantasy football player. And so let me welcome Chris Nixon up here to talk about asset management.

Thank you, Richard. I feel like you all know so much about me. We've got a couple of other hotels we'll highlight here, the Notary Hotel. That's in Philadelphia. That was up-branded from a courtyard. Beautiful hotel, served as the notary for the City of Philadelphia for a long time. Our great design team at Premier has integrated that theme throughout the hotel. And that's one of the assets we're really proud of in terms of renovation and up-branding. The newly acquired Mr. C Hotel and Beverly Hills. This is one we closed on just a couple of months ago. Remington is managing the hotel. You guys have seen some of the case studies. When Remington takes over a hotel for the first time, there's immense opportunities that are identified. We're really excited about what they're going to be able to accomplish. During our diligence visit there, we uncovered about 80 different opportunities that we put into a plan of immediate value, we feel we're going to be able to add to this hotel. So we're really excited about that. And then we've got The Clancy in San Francisco. This was another hotel that was a courtyard that we upbranded to the Autograph Collection within Marriott. You can see we did some facade work there. The hotel looks absolutely stunning. And we're really looking forward to the continued recovery of the San Francisco market. Similar to what I spoke on with Ashford Trust, Braemar also gets to benefit from our unique team structure that we feel is a big competitive advantage. We've got expertise in kind of all areas. We've got disciplined specific experts. It's tax experts, it's risk experts, insurance experts. Obviously, revenue optimization, we've got a team of data and analytic experts. It's -- nobody else has built out like this. We see some of our peers moving in this direction where they're adding one revenue specialist. And you can see here, we've got 3. And we're -- we added this department, I think, 7 years ago. And so we continue to innovate and it's driven results. You can see it here. I mean, the numbers speak for themselves. We're really proud. Here, we're highlighting EBITDA growth. Over the last 6 years, we've outperformed our peer set in 5 of those years, which is something, again, we're really, really proud of. You see 2019 was a bit of an anomaly. There were some outliers there. We had some fires in the Napa Valley area that affected our Hotel Yountville and Bardessono hotels. And then that was also the year we upbranded the Notary Hotel that you saw on the previous slide. And we did a full invasive renovation. The product turned out really beautiful, but it impacted results. When our team normalizes for kind of those anomalies, what you get is another year of outperformance. Now those numbers change to about 1.7%, 1.8% growth. And so we're really proud of the results. We're going to call up some of our Asset Management team members, just like we did with Trust, so they can step you through kind of the great work that we're doing, some of the stories that we've got and ways that we've attracted value from different assets. I'm going to introduce Steve Zunker. Steve joined us as part of the Highland portfolio acquisition we did a number of years ago. Steve is originally from Wisconsin. He's a big cheesehead, Packers fan. He likes cheese curds. He now lives with his wife in Florida. He spends a lot of time out on the water. They've got a boat. But he's been just an incredible member of our team. He oversees a number of our high-profile assets, including our Ritz-Carlton in St. Thomas for the Braemar portfolio. It's my pleasure to welcome Steve Zunker.

