Braemar Hotels & Resorts (BHR) 9 Nov 232023 Q3 Earnings call transcript

Good day, everyone, and welcome to the Braemar Hotels & Resorts Third Quarter 2023 Results Conference Call. Today's call is being recorded. [Operator Instructions]. After the speaker's remarks, there will be a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Jordan Jennings, Director of Investor Relations.

recent to Resorts to of for to you welcome Braemar results XXXX and update & Hotels the on morning, today's review call for and Good developments. third quarter

in the this offered an prospectus is to www.sec.gov. during or constitute of Securities not or found which could at buy Exchange company actual conference to filings obligated only not revise to be listen-only well On the forward-looking any Officer. release. assumptions, regulations. Such that publicly were can in Eubanks, the the made by known as Internet call are of to are or of are more the press statements factors Vice cause offer forward-looking be notice of Financial Chief as discussed Asset and Stockton, included call in this call, basis Executive of and At a and date and Nixon, registration and sell me will Chief solicitation in of this results this to statements Deric from pursuant the Chris The securities unknown made update or only and Richard differ remind certain this conference safe Securities of are those subject a time, do them. statement Officer; President yesterday harbor you the the with based Statements call contain a Executive President fully be company's an uncertainties Management. The call over call will assumptions are information made anticipated. These on today let Commission. which to Head and upon provisions distributed forward-looking this statements securities. results numerous possibility of means and offer and as being federal conference the risks, materially

the release website in which company's the provided other Please Also, call release with In in Unless ended all financial in reconciliations the measures, and otherwise addition, release. company's quarter ended go together provided of XXXX, non-GAAP to compared earnings XXXX, reported to XXXX. I this at quarter turn in filed and with X, in or accessed on be results ahead, the third this encouraged have on schedules also listener used is www.bhrreit.com. Each are provided stated, information earnings which accompanying X-K will reconciliations November are been certain now SEC with the Richard all terms review the may September through those tables to the third Stockton. call September XX, XX, call over Richard. discussed Form

will morning. Deric quarter overview an Afterwards, Welcome update an on conference Then activity. our begin update of today's call. will on review Q&A. open provide and by for asset will call of our an our our we to a the earnings Xrd financial results portfolio. call our XXXX providing management and will business Chris I Good provide

today's We call. few themes for have key a

in momentum the First, urban quarter. comparable of million third of EBITDA reported with which we're our hotel pleased $XX continued hotels, the

our Resort the underwriting. And Dorado maturities, Second, as well loan performing Scottsdale our we most are with continue Four acquisitions and as million regarding corporate by extension upsizing and Beach of our as Scottsdale through pleased exceed our Ritz-Carlton demonstrated well of Four recent closing announcement and extension diligently our Seasons Ritz-Carlton Resort are Tahoe program, we loan of $XXX making solid Lake progress the to with the refinancing They each and addressing True loan. financing the to remain Reserve our Seasons North. recent we at our X original continue work and third,

our results. to Turning

$XX.X with third million. perspective. our portfolio EBITDA Third of delivered seasonality macroeconomic volatile comparable a a is results Despite quarter weakest solid environment, hotel from quarter

outpace properties urban continue results recover. resort to our continue Our XXXX to properties and

Turning portfolio. in to the RevPAR all for hotels

year the down you RevPAR over year-over-year, results. result with important $XXX XXXX their of overall rates we're especially historical quarter. pleased decrease that solid performance that; is quarter performance b, outperforming third performance, a demand X.X% reflected their of Our to is consider a, It's when our resorts versus far the both note comparisons at and remain prior luxury while and still

portfolio. barrier-to-entry our REIT. Taking hotel strong versus our XX deliver growth resort highest hotels of any a portfolio of lodging In closer RevPAR best-in-class markets. fact, our portfolio year-to-date, with look and destinations are million other attractive, our well the hotels compared luxury located has quarter. continues high $XX leisure combined luxury EBITDA to performance resort the Many to XXXX this of XX at are in during seen considered

assets, our encouraged urban quarter $XX performance hotel very third for which solid. remains We EBITDA. our continued the momentum this Regarding million comparable by remain generated of segment,

