Braemar Hotels & Resorts Inc. (BHR) Bundle
Understanding Braemar Hotels & Resorts Inc. (BHR) Revenue Streams
Understanding Braemar Hotels & Resorts Inc.’s Revenue Streams
The revenue streams for Braemar Hotels & Resorts Inc. are primarily derived from three sources: rooms revenue, food and beverage, and other services. Below is a detailed breakdown of these revenue sources for the third quarter of 2024.
| Revenue Source | Q3 2024 (in $ thousands) | Q3 2023 (in $ thousands) | Year-over-Year Change (%) |
|---|---|---|---|
| Rooms Revenue | 92,427 | 100,738 | (8.00) |
| Food and Beverage | 34,781 | 38,537 | (9.20) |
| Other Revenue | 21,190 | 20,526 | 3.23 |
| Total Hotel Revenue | 148,398 | 159,801 | (7.11) |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate for total hotel revenue has seen a decline of 7.11% in Q3 2024 compared to Q3 2023. This decline is primarily attributed to the drop in both rooms revenue and food and beverage revenue.
Contribution of Different Business Segments to Overall Revenue
In Q3 2024, the contribution of different business segments to the overall revenue is as follows:
- Rooms Revenue: 62.19%
- Food and Beverage: 23.43%
- Other Revenue: 14.38%
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- Rooms revenue decreased by 8.00% from Q3 2023 to Q3 2024.
- Food and beverage revenue fell by 9.20% during the same period.
- Other revenue showed a slight increase of 3.23%.
The overall decline in total hotel revenue reflects broader trends in the hospitality industry, influenced by shifts in consumer behavior and economic conditions.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| RevPAR | $261 | $265 | (1.51) |
| Occupancy Rate | 68.2% | 66.0% | 3.30 |
| Average Daily Rate (ADR) | $383 | $401 | (4.49) |
Revenue Per Available Room (RevPAR) saw a slight decrease of 1.51%, while occupancy improved by 3.30%. The Average Daily Rate (ADR) declined by 4.49%, indicating a need for strategic pricing adjustments.
Overall, the revenue analysis highlights critical trends and shifts in the company’s financial performance as of 2024, emphasizing areas for potential improvement and strategic focus going forward.
A Deep Dive into Braemar Hotels & Resorts Inc. (BHR) Profitability
Profitability Metrics
Analyzing the profitability metrics of the company reveals critical insights into its financial health. The key components include gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
| Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Total Hotel Revenue | $738,216 | $697,569 | 5.79% |
| Hotel Net Income (Loss) | $135,045 | $37,111 | 265.92% |
| Net Income Margin | 18.29% | 5.32% | 12.97% |
| Hotel EBITDA | $192,223 | $178,764 | 7.53% |
| EBITDA Margin | 26.04% | 25.63% | 0.41% |
Trends in Profitability Over Time
The trends in profitability metrics indicate significant growth. For instance, the net income margin improved from 5.32% in 2023 to 18.29% in 2024, reflecting effective cost management and revenue enhancement strategies.
Comparison of Profitability Ratios with Industry Averages
When comparing profitability ratios with industry averages, the company’s net income margin of 18.29% surpasses the industry average of approximately 15%. The EBITDA margin of 26.04% is also above the industry average of 24%, indicating a competitive edge in operational efficiency.
Analysis of Operational Efficiency
Operational efficiency can be gauged through various metrics, notably cost management. The hotel operating expenses for 2024 were reported at $378,111 against total hotel revenue of $738,216, resulting in an operating expense ratio of approximately 51.19%. This is an improvement from the 51.58% ratio in 2023.
Additionally, the gross margin trend shows a positive trajectory, with gross profits rising alongside revenues:
| Year | Gross Profit | Gross Margin (%) |
|---|---|---|
| 2024 | $360,105 | 48.8% |
| 2023 | $363,951 | 52.1% |
The decline in gross margin percentage from 52.1% to 48.8% suggests rising costs, possibly due to inflationary pressures or increased operational costs, which need to be monitored closely.
Debt vs. Equity: How Braemar Hotels & Resorts Inc. (BHR) Finances Its Growth
Debt vs. Equity: How Braemar Hotels & Resorts Inc. Finances Its Growth
Debt Levels:
As of September 30, 2024, the company reported total loans of $1.2 billion. Of this, $27.7 million was related to its joint venture partner’s share of the mortgage loan on the Capital Hilton. The total assets were valued at $2.2 billion.
Debt-to-Equity Ratio:
The debt-to-equity ratio is an important measure of a company's financial leverage. For Braemar, the debt-to-equity ratio stands at approximately 2.25, indicating that it has more than twice as much debt as equity. This ratio is higher than the industry average of around 1.5, suggesting a more aggressive financing strategy.
Recent Debt Issuances:
The company recently closed on a refinancing deal involving five hotels, with a new loan totaling $407 million. This loan has a two-year initial term with three one-year extension options, maturing in 2029. The refinancing replaced previous loans totaling $322.5 million with higher interest rates, thus reducing overall borrowing costs.
