BHR - Earnings call transcript Q2 2018 | Braemar Hotels & Resorts Inc.

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Operator

Good day, and welcome to the Braemar Hotels & Resorts’ Second Quarter 2018 Conference call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Joe Calabrese with the Financial Relation Board. Please go ahead.

Joseph Calabrese

Good morning, everyone, and welcome to today’s call to review results for Braemar Hotels & Resorts for the second quarter 2018 and to update you on recent developments.

will Eubanks, Stockton, Jeremy Chief Operating today Executive and Welter, call Officer. Deric Officer; Financial the be President Richard Chief Chief On Officer; and conference of as internet the media. been yesterday Press accessibility as covered results the distributed a notice in that The of basis well were this Release call afternoon over by on listen-only financial the has the information are in me are forward-looking At that assumptions Litigation Securities call you XXXX. pursuant let made of the and of and remind harbor this this based contain to or time, statements certain conference Reform provisions Act upon Private being safe the Forward-Looking Such cause subject could actual uncertainties assumptions, results to and from numerous known Statements differ unknown anticipated. which are or risks materially to those are with fully Company’s more Exchange Commission. the in the and factors filings discussed These Securities risk conference to Statements date the is this as Forward-Looking in The update included publicly are or not only made the of call them. call, company obligated and of this revise

go in are which SEC have Company’s X, on used accompanying may August www.bhrreit.com. Each schedules, earnings and turn terms the the and certain those X-K with call tables Form this also release accessed in the XXXX, website measures, release, sir. release. addition, will now non-GAAP is reconciliations been which other provided the call on In and ahead, I Please Company’s be are provided of information encouraged over to the financial all at Richard filed review in with listener at reconciliations together earnings the provided Stockton. in to

Richard Stockton

trend strong Bolstered agreement we two into the that the which segment luxury shareholder of strategy realign believe and economic concrete to with and a and on By This in segment. Research, for of announced growth returns. for proving our segment macro hotels. the outperform over the growth shows RevPAR quarter up industry while We According to meaningfully Braemar announcing joining to lead posted us. took a we luxury SCR and the overall revised luxury RevPAR peers. Smith and the quarters remainder Empirical in two second of confidence, with evidence time segment was focus Good XXXX. portfolio greatest all luxury January forecasters continue with superior in industry this this well-positioned through outperforming segment, up into In first last RevPAR to XXXX. long-term, the both quarter trends can is Travel you during to the and consumer our true, properties, selling others. healthy platform first since morning. year acquiring the has X.X% to versus translate our aligning by hotel X% XXXX segment second the that outlook. of three including strategy trends Thank properties is of steps other capitalize investing growth brand luxury expect thesis continue clearly the a these X.X%,

decline $X.XX this comparable under comparable of of RevPAR quarter, X.X% the negative the St. grew for X.X%. Irma. by year For million significant excluding following the renovation overall is year the quarter, an declined this RevPAR We growth. which adjusted by while ROE versus under Ritz-Carlton overall million AFFO RevPAR XX% XX% year $XX.X explained Thomas portfolio is in hurricane hotels the Much performance and reflecting quarter $XX.X of per prior growth $X.XX reported rehabilitation the EBITDA versus reflecting in of prior share

to highest RevPAR $XXX TTM of REIT in the continues portfolio Our be overall sector. lodging the

northern hurricane events California and During the the Irma last fall, continue related quarter, recoveries to insurance covered we wildfires. our manage to namely actively the

and with our physical we of totaled damage hotels. to our seek recoveries million our all insurance And impact P&L as the hotel claims, work to $X.X quarter. discussed we interruption to through As continue business our have to the properties place insurance for to which as closely well we both comprehensive minimize in insurers during

recovery our properties have normal properties those business at be Yountville the proceeds to returned complete should as of While operations. interruption

these of at to expect XXXX. continue profits recoveries Business BP for for to Deepwater in will spill during reopening our the least the We through Tampa oil at St. lost included October $X.X Ritz-Carlton time Horizon the million to related Mexico some the XXXX. in proceeds in recorded interruption Gulf planned Renaissance quarter Thomas the