strength as As our detail This XXXX, return in by Demand in continue in solid cities results, transient that to as recent during be corporate as shortly. Overall, by before, we've emphasized ramp demonstrated urban will to greater up. demand urban continues to continues corporate to return our is expected and hotels to discuss shape. driven our Chris group well accelerate is which portfolio Braemar's

in will portfolio Moving for growth our driver coming the to our forward, primary be we hotels continue the believe quarters. urban of

guest lobby, and the an meeting million space. iconic and bathrooms, location with updates Hotel will This the entered renovation we rebranding have loyalty quarter, $XX facade of and program. great is as Beverly C. undergo property of Reservation agreement renovation a Honors part Beverly guest an Central a Mr. Hilton Hilton and Hills restaurant, into to Cameo conversion. The System Hills include corridors, to the this announced asset to During our guestrooms, the join will

for property before will We a distinctive of creating the is Hilton's commensurate completion LXR theme style XXXX. and with the be end join will that which upon renovation brand,

acquisition North expectations. continues Scottsdale True exceed recent Four to the Seasons our Next, Resort of at our

our addition by luxury portfolio its as high and great it year-to-date demonstrated hotels and strategy resorts. performance, RevPAR our to with a As fits it's third perfectly of owning quarter been

continue acquisition, Dorado Reserve the We solution optimal for Beach part to acquisition. Braemar's parcel also development the continues we Ritz-Carlton well. to as also acquired the nearly X-acre perform other very of this analyze XXXX

third quarter, based an the RevPAR XX% For $XXX on ADR occupancy $X,XXX. of and was

for XX Scottsdale the Four to properties. we the trailing cost, while a Ritz-Carlton our the well-positioned X.X% ahead about yield quarters, very have has achieved prospects underwriting encouraged Season on a Dorado cost. Reserve several luxury yield achieved Beach outpaced portfolio remain and the months, X.X% looking Over assets the these next on These

position, solid at flexibility sheet continue balance sheet and balance to Braemar's Looking shape. in capital emphasize remains we our

million to closing corporate we third quarter, the pleased announce During the were financing. our of $XXX

completed corporate have extension of Seasons discuss Lake those more Ritz-Carlton Four upsizing loan. a and our extended and portfolio, is Scottsdale XXXX. well-positioned in Tahoe about loan recently minute. In in both We by benefiting I'm our we from a XX% the We unique being social up results and groups. future also group summary, our and supported will XXXX which our Deric XX% for detail optimistic and pace for

believe long highest in remainder and is detail. take continue accelerate, you financing Deric and the in the attractive have and markets both what as footings the call with a place. I more our group and solid debt Braemar in and quality over now in through near business XXXX through financials with balance is XXXX to travel into positioned to the hotel term we Moving will the public of portfolio solid sheet remain the we liquidity position term. Further, turn well perform to on well

Thanks, Richard.

EBITDAre We $X.XX. we loss diluted Adjusted AFFO and quarter, $X.X share to the was La million or share Jolla million. and billion stockholders loans, negative per partner million the Torrey of common reported For related our assets which per of we of $XX.X Capital quarter had of of At had Pines. $XX joint $X.XX for Hilton total billion. end, net on attributable of diluted $X.X quarter share loan to venture Hilton the the $XX

interest in money debt caps, XX% our Our rate a at current interest X.X%, currently Based level rate rate and is loans interest SOFR fixed of effectively total had XX% our into taking combined corresponding approximately is the approximately floating. account the of average effectively on caps. of blended

of to had restricted XX.X% equivalents of quarter, of stock third X.X% $X.XX We per This net end in quarterly that and or one of share the based common annual to end manager December million basis. an stock per and yesterday's managers. the also held This reserve of quarter, also primarily had the cash At third-party hotel dividends, $XXX.X we represents by costs. With with company's in is significant announced we fund quarter and of which on an cash the lender accounts. diluted is annualized to operating debt of $XX.X share As to majority increase cash held cash vast million. The of price. comprised $XX.X our equates of a approximately the hotel in assets. restricted to yield regard gross we dividend the cash due XXXX, of million ended brand approximately managers, on available $X.XX from

