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Segment Reporting | 3 Months Ended
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Mar. 31, 2025
Segment Reporting [Abstract] |
Segment Reporting | Segment Reporting We operate in one reportable business segment within the hotel lodging industry: direct hotel investments. Direct hotel investments refer to owning hotel properties through either acquisition or new development. We report operating results of direct hotel investments on an aggregate basis as substantially all of our hotel investments: (i) offer similar products and services to their customers in the form of hotel rooms, food and beverage, and ancillary services; (ii) utilize third-party hotel management companies to deliver its products and services to its customers; (iii) are designed and operated to appeal to similar individuals, groups, leisure and business customers; and (iv) third-party hotel managers utilize the same methods (direct hotel sales and various online booking portals) to distribute the Company’s products and services. As of March 31, 2025 and March 31, 2024, all of our hotel properties were in the U.S. and its territories. The Company’s chief operating decision maker (“CODM”) is its President and Chief Executive Officer. Each hotel property derives revenue primarily from guestroom sales, food and beverage sales and revenues from other lodging services and amenities. The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies in note 2. The CODM reviews and makes decisions on all aspects of the Company’s business using all available financial and non-financial data for each hotel individually. Capital allocation decisions to acquire, sell, enhance, redevelop, or perform renewal and replacement expenditures are determined on a hotel-by-hotel basis. Specifically, the CODM reviews the results of each hotel to assess the hotel’s profitability. The key measure the CODM uses to allocate resources and assess performance is individual hotel net income (loss) before interest expense, income taxes, depreciation and amortization, adjusted to exclude certain items determined by management to not be reflective of its ongoing operating performance or incurred in the normal course of business (Hotel Adjusted EBITDA). The CODM does not regularly review the results of Stirling OP. The adjustments include gains and losses on hotel dispositions, impairment charges, pre-opening costs associated with extensive renovation projects, property-level legal settlements, restructuring, severance, management transition costs and other expenses identified by management to be non-recurring. The CODM does not regularly review asset information by segment. The following tables include revenues, significant hotel operating expenses, and Hotel Adjusted EBITDA for the Company’s hotels, reconciled to the consolidated amounts included in the Company’s consolidated statements of operations (in thousands):
|  |  |  | Three Months Ended March 31,
|  |  |  |  |  | 2025 |  | 2024 |  |
REVENUE |  |  |  |  |  |  |  |  |  |
Rooms |  |  |  |  |  | $ | 202,251 |  |  | $ | 225,650 |  |  |
Food and beverage |  |  |  |  |  | 54,529 |  |  | 57,358 |  |  |
Other hotel revenue |  |  |  |  |  | 16,153 |  |  | 16,627 |  |  |
Total hotel revenue |  |  |  |  |  | 272,933 |  |  | 299,635 |  |  |
EXPENSES |  |  |  |  |  |  |  |  |  |
Rooms |  |  |  |  |  | 46,858 |  |  | 53,740 |  |  |
Food and beverage |  |  |  |  |  | 35,726 |  |  | 37,831 |  |  |
Direct expenses |  |  |  |  |  | 2,175 |  |  | 2,309 |  |  |
