Part I [Business](index=6&type=section&id=Item%201.%20Business) DiamondRock Hospitality Company, a self-advised REIT, owns 36 premium hotels and resorts, emphasizing aggressive asset management and sustainability - As of December 31, 2023, the company owns a portfolio of **36 premium hotels and resorts**, containing **9,746 guest rooms** across **25 U.S. markets**[26](index=26&type=chunk) - The company's business strategy involves aggressive asset management, prudent financial strategy, and disciplined capital allocation to high-quality lodging properties in North American urban and resort markets with high barriers-to-entry[28](index=28&type=chunk)[32](index=32&type=chunk) - DiamondRock operates through an UPREIT structure, where hotels are owned by its operating partnership, DiamondRock Hospitality Limited Partnership, with the company owning **99.7% of the common OP units**[54](index=54&type=chunk) - The company emphasizes corporate responsibility and was ranked **first in sustainability performance** as the America's Regional Listed Sector Leader for Hotels for the **fifth consecutive year** by the GRESB Real Estate Assessment in **2023**[46](index=46&type=chunk) - The hotel industry is highly competitive, with competition based on location, brand, price, and services, including alternative lodging like Airbnb and other institutional investors[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) [Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from volatile hotel operations, reliance on third-party managers, debt and interest rate challenges, and the critical requirements for maintaining REIT status - The business model is highly volatile due to its concentration in premium full-service hotels, which are sensitive to economic cycles, and the daily fluctuation of rates and occupancy[82](index=82&type=chunk)[83](index=83&type=chunk) - The company is highly dependent on third-party hotel management companies for daily operations and has limited ability to influence operating decisions, which could impact performance[117](index=117&type=chunk)[118](index=118&type=chunk) - A substantial number of hotels (**22 of 36**) operate under Marriott, Hilton, or IHG brands, creating a concentration risk tied to the performance and reputation of these three chains[121](index=121&type=chunk)[122](index=122&type=chunk) - The company faces significant refinancing risk, as most debt has large balloon payments at maturity, potentially forcing asset sales or default if refinancing is not on acceptable terms[150](index=150&type=chunk) - Failure to maintain REIT qualification would have severe adverse consequences, including being subject to corporate income tax and being unable to deduct dividends paid to stockholders[166](index=166&type=chunk)[167](index=167&type=chunk) [Unresolved Staff Comments](index=36&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[206](index=206&type=chunk) [Cybersecurity](index=36&type=section&id=Item%201C.%20Cybersecurity) The company manages cybersecurity risk through external experts, internal oversight, regular risk assessments, and board-level governance - The company utilizes external experts, including a virtual Chief Information Security Officer (vCISO) and a virtual Chief Information Officer (vCIO), to guide its technology and security strategy[207](index=207&type=chunk) - A cyber risk management program assesses the cybersecurity maturity of third-party property managers operating the company's hotels[209](index=209&type=chunk) - The Audit Committee oversees cybersecurity risks, receiving regular reports from senior management, with the full Board also involved in risk oversight[211](index=211&type=chunk)[212](index=212&type=chunk) [Properties](index=38&type=section&id=Item%202.%20Properties) As of December 31, 2023, the company's portfolio includes 36 hotels with 9,746 rooms, managed by third-party operators, with most agreements terminable at will and some properties subject to debt or ground leases Portfolio Overview (as of December 31, 2023) | Metric | Value | | :--- | :--- | | Total Hotels | 36 | | Total Rooms | 9,746 | | Key Markets | Chicago, Boston, New York, San Diego, Fort Lauderdale, Washington D.C. | - The majority of hotel management agreements are terminable at will by the company, with four agreements (Chicago Marriott, Hilton Garden Inn NY/Times Square, Margaritaville Key West, Worthington Renaissance) being non-terminable[217](index=217&type=chunk) - Management fees typically consist of a base fee (**1-3.5% of gross revenues**) and an incentive fee based on operating profits exceeding a specified owner's priority return[219](index=219&type=chunk)[523](index=523&type=chunk) - Nineteen hotels operate under franchise agreements, primarily with Marriott, Hilton, and IHG, requiring royalty fees based on a percentage of gross room sales and, in some cases, food and beverage