Braemar Hotels & Resorts Inc. Q4 2023 Earnings Call
Operator: Thank you for standing by, and welcome to the Braemar Hotels and Resorts Inc. fourth quarter 2023 results conference call. I would now like to welcome Jordan Jennings, Director of Investor Relations, to begin the call. Jordan, over to you.
Thank you for standing by and welcome to the Braemar hotels, <unk> Resorts, Inc. Fourth quarter 2023 results conference call.
I would now like to welcome Jordan Jennings director of Investor Relations to begin the call Jordan over to you.
Jordan Jennings: Good morning and welcome to today's call to review results for Braemar Hotels and Resorts for the fourth quarter and full year 2023 and to update you on recent developments. On the call today will be Richard Stockton, President and Chief Executive Officer, Deric Eubanks, Chief Financial Officer, and Chris Nixon, Executive Vice President and Head of Asset Management. The results as well as notice of accessibility of this conference call on a listen-only basis over the internet were distributed yesterday in the press. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the Federal Securities Regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks, which could cause actual results to differ materially from those anticipated.
Good morning, and welcome to today's call to review results for Braemar hotels, <unk> resorts for the fourth quarter and full year 2023, and talking to you on recent developments on the call today will be Richard Stockton, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, and Chris Nicholson Executive Vice President and head of asset management.
The result, as well as notice of this that the ability of this conference call on a listen only basis over the Internet were distributed yesterday in a press release.
At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward looking information and are being made pursuant to the safe Harbor provisions of the federal Securities regulations.
Forward looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated.
Jordan Jennings: These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made after the date of this call, and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or a solicitation of an offer to buy any security. Securities will be offered only by means of a registration statement and prospectus, which can be found at www.sec.gov.
These factors are more fully discussed in the company's filings with the Securities and Exchange Commission.
Forward looking statements included in this conference call are only made after the date of this call and the company is not obligated to publicly update or revise them statements made during this call do not constitute an offer to sell or solicitation of an offer to buy any securities securities will be offered only by means of a registration statement and prospectus, which can be found at www.
That said got done in addition, certain terms used in this call are non-GAAP financial measures reconciliations of which are provided in the company's earnings release and accompanying tables or schedules, which have been filed on form 8-K with the SEC on February 29, 2024, and May also be accessed through the company's website at www dot be HR REIT dotcom.
Jordan Jennings: In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and in company tables or schedules, which were filed in Form 8K with the SEC on February 29, 2024, and may also be accessed through the company's website at www.bhreap.com. Each listener is encouraged to review those recommendations provided in the earnings release together with all other information provided in the release Also, unless otherwise stated, all reported results discussed in this call compare the fourth quarter and full year ended December 31st, 2023 with the fourth quarter and full year ended December 31st, 2023. Now, I'll turn the call over to Richard Stockton. Please go ahead, Richard.
Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release.
Also unless otherwise stated all reported results discussed in this call compare the fourth quarter and full year ended December 31, 2023, with the fourth quarter and full year ended December 31 2022.
Now I'll turn the call over to Richard Stockton. Please go ahead Richard.
Richard J. Stockton: Good morning. Welcome to our 2023 fourth quarter earnings conference call. I will begin today's call by providing an overview of our business and an update on our portfolio. Then, Deric will provide a review of our financial results, and Chris will provide an update on our asset management activities. Afterwards, we'll open the call for Q&A.
Good morning welcome.
Welcome to our 2023 fourth quarter earnings conference call I'll.
I'll begin today's call by providing an overview of our business and an update on our portfolio.
Then Derek will provide a review of our financial results and Chris will provide an update on our asset management activity.
Afterwards, we will open the call for Q&A.
Richard J. Stockton: We have a few key themes for today's call. First, we continue to be pleased with the continued momentum of our urban hotels, which reported a comparable hotel EBITDA of $11 million in the fourth quarter. Second, our two most recent acquisitions, the Ritz-Carlton Reserve Dorado Beach and the Four Seasons Resort Scottsdale at True North, are each performing well and continue to exceed our original underwriting. And third... As we continue to diligently work through our refinancing program, we have refinanced or extended almost all of our 2024 debt maturities, including the recent refinance of the Capitol Health in Washington, D.C., and the extension of our Extension of our Ritz Carlton St. Thomas loan, extension of our Ritz Carlton Lake Tahoe loan, and extension on our Hilton La Jolla Torrey Pines loan.
We are a few key themes for today's call.
First we continue to be pleased with the continued momentum of our urban hotels, which reported comparable hotel EBITDA of $11 million in the fourth quarter.
Second our two most recent acquisitions the Ritz Carlton Reserve Dorado Beach, and the four seasons resort Scottsdale at true North.
Forming well continue to exceed our original underwriting.
And third as.
As we continue to diligently work through our refinancing program, we have refinanced or extended almost all of our 2024 debt maturities, including the recent refinancing of our capital Hilton in Washington D. C. <unk>.
Extension of our Pier House resort and Spa in key West low extension of our Ritz Carlton Saint Thomas Long extension of our Ritz Carlton Lake Tahoe loan an extension on our Hilton La Jolla, Torrey Pines loan.
Richard J. Stockton: Turning to our fourth-quarter results, our portfolio delivered solid results with fourth-quarter comparable hotel EBITDA of $45.1 million. Our resort properties continue to outpace 2019 results, and our urban properties continue to recover. Turning to RevPAR for all hotels in the portfolio, our fourth-quarter RevPAR result of $288 reflects a decrease of 4.4% over the prior-year quarter.
Turning to our fourth quarter results, our portfolio delivered solid results with fourth quarter comparable hotel EBITDA of $45 1 million.
Our resort properties continue to outpace 2019 results and our urban properties continue to recover.
Turning to Revpar for all hotels in the portfolio, our fourth quarter Revpar result of $288 reflect a decrease of four 4% over the prior year quarter.
Richard J. Stockton: I'd like to point out that while the performance at our luxury resorts experienced a decrease compared to historically high 2022 levels, we're very pleased with their overall performance, especially when you take into account that, A, both demand and rates remain solid versus historical comparisons, and B, their performance is still far outperforming 2019 results. We're also encouraged by January RevPAR results for our portfolio, which reflected growth of 2.9% compared to the prior year. Taking a closer look at our best-in-class luxury portfolio, many of our hotels are well-located in attractive, high-barrier-to-entry leisure markets. Ten of our sixteen hotels are considered resort destinations.
