Sotherly Hotels Inc. (SOHO): Business Model Canvas [Dec-2025 Updated]

You're looking to cut through the noise surrounding Sotherly Hotels Inc. as they manage a major acquisition alongside tough macroeconomic conditions. Honestly, understanding the mechanics of their business model is key right now; they are balancing a portfolio of upscale assets with significant financial obligations, carrying $315.8 million in outstanding debt while projecting 2025 total revenue in the $185.2 million to $188.2 million range. This canvas distills exactly how Sotherly Hotels Inc. generates value-from managing brand affiliations with Hilton and Hyatt to executing sales across their Sun Belt and Mid-Atlantic properties-so you can see the core drivers and risks at a glance. See the full breakdown below.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Key Partnerships

You're looking at the critical external relationships Sotherly Hotels Inc. relies on to run its portfolio and execute major corporate events, like the announced acquisition. These partnerships dictate access to capital, brand standards, and day-to-day property performance.

The most significant recent development involves the acquirers. Sotherly Hotels Inc. signed a definitive merger agreement on October 27, 2025, to be acquired by a joint venture, KW Kingfisher LLC, led by affiliates of Kemmons Wilson Hospitality Partners, LP ("KWHP"), with Ascendant Capital Partners LP ("Ascendant") as a strategic partner.

The terms of this partnership-driven acquisition are concrete:

• Merger Consideration: $2.25 per share in cash for all outstanding common stock.
• Premium to Share Price: This represents a 152.7% premium over the closing share price on October 24, 2025.
• Premium to Average Price: This is a 126.4% premium over the 30-day volume-weighted average share price.
• Financing Backing: The acquisition is supported by debt financing commitments from Apollo and affiliates of Ascendant Capital Partners.

Sotherly Hotels Inc. operates its properties under licenses from major global brands. This relationship is essential for brand recognition and adherence to operational standards across the portfolio, which as of mid-2025 consisted of investments in ten hotel properties comprising 2,786 rooms, plus interests in two condominium hotels.

Brand licensors include:

• Hilton Worldwide
• Hyatt Hotels Corporation

Managing the balance sheet requires close collaboration with lending partners. As of the second quarter ended June 30, 2025, Sotherly Hotels Inc. was managing significant leverage. You need to know these figures:

Regarding day-to-day operations, Sotherly Hotels Inc. is described as a self-managed and self-administered lodging REIT as of late 2025. However, the company previously established a management structure with third parties. For instance, a master agreement was in place with Newport Hospitality Group, Inc. ("NHG") and its subsidiary Our Town Hospitality LLC for the management of ten hotels, effective January 1, 2020.

Insurance providers are a key operational partner, particularly given recent events. As of June 30, 2025, the company held approximately $26.5 million in total cash, with approximately $16.5 million reserved for items including real estate taxes, insurance, and capital improvements. This insurance reserve is relevant as the Hotel Alba in Tampa continued to face disruptions from Hurricane Helene, with restoration ongoing as of August 2025.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Key Activities

Lodging REIT asset management and portfolio oversight

Sotherly Hotels Inc. operates as a self-managed and self-administered lodging real estate investment trust (a REIT). The key activities involve oversight of the wholly-owned hotel properties, which totaled ten as of the second quarter of 2025.

The updated full-year 2025 guidance, as of August 2025, projects total revenue between $185.2 million and $188.2 million, with Hotel EBITDA projected between $45.3 million and $45.8 million.

Acquisition, renovation, and upbranding of hotel properties

Key activities included property stabilization following external events and asset monetization efforts.

• Insurance/involuntary conversion proceeds received for the six months ended June 30, 2025, totaled $4.12 million, related to damage from Hurricane Helene at Hotel Alba in Tampa.
• Agreement signed to sell the co-located parking garage for $17.75 million, with a target closing in the fourth quarter of 2025.
• Restoration efforts were ongoing at Hotel Alba, with full return to normal operations anticipated in August 2025.

Proactive debt and capital structure management

Managing the balance sheet involved addressing debt maturities and maintaining liquidity against a backdrop of macroeconomic uncertainty.

The company disclosed a payment-at-maturity default on the Georgian Terrace mortgage, which is approximately $38 million. As of March 31, 2025, the aggregate liquidation preference for preferred stock was:

• 8.0% Series B: $44,655,050
• 7.875% Series C: $40,940,681
• 8.25% Series D: $35,674,458

The accrued balance on preferred dividends as of Q1 2025 was approximately $21.9 million.

Group and business transient sales execution

Demand softness in Q2 2025, reflected in a 5.4% year-over-year RevPAR decrease, was attributed to factors impacting group and business travel segments.