Our improve. a Directors dividend on the it continues basis to to review Board of with policy view will quarter-to-quarter financial a as company's performance increasing

financing one on certain X-year loans related based financing to borrowing the loan of Sarasota, mortgage that options million is a million a financing rate to a has X.X%. those new Spa announced And grid X.XX%. off The pricing and with SOFR extension our range Bardessono by term base the a million a existing plus quarter, during for upon revolving subject mentioned, consists Ritz-Carlton proceeds Richard to interest X-year Hotel and that and used secured of net facility. of debt conditions pay EBITDA we The X.XX% we $XXX As satisfaction is Yountville. term the current provides X plus from financing new hotels, SOFR the a credit the the rate is of corporate and $XXX the $XX Hotel properties. This a to to

conditions. nonrecourse upsizing the maturity closed in mortgage we $XXX have now initial million X.XX%. the is the secured Seasons options of on of Arizona. December by and and plus Four only interest subject an Scottsdale of loan to X-year True XXXX also satisfaction the Scottsdale, in extension continues Resort and with totals During North extension The interest XXX-room rate SOFR loan loans floating The certain quarter, our has of at to a two,

term by on plus nonrecourse initial subject mortgage Tahoe a extension has is interest with of loan Additionally, SOFR in subsequent rate a the XXX-room to interest extension to X-year loan floating quarter million Lake one, $XX.X option Ritz-Carlton California. conditions. The of end, of the X.X%. we has only X-year totals certain closed the secured loan now Truckee, the and satisfaction The

Hilton Our next maturity matures lone Capital La Hilton Torrey in Jolla is and which Pines Hotels, February XXXX. a final debt our on

X,XXX As portfolio XX September our net rooms. with of consisted XX, of hotels XXXX,

now XX.X common OP over like to XX million X.X of at comprised which stands currently of our units. This fully count management I'd share million financial million concludes discuss shares our asset to is and shares it activities outstanding, Chris turn Our quarter. for review. to diluted stock the

you, Deric. Thank

the increase comparable the This our $XXX. to quarter hotel a RevPAR third the For quarter, over quarter X% for in prior decreased over XXXX. represents year XX% portfolio

urban EBITDA X%. continue prior Our growth to demand from assets comparable benefit year exceeding the total by hotel quarter with

assets increasing by which and our higher high-quality our luxury demand, hotels acquired within hotel portfolio optimizing time highlighting hotel of the normalization identifying initiatives year to quarter. Total a RevPAR I how at luxury some value-add average by portfolio. chain portfolio we prior would our the group nature national reflects and seeing from performance while increased RevPAR are was our over through XX% We the scale, the implementing hotels. spend urban of XX%, resort across are with X% our like our for the than newly declining including opportunities the for performance team, some resort increased RevPAR

by group group also We for activity. revenue by year pacing ahead group to is year through XX%. Within exceeded pace were experience of ahead is hotels, group XXXX quarter urban room XXXX year year full year a the The group quarter segment for the in revenue third resurgence continuing by X%. by encouraged We within segment. the prior XX%. the of continue prior with strength revenue prior full the Portfolio booking our quarter

revenue is quarter. group future an urban prior the year secured in XX% for our increase the quarter, periods, $X.X During over portfolio which million

Capital is revenue, quarter a XX% with increase hotel Hilton hotel This considering transformational largest in Our achievement finished approximately the $X.X the guest to was over the under positioning success found entire out of reduced quarter. Despite property renovation. team while room come improve the has also our as renovation throughout inventory, performance for we ways hotel the the the million prior noteworthy, group quarter. a year

added of part XX As recently we broader keys the across initiatives, portfolio.

we Additionally, portfolio. increased seeing nights the are peak across

XX%, any periods We nights During capitalize this our individual having high portfolio night as greater us were prior premium the to on generates up over where peak with quarter, occupancy rates. demand peak these XX% than the year allows additional nights quarter. define inventory

success and of contributed All portfolio the to have more of these overall quarter the during efforts third XXXX. the of

performance recent our strategic at Scottsdale. plan created Four X each for targeting are Reserve We the creating with takeover particularly assets, and Ritz-Carlton most our Beach the pleased of team acquisitions, Upon Dorado a Seasons value. the acquisition, for opportunities detailed the