sales[223](index=223&type=chunk)[527](index=527&type=chunk) - As of year-end 2023, **four hotels** are encumbered by mortgage debt, and **eight hotels** are subject to ground lease agreements[228](index=228&type=chunk)[229](index=229&type=chunk) [Legal Proceedings](index=44&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine litigation, with management expecting no material adverse impact on financial condition or operations - The company is involved in routine litigation but does not expect the outcomes to materially and adversely impact its financial condition, net of insurance coverage[231](index=231&type=chunk) [Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[232](index=232&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=45&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE, with its five-year total return underperforming the S&P 500 but outperforming the Dow Jones U.S. Hotels Index, and it has an active share repurchase program Five-Year Cumulative Total Stockholder Return (2018-2023) | Company/Index | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | DiamondRock Hospitality | $100.00 | $129.66 | $96.55 | $112.46 | $96.94 | $112.76 | | S&P 500 Total Return | $100.00 | $131.49 | $155.68 | $200.37 | $164.08 | $207.21 | | Dow Jones U.S. Hotels Total Return | $100.00 | $109.70 | $73.24 | $87.06 | $81.38 | $99.96 | - The company has a share repurchase program with an authorized capacity of **$200.0 million**, with approximately **$185.3 million** remaining available as of December 31, 2023, and no shares repurchased in Q4 2023[247](index=247&type=chunk) - As of December 31, 2023, there were **2,903,835 securities** to be issued under equity compensation plans, primarily performance and deferred stock units with no exercise price[244](index=244&type=chunk) [Reserved](index=47&type=section&id=Item%206.%20Reserved) This item is not applicable - Not applicable[249](index=249&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, total revenues increased **7.3%** to **$1.075 billion**, while net income decreased due to higher interest expense, with the company maintaining strong liquidity and planning **$100 million** in 2024 capital improvements Revenue Comparison (in thousands) | Revenue Type | 2023 | 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Rooms | $717,447 | $681,269 | $36,178 | 5.3% | | Food and beverage | $259,757 | $238,234 | $21,523 | 9.0% | | Other | $97,663 | $82,000 | $15,663 | 19.1% | | **Total revenues** | **$1,074,867** | **$1,001,503** | **$73,364** | **7.3%** | Key Hotel Operating Statistics (2023 vs. 2022) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Occupancy % | 72.1% | 68.3% | 3.8% | | ADR | $282.11 | $289.07 | (2.4)% | | RevPAR | $203.32 | $197.50 | 2.9% | - Total hotel operating expenses increased by **12.2%** to **$781.8 million** in 2023, primarily due to acquisitions, increased occupancy, higher labor costs, property tax assessments, and insurance premiums[272](index=272&type=chunk) - Interest expense increased by **70.0%** to **$65.1 million** in 2023, mainly due to rising interest rates on variable-rate term loans and mark-to-market adjustments on interest rate swaps[278](index=278&type=chunk) - The company maintains a conservative capital structure with **$1.2 billion of debt** outstanding and **32 of its 36 hotels** unencumbered by mortgage debt as of December 31, 2023[288](index=288&type=chunk) - For 2024, the company plans to spend approximately **$100 million** on capital improvements, including repositioning the Hilton Burlington and Bourbon Orleans hotels, and renovating the Westin San Diego Bayview[308](index=308&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on its **$0.8 billion** variable-rate debt, mitigated by **$325 million** in interest rate swaps, with a **100 basis point** change impacting annual interest expense by approximately **$4.8 million** - The primary market risk is interest rate risk, with **$0.8 billion** of the **$1.2 billion** total debt at a variable interest rate[338](index=338&type=chunk) - The company holds interest rate swaps on **$325 million** of its variable-rate debt to manage interest rate volatility[338](index=338&type=chunk) - A **100 basis point (1%)** fluctuation in interest rates on the unhedged variable rate debt would impact annual earnings and cash flows by approximately **$4.8 million**[338](index=338&type=chunk) [Financial Statements and Supplementary Data](index=62&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item directs the reader to the company's financial statements, indexed on page F-1 - This item directs the reader to the company's financial statements, which are indexed on page F-1[339](index=339&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=62&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[340](index=340&type=chunk) [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the most recent fiscal quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[341](index=341&type=chunk) - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, these controls[342](index=342&type=chunk) [Other Information](index=62&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[345](index=345&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=62&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[346](index=346&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=64&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's 2024 proxy statement - Information is incorporated by reference to the 2024 proxy statement[350](index=350&type=chunk) [Executive Compensation](index=64&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's 2024 proxy statement - Information is incorporated by reference to the 2024 proxy statement[351](index=351&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=64&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item, including equity compensation plans, is incorporated by reference from the company's 2024 proxy statement - Information is incorporated by reference to the 2024 proxy statement[352](index=352&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=64&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's 2024 proxy statement - Information is incorporated by reference to the 2024 proxy statement[353](index=353&type=chunk) [Principal Accountant Fees and Services](index=64&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's 2024 proxy statement, with KPMG LLP serving as the independent public accounting firm - Information is incorporated by reference to the 2024 proxy statement[354](index=354&type=chunk) - The company's independent public accounting firm is KPMG LLP, McLean, Virginia, PCAOB Auditor ID: 185[355](index=355&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=65&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This item provides an index of all financial statements, schedules, and exhibits included with the 10-K filing, such as Schedule III - Real Estate and Accumulated Depreciation - This item provides an index of all financial statements, schedules, and exhibits included with the 10-K filing[358](index=358&type=chunk)[360](index=360&type=chunk) - Financial Statement Schedule III - Real Estate and Accumulated Depreciation is included in the filing[359](index=359&type=chunk) [Form 10-K Summary](index=67&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company - Not applicable[363](index=363&type=chunk)

Diamondrock Hospitality Co (NYSE:DRH) Q4 2023 Earnings Conference Call February 23, 2024 11:00 AM ET Company Participants Briony Quinn - SVP & Treasurer Mark Brugger - President, CEO & Director Jeffrey Donnelly - CFO, EVP Conference Call Participants Dori Kesten - Wells Fargo Securities Smedes Rose - Citi Austin Wurschmidt - KeyBanc Capital Markets Bill Crow - Raymond James Floris van Dijkum - Compass Point Research & Trading Mike Bellisario - Baird Anthony Powell - Barclays Investment Bank Duane Pfennigwer ...

DiamondRock Hospitality (DRH) reported $263.55 million in revenue for the quarter ended December 2023, representing a year-over-year increase of 3.3%. EPS of $0.18 for the same period compares to $0.07 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $259.06 million, representing a surprise of +1.73%. The company has not delivered EPS surprise, with the consensus EPS estimate being $0.18.While investors scrutinize revenue and earnings changes year-over-year and how they compare wi ...

DiamondRock Hospitality (DRH) came out with quarterly funds from operations (FFO) of $0.18 per share, in line with the Zacks Consensus Estimate. This compares to FFO of $0.23 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this hotel and resort real estate investment trust would post FFO of $0.23 per share when it actually produced FFO of $0.26, delivering a surprise of 13.04%.Over the last four quarters, the company has surpassed consensus FFO es ...

Analysts on Wall Street project that DiamondRock Hospitality (DRH) will announce quarterly earnings of $0.18 per share in its forthcoming report, representing a decline of 21.7% year over year. Revenues are projected to reach $259.06 million, increasing 1.6% from the same quarter last year.The consensus EPS estimate for the quarter has undergone a downward revision of 6.3% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their init ...