I should point out that while the performance at our luxury resorts experienced a decrease compared to historically high 2022 levels. We're very pleased with their overall performance, especially when you take into account that.
Both demand and rates remains solid.
<unk> historical comparisons and be there.
Their performance is still far outperforming 2019 results.
We're also encouraged by January Revpar results for our portfolio, which reflected growth of two 9% compared to the prior year.
Taking a closer look at our best in class luxury portfolio. Many of our hotels are well located in attractive high barrier to entry leisure markets 10 of our 16 hotels are considered resort destinations and this luxury resort portfolio continues to deliver strong performance with a combined hotel EBITDA of $34 million during the quarter.
Richard J. Stockton: And this luxury resort portfolio continues to deliver strong performance with combined hotel EBITDA of $34 million during the quarter. Regarding our urban assets, our fourth-quarter performance remained solid and continued to exhibit strong growth, generating $11 million of comparable hotel EBITDA. Looking ahead, we remain very encouraged by the continued momentum for this segment, and as we've emphasized before, demand continues to return to our cities, and Braemar's urban hotels continue to ramp up. This return continues to be driven by corporate transients, as well as recent strength in corporate group demand, which is expected to accelerate during 2024, which Chris will discuss in greater detail shortly. Overall, as demonstrated by our results, our urban portfolio is in solid shape, and we continue to believe our urban hotels will be the primary driver of growth for our portfolio in the coming quarters. Next, we remain very excited about our recent acquisition of the Four Seasons Resort Scottsdale at True North, which continues to surpass our expectations, acquired in early December 2022 with cash on hand and with no common equity issued to fund the acquisition.
Regarding our urban assets, our fourth quarter performance remained solid and continued to exhibit strong growth generating $11 million of comparable hotel EBITDA.
Looking ahead, we remain very encouraged by the continued momentum for this segment and as we've emphasized before demand continues to return to our cities and Braemar as urban hotels continue to ramp up.
This return continues to be driven by corporate transient as well as recent strength in corporate group demand is expected to accelerate during 2024, which Chris will discuss in greater detail shortly.
Overall as demonstrated by our results our urban portfolio is in solid shape and we continue to believe our urban hotels will be the primary driver of growth for our portfolio in the coming quarters.
Next we remain very excited about our recent acquisition of the four seasons resort Scottsdale at true North which continues to surpass our expert to expectations.
Wired in early December 2022, with cash on hand, and with no common equity issued to fund the acquisition it fit perfectly with our strategy of owning high revpar luxury hotels and resorts.
Richard J. Stockton: It fits perfectly with our strategy of owning high-reputation luxury hotels and resorts. Financially, it's also been a great addition to our portfolio, as demonstrated by its strong fourth quarter and full year performance. We also continue to analyze the optimal solution for the nearly six acre development parcel we acquired as part of the acquisition.
Financially. It's also been a great addition to our portfolio as demonstrated by a strong fourth quarter and full year performance.
We also continue to analyze the optimal solution for the nearly six acre development parcel, we acquired as part of the acquisition.
Richard J. Stockton: Additionally, Braemar's other 2022 acquisition continues to perform very well. For the fourth quarter, REVPAR for the Ritz-Carlton Reserve Dorado Beach was $1,551, based on 58% occupancy and an ADR of $2,679. This rent part result reflected growth of 8.9% over the prior year quarter. For the full year 2023, the Ritz-Carlton Reserve at Rotter Beach achieved a 9.8% yield on cost, while Four Seasons Scottsdale achieved a 7.3% yield on cost. Both of these luxury assets have outpaced our underwriting, and looking ahead to the next several quarters, we remain very encouraged about the prospects for these well-positioned properties during Braemar's capital position. Our balance sheet remains strong, and we continue to emphasize balance sheet flexibility. During the fourth quarter, we extended our Ritz-Carlton Lake Taco line.
Additionally, <unk> other 2022 acquisition continues to perform very well for the fourth quarter Revpar for the Ritz Carlton reserved Rado Beach was 1551 based on 58% occupancy and an ADR of 2000 and $679.
This revpar result reflects growth of eight 9% over the prior year quarter.
For the full year 2023, the Ritz Carlton reserved Dorado Beach achieved a nine 8% yield on cost.
Four seasons, Scottsdale achieved seven 3% yield on cost.
Both of these luxury assets have outpaced our underwriting and looking ahead to the next several quarters. We remain very encouraged about the prospects for these well positioned properties.
Turning to <unk> capital position.
Our balance sheet remains strong and we continue to emphasize balance sheet flexibility.
During the fourth quarter, we extended our Ritz Carlton Lake Tahoe loan as the hotel debt capital markets continued to improve we also refinanced or extended almost all of our 2024 debt maturities.
We will discuss those in more detail in a minute, but taking a quick look we extended the loan secured by the Pier House resort and Spa. We also extended the loan secured by the Ritz Carlton St. Thomas and we refinance the capital Hilton in Washington, D C with a new $110 $6 million mortgage loan.
Richard J. Stockton: As the hotel debt capital markets continue to improve, we also refinanced or extended almost all of our 2024 debt maturity. Deric will discuss those in more detail in a minute, but taking a quick look, we extended the loan secured by the Pierhouse Resort and Spa. We also extended the loan secured by the Ritz-Carlton St. Thomas, and we refinanced the Capitol Hilton in Washington, D.C. with a new $110.6 million mortgage loan. Additionally, Hilton La Jolla Torrey Pines remains encumbered by the original mortgage loan, which has now been partially paid down to a remaining balance of $66.6 million.
Additionally, the Hilton La Jolla, Torrey Pines remains encumbered by the original mortgage loan, which now has been partially paid down to a remaining balance of $66 6 million.
While we consider all our alternatives regarding financing of this loan or potentially selling the asset.
Our lenders to provide a six month forbearance agreement.
Further regarding dispositions and favorable opportunities present themselves, we would consider raising capital through selective asset sales remain prudent in our approach and for now are testing the markets on that front.
As we look ahead braemar has unique well positioned portfolio and our solid liquidity position in summary, we believe braemar is on firm footing to perform well in both the near term and long term I will now turn the call over to Derek to take you through our financials in more detail.
