Portfolio and Operations - As of December 31, 2024, DiamondRock Hospitality Company owned a portfolio of 37 premium hotels and resorts with a total of 10,004 guest rooms located in 26 markets across the United States[26]. - Over 97% of revenues for the year ended December 31, 2024, were derived from core urban and resort destination hotels[36]. - The company has completed rebrandings at six hotels since 2021 and is currently rebranding one additional hotel[39]. - As of December 31, 2024, 34 of the 37 hotels were unencumbered by mortgage debt, indicating a conservative capital structure[42]. - The company’s strategy includes aggressive asset management and disciplined capital allocation to high-quality lodging properties[32]. - The company evaluates each hotel to assess optimal brand and management strategies, leveraging global hotel brands for increased revenue[38]. - 36 hotels are currently operated, with 19 under franchise agreements with Marriott, Hilton, or IHG[113]. - The company holds leasehold interests in 8 hotels, which may complicate financing and limit growth potential[121]. Financial Performance and Strategy - The company aims to deliver long-term stockholder returns that exceed those generated by peers through dividends and capital appreciation[28]. - The company maintains a conservative debt profile with a focus on balance sheet flexibility and low leverage[43]. - The company plans to pursue strategic acquisitions that create value in the near term and evaluate opportunities to dispose of non-core hotels[40]. - The company carries comprehensive property and liability insurance, including coverage for business interruption and natural disasters, but may incur losses from uninsured risks[63]. - The company has significant exposure to natural disasters, with 72% of total revenues in 2024 coming from hotels in metropolitan areas prone to such risks[101]. - The company expects to qualify as a REIT for the taxable year ended December 31, 2024, but cannot assure continued qualification due to complex requirements and potential changes in laws[156]. - To maintain REIT status, the company must distribute at least 90% of its REIT taxable income, which may require borrowing or selling assets if cash flow does not meet distribution needs[160]. Market and Economic Risks - The lodging industry is highly cyclical and linked to macroeconomic indicators such as U.S. GDP growth and consumer confidence, which can adversely affect the company's revenues and profitability[76]. - The company faces significant competition in the hotel market, with risks of over-building leading to decreased RevPAR and profitability[77]. - The increased use of third-party internet travel intermediaries and alternative lodging channels like Airbnb could negatively impact the company's profitability[79]. - Economic recessions could result in declines in average daily room rates, occupancy, and RevPAR, adversely affecting operational results[135]. - Inflation has negatively impacted operating expenses, including labor and utility costs, affecting overall profitability[125]. Regulatory and Compliance Issues - The company is subject to various governmental regulations that can materially impact capital expenditures and earnings[60]. - The company believes it is in substantial compliance with the Americans with Disabilities Act (ADA), but ongoing assessments and modifications may impact financial condition and distributions to stockholders[154]. - Environmental regulations may impose significant costs for compliance and cleanup, affecting financial condition and operational results[149]. - Climate change regulations may necessitate capital investments in energy efficiency and sustainable practices, impacting operational costs[153]. Cybersecurity and Operational Risks - Cybersecurity incidents pose risks to operations and could result in significant costs and reputational damage[106]. - The company engages a managed services provider for cybersecurity, which includes a virtual chief information security officer (vCISO) and a virtual chief information officer (vCIO)[202]. - The Audit Committee oversees the company's cybersecurity program and receives quarterly updates on incidents and developments[203]. - The company has implemented a cyber risk management program for third-party property managers to assess their cybersecurity maturity[200]. - The company faces various cybersecurity risks but has not experienced material impacts on its business strategy or financial condition to date[201]. Labor and Employment Considerations - The company employed 34 full-time employees, with no part-time employees, and none are union members[61]. - The company prioritizes employee well-being to attract and retain talent, focusing on competitive pay, benefits, and a discrimination-free work environment[62]. - Labor union activities may increase operational costs and reduce profitability, impacting financial results[128]. - Labor shortages may slow growth and increase operational costs due to the need for higher wages to attract qualified employees[130]. - Local jurisdictions in the U.S. are considering legislation to increase minimum wage, which could significantly raise hotel operating costs[131]. Legal and Litigation Risks - The company may face litigation that could materially impact its financial condition and results of operations[186]. - The company anticipates that the aggregate liabilities from ongoing legal proceedings will not materially impact its financial condition or results of operations[222]. Debt and Financial Obligations - Approximately $575.0 million of unhedged variable rate debt as of December 31, 2024, exposing the company to interest rate fluctuations[125]. - Existing debt agreements contain financial covenants that may limit operational flexibility and distributions to stockholders[137]. - Future debt service obligations may require liquidation of properties and jeopardize the ability to maintain REIT tax status[144]. - Increased interest rates could elevate interest expenses and reduce cash available for distributions to stockholders[146]. - Property tax increases due to rate changes or reassessments could negatively impact cash flow and financial condition[168]. Management and Franchise Agreements - The company has hotel management agreements that generally renew automatically for negotiated consecutive periods upon expiration unless the manager opts not to renew[208]. - The franchise agreements for 20 franchised hotels include fees of 5% to 7% of gross room sales, with some agreements also including a percentage of food and beverage sales[215][216]. - The company faces risks associated with maintaining franchise licenses, including potential termination and associated costs[114]. - The company has a cap on total management fees at 3.5% of total operating revenue, ensuring a limit on management costs relative to revenue[212]. Shareholder Considerations - The company has issued 4,760,000 shares of Series A Preferred Stock with an aggregate liquidation preference of approximately $119.0 million and annual dividends of about $9.8 million[191]. - The company intends to pay quarterly dividends representing at least 90% of its REIT taxable income, but future distributions may be adversely affected by various risks and uncertainties[182]. - The market price of the company's common stock and Series A Preferred Stock may decline due to increased market interest rates, which could make the returns on investment less attractive[185]. - Future issuances of common stock or Series A Preferred Stock may depress the market price and dilute existing stockholders' equity interests[189]. - The company has the authority to issue up to 400,000,000 shares of common stock and 10,000,000 shares of preferred stock, which could delay or prevent a change in control[174].

