BHR - Earnings call transcript Q1 2024 | Braemar Hotels & Resorts Inc.

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Operator

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.

First Quarter 2024 Results Conference Call. [Operator Instructions]. to Investor conference Relations. like Jennings, to now of Director would turn over the Jordan I Please ahead. go

Jordan Jennings

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

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

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

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

Richard Stockton

will of begin First Quarter to call Good morning, by today's and recently value. our I'll Then a providing on will Call. Earnings review portfolio an Chris the and to our we Q&A. shareholder asset additional create management an our update open plans will activity. and XXXX our Afterwards, on Conference announced for financial welcome update our call provide overview provide of our and business Deric results,

several key themes have We call. for today's

pleased had luxury our was that growth to in quarter. first positive we're quarter RevPAR the the our RevPAR for performance First, year, last report equivalent overall resort to essentially portfolio while

Reserve each Ritz-Carlton Four Scottsdale North Dorado and Troon Beach at performing the Seasons Second, acquisitions, are and exceed our to last X underwriting. original continue the our well Resort

through refinancing program. we work our to Third, continue as diligently

our debt selling shares share preferred shareholder value maturities. down select a and plan extended announced repurchase our gap excited and We between common value have share. to asset refinanced, we capital improve and our comprises opportunistically to all almost arbitrage order or assets of price net are have in paid XXXX per fourth, the to creation structure And which

Let me first turn results. our to

We $XX in benefited Resort EBITDA and the the Bowl comparisons RevPAR at the was of open light year. In demand Phoenix of first Super the to year reported Four our and of are prior which Scottsdale, hotel with last challenging to portfolio's quarter essentially million. $XXX comparable our from We occurring pleased Seasons quarter related same which equivalent year-over-year week performance.

in very Taking a of to luxury performance and encouraged growth posed are hotel high hotels RevPAR by our in We the markets. entry overall our both close well resort leisure portfolio look of at luxury EBITDA. located attractive portfolio, year-over-year barrier positive to our many are which

XX the portfolio hotel combined million XX luxury deliver quarter. hotels destinations and resort $XX to performance of our are of during with this resort considered EBITDA continues strong

challenging hotel impacted a refund prior and which our the million for Chicago, by quarter $X.X Regarding the for down RevPAR urban significantly in a was property Sofitel made assets, the year EBITDA tax comparison. slightly was at quarter

by remain ahead, this portfolio. momentum the segment for continued Looking very encouraged we of our

acquisition, last It exceed acquired addition Seasons was strategy to Scottsdale great our our the expectations. North, our in at fits with to RevPAR that resorts. delivered A XXXX Resort December Troon and of perfectly and Four portfolio high Next, strong luxury our hotels due to owning The continues revenue during difficult year. fantastic last first the up business did comps being quarter the RevPAR quarter. significant quarter hotel beverage despite performance securing property and property with same X.X% food almost EBITDA for a job down of from group $XXX,XXX team with a

about to for this continue excited the We hotel. prospects very be

XXXX other acquisition, well. also Braemar's continues Ritz-Carlton perform the to Beach Dorado Reserve very

$X,XXX. was year of on the an of growth first and $X,XXX RevPAR the quarter, for ADR prior reflected iconic For XX% RevPAR based this This result over asset quarter. XX.X% luxury occupancy

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

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

secured extended recently the extended detail year-end debt subsequent off the the XXXX quarter or extended by we we these to paid loan by Resort Hills. paid St. and quick of all secured or by loan the in look, House Thomas. our secured the Beverly off During Spa the We quarter Cameo end, almost loan and Ritz-Carlton Deric Pier & discuss also first momentarily. we a to will taking the maturities. But refinanced more

the down balance now paid to after encumbered Torrey mortgage Hilton $XX.X Capital remaining million. the Additionally, refinancing La been original loan remains has a the Pines Hilton, Jolla by which of

announced recently the the greater which the extinguish XXXX of last sale maturities. will property, our With in detail, we will debt we discuss of

During And Jolla Torrey creation share a and one, the the are: maturities. repayment level mortgage $XX authorization. room financing Ritz-Carlton common we of next. closed a property in planned a announced also on Reserve buyback million $XX X for we other Three, quarter, components Earlier this hotels sale value XXXX Beach year program. the X XX week, this Rico. share has a preferred Puerto shareholder the possibly they La plan, the debt which Hilton our million remaining Two, and between Pines of four Dorado redemption

