Financial Data and Key Metrics Changes - Comparable RevPAR increased by 2% over 2024, while total RevPAR increased by 1.6% [4] - Hotel adjusted EBITDA margins increased by 54 basis points, with hotel adjusted EBITDA in Q1 at $61.3 million, reflecting a 2.2% growth over 2024 [9] - Adjusted FFO was $0.19 per share, an increase of $0.01 or 5.6% over 2024 [10] - Free cash flow per share increased by 10% to $0.63 per share over the prior four-quarter period [10] Business Line Data and Key Metrics Changes - Urban portfolio RevPAR grew by 5%, driven by group and business transient segments, with room revenues up 3.1% in January, 2.6% in February, and 5.4% in March [4] - Food and beverage revenue at urban hotels declined by 3.3% year over year, but excluding the Chicago Marriott, it increased by 5.5% [5] - Resort portfolio comparable RevPAR declined by 2.1% over 2024, with total revenues slightly up in January and February but down 4.3% in March [6][7] - Group room revenues increased by 10.4% over last year on a 5.2% increase in room nights [8] Market Data and Key Metrics Changes - Florida assets saw mid-single-digit revenue declines, with RevPAR down 5.9% and total RevPAR down 4% [7] - Outside of Florida, RevPAR increased by 1.7% and total RevPAR increased by 2.9% [7] - Preliminary April RevPAR showed better than 2% growth [30] Company Strategy and Development Direction - The company is focused on adding groups to resorts to preserve pricing and improve profitability [8] - Plans to refinance maturing loans through a combination of corporate debt issuance and recasting the corporate credit facility [12] - The company is pursuing opportunities to dispose of non-strategic assets while recycling proceeds into attractive investment alternatives [17] Management's Comments on Operating Environment and Future Outlook - Management noted that the unsettled macroeconomic environment has led to softer closure rates for group bookings [9] - The long-term secular drivers for US resorts remain strong, but near-term performance could be soft [20] - The company expects economic anxiety to settle as 2025 progresses, with a focus on increasing earnings per share [27] - Revised full-year 2025 RevPAR outlook to a range of -1% to +1% growth, reflecting a cautious stance on group bookings [23] Other Important Information - The company intends to continue paying a quarterly dividend of $0.08 per share in 2025 [10] - Share repurchases totaled approximately $16 million or 2.1 million shares at an average price of $7.85 [11] Q&A Session Summary Question: Preliminary portfolio-wide RevPAR for April - Preliminary April is showing a little better than 2% growth [30] Question: Renovation project costs and tariffs - Costs depend on the type of renovations; efforts are being made to secure materials before tariffs are reinstated [31][32] Question: Group conversion profile and average group size - The average hotel is about 200 to 250 rooms, with groups running the gamut from associations to corporate [36][37] Question: Group pacing in specific markets - Denver and Salt Lake are showing significant strength in group bookings [41] Question: Holes in group bookings for the rest of the year - The biggest holes are due to difficult comps in Chicago and Boston [48] Question: Average booking window for groups - Smaller groups tend to book 4 to 6 months out, while larger groups book 8 to 12 months out [53] Question: Competitive supply growth and developer behavior - Approximately 40% to 50% of markets have little to no supply growth due to anti-development stances [82]

Core Insights - DiamondRock Hospitality (DRH) reported revenue of $254.85 million for the quarter ended March 2025, reflecting a decrease of 0.6% year-over-year and a revenue surprise of -2.01% compared to the Zacks Consensus Estimate of $260.08 million [1] - The company's EPS was $0.19, significantly higher than the $0.03 reported in the same quarter last year, resulting in an EPS surprise of +11.76% against the consensus estimate of $0.17 [1] Revenue Breakdown - Other Revenues amounted to $24.89 million, slightly exceeding the average estimate of $24.80 million, marking a year-over-year increase of +1.5% [4] - Food and Beverage Revenues were reported at $66.84 million, below the average estimate of $69.01 