Richard J. Stockton: While we consider all our alternatives regarding financing this loan or potentially selling the asset, our lender has provided a six-month forbearance agreement. Furthermore, regarding dispositions, if favorable opportunities present themselves, we would consider raising capital through selected asset sales. We're being prudent in our approach, and for now, we are testing the markets on that front. As we look ahead, Braemar has a unique, well-positioned portfolio and a solid liquidity position. In summary, we believe Braemar is on firm footing to perform well in both the near term and the long term. I will now turn the call over to Deric to take you through our financials in more detail. Thanks, Richard.
Thanks, Richard for the quarter, we reported net loss attributable to common stockholders of $31 1 million or <unk> 47 per diluted share and <unk> <unk> per diluted share of <unk> <unk> for the full year, we reported net loss attributable to common stockholders of $74 million or $1 13.
<unk> per diluted share and <unk> <unk> per diluted share of <unk> 61.
Adjusted EBITDA for the quarter was $37 $4 million adjusted EBITDA for the full year was $176 $7 million.
At quarter end, we had total assets of $2 2 billion.
Deric S. Eubanks: For the quarter, we reported a net loss attributable to common stockholders of $31.1 million, or $0.47 per diluted share, and AFFO per diluted share of $0.04. For the full year, we reported a net loss attributable to common stockholders of $74 million, or $1.13 per diluted share, and AFFO per diluted share of $0.61. Adjusted EBITDA R.E. for the quarter was $37.4 million. Adjusted EBITDA R.E. for the full year was $176.7 million.
We had $1 2 billion of loans of which $44 million related to our joint venture partner share of the loans on the capital Hilton and Hilton La Jolla Torrey Pines.
Our total combined loans had a blended average interest rate of seven 4% taking into account and the money interest rate caps base.
Based on the current level of sulfur and our first corresponding interest rate caps approximately 74% of our debt is effectively fixed at approximately 26% as effectively floating.
As of the end of the fourth quarter, we had approximately 39, 7% net debt to gross assets.
Deric S. Eubanks: At quarter end, we had a total assets of $2.2 billion. We had $1.2 billion of loans, of which $44 million related to our joint venture partner's share of the loans on the Capital Hilton and Hilton La Jolla Torrey Pines. Our total combined loans are at a blended average interest rate of 7.4%, taking into account in-the-money interest rate caps. Based on the current level of SOFR and our corresponding interest rate caps, approximately 74% of our debt is effectively fixed, and approximately 26% is effectively floating. As of the end of the fourth quarter, we had approximately 39.7% net debt to gross assets. We ended the quarter with cash and cash equivalents of $85.6 million, and restricted cash of $80.9 million.
We ended the quarter with cash and cash equivalents of $85 6 million and restricted cash of $89 million.
The vast majority of that restricted cash is comprised of lender and manager held reserve accounts.
At the end of the quarter, we also had $17 $7 million due from third party hotel managers. This primarily represents cash held by one of our brand managers, which is also available to fund hotel operating costs with.
With regard to dividends, we again announced a quarterly common stock dividend of <unk> <unk> per share or <unk> 20 per diluted share on an annualized basis.
This equates to an annual yield of approximately eight 8% based on yesterday's stock price. Our board of Directors will review the company's dividend policy on a quarter to quarter basis with a view to increasing it as financial performance continues to improve.
During the fourth quarter, we closed on the extension of the mortgage loan secured by the Ritz Carlton Lake Tahoe in Truckee, California. This non recourse loans now totaled $53 $4 million has a one year initial term with one year extension option subject to the satisfaction of certain conditions. The loan is interest only and has a floating interest rate of silver.
Deric S. Eubanks: The vast majority of that restricted cash is comprised of lender and manager health reserve accounts. At the end of the quarter, we also had $17.7 million due from third-party hotel managers. This primarily represents cash held by one of our brand managers, which is also available to fund hotel operating costs. With regard to dividends, we again announce a quarterly common stock dividend of 5 cents per share or 20 cents per diluted share on an annualized basis. This equates to an annual yield of approximately 8.8% based on yesterday's stock price. Our Board of Directors will review the company's dividend policy on a quarterly basis with a view to increasing it as financial performance continues to improve. During the fourth quarter, we closed on the extension of the mortgage loan secured by the Ritz-Carlton Lake Tahoe in Truckee, California. This non-recourse loan now totals $53.4 million and has a one-year initial term with one one-year extension option, subject to the satisfaction of certain conditions. The loan is interest-only and has a floating interest rate of SOFR plus 3.6%.
Plus three 6%.
Additionally, during the fourth quarter, we refinanced the capital Hilton in Washington, D C with a new $110 $6 million mortgage loan the new loan has an initial maturity date of December 2026, with two one year extension options subject to the satisfaction of certain conditions and bears interest at a floating interest rate of sofa plus 375.
5% the.
The property continues to be owned by a joint venture in which <unk> owns a 75% equity interest.
While we consider our alternatives regarding refinancing the Hilton La Jolla, Torrey pines loan or potentially selling the asset subsequent to quarter end. The lender has provided a six month forbearance agreement.
During this time the loan bears an annual fixed interest rate of 9%. This property also continues to be owned by the same joint venture and remained encumbered by the original mortgage loan, which now has been partially paid down to a remaining balance of $66 6 million.
Subsequent to quarter end, we also recently extended the loan secured by the Pier House resort and Spa in key West Florida alone now has an initial maturity date of September 2025, with one one year extension option subject to the satisfaction of certain conditions continues to have a balance of $80 million and bears.
Deric S. Eubanks: Additionally, during the fourth quarter, we refinanced the Capitol Hilton in Washington, D.C. with a new $110.6 million mortgage loan. The new loan has an initial maturity date of December 2026 with two one-year extension options subject to the satisfaction of certain conditions and bears interest at a floating interest rate of SOFR plus 3.75%. The property continues to be owned by a joint venture in which Braemar owns a 75% equity interest. While we consider our alternatives regarding refinancing the Hilton La Jolla-Torrey Pines loan or potentially selling the asset, subsequent to quarter end, the lender has provided a six-month forbearance agreement. During this time, the loan bears an annual fixed interest rate of 9%.
Interest at a floating interest rate of sofa, plus three 6%.
Finally, subsequent to quarter end, we extended the loan secured by the Ritz Carlton St Thomas and St. Thomas USPI.
<unk> now has an initial maturity date of August 2025, with one one year extension option subject to the satisfaction of certain conditions continues to have a balance of $42 $5 million and bears interest at a floating interest rate of silver plus 435%.
We have now refinanced or extended almost all of our 2024 debt maturities.