La Hilton the a agreement Pines, entered Regarding to Jolla the Torrey definitive company sell the hotel sale into the has million. for of $XXX

ground which of be of million a to the sales NOI nonrefundable deposit, several within being weeks. the capital the a San expenditures, is We have to $X than X.X%. received other consent provided planned by Inclusive XX-month next capitalization rate trailing is a subject to lessor that hard price city of Diego equates

to has updates solid by through a summary, a value coming we look and more sale these announcements to at the our plan. the well-positioned believe latest. for We our maximize be August in forward expect reflect and work commitment the Braemar weeks unique providing end We In position. of liquidity shareholders months to portfolio completed our the and as

As the perform is near believe of on we remainder XXXX, and the firm term. look and in ahead to we footing both Braemar well long

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

Deric Eubanks

Thanks, Richard.

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

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

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

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

September the Pier subject rate initial and interest certain now date a balance to House a interest bears extension West, $XX has the Florida. X.X%. have one XXXX plus Continues loan floating we quarter, During & an The of SOFR of secured of Resort loan the extended by maturity Spa conditions. option, Key to the of in with satisfaction X-year million at

of the extended closed Dorado a loan level secured a Dorado, XXXX provides and loan X.XX%. of interest St. SOFR million the subject Thomas interest date have room Thomas, in initial is plus of In interest-only The loan August the a X-year a extension plus Ritz-Carlton of SOFR we quarter, and the property option balance satisfaction of term. maturity X.XX%. floating now by The the mortgage continues during interest $XX USVI. one and Ritz-Carlton an has Rico. nonrecourse for on X-year Additionally, to $XX.X a St. The loan financing XX rate has bears Reserve million to for at conditions, we Puerto mid-March, certain Beach floating rate with

end, unencumbered. Beverly Hills Hills, $XX loan off subsequent is Cameo Finally, we California. quarter the the paid by million now to property Beverly That secured in

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

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

Christopher Nixon

you, Deric. Thank

our prior hotel by year Comparable quarter $XXX. For the portfolio the flat prior was quarter, increased over quarter. revenue at the hotel total nearly year with comparable RevPAR for X%

and XX% total This rooms over to hotel primarily been has the period respectively, by grown revenue, XX% beverage higher last time X% XX%, a food growth driven in was in same growth years. represents quarter annual First which XXXX. compounded and have than which by revenue quarter comparable same XXXX compared rate the the X and

While has in the has to are quarter basis relative hotel P&Ls controls several line in we areas the focus which top resulted of cost points compared expansion in This margin led to increased, our hotel to XXXX. on improvements growth, controlling expense first XXXX. EBITDA also XX on margin

balance would accelerate ahead revenue through revenue initiatives. of year, second to across the pacing Group increased the ahead some has I more is Group margin by how team X%. portfolio, our group by capitalized across portfolio. generated our pace full X% of like year with our continues the highlighting to last ancillary pacing expansion time for and the year position actively spend on rooms quarter the

meetings booking window effectively are helps mix. group continue groups to our seeing the being and business as optimize secured in This us further expand are layer out. We

Our currently is pace ahead XX%. XXXX room group revenue by

lead resulted year-over-year has increase. normalize, has to volume and started across remained the strong continues many rates in our While group to average hotels. size increased efficiency sales This booking conversion group of

strength We the employees their from and performing which market, corporation partners. represents are seeing highest rewarding incentive

is has Thomas, the benefited segment the pacing Ritz-Carlton group St. prior One hotel which year. is by compared XXXX particular that XX% ahead in this in rooms to revenue from

The Beach These year Caribbean EBITDA the in We saw Ritz-Carlton XXX margin expanded margin Reserve expansion quarter. their basis prior have the XXX basis been hotel hotels. performance points hotel point by our to Dorado of the assets quarter. pleased relative over strong with a EBITDA year prior

owners revenue from Our focused higher rental restructuring options, receptions the residential for team program. These asset posting hotel's several drive management on is implementing program's have the rental to initiatives included high the an in more These a incentive the the increase produces hotel. team. and efforts and a revenue, in rental XX% resulted for sales in implementing program for community which margin

more to drove an Thomas anticipation supply St. to opportunity on optimal margin Ritz-Carlton the result also XXX business prior coming shift group point This the market. team identifying the basis a into was quarter. hotel of expansion mix our The in segmentation EBITDA our a over a of new year focused

the in additional room quarter. prior incidental accompanies catering. nights business the the Typically, business group due including During the that hotel was over and up banquet to XX% generates year profit quarter, this it

more ancillary XX% This the increase increased quarter, urban our entire room by per portfolio. which than revenue During X% our driven assets, by performance generated a largely on across occupied a was basis.