Indirect expenses: |  |  |  |  |  |  |  |  |  |
Property, general and administration |  |  |  |  |  | 24,398 |  |  | 32,461 |  |  |
Sales and marketing |  |  |  |  |  | 28,410 |  |  | 31,505 |  |  |
Information and telecommunications systems |  |  |  |  |  | 4,583 |  |  | 4,320 |  |  |
Repairs and maintenance |  |  |  |  |  | 13,175 |  |  | 14,380 |  |  |
Energy |  |  |  |  |  | 9,939 |  |  | 11,283 |  |  |
Lease expense |  |  |  |  |  | 1,264 |  |  | 1,102 |  |  |
Ownership expenses |  |  |  |  |  | 555 |  |  | 590 |  |  |
Incentive management fee |  |  |  |  |  | 3,660 |  |  | 4,757 |  |  |
Management fees |  |  |  |  |  | 9,390 |  |  | 10,908 |  |  |
|  |  |  | Three Months Ended March 31,
|  |  |  |  |  | 2025 |  | 2024 |  |
Property taxes |  |  |  |  |  | 9,927 |  |  | 10,297 |  |  |
Other taxes |  |  |  |  |  | 116 |  |  | 224 |  |  |
Insurance |  |  |  |  |  | 5,422 |  |  | 6,444 |  |  |
Total expenses |  |  |  |  |  | 195,598 |  |  | 222,151 |  |  |
Hotel adjusted EBITDA |  |  |  |  |  | $ | 77,335 |  |  | $ | 77,484 |  |  |
Reconciliation of hotel operating income (loss) to net income (loss) |  |  |  |  |  |  |  |  |  |
|  |  |  | Three Months Ended March 31,
|  |  |  |  |  | 2025 |  | 2024 |  |
Hotel adjusted EBITDA |  |  |  |  |  | $ | 77,335 |  |  | $ | 77,484 |  |  |
Other revenue |  |  |  |  |  | 309 |  |  | 639 |  |  |
Stirling OP hotel profit (loss) |  |  |  |  |  | 1,129 |  |  | 800 |  |  |
Ownership expenses included in other hotel expenses |  |  |  |  |  | (5,347) |  |  | (2,651) |  |  |
Ownership expenses included in property taxes, insurance and other |  |  |  |  |  | (320) |  |  | (228) |  |  |
Management fees |  |  |  |  |  | (270) |  |  | (461) |  |  |
Depreciation and amortization |  |  |  |  |  | (37,339) |  |  | (40,544) |  |  |
Advisory services fee |  |  |  |  |  | (11,545) |  |  | (15,201) |  |  |
Corporate, general, and administrative |  |  |  |  |  | (4,332) |  |  | (8,210) |  |  |
Gain (loss) on disposition of assets and hotel properties |  |  |  |  |  | 31,868 |  |  | 6,956 |  |  |
Gain (loss) on derecognition of assets |  |  |  |  |  | 10,046 |  |  | 133,909 |  |  |
Equity in earnings (loss) of unconsolidated entities |  |  |  |  |  | (431) |  |  | (534) |  |  |
Interest income |  |  |  |  |  | 1,214 |  |  | 1,984 |  |  |
Other income (expense), net |  |  |  |  |  | — |  |  | 36 |  |  |
Interest expense and amortization of discounts and loan costs |  |  |  |  |  | (66,802) |  |  | (73,961) |  |  |
Interest expense associated with hotels in receivership |  |  |  |  |  | (10,046) |  |  | (12,098) |  |  |
Write-off of premiums, loan costs and exit fees |  |  |  |  |  | (4,597) |  |  | (18) |  |  |
Gain (loss) on extinguishment of debt |  |  |  |  |  | (13) |  |  | 45 |  |  |
Realized and unrealized gain (loss) on derivatives |  |  |  |  |  | (2,740) |  |  | 4,761 |  |  |
Income tax (expense) benefit |  |  |  |  |  | (317) |  |  | (303) |  |  |
Net income (loss) |  |  |  |  |  | $ | (22,198) |  |  | $ | 72,405 |  |  |
The following table reconciles segment total revenue to total consolidated revenue:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024 |  |
Segment total hotel revenue |  |  |  |  | $ | 272,933 |  |  | $ | 299,635 |  |  |
Stirling OP total hotel revenue |  |  |  |  | 4,117 |  |  | 3,622 |  |  |
Consolidated total hotel revenue |  |  |  |  | 277,050 |  |  | 303,257 |  |  |
Other revenue |  |  |  |  | 309 |  |  | 639 |  |  |
Total consolidated revenue |  |  |  |  | $ | 277,359 |  |  | $ | 303,896 |  |  |

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