A total of approximately $300 million in debt out of a total of approximately $330 million maturing in 2024 has been extended or refinanced.
Looking ahead, we plan to fully repay the $30 million loan associated with the cameo Beverly Hills, which is our only remaining 2020 for maturity with cash on hand.
Deric S. Eubanks: This property also continues to be owned by the same joint venture and remains encumbered by the original mortgage loan, which has now been partially paid down to a remaining balance of $66.6 million. Subsequent to Quarter End, we also recently extended the loan secured by the Pure House Resort and Spa in Key West, Florida. The loan now has an initial maturity date of September 2025 with one one-year extension option subject to the satisfaction of certain conditions, continues to have a balance of $80 million, and bears interest at a floating interest rate of SOFR plus 3.6 percent. Finally, subsequent to Quarter End, we extended the loan secured by the Ritz-Carlton St. Thomas and St. Thomas USBI. The loan now has an initial maturity date of August 2025, with one one-year extension option subject to the satisfaction of certain conditions, continues to have a balance of $42.5 million, and bears an interest at a floating interest rate of SOFR plus 4.35%.
We are also hopeful that the hotel financing environment will continue to improve as we've seen both rates and spreads decreased over the past few months.
As of December 31, 2023, our portfolio consisted of 16 hotels with 3957 net rooms.
Our share count currently stands at $73 9 million fully diluted shares outstanding which is comprised of $66 6 million shares of common stock at $7 2 million op units.
This concludes our financial review I would now like to turn it over to Chris to discuss our asset management activities for the quarter.
Thank you Derrick for the quarter comparable hotel Revpar for our portfolio decreased 4% over the prior year quarter to $288.
Despite the declines our portfolio Revpar is still higher than the national average for the luxury chain scale.
We continue to experience strengthen our urban assets with comparable total hotel revenue exceeding the prior year quarter by 2%.
I would like to spend some time highlighting how our team has capitalized on the urban recovery actively increased our group position across our portfolio and driven strong performance at our new acquisitions.
We experienced continued strength across our urban hotels during the fourth quarter, which achieved hotel EBITDA growth of 4% over the prior year quarter.
The notary grew comparable hotel EBITDA by 29% over the prior year quarter.
Deric S. Eubanks: We have now refinanced or extended almost all of our 2024 debt maturities. A total of approximately $300 million in debt out of a total of approximately $330 million maturing in 2024 has been extended or refinanced. Looking ahead, we plan to fully repay the $30 million loan associated with Cameo Beverly Hills, which is our only remaining 2024 maturity, with cash on hand.
The team has worked to increase exposure of the autograph up branding at the notary with an emphasis on the improved services restaurant re concept and room renovation.
During the quarter our team proactively identified a trend that groups, we're using 30% fewer room nights and contracted which was twice the historical trend and proactively resold that inventory to higher rated retail business.
This decision contributed to total hotel revenue growing 12% over the prior year quarter.
Deric S. Eubanks: We are also hopeful that the hotel financing environment will continue to improve as we've seen both rates and spread decrease over the past few months. As of December 31st, 2023, our portfolio consisted of 16 hotels with 3,957 net rooms. Our share count currently stands at 73.9 million fully diluted shares outstanding, which is comprised of 66.6 million shares of common stock and 7.2 million OP units.
Group room revenue for the fourth quarter exceeded the prior year quarter by 5% and was driven by strong short term group booking activity in the quarter.
We started the quarter with $15 million and on the books group room bookings for the fourth quarter.
During the fourth quarter, we added over $10 million and additional group room revenue either.
As a comparison on a more stabilized basis in 2019, we added under $6 million of group revenue during the fourth quarter.
One of our largest group hotels Hilton La tour La Jolla, Torrey Pines finished the quarter with $2 7 million and group room revenue at 25% increase when compared to the prior year quarter.
Christopher Nixon: This concludes our financial review. I'd now like to turn it over to Chris to discuss our asset management activities for the quarter. Thank you, Deric.
Christopher Nixon: For the quarter, Comparable Hotel Rev Par for our portfolio decreased 4% over the prior year quarter to $288. Despite the declines, our portfolio rep part is still higher than the national average for the luxury chain scale. We continue to experience strength in our urban assets, with comparable total hotel revenue exceeding the prior year quarter by 2%. I would like to spend some time highlighting how our team has capitalized on the urban recovery, actively increased our group position across our portfolio, and driven strong performance at our new acquisition. We experienced continued strength across our urban hotels during the fourth quarter, which achieved hotel EBITDA growth of 4% over the prior year quarter. The notary grew Comparable Hotel Ibiza by 29% over the prior year quarter.
During the fourth quarter, San Diego benefited from strong convention demand. Our team was successful in securing a number of these citywide related groups. Many of these groups occurred in December which has traditionally been one of our softest demand months of the year.
We've been particularly pleased with the performance of two of our most recent acquisitions the Ritz Carlton Reserve Dorado Beach, and the four seasons Scottsdale.
Dorado Beach, we conducted productivity benchmarking optimized our various ancillary revenue streams and redesign the luxury Villa sales program.
In addition, we have also analyzed available space to add additional revenue producing amenities.
These efforts helped propel hotel EBITDA by 15% compared to the prior year quarter.
The four season Scottsdale has benefited from similar initiatives and has increased hotel EBITDA by 14% compared to the prior year quarter.
Christopher Nixon: The team has worked to increase exposure of the autograph upbranding at the Notary with an emphasis on the improved services, restaurant re-concept, and room renovation. During the quarter, our team proactively identified a trend that groups were using 30% fewer room nights than contracted, which was twice the historical trend, and proactively resold that inventory to higher-rated retail businesses. This decision contributed to total hotel revenue growing 12% over the prior year quarter. Group room revenue for the fourth quarter exceeded the prior year quarter by 5% and was driven by strong, short-term group booking activity in the quarter. We started the quarter with $15 million in on-the-books group room bookings for the fourth quarter.
These included a recent food and beverage menu profitability deep dive, where the team analyze the profitability and order frequency of each menu item at every outlet to optimize profitability.
Additionally, our team did a full review of opportunities at the Spa we.
We strategically launched a program targeting the local demand for luxury salon.
Additionally, we identified underutilized space in the spot, where we built out our retail platform and partnered with local vendors to merchandize their products.
These initiatives have been successful propelling our full year comparable <unk> revenue by 27% over the prior year.
