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BH

Braemar Hotels & Resorts Inc. (BHR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid operating performance: total hotel revenue was $215.82M, diluted EPS was -$0.04, Comparable Hotel EBITDA was $70.8M, and Hotel EBITDA margin improved to 32.4% vs 32.1% in Q1 2024 .
  • Results beat Wall Street consensus: revenue $215.82M vs $207.50M consensus (beat), EPS -$0.04 vs -$0.11 consensus (beat), and EBITDA ~$60.24M vs $57.8M consensus (beat). The company also reported Adjusted EBITDAre of $63.0M (above consensus) .*
  • Urban assets were a key driver: comparable RevPAR growth of 11.3% YoY; management cited the presidential inauguration as a tailwind at Capital Hilton and continued strength across urban markets .
  • Balance sheet actions lowered cost of capital and addressed 2025 maturities: a $363M refinancing across five hotels (SOFR +2.52%) and extension of Ritz-Carlton Lake Tahoe mortgage (SOFR +3.25%) reduced interest costs and extended weighted average maturities .
  • Strategic update: Sofitel Chicago Magnificent Mile converted to a franchise structure, expected to provide immediate uplift in asset value and operational flexibility; quarter capex was $15.3M, and the dividend was maintained at $0.05 per share .

What Went Well and What Went Wrong

What Went Well

  • Record/highest quarterly RevPAR for the portfolio at $404; second consecutive quarter of RevPAR growth signaling an inflection point .
  • Urban portfolio strength: comparable RevPAR up 11.3% YoY; Capital Hilton delivered 19.3% YoY RevPAR growth, aided by inauguration-related demand .
  • Margin execution: Comparable Hotel EBITDA rose to $70.8M (+5.3% YoY), with Hotel EBITDA margin up ~34 bps YoY; management emphasized cost containment and productivity improvements across properties .

What Went Wrong

  • Sofitel Chicago underperformed: hotel EBITDA fell to -$2.4M and RevPAR declined 6.1% YoY; occupancy dropped to 48.0% .
  • Cameo Beverly Hills faced volatility linked to California wildfires: group displacement and daily booking/cancellation swings pressured performance early in the quarter .
  • Resorts normalized: while still strong, several resort assets showed mixed YoY performance (e.g., Ritz-Carlton Sarasota RevPAR -10.4% YoY and EBITDA -3.7%), reflecting normalization from post-COVID peaks .

Financial Results

MetricQ1 2024Q4 2024Q1 2025
Total Hotel Revenue ($USD Millions)$221.44 $175.22 $215.82
Diluted EPS ($USD)$0.05 -$0.47 -$0.04
Hotel EBITDA Margin %32.05% 23.45% 32.39%
Comparable Hotel EBITDA ($USD Millions)$67.21 $41.08 $70.80
AFFO per Diluted Share ($USD)$0.42 -$0.06 $0.40

Segment KPIs and profitability

SegmentMetricQ1 2024Q1 2025
Resorts (Total)Comparable RevPAR ($)$785.13 $800.22
Resorts (Total)Occupancy (%)69.90% 69.64%
Resorts (Total)ADR ($)$1,123.27 $1,149.04
Resorts (Total)Comparable Hotel EBITDA ($MM)$61.16 $62.39
Urban (Total)Comparable RevPAR ($)$149.74 $166.59
Urban (Total)Occupancy (%)61.75% 61.54%
Urban (Total)ADR ($)$242.51 $270.69
Urban (Total)Comparable Hotel EBITDA ($MM)$6.05 $8.41

Portfolio KPIs

MetricQ1 2024Q1 2025
Comparable RevPAR ($)$387.90 $403.99
Comparable Occupancy (%)64.80% 64.58%
Comparable ADR ($)$598.60 $625.59
Net Debt to Gross Assets (%)—42.3%
Capex Invested in Quarter ($MM)—$15.30

Vs. Wall Street consensus (Q1 2025)

MetricConsensusActualResult
Revenue ($USD Millions)$207.50*$215.82 Bold beat
Primary EPS ($USD)-$0.11*-$0.04 Bold beat
EBITDA ($USD Millions)$57.80*$60.24*Bold beat

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capex ($MM)FY 2025$75–$95 $75–$95 Maintained
Common Dividend ($/share)Q1 2025$0.05 $0.05 (Q2 2025 also declared) Maintained
Group Rooms Revenue PaceFY 2025+8% YoY (as of Q4) +7% YoY (as of Q1) Lowered slightly
Group Rooms Revenue PaceFY 2026—+10% YoY (as of Q1) New disclosure
Debt Maturities2025In discussions to refi Addressed: $363M refi done (SOFR+2.52%) Resolved/Improved
Asset Sales2025Evaluating sales; improving buyer interest Expect closings on 1–2 hotels this year; LOIs in market Clarified trajectory