At We initiatives, we diligently the Dorado strategy. have increased results. produced sales program, Reserve strong the our optimized been Beach, executing have which on Cabana digital have enhanced our and marketing Ritz-Carlton luxury villa rental

The X% have We Scottsdale room flex has Seasons labor, rooms quarter. a allowed benefited Four quarter in has actions. introduced similar of expense which appropriately the per occupied third in from reporting, us more enhanced resulting cost year reduction to prior to

room XX% productivity, the labor to measured hotel compared hours quarter. occupied by third year per quarter, third During the by prior the improved

recommended management implemented and labor a team Our new system.

Seasons our time GOP hotel staff hotel hotels where last have task have branded to Four optimize comparable higher send we hotel's successful, other U.S. These the utilization, XX% the to our partnered force initiatives from compared the year. propelling We been same Four also need year-to-date Seasons ability that with around to to support. the available

In Waterfront the quarter. margin most improved Marriott addition by basis over recent prior quarter. hotel Seattle to points year our a GOP acquisitions, our its had XXX The successful

recently increase aggressive enhanced labor hotel prior plans, a and and resulted efficiencies. hotel year the the product The XX% contributed during X focused a an total room added renovation total to implemented revenue property in team Our room for guest in heavily increase XX% keys the over improvement quarter. in hotel This productivity on new quarter quarter. which completed the

Moving on to expenditures. capital

heavily several portfolio last transformational in invested Ritz-Carlton hotel. our the Tahoe renovation of The the areas have a years. all over spanning is Lake We undergoing

event the and wet pits exclusive as fire be guestrooms luxury renovating the sold adding areas, will that renovating spas iconic and premium currently space highly are upgrading club well a lounge as retail the visible We suites, outlet, adding Cabanis. by patio

previously at suites addition, In Hilton and the guestrooms are we new mentioned, the X adding Capital as keys. renovating and

Sarasota. Beaver have to we and center the fitness plan the and meeting started Park renovation Lastly, year, room renovating Ritz-Carlton Later spa a and at at start at Creek the space the Spa. this Bardessono Hyatt Hotel guest we

capital For XXXX, we anticipate spending $XX on between expenditures. $XX million and million

in it outperform to high-quality in are our extremely confident demand, This is the is experiencing portfolio term. stabilization long Lastly portfolio. a an we that continue will the market

Our team at extensive adding of track we optimistic has pace. an record value, group future and are ahead as we look

reiterate with Thank properties. to recovery our you, continued that I'd Chris. be by emphasized summary, continue of we of In performance to the hotels, the like pleased urban our

balance forward ahead. This for very also we the progress operationally market. and open in and the portfolio remarks, publicly well the call quality on sheet up you with We updating a look will our hotel Q&A. We prepared solid remain positioned to REIT quarters the now traded highest in our concludes

Batory with from question first our Oppenheimer. take Tyler We'll Instructions] [Operator

the So assets particular. at build management properties? some maybe and use are of back mean how some of revenue you rate Just there. or some in OTAs kind even of more seeing about drive think normalization think to you moving want the sacrifice demand and those occupancy my some thinking you bit lower more to trying may on to pieces I there. little to to first demand about try do rate to want to trying to resort question what you hold is some you're a occupancy? more through maybe the Would How at about

it's Tyler. great question, a Yes,

of demand So our we resort stabilization are properties. in seeing a

XX% XX%. is in ADR to XX% significantly up that down to year-on-year. they're XXXX. With up said, QX were up XXXX, still about resorts Our

think a having optimization hotel to through. even is in where specific the still the we softening, have I the So broad get we've really, work to in-house really got strong revenue that we're able advantage teams nuances team we're very seeing though that's with there's market because details