Moving on to capital expenditures in 2023, the Ritz Carlton Lake Tahoe has started a transformational renovation spending all areas of the hotel, we completed renovations of the Guestrooms and suites added a highly visible luxury retail outlet upgraded the spa facilities renovated the iconic club lounge and added premium event space as well.
Christopher Nixon: During the fourth quarter, we added over $10 million in additional group room revenue. As a comparison, on a more stable basis, in 2019, we added under $6 million of group revenue during the fourth quarter. One of our largest group hotels, Hilton La Jolla, Torrey Pines, finished a quarter with $2.7 million in group room revenue, a 25% increase when compared to the prior year quarter. During the fourth quarter, San Diego benefited from strong convention demand. Our team was successful in securing a number of these citywide-related groups. Many of these groups occurred in December, which has traditionally been one of our softest demand months of the year.
As exclusive patio fire pits.
In addition, we have renovated approximately 90% of the Guestrooms and suites at the capital Hilton with the remainder to be completed in the first quarter of 2024, along with nine key additions.
Finally, we have completed renovations of the fitness center and meeting space at the Park Hyatt Beaver Creek, and the Spa at the Ritz Carlton Sarasota.
In 2023, we spent approximately $77 million on capital expenditures for 2024, we anticipate spending between 90 and $100 million on capital expenditures.
Christopher Nixon: We have been particularly pleased with the performance of two of our most recent acquisitions, the Ritz-Carlton Reserve Dorado Beach and the Four Seasons Scottsdale. At Dorado Beach, we conducted productivity benchmarking, optimized our various ancillary revenue streams, and redesigned the Luxury Villa sales program. In addition, we have also analyzed available space to add additional revenue-producing amenities. These efforts helped propel Hotel Ibiza by 15% compared to the prior year quarter.
As mentioned earlier, our urban assets are experiencing strong demand our portfolio is building a solid foundation of group business and a number of our new acquisitions continue to outperform our underwriting.
We are already launching new initiatives to further enhance our portfolio, which include transformative full property renovations and developing underutilized land with.
With these new initiatives underway, we are optimistic about the future for this portfolio.
Thank you Chris.
In summary, I'd like to reiterate that we continue to be pleased with the performance of our hotels emphasized by the continued recovery of our urban properties. We also remain very well positioned with a solid balance sheet promising outlook. We look forward to updating you on progress in the quarters ahead. This concludes our prepared remarks, and we will now open the call for Q&A.
Christopher Nixon: The Four Seasons Scottsdale has benefited from similar initiatives and has increased hotel EBITDA by 14% compared to the prior year quarter. These included a recent food and beverage menu profitability deep dive where the team analyzed the profitability and order frequency of each menu item at every outlet to optimize profitability. Additionally, our team did a full review of opportunities at the spa, and we strategically launched a program targeting the local demand for a luxury salon. Additionally, we identified underutilized space in the spa where we built out a retail platform and partnered with local vendors to merchandise their products.
The floor is now open for your questions to ask a question at this time simply press star followed by the number one on your telephone keypad.
We will now take a moment to compile our roster.
Our first question comes from the line of Tyler <unk> with Oppenheimer. Please go ahead.
Thank you and good morning. This is Jonathan on for Tyler. Thank you for taking our questions first one for me the outlook for group seems very encouraging any additional color. There you can provide where group pace relative to 2019, the opportunity to consider based on the portfolio and any thoughts on the sustainability of the strong closing.
Christopher Nixon: These initiatives have been successful, propelling our full-year comparable spa revenue by 27% over the prior year. Moving on to capital expenditures, in 2023, the Ritz-Carlton Lake Tahoe started a transformational renovation spanning all areas of the hotel. We completed renovations of the guest rooms and suites, added a highly visible luxury retail outlet, upgraded the spa facilities, renovated the iconic club lounge, and added premium event space, as well as an exclusive patio fire pit. In addition, we have renovated approximately 90% of the guest rooms and suites at the Capitol Hilton, with the remainder to be completed in the first quarter of 2024, along with nine key additions. Finally, we have completed renovations of the fitness center and meeting space at the Park High at Beaver Creek and the spa at the Ritz-Carlton, Sarasota. In 2023, we will spend approximately $77 million on capital expenditures.
Bookings.
Yes. Thanks for the question Jonathan This is Chris.
We were really happy with group production in 2023, we finished the year up 15% to prior year in group revenue as we look ahead group pace is favorable in 2024 were up 4% revenue.
The team has done a great job of being very surgical with where were placing group throughout the year.
We were hyper focused and worked with each of our hotels to come up with optimal mix exercises.
And group targets by quarter. So when you look at where our group is spread in 2024 Q3 is traditionally the softest quarter for this portfolio and our group revenue is up 14% in that quarter.
And so we've been encouraged by the short term strength, we've seen in group bookings were up 4%, we got much larger increases kind of strategically where we needed throughout the year and we expect pace to continue to improve as we get into the year. As we look ahead to 2025 pace is up 22%. So we've got a very very strong.
Christopher Nixon: For 2024, we anticipate spending between $90 and $100 million on capital expenditures. As mentioned earlier, our urban assets are experiencing strong demand. Our portfolio is building a solid foundation of group business, and a number of our new acquisitions continue to outperform our underwriting. We are already launching new initiatives to further enhance our portfolio, which include transformative full property renovations and developing underutilized land. With these new initiatives underway, we are optimistic about the future of this portfolio. Thank you, Chris.
Asian, and we're encouraged that a majority of that growth is in ADR with ADR up 14% for 2025.
So we feel like the portfolio has got a very strong foundation of group business.
Okay, Great very helpful and then switching gears.
Can you help us think about the cost environment overall what.
Richard J. Stockton: In summary, I'd like to reiterate that we continue to be pleased with the performance of our hotels, highlighted by the continued recovery of our urban properties. We also remain very well positioned with a solid balance sheet and promising outlook. We look forward to updating you on progress in the quarters ahead. This concludes our prepared remarks, and we will now open the call for Q&A. The floor is now open to your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.
What youre, saying on a per occupied room basis, and the expectation for kind of where that could go over the year.
Yeah, Jonathan Great question.
So we're certainly feeling the cost pressures that everybody else is seeing within the industry. I think our team has done a great job and kind of managing that through driving efficiencies on property.
When you look at Q4, our EBIT margin for the portfolio was actually up 70 basis points in 2019.
