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Braemar Hotels & Resorts(BHR) - 2024 Q1 - Earnings Call Transcript
BHRBraemar Hotels & Resorts(BHR)2024-05-09 19:48
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Financial Data and Key Metrics - Net income attributable to common stockholders for Q1 2024 was 3.5millionor3.5 million or 0.05 per diluted share, with AFFO per diluted share of 0.42[66]−AdjustedEBITDAreforthequarterwas0.42 [66] - Adjusted EBITDAre for the quarter was 66.2 million, with total assets of 2.3billionandtotalloansof2.3 billion and total loans of 1.2 billion [66] - Comparable hotel RevPAR for the portfolio was nearly flat at 368,witha2368, with a 2% increase in comparable hotel total revenue compared to the prior year quarter [27] - Hotel EBITDA margin expanded by 95 basis points in Q1 compared to 2019, driven by cost controls [28] - The company announced a quarterly common stock dividend of 0.05 per share, equating to an annual yield of approximately 7.7% [19] Business Line Performance - The Ritz-Carlton St. Thomas saw a 258 basis point hotel EBITDA margin expansion, driven by a 40% increase in group room nights [23] - The Ritz-Carlton Reserve Dorado Beach achieved a 199 basis point expansion in hotel EBITDA margin, with a 44% increase in rental program revenue [32] - The Four Seasons Resort Scottsdale delivered a strong Q1 performance with hotel EBITDA up almost 800,000despitea1.4800,000 despite a 1.4% decline in RevPAR [54] - Ancillary revenue increased by more than 5% across the portfolio, with urban assets generating a 37% increase on a per occupied room basis [33] Market Performance - The luxury resort portfolio posted positive year-over-year growth in both RevPAR and hotel EBITDA, with combined hotel EBITDA of 65 million during the quarter [48] - Urban assets saw a slight decline in RevPAR, impacted by a 2.2millionpropertytaxrefundintheprioryearquarterattheSofitelChicago[49]−TheCaribbeanhotels,includingRitz−CarltonSt.ThomasandDoradoBeach,expandedtheirhotelEBITDAmarginby215basispointsrelativetotheprioryearquarter[31]StrategicDirectionandIndustryCompetition−Thecompanyisfocusedonsellingselectassetstorepurchasecommonandpreferredshares,aimingtoimprovethecapitalstructureandarbitragethegapbetweensharepriceandnetassetvalue[53]−Majorrenovationsareunderway,includingattheRitz−CarltonLakeTahoeandRitz−CarltonSarasota,withanticipatedcapitalexpendituresbetween2.2 million property tax refund in the prior year quarter at the Sofitel Chicago [49] - The Caribbean hotels, including Ritz-Carlton St. Thomas and Dorado Beach, expanded their hotel EBITDA margin by 215 basis points relative to the prior year quarter [31] Strategic Direction and Industry Competition - The company is focused on selling select assets to repurchase common and preferred shares, aiming to improve the capital structure and arbitrage the gap between share price and net asset value [53] - Major renovations are underway, including at the Ritz-Carlton Lake Tahoe and Ritz-Carlton Sarasota, with anticipated capital expenditures between 85 million and 105millionfor2024[37]−Thecompanyisleveraginggroupbusinessandancillaryrevenueinitiativestooptimizebusinessmixanddrivemarginexpansion[29][33]ManagementCommentaryonOperatingEnvironmentandOutlook−Managementremainsoptimisticabouttheportfolio′sperformance,citingstronggroupbookingsandpositivemarketoutlook[38]−Thecompanyisencouragedbytheperformanceofitsluxuryresortportfolio,particularlyinhighbarrier−to−entryleisuremarkets[48]−TheelectionseasonisexpectedtobenefithotelsinWashington,D.C.,withnewproductofferingsbeingassessedfornextyear[11]OtherImportantInformation−Thecompanyclosedona105 million for 2024 [37] - The company is leveraging group business and ancillary revenue initiatives to optimize business mix and drive margin expansion [29][33] Management Commentary on Operating Environment and Outlook - Management remains optimistic about the portfolio's performance, citing strong group bookings and positive market outlook [38] - The company is encouraged by the performance of its luxury resort portfolio, particularly in high barrier-to-entry leisure markets [48] - The election season is expected to benefit hotels in Washington, D.C., with new product offerings being assessed for next year [11] Other Important Information - The company closed on a 62 million non-recourse loan for the Ritz-Carlton Reserve Dorado Beach, with a floating interest rate of SOFR + 4.75% [20] - The Hilton La Jolla Torrey Pines is being sold for 165million,witha165 million, with a 6 million non-refundable deposit received [58] - The company has refinanced, extended, or paid off almost all of its 2024 debt maturities, including loans secured by the Pier House Resort & Spa and Ritz-Carlton St. Thomas [61][46][47] Q&A Session Summary Question: Marketing of La Jolla Property and Backup Buyers - The property was marketed through Eastdil, with over 80 confidentiality agreements signed and half a dozen offers received, with JRK being the highest bidder [15] Question: Performance of Cameo Beverly Hills and Napa Valley Market - The LA market was soft in Q1, with challenges from transitioning to the Hilton platform and reduced production from Amex's Fine Hotels and Resorts program [44] - Napa Valley experienced broad market softness, with aggressive rate competition and reduced weekend trips due to tech layoffs in San Francisco [45] Question: Strength in Caribbean Markets - Early spring break and proactive group bookings drove strong performance in the Caribbean, with no significant impact from new hotel openings [70] - Dorado Beach benefited from demographic shifts and high demand for residential properties, driving ancillary hospitality demand [71] Question: Impact of Disposition on Joint Venture Partnerships - The sale of Hilton La Jolla Torrey Pines was a joint decision with Park, with no impact on the relationship, and the Capital Hilton remains a key joint venture asset [77]