LOS ANGELES — Braemar Hotels & Resorts CEO Richard Stockton said economic realities out of his hands kept his company from buying hotels in 2023, but there are signs the interest rate environment could soon improve and Braemar could be set up for a more active 2024.
During an interview with Hotel News Now at the 2024 Americas Lodging Investment Summit, Stockton said Braemar's interest expense tripled in 2023, spurring the company to be "very cautious in how we utilize our available liquidity." He said that caution will serve Braemar well this year.
"I think we're in a great position for 2024 because it looks like interest rates are coming down ... and this is exactly what we need," he said.
Stockton said his company's first goal for the year is to refinance some existing debt to lower costs, which executives have already made significant progress on.
Early in February, the real estate investment trust announced refinancing or extensions for $300 million of the $330 million in debt maturities slated for 2024. Braemar refinanced the 550-room Capital Hilton with a new $110.6 million loan now maturing in December 2026; received a six-month forbearance on the Hilton La Jolla Torrey Pines after paying down the original mortgage to a balance of $66.6 million; and signed a one-year extensions for two properties: the 142-room Pier House Resort & Spa in Key West, Florida, and the Ritz-Carlton St. Thomas in the U.S. Virgin Islands.
Beyond just potential shifts in interest rate policy, Stockton is hopeful that broad travel trends could also help benefit his company's portfolio of 16 luxury hotels and resorts.
"I went to Europe twice last year," he said. "I hadn't been to Europe in years. Am I going to go to Europe next year? Probably not. I think a lot of people had that kind of pent-up demand, whether it be weddings or to visit family and friends or whatever. Then they got it out of their system."
He said the increasing costs of traveling to Europe will also buoy domestic leisure demand, which will benefit Braemar's portfolio.
One of Braemar's biggest acquisition in recent years was the purchase of the Mr. C Beverly Hills, which has converted to join Hilton's LXR Hotels & Resorts collection as the Cameo Beverly Hills. Stockton said ramping up that property is still a work in progress, but early signs are positive.
"I'm excited for it," he said. "I think it'll breathe new life into that assets. It's a great location in terms of access to Culver City, Century City, Beverly Hills, and we spent a decent amount of money on the renovation. So it should be a great product."