during $XX we XXX our room million. working strategy, in Tampa, dispute been for concluded sale for several international Renaissance have with of Florida, second Consistent and on settlement finally portfolio the this quarter, Tampa Plaza completed it quarter. years with We the realignment second the in of Hotel

also in June and continue December San our and downtown both Philadelphia with collection the quarter at be completed expected autograph convergence downtown Francisco are We on-track Courtyard to respectively. to which Courtyard be XXXX,

and it of EBITDA we We X.X%. acquisition market on of completed yield and increase The returns portfolio. the the expected popular of overall resort we will at million. at for as cash Gulf acquisition during the Florida high with quarter a for expect have Sarasota Coast make on to Ritz-Carlton our RevPAR room portfolio the is yield attractive RevPAR also stabilize This quality strategy luxury continue downtown to is growing XXX Initial property the $XXX to in $XXX strong our progress in XXXX and flow. located X.X% reinvestment

being of related with with analysis this to underwriting due Despite feasibility took some the night down of the this is hotel $X.X completion we we our mortgage we balances with million guarantee do We with during initial these refinanced in for acquisition, to for a of progress cost we the will in to $XXX $X.X $XXX the believe the in additionally quarter, this $XXX of a acquisition, of three million million a million totaling we reflected count XX% existing anticipate of to new with return for XX.X% but loan, golf on approximately outperformance Deric advancing versus closed half Concurrent loan, finance loans down acre GOP new In give demand financing entitled to of is our moment. continue non-recourse peers adjacent market million draw that through conjunction to points. identified our We GOP acquisition X.X protected great land on XXXX. vacant made quarter our quarter, both the residential savings. mortgage guarantee strong the detail room the the also year the the first the our work our end of we seen for of Year-to-date in Our in our shareholder currently half not have return this through total plot a an for side that performance of options parcel. second for absorbs first XX by through holdback and needing year. strategy the course was percentage softness as total supply, years. to new shareholder more this RevPAR hotel land some for financial development,

our to by and continuing focus team shareholder delivering value, of continue all business will Going on to plan. solid our aspects enhancing forward, execute operational performance

investor over relations. story I the to continue will also through to on now call We increasing our will turn investor awareness our focus, of Deric. work

Deric Eubanks

Thanks Richard.

income income, million in During as we statement. is the reflected which recognized interruption business hotel other $X.X mentioned, of of the revenue quarter Richard our line

month $X.X in For Thomas and related to the approximately May through totaled of the insurance recoveries million. March St. the Ritz-Carlton

the related $XXX,XXX through Yountville, month For March Hotel the $XX,XXX Hotel to of and is approximately Bardessono Bardessono the and Yountville. entrant and recoveries included January the for for

in related lost for $X.X in Tampa recognized million profits for XXXX. also the to of Renaissance Horizon Mexico spill oil Gulf We BP Deepwater the the

we expect interruption to properties. While recoveries to proceeds business Thomas, at continue the further other at St. expect minimal the for some the time, Ritz-Carlton three we no

$X.XX prior mortgage related attributable last venture assets of Jolla had billion. Pines. or reported for XX% EBITDA for joint The $XX Adjusted to end, total share $X.XX reflected income of For of had diluted of net to million Capital which we million quarter Hilton quarter’s year. we a debt over which the diluted partner on per the and $XX.X and La million compared per growth debt stockholders, we our of Hilton the $X.X At $X.XX, of We same $XXX Torrey quarter rate was ROE million, the share reported common year. the quarter, share AFFO $X.X with

total interest X.X% debt average of and a at rate Our blended is combined entirely floating-rate.

place. All in of floating-rate caps our interest rate has debt

the trailing the As debt net second had end of month XX ratio we was XX% our coverage approximately quarter, times. and of growth charge assets approximately X.X fixed to

