UNITE HERE Local 11 sent a letter to California Attorney General Rob Bonta, California Franchise Tax Board Executive Officer Selvi Stanislaus, and California Franchise Tax Board Chair Malia Cohen on October 16, 2024. The letter called for an investigation into whether Ashford Hospitality Trust is violating IRS provisions that provide lucrative tax breaks to Real Estate Investment Trusts (REITs).
REITs generally face no federal or state corporate taxes on their earnings, provided they do not operate real estate assets directly. However, evidence suggests that Ashford Hospitality Trust executives have regularly discussed efforts to cut labor costs and streamline operations on quarterly earnings calls, which may indicate direct involvement in hotel operations.
For example, on AHT’s Q2 2023 earnings call, AHT Senior Vice President Chris Nixon stated, 'And so we’ve been laser-focused on managing labor. We’ve been able to keep it flat year-over-year with servicing additional rooms, which has been great.' Such statements appear to indicate direct involvement by REIT leadership in hotel operations, potentially making them ineligible for the REIT tax break.
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