BETHESDA, Md., Sept. 4, 2024 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") (NYSE: DRH) will report financial results for the third quarter 2024 after the market closes on Thursday, November 7, 2024. A conference call for investors and other interested parties is scheduled for the next day on Friday, November 8, 2024 at 9:00 a.m. Eastern Time (ET). The information to be discussed on the call will be contained in the Company's earnings release, which will be available in the Investor Relatio ...

Core Points - DiamondRock Hospitality Company declared a quarterly cash dividend of $0.03 per common share, payable on October 11, 2024, to shareholders of record as of September 30, 2024 [1] - The Company also declared a quarterly dividend of $0.515625 per share on its 8.250% Series A Cumulative Redeemable Preferred Stock, payable on September 30, 2024, to shareholders of record as of September 20, 2024 [2] 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 [3] - The Company currently owns 36 premium quality hotels and resorts, totaling over 9,700 rooms [3] - The portfolio includes properties operated under leading global brand families as well as independent boutique hotels in the lifestyle segment [3]

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shunyufan/iStock via Getty Images Introduction/Earnings DiamondRock Hospitality Company (NYSE:DRH) is a hotel REIT with a portfolio of 36 hotels and resorts located in the U.S. They announced their second quarter FY2024 results on August 1st, reporting a double beat on both FFO per share and revenue. Revenue increased to $309.3mn for the quarter, which represented a 4.8% increase YoY and beat consensus estimates by 2.4%. FFO per share beat by $0.02 coming in at $0.34 for the quarter. Revenue per available r ...

Financial Data and Key Metrics Changes - Comparable RevPAR grew 2.2% year-over-year, which was 260 basis points higher than the growth in the first quarter [3] - Total RevPAR increased 4.5%, an acceleration from the 2.4% growth in the first quarter [3] - Comparable hotel adjusted EBITDA was $99.5 million, reflecting a 5.5% growth over last year [5] - Adjusted FFO per share increased 6% over 2023 to $0.34 per share [5] - 2024 adjusted EBITDA is expected to range between $278 million and $290 million [6] - 2024 adjusted FFO is projected to range between $201.5 million to $213.5 million, with adjusted FFO per share increasing to $0.95 to $1 [6] Business Line Data and Key Metrics Changes - Group revenue increased 7.2% year-over-year, with banquet catering and AV revenue rising over 20% [4] - Comparable RevPAR at resorts was 1.9% higher than last year, with total RevPAR 2.7% higher [4] - Comparable RevPAR at urban hotels was 2.2% higher than last year, with total RevPAR 5.4% above 2023 [4] - Comparable hotel operating expenses increased 4.5% from last year, with total wages and benefits increasing by 7% [4] Market Data and Key Metrics Changes - Group room revenue on the books is up 14% over the prior year, with over 30% growth at specific urban hotels [11] - Resort comparable occupancy increased 8.6%, offset by a 6.1% decline in ADR [11] - The company is outperforming its markets, taking share in 14 of its 16 resorts [12] Company Strategy and Development Direction - The company is focused on maximizing profit rather than just RevPAR or margin, shifting towards Group business to enhance total RevPAR growth [10] - The strategy includes reducing capital expenditures as a percentage of revenues to improve retained earnings for share repurchases and ROI projects [17][18] - The company plans to continue growing its leisure market exposure while also targeting urban markets [15][20] Management's Comments on Operating Environment and Future Outlook - Management expects total RevPAR growth to be in the range of 3% to 4.5% for the year, with a slight reduction in room RevPAR growth due to the focus on Group business [6] - The company anticipates that the second half of the year will not see the same level of out-of-room spending as the first half [6] - Management is optimistic about the performance of the Group strategy and its ability to drive incremental revenue and profit [6] Other Important Information - The company successfully implemented a new Oracle cloud-based ERP system to streamline accounting activities and enhance data analysis [8] - Share repurchase activity commenced during the quarter, with 2.8 million shares repurchased at an average price of $8.36 per share [7] - The company plans to repay a $73 million mortgage maturity with cash on hand and extend a $300 million term loan maturity to January 2026 [7] Q&A Session Summary Question: Update on noncore asset identification and transaction market - Management highlighted specific noncore assets and noted that the transaction market remains challenging due to high debt costs [21][22] Question: Rate sensitivity of leisure transient customers - Management indicated that there is a reversion to prior patterns, with a focus on building the base through Group bookings [23][24] Question: Insights on portfolio composition and guidance - Management attributed the ability to raise guidance to a strategic shift towards Group bookings and effective management of leisure-centric properties [27][28] Question: Appetite for dilutive trophy asset acquisitions - Management expressed a lack of interest in dilutive acquisitions, focusing instead on capital allocation that maximizes returns [30][31] Question: Benefits of the new enterprise analytics platform - The platform allows for standardized reporting and benchmarking across the portfolio, aiding in cost management [34] Question: Changes to ROI pipeline - Management confirmed no material changes to the ROI pipeline but continues to evaluate potential projects [36] Question: Priorities for share repurchase - Management indicated that share repurchases are a priority, especially given the current market conditions [39] Question: Sensitivity of smaller group bookings to economic changes - Management noted that smaller group bookings are less sensitive to economic changes compared to larger assets [75]