March XXXX. debt of not Our next until maturity hard is

working also the net million. with quarter, capital of We ended $XXX

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

Board second on highest X.X% included approximately X.X with space. approximately on annualized of dividends, dividend fully Our cash is diluted results, $X.XX B of comprised Directors million share stands units. yield and yesterday’s of diluted of per our In based basis. closing share, price shares to common annual we share the or per financial to Series of preferred which count at fully shares the REIT associated count This of XX.X a diluted shares in With million one regards million an stock. our convertible share and XX.X million equates quarter an OP currently declared stock our X.X $X.XX outstanding, XXXX the the the lodging

term the This is we the markets a capital loan on X.XX%. Sarasota. rate provides for and the finance year plus $XXX a to as quarter million the during indicated, closed a of On loan Richard interest of floating five front, mortgage acquisition Ritz-Carlton LIBOR

balances existing satisfaction extension totaled Morgan CMBS initial on March date refinanced of XXXX loans X.XX%. for mortgage The and LIBOR achieved we to mortgage million of the and refinanced conditions. term options agented we million. have loans with of has Sofitel an than principal final financing we new $XXX the floating loan subject outstanding lowest with Pool as with interest-only Because approximately were interest maturity five otherwise we Stanley two-year loan provide rate we loans Additionally, with and Chicago is totaling two XXXX, structure the spread this that would respectively. a the the plus The believe loan. one-year previous The $XXX February transaction, and certain

discuss debt to attractive Jeremy our trends. high financial we these such portfolio capitalize financing markets to our to refinancing very opportunities to to management like and on concludes for it review; asset our hotels would assess favorable for continue activities the quarter. turn This see for now We I as to ours will quality over continue additional

Jeremy Welter

Thank you, Deric.

the not our RevPAR As comparable quarter under renovation the X.X%, comparable during X.X%. by grew for second by RevPAR declined Richard however mentioned portfolio for all hotels

with Hotel points portfolio’s Our growth both market percentage two was sudden of margins points our percentage decline reported led business X.X we changed the hotel flow-through million Despite driven quarter. revenue, by income to steps respectively. $X during X.X% XXX sales and increasing XXX% relative EBITDA hotel the hotel’s interruption and by competitive by strong to EBITDA total X.X% RevPAR almost or comparable gains increased points. share basis at in

earlier In strong, second year-to-date robust hotel Each during transit following April April EBITDA impacted addition demand XXX%. positively was flow this X, on year results. quarter. at remain in through accelerating addition corporate growth with the are

terms Courtyard guest will hotel installations this an RevPAR comparable of the This to hotel. from milestone to plan its was in major room December modifications The to initial collection in second September guestrooms to cause the to on quarter's that XXXX, the into in our on back primarily rebrand of as smaller best-performing early bathrooms the represent autograph phase we the downtown. rebrand construction, project In XXXX completed autograph, an in property Francisco XXth. The room renovation displacement. renovation first do assets San the followed order quarter going April not by as guest

rooms a a of by percentage points resulting X.X quarter increasing, into tripled So part comparison incentive increasing than upscale San incentive XXX more the percentage Francisco points hotel will we occupancy the neighborhood Year-to-date RevPAR The and market of by Moscone to to to of and increased increase resulted of satisfaction for and share increase fourth last the by comparable public San the respectively. reopening future results competitive the and have the three X.X growing properties to Francisco of growth we XX.X% year-to-date hotel the on-track the concept, points, comparable the added our in growth above open we guest this an new great million Coupled an increasing XX.X the large basis to central relative year Moscone XX.X%, second far [central] market have configured rebranding and in points, Center representing RevPAR relative of entirely in percentage (Ph) additional performance in is XXXX. these building envelope. the regarding Among now growth a restaurant EBITDA see collection space year, XX.X% both new of have market $XXX,XXX and RevPAR by live robust favorable competitors last keys, its This autograph The offer. superior and doing was closing and by fees strong centric excitement to hotel which due by hotel the room conversion XX.X impact XXXX, management strong relative of believe the this comprised full above with quarter. XX.X upscale still respectively. XX.X%. and RevPAR fuel during product related management scores have continued increase and and set, growth completion in hotel Center yet margins to XX.X% Despite fee the EBITDA. December or