And so a lot of the efficiencies that we implemented through Covid.
Operator: We'll now take a moment to compile our roster. Our first question comes from the line of Tyler Batory with Oppenheimer. Please go ahead. Thank you, and good morning. This is Jonathan on behalf of Tyler.
<unk> continued to be utilized in the properties today.
We have very strong house profit margin in Q4.
Jonathan: Thank you for taking our questions. First one from me, the outlook for groups seems very encouraging. Any additional color there you can provide on where a group is relative to 2019, the opportunity that still remains for the portfolio, and any thoughts on the sustainability of the strong close method? Yeah, thanks for the question, Jonathan. This is Chris.
With with some challenges and so.
From a labor market standpoint.
That typically played heavily into our cost structure.
And increase productivity across our hotels, which is great.
Pages have been steadily increasing but we saw the first signs of them starting to normalize in Q4.
Where those increases are really started to decelerate in November over October our hourly wage rate was flat, which was very encouraging.
Christopher Nixon: We were really happy with group production in 2023. We finished the year up 15% to the prior year in group revenue. As we look ahead, the group pace is favorable. In 2024, we're up 4% in revenue. The team has done a great job being very surgical with where we're placing groups throughout the year. We were hyper-focused and worked with each of our hotels to come up with optimal mix exercises and group targets by quarter.
We're seeing reductions in contract labor across the portfolio and so again the cost pressures are there.
But I feel like our team is doing a really really great job managing through it.
Okay, that's great and then turning toward dispositions any additional color you can provide on the best in the market commentary.
Maybe on the type of assets are in locations that would make sense or is everything kind of on the table right now and we're seeing what type of pricing out there at this point.
Christopher Nixon: So when you look at where our group is spread in 2024, Q3 is traditionally the softest quarter for this portfolio, and our group revenue is up 14% in that quarter. And so we've been encouraged by the short-term strength we've seen in group bookings. We're up 4%.
Yes, all I can really point to is what we've already said.
I referenced the fact that we have a short term forbearance agreement on the Hilton Torrey Pines.
One that we're actively considering selling or refinancing, but certainly selling.
Christopher Nixon: We've got much larger increases kind of strategically where we need them throughout the year, and we expect the pace to continue to improve as we get into the year. As we look ahead to 2025, pace is up 22%, so we've got a very, very strong foundation. And we're encouraged that a majority of that growth is in ADR, with ADR up 14% for 2025. So we feel like the portfolio's got a very strong foundation of groupism. Okay, great. Very helpful.
And I got comfortable with that and that it is not a luxury hotel REIT and luxury is clearly our strategy.
And it's also a part of our Hilton JV with Park hotel, so we own 25% of it.
I think longer term, we'd like to have wholly owned positions that are in our core assets.
So there might be there might be something more to report on that one in the future.
Okay very helpful. Thank you for all the color net Boe per day.
Christopher Nixon: And then switching gears, can you help us think about the cost environment overall, what you're seeing on a per occupied room basis, and any expectations for kind of where that could go over the year? Yeah, Jonathan, great question. So we're certainly feeling the cost pressures that everybody else is seeing within the industry. I think our team has done a great job in kind of managing that through driving efficiencies on property. You know, when you look at Q4 or even the margin for the portfolio, it was actually up 70 basis points in 2019. And so, a lot of the efficiencies that we implemented through COVID continue to be utilized at the properties today.
Our next question comes from the line of Michael Bellisario with Baird. Please go ahead.
Thank you good morning.
I just wanted to follow up on on Torrey Pines, there maybe help us understand what is the sales versus refinancing analysis Youre doing and then also just the size of the loan today. After you paid it down it's now 20 plus percent debt yield is there a renovation needed or something else about the hotel, that's impacting value or where you might be able to.
Financing.
Yes, Hey, Michael its rich.
Yes, good question.
Christopher Nixon: We had a very strong house profit margin in Q4, you know, with some challenges. And so, you know, from a labor market standpoint, that typically plays heavily into our cost structure. We're seeing increased productivity across our hotels, which is great. Wages have been steadily increasing, but we saw the first signs of them starting to normalize in Q4, where those increases really started to decelerate.
There isn't renovation needed just kind of start with that one.
I think the lesson of the hotels renovated despite 12 years ago.
So yes that would be.
Part of the the the alchemy that we utilize to consider whether or not we should hold.
Hold or sell something.
It's under leveraged from a kind of a single asset financing perspective, only as a function of the paydown in order to.
Christopher Nixon: And November over October, our hourly wage rate was flat, which was very encouraging. We're seeing reductions in contract labor across the portfolio, and so again, the cost pressures are there, but I feel like our team is doing a really, really great job managing through it. That's great.
Extract the capital Hilton from that cross collateralized loan with Prudential.
So it could certainly support.
Higher loan proceeds.
And so that's that's something that we're having a look at but.
Richard J. Stockton: And then turning toward dispositions, any additional color you can provide on the testing the markets commentary, you know, maybe on the type of assets or locations that would make sense, or is everything kind of on the table right now, and more seeing what type of pricing's out there at this point? All I can really point to is what we've already said. I referenced the fact that we have a short-term forbearance agreement on the Hilton Torrey Pines, that's one that we're actively considering selling or refinancing, but certainly selling. And I get comfortable with that in that it's not a luxury hotel, and luxury is clearly our strategy. And it's also a part of our Hilton JV with Park Hotel, so we own 25% of it, and I think, longer term, we'd like to have wholly owned positions in our core assets. So there might be something more to report on that one. Okay, very helpful. Thank you for all the color.
It might be one of the worst kept secrets in the world that we have been out talking to potential buyers as well.
And is the decision will come to whether or not we believe.
The prices that we received reflect appropriate value.
Simple as that so.
We'll let you know.
Understood and then is there a pecking order for immune sold or refinanced.
<unk> in excess proceeds let me deal with us.
So let's talk about Hunter sure happy to.
We've got some capital projects that we're looking at we've talked about the opportunities that we have with some vacant land across the portfolio. We obviously want to pay off the debt and Delever song, but.
I think ideally is to reinvest in some of our some of our assets.
And then just my last question sort of along those same lines.
Tahoe development.
Much money was spent in 'twenty three what's included in that Capex budget in 2004 and then.
Jonathan: That's all for me. Our next question comes from the line of Michael Bellisario with Baird. Please go ahead. Thank you. Good morning.
