Braemar Hotels & Resorts (BHR) 7 Nov 242024 Q3 Earnings call transcript

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Braemar Hotels & Resorts, Inc.

Third Quarter 2024 Results Conference Call. [Operator Instructions] I would now like to turn the conference over to Deric Eubanks, Chief Financial Officer. ahead. go Please

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

were will the and on accessibility Asset yesterday of of Officer; Executive distributed Management. also On results Nixon, the listen-only today be Stockton, basis well Chief Chris Head President and President press call the as a this a release. Richard over Vice The conference Executive and of Internet in notice call as

Such At could certain being this numerous to based to this cause actual contain this you statements federal the which are to the as revise from time, and forward-looking the are upon uncertainties let in unknown me These assumptions, risks, regulations. anticipated. discussed the only provisions Exchange pursuant are made statements conference results The fully or statements not is remind that harbor are or are in update and and company them. with the safe and assumptions subject publicly and differ known to more of or forward-looking conference information date call of materially call Securities of in this Commission. filings factors company's call, made those obligated the included forward-looking securities

of of means offer buy by any www.sec.gov. to Statements made will can registration during or offered be this call prospectus, do which only not an at sell a securities. constitute an statement offer solicitation found to be and Securities a

or those website provided provided may all release provided the accessed and non-GAAP information which reconciliations in other Form with encouraged XXXX, at been terms in in review to also company's measures, the certain be X, are in and Each earnings the together listener schedules, reconciliations November release, is www.bhrreit.com. the through on release. company's SEC filed have are used with on addition, the In which X-K earnings financial accompanying tables call of this

third otherwise discussed quarter in this compare call unless XXXX. quarter the September September all Also, stated, XX, reported the results ended ended third with XXXX, XX,

over now I will Stockton. to ahead, Richard. Richard turn the Please call go

value third and Good call. our overview business on begin quarter an portfolio earnings to recently an today's morning, on of and and by call will Q&A. an update our Deric our providing our welcome And update I our conference update shareholder results, announced creation then open provide management will we'll review plan. asset activity. our will Chris call a Afterwards, for provide on the of and financial

themes today's key several are for call. There

urban of with our prior again X% growth year First, the hotels impressive quarter strong delivered comparable this over RevPAR quarter. performance

La remaining maturity. on no we have XXXX, third, have we are our working and made Second, final And sole of refinancing XXXX with pleased the in we're debt maturities progress on a sale currently Hilton our our Jolla preferred. shareholder of with Pines plan value value an approximately recently announced the the and the of attractive closing million redemption nontraded of of Torrey at creation $XX

quarter our relates useful $XX.X for of is financial that comparable from year third the perspective, seasonality to it RevPAR quarter, comparable portfolio. a of note reported quarter we As EBITDA the hotel our and the million. to the weakest in $XXX, for It's results

Importantly, be RevPAR performance in achieved growth urban of to said, the our hotels, quarter. as the which, by we strong continue of I X% encouraged

segments We're properties. for hotel RevPAR million. Regarding our across $XX.X $XXX, strength was urban urban seeing at assets, the our was and demand comparable EBITDA quarter all

of primary for very portfolio we continued by remain segment momentum will be in and the growth our quarters. this our the the encouraged driver ahead, portfolio, to coming our for urban hotels we believe Looking continue of

flexibility. position, emphasize Looking continue at Braemar's to capital we sheet balance

this La about select our we year, addressed currently and Pines; we million four Pines, XXXX to Hilton sale $XX Jolla execute a maturity. are: talking debt the including noncore Torrey our of million are and the all of Hilton closing La maturities value Earlier a the redemption of creation recent the has plan, They recent the which share With announced lenders three, of our debt have program; now four, sole shareholder sale one, preferred two, sales, Torrey share common remaining buyback the $XX a XXXX Jolla authorization. asset maturities; components. repayment of XXXX

rate During The million per operating for $XX income including on anticipated months Hilton the trailing sale the X.X% the expenditures XX quarter, price of ended key, Jolla March Pines we represented Torrey million. XXXX. La capital $XXX sold for $XXX,XXX a or capitalization XX, net

