BHR - Earnings call transcript Q1 2021 | Braemar Hotels & Resorts Inc.

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Operator

Greetings, and welcome to the Braemar Hotels & Resorts, Inc.

First Quarter 2021 Results Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Jordan Jennings, Manager of Investor Relations for Braemar Hotels & Resorts. you. Thank

begin. may You

Jordan Jennings

welcome & call quarter Resorts update developments. and and for of review Braemar to recent on Hotels for you to morning to todays results XXXX Good the first

will the Eubanks, Officer. Deric Officer; be On Financial today Richard President Executive Chief Chief and Welter, Jeremy Stockton, and Officer; Chief Operating call

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

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

Richard Stockton

our Four an activity. for call in quarter, update Good review positive Welcome business quarter I which our and earnings our is luxury portfolio, first to ADR begin on in providing EBITDA of for themes $XX our provide our our open includes history. are: results, will the million resort hotel morning. After an Q&A. on of Jeremy Deric the for in financial highest for average today's portfolio, quarter of call the update will EBITDA a our our our third asset that, of hotel the and again management rate daily a conference outperformance key provide will achieving resulting we of which quarterly an an hotels by Afterwards, overview portfolio call. and row. $XXX will for entire the

positioned shape highest properties first quarterly history. XX.X% second pleased the our And quarter. well in and quarter of EBITDA I'm reported for outperform our the at balance as look term in portfolio. were quarter, in strong hotel during a to over which the we occupancy $XX.X is ADR levels at quarter. hotel EBITDA our with our forward We continued across to prior resort the increase to during by million sheet level strong the no positive resulted maturities. ADR we year driven achieve quarter, the positive report is portfolio flow very in Our corporate the cash debt near good at We bookings with that

we that demand demand. Overall, leisure is portfolio. up to are group transient While is ultimately on to forward our in and on strong our bookings well, anything ramping a continued corporate recovery particularly likely demand the RevPAR performance of can resorts weekends, rely throughout uptake perform quickly, and

For RevPAR XX.X% occupancy April, our preliminary $XXX an $XXX. ADR was of of of with the month and

and current markets Our of are drive occupancy pent of also June look well-positioned for the resurgence benefit of books bookings been and our strong, to have for for XX% May June. Many the on current with May from XX% to LA hotels destinations. in Hilton Bardessono, and leisure hotels Ritz-Carlton XX Hyatt St. up Yountville, the leisure Park These Pines, total, include Torrey Ritz-Carlton months. House Creek, of Thomas. demand recent resort Hotel hotels eight Ritz-Carlton Resort, Beaver in In Lake are Sarasota, Jolla our considered Pier Tahoe, and

are to hotels these just quarter. out million EBITDA this hotel as as we for continues thesis that had expected report the pleased $XX.X We to combined of a play

While early clear about are guests’ enthusiastic in are it is it recovery, feedback is the early still the that hearing from we again. traveling

we at the for flow Additionally, level were cash the positive quarter. corporate

in of in XXXX, us and position team. proud much was work sheet more entire dedication puts could the we be entered as shape While financially, good the incredible this and a not better I our of balance

portfolio leisure in markets, properties luxury us drive ultimate the near unique perform and industry. focused on positions for as to to as our Our the the recovery segment many well term, well with in

space. opportunity Braemar the compelling Looking forward, that in we continue presents REIT lodging to a believe

in the now what portfolio I portfolio very differentiated a balance quality flow, position our solid and highest debt we assets majority and is to locations, over attractive generating public liquidity and Deric. cash the is desirable EBITDA are that in hotel a in with turn positive call the markets, resort story sheet will We believe place. of with the a financing

Deric Eubanks

Richard. Thanks,

to or $X.XX stockholders quarter XXXX, attributable diluted per share. a net we reported of loss For common $XX.X the of million first

venture reported La Torrey our was shared on assets total EBITDA Hilton Hilton to of of RE end, $X.X diluted billion AFFO the billion. the $X.X alone per we million joint had of $X.XX, For partners Adjusted the of we $XX quarter prior Pines. growth the represents which Jolla million. quarter, over Capital of which related year had We At loans quarter $XX.X for quarter. and share XX%

Our average a total X.X%. had of rate combined loans blended interest

rate. entirely floating are Our loans

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

are we our defaults. loans of have All current and no

As Richard $XX.X the mentioned, our quarter during million. hotel EBITDA was

our run monthly advisory current is run corporate current approximately G&A and million, monthly $X.X service debt is Our and rate fees approximately $X.X for rate for million.