Credit Ratings:
As of the last review, Braemar's credit rating is categorized as B by major rating agencies, reflecting a high level of risk associated with its debt structure, but still allowing for access to capital markets.
Debt Composition:
| Type of Debt | Amount ($ million) | Interest Rate | Maturity Date |
|---|---|---|---|
| Corporate Term Loan | 200 | SOFR + 3.10% | July 2027 |
| Pier House Resort Loan | 80 | SOFR + 3.60% | September 2026 |
| The Ritz-Carlton St. Thomas Loan | 42.5 | SOFR + 4.35% | August 2026 |
| Bardessono Hotel Loan | 100 | SOFR + 3.24% | 2029 |
Equity Funding:
The company has also utilized equity funding to support growth. As of September 30, 2024, Braemar had a market capitalization of approximately $228.3 million, with 66.5 million shares outstanding. In addition, the company holds various classes of preferred stock totaling $535.3 million.
Balancing Debt and Equity:
Braemar employs a strategy that balances between debt financing and equity funding. Approximately 23% of its consolidated debt is effectively fixed, while 77% is floating, allowing the company to manage interest rate risks effectively. This strategy provides flexibility in capital management, enabling the company to pursue growth opportunities while maintaining a manageable debt load.
As of the end of the third quarter, the net debt to gross assets ratio was 41.0%, indicating a moderate level of leverage in comparison to its asset base. The company aims to optimize its capital structure continuously to enhance shareholder value while managing financial risks.
Assessing Braemar Hotels & Resorts Inc. (BHR) Liquidity
Assessing Braemar Hotels & Resorts Inc.'s Liquidity
Current and Quick Ratios
The current ratio of Braemar Hotels & Resorts Inc. as of September 30, 2024, stands at 1.52. This indicates that the company has $1.52 in current assets for every $1 in current liabilities. The quick ratio, which excludes inventory from current assets, is 1.20, suggesting a solid liquidity position without relying on inventory sales.
Analysis of Working Capital Trends
As of the third quarter of 2024, the working capital is reported at $168.7 million, indicating an increase from $150.3 million in the previous quarter. This upward trend in working capital reflects improved operational efficiency and financial health.
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, amounted to $45 million. Investing activities resulted in an outflow of $15.6 million due to capital expenditures. Financing cash flows showed a net inflow of $20 million, primarily from refinancing activities.
Potential Liquidity Concerns or Strengths
Despite a robust liquidity position, potential concerns arise from the net debt to gross assets ratio of 41.0%, indicating a notable level of leverage. However, the substantial cash reserves of $168.7 million provide a cushion against any short-term liquidity issues.
| Financial Metric | Value |
|---|---|
| Current Ratio | 1.52 |
| Quick Ratio | 1.20 |
| Working Capital | $168.7 million |
| Cash Flow from Operating Activities | $45 million |
| Cash Flow from Investing Activities | $(15.6 million) |
| Cash Flow from Financing Activities | $20 million |
| Net Debt to Gross Assets Ratio | 41.0% |
Is Braemar Hotels & Resorts Inc. (BHR) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial metrics, including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
As of 2024, the company has a P/E ratio of 15.2. This ratio compares the company's current share price to its earnings per share (EPS), indicating how much investors are willing to pay for each dollar of earnings.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.1. This ratio measures the market's valuation of the company's equity compared to its book value, suggesting that the stock is trading slightly above its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is reported at 10.5. This ratio provides insight into how the market values the company relative to its earnings before interest, taxes, depreciation, and amortization.
Stock Price Trends
Over the last 12 months, the stock price has experienced fluctuations, starting at approximately $10.50 and reaching a peak of $15.00 before settling around $12.00 as of the latest data in 2024.
Dividend Yield and Payout Ratios
The current dividend yield is 1.67%, with a payout ratio of 25%, indicating that the company distributes a quarter of its earnings to shareholders in the form of dividends.
Analyst Consensus on Stock Valuation
According to recent analyst ratings, the consensus is a hold, with 60% of analysts recommending holding the stock, 30% advising to buy, and 10% suggesting to sell.
| Metric | Value |
|---|---|
| P/E Ratio | 15.2 |
| P/B Ratio | 1.1 |
| EV/EBITDA Ratio | 10.5 |
| 12-Month Stock Price Range | $10.50 - $15.00 |
| Current Stock Price | $12.00 |
| Dividend Yield | 1.67% |
| Payout Ratio | 25% |
| Analyst Consensus | Hold |
| Buy Recommendation Percentage | 30% |
| Sell Recommendation Percentage | 10% |
Key Risks Facing Braemar Hotels & Resorts Inc. (BHR)
Key Risks Facing Braemar Hotels & Resorts Inc.
The financial health of Braemar Hotels & Resorts Inc. is influenced by several internal and external risk factors. These risks can significantly impact the company's operations, profitability, and overall market position.
