Braemar Hotels & Resorts Inc. Q2 FY2025 earnings call

Key Themes - Portfolio achieved 1.5% comparable RevPAR growth and 3.7% total comparable hotel EBITDA growth with stronger margins, including growth in both urban and resort segments. - Well-positioned liquidity with debt maturity addressed and Marriott Seattle Waterfront sale completed. - Strong booking pace despite renovations at 3 hotels. ### Second Quarter Results - Portfolio had comparable RevPAR of $318, a 1.5% increase year-over-year; comparable hotel EBITDA was $47.8 million, a 3.7% increase. - Resort portfolio: Comparable RevPAR $464, +1.6% year-over-year; combined comparable hotel EBITDA $25.7 million, +6.9% year-over-year. - Urban hotels: Comparable RevPAR growth 0.5%, with the Clancy in San Francisco seeing 14% total revenue growth. ### Capital Markets - Refinanced 5 hotels in March at competitive spread, addressing 2025 debt maturity. - Restructured Sofitel Chicago Magnificent Mile to franchise, with expected value uplift. - Sold Marriott Seattle Waterfront for $145 million, aligning with deleveraging and focus on luxury sector. - Redeemed ~$107 million of nontraded preferred stock, ~23% of original raise. ### Asset Management - Renovations in process at 3 hotels; group revenue strong, Q3 group revenue pace up 8.8% vs prior year, full year group revenue pacing ahead 8.6% vs prior year. - Ritz-Carlton Dorado Beach had 17% RevPAR increase, 98% group revenue growth; Sofitel Chicago Magnificent Mile post-franchise transition had strong revenue growth. - Capital expenditures for renovations and enhancements at various hotels, with plans to complete Cameo Beverly Hills renovation and enhance other properties.

The portfolio achieved 1.5% growth in comparable RevPAR in the second quarter. Comparable hotel EBITDA grew by 3.7% with slightly stronger margins. Resort segment: Comparable RevPAR was $464, a 1.6% increase over the prior year period, and combined comparable hotel EBITDA was $25.7 million, a 6.9% increase. Notable resorts include the Ritz-Carlton Lake Tahoe with ~39% growth in total revenue and the Ritz-Carlton Reserve Dorado Beach with ~14% growth in total revenue. Urban segment: Delivered comparable RevPAR growth of 0.5%, with the Clancy in San Francisco achieving 14% total revenue growth in the quarter. Revenue contribution: Resort and urban segments both saw growth.

• Portfolio expected to outperform with strong booking pace. - Group pace 2025 up 8.6%, 2026 up 3.6%. - Q3 group revenue pace up 8.8% vs prior year, full year group revenue pacing ahead 8.6% vs prior year. - Plan to continue redeeming nontraded preferred stock to deleverage and improve cash flow per share.

• Temporary headwinds from 3 hotels undergoing renovations, which muted results to some extent. - Softness in the government segment impacted Capital Hilton and D.C.

Q: First, just on some revenue management strategies. Is there an incremental focus on grouping up? I know you mentioned doing that at Dorado Beach. Is that something you're looking to do at more properties? And is there a change in booking leads versus signed contracts?

A: Yes. We are looking to group up broadly across the portfolio. Group has to be the right group with focus on group that generates additional catering and banquet spend. F&B revenue growth outpaced rooms revenue growth, and we're looking for additional groups but it's got to be the right groups.

Q: Okay. Great. And then I know April was affected by the Easter shift. Maybe how did May and June perform versus your expectations and performance throughout the quarter? Was that more in line being more normalized months and calendars?

A: May and June performed more in line with expectations. There were headwinds from hotels under renovation and soft government segment, but rest of business was strong with group strength up high single digits, corporate up, and leisure strong at resorts.

Q: And then last one for me. Following the Seattle sale, does this make there'd be less of an urge to sell more assets? Is that's still focused and does that affect any of the upcoming transactions that you're looking to do?

A: Yes. With the sale of Seattle, we have more flexibility. We don't have further property sales planned for this year, but will assess 2026. Transaction environment improving, and we achieved full market value for Seattle asset, with potential for more interest in assets next year as debt markets heal.