streams consist dues and amenities. outlets, membership parking, guest spas, revenue retail These of leases, various

strategic which resulted its a revenue streams in of compares and portfolio. One well conducted for guest our the several audit was our competitive initiatives teams of hotel as rest the of This the set. experiences the services rollout the new portfolio subject and amenity as to

capital Moving on to expenditures.

Hilton, adding renovations. guest These new During included and a renovation Capital at suite rooms. the completed first several the X room quarter, we major

the Valley and we an Suite. spa renovation at underutilized into club and kids Ritz-Carlton the the Bardessono space we Swing at hotel with a event and Lake the Additionally, Tahoe, guest Napa a prominent arcade completed Topgolf in room transformed

a we Ritz-Carlton the terrace completed the spa areas, wet pools renovation bay. overlooking Lastly, Sarasota, comprehensive a treatment relaxation at and healing water enhancing rooms,

of abandoned bar previously Ritz-Carlton outdoor a at recently Sarasota. initiated the also We the renovation

the fitness overlooking major several plan restaurant the Looking center the relocating at as the the renovations and space start well quarter, include pool. to room second as which Ritz-Carlton renovating Lake ahead cabanas meeting to adding living we and outdoor bar, Tahoe expanding

to Additionally, options. construction retail Scottsdale guests the outlet of and to curated Resort offer food beverage Four we will a begin access at Seasons

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

This quarter, operational implemented our improvements. actions aggressive drive to team

of We a that March which fruit in are the flow-through. to produced labor starting performance, hotel EBITDA see our XX%

of the positive are remainder for In addition, we year. seeing the signs segment in the group

initiatives market ability the outlook portfolio's underway to signs, these With perform. we about showing positive our optimistic and are

Richard Stockton

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

on matter. those activist from positioned capital value specific able We for the ongoing litigation we concludes look and our recently company's questions well on plan. we respond forward announced that remain to campaign, will Please also be quarters to the management's note remarks, in well as you very to that outlook your the and allocation outlook. to resulting to assets, call open shareholder solid Thank the We This creation balance now an concerning due sheet limit ahead. updating as Please industry prepared a with and promising progress our not operations, questions will our priorities you. Q&A.

Operator

[Operator Instructions].

Bryan will B. question first with Our Maher come from the line of Riley Securities.

Bryan Maher

sticking with couple a today, Just me your criteria. for

how On the to La that if were deal property that apart? there Jolla marketed? And are buyers property, fall backup is any

Richard Stockton

Yes.

And broad a very So set broker went potential which was of out they the we market Estel. property, to a to buyers. hired

a agreements some about privately buyers a we we private of which in end, with were fact, of equity and the confidentiality a JRK have received financed were half over In round ended and so signed REITs. down. deposit said, like then And prospective And bidder. companies up tours highest being XX subject ground a just mix ultimately a only or kind lessor some ran dozen and buyers, there then we the consent. of They other conducted. with nonrefundable second to I do dozen the offers a It's

half a no in. we the backup as So said, for is there a real a bidder. had that But I come bids need said, need -- dozen

than JRK. there's So broader interest asset in just certainly the

Bryan Maher

the And what that mentioned? the inning other properties are marketing X you you've in with of

Richard Stockton

haven't And the one as at have looking we then year, yet On for we process. we broker that the next who drafting started memorandum an is we a already offering second one, selected speak. are

Bryan Maher

give fundamentals. quarter on the for us Cameo? going maybe you anything Can you little shifting bit some color what's little weakness with couple a the more RevPAR systemic one-off I was of we've us on also in on color as give something And Okay. all there some to pretty there's quarters, me. property light. or Can if well? The noticed was if market just there there and didn't that's last NAV. then And know going in that a

