When analyzing potential investments, Ashford looks at the price of oil, credit creation by the banks, the rise in nonperforming loans, consumer sentiment, and other indicators to aid in determining where the economy is headed. “When the broader economy is doing well, demand is growing strongly in our business,” Bennett says. “It looks like, at least for the time being, the economy should continue to hum right along.”
But the economic landscape can turn on a dime, and the Ashford platforms will have to change along with it or face restless investors. “We’ve got a lot of investors—all public companies do,” Bennett says. “You just have to listen to them and then do the best you can, and keep moving. The good news is that industry fundamentals are great, so we’re plowing ahead.”
Good Advice
Monty Bennett, CEO of Ashford, shares advice on how to prepare for the next downturn.
Use floating rate debt. “Last time around, we prepared ourselves by swapping all of our fixed-rate debt to floating, so when the recession came and interest rates dropped dramatically, our debt service cost dropped dramatically.”
Keep plenty of cash on hand. “Don’t let yourself get overleveraged. We are hanging on to large amounts of cash so that we have extra cash on hand in case servicing some debts is problematic and so that, if the opportunity is there, we can go out and buy properties, and maybe our own stock, when times turn down.”
Purchase hedges. “Going into the financial markets and putting in place some other hedges pays off if we go into a recession.”
