8-K: Braemar Hotels & Resorts Reports Mixed Fourth Quarter and Full Year 2024 Results, Cites RevPAR Growth Inflection Point

Braemar Hotels & Resorts reported a 1.9% increase in comparable RevPAR for the fourth quarter, signaling a potential turnaround after six quarters of decline, but reported a net loss attributable to common stockholders for the quarter of $(31.1) million.

Summary

• Braemar Hotels & Resorts (BHR) announced its financial results for the fourth quarter and full year ended December 31, 2024.
• Comparable RevPAR for all hotels increased by 1.9% in the fourth quarter to $305, with ADR increasing 0.4% to $480 and Occupancy increasing 1.5% to 63.5%.
• The net loss attributable to common stockholders for the quarter was $(31.1) million, or $(0.47) per diluted share.
• Adjusted funds from operations (AFFO) was $(0.06) per diluted share for the quarter, and Adjusted EBITDAre was $30.2 million.
• Comparable Hotel EBITDA was $41.1 million for the quarter.
• The company ended the quarter with $135.5 million in cash and cash equivalents and $49.6 million in restricted cash.
• Net debt to gross assets was 40.8% at the end of the fourth quarter, and capex invested during the quarter was $15.8 million.
• For the full year, comparable RevPAR decreased 0.3% to $317, with ADR decreasing 2.2% to $473 and Occupancy increasing 2.0% to 67.0%.
• The net loss attributable to common stockholders for the year was $(50.9) million, or $(0.77) per diluted share.
• AFFO per diluted share for the year was $0.21, and Adjusted EBITDAre was $157.6 million.
• Comparable Hotel EBITDA for the year was $179.0 million, and capex invested during the year was $70.6 million.
• Subsequent to quarter end, the company extended its mortgage loan secured by the Ritz-Carlton Lake Tahoe.

Sentiment

Score: 6

Explanation: The sentiment is mixed. While there's positive RevPAR growth in Q4 and optimism about future performance, the net losses and overall negative full-year results temper the outlook. The extension of the Ritz-Carlton Lake Tahoe loan is a positive sign, but the company still faces challenges.

Positives

• The company saw a 1.9% increase in comparable RevPAR for all hotels in Q4 2024, signaling a potential turnaround.
• The company has ample liquidity on its balance sheet and is positioned well to benefit from future interest rate cuts.
• The company has redeemed approximately $80 million of its non-traded preferred stock.
• The Board of Directors declared a quarterly cash dividend of $0.05 per diluted share for the Company's common stock for the first quarter ending March 31, 2025.

Negatives

• The company reported a net loss attributable to common stockholders of $(31.1) million, or $(0.47) per diluted share for Q4 2024.
• For the full year, comparable RevPAR decreased 0.3% to $317.
• For the full year, the net loss attributable to common stockholders was $(50.9) million, or $(0.77) per diluted share.

Risks

• The company's forward-looking statements are subject to risks and uncertainties, including the ability to repay, refinance, or restructure debt.
• Changes in interest rates or the general economy could impact the company's performance.
• The company faces competition in the markets in which it operates.

Future Outlook

Management anticipates strong momentum and solid forward bookings in 2025, driven by improving industry fundamentals, sustained growth in urban hotels, and a continued bounce in the resort segment, further supported by supply constraints resulting from the ongoing restrictive capital markets environment.

Management Comments

• Richard J. Stockton, Braemar's President and Chief Executive Officer, stated that he is very pleased with Braemar's strong fourth quarter performance, highlighted by RevPAR growth of almost 2%.
• Mr. Stockton believes that the positive RevPAR growth indicates an important inflection point.
• Mr. Stockton noted that RevPAR growth for the portfolio for the month of January was approximately 13%, benefiting from the inauguration in Washington, D.C.
• Mr. Stockton stated that the company has ample liquidity on its balance sheet and is positioned well to benefit from future interest rate cuts.
• Mr. Stockton stated that the company continues to make progress on its shareholder value creation plan and has now redeemed approximately $80 million of its non-traded preferred stock.
• Mr. Stockton believes that the company's portfolio is well-positioned to outperform.

Industry Context

The announcement highlights the impact of the post-COVID inflationary environment on resort RevPARs and the potential for a turnaround in the hotel industry, supported by supply constraints due to restrictive capital markets.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or competitors.
• However, it does mention general industry trends such as the impact of inflation and capital market conditions on hotel performance.
• To provide a more detailed comparison, one would need to benchmark Braemar's RevPAR, ADR, occupancy, and EBITDA margins against those of comparable hotel REITs like Host Hotels & Resorts (HST), Park Hotels & Resorts (PK), and Pebblebrook Hotel Trust (PEB).
• Additionally, comparing Braemar's performance to industry averages reported by STR (a global hospitality data and analytics company) would offer valuable context.

Stakeholder Impact

• Shareholders will be impacted by the quarterly dividend of $0.05 per diluted share.
• Employees may be affected by the company's performance and future growth plans.
• Customers will experience the quality of service and amenities at Braemar's luxury hotels and resorts.
• Creditors will be interested in the company's ability to manage its debt and maintain financial stability.

Next Steps

• The Board of Directors will review its dividend policy on a quarter-to-quarter basis.
• The company will continue to execute its shareholder value creation plan.
• The company will monitor industry trends and capital market conditions to optimize its portfolio and financial performance.

Key Dates