Financial Performance - For the nine months ended September 30, 2023, room revenue comprised approximately 67% of total revenues[127]. - Total revenues for the three months ended September 30, 2023, increased by $8.3 million, or 3.1%, to $276.5 million compared to $268.2 million in 2022[135]. - Room revenues increased by $1.3 million, with a $3.0 million increase from non-comparable properties, offset by a $1.7 million decrease at comparable properties due to declining occupancy and ADR[135]. - Food and beverage revenues rose by $2.8 million, with $1.3 million attributed to non-comparable properties, reflecting higher outlet revenues at comparable properties[137]. - Other revenues increased by $4.2 million, with $2.8 million from non-comparable properties, primarily due to higher resort fees and parking revenues[138]. - Total revenues for the nine months ended September 30, 2023, increased by $64.8 million, or 8.7%, to $811.3 million compared to $746.5 million in 2022[145]. - Room revenues for the nine months increased by $34.1 million, with $10.0 million from non-comparable properties, driven by improved occupancy and ADR at urban hotels[145]. - Net income for Q3 2023 was $27.33 million, a decrease of 4.3% from $28.56 million in Q3 2022[187]. - EBITDA for Q3 2023 increased to $71.21 million, up 9.3% from $64.99 million in Q3 2022[187]. - Adjusted EBITDA for the nine months ended September 30, 2023, was $214.38 million, slightly up from $213.16 million in the same period of 2022[187]. - FFO for Q3 2023 was $55.01 million, a decrease of 1.1% compared to $55.61 million in Q3 2022[188]. - Adjusted FFO available to common stockholders for Q3 2023 was $54.59 million, down from $60.63 million in Q3 2022[188]. Hotel Operations - As of September 30, 2023, the company owned a portfolio of 36 premium hotels and resorts with a total of 9,745 guest rooms located in 25 different markets in the United States[118]. - The total weighted average occupancy rate for the portfolio was 73.3%, with a Revenue per Available Room (RevPAR) of $206.76, reflecting a 4.1% increase from the previous year[132]. - The Chicago Marriott Downtown Magnificent Mile achieved a RevPAR of $149.41, representing a 14.8% increase from 2022[132]. - The Westin Boston Seaport District had an occupancy rate of 85.3% and a RevPAR of $207.90, up 15.5% from the previous year[132]. - The company’s hotels are managed by third-party operators, with management fees based on revenue and profitability levels[119]. Capital Structure and Investments - The company employs a strategy of aggressive asset management and disciplined capital allocation to enhance long-term stockholder returns[120]. - The company is committed to a conservative capital structure and regularly assesses the availability and affordability of capital to maximize stockholder value[122]. - The company had $1.2 billion of outstanding debt with a weighted average interest rate of 5.07% and a weighted average maturity of approximately 2.7 years[162]. - The company expects to spend approximately $100 million on capital improvements at its hotels in 2023, having already invested $67.4 million during the nine months ended September 30, 2023[178]. - The company has set aside $36.5 million for capital projects in property improvement funds as of September 30, 2023[177]. - The company repurchased 318,454 shares of common stock at an average price of $7.60 per share for a total of $2.4 million during the nine months ended September 30, 2023[165]. Cash Flow and Expenses - The company’s net cash provided by operations was $184.7 million for the nine months ended September 30, 2023[170]. - The company’s net cash used in investing activities was $101.2 million for the nine months ended September 30, 2023, including $31.9 million for the acquisition of Chico Hot Springs Resort[171]. - Hotel operating expenses increased by $13.2 million, or 7.1%, to $199.1 million, with $5.8 million from non-comparable properties, driven by increased occupancy and related labor costs[140]. - Total hotel operating expenses for the nine months increased by $66.4 million, or 12.9%, to $581.3 million, with $16.0 million from non-comparable properties[150]. - Interest expense rose by $6.9 million, from $9.1 million in 2022 to $16.0 million in 2023, primarily due to rising interest rates on variable rate debt and new unsecured term loans[144]. - Interest expense for the nine months increased by $25.8 million, from $22.9 million in 2022 to $48.7 million in 2023, mainly due to rising interest rates and changes in interest rate swaps[155]. - The company’s total outstanding debt as of September 30, 2023, was $1.2 billion, with $425 million being variable rate debt[200]. - A 100 basis point fluctuation in interest rates on variable rate debt could result in an annual change in interest expense of $4.3 million[200]. Risks and Market Conditions - The company faces risks including rising inflation, increased competition, and potential impacts from economic downturns on hotel operations[118]. - The company anticipates ongoing market risks primarily related to interest rate fluctuations affecting its financial performance[200]. Dividends and Shareholder Returns - The company intends to distribute dividends at least equal to its REIT taxable income to avoid corporate income tax, with recent dividends of $0.06, $0.03, and $0.03 per share paid in 2023[175].