we million the gross During million shares raising ATM, under approximately quarter, to proceeds. in X.X quarter the our approximately and of issued the end subsequent $XX.X

leverage the have completed exchanges of also million Series been X,XXX,XXX or all to commitment able a common we've X.XX Series our we These the stock. sell B These continue a to the beginning shares stock, X.X to in original the the we of preferred cash the as B XX-month total, exchanges sheet. of a During year, our associated these at as and also approximately shares increase an serve approximately lower way as to exchanges stock outflow. up improve the our entering common into quarter, shares at to Since million shares, for million are to distribution X.X shares the in our important SEDA, count negotiated preferred have under strengthen XX.X% common balance into but to not several entered an transactions SEDA to the time discount issued only of during we approximately we've of dividend $X.X of raising into stock. with value shares into to period. stock these and equating privately proceeds. of opportunity, our stock Since equity also convertible any pursuant capital our preferred our million share standby par counterparty which preferred agreement we We exchanged completed view remove a of SEDA liquidity our

covenant loan fixed our covenant fourth of quarter, and our charge XXXX. our the XXXX amendment the reduced During quarter extended an end of the term we to through completed through waiver that

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

stands Jeremy quarter. concludes diluted share count I'd stock. common we preferred over our our X.X now turn to asset This count of million currently OP In comprised has diluted Our XX.X stock and million shares approximately at financial shares management our our to financial which shares share fully activities million associated results, convertible discuss outstanding, our include Series XX.X the million fully units. X.X B at like in review. to for with

Jeremy Welter

we portfolio EBITDA Thank And you, first generate able were XX% flow-through hotel to RevPAR during the Comparable Deric. decreased of our for XX%. quarter.

recorded impressive believe our the to of market efforts quarter, an XX% whole. first RevPAR a portfolio market testament its quality outperformance and For the first is We the of the compared to a over to asset tireless XX% our the as quarter U.S. Braemar XXXX this management of team.

of was XX% only of hotel first team This performance the ADR, recovery. our but at is evident worked the our quarter, which Our asset levels overall drive hotels. higher also XXXX has our relentlessly not each in to in management portfolio for than strength EBITDA

to relative a comparable delivered which achieving noteworthy example, period. million the monthly St. XX% just revenue, in The of For the history. first resorts $X.X Thomas XXXX incredibly hotels in highest total finished revenue hotel EBITDA the our Ritz-Carlton quarter strong March an resort is

excess in addition, $X,XXX in average that In March, largely XX% driven for in More by being the $X,XXX. achieved impressively, in the ADR hotel renovation ADR of spectacular occupancy numbers This one was completed. quarter. and hotel quarter, the night the in recently an saw is of first fact, we strong outperformance the over

an drive $X.X highest month did comparable EBITDA, a has March, demand of optimized spring strong Currently, anticipate Irma. The demand. than in the transient the continuation break history. ADR. XXXX, of pace period the team ensuring quarter the standout to that the leisure, with resort finished In is navigating Looking month to second performer. excellent in the hotel ahead, more impressive last job Sarasota an million single XXX% to Hurricane resorts we up a strategies The the at compared been is which were Ritz-Carlton prior transient and

first than period. the during higher quarter XX% was the ADR XXXX comparable fact, In

December in first selectively XX until asset attributable during be projected hotel January remarkable quarter XX, Resort meaningful, especially outlets in million quarter. are FMB XX% a when labor solid which to the a order This was as under over to management quarter can quarter that to first also in and coming a been California revenue of in want hotel of period. I property with Spa reductions, success cancellations result consider X%. for such is this resulted that had up The opening in XX% These our the limiting quarter, $X.X Lake hotel match membership you $X.X $X.X EBITDA also by the achieve Tahoe largely had over mandatory our in XX% XXXX. place successful was Pier first put at stay-at-home and results the million year which flow-through. The mention XXXX of from changes House hotel with period prior the Additionally, Ritz-Carlton operational strong EBITDA We has at team a the amenities, program to property. hotel same compared occupancy. EBITDA exceeds in EBITDA the that million first The the membership how

on leisure to resulted seen, to this shift and helped that was hotel The continue averaged summer $X.X or anticipate driving hotel demand million rather days XX% of largely new take out leads this direct campaign In XX of overwhelmingly an XX resulting due bookings occupancy, West higher advantage becoming success than over This to the segments. addition will We outstanding discounted strategy those rated has Pier during focused in in strategy revenue. Key market OTA. the during pent marketing also is that successful that days, a towards reliant shift on demand a ADR strategy. less the months. in up in That to the On push with the House the quarter. $XXX the business