million, indicating a year-over-year decline of -2.3% [4] - Room Revenues totaled $163.12 million, also falling short of the average estimate of $165.03 million, with a minimal year-over-year decrease of -0.2% [4] Stock Performance - Over the past month, shares of DiamondRock Hospitality have declined by -6.9%, contrasting with the Zacks S&P 500 composite's decrease of -0.7% [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - DiamondRock Hospitality (DRH) reported quarterly funds from operations (FFO) of $0.19 per share, exceeding the Zacks Consensus Estimate of $0.17 per share, and up from $0.17 per share a year ago [1][2]. Financial Performance - The quarterly FFO surprise was 11.76%, and the company had a previous quarter surprise of 14.29% with an actual FFO of $0.24 per share against an expected $0.21 [2]. - Revenues for the quarter ended March 2025 were $254.85 million, missing the Zacks Consensus Estimate by 2.01%, and down from $256.42 million year-over-year [3]. - Over the last four quarters, the company has surpassed consensus FFO estimates three times and revenue estimates two times [2][3]. Stock Performance and Outlook - DiamondRock Hospitality shares have declined approximately 18.7% since the beginning of the year, compared to a 5.3% decline in the S&P 500 [4]. - The future stock price movement will largely depend on management's commentary during the earnings call and the company's FFO outlook [4][5]. Estimate Revisions and Industry Context - The estimate revisions trend for DiamondRock Hospitality is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [7]. - The current consensus FFO estimate for the upcoming quarter is $0.33 on revenues of $309.56 million, and for the current fiscal year, it is $0.98 on revenues of $1.14 billion [8]. - The REIT and Equity Trust - Other industry is ranked in the bottom 35% of over 250 Zacks industries, suggesting potential challenges for stock performance [9].

[First Quarter 2025 Financial & Operational Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20%26%20Operational%20Highlights) [Performance Summary](index=1&type=section&id=1.1%20Performance%20Summary) DiamondRock's first-quarter 2025 results were in line with expectations, showing a 2.0% increase in Comparable RevPAR and a 2.2% rise in Comparable Hotel Adjusted EBITDA, with net income attributable to common stockholders increasing 59.3% year-over-year Q1 2025 Key Performance Indicators (vs. Q1 2024) | Metric | Q1 2025 | Change vs. Q1 2024 | | :--- | :--- | :--- | | Net Income (attributable to common stockholders) | $9.4 million | +59.3% | | Comparable RevPAR | $186.20 | +2.0% | | Comparable Hotel Adjusted EBITDA | $61.3 million | +2.2% | | Comparable Hotel Adjusted EBITDA Margin | 24.36% | +39 bps | | Adjusted FFO per Share | $0.19 | +5.6% | - Strong revenue growth was driven by a more than **10% increase in group revenues** and a over **9% increase in business transient revenues** compared to the prior year[4](index=4&type=chunk) - The company is executing a capital recycling strategy, exemplified by the sale of the Westin Washington, D.C. and subsequent repurchase of **$15.9 million** of its common shares[5](index=5&type=chunk) [Operating and Financial Results](index=2&type=section&id=Operating%20and%20Financial%20Results) [Operating Results Summary](index=2&type=section&id=2.1%20Operating%20Results%20Summary) For Q1 2025, comparable RevPAR increased by 2.0% to $186.20, driven by a 2.7% rise in ADR to $277.36, which offset a slight 0.5% decline in occupancy, while net income attributable to common stockholders surged 59.3% to $9.4 million Q1 2025 Comparable Operating Results (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | ADR | $277.36 | $269.95 | +2.7% | | Occupancy | 67.1% | 67.6% | (0.5)% | | RevPAR | $186.20 | $182.50 | +2.0% | | Total Revenues | $251.8 million | $250.5 million | +0.5% | | Hotel Adjusted EBITDA | $61.3 million | $60.0 million | +2.2% | | Hotel Adjusted EBITDA Margin | 24.36% | 23.97% | +39 bps | Q1 2025 Actual & Adjusted Financial Results (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $254.9 million | $256.4 million | (0.6)% | | Net income attributable to common stockholders | $9.4 million | $5.9 million | +59.3% | | Earnings per diluted share | $0.04 | $0.03 | +33.3% | | Adjusted EBITDA | $56.1 million | $56.2 million | (0.2)% | | Adjusted FFO per diluted share | $0.19 | $0.18 | +5.6% | [Consolidated Financial Statements](index=5&type=section&id=2.2%20Consolidated%20Financial%20Statements) The company's consolidated financial statements reflect a stable but slightly smaller balance sheet compared to year-end 2024, with total assets at $3.10 billion, and a significant improvement in Q1 2025 profitability despite a slight dip in total revenues [Consolidated Balance Sheets](index=5&type=section&id=2.2.1%20Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were $3.10 billion, a decrease from $3.17 billion at December 31, 2024, primarily due to a hotel sale, with total liabilities and equity also slightly declining Key Balance Sheet Items (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $3,101,597 | $3,172,251 | | Total liabilities | $1,527,945 | $1,573,319 | | Total equity | $1,573,652 | $1,598,932 | [Consolidated Statements of Operations](index=6&type=section&id=2.2.2%20Consolidated%20Statements%20of%20Operations) For the first quarter of 2025, total revenues were $254.9 million, a slight decrease from $256.4 million in Q1 2024, yet net income attributable to common stockholders increased substantially to $9.4 million from $5.9 million, benefiting from lower total operating and interest expenses Q1 Statement of Operations Highlights (in thousands) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total revenues | $254,853 | $256,423 | | Total operating expenses | $230,086 | $233,978 | | Interest expense | $15,158 | $16,246 | | Net income attributable to common stockholders | $9,403 | $5,874 | | Earnings per share - diluted | $0.04 | $0.03 | [Corporate Activities and Capital Allocation](index=2&type=section&id=Corporate%20Activities%20and%20Capital%20Allocation) [Hotel Disposition](index=2&type=section&id=3.1%20Hotel%20Disposition) On February 19, 2025, the company finalized the sale of the 410-room Westin Washington D.C. City Center for $92.0 million, representing an 11.2x multiple on 2024 Hotel EBITDA and a 7.5% capitalization rate on 2024 net operating income - The Company completed the sale of the Westin Washington D.C. City Center for a contract price of **$92.0 million** on February 19, 2025[9](index=9&type=chunk) - The sale price represented an **11.2x multiple on 2024 Hotel EBITDA** and a **7.5% capitalization rate on 2024 hotel net operating income**[9](index=9&type=chunk) [Capital Expenditures](index=3&type=section&id=3.2%20Capital%20Expenditures) The company invested approximately $25.6 million in hotel improvements during Q1 2025, with a full-year 2025 capital expenditure forecast of $85 million to $95 million, focusing on key repositioning and renovation projects - The company invested approximately **$25.6 million** in capital improvements in Q1 2025 and expects to invest **$85 million to $95 million** for the full year[10](index=10&type=chunk) - Significant 2025 projects include repositioning Orchards Inn Sedona as the Cliffs at L'Auberge, and guestroom renovations at Hilton Garden Inn New York / Times Square Central, Kimpton Hotel Palomar Phoenix, and Courtyard New York Manhattan/Midtown East[15](index=15&type=chunk) [Share Repurchase Program](index=3&type=section&id=3.3%20Share%20Repurchase%20Program) During the first quarter, the company repurchased 1.4 million common shares for $11.1 million, with an additional 0.7 million shares bought back for $4.8 million subsequent to quarter-end, leaving $158.1 million available under the existing $200.0 million repurchase authorization - Year-to-date, the Company has repurchased **2.1 million shares** of its common stock for a total of approximately **$15.9 million**[6](index=6&type=chunk)[12](index=12&type=chunk) - The company has **$158.1 million** of remaining capacity under its **$200.0 million** share repurchase program[12](index=12&type=chunk) [Dividends](index=3&type=section&id=3.4%20Dividends) The Board of Directors declared a quarterly cash dividend of $0.08 per common share, payable in July 2025, and a quarterly dividend of $0.515625 per share for the 8.250% Series A Cumulative Redeemable Preferred Stock, payable in June 2025 - A quarterly cash dividend of **$0.08 per share** on common stock was declared, payable on July 11, 2025, to