Earnings Call Themes & Trends

TopicQ3 2024 (Prior-2)Q4 2024 (Prior-1)Q1 2025 (Current)Trend
Urban demandRevPAR +6% YoY; urban revenue +8% YoY; momentum expected Urban RevPAR +3.3% YoY; strong Jan pacing Urban comparable RevPAR +11.3% YoY; inauguration tailwind Strengthening
Resort normalizationNormalizing from post-COVID highs; mixed YoY Resort comparable RevPAR +1.3% YoY; expected steady growth Resort comparable RevPAR +1.9% YoY; mixed asset-level results Stabilizing/gradual growth
Debt/financing markets$407M CMBS (SOFR+3.24%) in Q3; reduced spreads Active refi talks; spreads down ~100 bps YoY $363M refi (SOFR+2.52%); Lake Tahoe extension (SOFR+3.25%) Improving cost/maturity profile
Preferred redemptions~$50M redeemed ~$80M redeemed ~$90M redeemed to-date Ongoing deleveraging
Group businessPace up ~13% FY 2025; leads +14% Q4 group rev +7%; FY25 pace +8% Q1 group rev +31%; FY25 pace +7%, FY26 +10% Strong but pacing normalized
Asset salesPreparing for future sales; market interest rising Buyer/seller gap narrowing; financing improving Buyers touring assets; LOIs in hand; 1–2 closings expected Execution phase
Strategic repositioningCapital Hilton/Lake Tahoe renovations Targeted F&B and space conversions Sofitel Chicago franchise conversion; new retail/cabanas Value creation actions advancing

Management Commentary

  • “I’m extremely pleased with Braemar’s solid first quarter performance, highlighted by RevPAR growth of 4.2%. This marks our second consecutive quarter of RevPAR growth… our urban hotel portfolio delivered impressive 11.3% RevPAR growth… resorts continued their upward recovery trajectory with nearly 2% RevPAR growth.” – CEO Richard Stockton .
  • “Adjusted EBITDAre for the quarter was $63.0 million… approximately 23% of our debt is effectively fixed and approximately 77% is effectively floating… net debt to gross assets was 42.3%.” – CFO Deric Eubanks .
  • “We closed on a refinancing involving five hotels… $363 million… SOFR +2.52%… addressed our only remaining final debt maturity for 2025.” – CEO Richard Stockton .
  • “Sofitel Chicago… transition to a franchise… expected to provide an immediate uplift in the value of the property… management agreement with Remington being terminable on sale.” – CEO Richard Stockton .

Q&A Highlights

  • Group demand resilience despite macro volatility: booking window shortened slightly but conversions strong; Q1 group revenue +31% YoY across 14 of 15 hotels; FY25 pace +7%, FY26 +10% .
  • International inbound exposure is minimal (mid-single digits portfolio-wide); muted impact and market-specific (St. Thomas down slightly; Puerto Rico up modestly) .
  • Margin outlook optimistic: productivity up 1% YoY; contract labor reduced to ~2% of total labor; wage growth stabilizing; continued EBITDA growth expected via cost containment .
  • Sofitel franchise conversion rationale: unencumbered structure improves asset value; minimal capex required (public/meeting spaces planned next year) .
  • Preferred redemption mechanics and asset sales: staged by issuance timing with expectations to close 1–2 hotel sales in 2025; proceeds could address 2026 convertible notes .

Estimates Context

  • Revenue: $215.82M actual vs $207.50M consensus – bold beat .*
  • EPS: -$0.04 actual vs -$0.11 consensus – bold beat .*
  • EBITDA: ~$60.24M actual vs $57.8M consensus – bold beat.*
  • Implication: Estimates likely need upward revision for urban-driven recovery and portfolio margin resilience; management’s Adjusted EBITDAre ($63.0M) and comparable EBITDA ($70.8M) underscore operating strength .*

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Operating momentum is improving, led by urban markets; current-quarter urban RevPAR +11.3% YoY and portfolio Comparable Hotel EBITDA +5.3% YoY support narrative of an inflection in fundamentals .
  • Financing actions de-risk 2025 with lower spreads and extended maturities ($363M refi; Tahoe extension), reducing interest costs and near-term refinancing risk .
  • Strategic franchising at Sofitel Chicago should enhance sale optionality and asset valuation; watch for subsequent operating efficiencies under Remington .
  • Group business remains a material lever: strong Q1 performance (+31% YoY) and solid forward pace (+7% FY25, +10% FY26) could sustain occupancy/margin gains despite leisure normalization .
  • Dividend is intact ($0.05/share) and reiterated for Q2; pairing cash returns with deleveraging (preferred redemptions now ~$90M) strengthens equity case .
  • Asset sale pipeline is moving toward execution (buyers touring, LOIs in hand); potential proceeds give flexibility to redeem preferreds, repurchase common (when permitted), and address 2026 converts .
  • Near-term trading: stock sensitivity to asset sale catalysts, urban demand prints, and additional refinancing at favorable spreads; medium-term thesis: margin and RevPAR normalization with constrained industry supply and targeted capex driving asset-level ROI .