Thank you. One of the most unique introductions I've had. Who's had deep fried cheese curds? Nobody? Get one. All right, good. Try them, you'll love them. I've got 4 properties to go through. It really reads like a bucket list of vacations here. So I'm really, really proud of these assets and looking forward to speaking about them. First one here is Green Arrow. Yes, Lake Tahoe. This property was purchased in January 2019. It's a fabulous 5-star resort 180 -- 170-room ski-in, ski-out, mid-mountain [ star ] resort. Included with this resort was a really cool ultra-exclusive Lake Club right on Lake Tahoe as well as 3.4 acres of developed land. The original cost to develop this land or this resort in 2009 was over $300 million, which [ made our ] $120 million price tag look pretty attractive when we purchased this, especially considering you probably couldn't rebuild it in this area for that price anyways. Since we acquired the resort, we've implemented a number of strategies. The first B&R asset management team takes an extremely aggressive approach on fees and ancillary revenues. On this slide, you can see just a few examples of the 3 changes that resulted in basically 46% increase year-over-year, from 2018 to 2019. And of course, we look at these fees annually to make sure that we keep up with those increases. The changes are limited fees. Historically, this resort closed down during the summer right after ski season, which was basically called mud season. And we thought that with this resort, we could create demand or capture demand that was coming to that market. So in 2019, we contracted that close season for a period of time. And in 2020, we plan to not close at all. So in 2019, when we did contract that season, that 2 weeks, we earned just over $1.1 million in additional incremental revenue for that property. We also expanded some of the offerings at our Cafe Blue, kind of a Starbucks style restaurant there that we added higher-margin items in alcohol and spirits and increased revenue by $133,000 for that outlet. And as you might imagine, the ski resort, the seasonal labor is certainly a challenge here as well. And while we certainly have more work to do here in the first year alone, we looked at the profitability and productivity and that we're able to increase productivity by 3%. So we're making strides there and expect more as we emerge from this pandemic. The results have been impressive with revenue up $4 million, RevPAR up $42, and RevPAR index an amazing 211.9. It's just incredible. So I mentioned earlier, the 3.4 acres of land that came with this asset. And this has led to 1 of the more unique opportunities we've had in this portfolio. We are pursuing right now a ground-up development of 7 buildings with 18 individual luxury townhouse units, each which feature what's called the lock-off and that really allows the owner of that unit to contract or expand that unit and parcel off some of it to the hotel rental program. Developing these units and selling these units will also shift expenses off the hotel, such as property taxes and brand shared services expenses further enhancing the, I guess, the benefit of this investment that we expect to be around $1.1 million in total. Developing -- I'm sorry, these 3, 4 and 5 bedroom units built and presold in 2 phases will combine to add up to 38 rental keys at this hotel. We believe this creative approach to developing these units is easily going to fetch the $2 million to $5 million per unit cost in our sale price and generate roughly $1.3 million in additional hotel revenue. So this is really going to be an interesting property as we continue to develop this one. Pier House Key West, another great resort. It's located obviously, in Key West, right at the north end of Duval Street and Duval Street, I think, Richard said was kind of the Bourbon Street of Key West. It's an interesting place. And when you want to get away from that, you just go right up to the Pier House, and it's a great waterfront retreat from Duval Street. So you've got the best of both worlds. If you're a Jimmy Buffett fan, you might be interested know that the Chart House -- or Chart Room Bar at the Pier House where Jimmy Buffett actually got his start. This hotel was purchased from a less sophisticated owner, leaving plenty of value to be extracted. Upon closing, the Remington assumed management of this resort and immediately implemented better leadership and revenue strategic programs. Strategic changes, the room types and better yield management really resulted in rate premiums from higher category rooms and a better mix and flow of rooms across the entire week. Because we have relationship with another hotel in Key West, LaCanta right up the in Wall Street, we were able to consolidate accounting reservations and administrative roles and save a significant amount of payroll for both properties. The organizational changes and optimized revenue strategy have yielded impressive results. Revenue growth since purchase, but the additional EBITDA that's been unlocked is really a real story. You can see from the slide that while revenue has increased $4.5 million since 2012 prior to our purchase, EBITDA has increased an astounding $6.9 million, a 53.5% EBITDA margin. So very impressive here. The next slide here is Ritz-Carlton St. Thomas. We originally purchased this in December of 2015. It's a 180-room resort that overlooks St. John across a really tranquil blue bay of nice water. The resort features 3 restaurants, 2 pools, a really nice spa, a kids club and expansive beach. So trophy location aside, I mean, it's just spectacular. It wasn't needed some renovations at this property. They gotten a little bit tired. So just 21 months following our acquisition, of course, Irma and Maria hit this island and the resort and really devastated it. Immediately following our hurricanes, our risk management and insurance people we're leveraging their relationships with our partners in insurance to ensure that we could kind of recalibrate the renovation and rebuild of this project and use insurance funds along the way, so as not to drain our own cash reserves. In the end, we exhausted 99.2% of our policy limits, we're around $124 million, with most of that levied towards St. Thomas. The end result is a resort that was essentially rebuilt with insurance proceeds at nearly double the $65 million purchase price in 2015. As you might imagine, rebuilding a resort on an island is not an easy task, especially following a hurricane. Premier Project Management executed flawlessly. And because of that, we were able to get back to the market sooner and have just a great product to do so, especially right now during COVID, that's certainly benefited us as well. Total ADR for this property has exceeded $1,000 every month since March, and TTM EBITDA through June is $18 million, up 104% full year 2016, which is our last year of uninterrupted service. Full year 2021 EBITDA is expected to come in at around $27 million. Again, just under half of the purchase price of $65 million. This resort is now truly the jewel of the Caribbean and performance that reflects a significant investment. Last one I'm going to discuss is Bardessono Yountville. This was originally purchased in 2015, and it's one of only a couple of dozen lead certified platinum hotels in the country. The hotel is 65 rooms along with an outstanding spa located just 60 miles north of San Francisco and the Napa Valley. Bardessono is widely considered to be one of the best hotels in the region, if not the country. The hotel boasts a modern but organic spa-like design and offers over 6,000 square feet of meeting space, a destination-style restaurant on its own, Lucy, and also offers guests Lexus hybrid vehicles for guest use. So aside from plugging Remington into the management to see if this property, which has worked out greatly, also added 3 luxury villas to the resort, which opened up in 2019. Premier Project Management, again, developed a creative design that allows these 3 villas to seamlessly turn into one that we can sell to just, I mean, somebody who wants the most fantastic lodging in Napa Valley. July ADRs for this averaged $31.71 each and are expected to generate $1.8 million in 2021. So demand for luxury combinations in Napa Valley continues to increase development, barriers to entry continue to tighten. This is no doubt contributed to the $200 ADR improvement since 2019, along with EBITDA pull-through, and we expect both trends to continue. So I'm going to hand it over to Liz. Liz is one of my counterparts in the property. Liz Lloyd, she's joined Ashford in 2015, bringing with irreplaceable experience on both the lodging operations side and the finance discipline as well as asset management in a couple of our peers. Liz resides in Nashville, Tennessee and oversees some of the most complicated assets in our portfolio. So Liz, welcome.

