BRAEMAR HOTELS & RESORTS INC. - FORM 10-K

Overview of Braemar Hotels & Resorts

Braemar Hotels & Resorts is a real estate investment trust (REIT) that invests primarily in high-end luxury hotels and resorts. The company was formed in 2013 and is based in Maryland. As of the end of 2025, Braemar owned 13 hotel properties across 6 states, Washington D.C., Puerto Rico, and the U.S. Virgin Islands, with a total of 3,028 rooms.

Braemar does not operate the hotels directly, but instead hires third-party management companies to run the properties. The company’s largest hotel management provider is Remington Hospitality, a subsidiary of Braemar’s advisor, Ashford Inc. Ashford Inc. also provides other services to Braemar, such as design, construction, and insurance.

Financial Performance in 2025

In 2025, Braemar reported a net loss of $22.3 million, compared to a $1.7 million net loss in 2024. This was primarily due to the following factors:

Revenues:

• Rooms revenue decreased 5.2% to $429.0 million, mainly due to the sale of two hotel properties.
• Food and beverage revenue decreased 0.9% to $179.5 million.
• Other hotel revenue increased 0.7% to $95.5 million.

Expenses:

• Hotel operating expenses decreased 1.9% to $492.2 million, driven by lower rooms, food & beverage, and management fee costs.
• Property taxes, insurance, and other expenses decreased 19.4% to $34.3 million.
• Depreciation and amortization decreased 6.2% to $92.6 million.
• However, the company recorded a $54.5 million impairment charge related to three hotel properties.
• Advisory services fees decreased 4.3% to $29.2 million.
• Corporate general and administrative expenses decreased 18.2% to $11.8 million.

Other Items:

• Braemar recognized a $82.8 million gain on the disposition of hotel assets.
• Interest expense decreased 8.9% to $98.5 million due to lower average debt levels and interest rates.

The company’s 13 comparable hotels (those owned for the full year in both 2025 and 2024) saw a 3.7% increase in average daily rate (ADR) but a 181 basis point decrease in occupancy compared to 2024.

Analysis of Strengths and Weaknesses

Strengths:

• Diversified portfolio of high-end luxury hotels and resorts in desirable markets
• Strong brand affiliations with Marriott, Hilton, Four Seasons, Hyatt, and Sofitel
• Experienced hotel management team through Ashford Inc.
• Ability to generate gains from strategic hotel dispositions
• Declining interest expense due to lower debt levels and rates

Weaknesses:

• Reliance on Ashford Inc. for advisory services and hotel management, creating potential conflicts of interest
• Impairment charges on several hotel properties, indicating challenges in certain markets
• Declining occupancy at comparable hotels, despite higher room rates
• Net losses in both 2025 and 2024, limiting cash flow and dividend payments

Outlook and Future Prospects

Braemar is currently exploring strategic alternatives, including a potential sale of the entire company or individual hotel assets. The outcome of this process remains uncertain and will depend on market conditions, buyer interest, and the company’s ability to negotiate favorable terms.

In the near-term, Braemar faces headwinds from the ongoing impact of the COVID-19 pandemic on the hotel industry, as well as potential supply growth in certain markets that could negatively impact performance. The company’s ability to maintain and grow revenue, control costs, and effectively manage its capital structure will be critical to its future success.

If Braemar is able to successfully execute on a strategic transaction, it could provide liquidity and unlock value for shareholders. However, the failure to complete a deal or uncertainty around the process could also negatively impact the company’s business and stock price.

Overall, Braemar’s financial results in 2025 were mixed, with revenue declines, impairment charges, and net losses, offset by gains on asset sales and lower interest expense. The company’s future prospects will depend on its ability to navigate the challenging operating environment, address the weaknesses in its portfolio, and potentially pursue a transformative strategic transaction.