Today, shares of Ashford Hospitality Trust (NYSE:AHT) are in free fall. AHT stock closed out Tuesday down by more than 35% on heavy trading volume.
Indeed, today’s move is a continuation of a longer-term bearish trend in AHT stock. In fact, over the past five years, Ashford Hospitality has lost a whopping 96% of its value. This is a stock with a chart that looks very different from most pandemic recovery plays. That is, this stock never recovered from the pandemic, and only continued lower.
There are a number of reasons for this long-term decline in AHT stock. Among the reasons for the decline has been a 1-for-10 reverse stock split initiated last Friday. However, today’s news comes amid rather disappointing results.
Let’s dive into why these numbers are driving investors away from AHT stock today.
Lower Revenue Per Available Room Hurting AHT Stock
This morning, Ashford Hospitality reported preliminary Q2 revenue per available room (RevPAR) which more than tripled (up 256%) from the same quarter a year prior. Sounds good, right?
Sort of. When compared to the quarterly numbers during the depths of the pandemic-induced recession in the hospitality sector, these numbers shine. However, compared to Q2 2019, Ashford’s RevPAR actually dropped 37%.
Indeed, it appears the market was expecting better numbers. Pent-up leisure travel demand certainly drove an increase in average revenue per room over last year. However, the fact that numbers are down so drastically from 2019 levels suggests the road to recovery may be a lot longer than investors initially expected.
As fellow InvestorPlace contributor Thomas Niel points out in a recent piece, Ashford Hospitality has been on some shaky financial ground of late. Yes, the company did avoid Chapter 11 bankruptcy this past year. Ashford was able to negotiate forbearance from its lenders to do so. However, these numbers indicate AHT stock could be one that’s not quite out of the woods yet.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
