Braemar Hotels & Resorts Inc. (BHR) Q2 2024 Earnings Call Transcript

Braemar Hotels & Resorts Inc. recently held a conference call to discuss their second quarter 2024 financial results, providing insights into the company's performance and strategic initiatives. The call, led by CEO Richard Stockton, CFO Deric Eubanks, and EVP of Asset Management Chris Nixon, highlighted several key themes and trends that underscore the company's financial health and growth prospects.

Strong Performance and Strategic Acquisitions

Braemar's urban hotels delivered a robust performance, with a 6% increase in comparable RevPAR (Revenue Per Available Room) compared to the previous year. This growth was particularly noteworthy, given the challenges faced by the hospitality industry post-pandemic. The acquisition of the Four Seasons Resort Scottsdale at Troon North has been a significant contributor to the company's success, with a 10% increase in RevPAR during the second quarter. The hotel's performance aligns with Braemar's strategy of owning high RevPAR luxury hotels and resorts, highlighting the potential of its portfolio.

Financial Performance and Capital Position

Deric Eubanks provided a detailed review of Braemar's financial results, including a net loss attributable to common stockholders of $21.9 million and AFFO (Adjusted Funds From Operations) per diluted share of $0.10. The company's total assets stood at $2.2 billion, with $1.2 billion in loans, most of which are effectively fixed. Braemar's liquidity position is solid, with cash and cash equivalents of $120.3 million and restricted cash of $60.7 million, primarily held by lenders and managers. The company's dividend policy is under review, with a focus on increasing it as financial performance improves.

Asset Management and Strategic Initiatives

Chris Nixon discussed the company's asset management activities, including the strong performance of urban hotels, particularly the Capitol Hilton, which saw a 24% increase in hotel EBITDA following a transformative guest room renovation. Braemar's strategy of focusing on underutilized markets and segments has yielded positive results, with the Four Seasons Scottsdale achieving an impressive 22% increase in hotel EBITDA compared to the previous year. The company's capital expenditures for the year are expected to range between $80 million and $100 million, with major renovations planned across its portfolio.

Future Outlook and Challenges

Braemar's outlook for the remainder of 2024 remains positive, with a focus on maximizing value for shareholders through strategic asset sales, debt repayments, and share buybacks. The company's commitment to balance sheet flexibility is evident in its recent sale of the Hilton La Jolla Torrey Pines, addressing all 2024 debt maturities. However, challenges remain, including the softness in resort average daily rates and the impact of the Easter timing shift on group revenue. The company's ability to navigate these challenges while executing its strategic initiatives will be crucial in shaping its future performance.

In conclusion, Braemar Hotels & Resorts Inc.'s second quarter 2024 earnings call provided a comprehensive update on the company's financial performance, strategic initiatives, and outlook. The company's strong performance in urban hotels, strategic acquisitions, and focus on balance sheet flexibility are promising signs for its future growth. However, challenges such as softness in resort ADR and the impact of external factors like the Easter timing shift underscore the need for careful management and strategic execution. As Braemar moves forward, its ability to navigate these challenges while capitalizing on growth opportunities will be critical to its long-term success.