our We and at also X The X closed taking certain $XXX In maturity rates August, subject loan properties. X-year X-year continue the to new a XXXX. early we the hotel a term through of options financing. of hotels extension satisfaction conditions, million additional attractive to involving of initial to final the refinancing has sale evaluate CMBS

term a in of loan schedule and interest improving interest on facility off average and extending rate credit our in for weighted provides as this Loans only resulted resulted and plus assets, of lower capital a the SOFR debt maturity us paying our floating for and these X.XX%. corporate well financing our cost as Notably, maturity.

of stock approximately have now we our date, preferred $XX nontraded million preferred of nontraded redeemed Regarding to stock. our redemptions

of the continue As the any back we bought of our shares. have common both we needs, our monitor end leverage to not liquidity and quarter, as

RevPAR performance. of October, most results, pace in fourth first our for X.X% quarter Furthermore, that up XX%. report we're group which total currently the well portfolio for comparable XX%, to up of almost us XXXX comparable quarter with is our sets increased revenue recent of our for terms pleased In growth nearly

in well and both term. and believe near long with encouraged these the in position a good We perform to are points is Braemar very data

take now our call Deric turn more in will detail. you over financials the through I to to

Richard. Thanks,

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

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

from of cash of $XXX.X of cash ended held vast As of net At This managers. available had fund to managers, gross cash we our hotel which represents million. by also the and quarter, majority and We of XX% the the is the quarter hotel end cash of lender of restricted third $XX.X primarily had brand reserve that quarter, manager assets. with one The and is approximately of we debt equivalents to end comprised cash restricted $XX.X million accounts. in held costs. due million also operating third-party the

dividend share regard X.X% This With annualized or share diluted $X.XX $X.XX of to stock based stock again equates basis. per price. on to common per on an dividends, quarterly of announced approximately yesterday's a we an yield annual

Directors Board policy a dividend of will company's review continue the to Our on basis. quarter-to-quarter

mentioned, of interest-only during rate extension to $XXX loan X.XX%. maturity a final quarter, of Richard new options provides of SOFR term a is involving certain X hotels. initial The has XXXX. X floating the subject The X-year interest refinancing As on satisfaction million to loan plus closed taking and with X-year conditions, for the the we a

XXXX. Thomas. had acquired and Spa, par Resort financing, House SOFR Pier the House hotels, of which & SOFR Sarasota X new our Resort secured and final XXXX. term with which Hotel Sarasota, X.X%, by The we Ritz-Carlton the $XXX this interest part rate SOFR date $XX a a date of which million the interest date final had plus $XX.X X.XX% loan rate Bardessono July a Yountville, facility Hotel the and $XX.X a loan and Bardessono maturity loan maturity Ritz-Carlton and X.X%, August of on rate by St. by interest loan SOFR value which secured Thomas, the net million to plus tranche Spa, plus $XXX.X secured X.XX%. Spa, is maturity million by credit September & Ritz-Carlton in & and an had The corporate a had million XXXX. the Ritz-Carlton Hotel final refinanced St. an million rate As plus of plus The lowered And Spa, and an loan secured had remaining spread a Hotel in CMBS and Pier Yountville SOFR and had of X.X% of of loan the amount in

in loan Marriott the Looking includes matures ahead, in the XXXX Seattle, maturity Chicago, our the is which June. only Clancy, Sofitel the the that

We the currently expect and refinancing are have year. early discussions about of with completed this next to loan that in lenders