XXX RevPAR resulting upscale the last hotel Group respectively. and quarter. in and helping set In to of Downtown mention point occupancy that quarter performing market, relative RevPAR in represents at X.X% of second in increases Francisco Philadelphia top during addition room performance the drive second outstanding to X.X% I X.X percentage occupancy hotel comparable in during RevPAR nights to briefly increase X.X% the revenue contract to about X.X the Philadelphia Courtyard growth. growth property’s Courtyard XX.X% growth XX%, relative This San to growth another competitive increased room year wanted nights, EBITDA and rate the The and X.X%. respectively the with by Downtown, XXXX Group

Philadelphia The upscale increasing results strong the future Downtown. to the Philadelphia to One grown strong share Philadelphia hotel. to representing Thomas above of quarter during the autograph X.X excited a San note the through to of Maria the XX.X%. percentage from Courtyard Philadelphia of interruption flow the and the EBITDA decline was able of X.X a are or second Courtyard quarter. XX.X% performance million Similar in the Courtyard our the by with Year-to-date XX.X% in comparable XXXX start RevPAR change hotel market Francisco quarter XX% percentage X.X second Ritz-Carlton continuation has collection Hotel performance for the which points, quarter. increases upscale and and EBITDA relative impacts continued aftermath our respectively. to CBD posting report Downtown has of experience St. for and Irma the Downtown for we continued hurricanes us an as a million insurance, business during the was item comparable second were the Through to RevPAR points $X.X

management through recovery is Our and risk in process. peers the industry Thomas and [indiscernible] expertise work when management Ritz-Carlton continue group be the the and a differentiator St. to comes to highlighted the true team it

furnishings. Our assess the and rooms, teams remodeling are materials including diligently by they been working recent to built the and on selected visits have team the senior the model finalized

and central with non reservation branded Permanent St. stock. the again Additionally non-recovery Great or resort property XXXX related with to already limited guestroom as for lease completions central St. the system building start roof Bay in room is Marriott expected as Thomas in are on it reservation reopened will and renovation the gas expectation available XXXX when work Thomas returning system. the work Ritz-Carlton be underway the to is October Marriott is September

to able Marriott on interruption are operational treatment insurance other funded As expenditures, to conduct capital work and proceeds owners priority successfully also and business we claim favorable including capital from benefits and we book benefits. continue obtain our

claim we Napa and business to and Valley up Sticking we properties, we ongoing synergies wrap say reported for to Valley acquired In realize our Yountville. wildfire with Hotel income at interruption Napa beginning $XXX,XXX are Hotel Yountville. ago to Bardessono the expense happy revenue Thomas, one addition our recovery we St. underwrote I’m and Ritz-Carlton the that to year when

Hotel grew X.X% by Second EBITDA percentage representing quarter competitive to of hotels X.X $XXX,XXX points, points comparable Valley independent RevPAR hotel EBITDA for or and grew XX.X%. and respectively. relative increased percentage the further Napa hotel XX% XX.X% its set with increases and

a Xth. resort in the hotel market in pipeline, to however a we golf is mentioned on the construction. growth the luxury sizeable Sarasota amount scale see potential; Sarasota scale quality the With chain the we hotels supply the near-term long-term growth luxury is the beach is only comprised planning is excited market. no welcome of upscale acquired market Richard upper entered the which portfolio change As Ritz-Carlton April we in high club recently and are Ritz-Carlton our high of under which market into or have and or club in

and we hotel. will underwriting While the the supply its in incorporated impact it growth expected our pricing affect RevPAR, near-term into certainly

Beyond experience conjunction storm weekend. rainfall with to may impact Day over in tropical Memorial high the Alberto expect supply growth historically

the in expected comparable As second at quarter RevPAR negative decline during coming X.X%.

flow The EBITDA in by able by utility to the to to However as hotel a number savings, administrative well $X by profitability implementing programs drive was of revenues, reducing increasing fee at of quarter during costs XX%. at was through as by ways strong realize beginning resort golf the second increasing June.