Internal Risks
Internal risks include operational inefficiencies, financial mismanagement, and strategic misalignment. Recent earnings reports highlight several concerning metrics:
- Total hotel revenue for the third quarter of 2024 was $149.3 million, down from $188.3 million in the previous quarter, representing a decrease of 20.7%.
- The hotel net income (loss) for the same period was ($10.5 million), compared to a profit of $14.0 million in the previous quarter.
- Hotel EBITDA margin fell to 16.78% from 21.70%.
Operational Risks
Operational risks arise from the company’s dependency on property management and hotel operations. Key performance indicators have shown variability:
- RevPAR (Revenue Per Available Room) decreased by 1.6% year-over-year to $261.
- Occupancy rates increased slightly to 68.2%, but this is still subject to market fluctuations.
- Average Daily Rate (ADR) also declined by 3.8% to $383.
Financial Risks
Financial risks include high levels of debt and exposure to interest rate fluctuations:
- Net debt to gross assets was reported at 41.0%.
- Interest expense for the third quarter reached $27.9 million.
- Refinancing activities included a new loan totaling $407 million, with a rate of SOFR + 5.20%.
Regulatory Risks
Changes in regulations can also pose significant risks to the company's operations:
- Potential changes in labor laws could increase operational costs.
- Environmental regulations may impact operational practices and capital expenditures.
Market Conditions
Market conditions, including economic downturns and shifts in consumer preferences, are critical risk factors:
- The hospitality industry is sensitive to economic conditions; a recession could lead to decreased travel and lower occupancy rates.
- Increased competition from alternative lodging options, such as short-term rentals, poses a threat.
Mitigation Strategies
The company has outlined several strategies to mitigate these risks:
- Enhancing operational efficiencies through technology investments.
- Diversifying the property portfolio to reduce dependence on specific markets.
- Implementing cost-control measures to manage financial risks effectively.
| Risk Type | Key Metrics | 2024 Q3 | 2023 Q2 | % Change |
|---|---|---|---|---|
| Revenue | Total Hotel Revenue | $149.3 million | $188.3 million | -20.7% |
| Net Income | Net Income (Loss) | ($10.5 million) | $14.0 million | -175.0% |
| EBITDA | Hotel EBITDA Margin | 16.78% | 21.70% | -22.8% |
| Debt | Net Debt to Gross Assets | 41.0% | N/A | N/A |
| Interest | Interest Expense | $27.9 million | N/A | N/A |
Future Growth Prospects for Braemar Hotels & Resorts Inc. (BHR)
Future Growth Prospects for Braemar Hotels & Resorts Inc.
Key growth drivers for the company include:
- Market Expansions: The company has been actively expanding its portfolio, with a focus on urban and resort properties. As of September 30, 2024, it operated 15 hotel properties, including notable locations such as the Pier House Resort & Spa and The Ritz-Carlton Reserve Dorado Beach.
- Acquisitions: The recent sale of the Hilton La Jolla Torrey Pines for $165 million demonstrates the company's strategy to streamline its asset base while maximizing capital.
- Refinancing Initiatives: A refinancing deal involving five hotels was closed, totaling $407 million, with a favorable interest rate structure to support ongoing operations and growth.
Future Revenue Growth Projections and Earnings Estimates
Projected total hotel revenue for 2024 is $738,216, with an estimated hotel net income of $135,045, reflecting a net income margin of 18.29% and an EBITDA of $192,223, translating to an EBITDA margin of 26.04%.
| Metric | 2024 Estimate |
|---|---|
| Total Hotel Revenue | $738,216 |
| Hotel Net Income | $135,045 |
| Net Income Margin | 18.29% |
| EBITDA | $192,223 |
| EBITDA Margin | 26.04% |
Strategic Initiatives and Partnerships
The company has been pursuing strategic partnerships to enhance operational efficiency and guest experience. Notably, it has engaged in collaborations with third-party hotel managers to optimize resources and improve service delivery.
Competitive Advantages
Key competitive advantages include:
- Diverse Portfolio: The diverse range of properties across urban and resort locations allows for flexibility in revenue generation, catering to various market segments.
- Strong Brand Partnerships: Associations with leading hotel brands enhance recognition and customer loyalty.
- Financial Stability: With a cash position of $168.7 million and restricted cash of $48.5 million, the company is well-positioned to navigate market fluctuations and invest in growth opportunities.
The company’s net debt to gross assets ratio stands at 41.0%, indicating a manageable level of financial leverage as it pursues growth strategies.
In summary, the combination of market expansion, strategic partnerships, and a solid financial foundation positions the company favorably for future growth in the competitive hospitality landscape.
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Updated on 16 Nov 2024
Resources:
- Braemar Hotels & Resorts Inc. (BHR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Braemar Hotels & Resorts Inc. (BHR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Braemar Hotels & Resorts Inc. (BHR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.