Sotherly Hotels Inc. Segments Disclosure
15. Segment Information
The Company’s chief operating decision maker (“CODM”) is the .
The CODM separately evaluates the performance of each of the Company’s hotel properties and each hotel property is an operating segment. However, because each of the hotels has similar economic characteristics, facilities, and services, the hotel properties have been aggregated into a reportable segment.
The hotel segment revenues are derived from the operation of hotel properties. The hotel segment generates room revenue by renting hotel rooms to customers at the Company’s hotel properties. The hotel segment generates food and beverage revenue from the sale of food and beverage to customers at the Company’s hotel properties. The hotel segment generates other revenue from parking fees, resort fees, gift shop sales and other guest service fees at the Company’s hotel properties.
The CODM assesses performance for the hotel segment and decides how to allocate resources based on Hotel EBITDA, which is a non-GAAP financial measure. We define Hotel EBITDA as net income or loss excluding: (1) interest expense, (2) interest income, (3) income tax expense or benefit, (4) depreciation and amortization, (5) impairment of long-lived assets or investments, (6) gains and losses on disposal and/or sale of assets, (7) gains and losses on involuntary conversions of assets, (8) realized and unrealized gains and losses on derivative instruments not included in other comprehensive income, (9) other income at the properties, (10) loss on early debt extinguishment, (11) Paycheck Protection Program (PPP) debt forgiveness, (12) gain on exercise of development right, (13) corporate general and administrative expense, and (14) other income.
The following table presents information about profit or loss for the hotel segment:
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For the Years Ended December 31, |
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2025 |
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2024 |
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2023 |
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REVENUE |
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Rooms department |
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$ |
114,400,434 |
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$ |
119,079,903 |
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$ |
114,748,834 |
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Food and beverage department |
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36,458,606 |
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36,626,906 |
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35,231,959 |
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Other operating departments |
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25,528,188 |
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26,187,478 |
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23,857,264 |
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Total revenue |
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176,387,228 |
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181,894,287 |
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173,838,057 |
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EXPENSES |
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Hotel operating expenses |
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Rooms department |
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26,732,018 |
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27,376,330 |
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26,177,539 |
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Food and beverage department |
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25,606,512 |
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25,429,218 |
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24,211,133 |
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Other operating departments |
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9,184,742 |
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9,428,889 |
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9,031,960 |
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Indirect |
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72,412,162 |
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72,847,022 |
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69,629,724 |
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Total hotel operating expenses |
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133,935,434 |
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135,081,459 |
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129,050,356 |
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Hotel EBITDA |
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$ |
42,451,794 |
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$ |
46,812,828 |
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$ |
44,787,701 |
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The following table provides a reconciliation of the hotel segment profit and loss to the Company’s consolidated totals:
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Year Ended |
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Year Ended |
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Year Ended |
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December 31, |
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December 31, |
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December 31, |
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2025 |
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2024 |
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2023 |
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Net (loss) income |
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$ |
(7,779,133 |
) |
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$ |
1,179,854 |
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$ |
3,809,711 |
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Interest expense |
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24,799,871 |
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20,882,681 |
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17,588,091 |
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Interest income |
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(252,961 |
) |
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(692,756 |
) |
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(802,183 |
) |
Income tax expense (benefit) |
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50,120 |
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132,491 |
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(304,947 |
) |
Depreciation and amortization |
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19,658,902 |
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19,380,906 |
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18,788,748 |
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Impairment of investment in hotel properties, net |
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1,310,308 |
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- |
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- |
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Realized and unrealized (gain) loss on hedging activities |
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(131,803 |
) |
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(104,211 |
) |
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|
737,682 |
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Loss on early debt extinguishment |
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463,195 |
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241,878 |
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— |
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Gain on disposal of assets |
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— |
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(4,400 |
) |
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(4,700 |
) |
PPP loan forgiveness |
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— |
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— |
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(275,494 |
) |
Other income |
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(467,599 |
) |
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(489,267 |
) |
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(456,388 |
) |
Net gain on involuntary conversion of assets |
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(3,985,417 |
) |
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(502,808 |
) |
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(1,371,041 |
) |
Corporate general and administrative expenses |
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8,786,311 |
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6,788,460 |
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7,078,222 |
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Hotel EBITDA |
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$ |
42,451,794 |
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$ |
46,812,828 |
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$ |
44,787,701 |
|
A measure of segment assets is not currently provided to the CODM and has therefore not been included herein.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Apr 15, 2026 | Showing above |
| 2024 | Mar 31, 2025 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.