Financial Data and Key Metrics Changes - Total revenues for DiamondRock's entire portfolio in Q3 2023 were $277.1 million, marking the highest third-quarter revenue in the company's history, despite being only modestly up from 2022 [77] - RevPAR in Q3 contracted 1.1% compared to the same period in 2022 but was up 7.6% compared to 2019, exceeding expectations [76] - Hotel adjusted EBITDA in Q3 was $81.1 million, which was $6.6 million or 8.9% ahead of 2019 [77][91] Business Line Data and Key Metrics Changes - Group business in Q3 was strong, with notable increases at various properties: Westin DC up 33%, Westin Boston up 10.4%, and Westin San Diego up 15.6% [78] - Resort RevPAR increased nearly 24% over 2019, despite an 8.2% contraction compared to last year [69] - The Dagny in Boston is projected to increase its EBITDA by $4 million next year, stabilizing at over $15 million of annual EBITDA [71][101] Market Data and Key Metrics Changes - Urban total RevPAR was up 2.9% in Q3 over last year, while resorts saw a significant sequential improvement [67] - Forward bookings for group revenue are pacing up over 23% compared to the same time last year, with Chicago Marriott up over 40% [90] - The company noted that the number of nights of locational flexibility has doubled post-pandemic, impacting demand positively [70] Company Strategy and Development Direction - DiamondRock's strategy focuses on maintaining a high-quality portfolio with nearly 95% of properties unencumbered by long-term management contracts, allowing for greater operational control [66] - The company has invested over $0.5 billion in renovations and repositioning over the last five years, enhancing competitiveness [81] - Future ROI projects include converting the Hilton Burlington to a lifestyle hotel and repositioning the Bourbon Orleans in New Orleans [82][115] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the travel industry's future, citing strong demand and limited hotel supply in most markets [162] - The company anticipates that 2024 will see improved expense comparisons and continued growth in group demand [99][162] - Management acknowledged the current economic environment's impact but remains constructive on travel demand and hotel performance [100][162] Other Important Information - The company repurchased over 1.8 million shares for approximately $14.7 million, indicating a focus on maximizing shareholder value [97] - The company is testing the market with potential dispositions, primarily in urban markets, due to better liquidity for smaller transactions [177] - The company expects a $6.2 million increase in property taxes in Q4 compared to last year [125] Q&A Session Summary Question: What are the trends in resort performance? - Management noted a sequential improvement in resort performance, with some markets stabilizing and others reaccelerating [4][10] Question: How does the company view the normalization period in resorts? - Management believes the normalization period is starting to improve and expects further reacceleration in 2024 [3][5] Question: What is the outlook for group revenue in 2024? - Group revenue is pacing up over 23% compared to the same time last year, with strong forward bookings in key markets [90][144] Question: How is the company managing expenses and margins? - Management indicated that expenses have come down substantially year-over-year, with a focus on improving productivity per room [14][99] Question: What is the company's strategy regarding asset sales? - The company is testing the market for potential dispositions, primarily focusing on urban assets below $100 million due to current market conditions [177]

Financial Data and Key Metrics Changes - Total revenues in Q2 2023 were $289 million, nearly 1% ahead of 2022, with hotel adjusted EBITDA at $93.6 million, which was $3.2 million ahead of 2019 [78][30][29] - Portfolio RevPAR increased by 0.5%, with total revenue up 0.9% in the quarter, driven by a 7.1% increase in urban hotels and an 8.3% decrease in the resort portfolio [29][30] - Adjusted EBITDA was $85.8 million, impacted by disruptions and property tax refunds from the previous year [30][31] Business Line Data and Key Metrics Changes - Urban hotels experienced nearly flat performance compared to 2019, down just 0.7%, while resorts were robustly 33% higher [29] - Group room nights increased by 4.6% compared to Q2 2022, but were still 11.1% behind 2019 levels [88] - Business transient demand showed mixed results, with strong performance in cities like New York but continued weakness in San Francisco [109][95] Market Data and Key Metrics Changes - Group demand is solid in Boston, San Diego, and Washington, D.C., but Chicago, the largest group market, is expected to be weaker in the second half of the year [39][39] - Florida continues to show a year-over-year trend, with RevPAR for non-Florida hotels increasing by 3.7% [29] - The leisure segment in the U.S. is projected to hit a new record next year, with occupancy expected to exceed 1.3 billion hotel nights [47][46] Company Strategy and Development Direction - The company is focusing on capital allocation towards high IRR opportunities, including internal ROI projects and share repurchases [34][35] - The acquisition of Chico Hot Springs Resort in Montana is seen as a strategic move to enhance the portfolio, with plans to implement best practices and modern revenue management systems [54][55] - The company remains committed to a strong balance sheet with low leverage and significant liquidity, allowing for opportunistic investments [37][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of business travel and the normalization of leisure travel patterns, expecting improvements post-Labor Day [95][39] - The company anticipates that renovations and repositionings will negatively impact revenue growth in the second half of the year by approximately $4 million [41] - Management highlighted the importance of demographic changes driving leisure travel, with a significant increase in travel by millennials and baby boomers [91] Other Important Information - The company has completed or is nearing completion of $58 million in ROI repositionings at 16 of its 36 properties [51] - The company is exploring dispositions to fund additional repurchases and future growth opportunities [36] - The impact of increased property insurance costs and property tax comparisons is expected to be a headwind in the second half of 2023 [43][42] Q&A Session Summary Question: What is the expected year-over-year impact from ROI projects and acquisitions? - Management estimates a few million dollars from acquisitions and additional contributions from ROI projects, with specific expectations for Chico and Dagny [66][67] Question: How is the performance of the ex-Florida portfolio and potential for recovery? - Management noted that the Florida Keys are stabilizing, with expectations for normalization by late 2023 [68][69] Question: What is the outlook for group bookings in Chicago? - Management indicated that 2024 looks strong for Chicago, with solid bookings expected [131] Question: How does the company view the acquisition environment? - The acquisition volume is down significantly, but the company sees advantages as a public entity with lower borrowing costs [119][120] Question: What are the plans for the new acquisition in Montana? - The company plans to enhance the property and build relationships within the community for future opportunities [122][121]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 For the transition period from _________ to _________ OR Commission File Number: 001-32514 DIAMONDROCK HOSPITALITY COMPANY (Exact Name of Registrant as Specified in Its Charter) Maryland ...