And there so marketing additional we demand. do so programs the loyalty really and is challenge leverage sacrificing looking stimulate activations, our rate. at are how to without some can The teams

channels we decline. successful But so nearly XX% I up make 'XX think a to not optimizing there. want after we're And customer the fact that that we're that do sure we're at we doing so going ADR show segments. we've are in And that all all that significant been

for strategies, group our we've group to broad been resort looking experience the XXXX. of a for is group come in obviously, segment looking business need able time. encouraging the terms In within aspirational it. that. first key the is groups group We're to taking to off-season What more and pace improve we're seeing where at we We're at

that we with elongating that that at in it's of us staying groups group that all our smaller So offset contribution the groups and length that been. are What overall stays. slowly for the help groups think going shorter that year means a coming the pricing can after window, we pace the are they're night, that stronger within on are is greater hotel. with much we're more in the longer booking in higher said, of group peak resorts they're go kind have while stabilization. With year we than will the We're to still value we that to continued power and is think year catering into segment, going groups a much any for pursue. We historically and seeing

demand. how kind we're And of so on in of of navigating some that's planning kind stabilization the

Okay.

Okay. that. Appreciate

things margin, we the decline pressuring of the little get could year-over-year, terms margin QX to that you onetime expect numbers when at bit was perhaps margin. into -- would level pressure in in that QX? In any look were better. of there Or continue a And

Yes.

there's kind play into of that we at things margins, when of a think heavily look that. I couple

do? in that portfolio the RevPAR what ADR we quarter, The pressure for And downward broadly saw lot of the margins. first declines thing a puts is does and on

at when of . there happening resort post-COVID, XXX our of think terms I premium dynamics over point margin look urban our and in of kind what's you resort and mix, hotels. a have the run revenue basis weighting hotels our urban our

got have as increase our going a insurance continue of hotels weighting, many on carrying as revenue margin. experiencing That for urban a And so we've and the grow is had of our impact very in insurance property they margin they're contribute of significant especially in bps larger to hurricane property percent about XXX was some the that's markets QX. our revenue tough The EBITDA insurance. and well. exposure where property some and in have as forward accelerate we We portfolio, to exposure what kind been are erosion others to an

the in done is an exceptional our big of the has team feel One And margins I that's other factors labor. area in.

first quarter, for we time, in a significant reduction labor a pullback had we the usage labor about saw contract contract the the XX% portfolio. across in For

labor X%, total reduced portfolio X%. We improved. while by our across much hours occupancy decreased was productivity only Our by

been in of kind we've talked will with we've that of at still hold ADR I'm confident line about seen. maintain labor so those will of aggressive confident And the flexing urban to continue, resort on and the within able be we'll that portfolio our demand terms on I'm But I be play. changes and kind based dynamics ADR.

that allocation conversations buybacks? that something could something question around for Any additional Okay. handling mean mean about? Richard, that you Great. just I last the I debt sense? implementing maturities front. share make a has just Is know priority. think Maybe is certainly been me, I capital

lot are Well, gotten these based share on interesting. I shares a movement today, Yes. undervalued. believe that that's our grossly price certainly more

to as I I went an a that No, in the is personally have now want that to to unknowns. interest don't a as into you've kind our going got liquidity know ample balance saw made month I because right need because as take. when ago, how long inflation as expense like future various do rates the rate address liquidity market of You just be on to they that our able management are, this discuss. careful we able It investment. Yes. to long ensuring fine phase think Board is high fund is CapEx We our embark want to be And see as with going they to about something would of that address be really to as strategy it's its we well are we programs. the maturities. Fed What I will cutting

it's very certainly topical. So

what's is kind happening market more seeing it today think the making of mind. I even top in of

[Operator Instructions] Michael next Bellisario take we'll question from our with Baird.

back to thinking we'll and I again question when get top Presumably, bottom of see big of the your might the kind about comps just cadence thinking Richard, line you What's year? how growth line? resorts. tough throughout and there, sort positive recovery flip in XXXX for both but XQ, are first the picture of

Yes. Thanks for that.