Thanks, Steve. So happy to be here in person today. One thing I did learn though, this is my first time, not my first time traveling in my first meeting, but first time presenting in this format. And I've done this Investor Day before, but I've never had to wear glasses. So unfortunately, that's one of the bad things of a pandemic and being locked to your computer for 18 months. The first hotel that I'm going to talk about is our most recent acquisition for Braemar, which is the Mr. C Hotel in Beverly Hills. We acquired this 143-key asset in August, total acquisition price is $77.9 million, including the 5 adjacent condominium units. This luxury hotel has really been a go-to destination for LA elites, especially for celebrations, meetings, product reveals and the namesake restaurant at Mr. C has really been a dining destination on its own. It sits in the heart of LA in Beverly Hills and Century City is in close proximity. And we believe our location will also benefit from a massive redevelopment of the 600,000 square feet Westside Pavilion shopping mall, which has Google as the anchor tenant just 2 miles away. This location will also host Super Bowl in 2022, and you've seen on some previous slides we can always count on the benefit of that in that year. Prior to closing on the hotel, our asset management was deployed really like a SWAT team to develop an extensive strategic plan, and we have identified a list of initiatives worth at least $1 million in stabilized annual EBITDA. We also transitioned the management contract to Remington upon takeover, and they are already making an impact with stronger leadership, better technology and centralized support services. I like to say the proof is in the pudding. So hopefully, next year, when we put these case study slides together, Mr. C will be in this presentation. The next hotel I'm going to talk about is the Ritz-Carlton Sarasota. I've been working with this asset since we acquired it in 2018 in partnership with Sunny Brewer in the revenue optimization side. As Rich previously said, I think that this hotel is really unique. I have really learned to run this asset. One of the things I really like about it is the 3 campuses. Sometimes when you think of this hotel, knowing that the hotel isn't necessary beach side, you think is that a negative? And I don't think so. One of the reasons that I love this hotel is, you go and say the hotel and you're in downtown Sarasota. It's this booming community. It's starting to grow quite a bit from the downtown development. It's very walkable. It's marina side. There's a lot to do, big art scene. But then you jump on a shuttle and you go over to Lido Key at the beach club where you're a rock star, where they wait on your hand and foot. There's the pool service, the beach service, a great evening dining destination. And if you're a golf person; you can hop over to the 18-hole Tom Fazio. Wonderful golf course at Lakewood Ranch. So you get all those things in 1 stay, and I think that's really unique about this asset. This hotel has really exceeded all of our pro forma assumptions since acquiring the resort. Pre-pandemic Sarasota was on a growth boom, but I think the timing of this acquisition with COVID, I think, it couldn't be better. You can see the performance, this is one of our strongest performing hotels, remained profitable throughout the pandemic. And somehow, there was this wonderful combination of Sarasota really got to be known as a safe leisure. The Ritz is a luxury destination, so we kept that demand through the pandemic. It also is one of the biggest population growth locations in Florida from a residential perspective and what that did. Also is, it created an incredible demand for our members' club, which we have a membership component to this resort, which also offers golf, beach and spa membership, and we are actually at a sellout capacity for those members. As you can see from the chart in front of you, EBITDA has grown 55% from $12.7 million in 2018 and to $19.7 million on a trailing 12 basis. And we are on track to have a record year with EBITDA at $22 million, I'm happy to say. Also worth noting is that, that membership component is now at $5.7 million in annual dues. If I move to the next slide. When we purchased this resort in 2018, part of the acquisition was a vacant 22-acre parcel of land adjacent to the golf course. We always saw this as a unique value enhancement opportunity and we are currently working with an outside developer to build 55 to 60 Ritz-Carlton branded single-family homes on this site. One of the great deal points that we are working through is that the -- they will build a new amenity center, including a new pool, fitness center, pickleball courts at that location. And this can be used by both the new residents and existing members and the increase in amenities will also allow us to grow that membership component with the new residents gaining at a gold level of membership, which is an annual increase of $645,000 in annual deals. The next slide I'm going to present is talking a little bit about Braemar's portfolio, ADR. We have a class leading ADR. This slide demonstrates how well the Braemar portfolio is positioned from an ADR recovery standpoint. The quality and the location of these assets allow us to command a rate far above the average luxury segment. As you can see from the chart, we have outpaced both the Smith Travel luxury class over the last 18 months. But even compared to ourselves, we are exceeding the July -- the July RevPAR exceeded 2019 results by 14%, which is wonderful. And then lastly, I have this slide that talks a little bit, it's similar to what we presented in the Trust portfolio, but we always look for silver linings. Another positive from the pandemic in our portfolio is the impact of new supply slowing. This slide represents the forecast of new supply coming into specifically Braemar markets. If you compare the forecast from February of 2020 to the newest forecast, you can see new supply additions have dropped significantly for the next -- both the next 12 months in that 12- to 24-month time period. And then on the bottom right, you'll also see that the forecasted key additions are down 15%. And the amount of deferred projects rose from 3% to 9%. So all of this will positively impact our portfolio and the pace of our recovery. And now I'm going to hand it back over to Chris Nixon.

