8-K: Braemar Hotels & Resorts Reports Positive RevPAR Growth in Q4 2024, Focuses on Refinancing and Shareholder Value

Braemar Hotels & Resorts saw a 1.9% increase in Comparable RevPAR in Q4 2024, signaling a turnaround after six quarters of decline, and is actively working on refinancing debt and enhancing shareholder value.

Summary

• Braemar Hotels & Resorts reported a 1.9% increase in Comparable RevPAR for the fourth quarter of 2024, marking the end of six consecutive quarters of decline.
• Comparable Total Hotel Revenue increased by 5.3% in Q4 2024, and Comparable Hotel EBITDA rose by 0.7% to $41.1 million.
• The company is in active discussions to refinance a $293 million loan maturing in June 2025.
• Braemar has redeemed approximately $80 million of its non-traded preferred stock as part of its Shareholder Value Creation Plan.
• The portfolio's luxury resort segment saw a 1.3% increase in Comparable RevPAR, reaching $515, and a 4.1% increase in Comparable Hotel EBITDA, totaling $31 million.
• Urban hotels experienced a 3.3% increase in Comparable RevPAR during the fourth quarter.
• January 2025 RevPAR showed an impressive 13% increase year-over-year, with the portfolio RevPAR growth excluding the Capital Hilton still over 9%.
• The company invested approximately $70 million in capital expenditures in 2024 and expects to spend between $75 million and $95 million in 2025.
• The Ritz-Carlton Lake Tahoe loan was extended with a $10 million paydown, and the spread is now SOFR + 3.25%.
• The company reported a net loss attributable to common stockholders of $(31.1) million, or $(0.47) per diluted share, for the quarter and AFFO per diluted share of negative $(0.06).
• For the full year, the net loss attributable to common stockholders was $(50.9) million, or $(0.77) per diluted share, and AFFO per diluted share was $0.21.
• Adjusted EBITDAre for the quarter was $30.2 million, and for the full year, it was $157.6 million.
• As of December 31, 2024, the company had $135.5 million in cash and cash equivalents, plus $49.6 million in restricted cash.
• The company announced a quarterly common stock dividend of $0.05 per share, or $0.20 per diluted share on an annualized basis, equating to an annual yield of approximately 7.7% based on yesterday's stock price.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the return to RevPAR growth and strategic initiatives, but tempered by the reported net losses and ongoing debt refinancing efforts.

Positives

• The company achieved positive RevPAR growth of 1.9% in Q4 2024 after six quarters of decline.
• Total Hotel Revenue increased by 5.3% in Q4 2024.
• The company is actively working to refinance its debt, with discussions underway for a $293 million loan.
• Braemar has redeemed $80 million of its non-traded preferred stock, improving cash flow per share.
• The luxury resort portfolio showed a 1.3% increase in Comparable RevPAR.
• Urban hotels experienced a 3.3% increase in Comparable RevPAR.
• January 2025 RevPAR increased by 13% year-over-year.
• Group room revenue increased by 7% compared to the prior year period.
• The Ritz-Carlton Lake Tahoe experienced a 418% growth in lead volume year-over-year.
• The Ritz-Carlton Reserve Dorado Beach delivered significant financial gains in the fourth quarter, increasing its gross operating profit margin by over 1,100 basis points compared to 2019.

Negatives

• The company reported a net loss attributable to common stockholders of $(31.1) million, or $(0.47) per diluted share, for the quarter.
• AFFO per diluted share was negative $(0.06) for the quarter.
• The company reported a net loss attributable to common stockholders of $(50.9) million, or $(0.77) per diluted share, for the full year.
• AFFO per diluted share was $0.21 for the full year.

Risks

• Unseasonably mild winter weather impacted demand in key seasonal destinations.
• Shifts in the timing of Festive events influenced booking patterns.
• The Southern California fires caused fluctuations in Los Angeles market demand.
• The company's debt is largely floating, making it susceptible to interest rate fluctuations; approximately 77% is effectively floating.

Future Outlook

The company anticipates a rebound in the resort segment and steady growth, aided by supply constraints. They are seeing strong momentum and solid forward bookings, driven by improving industry fundamentals and sustained growth in urban hotels.

Management Comments

• Im pleased to report that after six straight quarters of declining RevPAR, our portfolio achieved 1.9% Comparable RevPAR growth in the fourth quarter and achieved 5.3% Comparable total revenue growth.
• We are in active discussions with a lender on the refinancing of our $293 million loan that matures in June.
• We continue to make solid progress on our Shareholder Value Creation Plan, having redeemed approximately $80 million of our non-traded preferred stock.
• We also remain well positioned with a solid balance sheet and promising outlook.

Industry Context

The announcement reflects a broader trend of recovery in the hospitality sector, particularly in urban markets and luxury resorts, as travel demand normalizes post-COVID. The company's focus on refinancing debt and enhancing shareholder value aligns with industry-wide efforts to strengthen financial positions amid economic uncertainty.

Comparison to Industry Standards

• Braemar's focus on luxury hotels aligns with industry trends favoring high-end experiences.
• The company's RevPAR growth is in line with other luxury hotel REITs showing recovery.
• The Ritz-Carlton Reserve Dorado Beach's margin improvement of over 1,100 basis points is exceptional compared to industry averages.
• The company's capital expenditure plans are consistent with peers investing in property enhancements.

Stakeholder Impact

• Shareholders may see increased value through the Shareholder Value Creation Plan and potential for future dividend increases.
• Employees may benefit from the company's investments in property enhancements and operational efficiencies.
• Customers can expect enhanced guest experiences through renovations and improved service offerings.
• Suppliers may see increased business opportunities as the company invests in capital expenditures.

Next Steps

• Continue discussions with a lender regarding the refinancing of the $293 million loan maturing in June 2025.
• Continue to redeem non-traded preferred stock as part of the Shareholder Value Creation Plan.
• Launch guestroom renovations at Hotel Yountville in Q1 2025.
• Add five luxury beachside cabanas at The Ritz-Carlton St. Thomas.
• Initiate renovations to transform Cameo Beverly Hills into a luxury Hilton LXR hotel.
• Begin a comprehensive guestroom renovation at Park Hyatt Beaver Creek.

Key Dates