These total, in heavily These the new guest portfolio. a These projects. Tahoe We're of the at include several encounter to Ritz-Carlton invested and Pines, at enhance that in performance Hilton revenue restarting extremely to we in of up to and beach approximately from in Torrey will competitive the types the Notary. La we Jolla XXXX, to that our at the advantage portfolio investments, take value-add recent we uniquely across $XX benefit forward and pent the our order strategic Lake room the bullish keys projects displacement $XX positioned renovations doing Clancy Marriott, a our current cafe grab-and-go cycle advantage. portfolio, of million at we demand we investment, capital market Seattle. minimize demand are a retail XX construction In to are renovation seeing on particularly typically the looking luxury these million as when anticipate The XXXX. space up-branding In the recent expenditures club spending at given our capital Ritz-Carlton adding future portfolio our well of The the on at market. new as Sarasota, investments of about capital and Moving

outperformance of assets, as performance destinations Notary of over allowing recover, Richard in final extraordinary back and this mentioned and the start remarks. urban we we I fully see will convergence. upside now to As realize The anticipate seeing we us turn continuing The to Clancy call above, some the we are our to for

Richard Stockton

Thank the steady path clear a recovery early us to of in sets normalcy. you, In now up recovery, in for still but results. can Jeremy. our nicely we the financial see continued stages we're This summary,

This and navigate our We I have the this efforts forward balance moving with assets you concludes forward and to and as remarks, on us challenges our solid for success. actions we're to open the maintain XXXX. Q&A. the will to well-positioned move am taken we future to we now prepared financial decisive sheet crisis, of through and position portfolio. proud We a diversified protect flexibility our call up unique of progress our for updating near-term look

Operator

question from with first of Thank you. with Riley question. Securities. Please Kyle Our Menges line Instructions] comes your the [Operator proceed B.

Kyle Menges

is Bryan. on Kyle for This

your levels. have key at of pre-pandemic been resort higher hotels actually you've As mentioned, several ADR than luxury

travel as if as up and essentially loosened open have actually you vacationers of will that's the to throughout restrictions and XXXX think Just where curious move international sustainable to begin go? we things options more are

Richard Stockton

I the that Look, benefited travel even international and I that's on observation. Yes. think of astounded properly good the Kyle. maybe benefit by portfolio have think performance from. Thanks, of didn't a We've restrictions ADR the been appreciate we

to be market. are of we'll demand I demand think But coming international some diffuse. see that benefit of there a couple that properties counterbalancing back would the our

So one that's trend.

group between on that increased eye trend the return another lower and think a our I we're segment keeping of occupancy via is the rate the of trade-off business.

the But our will our is business. to come So build think do I recovery the expect think EBITDA kind we for trends think quarter at we beneficial. that's on be strong continue ADR. instincts to And to some I improve, to fourth overall, third But that just part think I going I and cost to of have are right. of expecting we're change your that in very but still but business, the outlook and will group a continue pace

Jeremy Welter

Yes.

specificity add to and to far is QX, X the ADR XXXX so a that forecasted to of may through be to Just trend continue. that up months outlook the little is actually X and bit QX more

Kyle Menges

also then pretty That's positioned is sheet expand than positioned curious, maybe maybe than of operators think hotel less portfolio? there your good a to from other the better And opportunity operators Great. helpful. lot I there's opportunity hotel an I in was that you in you well mean your is are Do and condition. are balance acquire some out assets guys to portfolio

Richard Stockton

good That's a Yes. question.

opportunities. are on for absolutely acquisition lookout We the

challenges, of are I cash liquidity very still and being think there's our couple balances. is, one of we a conscious

IRRs, pricing always financial pretty very also, we've that at on penciling the we've luxury heavy pricing protective the necessarily moment. out acquisitions in something targeted of of the strict we then particularly there, have very we're And And unlevered and segment. aren't being maintained some seen seen have out that's there. So our some that discipline which specific

something. we that We're we to can look. So hopeful continue do

the the in to arise. be opportunities an And these open OP if of units can we all certainly are as do into We a you partnership hotel updating merging further that accretive manner. issuance by we'll

Kyle Menges

all That’s thanks. me. Great, for

Operator

you. Thank

next proceed from Our question. Batory of question your with Please Capital the Markets. Tyler line Janney with comes

Tyler Batory

And really I the morning. performance margin of start, quarter, Thank strong. that the few with A How much to the is structure? and related back And impacting me. wanted Good what's which operations? just is to that on quite to to going you. the other flow-through where offering in ADR questions in services factors? how in go are for was terms you versus of amenities, guest cost of terms And