Financial Data and Key Metrics Changes - In Q1 2023, comparable RevPAR increased by 16.9% and comparable revenues rose by 18% compared to the prior year [6] - Hotel adjusted EBITDA increased by $8.5 million or 15.9% [6] - Compared to 2019, comparable RevPAR was up 13.8% and hotel adjusted EBITDA increased by 19.5% [6][39] - Comparable RevPAR for the portfolio was $185, nearly 17% higher than 2022 and 14% higher than 2019 [26] - F&B and other revenue increased by 14.1% or over $10 million, totaling nearly $83 million [27] - Corporate adjusted EBITDA reached $55.4 million, with adjusted FFO of $0.18 per share [39] Business Line Data and Key Metrics Changes - The group segment showed significant strength, with room revenue increasing by 59% year-over-year and activity up nearly 15% [11] - RevPAR at the San Diego Westin increased by 71% over Q1 2022, while the Chicago Marriott saw a 62% increase [12] - Business transient demand saw midweek occupancy increase by 50.8% compared to the previous year [13] - The resort portfolio's RevPAR was 30.4% higher than 2019, with adjusted EBITDA 47% higher than 2019 [33] Market Data and Key Metrics Changes - Urban properties are concentrated in desirable submarkets, avoiding markets like San Francisco and Los Angeles due to post-pandemic demand changes [9] - The resort segment in the US saw a year-over-year RevPAR increase of 12.9% in Q1 [34] - The Florida Keys and Destin Beach resorts are stabilizing, still 38% above 2019 levels [20] Company Strategy and Development Direction - The company focuses on a portfolio of differentiated hotels and resorts, with a competitive advantage stemming from its unique property mix [7] - Plans to acquire more experiential hotels and maintain a strong balance sheet with low leverage [21][66] - The company aims to close the gap in group room nights and revenue, projecting to finish 2023 at 94% of peak group room nights [22] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about the future of travel, expecting record revenues in 2023 despite economic volatility [38][46] - The company anticipates that leisure demand will continue to outperform, with a new normal for resort NOI expected to be 50% higher than 2019 [37] - Management noted that while business transient demand is recovering, it may not reach prior peak levels this year [71] Other Important Information - The company has a strong liquidity position of $585 million, including $185 million in cash [45] - The acquisition of the remaining land parcels under the Worthington Renaissance parking structure enhances liquidity and financeability [29] - The company is actively engaged in repositioning several properties to drive future growth [31][64] Q&A Session Summary Question: Can you elaborate on the moderation of business transient demand? - Management indicated that while leisure and group segments are performing well, business transient demand is recovering but at a slower pace compared to other segments [49][50] Question: What is the company's appetite for acquisitions this year? - The focus remains on smaller, owner-managed properties rather than large deals, with a competitive advantage in identifying value [53][54] Question: How is the company managing labor costs? - The company is reducing reliance on contract labor and focusing on permanent staffing to improve margins and service quality [75][98] Question: What are the expectations for group revenues? - The company ended the quarter with about 80% of group room nights under contract, projecting to reach 94% of prior peak by year-end [72] Question: How did the resorts perform relative to expectations? - Overall, resorts performed well, with some markets exceeding expectations, while others like the Florida Keys were slightly behind [94][113]