• Occupancy decreased by 3.5 percentage points to 70.8% in Q2 2025.
• ADR decreased by 1.9% to $183.88 in Q2 2025.
• Performance shortfalls were linked to a pullback in government-related travel due to DOGE program spending cuts in the DC MSA and association-heavy markets.

Compliance with REIT regulations and SEC filings

As a publicly traded REIT, Sotherly Hotels Inc. must adhere to SEC reporting requirements and maintain specific shareholder structures.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Key Resources

The core assets underpinning Sotherly Hotels Inc.'s operations are tangible real estate holdings and the contractual relationships that govern their use and branding.

The physical asset base consists of a portfolio of exactly ten hotel properties, which collectively represent 2,786 rooms. Sotherly Hotels Inc. also holds interests in two condominium hotels and their associated rental programs. This portfolio is concentrated in the upscale to upper-upscale full-service segment.

Key Resource: Portfolio Composition

• Ten hotel properties owned.
• 2,786 rooms total inventory.
• Interests in two condominium hotels.

A critical resource is the set of brand affiliation agreements that provide instant market recognition and established operating standards. Sotherly Hotels Inc. utilizes major global brands for a portion of its properties.

The company owns hotels that operate under the Hilton Worldwide and Hyatt Hotels Corporation brands, alongside properties operating as independent hotels.

The real estate assets are strategically located, focusing primarily on primary markets within the Southern United States. Geographically, the group has presence in regions including Florida, Georgia, Indiana, Maryland, North Carolina, Pennsylvania, Texas, and Virginia. This focus targets high-barrier-to-entry markets.

The balance sheet as of June 30, 2025, provides a snapshot of the financial resources available to Sotherly Hotels Inc. for ongoing operations and debt management.

The management structure itself is a key resource, as Sotherly Hotels Inc. operates as a self-managed and self-administered lodging Real Estate Investment Trust (REIT). This structure relies heavily on the internal executive team, including President and CEO David R. Folsom and COO Scott M. Kucinski, to execute the acquisition, renovation, and repositioning strategy directly, rather than relying on third-party management contracts for the entire portfolio.

The projected financial outlook for the full year 2025, based on updated guidance, further defines the scale of the business these resources support:

• Projected Full Year 2025 Total Revenue Range: $185.2 million to $188.2 million.
• Projected Full Year 2025 Hotel EBITDA Range: $45.3 million to $45.8 million.

Finance: draft 13-week cash view by Friday.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Value Propositions

You're looking at the core promises Sotherly Hotels Inc. makes to its guests and owners as of late 2025. This isn't about the stock price, but what the hotels actually deliver day-to-day.

Reliable, branded lodging experience (Hilton/Hyatt) in key urban/resort markets

Sotherly Hotels Inc. offers guests the assurance of established brand standards across its owned assets. The value here is the consistency you expect when booking a major flag, even within a focused portfolio. As of the second half of 2025, the portfolio is built around these affiliations.

The company is focused on full-service properties, which means more than just a bed. For instance, the Q3 2025 total revenue was reported at $38 million, showing the scale of operations generating these value propositions.

Full-service amenities including food, beverage, and meeting space

The offering goes beyond standard lodging by integrating comprehensive on-site services. This is key for both business travelers needing event space and leisure guests wanting convenience.

• Accommodation services
• Restaurant services
• Retail spaces
• Food and beverage offerings
• Ancillary services

The operational focus supports this full-service model, though the Q3 2025 results showed a Net Operating Income of $514,758, indicating the margin pressures in the current environment.

Strategic location focus in the Sun Belt and Mid-Atlantic regions

Sotherly Hotels Inc. targets specific geographic corridors where they believe demand drivers are strong. This focus on the Southern US and Mid-Atlantic is a deliberate strategy to capture regional growth trends.

• Georgia (e.g., The DeSoto in Savannah)
• Florida (e.g., Hotel Alba Tampa)
• Maryland (e.g., Hyatt Centric Arlington)
• North Carolina (e.g., Hotel Ballast Wilmington)
• Virginia (e.g., The Whitehall)
• Texas
• Pennsylvania
• Indiana

This geographic concentration is intended to align with markets exhibiting healthy leisure and business travel corridors.

Upscale and upper-upscale segment quality assurance

The commitment is to the higher end of the service spectrum. This segment positioning dictates the level of capital expenditure and service required, which is a core part of the value delivered to the guest and the owner.

The company reported a Funds From Operations loss of $2.5 million, or 12 cents per share, for the third quarter ending September 30, 2025. This financial metric, closely watched for REITs, reflects the cost structure associated with maintaining this upscale positioning.

