HLT - Braemar Hotels falls as B. Riley downgrades on debt
2023-08-14 10:48:03 ET
Braemar Hotels & Resorts Inc. ( NYSE: BHR ) fell 6.4% on Monday morning after B. Riley Securities dropped its rating.
The firm lowered its rating on BHR to Neutral from Buy saying it expects revenue per available room (RevPAR) may see prolonged softness at its ten luxury hotels. There’s also uncertainty surrounding about $400M in remaining 2024 debt maturities.
“As it relates to Braemar’s luxury resort hotels, we have been writing about RevPAR weakening for several quarters,” B. Riley’s Bryan Maher wrote in a note.
In the second quarter, resort RevPAR declined 11.4%. Additionally, some affluent travelers have begun to trim spending due to concerns over the economy.
“None of this bodes well for the U.S. luxury resort segment,” Maher wrote. “Admittedly, Braemar’s six urban hotels have recently seen RevPAR ramp, up 12.2% in 2Q23. However, we don’t believe this will be strong enough in 2024 to keep Braemar’s RevPAR in the black. We now forecast a 3.4% Y/Y RevPAR decline for 2024.”
The stock has two Strong Buy ratings from Wall Street analysts and two Holds. Seeking Alpha analysts give the shares one Buy rating and two Sells.
Last week, Seeking Alpha analyst Philip Wang noted debt concerns with the company.
The company's debt schedule has half of the total debt, or $550 million, due by the end of next year.
“This concern was raised during the earnings call, where management acknowledged that even with the recent injection of $200 million in corporate financing, the company will still be unable to meet its debt obligations,” Wang wrote in an August 8 note.
“Management expressed confidence in being able to refinance these loans, adding that they had begun talks in that regard. Nevertheless, should these talks fail, the potential for asset sales is a distinct possibility and one investors should be aware of.”
Shares of BHR are down 51% over the past 12 months.
More on hoteliers:
- Braemar Hotels & Resorts: Bad Q2, Even Worse Balance Sheet
- Braemar Hotels & Resorts Inc. ( BHR ) Q2 2023 Earnings Call Transcript
- Hilton Worldwide Holdings Inc. ( HLT ) Q2 2023 Earnings Call Transcript
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Braemar Hotels falls as B. Riley downgrades on debt