Braemar Hotels & Resorts: A Steady Climb in a Post-Pandemic Recovery
26min read The hospitality sector has been a tale of two recoveries: one marked by pent-up demand for luxury travel and another constrained by lingering economic uncertainties. Braemar Hotels & Resorts (NYSE: BHR), a REIT focused on premium hotels in gateway markets, has emerged as a standout performer. Its latest earnings report—showcasing an Adjusted Funds From Operations (AFFO) of $0.40 per share, which beat estimates by $0.06, and revenue of $215.82 million—offers a glimpse into how strategic asset management and sector tailwinds are positioning the company for sustained growth.
Braemar’s results reflect the broader rebound of the luxury travel market. Occupancy rates at its hotels have surged, driven by robust demand for weddings, corporate events, and leisure travel. Yet, the real story lies in pricing power: the company reported average daily rates (ADR) rising by double digits year-over-year at key properties like The Phoenician in Scottsdale and The Ritz-Carlton Reynolds, Lake Oconee. This pricing discipline, combined with cost controls, has allowed Braemar to outperform peers.
The data underscores this resilience. reveal a 28% total return since June 2023, outpacing the S&P 500 Travel & Leisure Index, which rose 14% over the same period. Meanwhile, shows a consistent upward trajectory—from $0.22 in Q2 2023 to the current $0.40, signaling improving profitability.
But challenges persist. While leisure travel has rebounded strongly, business travel remains below pre-pandemic levels, and Braemar’s exposure to corporate clients—roughly 30% of its revenue—could limit upside. Additionally, rising interest rates pose a threat to REITs, as borrowing costs and refinancing risks increase. Braemar’s debt-to-EBITDA ratio of 4.5x, while manageable, leaves little room for error.
Yet, Braemar’s portfolio strength offers a bulwark. Its 24 hotels, concentrated in markets like Las Vegas, Orlando, and Austin, cater to both transient travelers and high-margin group bookings. Management’s focus on asset-light strategies—such as fee-based management agreements and third-party leases—also reduces capital intensity. This approach allowed Braemar to generate 92% of its revenue from recurring sources in Q3, a stabilizing factor in volatile markets.
The numbers tell a compelling story. Revenue of $215.82 million in Q3 2023 represents a 29% year-over-year increase, while EBITDA margins expanded to 36%, up from 28% in 2022. Crucially, Braemar’s AFFO beat estimates for the third consecutive quarter, a streak that has bolstered investor confidence. With a dividend yield of 5.8%—sustained by a conservative payout ratio of 75% of AFFO—the stock appeals to income-seeking investors.
In conclusion, Braemar Hotels & Resorts stands at an inflection point. Its ability to capitalize on luxury travel’s recovery, paired with a disciplined balance sheet and high-margin assets, positions it to outperform as the economy navigates near-term headwinds. The company’s AFFO beat and revenue growth signal a durable business model, while its dividend resilience offers a compelling risk/reward trade-off. Should leisure demand hold and corporate travel rebound further, Braemar could continue its ascent—making it a rare gem in an otherwise uneven hospitality recovery.
Investors would be wise to monitor Braemar’s Q4 results for signs of sustained momentum. With a stock price up 40% year-to-date but still trading at a 15% discount to its pre-pandemic peak, the shares may offer further upside—if the luxury travel renaissance continues.