Any update to share on the timing of both entitlements and any potential groundbreaking for the projects. Thank you.
Michael Joseph Bellisario: I just wanted to follow up on Torrey Pines there. Can you maybe help us understand what the sale versus refinancing analysis you're doing? And then also just the size of the loan today, if you paid it down, it's now a 20 plus percent debt yield. Is there a renovation needed or something else about the hotel that's impacting value or where you might be able to find? Yeah, good question. There is a renovation needed, so just kind of start with that one. I think the last time that the hotel was renovated was probably 12 years ago.
Yes sure. It's a good question so not much money has been spent to date.
The 23 was.
Low single digit millions I'm going to say <unk> front of me.
But the process there is one going through an entitlement amendment with Placer County.
And as a result, you do have to hire.
Certainly architects and.
Engineers and the like in order to.
Richard J. Stockton: So yeah, that would be part of the alchemy that we utilize to consider whether or not we should hold or sell something. It's underleveraged from a kind of single asset financing perspective only as a function of the paydown in order to extract the capital out of that cost-collateralized loan. So it could certainly support a higher loan process. And so that's something that we're having a look at. It might be one of the worst-kept secrets in the world that we happen to be talking to potential buyers as well. The decision will come down to whether or not we believe the prices that we receive reflect appropriate value. It's as simple as that.
You'll do that submission and get through the various questions that they have in order to award the entitlement Amendment.
We're going through a relatively straightforward I would think to entitlement amendment that reduces the entitlements that were in place on that parcel from 62.
Units.
For sale to 18 townhome units for sale with Lacoste that give you a total of 38 rentable keys.
They are contributed to our rental pool.
The process of building in Placer County involves what they call grading windows, which run from May to October.
Richard J. Stockton: We'll let you know. Okay. And then, is there a pecking order for if you sold or refinanced the property and had excess proceeds? What do you do with those? Want to talk about that? Sure. Happy to.
And so you can't move soil outside of that window.
Richard J. Stockton: We've got some capital projects that we're looking at. We've talked about the opportunities that we have with some vacant land across the portfolio. We obviously want to pay off the debt and deliver some.
And that's to prevent erosion associated with the snowfall and so.
It looks fairly unlikely that we'll have the entitlements in time to start grading this year.
Richard J. Stockton: I think ideally it's to reinvest in some of our assets. And then just my last question, sort of along those same lines, just on the Tahoe development, maybe how much money was spent in 23, what's included in that CapEx budget in 24, and then any update to share on the timing of both entitlements. Yeah, sure. It's a good question. So, uh, not much money has been spent to date. Uh, the 23 was... low single-digit millions, I'm going to say. I don't have a number right in front of me.
So we would target grading in may of 2025.
As a result expenditure will be rather limited also for 2024.
Total project cost is in the area of $80 million on that so I would think about.
Half of that would be spent in 2025 and about half in 2026 something like that.
With maybe again some consultant type soft cost extend into 2024 that would number in the low single digit millions.
Again.
Richard J. Stockton: But the process there is one of going through an entitlement amendment with Foster County. And as a result, you do have to hire, certainly, architects and engineers and the like in order to make that submission and get through the various questions that they have in order to award the entitlement amendment. We're going through a relatively straightforward, I would think, entitlement amendment that reduces the entitlements that were in place on that parcel from 62 units for sale to 18 townhome units for sale with lock-offs. That gives you a total of 38 rentable keys if they are contributed to a rental pool. The process of building in Placer County involves what they call grading windows, which run from May to October. And so you can't move soil outside of that window, and that's to prevent erosion associated with snowfall.
The floor is now open for your questions to ask a question at this time simply press the star followed by the number one on your telephone keypad.
Our next question comes from the line of Bryan Mayer with B Riley Securities. Please go ahead.
Thank you and good morning.
My name is Derrick the extensions and the loans that were addressed for this year, we're pretty short term in nature and he was that strategic I mean is that bad debt interest rates are going to come down and youll refinance them at lower rates and if in fact that holds true would you be inclined to go.
More fixed rate debt in the future than you currently have now.
Richard J. Stockton: And so, it looks fairly unlikely that we'll have the entitlements in time to start grading this year. So, we would target grading in May of 2025. As a result, expenditure will also be rather limited for 2024. The total project cost is in the area of $80 million on that, so I would think about half of that would be spent in 2025 and about half... Again, the floor is now open for your questions. To ask a question at this time, simply press the star followed by the number one on your telephone keypad.
Thanks, Brian I'd say, a couple of things I mean, one the financing environment continues to be a little challenging when it comes to the hotels. Obviously, we've got very desirable assets that are very low leveraged and so I think from <unk> perspective, it's a little bit different than than the rest of the market but.
Typically the current lender that you have is kind of your best the best lender, but.
But we've also wanted to be strategic about having a very well ladder maturity schedule and I think if you model out what our maturity schedule now looks like with some of these shorter term extensions, while maintaining some pretty attractive spreads.
That we've got a very very attractive maturity schedule looking forward.
Operator: Our next question comes from the line of Bryan Maher with B. Reilly Security. Please go ahead. Thank you and good morning.
In terms of the amount of debt thats maturing a any given year.
Bryan Anthony Maher: Deric, the extensions and the loans that were addressed for this year were pretty short-term in nature. Was that strategic? Is the bet that interest rates are going to come down and you'll refinance them again at lower rates? And if in fact that holds true, would you be inclined to go more fixed-rate debt in the future than you currently have now? Thanks, Bryan.
It's somewhere around 10, 11% of our asset value. So so very very manageable very low leverage I would say we continue to.
Prefer floating rate debt, just because as I've said before.
You're typically going to pay less overtime and you're typically going to have much more flexibility in terms of either refinancing that loan or selling an asset and paying the debt off et cetera. So.
But we do have a mix, we've got a mix of fixed and floating and I think we'll probably continue to have a mix but.
I'd say, our preference continues to probably lean towards the side of floating rate.
Okay, and maybe for Richard or Chris when we think out to this summer.
Deric S. Eubanks: I'd say a couple of things. One, the financing environment continues to be a little challenging when it comes to hotels. Obviously, we've got very desirable assets that are very low leveraged. And so I think from Braemar's perspective, it's a little bit different than the rest of the market. But typically, the current lender that you have is kind of the best lender.
And luxury leisure book gains most of it we're all aware that last year. It looked like people started to go abroad again.
<unk>.
Insights into the booking window or soon to think about this summer.
