Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Braemar Hotels & Resorts Inc (NYSE:BHR) achieved a 1.9% comparable RevPAR growth in the fourth quarter, marking a positive turnaround after six consecutive quarters of decline.
• The company reported a 5.3% increase in comparable total hotel revenue, driven by a strong 7% increase in group revenue.
• Braemar Hotels & Resorts Inc (NYSE:BHR) successfully refinanced a $293 million loan, eliminating any final debt maturities for 2025.
• The luxury resort portfolio delivered solid performance with a 1.3% increase in comparable RevPAR and a 4.1% increase in combined comparable hotel EBITDA.
• The company made significant capital improvements, including renovations at the Four Seasons Resort Scottsdale and Ritz-Carlton properties, enhancing guest experiences and driving long-term value.

Negative Points

• Braemar Hotels & Resorts Inc (NYSE:BHR) reported a net loss attributable to common stockholders of $31.1 million for the quarter.
• The company faced temporary challenges due to unseasonably mild winter weather and shifts in festive event timings, impacting demand in key seasonal destinations.
• The Los Angeles market experienced fluctuations in demand due to the South California fires, affecting group business and leading to cancellations.
• Approximately 77% of the company's debt is effectively floating, which could pose risks in a volatile interest rate environment.
• Despite improvements, the company continues to face challenges in the transaction market, with ongoing efforts to close the gap between buyers and sellers' expectations.

Q & A Highlights

• Warning! GuruFocus has detected 6 Warning Signs with BHR.

Q: Can you provide an update on the capital expenditures for the development in Tahoe and any spending planned for 2025? A: Richard Stockton, CEO: The development in Tahoe is mostly complete, with only a small project remaining. We plan to renovate a small F&B outlet called Cafe Blue for under $2 million. As for the branded residences development, we are still pursuing entitlements with Plaster County, and no expenditure is anticipated for 2025 due to the slow process.

Q: Are you still restricted from repurchasing common stock, and how are you balancing common versus preferred repurchases? A: Richard Stockton, CEO: Yes, we are restricted from repurchasing common stock. We will consider common stock repurchases when they become available, but it's difficult to predict when that might be.

Q: Can you elaborate on the revPAR strength in January and its sustainability? A: Chris Nixon, EVP and Head of Asset Management: January's performance was strong due to calendar shifts that positively affected the festive period in Q1 2025. We've positioned our hotels well through revenue management and capital investments, such as renovations in Lake Tahoe, which have shown positive forward pace. We are encouraged by the broad-based demand and outlook.

Q: How do you view the return of steady growth in resort markets? A: Richard Stockton, CEO: We expect performance to skew to the upside due to historically low supply growth. The resort segment has higher barriers to entry, and with limited new supply, we are set up for strong performance over the next few years.

Q: Can you discuss the transaction market in terms of volume and pricing? A: Richard Stockton, CEO: The bid for hotels is strong, with many interested parties. We recently launched two hotels for sale and received positive reception. The interest rate environment has stabilized, and spreads on debt have decreased, making the market attractive for transactions. We expect transaction volumes to be higher than last year, potentially leading to cap rate compression.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.