Thanks, Liz. One of the hardest things that we go through when we're putting together at these decks is trying to determine which case studies to share with you guys. And because we don't have time to hit them, but we've just got so many hotels where we're doing really amazing things that we're excited about. And hopefully, the passion is coming through. But Braemar has just seen stellar performance up to this point. You can see here, Q2 -- through Q2, year-to-date, our RevPAR growth has outperformed our peer set significantly, up 54%. Our peer sets up 2%. Now we removed those that are normal in our peer set that aren't experiencing RevPAR growth. And so these are looking at only our peers with RevPAR growth through Q2. So up to this point, we've been performing very well. And really, it's being driven by just a handful of assets, those that are there on the right, that are just seeing just this crazy growth. And so what we're excited about as we look ahead is there's still a lot of runway left for this portfolio. There's 10 hotels on the left that haven't got back to their 2019 RevPAR totals, where they're at earlier stages of the recovery based on their markets or urban locations and are going to continue to ramp aggressively and are going to continue to see rapid recovery. And so as those hotels get further along in the recovery curve, it's just going to propel Braemar's growth even further. So we're really happy about the hotel performance, but we're really happy when we look at the future, and we see that there's a large majority of the portfolio that still has a lot of room for continued growth. And with that, I'll turn it over to CEO of Braemar, Richard Stockton.