Core Insights - DiamondRock Hospitality (DRH) reported revenue of $279.05 million for the quarter ended December 2024, marking a year-over-year increase of 5.9% and exceeding the Zacks Consensus Estimate of $273.69 million by 1.96% [1] - The company achieved an EPS of $0.24, significantly higher than the $0.04 reported a year ago, and surpassed the consensus EPS estimate of $0.21 by 14.29% [1] Revenue Breakdown - Other Revenues reached $26.49 million, exceeding the average estimate of $24.45 million by analysts, representing a year-over-year increase of 12.5% [4] - Food and Beverage Revenues totaled $69.40 million, slightly above the average estimate of $68.85 million, with a year-over-year growth of 3.8% [4] - Room Revenues amounted to $183.16 million, surpassing the estimated $178.65 million, reflecting a year-over-year increase of 5.8% [4] Stock Performance - Over the past month, shares of DiamondRock Hospitality have returned -7%, compared to a -2.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

DiamondRock Hospitality (DRH) came out with quarterly funds from operations (FFO) of $0.24 per share, beating the Zacks Consensus Estimate of $0.21 per share. This compares to FFO of $0.18 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 14.29%. A quarter ago, it was expected that this hotel and resort real estate investment trust would post FFO of $0.26 per share when it actually produced FFO of $0.26, delivering no surprise.Over t ...