Portfolio and Operations - As of June 30, 2024, the company owned a portfolio of 36 premium hotels and resorts with a total of 9,760 guest rooms located in 25 different markets in the United States[57] - The company owned 36 hotels as of June 30, 2024, compared to 35 hotels in the same period of 2023[71] - The weighted average occupancy across all properties was 73.1%, with a RevPAR of $206.72, reflecting a 1.0% increase from the previous year[70] Financial Performance - Room revenue accounted for approximately 65% of total revenues for the six months ended June 30, 2024[66] - Total revenues increased by $30.9 million, or 5.8%, from $534.8 million for the six months ended June 30, 2023, to $565.7 million for the six months ended June 30, 2024[79] - Total revenues increased by $18.0 million, from $291.2 million in Q2 2023 to $309.3 million in Q2 2024, representing a 6.2% growth[72] - Rooms revenue rose by $9.0 million, or 2.5%, primarily due to improved occupancy and an acquisition of a non-comparable property[80] - Rooms revenue rose by $6.2 million, with $1.5 million attributed to the acquisition of a non-comparable property, and the remaining $4.7 million due to improved occupancy and increased ADR[73] - Food and beverage revenues increased by $18.3 million, or 14.3%, driven by higher banquet and audiovisual revenues[82] - Food and beverage revenues increased by $9.7 million, with $1.5 million from the acquisition of a non-comparable property, driven by higher banquet and audio-visual revenues[75] - Net income for Q2 2024 decreased to $24,631,000 from $39,134,000 in Q2 2023, a decline of 37.0%[119] - The company reported FFO (Funds From Operations) of $52,504,000 for Q2 2024, down from $67,915,000 in Q2 2023, a decrease of 22.6%[121] Key Performance Indicators - The company employs key performance indicators such as Occupancy percentage, Average Daily Rate (ADR), and Rooms Revenue per Available Room (RevPAR) to evaluate financial performance[65] - RevPAR is calculated as the product of ADR and occupancy percentage, serving as a critical measure for monitoring hotel performance[66] - Occupancy rate improved to 77.8% in Q2 2024, up from 76.6% in Q2 2023, marking a 1.2% increase[74] - Average Daily Rate (ADR) increased slightly to $294.55 in Q2 2024, compared to $292.67 in Q2 2023, a 0.6% rise[74] - Revenue per Available Room (RevPAR) increased to $229.21 in Q2 2024, up 2.2% from $224.27 in Q2 2023[74] - The occupancy rate improved to 73.1% for the six months ended June 30, 2024, compared to 71.8% for the same period in 2023[81] Expenses and Costs - Total hotel operating expenses increased by $26.4 million, or 6.9%, from $382.2 million to $408.6 million, largely due to higher occupancy levels and increased labor costs[83] - Total hotel operating expenses rose by $12.2 million, from $199.7 million in Q2 2023 to $211.9 million in Q2 2024, a 6.1% increase[75] - Corporate expenses surged by $21.3 million, primarily due to $20.4 million in severance expenses related to leadership changes[85] - Corporate expenses surged by $20.2 million, primarily due to $20.4 million in severance expenses related to leadership changes announced in April 2024[77] - Interest expense decreased by $0.3 million, or 0.9%, from $32.7 million to $32.4 million, attributed to the conversion of interest rate swaps to cash flow hedges[86] Leadership and Strategy - Leadership changes were announced on April 15, 2024, including the appointment of Jeffrey J. Donnelly as CEO and Briony R. Quinn as CFO[61] - The company focuses on aggressive asset management and disciplined capital allocation to high-quality lodging properties[58] - The company evaluates its hotels to ensure alignment with its strategic vision and identifies opportunities for capital investment or asset sales[60] - The company regularly assesses the availability and affordability of capital to maximize stockholder value and minimize enterprise risk[60] Capital and Debt Management - As of June 30, 2024, the company had $1.2 billion of debt outstanding with a weighted average interest rate of 5.22%[92] - The company intends to repay a mortgage loan of $73.4 million maturing on August 6, 2024, using cash on hand[87] - The company maintains an "at-the-market" equity offering program with an aggregate offering price of up to $200.0 million, which has not yet been utilized[94] - The company has a $400 million senior unsecured revolving credit facility and two term loan facilities totaling $800 million, with the right to increase the aggregate amount to $1.4 billion[97] - As of June 30, 2024, the company had $125.2 million of unrestricted cash and no outstanding borrowings on its senior unsecured credit facility[99] Future Outlook and Investments - The company expects to spend approximately $90 million to $100 million on capital improvements at its hotels in 2024, having already invested $35.8 million during the first half of the year[105] - Significant projects in 2024 include the rebranding of Hilton Burlington Lake Champlain to Hotel Champlain Burlington and a comprehensive renovation of Westin San Diego Bayview[105] - The company intends to distribute dividends at least equal to its REIT taxable income to avoid corporate income tax, having paid $0.06 per share for the six months ended June 30, 2024[102] - The company plans to extend the maturity of its $300 million term loan by an additional year upon meeting certain conditions[97] Economic and Market Conditions - The company experienced inflationary pressures affecting labor, materials, and operational costs, impacting overall expenses[124] - Seasonality in hotel revenues is expected, with variations based on property location and customer base[125] - The company continues to evaluate its critical accounting estimates and policies, with no significant changes reported since December 31, 2023[122] Non-GAAP Measures - The company uses non-GAAP financial measures such as EBITDA and FFO to evaluate operating performance, which may not be comparable to other companies[106] - Hotel Adjusted EBITDA for Q2 2024 was $99,488,000, compared to $93,529,000 in Q2 2023, reflecting an increase of 4.3%[119] - Adjusted EBITDA for the first half of 2024 was $146,105,000, up from $141,139,000 in the same period of 2023, representing a growth of 3.4%[119] Interest Rate Management - As of June 30, 2024, the company had outstanding debt of $1.2 billion, with $0.8 billion at a variable interest rate[126] - The company holds interest rate swaps related to $325 million of its variable-rate debt, which helps manage interest rate exposure[126] - If market interest rates on unhedged variable rate debt fluctuate by 100 basis points, interest expense could change by $4.8 million annually[126]