All right. I'm back. Now the final stretch. Here's the Bardessono. This is in Napa Valley. As you can see, we have kind of an indoor-outdoor feel to its contemporary architecture. It's also a lead platinum properties. So for the aerial view, you'll see all of our solar panels make it very energy efficient. Here's a picture of the Sofitel Chicago Magnificent Mile right there in the shopping district of North Michigan Avenue. And here, we have Marriott Seattle Waterfront. It's a little bit right on the waterfront there, next to the cruise terminal, walking distance to Pike's Place, but also the stadium just down the road. So very well-located asset as well. All right. Let's talk about some numbers. Cash and liquidity position. Braemar is cash flow positive. I'm happy to report. As of the second quarter, we had $10 million of positive cash flow after CapEx and preferred dividends. We never missed the preferred dividend payment through the entire pandemic of last year. We went into the crisis with actually a lever strategy, I think, was well designed for it. We maintained a significant amount of cash on our balance sheet. We had always had a target of 10% of our gross debt balance as cash. We also had an undrawn credit facility as a kind of a backup liquidity facility that we did utilize. But then we also had all nonrecourse debt at the property level. And that strategy served us well. Didn't miss the dividend payment. We're now back to cash flow positive. You can see we have ample cash on the balance sheet, $158 million of cash and cash equivalents totaled $237 million. That represents 20% of our gross debt balance. So very well cashed up, which positions us for growth, which I'll talk about in more detail in a few minutes. So the leverage strategy from here going forward. So we had about 45% net debt to gross assets going into March of 2020. We found that we were well prepared for the pandemic, but that investors gave us feedback that, that's probably a higher level of leverage than they would like to see long term. And so we've come up with a strategy that deleverage to 35% net debt to gross assets in the coming years. And that's through a combination of internally generated cash flow as well as potentially some capital raising. So that's a key pillar of our strategy looking forward, but also we intend to stick to primarily nonrecourse debt. We have a little bit of convertible notes at the corporate level and sticking with primarily floating rate debt, which you heard Rob Hays talk about. The philosophy is the same. Reasons for doing that, in terms of as a hedge and also financing flexibility. Our current leverage sits at 49% net debt to gross assets. So it's a little bit higher than when we entered the pandemic, it's a little bit of a hangover as a result of drawing down those credit facilities and experiencing some cash outflows over that period. We're very comfortable with our maturity schedule. And we like to say it's well laddered maturities with only about $68 million coming due in 2022. No maturities in 2021. So we can certainly get well ahead of any refinancings that we'll be doing in the coming years. And in order to achieve that leverage target, you'll also see us potentially paying off some debt as we go along. In terms of floating rate rationale, I won't talk about it too much. You've heard the reasoning. In the case of Braemar, we were able to significantly reduce our interest rate over the course of 2020. That results in about a $15 million interest expense savings for 2020, and we're continuing to benefit from that low interest rate environment. This is a picture of the Capital Hilton in Washington, D.C. It is our largest hotel, 550 rooms. It sits only a couple of blocks from the White House. You can actually see in the picture there, the front door or the White House on the right. It's literally right down the street. So a really iconic landmark hotel built in 1947. But one of the ones that has the most opportunity from this point going forward, it is an urban property that's highly reliant on group business, convention business city-wide and the like. And as a result, is not performing well at the moment, but it's something that we expect will bounce back and join the rest of the portfolio hopefully in the coming quarters. There's Hotel Yountville. This is a smallish hotel, 80 rooms, in Yountville down the street from our other Napa Valley property, the Bardessono. It's got one of the best pools, I'd say, in Napa Valley. But it's a property that we acquired in 2017 and has continued to perform well. We're in the process right now of building some model