Financial Performance - Net loss attributable to common stockholders for Q4 2024 was $13.7 million, or ($0.07) per diluted share, compared to a net income of $8.5 million in Q4 2023, impacted by a $32.6 million impairment loss on the Westin Washington D.C. City Center[5] - Net loss attributable to common stockholders for the year ended December 31, 2024, was $38,230,000, compared to a net income of $76,523,000 in 2023[29] - Net income for Q4 2024 was $(11,296) thousand, compared to $10,983 thousand in Q4 2023, with a full year net income of $48,250 thousand in 2024 versus $86,635 thousand in 2023[40] - FFO for Q4 2024 was $50,323 thousand, up from $39,290 thousand in Q4 2023, with full year FFO at $196,007 thousand compared to $198,878 thousand in 2023[42] Revenue Growth - Comparable revenues for Q4 2024 were $280.5 million, an increase of 5.7% compared to Q4 2023, while full year comparable revenues reached $1.1 billion, up 4.3% from 2023[5] - Total revenues for the year ended December 31, 2024, increased to $1,129,883,000, up from $1,074,867,000 in 2023, representing a growth of approximately 5.1%[29] - Total revenues for the fourth quarter of 2024 reached $279,051 million, with an adjusted EBITDA of $75,453 million[58] - The total comparable revenue for the year to date 2023 was $1,092,452,000, with an adjusted EBITDA of $305,224,000, indicating consistent performance[64] Adjusted EBITDA - Adjusted EBITDA for Q4 2024 was $68.7 million, a 19.9% increase from Q4 2023, and for the full year, it was $290.4 million, up 6.9% from 2023[9] - Adjusted EBITDA for Q4 2024 was $68,697 thousand, compared to $57,291 thousand in Q4 2023, with full year Adjusted EBITDA reaching $290,402 thousand versus $271,669 thousand in 2023[40] - Hotel Adjusted EBITDA for Q4 2024 was $75,453 thousand, an increase from $64,818 thousand in Q4 2023, with full year Hotel Adjusted EBITDA at $318,614 thousand compared to $301,156 thousand in 2023[44] - The total adjusted EBITDA for the year to date 2024 was $301,156,000, showing a significant increase compared to prior periods[64] Capital Expenditures and Investments - The company expects to invest approximately $85 to $95 million in capital improvements at its hotels in 2025[14] - The company repurchased 3.1 million shares of its common stock at an average price of $8.33 per share for a total of approximately $26.0 million during 2024[16] - The company declared a quarterly cash dividend of $0.08 per share on its common stock, payable on April 11, 2025[19] Guidance and Projections - The company provided guidance for 2025, expecting Adjusted EBITDA between $275 million and $300 million and Adjusted FFO between $199 million and $224 million[21] - Full year 2025 guidance for net income is projected between $79,117 thousand and $105,117 thousand[40] - Full year 2025 guidance for Adjusted EBITDA is estimated between $275,000 thousand and $300,000 thousand[40] - Full year 2025 guidance for FFO is expected to be between $195,117 thousand and $220,117 thousand[42] Asset and Liability Management - Total assets as of December 31, 2024, were $3,172,251,000, a decrease from $3,238,687,000 in 2023[27] - Total liabilities decreased to $1,573,319,000 as of December 31, 2024, from $1,589,704,000 in 2023[27] - Consolidated debt amounts to $1,095.8 million, with a weighted-average interest rate of 5.21%[50] Hotel Performance Metrics - Comparable RevPAR for Q4 2024 was $200.46, a 5.4% increase from Q4 2023, and for the full year, it was $205.15, up 2.6% compared to 2023[5] - The company has a total of 10,004 comparable rooms, achieving an average daily rate (ADR) of $290.02 and occupancy of 69.1% in Q4 2024[52] - The overall occupancy rate for YTD 2024 is 72.6%, up from 71.6% in the same period of 2023, reflecting a 1.0% increase[54] - The overall performance of the comparable hotels indicates a positive trend in revenue growth and occupancy rates across various locations[54] Acquisitions and Rebranding - The company completed the rebranding of the Hilton Burlington Lake Champlain to Hotel Champlain Burlington, Curio Collection by Hilton, in July 2024, enhancing its portfolio[17] - The company acquired the AC Hotel Minneapolis Downtown on November 12, 2024, contributing to the operating results for the period[52] - The hotel portfolio includes acquisitions such as the AC Minneapolis Downtown and Chico Hot Springs Resort & Day Spa, contributing to the overall performance metrics[56]

Group 1 - The article highlights DiamondRock Hospitality Company (NYSE: DRH) as a safe choice for Hotel REIT investments [1] - The investing group Trade With Beta offers features such as frequent picks for mispriced preferred stocks and baby bonds, weekly reviews of over 1200 equities, IPO previews, hedging strategies, and an actively managed portfolio [1] - The analyst has a beneficial long position in the shares of DRH, indicating confidence in the company's performance [1]

Core Viewpoint - Wall Street analysts anticipate DiamondRock Hospitality (DRH) to report quarterly earnings of $0.21 per share, reflecting a year-over-year increase of 16.7%, with revenues expected to reach $273.69 million, up 3.9% from the previous year [1]. Earnings Estimates - The consensus EPS estimate has been revised upward by 0.9% in the last 30 days, indicating a reassessment of initial estimates by covering analysts [2]. - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock price performance [3]. Revenue Projections - Analysts project 'Revenues- Other' to reach $24.45 million, indicating a 3.9% increase from the prior-year quarter [5]. - 'Revenues- Food and beverage' are expected to be $68.85 million, suggesting a year-over-year change of 2.9% [5]. - 'Revenues- Rooms' are predicted to reach $178.65 million, reflecting a 3.2% increase from the year-ago quarter [5]. Depreciation and Amortization - The average prediction for 'Depreciation and amortization' is set at $29.06 million, compared to $28.31 million reported in the same quarter last year [6]. Stock Performance - Shares of DiamondRock Hospitality have decreased by 8.7% over the past month, contrasting with a 1.8% decline in the Zacks S&P 500 composite [6]. - With a Zacks Rank of 3 (Hold), DRH is expected to perform in line with the overall market in the near future [6].

