Lodging REITs can be cyclical due to their short-term market-to-market leasing and their reliance on seasonal consumer behaviour. By considering the current economic uncertainty, one could say that lodging REITs are a no-go, and while we somewhat agree with the ideaPearl Gray is a proprietary investment fund and independent market research firm specialising in systematic analysis.Our latest work on SA primarily covers: Bonds, Preferreds, REITs, with an occasional drift.Primary Sectors: Financials and Real E ...

Braemar Hotels & Resorts (BHR) Q1 2025 Earnings Call May 08, 2025 11:00 AM ET Speaker0 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 and Resorts Inc. First Quarter twenty twenty five Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference ove ...

Financial Data and Key Metrics Changes - The company reported a consolidated revenue increase of 11% year over year, with adjusted EBITDAre rising by 15% and AFFO per fully diluted share increasing by 28% [15][25]. - Hospitality segment achieved record first quarter revenue and adjusted EBITDAre, driven by RevPAR and total RevPAR growth of 109% year over year [15][16]. - ADR reached a first quarter record of $264, up nearly 6% compared to the previous year [16]. Business Line Data and Key Metrics Changes - The Hospitality segment's revenue and adjusted EBITDAre were driven by strong growth in both group and transient segments, with outside room spending from group customers slightly better than anticipated [17][19]. - The Entertainment segment generated a revenue growth of 34% year over year, with adjusted EBITDAre increasing by 35% [16]. Market Data and Key Metrics Changes - Gross group room nights booked for future years increased by 10% year over year, with significant strength in bookings for 2026 and 2027, which were up 133% and 135% respectively [21]. - The company noted a decline in consumer confidence but highlighted that the consumer segments served continued to show strength in the first quarter [17]. Company Strategy and Development Direction - The company is focusing on long-term value creation while managing short-term dynamics, with a proactive approach to margin management and operational efficiencies [11][24]. - The acquisition of Southern Entertainment is seen as an opportunity to expand the live entertainment segment and enhance brand synergy across venues [53][56]. Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the near-term outlook due to economic uncertainties, particularly related to government business and group demand [6][11]. - The company has slightly modified its guidance for hospitality RevPAR and total RevPAR, reflecting expectations of weaker group business volumes compared to previous assumptions [25][27]. Other Important Information - The company ended the first quarter with $414 million in unrestricted cash and a total available liquidity of approximately $1.2 billion [30]. - Capital expenditures expectations for 2025 have been lowered to a range of $350 million to $450 million, based on updated construction timelines [31]. Q&A Session Summary Question: How short-term is the hesitancy being seen in bookings? - Management noted that while there is uncertainty, recent April production numbers showed a marked improvement in lead volumes for in-the-year bookings, indicating a potential recovery [38][39]. Question: What allows the company to maintain EBITDA guidance despite lower RevPAR? - The company has implemented profit improvement plans early in the year, which have helped safeguard margins and maintain guidance [46][48]. Question: Can you elaborate on the strategy behind the acquisition of Southern Entertainment? - The acquisition is aimed at increasing the opportunity set for live venues and enhancing the overall brand experience across different events [53][56]. Question: What is the government exposure across the portfolio? - The company indicated that government business is not a significant portion of its overall bookings, and stress testing showed resilience even if all government business were to cancel [92][93]. Question: How does the company plan to handle cancellations and rebooking? - Management plans to be more aggressive in collecting cancellation fees compared to previous crises, while still working with customers to find mutually beneficial solutions [100][101].