shareholders of record as of June 30, 2025[13](index=13&type=chunk) - A quarterly dividend of **$0.515625 per share** on its 8.250% Series A Cumulative Redeemable Preferred Stock was declared, payable on June 30, 2025[13](index=13&type=chunk) [Balance Sheet, Liquidity, and Debt](index=3&type=section&id=Balance%20Sheet%2C%20Liquidity%2C%20and%20Debt) [Liquidity and Debt Summary](index=3&type=section&id=4.1%20Liquidity%20and%20Debt%20Summary) As of March 31, 2025, DiamondRock maintained a strong liquidity position of $624.6 million, including $224.6 million in unrestricted cash and full availability of its revolving credit facility, with total debt outstanding at $1.1 billion at a weighted average interest rate of 5.08% - The Company ended Q1 2025 with **$624.6 million of total liquidity**, comprising **$100.6 million of unrestricted corporate cash**, **$124.0 million of unrestricted hotel cash**, and full availability of its revolving credit facility[11](index=11&type=chunk) Debt Summary as of March 31, 2025 | Category | Amount | | :--- | :--- | | Total Debt Outstanding | $1.1 billion | | Unsecured Term Loans | $800.0 million | | Property-Specific Mortgage Loans | $293.7 million | | Weighted Average Interest Rate | 5.08% | - The company has three mortgage loans maturing in the next 12 months and is actively pursuing a financing transaction to repay them[10](index=10&type=chunk) [Full Year 2025 Guidance](index=3&type=section&id=Full%20Year%202025%20Guidance) [Updated 2025 Outlook](index=3&type=section&id=5.1%20Updated%202025%20Outlook) In response to macroeconomic uncertainty and moderating group revenue pickup, the company has updated its full-year 2025 guidance, lowering the Comparable RevPAR growth forecast by 200 basis points to a range of -1.0% to +1.0%, while maintaining Adjusted FFO per share guidance Full Year 2025 Guidance Update | Metric | Current Guidance | Previous Guidance | Change at Midpoint | | :--- | :--- | :--- | :--- | | Comparable RevPAR Growth | (1.0)% to 1.0% | 1.0% to 3.0% | (2.0)% | | Adjusted EBITDA | $270 million to $295 million | $275 million to $300 million | ($5.0 million) | | Adjusted FFO | $198 million to $223 million | $199 million to $224 million | ($1.0 million) | | Adjusted FFO per share | $0.94 to $1.06 | $0.94 to $1.06 | - | - The updated outlook is based on current economic trends, including a tempered pace of group revenue pickup for the rest of the year[14](index=14&type=chunk) - Key full-year 2025 assumptions include corporate expenses of **$24 million-$25 million**, cash interest expense of **$60.5 million-$61.5 million**, and **210.3 million** fully diluted weighted average shares[20](index=20&type=chunk) [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures%20and%20Reconciliations) [Explanation of Non-GAAP Measures](index=7&type=section&id=6.1%20Explanation%20of%20Non-GAAP%20Measures) The company utilizes several non-GAAP financial measures, including EBITDA, EBITDAre, FFO, and their adjusted versions, to assess operating performance and facilitate peer comparison, with key adjustments for non-cash lease expenses, hotel acquisition costs, and, effective January 1, 2025, share-based compensation - The company uses non-GAAP measures such as EBITDA, EBITDAre, Adjusted EBITDA, Hotel Adjusted EBITDA, FFO, and Adjusted FFO as key indicators of operating performance[25](index=25&type=chunk) - Adjustments are made for items like non-cash lease expense, hotel acquisition costs, severance, and other non-recurring items to provide a clearer view of ongoing performance[33](index=33&type=chunk) - Effective January 1, 2025, the company excludes share-based compensation from its calculations of Adjusted EBITDA and Adjusted FFO, with prior periods adjusted for comparability[8](index=8&type=chunk)[33](index=33&type=chunk) [Reconciliations](index=11&type=section&id=6.2%20Reconciliations) This section provides detailed reconciliations of GAAP net income to the company's key non-GAAP performance metrics, showing Q1 2025 net income of $11.9 million reconciled to an Adjusted EBITDA of $56.1 million and an Adjusted FFO of $39.5 million, along with reconciliations for the full-year 2025 guidance Q1 2025 Reconciliation: Net Income to Adjusted EBITDA (in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $11,915 | | Interest expense | $15,158 | | Income tax benefit | $(842) | | Real estate related depreciation and amortization | $27,892 | | **EBITDA/EBITDAre** | **$54,123** | | Adjustments (Non-cash lease, Share-based comp, etc.) | $1,987 | | **Adjusted EBITDA** | **$56,110** | Q1 2025 Reconciliation: Net Income to Adjusted FFO (in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $11,915 | | Real estate related depreciation and amortization | $27,892 | | **FFO** | **$39,807** | | Adjustments (Non-cash lease, Share-based comp, etc.) | $2,163 | | **Adjusted FFO available to common stock and unit holders** | **$39,516** | [Supplemental Information](index=13&type=section&id=Supplemental%20Information) [Comparable Operating Results and Quarterly Data](index=13&type=section&id=7.1%20Comparable%20Operating%20Results%20and%20Quarterly%20Data) This section adjusts historical results to create a comparable portfolio view, excluding the sold Westin Washington D.C. and including pre-acquisition results for the AC Hotel Minneapolis, showing Q1 2025 Comparable Revenues of $251.8 million and Comparable Hotel Adjusted EBITDA of $61.3 million, alongside detailed quarterly operating metrics for 2024 Q1 2025 Reconciliation to Comparable Results (in thousands) | Metric | Reported | Adjustments | Comparable | | :--- | :--- | :--- | :--- | | Revenues | $254,853 | $(3,077) | $251,776 | | Hotel Adjusted EBITDA | $61,664 | $(331) | $61,333 | - The report provides selected quarterly comparable operating information for the full year 2024, including ADR, Occupancy, RevPAR, and Hotel Adjusted EBITDA for the current portfolio of 36 hotels[38](index=38&type=chunk)[39](index=39&type=chunk) [Market Capitalization and Debt Details](index=14&type=section&id=7.2%20Market%20Capitalization%20and%20Debt%20Details) As of March 31, 2025, the company's total enterprise value was calculated at approximately $2.73 billion, composed of $1.62 billion in common equity, $119 million in preferred equity, and $1.09 billion in debt, offset by $100.6 million in cash, with a detailed debt summary provided Enterprise Value as of March 31, 2025 (in thousands) | Component | Value | | :--- | :--- | | Common equity capitalization | $1,616,966 | | Preferred equity capitalization | $119,000 | | Consolidated debt (face amount) | $1,093,694 | | Cash and cash equivalents | $(100,621) | | **Total enterprise value** | **$2,729,039** | - A detailed debt summary table provides specifics on interest rates, principal amounts, and maturity dates for the company's mortgage loans and unsecured term loans[43](index=43&type=chunk) [Hotel-Level Operating Statistics](index=15&type=section&id=7.3%20Hotel-Level%20Operating%20Statistics) The report includes detailed property-level operating statistics for the first quarter, comparing 2025 to 2024, covering ADR, Occupancy, and RevPAR for each of the 36 hotels in the comparable portfolio, along with detailed reconciliations from property-level net income (or loss) to Hotel Adjusted EBITDA - Provides a detailed table of Q1 2025 vs. Q1 2024 operating statistics (ADR, Occupancy, RevPAR) for each individual hotel in the portfolio[44](index=44&type=chunk) - Includes detailed hotel-by-hotel reconciliations of Net Income/(Loss) to Hotel Adjusted EBITDA for Q1 2025 and Q1 2024[45](index=45&type=chunk)[46](index=46&type=chunk)

Group 1 - DiamondRock Hospitality (DRH) shares increased by 13.8% to close at $7.28, following a significant trading volume, contrasting with a 19.1% loss over the past four weeks [1] - The optimism in DRH's stock is linked to President Donald Trump's announcement of a 90-day pause on reciprocal tariffs for most countries [1] - The upcoming quarterly funds from operations (FFO) for DRH are expected to be $0.17 per share, unchanged from the previous year, with revenues projected at $259.27 million, reflecting a 1.1% increase year-over-year [2] Group 2 - Research indicates a strong correlation between FFO estimate revisions and near-term stock price movements, highlighting the importance of these metrics in stock evaluation [3] - The consensus estimate for DRH's FFO per share has been revised down by 4.2% over the last 30 days, suggesting that negative trends in FFO revisions typically do not lead to price appreciation [4] - DRH currently holds a Zacks Rank of 3 (Hold), indicating a neutral outlook, while Hudson Pacific Properties (HPP), another stock in the same industry, also holds a Zacks Rank of 3 [4]