rooms there for an upcoming renovation next year. This is our Park Hyatt Beaver Creek. Park Hyatt Beaver Creek is the only luxury hotel in Beaver Creek village. So on one side, you have access to the slopes, right there at the chairlift, the other side, you have the Beaver Creek Village skating rink. So right in the heart of all the action in Beaver Creek. It's a really incredible property, and it's done well for us. We acquired this in 2017 as well. All right. Let's talk about growth, acquisition opportunities. Our strategy remains luxury. We believe in the long-term RevPAR growth potential for the luxury segment. So that's where you'll see us acquiring. We do believe there are some opportunities that the market is giving us, kind of given some refinancing challenges and some owners of hotel assets that maybe have had as much fun in the hotel business as they would like in the last 18 months. And so for instance, the Beverly Hills acquisition of Mr. C, we acquired a $474,000 per key, which is a very attractive basis if you look at other Beverly Hills luxury hotels that have traded recently, upwards of $2 million per key. So if you look at the long-term average over the last 5 years, luxury assets have traded about $650,000 per key. And you can see the most recent data points are slightly below that, which represents the opportunity for us. You'll see us acquire probably 2 to 3 luxury hotels per year going forward. Now remember that $650,000 a room number. So this is a hypothetical analysis of if our portfolio were revalued based on that intrinsic value. So currently, you can see our capital stack here. We have debt, preferred equity and current market cap of $323 million. That equates to about $400,000 per room. If our portfolio were to be valued and our equity revalued at $650,000 per room, our equity market cap will be $1.3 billion, significant upside from what we are currently seeing in the market. And that's really the value proposition for Braemar. And I think that's something to think hard about as you look at whether or not you should be recommending or owning Braemar. Significant value upside, If we were to revert to those types of per room values. All right. So where do we go from here? The 3-year plan. We're going to continue to capitalize on the recovery that we're seeing, and it's the recovery and continued performance and outperformance of the luxury resort segment but also the urban segment, which, as I've shown you, is on the rise, is recovering and represents perhaps the greatest opportunity for us. We'll continue to raise capital through our in-house broker-dealer, you heard about Ashford Securities. We do have a nontraded preferred in the market right now. It comes in drips and drabs and we've got about $10 million in so far over the first couple of months. That will continue to accelerate. That capital pays us a 7.5% dividend and that can be used and redeployed into acquisitions where we're targeting a 10% unleveraged IRR. As I mentioned, we'll acquire 2 to 3 assets per year. while reducing our leverage and then ultimately, we will resume dividends on the common stock. So our common dividends are currently suspended as with many of our peers, and we'll seek to put that in place. We do have very high inside ownership as well amongst the management team. So clearly aligning with investors and resuming those dividends as a joint goal, let's say. So I'll wrap up with the reasons to own Braemar. First is the portfolio. It's all about the portfolio, right, very attractive portfolio, highest RevPAR portfolio amongst all lodging REITs, a concentration in luxury resorts, which is precisely where you want to be right now, and very low new supply exposure. You saw that 1.3% over the next 12 months. You've heard from members of our best-in-class asset management team, a very deep team. I'm hoping you can appreciate with some significant credentials in asset value creation and operating metric performance. But then look at our balance sheet. So our balance sheet is very strong, a lot of liquidity, lower leverage that's going even lower, well-laddered maturities. So clearly, no signs of financial distress here at Braemar. We're positioned for growth and for further expansion and value creation. And then lastly, it's about the valuation, right? So as I've said, our current market cap is a really far shot from the potential value if the portfolio were to be valued in line with other luxury asset portfolios, as you've seen on the recent transactions. So with that, I will conclude. Thank you very much for your time. I think we're going to do some Q&A now with Deric.