Company Overview - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that owns a diversified portfolio of hotels concentrated in leisure destinations and top gateway markets, currently owning 36 premium quality hotels and resorts with approximately 9,600 rooms [3] Recent Transaction - On February 19, 2025, the company completed the sale of the 410-room Westin Washington, D.C. City Center for a contract price of $92.0 million, representing an 11.2x multiple on 2024 Hotel EBITDA and a 7.5% capitalization rate on 2024 Hotel net operating income [1] - Excluding a one-time property tax credit and temporary discount on franchise fees, the sales price represents an 11.9x multiple on 2024 Hotel EBITDA and a 7.0% capitalization rate on 2024 Hotel net operating income [1] Strategic Intent - The sale of the Westin D.C. City Center is part of the company's strategy to drive long-term earnings and cash flow per share growth, with plans to prudently redeploy the proceeds to create exceptional value for shareholders [2]

Core Insights - Investors in the REIT and Equity Trust - Other sector may consider DiamondRock Hospitality (DRH) and CubeSmart (CUBE) for potential value investments [1] - The Zacks Rank and Style Scores system are effective tools for identifying value stocks, emphasizing earnings estimates and specific stock traits [2] Valuation Metrics - DiamondRock Hospitality has a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to CubeSmart, which has a Zacks Rank of 3 (Hold) [3] - DRH's forward P/E ratio is 8.21, significantly lower than CUBE's forward P/E of 15.60, suggesting DRH may be undervalued [5] - The PEG ratio for DRH is 4.72, while CUBE's PEG ratio is 11.56, indicating DRH's expected EPS growth is more favorable [5] - DRH's P/B ratio is 1.06, compared to CUBE's P/B of 3.38, further supporting DRH's valuation advantage [6] - Based on these metrics, DRH receives a Value grade of A, while CUBE is rated D, making DRH the more attractive option for value investors [6]

Core Insights - The article emphasizes the importance of value investing and highlights specific companies that exhibit strong value characteristics, particularly DiamondRock Hospitality (DRH) and Xenia Hotels & Resorts (XHR) [2][9]. Company Analysis: DiamondRock Hospitality (DRH) - DRH holds a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - The stock has a P/E ratio of 8.31, significantly lower than the industry average of 15.07, suggesting it may be undervalued [4]. - DRH's P/B ratio is 1.08, compared to the industry's average P/B of 1.77, further indicating solid valuation metrics [5]. - The P/S ratio for DRH is 1.58, while the industry average is 3.88, reinforcing the notion of undervaluation [6]. - The P/CF ratio stands at 9.80, compared to the industry's average of 15.99, highlighting an attractive cash flow outlook [7]. Company Analysis: Xenia Hotels & Resorts (XHR) - XHR also holds a Zacks Rank of 2 (Buy) and a Value score of A, making it another appealing option for value investors [8]. - The P/B ratio for XHR is 1.15, which is lower than the industry's average of 1.77, indicating a favorable valuation [8]. Conclusion - Both DRH and XHR are identified as impressive value stocks, likely being undervalued in the current market, supported by their strong earnings outlook and favorable valuation metrics [9].

Core Viewpoint - The comparison between DiamondRock Hospitality (DRH) and CubeSmart (CUBE) indicates that DRH presents a better value opportunity for investors at this time [1]. Group 1: Zacks Rank and Earnings Outlook - DiamondRock Hospitality has a Zacks Rank of 2 (Buy), while CubeSmart has a Zacks Rank of 3 (Hold), suggesting a more favorable earnings outlook for DRH [3]. - The Zacks Rank system favors stocks with positive revisions to earnings estimates, which is currently the case for DRH [3]. Group 2: Valuation Metrics - DRH has a forward P/E ratio of 8.74, significantly lower than CUBE's forward P/E of 15.87, indicating that DRH may be undervalued [5]. - The PEG ratio for DRH is 5.02, while CUBE's PEG ratio is 11.75, further suggesting that DRH is a more attractive investment based on expected earnings growth [5]. - DRH's P/B ratio stands at 1.13, compared to CUBE's P/B of 3.44, reinforcing the notion that DRH is undervalued relative to its book value [6]. Group 3: Overall Value Assessment - Based on the aforementioned valuation metrics, DRH holds a Value grade of A, while CUBE has a Value grade of D, indicating a stronger value proposition for DRH [6]. - The improving earnings outlook for DRH enhances its attractiveness as a value investment option [7].