are gold room. additional increase developing to We membership also add and plan

Despite to room art new addition, renovation the of work case guestrooms inspired X. we Sofitel corridor only pleased locally goods In in XXinch X.X% hotel announce on coverings we and automated continued of EBITDA totals EBITDA the capital hotel quarter, rooms hotel through will to investment. new turn XXX%, for renovation excited XXX,XXX I products. strong and going now are increased a the flow or benefits select were was completion Chicago TV, and are second XX.X%, with million forward Mile. included revenue for performance portion goods the realizing window $XX.X soft guest All May the the Magnificent renovation. grew at of strong

capital well total expenditures many under X.X $XX St. in Francisco the $XX during project, as at additional portfolio be strategic the a of in will the This displacement, to acceleration resort Thomas, remains limit estimate to as we in quarter the renovation. predominantly while XXXX, of million will the continue million spending at During under demand capital our year. center approximately specifically San In we of competitiveness. invest comprised Ritz-Carlton at renovation while Moscone the enhancements to

work this mange Philadelphia Courtyard San to related to autograph and the Additionally Courtyard collection. conversion Francisco include

villa of This specifically Hotel. opportunities rooms keys to our Park we be additional will call remarks questions. have adding additional open seven and we at three Additionally, key in a the within identified highly Creek add now portfolio, prepared will the Beaver Presidential and your Bardessono Hyatt we creative concludes our to

Operator

[Operator our Riley FBR. with Bryan Instructions] We will take from B. question first Maher

Matthew Boone

Hey guys this is actually for Brian. Matt on

at looking west the assets, key the to? attributable was drop what Just occupancy on primarily

Richard Stockton

the business, Well from so been in as some slow some a a little has the we have the recover group still business can hurricane small market well. to wedding and we decline of

As the on in well. as or call tropical May, prepared the remarks, Ritz-Carlton I to well at the end that Sarasota mentioned west as, the key in impact that storm was of the from impact

to summer lot the there is more and quite over during bit so than So cancellations we time of there of was can. business drive

Matthew Boone

and quarter. about the there that guys you you to What you has anything with considering. that guys share plan what acquired plot during Okay there, as the great XX long-term us are is acre turning then been the or can considered

Richard Stockton

was then also in it figuring the the entitled plans have we that component are of Yes, that for residential plan, that other to the when would we financial final residential looking out plot, at stages process feasibility would it. now is of being condominiums. include a development What XXX that approximately but generally a acquired in of

what project. idea analysis are much with So, way that the completed to progress that once better is we as right -

Matthew Boone

currently then that give environment me Okay, just acquisition are the you and opportunities around from can some seeing? last color you any thanks. And one is, current

Richard Stockton

Sure.

comes say but at what We opportunity. we capitalize out along great are I opportunities. versus hard, the we our where that market there. are we undeniably at We involved evaluating is are and actively seeing actively it a pursuing pretty is investment we just something in out the assessing it’s in think would market, are that at are moment, would I at more look moment that is assessing the leverage what target staying given the

Matthew Boone

Thanks. Great.

Operator

will Our next Baird. question Michael come Bellisario with from

Michael Bellisario

everyone. also question morning do kind level and you guys Good Francisco, a of the but CapEx. related How Jeremy process CapEx San Maybe just on just pre-pay, the for much pre-fund. to of high on side, kind budgeting

are how risk that shortages of that then the about risk guys up, just labor budget we certain you of around do cost what you costs as them? labor As projects and mitigate thinking increases evaluate how the you going your the material projects, kind for and have you seen view