Deric S. Eubanks: But we've also wanted to be strategic about having a very well-laddered maturity schedule. And I think if you model out what our maturity schedule now looks like with some of these shorter-term extensions while maintaining some pretty attractive spreads, we've got a very, very attractive maturity schedule looking forward in terms of the amount of debt that's maturing any given year. It's somewhere around 10%, 11% of our asset value. So it's very, very manageable, very low leveraged. I would say we continue to prefer floating rate debt just because, as I've said before, you're typically going to pay less over time and you're typically going to have much more flexibility in terms of either refinancing that loan or selling an asset and paying the debt off, etc. But we do have a mix.
Some of your.
Properties.
Yes, great question, Brian So.
We are seeing the booking window expand I think it's a little bit early for leisure in terms of the summer.
I do think we've been encouraged by some of the stats, we've been seeing from from international inbound and what's expected.
In terms of next year and so that's that's going to be a tailwind I think.
In terms of our resorts.
The summer periods are always a bit softer and so we've kind of.
Proactively hedged against that with our group position.
Where we are building up our group base Q2 Q3.
At our resorts.
Kind of insulate and mitigate.
Christopher Nixon: We've got a mix of fixed and floating rates, and I think we'll probably continue to have a mix. But I'd say our preference continues to probably lean towards the side of the floating rate. And maybe for Richard or Chris, you know, when we think out to the summer and, you know, luxury leisure bookings, you know, most of us are all aware that last year it looked like people started to go abroad again. Do you have any thoughts or insights into the booking window, or is it too soon to think about how the summer is going to shape up some of your luxury properties? Yeah, great question, Bryan.
Any any any normalization of demand.
We are encouraged by kind of what we're seeing in our urban hotels and the continued uptick we're seeing strength out of our corporate business at our urban hotels.
Got pretty strong citywide calendars through.
Through 2020 for most of our major markets, especially Seattle, and Chicago, and so I think when you couple those two things.
From a leisure standpoint, we're fairly well insulated.
Okay, and just last for me I mean, when you look at the results across the portfolio and it kind of jumps out at you here the occupancy levels often in the 50 60 percentile range.
Christopher Nixon: So we are seeing the booking window expand. I think it's a little bit early for leisure in terms of the summer. But I do think we've been encouraged by some of the stats we've been seeing from international inbound and what's expected in terms of next year. And so that's, that's going to be a tailwind.
Christopher Nixon: I think in terms of our resorts, the summer periods are always a bit softer. And so we've kind of, you know, proactively hedged against that with our group position. We're building up our group base, Q2, Q3, at our resorts to, you know, kind of insulate and mitigate any, any, any normalization of demand. We are encouraged by what we're seeing in our urban hotels and the continued uptick we're seeing in our corporate business at our urban hotels. We've got pretty strong citywide calendars through 2024 in most of our major markets, especially Seattle and Chicago. And so I think when you kind of couple those two things, you know, from a leisure standpoint, we're fairly well insulated. Okay, and just last for me, I mean, when you look at the results across the portfolio, it kind of jumps out at you, the occupancy levels, you know, often in the 50-60 percentile range, and I know the long-term nature of if you want to keep rates high for the bottom line, occupancy has to be service. But I mean, what are your thoughts there about taking that off?
The long term nature, and you want to keep rate high drop to the bottom line occupancy has to be serviced.
But I mean, what are your thoughts there about taking that occupancy five or seven percentage points by lowering rate maybe capturing some ancillary revenue at the various resort I mean, what was the thought process from the firm there.
Yes, so our preference as you said is definitely.
To get rate over occupancy and its rate focused.
Got a revenue optimization team that really big Zen property by property to come up with kind of the optimal strategy and so it's a case by case basis.
Can tell you Q4, especially at our resorts.
We're impacted by snowfall, we had really really tough snowfall at both Beaver Creek and Lake Tahoe.
Beaver Creek.
Snowfall for the fourth quarter was down about 60 inches and <unk>. It was down almost a 170 inches and so that really impacted demand.
Christopher Nixon: five or seven percentage points by lowering the rate and maybe capturing some ancillary revenue at the various resorts. I mean, what was the thought process from the firm? Yeah, so our preference, as you said, is definitely to get rate over occupancy, and it's rate-focused. We've got a revenue optimization team that really digs in property by property to come up with kind of the optimal strategy, and so it's on a case-by-case basis. I can tell you Q4, especially at our resorts, was impacted by snowfall. We had really, really heavy snowfall at both Beaver Creek and Lake Tahoe.
So I wouldn't say that we're at a point, where we were looking to sacrifice ADR for increased occupancy, but we are strategically looking at some of those more discount related channels that we probably haven't had opened in the past and whether or not we need to open them. We're taking a hard look at our marketing programs to.
To see if we can drum up some additional demand and then we're being strategic at certain points of the year and our resorts, where we can target more aspirational group customers.
That may not be able to afford us during peak season that we can go after and off season, and so we're doing some things that are occupancy focused but.
Christopher Nixon: Beaver Creek snowfall for the fourth quarter was down about 60 inches, and then Tahoe was down almost 170 inches, and so that really impacted demand. So I wouldn't say that we're at a point where we're looking to sacrifice ADR for increased occupancy, but we are strategically looking at some of those more discount-related channels that we probably haven't had open in the past and whether or not we need to open them. We're taking a hard look at our marketing programs to see if we can drum up some additional demand. And then we're being strategic at certain points of the year at our resorts, where we can target more aspirational group customers that may not be able to afford us during peak season that we can go after in off-season. And so we're doing some things that are occupancy-focused, but we're not at a point where we want to sacrifice rate to go and fill up on occupancy.
But we're not at a point, where we want to sacrifice rate to go up to go and fill up our occupancy.
Okay. Thank you that's all from me.
Thanks, Brian.
This concludes today's question and the answer session I would now like to turn the call over to management for closing remarks.
Thank you all for joining us on our year end earnings call and we look forward to speaking with you again next quarter.
That concludes today's call you may now disconnect.
[music].
Okay.
Okay.
[music].
Okay.
Yes.
Bryan Anthony Maher: Okay, thank you. That's all for me. Thanks, Brad.
Operator: This concludes today's question and answer session. I would now like to turn the call over to management for closing remarks. Thank you all for joining us on our year-end earnings call, and we look forward to speaking with you again next quarter. That concludes today's call. You may now disconnect.
Okay.