Richard Stockton

about maybe answer me services very, flow-through. – second the at The occupancy then and Jeremy hotels. on much there's amenities is talk reinstatement first It's is ad by Let to and driven general basis, will the take which a question no very the amenities, case-by-case of that.

at there here And over things these for in to are and things cases, are so occupancy cut to were in turned is These better them attract probably, increases housekeeping are I some to in differentiate that say relative whereas as optional increases service, product. competing and hotels, will demand optional for that each being as we've that perfunctory the of are and be will going order us. further And on profitability will reinstated of back stay margins one things past, that result that and forward, stay. many in down instance. the

certainly But situation general and services, the that ground. of that's really terms assessing a in amenity on welcome. depend other we so it And manager change does introducing the on

Jeremy Welter

flow-throughs. question I'll And the answer on

contributing I hotel. is our access certainly up and rehiring having with to right. to it. ADR Also, struggle mean, You're our staffing

out with our team regardless this can't of have with we process bit flow-throughs we've done get in incredible hotels asset approval. factors, the enough all of leaders And of did well level. group to coming I once because individual with that they've levels be last all And staffing. that resources do is to the we one we And companies deal and thoughtful little thoughtful with still that. companies we add discipline we our two more well we've with place of management pandemic would these as levels, all prudent of the very, less we a RevPAR where a teams, over are and back a models thank of hands-on have management portfolio my physicians granular the as of and pre-pandemic. with this very those contributed of think every no there's more XXXX But been So asset how occupancy And we've than very to put to had that much of property year. those leanly very as through without I team, regionals working with well. for mean course area challenging had the situation our will properties. labor these these as shortages full as have hotels gone we hotels as great we've expectation expectations with we've assets. our dissected so added had And management the our have because we back we do have operate to on internal staffing has that But have the we I our

because of that said, coming out benefit with and RevPAR a a process our uncovered levels process. through I'm be teams, it's once of will pandemic been we we've very very with been the optimistic this the of in things we there but properties, hands-on very, constructive our like I So margins some get the have this that full and

Tyler Batory

international other at where of luxury urban expectations follow-up you the your asset assets, resort it types? at to you bigger running is now, employees only And in those some The peak And terms than you're Are seasonal helpful. high issue a hotel high Right labor Or source on markets, labor then Very do the service. and all? properties in periods? of time comments. the Is or labor? available how labor obviously, occupancy. that's guest using at Okay. some the resorts perhaps and

Jeremy Welter

a such basis. It's Yes. case-by-case

it's portfolio at to – Braemar, what over statement So because put generalized smaller hard with a assets. a we have different like they're even very

urban, are And big a for if would occupancy. at you I those the are think, that urban for the assets be, start the so except sure, that fact the with challenge lowest

as great when West have come residents went of Key And much of challenge So properties a a West we at the income you and it's of But just lower in to back. were a hotels, don't tough. example, because as pandemic the left have and been the much we're the not at that because House that maybe happened Pier urban having resort look in what need. at haven't is levels lot different markets they Key being

labor a struggle with And so we've had there.

in Islands, labor. actually local some we're definitely there, we've to some of of then a get some available at residents can and for though folks from U.S. West work. we the hotel incentive Virgin But just Key a Eastern is so pools. international struggles like and still and labor with our other having And we're implying cases, we have Thomas, then primarily – they're force towards back incentives labor is labor a get getting even sending there to you labor. good there having terms cases, an In to the there, look Ritz But of contract used back them in Carlton St. local in bias work European that labor, labor relationship to do where government we

struggle. been that I first happened quarter we've in in for think and team – as think of back portfolio this a so We terms is continuing it's at And was we to And address, were for got I performing we optimistic we that the will sure. just what that the ramp the try we to we're address optimistic St. us at as properties, service And thought Thomas, the quarter struggle aggressive would today. beginning exceeded But think would have up we sit numbers we have. had that to example, first be well. really of great something challenge to we our would want the have particularly as I been we would definitely And but expectations. we don't to just the that and that's have it our levels a

Tyler Batory

me. Okay. And for last question

talk preferred like that sense? Is of continue something makes exchange, in you'd common you future? can In more terms about that the to that it for doing you why the think

Deric Eubanks

Tyler, Deric. in chime it's I'll on that.