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

common of fully million is currently OP million Our which diluted stock million shares XX.X shares share XX.X comprised outstanding, and count of units. stands X.X at

to to management financial now over our I'd review. activities asset concludes Chris our to like This it quarter. for discuss the turn

hotel was factors. Deric. for X.X% two you, RevPAR by primarily Comparable a portfolio year-over-year third RevPAR driven the the decline The year decrease key prior Thank in quarter. over quarter, $XXX our was for

hotel quarter, renovation of for which final and nearly this the season. at the the completed stages which in Tahoe. work extensive every the we well is festive be of are ongoing Lake First hotel position renovation, Ritz-Carlton the area will The completing, the transform upcoming will

in we third period. to The in are hotels. up the seeing the to normalization RevPAR prior Despite XX.X% slight quarter the the to resort Portfolio-wide year decline is continued quarter increased revenue leisure compared demand period group XX% year-over-year. resort our third of second being a still XXXX, comparable this year

well, achieved of growth downtown occupancy growth returning prior urban urban compared perform our assets continue period. the in In Our our of hotel to with quarter, in third to year the steadily portfolio X% to and total demand X% locations. revenue

property continues managers the a X.X% compared with drive to Our basis per revenue, work management increased prior occupied asset on room year which quarter. our to ancillary team to

and aimed Additionally, productivity our implemented our various initiatives at boosting have across hotels portfolio. efficiency

per overall the a as basis to measured result, room, productivity, labor XX prior by improved hours quarter. occupied compared year points As

the I some would successes quarter. spend highlighting now our time of in some to like

ahead accelerate rooms year As XX%. quarter quarter pace the across continues for by previously the portfolio. Group prior group revenue third the mentioned, to finished of

the generation, increase in ahead first an is of full industry-wide. we pacing despite the partially with by compared attributed success lead in XXXX softening XX%, This revenue to to XX% well the the to positioned compared by a quarter quarter year. prior prior trends on year group ahead year resulted are which leads With emphasis pacing XX% for rooms

lead diligently sales monitor optimize to have Our from seen teams sales recently two actionable takeaways and hotels robust group of performance. revenue optimization targets works team renovated hotel generation most platforms. Notably, with our

largest Capital hotel, above year rooms quarter with XX% quarter. group prior the Our third finished revenue Hilton, the

expenses, is new intensify booking on event detailed to sales team. conducted their the which led restructured to in quarter. compared renovation Tahoe, increase a Lake hotel's efforts opportunities analysis group completing Ritz-Carlton volume marketing marketing the a This sales currently of identifying XX% prior quarter to The the and the has lead leader full transformative initiative Additionally, and a during platforms. third year sales

As year to the by continue cited as hotels. our third hotel XXX points quarter basis we compared for the for earlier, to experience hotels strength urban RevPAR grew prior period these

Our and to The the prior quarter X% beverage revenue a Marriott and base, Hotel comprehensive share an its increase had in hotel a market Seattle successful drive increase year with capture increase food quarter. implemented total compared and a in hotel strategy Waterfront revenue. to group XX% EBITDA

during hotel during customers simultaneously the rates pushing groups July, quarter, and peak the successfully allocating season. a while additional result, in the hosted market's premium to rooms two large leisure As

to addition location and conference Seattle local developing international visual to the marketing involves a tourism visibility government in teams, enabling for collaborated at and hosted a September secure of These our efforts, us presented strategy launch the business the and in occurring are hotel. $XXX,XXX total to Seattle. internal materials the including enhancing U.S. by Visit transformations in aimed government aids officials authorities, Waterfront agency closely market in successfully team development Waterfront, hotel's the sales strategy revenue This at local generated which significant presentations a property. In showcase Destination with at that has the the

portfolio impact government election stalls. this during industry, year Similar a the sees rest third as to the an the quarter of negative typically of business

a to However, demand. year operational levels, demand eliminating the increasing by efficiencies key from prior control this The staffing and drove third with at this PTO quarter the XX% has time, group tax the a significant election successfully achieved state. and EBITDA force Notary XX% Notary the being year labor. on in based strong and quarter. The with managing hotel, favorable an transient Philadelphia hotel efforts by has increased by total on same location in optimizing At results combined seen over revenue comparable increasing battleground capitalized hotel costs benefit its