the look forecast segment. you mean, for the they're I X% So for year, X% at RevPAR over and up first, if industry luxury over generally next

think portfolio I will our trends. benefit those from

things the telling noticing guests U.S. year find year I've travel same travel and instead of been they for luxury that amount you overseas demand so had the One that do domestic more international it's people next resorts. typical we've our unlikely of of that much many that this and is past

trends quarter, all turn? close you'll coming also I summer, to those when over first second, the certainly that home. third by Europe. see to conflict quarter, helped does could the had way, say geopolitical has I in in by This seeing So it but it I'm we're hopeful be of next think, exactly the

at a home. so travelers And I of our U.S. also think keep will lot that

that. anticipating yes, I we're you view? which quarter? so And Chris, don't benefiting better from Exactly know,

Yes.

hard it's quarter, Michael. think I specific a to peg

I positive group That's about we're I for are indicators. optimistic think will XXXX. there pace is I encouraging. mentioned resorts XXXX. some overall, at up our say

that softness to magnitude. look degree lesser it's in while we're down lesser Some of still down a trends we ahead seeing, as leisure leisure the and

the we into and that, -- new And hope believe kind kind of norm. that we is that settling settling of so softening we hope and kind going be of we're what's that, to

was plan the begin then the loan what's then understand to was Scottsdale there? it. with. low proceeds it Got But And another the That's I a just And loan with upsizing. ahead? driver one looking those what leverage on helpful.

property the just From leverage standpoint, the extended Yes. to had obviously a We June, time some that paydown replenish it was mentioned, big use And Back it Michael, up just like was sure to increase like And our cash. property. in. going well. just months in you plan Deric. is, got opportune to we've sizing maximum thing there felt felt loan. replenishing on we has an The of couple it's made Look, a very loan was ramped basically proceeds low -- like of debt the that X-pack we prudent do a I earlier. it liquidity. cash to make that

Yes. that Deric a I'll bit to add what said. to little

some look and forward at you ROI to the As CapEx projects you we have. look XXXX that of interesting

those the get Lake in out is That to Tahoe through we of the some capital past anticipate is Ritz-Carlton that entitlement And progressing the of very development. you've nicely. the spending that One We're with heard working next ground townhome significant Plaster development about County. year. process

opportunity had shore one we up so uses we it of some of XXXX. into said, And move as Deric that's as the to the and cash,

moment, a I at we $XX place debt yield just wanted coming really of might all, little perspective, have loan. refinancing. we debt bit challenging It's we'd Beverly a those challenging, an EBITDA and front those be the keep got a because a just mentioned the part, of more to at a long easily possibly Canyon look refinancing of been those. maturities the bit be little in loan in in debt But upcoming it's probably so to amount one maturities of maturities. Normally, very -- you pursue market upcoming unattractive in one the front most as from we small that of our slow that is there's a bit would be well of And that be little should from on can. And refinanceable if million Hills. for but it also those. XXXX we're only loans. We've a decent more XXXX, in Those We've very as a up

handy might So cash that the having our come well. upside balance for sheet as additional on in from that Scottsdale

Understood. for That's follow-up one helpful. just Chris. Actually

XX% high mentioned nights nights? achieve Just on the the RevPAR what's nights how that year-over-year. up occupancy quantify is I think you growth across you peak many you portfolio? those Can that And

are the slightly portfolio. say those XX% of we for Thanks the increase nights majority would our that question, fewer. Yes. will is dozen realize probably or a the I the revenue Michael. estimated I where within the nights that

And we those peak so double aggressive. push across for average to the able of increases urban is. for RevPAR realize to We wouldn't that it rates. are those uncommon of peak most We're be get And very hotels. night seeing us our are kind nights what monthly

group, strategies the work so And properties down we're on those loyalty program It's us. thing of our and laser-focused kind way all majority for on the we make most kind getting we critical very factor identify programs strategies a brand to ancillary advance. a the the that's money. We're of how that those respective in with loyalty to our to nights. ensure of we We where our of revenue our manage out nights. something It's

So indeed, significant. is it

I'd further remarks. questions. call turn no like over are management to back there for closing the And to

earnings All quarter all speaking with call. on Thank you right. forward call, our we us and on for to third you our joining look again year-end

does today, and disconnect. That you. for your now conclude Thank presentation. Thank you may today's you participation