Braemar Hotels & Resorts Inc.

Greetings and welcome to the Braemar Hotels and Resorts Inc. First Quarter 2020 Results Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Ms. Jordan Jennings, Manager, Investor Relations for Braemar Hotels and Resorts. Please go ahead.

Good morning, and welcome to today's call to review results for Braymar Hotels and Resorts for the first quarter of 2020, and to update you on recent developments. On the call today will be Richard Stockton, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, and Jeremy Walter, Chief Operating Officer. Your results, as well as notice of the accessibility 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. Such forward-looking statements are subject to numerous assumptions and certainties in known or unknown risk, which could cause actual results to differ materially from those anticipated. 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 as of 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.sec.gov. 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 Board 8K with SEC on May 21, 2020, and may also be accessed through the company's website at www.chreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. I will now turn the call over to Richard Stockton. Please go ahead.

Good morning. Welcome to our first quarter 2002 earnings conference call. I will begin by providing an update on our activities in response to the COVID-19 pandemic. After that, Derek will provide a detailed review of our financial results, and then Jeremy will provide an update on our asset management activities. Afterward, we'll open up the call for Q&A. First, this has been an extraordinary period for all of us as this global pandemic has created both social and economic disruption on an unprecedented level. Our thoughts go out to those affected by COVID-19 and to those on the front lines working to keep us safe. The pandemic has created a volatile landscape throughout the hospitality industry, and our entire leadership team has been steadfast in its commitment to protect all of our stakeholders during this unprecedented time. A few objectives have guided us. First, the health and safety of our employees, guests, and the communities in which we operate is our highest priority. As stay-at-home orders were implemented, we quickly adapted to the restrictions and challenges affecting our guests and hotels. Initially, we took quick and decisive steps to significantly reduce staffing levels and non-essential expenses across all of our hotels. Later, in many cases as a response to a government order, we took steps to temporarily suspend operations at 11 of our properties. For those properties that remain open, we have instituted stringent safety measures consistent with evolving best practice recommendations regarding COVID-19 and are operating those hotels with minimal staffing. The following are a few of the many steps we have taken to reduce expenses at our closed properties. We have set all thermostats in rooms and public spaces to temperatures that conserve the most energy. We have turned off in-room refrigerators and unplugged kitchen, back of house, and office equipment. We have renegotiated pricing on or canceling service contracts. We are working diligently to collect cancellation fees or partner with group customers to rebook their programs for a later date. For those two hotels that we do have open, we have reduced staffing to skeleton crews through furloughs and layoffs. We are scheduling partial shifts when full shifts are not necessary. In some cases, we have blocked off and shut down floors and wings of the hotels. Additionally, we have specific plans to contain expenses and generate revenue as the portfolio reopens. We may eliminate housekeeping service from some properties for stayovers. We will also eliminate van transportation, airport shuttle service, valet parking services, turndown service, and all amenities that exceed brand standards. We may suspend some services at concierge lounges, M-Clubs, and all spas and kids' clubs. Our asset management efforts have been relentless and have positioned us well for the impending ramp-up in operations that we now anticipate. Although the vast majority of our hotels are currently closed, we believe that hotel occupancy bottomed in the middle of April. Since then, occupancy continues to increase on a weekly basis. Net new bookings are positive. We are seeing pickup of room nights on a short-term basis, and the pace of that pickup is increasing almost daily. We expect Drive-Thru Leisure Hotels to be among the first to bounce back, and we are already seeing this at our Ritz-Carlton Sour Soda, which ran 42% occupancy this past Saturday at an average rate of $392. Seven out of our 13 hotels are well-positioned to benefit from Drive-Thru Leisure demand. In addition to the Ritz-Carlton Sour Soda, these include the Bar de Sono, Hotel Yonkville, Ritz-Carlton Lake Tahoe, Gear House Resort, Park High at Beaver Creek, and Hilton La Jolla Torrey Pines. They will similarly benefit from their ability to attract drive-thru leisure demands once they resume services. We currently expect to resume services at each of these hotels sometime in June. Looking ahead a few months, we continue to be excited about the Courtyard San Francisco Downtown and its upcoming conversion to the Autograph Collection under the name The Clancy. The renovation continued during the first quarter, with a portion of the lobby opening along with the parklet and outdoor seating and reception area. Operations at the hotel were temporarily suspended on April 11th, with the local shelter-in-place order extended until May 31st. However, certain construction projects have been allowed to resume. We have recently restarted construction following a hiatus due to the initial shelter-in-place order. Our current estimate for the hotel's completion is expected in the mid-third quarter of this year. Comparable rev part decreased 30% during the first quarter. We've also taken proactive and aggressive actions to protect and enhance our corporate liquidity. This included drawing down over $75 million credit facility in early March, cutting expenses at the corporate level, and significantly reducing our planned cap expense for the year. All in, we estimate that we have reduced our run rate corporate G&A and reimbursable expenses under our advisory agreements by approximately 25%. Additionally, we have been focused on working with our lenders to arrange mutually agreeable forbearance agreements They'll provide us with some necessary financial relief during this crisis. I'd like to close by saying that Braemar has a long-tenured and experienced management team that successfully managed through prior challenging economic periods. We believe the company has the right management team in place to protect long-term values, and our entire team remains undaunted in managing these near-term challenges while positioning ourselves for continued long-term success. I'll now turn the call over to Derek.