REPORTABLE SEGMENTS

12 Months Ended

Dec. 31, 2024

13. REPORTABLE SEGMENTS

As of December 31, 2024, we have one operating segment, our consolidated hotel properties. Our CODM, who is our chief executive officer, evaluates our consolidated hotel properties primarily based on house profit when deciding how to allocate resources, in making other day-to-day operating decisions and evaluating our operating performance against other companies within our industry.

House Profit, presented herein, is calculated as revenues generated through hotel operations (room revenue and food & beverage revenue) less total segment expenses in connection with operating the hotels, which includes all department expenses incurred in connection with supporting the operations (i.e. franchise fees, management fees, sales and marketing and certain general and administrative expenses). The Company believes House Profit is useful to investors because it helps the Company and its investors evaluate the ongoing operating performance of the Company by removing the impact of its capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). The Company further excludes the following items that are not reflective of its ongoing operating performance or incurred in the normal course of business, and thus not utilized in the CODM’s analysis to allocate resources and assess operating performance of the Company’s business:

●

gains or losses from sales of hotel properties

●

real estate related impairments

●

actual corporate-level expenses, which includes property taxes and insurance and other owner-level expenses and any acquisition expenses

●

other corporate income, including interest income.

The following table presents our reportable segment revenues reconciled to our consolidated amounts, reportable segment expenses and House Profit reconciled to net loss:


	For the Years Ended December 31,
	2024		2023
Revenues
Room revenue	$	69,484,481	$	70,159,314
Other revenue		4,761,914		4,655,893
Total segment revenue		74,246,395		74,815,207

Expenses
Room Expense		17,272,363		17,382,217
Other departmental and support expense		12,191,460		12,426,628
Franchise fees		6,368,166		6,278,185
Management fees		2,323,728		2,483,538
Sales and marketing		4,823,461		4,689,339
General and Administrative		6,878,498		6,789,387
Total segment expenses		49,857,676		50,049,294

House Profit		24,388,719		24,765,913
Other (income)		(84,428)		(1,128,739)
Property taxes and insurance		6,361,645		6,108,486
Corporate general and administrative expense		5,146,975		3,746,078
Corporate sales and marketing expense		62,572		161,212
Corporate asset management fees		2,451,957		2,683,975
Acquisition expense		34,353		1,333,267
Owner expense		3,827,187		473,306
Depreciation and amortization		10,583,112		10,396,448
Interest expense		17,500,035		14,621,824
Income tax expense (benefit)		(210,060)		(254,344)
Impairment loss		3,992,772		—
Loss from sale of hotel property		4,638,883		—
Net Loss	$	(29,916,284)	$	(13,375,600)

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

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+ Details

Lodging Fund REIT III, Inc. 10-K