United of in our September quarter. Hurricane the late the of and Helene hit impacted Milton, the by right Hurricane fourth and some October, which beginning Southeastern hotels were at early In States

hurricane allowing equipment. on risk impacted identifying preparation them procedures and to with low hotels We Our prepare. ample potentially hotels, management adding team and proactively identifying procedures, align removing spots, time handles down sand as bags, then strapping such by notifying debris preemptively

hotels procedures to outage. a our forge These aid our access case who helped release companies of power of have quick All with us generators to strong cleanup. to have relationships disaster provide hotels with in

impact quarter. the did third Beach damage sand at pushed our some to by up to winds, surge that Club operational during due deck Ritz-Carlton roof caused we damage experienced to the sustain the the and to hotel While high level minimal pull we Sarasota storm

capital on Moving expenditures. to

several third relocation of the the and Tahoe. Bar, upgrades included Ritz-Carlton the serves renovations Room Lake of transformative completed the During space. the expansion which as at centerpiece we the of XXXX, These now Living quarter

also to ROI We upgrades enhance experience meeting significant strong pool the generate revenue. the increased and luxury expected through completed the side outdoor addition X are area, guest of pool which to spaces cabanas, including center, and fitness

for and Additionally, access Scottsdale, guests Resort the converting at the retail epicurean at back-of-house the we we Seasons offering continuous and selections where underutilized incremental the Sarasota. beverage an are market, continues food Dusty curated property. Progress drive restaurant completed to refresh Jack iconic to into space Four the revenue Ritz-Carlton

to to St. restaurant Ritz-Carlton the we quarter, by the expect In beachfront updates the completion Thomas, but initiated comprehensive also year-end. third

we fine dining Lake plan Ritz-Carlton Looking begin ahead quarter, at restaurants and Ritz-Carlton the at to fourth Toronto to renovations our the Tahoe Beach. Reserve

revenue. construction the luxury Ritz-Carlton to start which cabanas incremental experience on at will generate enhance sight strong and guest the X Thomas, are we beach Additionally, St. expected

range in as $XX our XXXX, For to portfolio. million continue expenditures and to we million, capital we between renovations $XX expect across and upgrades key invest strategic

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

a look to We outlook. the We quarters also updating progress balance you on remain and in positioned sheet forward with our well ahead. promising solid

prepared Q&A. and our remarks, open concludes for now This we'll call the

[Operator come Jonathan the Instructions] will with Jenkins of Oppenheimer. question Our first from line

of has going group talk And how First forward? when if look normal one me, to mix underlying the mix mix BT can that shift in -- maybe for about you past? the more And impact at quarter, could the just demand? you maybe impact outlook historical remind strong your been you mix that could us what

Yes. Thanks, Jonathan.

done Our XX% XX% historical to mix, group we've business. typically anywhere from

as the XXXX, how at very for year is look layered in our we we're group next think I year happy. pace

lot high season quarter So from we and strongest RevPAR a because a QX is festive resorts, standpoint have our quarter. run that impacts very in that we of typically our ADRs

standpoint, actually quarters. other run QX occupancy occupancy we from an However, is than a lower where

quarter. in group base And so that prefer a we

of pace over where prior is our of the March that's we deeper the Group have for increases kind into currently we pace historically largest within XX% month QX, month softest dive year. group and As is March quarter, up year-over-year. the the

so we're we standpoint, of where with leisure especially group are to only just when softer weekends, continues up throughout And a but resorts. full layered demand our it's our for the you trends, digits of also happy on the leisure that increase. in seeing From throughout quarter. mix and kind year the pace, kind very Corporate first the softer impacting not double zoom year, it's

And an if whole, is rates exclude markets. They revenue corporate soft had San in seeing certainly the very, we're I'd But seeing say quarter. citywide this The to office was They've exception which challenged. that is that be us. you up our pace And in high. seen increase all vacancy only very to continues production all-time BT corporate we're strong year-on-year. that for Francisco, very there. on demand Our XX% nearly hotel