Condominium hotel rental program participation for owners

For a portion of its portfolio, Sotherly Hotels Inc. provides management services for condominium units, creating a shared value proposition for both the REIT and the unit owners. The company holds interests in two condominium hotels and their associated rental programs.

The performance of the rental program units is tracked within the composite portfolio metrics. For the three months ended June 30, 2025, the composite portfolio RevPAR (Revenue Per Available Room), which includes rooms participating in these rental programs, was $130.20, down 5.4% from the prior year period.

The average daily rate (ADR) for this composite portfolio in Q2 2025 was $183.88. This participation offers owners a way to generate income from their assets via professional management.

Finance: draft 13-week cash view by Friday.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Customer Relationships

You're managing a portfolio of upscale to upper-upscale full-service hotels in the Southern U.S., so your customer relationships are a blend of big-brand standardization and on-site, personal service. Honestly, the scale of major brand loyalty programs means your direct involvement is often through their automated systems.

Automated loyalty program participation (via major brand systems)

Sotherly Hotels Inc. leverages its affiliations with major global brands like Hilton Worldwide and Hyatt Hotels Corporation to plug guests directly into massive, automated loyalty ecosystems. This means participation is passive for SOHO in terms of system maintenance, but the revenue impact is direct. Industry-wide, loyalty members booked more than 59.2% of room nights at major hotel chains as of late 2025. Furthermore, loyal customers, on average, spend 22.4% more than non-members and stay 28% longer, which is the core value you capture from these relationships. The sheer scale is telling: industry-wide membership hit 675 million members in 2024, growing more than twice as fast as new hotel supply.

Here's a quick look at the scale of the brands Sotherly Hotels Inc. uses to manage these relationships:

Dedicated group sales and catering teams for contract negotiation

For the group segment, Sotherly Hotels Inc. relies on dedicated, on-the-ground teams to secure high-value, negotiated contracts. This is where direct sales effort translates into hard revenue figures. For instance, one property, the DoubleTree Philadelphia Airport, showed the power of this focus, seeing group business surge by nearly 158% year-over-year during the first quarter of 2025. This segment is crucial for filling rooms when transient demand softens. Your portfolio, consisting of ten wholly-owned hotel properties comprising 2,786 rooms, requires these teams to manage complex catering and meeting space agreements across different markets.

Direct customer service and on-site hotel staff interaction

The quality of the direct interaction sets the tone for repeat business, especially for your independent properties or when brand standards are being pushed. Your Q2 2025 composite portfolio occupancy was 70.8%, with an Average Daily Rate (ADR) of $183.88. These metrics reflect the day-to-day success of your on-site staff in delivering value. A key risk is service failure; in the market, 72% of consumers say they'd switch to a competitor after a negative customer service experience. To be fair, managing service consistency across ten distinct properties is a constant challenge.

• Portfolio Size: 10 hotel properties.
• Total Rooms: 2,786 rooms.
• Q2 2025 Occupancy: 70.8%.
• Q2 2025 ADR: $183.88.
• Top-line Revenue (Q2 2025): $48.8 million.

Investor relations and transparent communication (e.g., Q2 2025 calls)

Transparent communication with capital providers is a non-negotiable relationship for a publicly traded REIT. Sotherly Hotels Inc. maintains this through scheduled disclosures and calls. Management discussed the Q2 2025 results on a conference call held on August 12, 2025, following the release of results for the quarter ended June 30, 2025. The company provided full-year 2025 guidance projecting total revenues between $185.2 million and $188.2 million. Furthermore, Sotherly Hotels Inc. demonstrated capital allocation transparency by announcing the sale of a parking garage on July 24, 2025, for $17.75 million, with proceeds earmarked for mortgage paydown. This shows a clear, actionable dialogue with the investment community.

Key Investor Relations Touchpoints (2025):

Finance: draft 13-week cash view by Friday.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Channels

You're looking at how Sotherly Hotels Inc. gets its rooms and services in front of customers and capital providers as of late 2025. The channel strategy is heavily influenced by brand affiliation and direct sales efforts, though the precise revenue split across these paths isn't broken out in the latest filings.

The foundation of Sotherly Hotels Inc.'s distribution is its physical portfolio, which as of late 2025, consists of investments in ten hotel properties, totaling 2,786 rooms, plus interests in two condominium hotels. This physical footprint dictates the reach of all sales channels.