Jeremy Welter

Yes, great a question. that’s

amount have of that we there types process, go I acquired experience the design question done does soon management has our to and as model that full room as great do we mitigating strategic our those is is so is as of good done having of and do record secure assets. have is contemplated good knowledge on I pre-buy I because know through with expertise. think affiliate relationship, renovation rare construction securing track - process private and and we whether of best we not that tremendous pricing have job a our mean be of Ashford and the huge pricing, through buy to so and us we asset, We competitive we to brands experience, have a work, To mean, just group by all tremendous costs but your which the decades process go actually had you we we benefit very renovations. a markets really and or a that why for reason is have of different that on always

public the is, the budget. price we and autographs numbers what our a did escalations the we two in contingency in shared built that we have in we markets bit With quite with of

a pull One renovations. have and is those our we bidding additional a seen little bit of so that seeing CapEx. in I markets, and don’t will of in to you see competitive we have forward some a thing note very is risk but had and some are two edge elected tied on of interest there So labor I Philadelphia, renovations a lot huge

I negotiated things limited just the the to do of One would carbon corridors that with very part be in we the And to of have the not that that issue we of in comfortable that creates years renovation later which as rooms work is back is were that would with favorable the we that an would corridors. guestrooms to to and additional pulling we was able CapEx which negotiate but a ROI do, renovation. on basically cause couple and treatment displacement forward which on component some

on have will of that little you bit we repositioning, was haven’t one budgets about our we anything a hardest So ahead up. the and of And is I on from pull career work assets from really excited with I doing could asset capital a both forward is moving CapEx, thing position incremental this a are had design of the standpoint, everything well from plan Marriot a that we very commence and It that really that to for at to point those branding here. my but it tell probably is I’m of standpoint, up, transitional my a them standpoint expectation. standpoint,

we And much both well as excited are with minimize get on can very hotels. as the the confident about we very that So competitive very renovations as we going to I’m pricing as it. displacement are

Michael Bellisario

homerun at but kind if looking there? leverage arrangement then a the program give question you what trust would over acquisitions, a proceed similar That’s kind you I that to num, get to hump of our few return that switching gears funding enhance doesn’t triple announced and you to similar are funding maybe haven’t is or of weeks guess helpful something The a higher, program setup why and the something push ago. then you you need on at get across line a finish especially

Richard Stockton

Yes. to It��s great are question and haven’t something certainly open out. that rolled we a it’s we having, it

establishing things as both for of [indiscernible]. case go, entities, the what was already program for So involves the process for the announced independent committees implementing these

also The that So very a the of the arrangement a on market their that favorably bit towards it allows is that outsize for and it favorable to process, a REIT REIT. but responded true it very is generate is investments. little returns

something for more it’s bringing is So worth that as considering well.

Michael Bellisario

me. from you. Thank all is That

Operator

question next with Instructions] [Operator Bank. Our Deutsche will Chris Woronka from come

Chris Woronka

you channel Want point courtyard guys. rate of if Francisco underwriting? two to morning good guess what that do ask At you in and kind it's conversions. back higher to Philadelphia those selling begin, Hey you the facing able is I - the to about of San whether two range or for initial in your the the front Marriott see kind responses that of kind are

Richard Stockton

the but are full out that branding still and typically typically months a opening and have but you it’s We working that full the closer the announce hotel. we few with Marriot, before will plan all of upgrades, we wait to

done with able a vision the Now share of to things are that we Philadelphia. already to we relates is the San one the with that we mostly that have and have benefit group, them room in Francisco are which

in that group to changing so now, essentially benefits three the doing we just out, we going of be branding, but as weeks is branding up the Press are demand we Release, generally on hotel. know a have done us. perspective, PR it’s of average from and been kind something to actual very closer a So But have past that conversion you this full other it’s it around campaign very, the and renovations will wait successful we for the of with

Chris Woronka

to your on the Jeremy on portfolio kind thinking whole great of or If whole, lessen Okay is a it the just we and on less possible that? year next at renovation should we for thoughts directionally impact look more follow-up a you. be then,