Core Viewpoint - DiamondRock Hospitality Company will report its financial results for the first quarter of 2025 on May 1, 2025, and will hold a conference call to discuss these results on May 2, 2025 [1]. Company Overview - DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that owns a diversified portfolio of hotels, primarily located in leisure destinations and major gateway markets [4]. - The company currently owns 36 premium quality hotels and resorts, totaling approximately 9,600 rooms [4]. - The portfolio includes properties operated under leading global brand families as well as independent boutique hotels in the lifestyle segment [4].

Core Viewpoint - The article compares two companies, DiamondRock Hospitality (DRH) and Omega Healthcare Investors (OHI), to determine which is a better option for investors seeking undervalued stocks. Group 1: Company Rankings and Performance - DiamondRock Hospitality currently holds a Zacks Rank of 2 (Buy), indicating a stronger earnings outlook compared to Omega Healthcare Investors, which has a Zacks Rank of 3 (Hold) [3] - DRH has likely experienced a more significant improvement in its earnings outlook than OHI recently, making it more appealing to value investors [3] Group 2: Valuation Metrics - DRH has a forward P/E ratio of 7.70, while OHI has a forward P/E of 12.61, suggesting that DRH may be undervalued relative to OHI [5] - The PEG ratio for DRH is 1.90, compared to OHI's PEG ratio of 2.10, indicating that DRH offers better value when considering expected earnings growth [5] - DRH's P/B ratio is 1.04, while OHI's P/B ratio is 2.16, further supporting the notion that DRH is undervalued [6] - These metrics contribute to DRH's Value grade of A and OHI's Value grade of C, reinforcing the view that DRH is the better investment option at this time [6]

Core Viewpoint - The article compares DiamondRock Hospitality (DRH) and Sunstone Hotel Investors (SHO) to determine which stock is more attractive to value investors [1] Group 1: Zacks Rank and Earnings Outlook - DiamondRock Hospitality has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while Sunstone Hotel Investors has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank system emphasizes companies with positive earnings estimate revisions, suggesting that DRH is likely experiencing a more favorable earnings outlook [3][7] Group 2: Valuation Metrics - DRH has a forward P/E ratio of 7.88, significantly lower than SHO's forward P/E of 10.95, indicating that DRH may be undervalued [5] - The PEG ratio for DRH is 1.95, while SHO's PEG ratio is 2.15, suggesting that DRH has a better valuation relative to its expected earnings growth [5] - DRH's P/B ratio is 1.07 compared to SHO's P/B of 1.15, further supporting the notion that DRH is more attractively valued [6] - Based on these metrics, DRH earns a Value grade of A, while SHO receives a Value grade of C, highlighting DRH's superior valuation profile [6]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks across various market conditions, utilizing established valuation metrics to uncover potential opportunities [2]. Company Summary: DiamondRock Hospitality (DRH) - DRH currently holds a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [4]. - The stock has a P/E ratio of 7.96, significantly lower than the industry average of 15.52, suggesting it may be undervalued [4]. - DRH's Forward P/E has fluctuated between 7.69 and 10.15 over the past 12 months, with a median of 8.65 [4]. - The PEG ratio for DRH is 1.96, compared to the industry average of 2.33, indicating favorable growth expectations relative to its valuation [5]. - The P/B ratio stands at 1.07, which is lower than the industry average of 1.67, further supporting the notion of undervaluation [6]. - DRH's P/S ratio is 1.52, significantly below the industry average of 4.02, reinforcing its attractiveness as a value stock [7]. - The P/CF ratio is 10.57, compared to the industry average of 15.58, highlighting DRH's strong cash flow outlook [8]. - Overall, these metrics suggest that DRH is likely undervalued and presents an impressive value opportunity at this time [9].