Deric Eubanks

LA for the we in whole soft. first quarter, saw as So a Cameo, was the market

The I production of all program. longer program RevPAR in Hotels down. much not with improving, think and is conversion upside but Fine done, hiltonbrand.com transition until to Resorts the direct optimistic we'll contribution a like be very with from from from recognizing no to The again. ADR, had benefit that platform, Amex's hotel all able as that the we is Hilton, obviously, is conversion the white-label occupancy, we're we were Hilton the year lot hotel associating but happen channel last to are complete. is with program LXR quicker. the obviously, of that we'd The once The

of been there those so that hotel. And the have some challenges with

there, high-end Yountville the softness. very Francisco we're we're still We're coming employed, try just terms still aggressive the to not seeing terms San fewer associated broad kind and to where those luxury of that some In of some trips of what doing softness seeing layoffs. travelers with taking We're of capture from market And production. weekend to of rates they're out Napa. they're -- with the it's feeling tech of things seeing in hotels

the the get And optimistic about in room now a results we'll further The we new renovation product ADR also there. Bardessono market is challenged. additional there. the rooms so underwent with QX and the been that renovation at kind kind ADR complete. has But outlook that of in of challenge We're premium

Operator

Tyler line with next Oppenheimer. Instructions]. question will And our [Operator the from Batory come of

Jonathan Jenkins

for Tyler. This on Jonathan is

customer and the in First in you're so talk just markets maybe what strength compared me, the But you of strength one your Caribbean Caribbean far. what's about seeing helpful leisure domestic markets? the can in the to commentary the for driving

Deric Eubanks

the kind that helped there. very of further which major in the increasing festive the those very, Those January, the and prepared very platforms residences. season the into successful high through. the remarks very, you program residential kind there heard -- benefit in are of impact been distribution us reference of was In Dorado, rates. extended We We've our in come sold strong

didn't And there of there a we're Out an feel demand initial break. to an we in We pop ourselves from kind some St. hotel from impact recent be in from so kind pleased up kind but the Thomas, significant product. with terms there. getting QX. of insulate We at subsided impact proactively And more Bonvoy. openings that any in spring started impact, of transient, really We really, that's benefited to room thought but impact pretty lot of try grouping from would results. any we that hotel very, were high-end was early for very the of a to

Richard Stockton

would of And specifically, a as sits a that lot hotel within development on I this plan Dorado lot Yes. activity, experiencing add mainland Beach demographic just acre citizens X,XXX really demand residential of to hospitality for of is is of a a U.S. master that prices ancillary to they're demand, lot selling of realizing related Puerto for and result high their shifts activity all-time therefore, a Rico generating, on and homes moving the almost too.

Jonathan Jenkins

change us change Did can you about that any I have while, joint -- disposition. walk impact appreciate a that it's did I on a disposition? Great. then of you -- but maybe through? question color know partnerships. La the disposition of kind the how Jolla clarification a And kind question there. Does or on been the that just And think Okay. venture just the

Richard Stockton

at of Park relationship been our certainly -- hip a several hotels, asset, the sort quarter I that expenditures Well, There good as agree of sale. we these on been for was us the else years. necessary. light anything upcoming will But jointly that this Yes. has be this monetize say partner X that caused of with joined and great time particularly in any we've no it for them to would a the a result were this. capital

joint excited in very just, remaining one, asset, season We're Capital venture our the major that we've coming up. renovation. to look election Hilton, fact, we about a completed As

we'll to the perform have this, As as during election D.C., market. product hotels very you offer probably the Washington, know, to tend well season brand-new such and

we'll Park So year us think with not assess do And, are otherwise, hotel fellows. after want to or through next that. yes, and we I bet something we whether quite happy that get

Christopher Nixon

the renovation. just was I'll massive renovation on add hotel finishing grew year-over-year whole, total of added is renovation finished and The XX% work note on March keys, at of look you mean we by year-on-year March when We a X%. under and still in was kind there. Hilton for X the revenue X one the revenue. transient Capital up as performance I the that hotel QX, up

rooms And so with we're very hotel what going it's about do the to and and excited optimistic that product of new the outlook there.

Operator

question-and-answer remarks. our back concludes call session. I'll closing management This the hand to for

Richard Stockton

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

Operator

all That will for you joining. our conclude call today. for Thank

disconnect. now may You

Braemar Hotels & Resorts (BHR) 9 May 242024 Q1 Earnings call transcript