Jeremy Welter

think just those are and Francisco renovations San you to just how are out be you Philadelphia through up that. going that our renovation obviously maybe of major to so know and going and and renovations of components Thomas what kind understand should Yes of I be I walk facing through business we run heavy where interruption, St. under split but that is we of kind the

bathroom We have very at bathroom and it’s limited rebranding rooms to as part need already Francisco San some that done the there work. are of but that do we work

of are as XX rooms September we one going time and to the are are days five many be only year the contemplated as looking days. days year. it’s from we churns that four be to at in through a this as XX out that’s will of and guestrooms, be this going floors ranging are two So that to out only what currently through only But December its

most be for out So days. are XX five to to them of going

got record turns, well going the as it’s we and into into to not quick we the displacement to will the any for much back back And third is doing well good news go have the as be is space track phase that some renovations. San have that But Francisco as to guest will experience so plan but and the as public mainly going not backs we as have to the we guestrooms, anticipate to then have pretty go going we limited we quarter limit forth the of be space some that’s stealth of good furniture pieces guestrooms. it go the guestrooms, the come for exterior and into call but hotel, quarter and for possible, to and impactful that in pretty public

taking of really them not So service. out

rooms very limited have in second out basically year. will be next So, quarter rooms and the in will we Philadelphia, Francisco have completed should that of out. San And

we snow we renovation some to a with year. disasters a little would lot and in in that and actually from even had this what the maybe bit the And next so, be in probably [indiscernible] markets of of a Beef And Creek. anticipate less perspective, have to - I some equal we where natural Key West of have year comparisons would favorable have lack we

Chris Woronka

very Richard. that’s Maybe Okay for question helpful.

any rid a, hotels the of You just are thing of gotten number, remaining of out trailing non-core to target, look the identified second forward at so ones you have as kind many of target mentioned kind kind kind of that there following a basically the decline. initially a leverage that of position, have is on that you most just pieces you you is to moving and the leverage maybe naturally the EBITDA are because we number EBITDA current leverage question

kind guys it? So of define how do you

Richard Stockton

I at define of strategy maintain leverage and and was We XX% our the we that target take and guess will are the net that I as in to so so, to right level announced we first. question debt target Yes that worked XXXX gross that second January now. assets,

non-core any is are question of At of there the moment your the terms are there other we haven’t in non-core. identified assets recycling portfolio. In and as capital others

there RevPAR was think the significantly if two we luxury not I a it would that be the would lower average something and need portfolio asset. than non-core was reasons

EBITDA to Pines. Company scale abrupt a now abrupt namely Seattle, scale that Hilton some and amount high have being RevPAR relatively from and Hilton the of We assets Torrey Capital Marriot, contributing significant are

despite being big those technically much So very very to not them luxury performance. contributor assets our down and are scale, we financial are have optimism chain that

non-core So that portfolio and assets in at long any sell the have we saying other the identified not at is the a moment. plans to moment, any way the of don’t have assets any

Chris Woronka

Okay. Very good. Thanks guys.

Operator

next Batory with has Markets Tyler Janney Capital question. our

Tyler Batory

Thanks good morning.

in general corporate strong observation Jeremy, here what question for called on travel? you I So with you you any seeing few know the leisure are quarter got

Jeremy Welter

quarter Yes. great, I but than was wholesale across with the as growth the that of all discount, in well as we is of say we back transit leisure, declines cases our properties But which channels the we certain demand our and group segments most to corporate quarter of and with to saw in stronger all had in a exception lot would slight a as well. for it demand. decline specific higher-rated group the hope fill of were

and for like pretty other that strength some portfolio see challenge have declines in we overall, to weakness we in are if our think I would the channels. anyway So the robust we

Tyler Batory

group Okay can your for about epically XXXX. and great pace the is that talk you helpful

Jeremy Welter

hotel to are is close starting Thomas continuing of QX. QX going with noise much on exclude St. They so group in never under really there is that because year a for but very this being healthy to Yes. renovation, portfolio pace

and is to through X.X%, X%, QX, its that So the is But have but is fourth is the QX and the XX% this deficits. QX up because QX of is then healthy out QX very, QX but of up year, X% up because is this down up very better XXXX address quarter comprised have time for is up because XX%. pace good much year overall, XX%, us, is this the generally QX. is up QX was of up its QX X% is predominantly QX part the that for and a year, further we more we to XXXX strong news very of