Financial Data and Key Metrics Changes - Comparable total RevPAR increased by 5.5% over 2023, exceeding expectations and showing a growth of over 250 basis points compared to the previous quarter [4][12] - Hotel adjusted EBITDA for Q4 was $75.9 million, reflecting a 16.4% growth over 2023, with a margin increase of 250 basis points [12] - Corporate adjusted EBITDA was $68.7 million, representing nearly 20% growth over 2023 [12] - Adjusted funds from operations (AFFO) was $0.24 per share, a 33% increase over 2023 [12] Business Line Data and Key Metrics Changes - Urban hotels saw RevPAR increase by 8.2%, driven by a 5.4% increase in average daily rate [5] - Resort hotels experienced mixed results, with RevPAR declining by 150 basis points, while out-of-room spending helped maintain total revenue with only a 10 basis point decline [8] - Group room revenues increased by 8.1% over 2023, with urban hotels seeing a 10.2% increase [10] Market Data and Key Metrics Changes - Florida resorts faced a 5.8% decline in RevPAR, attributed to post-pandemic headwinds [9] - Urban markets, particularly in December, showed exceptional growth with RevPAR up 13.2% [7] Company Strategy and Development Direction - The company aims to focus on increasing earnings per share and free cash flow per share, which will allow for share repurchases and dividends [42][43] - Capital expenditures were rationalized to minimize costs and maximize impact, with ongoing renovations and repositioning projects [22][26] - The company is actively looking for opportunities to prune hotels from its portfolio to realize attractive pricing [35] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the Florida market, expecting it to stabilize in the latter half of 2025 [60] - The company anticipates RevPAR growth of 1% to 3% for 2025, with group revenue expected to improve [37][41] - There is recognition of economic uncertainties, including inflation and job market pressures, which may impact leisure travel [62] Other Important Information - The company announced a $0.20 per share stub dividend in addition to the regular $0.03 per share quarterly dividend for 2024, with plans for a regular quarterly dividend of $0.08 per share in 2025 [13][15] - The company is reviewing refinancing options for maturing loans, with expectations of slightly lower overall interest expenses in 2025 [16][17] Q&A Session Summary Question: Can you provide insights on leisure group revenue growth expectations? - Management noted that leisure weakness is primarily in Florida, where their portfolio is more broadly appealing compared to luxury properties elsewhere [46][47] Question: What is the current state of the transaction market? - The transaction volume is down significantly, about 75% compared to pre-COVID levels, with few transactions closing [50][52] Question: Are further hotel-level operating efficiencies expected in 2025? - Management expects a slowing of expense growth due to reduced labor growth as group pace slows, while focusing on productivity improvements [55][56] Question: What are the expectations for labor and wage growth in 2025? - Wages and benefits are expected to grow around 4% in 2025, with a noted slowdown in labor growth [73][74] Question: Will a stub dividend be paid in 2025? - Management expects to pay a stub dividend in the fourth quarter, despite a loss on the sale of the Westin [79] Question: How is the company managing capital expenditures? - The company is being disciplined about capital expenditures, focusing on projects with better ROI and potentially delaying others [85][88]