The primary distribution channels Sotherly Hotels Inc. uses to drive occupancy and revenue are:

• Hilton and Hyatt central reservation systems (CRS)
• Direct hotel websites and Sotherly Hotels Inc. corporate site
• Online Travel Agencies (OTAs) and third-party booking platforms
• On-site sales teams for group and banquet bookings
• Investor relations platforms for capital raising

Hilton and Hyatt central reservation systems (CRS)

Sotherly Hotels Inc. leverages the massive reach of major global distribution systems because a portion of its portfolio operates under the Hilton Worldwide and Hyatt Hotels Corporation brands. These CRS connections are critical for capturing transient business that prefers booking within established loyalty ecosystems. The integration allows Sotherly Hotels Inc. properties to be visible to millions of loyalty members globally, which is a key component of driving base occupancy.

Direct hotel websites and Sotherly Hotels Inc. corporate site

Driving direct bookings helps Sotherly Hotels Inc. avoid third-party commissions, which directly improves net revenue per available room (RevPAR). You can see the company actively uses its corporate site, www.sotherlyhotels.com, as the official channel for disseminating critical information, such as the earnings release for Q3 2025, which was scheduled for November 13, 2025. Direct bookings are always the most profitable segment when they convert.

Online Travel Agencies (OTAs) and third-party booking platforms

While essential for filling rooms during lower-demand periods, OTAs represent a variable cost channel. The search results don't detail the exact percentage split of revenue coming from OTAs versus direct or CRS channels for the period ending in late 2025. However, the company's overall revenue for Q3 2025 was $38.0M, which is the aggregate result of all these channels working together. Managing the mix here is key to profitability, especially when the company noted a deceleration in hotel demand attributed to macroeconomic uncertainties in the second half of 2025.

On-site sales teams for group and banquet bookings

For Sotherly Hotels Inc., which focuses on upscale, full-service hotels, group and banquet sales are a high-yield segment. Management noted in August 2025 that the group booking pace remains resilient, showing only minor reductions compared to the same pace in 2024. This suggests the on-site sales teams are successfully capturing corporate and event business, a channel that often yields higher average daily rates (ADR) and significant non-room revenue.

Investor relations platforms for capital raising

The most significant recent event channeled through investor platforms was the announcement on October 27, 2025, that Sotherly Hotels Inc. entered a definitive merger agreement to be acquired by a joint venture. This transaction established a clear exit channel for common stockholders, offering $2.25 per share of common stock in cash. This cash offer represented a 152.7% premium to the closing share price on October 24, 2025, the last trading day before the announcement. The company's market capitalization as of December 4, 2025, was $44.46 million, based on 20.49 million shares outstanding.

Finance: draft 13-week cash view by Friday.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Customer Segments

Sotherly Hotels Inc. (SOHO) targets several distinct customer groups across its portfolio of ten hotel properties, which comprise 2,786 guest rooms, plus interests in two condominium hotels and their associated rental programs.

The company's full-year 2025 total revenue guidance was projected in the range of $183.4 million to $188.2 million. For the trailing twelve months ending September 30, 2025, revenue was $177.57 million. The revenue for the third quarter ending September 30, 2025, was reported at $38.01 million.

The primary customer segments Sotherly Hotels Inc. serves include:

• Upscale business transient travelers
• Group and conference attendees
• Leisure travelers seeking full-service amenities
• Government-related travel (currently facing pullbacks)
• Condominium unit owners (for rental program)

Management commentary from the second quarter ended June 30, 2025, provided insight into the relative performance and importance of these segments:

For the three months ended June 30, 2025, total revenue was approximately $48.8 million, down from approximately $50.7 million in the comparable period in 2024.

The portfolio's composite RevPAR (Revenue Per Available Room) for the three months ended June 30, 2025, was $130.20, down from $137.67 in the comparable 2024 period. The Average Daily Rate (ADR) for that quarter was $183.88.

The company's focus on upscale properties is reflected in the rate discipline, where the ADR for the six months ended June 30, 2025, was $186.14. However, the overall financial results for the third quarter of 2025 showed a funds from operations (FFO) loss of $2.5 million, or 12 cents per share.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Cost Structure

You're looking at the hard costs Sotherly Hotels Inc. faces to keep its portfolio running and servicing its obligations as of late 2025. The cost structure is heavily influenced by debt servicing and property-level operations.

High interest expense on debt is a major fixed cost. As of June 30, 2025, Sotherly Hotels Inc. had principal balances of approximately $315.8 million in outstanding debt, which includes mortgage and unsecured principal balances. This debt carried a weighted average interest rate of approximately 5.89% as of that date. The interest expense for the first six months of 2025 was substantial, totaling $10,945,354. For just the second quarter of 2025, the interest expense was $5,497,789. To manage upcoming maturities, Sotherly Hotels Inc. secured a new loan for its DeSoto Hotel in Savannah, which carries a fixed rate of 7.13%.