Great. Okay. So we've got some time for questions before we go to the cocktail reception, if anybody has any questions. Yes, we've got a few right here. Microphone.

Thank you. So a couple of things that are new in the presentation, the leverage target, 35% of the 3 assets resuming the dividend, and I understand it's on the slide that talks about that being over the next 3 years. Any more detail you can give in terms of timing on those? And you may be talk about rank order priority as well, just how you're thinking about balancing all 3 of those initiatives, please?

You want to go ahead?

There really isn't a lot more detail on that right now. There's a lot of different levers to pull at the same time, right? We're raising the nontraded preferred, we're repaying certain financings, we're acquiring new assets at the same time, and it's a balancing act, frankly. But everything that we do, we kind of keep that target in mind and make sure that we're slowly chipping away at it. And I think that's what you'll see us do each quarter.

Great. Kind of following on Tyler's question. Maybe just asked a different way. If you're going to acquire 2 to 3 assets per year and you want to delever at the same time, these assets aren't cheap, where does the money come from?

Well, the -- it's a question if we're requiring with leverage or not, right? I think we can...

You want to delever at the same time.

Yes, we can acquire assets with no leverage, right, create an unencumbered asset pool. In terms of where the capital comes from, we talked about the nontraded preferred program. We talked about internally generating capital. Those are the 2 primary sources that we see right now.

And then when we look at this chart with all the dots, do the dots represent actual transactions that took place.

It is.

And can you give us a little market color on the acquisition opportunities that you're looking at now?

Yes. I'd tell you, since about the 1st of June, there's been really a flood of asset opportunities coming to the market. And so we're seeing a lot in the luxury side. It's primarily luxury resorts, which tend to be a little bit more sharply priced, so we're being very picky. But we're -- we've seen -- we looked at things in New York. We looked at things in the Caribbean. We looked at things in California. So there are assets out there that are attractive. We're being disciplined in terms of assets that show a proven track record of generating profit. I know it sounds crazy, but there are luxury assets there that even in 2018, '19 didn't generate a profit, and that's not something that we're interested in taking a risk on. So we're looking to buy yields. But then, as I said, target that 10% or higher unlevered IRR. And we've got a list of 10 or 15 things that we're looking at right now.

When you're going over the portfolio performance, you kind of pointed to the improving urban RevPAR. As we've kind of seen headlines around delayed return to office, how are you thinking about kind of the urban RevPAR recovery and business transient and kind of any color you can provide there?

Anyone?

Yes, I'll take it. Yes. So one of the things that -- as you look to that slide, we're surprised to see the urban recovery where it is given the portfolio because these locations are -- that we have at Braemar are in areas that are going to be late adopters potentially in the recovery of what you would think. San Francisco, Seattle and then also DC for sure. But there is a ton of pent-up demand, and we saw that in leisure. As soon as the market would open up, I mean, Florida was a great example. We have some great assets in Florida. As soon as it opened up, the demand will just pop back. And so I think that we will see a recovery of business transient. We're also seeing, because we own an audiovisual services company at Ashford Inc., which is Inspire, we're seeing the demand in bookings out 6 months and later for group travel as well. And so there is a lot of pent-up demand that we see. It just takes a little bit of time. But I think if you go to the first quarter next year, I think we're probably in a quite a bit different spot.

The thing to keep in mind with corporate transient travel is typically only has about a 3-week booking window. So those trips are not booked very far out when people are booking those trips. And even today, it's probably even shorter they want to spend. But when we look at our corporate bookings, the demand has continued to be on an upward slope. It did sort of flatten off a little in the middle of August to about the middle of September. But we've started to see that start to resume, growing again, which we're real optimistic about.

As I said, our October forecast, occupancy forecast, is over 65%, up from 56% for September. That's primarily driven by the urban portfolio recovery. And you'll see that when we come out with our final numbers on a per asset basis. But October doesn't tend to be a very strong resort month. In fact, it's the opposite. And so it's that urban recovery that's driving that.

I think it's clear because as Deric mentioned, we're flattened out. That was the Delta variant for sure, had an impact in business transient travel. And so with that, hopefully contained. Hopefully, we'll see continued demand. And every month, we've exceeded our forecast in terms of occupancy where we estimate in the beginning months or until the end with the exception of September. And again, that's primarily because of the Delta variant.

Any other questions? No? Okay. Well, thank you all for attending the Ashford Investor Day. We've got a cocktail reception downstairs and we'll be around if you have any other questions. So thank you.