Core Insights - DiamondRock Hospitality (DRH) reported revenue of $309.28 million for the quarter ended June 2024, marking a year-over-year increase of 6.2% and exceeding the Zacks Consensus Estimate of $301.38 million by 2.62% [1] - The company achieved an EPS of $0.34, compared to $0.17 a year ago, with an EPS surprise of 6.25% against the consensus estimate of $0.32 [1] Revenue Breakdown - Revenues from Rooms totaled $203.49 million, slightly below the estimated $204.55 million, reflecting a year-over-year increase of 3.1% [3] - Revenues from Other sources reached $27.68 million, surpassing the estimated $26.31 million, with an 8.3% year-over-year increase [4] - Food and Beverage revenues amounted to $78.11 million, exceeding the average estimate of $70.63 million, representing a significant year-over-year growth of 14.3% [5] Earnings Performance - The diluted net earnings per share were reported at $0.10, which is below the three-analyst average estimate of $0.19 [6] - Over the past month, shares of DiamondRock Hospitality have returned -0.2%, while the Zacks S&P 500 composite has increased by 1.1% [6] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [6]

DiamondRock Hospitality (DRH) came out with quarterly funds from operations (FFO) of $0.34 per share, beating the Zacks Consensus Estimate of $0.32 per share. This compares to FFO of $0.32 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an FFO surprise of 6.25%. A quarter ago, it was expected that this hotel and resort real estate investment trust would post FFO of $0.16 per share when it actually produced FFO of $0.17, delivering a surprise of 6.25 ...

COMPANY CONTACT Briony Quinn Chief Financial Officer (240) 744-1196 FOR IMMEDIATE RELEASE DIAMONDROCK HOSPITALITY COMPANY REPORTS SECOND QUARTER 2024 RESULTS Comparable Total Revenues 4.8% Above 2023 Raises Midpoint of Full Year Guidance BETHESDA, Maryland, Thursday, August 1, 2024 – DiamondRock Hospitality Company (the "Company") (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 36 premium hotels and resorts in the United States, today announced results of operations for ...

jewhyte/iStock via Getty Images Introduction I like preferred shares as a subdivision of my income portfolio, and my main focus is obviously on the issuer's ability to pay the preferred dividends while the balance sheet strength also plays an important role. The REIT's management team also calls value creation its 'magnetic north', and that definitely is an attitude I like to see. I have been keeping an eye on DiamondRock Hospitality's (NYSE:DRH) preferred shares and I used to have a long position which I s ...