Property operating expenses-covering labor, utilities, and maintenance-are embedded within the Hotel EBITDA metric, as this figure represents performance before corporate overhead and financing costs. For the six months ended June 30, 2025, the portfolio generated Hotel EBITDA of approximately $26.8 million. For the most recent quarter, Q2 2025, Hotel EBITDA was approximately $13.9 million. Sotherly Hotels Inc. is projecting full-year 2025 Hotel EBITDA to fall in the range of $45.3 million to $45.8 million.

Sotherly Hotels Inc. has specific allocations for capital expenditures for renovations, which are crucial for maintaining and improving asset value. The planned capital expenditure for the full year 2025 is $7.1 million. This is separate from prior planned Property Improvement Plan (PIP) renovations, such as the $11.5 million project in Philadelphia and $14.6 million in Jacksonville mentioned earlier in the year.

The cost structure also includes ongoing fees related to operations, such as brand franchise fees and management fees. While Sotherly Hotels Inc. is described as self-managed, property-level management fees paid to third parties are a component of the costs factored into the Hotel EBITDA calculation.

Finally, corporate general and administrative expenses are a distinct cost layer. These expenses are explicitly excluded when calculating Hotel EBITDA, meaning they are an additional corporate overhead cost on top of property operating expenses.

Here's a quick look at the key financial figures impacting the cost structure as of the mid-2025 reporting period:

The cost profile is also shaped by other operational and corporate items that are deducted before reaching net income. You should keep an eye on these related outflows:

• Interest expense for Q2 2025 was $5,497,789.
• Total revenue for Q2 2025 was approximately $48.8 million.
• Unrestricted cash as of June 30, 2025, was approximately $10.5 million.
• Total liabilities were $366.84 million as of June 30, 2025.

The company is actively managing debt maturities, with approximately $89.71 million in mortgage principal scheduled to mature in 2025. Honestly, the high fixed cost of debt at a near 6% rate is definitely a primary lever in their cost structure right now.

Finance: draft 13-week cash view by Friday.

Sotherly Hotels Inc. (SOHO) - Canvas Business Model: Revenue Streams

You're looking at the core ways Sotherly Hotels Inc. brings in cash as we move through late 2025. Honestly, for a lodging REIT, it's all about occupancy and rate, but the ancillary services really round out the top line.

The company has reiterated its full-year 2025 guidance, projecting Total Revenue in the range of $185.2 million to $188.2 million. This guidance reflects management's current view on demand, which has seen some softening due to macroeconomic factors like interest rates and government travel spending cuts, as noted after the second quarter results. To be fair, this range shows a slight adjustment from earlier expectations, signaling a more cautious near-term outlook.

Primary room revenue from hotel operations remains the bedrock. Sotherly Hotels Inc. currently manages a portfolio consisting of investments in ten hotel properties, which comprise 2,786 rooms. The revenue generated here is directly tied to the performance of the Average Daily Rate (ADR) and occupancy levels across these upscale and upper-upscale assets. For instance, the composite portfolio saw a RevPAR (Revenue Per Available Room) of $130.20 for the six-month period ending June 30, 2025. While the specific percentage split between room revenue and other sources for the full year isn't public yet, room revenue typically accounts for the vast majority of a hotel's top line.

Beyond the rooms, Sotherly Hotels Inc. captures revenue through ancillary services, which are crucial for maximizing RevPAR and overall property profitability. These streams include:

• Food and beverage, banquet, and catering sales across the full-service properties.
• Condominium hotel rental program fees and commissions, derived from the interests the company holds in two condominium hotels and their associated rental programs.

These non-room revenues are important because they often carry higher margins than transient room bookings, especially group and banquet business. If onboarding takes 14+ days, churn risk rises, but for Sotherly Hotels Inc., the focus is on driving higher spend per guest through these services.

There is also the potential for non-recurring revenue tied to property events. Specifically, the Hotel Alba property faced disruptions from Hurricane Helene. Management noted in August 2025 that restoration was ongoing and they anticipated a full return to normal operations later that month. This situation implies the potential for recognizing business interruption insurance proceeds, which are designed to compensate for lost revenues and incurred extra expenses during the period of restoration, helping to bridge the gap until normal operations resume.

Here's a quick look at the hard numbers we have for the 2025 fiscal year outlook and recent performance metrics that feed into these revenue streams:

The revenue picture for Sotherly Hotels Inc. is clearly anchored by room nights, but the management team is definitely focused on optimizing the non-room segments and managing the impact of unforeseen events like the one at Hotel Alba to hit that projected $185.2 million to $188.2 million top line.

Finance: draft 13-week cash view by Friday.