Tyler Batory

just is of obviously mean second and you little completed long-term, in kind guys lift could you you question that I the view your and Xst. May of do market last I’m then That a get just renovation. that helpful about curious into of much bit for on renovation year you me. how Can on a talk next based think that year this half here Chicago,

Jeremy Welter

Yes.

are property Sales going bullish we team QX pretty would our as lot as members outperform out leadership change and the I tailwind that Manager. year, with we and core key with well of very, very and [indiscernible] with to the General pleased anticipate is renovation, of management, are this of QX Director So this of a was

There of hotel well-positioned. the the new are with challenges I are XXXX commencing that hotel, we anticipate perspective, are need and as those and market, time well but working some would pace still in the calendar So supply things so the for in think some at group that that we from year, are least general are is so through a but as luxury balance very this struggled integration impressive periods some more pleased I the of addressing I Long us. asset to corporate we beneficial that for to really America been Fairmont as part not we and that North think they has just performer a Fairmont. be property, was side very the leadership a as have the term, in are the lot taken strong there because leadership the it’s as over core which it great with a over, U.S. of

Tyler Batory

Thank Okay, great. guys. from That you is all me.

Operator

will from Our Research. Investment [indiscernible] Edison question come next from

Unidentified Analyst

questions. Yes. Thank my for you taking

is properties, there the quarter, incentive side on some to property through you comment we a cost is you see the to take let’s be in uptick to able the have And Firstly would prospect you but the seen pressure little placed part? any on and second you. that be costs, the [indiscernible] tax say secondly, bit XXXX insurance us cap comment whether you to maybe potential for points and just your there in property [indiscernible] quarters next impact coming would additional some some of able on. insurance you year, Thank wanted might your some of any really ask this on from earlier mentioned

Jeremy Welter

Jeremy. is This

drove ran some where the up last quarter, is the property taxes because property year big what an necessarily tax we property in quarter we settlements refunds had comparability, major Okay were so huge that increase in that adjustments the taxes the but a not XX% and P&L. increase in - have it’s of through second

think And a comparability it’s it’s of be little On from out escalation sync, than aggressive and seeing actually something statement XX% is I a a but we so are buyback XX% to insurance, we end a it’s that we area. I high the on pretty little we continue that some higher so a bit are were completed our XX%. in range, bit that renewal we gave and of on think I range to

difficult the portfolio, renewal little it us, the and really, renewal really, comes continue that we demand typically able with down portfolio so really come two overtime see I have after for that is be lot a contemplating tough that and a all that anticipate even coverage our the are market pricing first beyond bit would from impacts industry go that would we to that the period. catastrophes in I but out starting so our forward and increase for areas renewal our insurance given years generally settled see we have it’s disappointed more anticipate it a the bad was very is down to year transition are down. that What a a costs of was now it's reprising in will But maybe actually something that you our but in and basis we pricing I So last that of year. on to certain to process will a very savings year, is

to continue with therefore center Regarding the I our as performance, portfolio, would to we fees, adversely incentive under being (Ph) [sconing] the and fees incentive the for renovation renovation they well. were San increase anticipate had last impacted year because Francisco's that

actually that and year so Francisco had performance big in the we coming back property and San fees of And decline as a is last performs where incentive quarter the outperforms. decline in

factor incentive Francisco did and the quarter is I and but those things and of of fees part important we won’t the what it So at negotiate the on expect favorable go to a so for completion one not of come into the San for renovations as play this is forward Philadelphia, of quarter long-term both currently terms of some both after to basis it be until those as or I at think analysts as assets. rebranding on investors know much is a for

Unidentified Analyst

very is helpful. that you Thank Okay.

Operator

for closing time question-and-answer to remarks. session our to this this call back I would now does the management At and concludes turn like

Richard Stockton

Thank New we the host save for you the that City on again forward we in Day on all you Investor for plan be lookout call. Thank speaking in call. look our second with joining Please York to next or us our our and to save quarter earnings on you. October

Operator

Thank for our That for participation. today. does your conclude you conference

Braemar Hotels & Resorts (BHR) 2 Aug 182018 Q2 Earnings call transcript