Okay. maybe for strength Or of Day line Labor steady or is a the Great. I'm year? if curious continuation you you've the think demand demand? thinking, I that, improvement seen post on corporate appreciate there. the in that of And a higher kind that is inflection that kind of of color shift throughout

slight Yes. quite seen post strength we post growth acceleration saw some segment. year-on-year. and a to strong in been Day, It we've kind There was QX, did of see Labor and but of as kind as hasn't Labor Day we acceleration the

election. Okay. And on maybe the on the to commentary follow

for demand you talk strength impacted overall kind November? in the can but at about portfolio, noted of You kind maybe of the how Notary, election here the the has

would some I looking we've seen We that in to within In around set renovation, our acceleration. a in in softening election hotels we've some a Yes. uncertainty group months our demand, got very government pace. other from team best turn of softening the group post out of some of the mitigated strong stat that the there's -- Hilton got the hopeful segments where and of how also They're high of a election, of the kind records the November. I to strong that last election. coming ever advance We've of broadly ADRs very that's standpoint. and they well our with to did was segments hotel history Hilton say happened of at kind X year. Capital There ability very just see from and capture particular, continue saw behind D.C., government-related decline. some We're travel lot us, out in saw Capital -- that government big a will hotel. the

D.C. did see we hotel question And a election government softening well, performing so but is your in there impact, around the specifically

could. seller volume broadly And that, or terms the adding the interest and there Okay. expectations September? closing between given to of movement gap the then been other there me, buyer you've you refi Can any September any or maybe for been late transaction change rate has any last having? pricing? in That's in talk color. one of moves maybe the Has about I And in and as since if excellent in conversations here that been market

Fed on people positive Yes. months rates, very think Look, has are more -- over modeling Deric last buyers next curve. and Jon, recession for in been talk in that market. everything the market. It's transaction that I'll risk cutting we've for year. that let about started transaction forward I the handle No now X the the has seen market, modeling I'll financing that

these of all That aren't but said, And you, is just that a That we'll yet. Those said, of data ask extraordinarily -- helpful. some on come suggests So things assets. on certainly we typically have firming back, just there's the brokers. definitely time, time from our are which points lot cap been say or opinion don't brokers their of surprised least the at have we to value eyes I numbers tell in there can the upside. of rates, typically,

as X X or a that transaction a So now. what market our consider hotel hotels would sell another a mentioned, year. But X place take sell It's we'll be will I months. intention averaging process to on constructive long very to to be able to right next I capitalize . is hopefully,

financing seen hotels the CMBS the a And available. We've on down financed continue seen market. say Yes. spreads we've some. get There's lot plenty I of out of come there then in capital debt would to side,

we're other real in cheapest opportune we've part, attractive to for their we're allocating attractive, active and it's to on like and doing the And being be of time attractive market about the in. sidelines. the very out. suspect maturity we're large until are good to we've issues balance see of types maturity Thankfully seeing continue to and of more commercial held at is market not a it's kind probably plenty very most some banks looking But them on we the that's of the we few and one source on feel market frustrating you'd of the that function the so estate feel which, capital. getting be But that address was Banks more we well them that's source financings that active, the of We're been very off like sheet. I capital with to and interest an positioned, got maturities in have, our capital on, the and working schedule. an

of And line next [Operator our the Hogan Baird. we'll with Instructions] from question take Daniel

I you're know damage too there terms much but in a mentioned wasn't expecting impact? you hurricane briefly impact, from just there of an is that that the impact XQ

Thanks, upwards that as levels water beach I the I'd The the of and estimating damage mentioned, hotel. the was impact the there, storm from majority $XXX,XXX some impact say, sand that some We did to moved have Yes. anywhere October. There was was cancellations club. into the it areas. with Daniel. pool and at We're the in the that surge $XXX,XXX kind of to of group sustained an

was it outran And in our for of impactful it kind that it. of So more results. heard and cite terms business. portfolio October Richard of performed offset well us, so Luckily than the that the October you rest

of lot a but with hotel for isolated was impact October, that portfolio the month. whole as a that very So performed at we're to how happy the

That will the to session. back closing management remarks. today's any conclude I'll call for hand question-and-answer

earnings and with to speaking call, joining for on look third quarter. quarter all our you forward you we us thank Well, next again

Thank conclude call. today's all joining. will you That for

may now disconnect. You