I we just at view as it a opportunistic, as accretive dividend been to to as that – opportunity that common think as on shareholders. for take our discount It's and we saw as to ratio our that that's shareholders an to long attractive an it it's way on the well. believe preferred and a preferred out par cash common saves the

forward, be shareholders, we'll And so that If think we something looking for think and it common entertain. it's we'll our I it. makes opportunistic sense about just

Tyler Batory

Appreciate Okay. the Great. detail. for That’s me. all

Operator

you. with Our question proceed with line from comes [Operator Thank Instructions] question. next Baird. of your Alex Kubicek Please

Alex Kubicek

Good morning.

this of balance moving pieces of back sheet, the to lots quarter. Moving

over other, preferred norm how in leverage how just of on you of And the company's profile kind to E&M you see long back future? then – the the exchanges the the the part the term. progressing one having to but hand, the changing Series do stack and stack private that with see curious kind on the near Just capital generally of more

Richard Stockton

a over bit, Richard. leverage is last This Yes. year. their all the I'm question. On generalizing that I increased think lodging profile, Thanks, rates look, take Alex. leverage, have I'll

running coming sector lower years. the that and be a is that prefer would follow years leverage. That's as guidance it's measured in to investors, bit sense Our on you the we'll the

variety adamant a bit preferred equity I come terms the think structure means balance we that we now. these in one through raising in drastic try we've of view been move than to along bits. That not small about price the less sheet of opportunistically or as or is doing capital have way to the but pretty of share thing a it's very do towards to very, cash retaining anything a accretive leveraged whether exchanges, which

past had to headed. target that we're gross historically seek a years. even more We've that net that's through assets. on during So cash of and that we've year took XX% We're that's where we'll measured below to now but some used and and the debt in debt, because above forward, going get

That the terms is slowly over we're a of In strategy and incremental series kind still of also pursuing. very is time. strategy that's that E&M, that a builds

in some market assess second the more we're we half year, that as we to that we'll the of and may So but offer. for the front able understand that about the really see activity learn securities on appetite

Alex Kubicek

but your Most That's comparing And helpful. then RevPAR XXXX in the seat in of my XXXX. more hurricane are one recovery cadence portfolio, and the for the to just isn't me. with disruption people EBITDA for guy's probably fair

are kind back of the prior and of just magnitude guys getting So curious how timing more to you about a comparable thinking peak?

Deric Eubanks

going were raised do I'll really things getting for there. in people the Yes. to lot when presidential of guys and But at few income chime Braemar There few on the Villa, the on other rebuilding that performance was doesn't smaller beach things XXXX talk assets portfolio, going ramped XXXX. back other XXXX And about as also That's good We Clancy year point. lot in, make hear at us. or wasn't there of and a benchmark a let and remediation were Francisco open had look totally in The Sarasota. even basically and The not you Notary and yet. Barcelona, up. XXXX closed getting and a you we you St. it Philadelphia a business good take a San but a good And question. converted hotel in this Thomas, was interruption is Deric. these I'll mentioned, that a then that at other

we're if on think terms don't but to I else results to expect was So get in can XXXX in. it because what back were cylinders, of our that actual we'd XXXX, I factors. portfolio provide our chime think say of can anyone when we prepared to in guidance we all those exceed clicking And

Jeremy Welter

Yes.

absolutely And gotten really success. believe that repositioning a would for benefit that late February, I our were that look yet, outperforming well play and future. believe is, been XXXX very XX% do recollection revenues But do way just well, in clock it out I reflective year-over-year what in we the being the we in we of we in late have that to those Braemar have at turn the continuing outperformer and if pandemic were and from REITs haven't that's up be that I of nobody back there, so of XXXX, out think my at have relatively impactful XXXX. I When phenomenal. that We the long-term January phenomenal. add was February, the because forward we a mean, I we you of it that think been. you XXXX, Obviously go cycle, can of January heavy early portfolio, which are and hope it say, and the we the was Braemar be other but wanted think you I at near if in that as in might what should been of optimistic knew were really could were out, would would think portfolio you okay, to probably February we stood well was, the and And industry. would will. outperforming I pandemic, and numbers regardless for going was I relative more them. lot to play we cycle it the didn't what look industry the

Alex Kubicek

color. Thanks. helpful That’s

Operator

management question-and-answer and I'll for Thank any that floor the to session. turn our you. concludes final comments. gentlemen, Ladies back

Richard Stockton

speaking we Well, on first our day. you thank and all on our for us earnings good call. Have look to quarter again a next you joining with forward call,

Operator

concludes conference. This today's Thank you.

may You your this lines your Thank time. for participation. disconnect you at

Braemar Hotels & Resorts (BHR) 8 May 212021 Q1 Earnings call transcript