DiamondRock Hospitality pany(US:DRH)2025-11-07 15:02Company Overview - As of September 30, 2025, DiamondRock Hospitality Company owned a portfolio of 36 premium hotels and resorts with a total of 9,595 guest rooms located in 26 different markets in the United States[81]. Revenue Performance - Room revenue accounted for approximately 65% of total revenues for the nine months ended September 30, 2025[90]. - Total revenues for the three months ended September 30, 2025, were $285.4 million, a slight increase of 0.1% compared to $285.1 million in the same period of 2024[100]. - Total revenues for the nine months ended September 30, 2025, were $846.0 million, a decrease of $4.9 million or 0.6% from $850.8 million in 2024[110]. - Rooms revenue decreased by $3.4 million, primarily due to a $5.9 million decrease from the 2025 Disposition, partially offset by a $2.9 million increase from the 2024 Acquisition[101]. - Food and beverage revenues increased by $1.6 million for the three months ended September 30, 2025, primarily due to higher banquet and catering revenues[104]. - Food and beverage revenues increased by $0.8 million, while other revenues rose by $3.3 million, primarily due to new resort fees and increased spa and parking revenue[114]. Financial Metrics - 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[89]. - The company’s financial performance is also measured using metrics such as EBITDA, Adjusted EBITDA, Funds From Operations (FFO), and Adjusted FFO[92]. - RevPAR is calculated as the product of ADR and occupancy percentage, serving as a critical statistic for monitoring hotel performance[90]. - EBITDA for the three months ended September 30, 2025, was $68.558 million, while Adjusted EBITDA was $79.084 million[154]. - Hotel Adjusted EBITDA for the nine months ended September 30, 2025, was $240.192 million, reflecting a slight decrease from $243.161 million in the same period of 2024[154]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $225.651 million, compared to $228.229 million in the same period of 2024[154]. - FFO for the nine months ended September 30, 2025, is calculated by excluding gains or losses from sales of properties and impairment losses, plus real estate-related depreciation and amortization[150]. Operating Performance - Occupancy rate for the three months ended September 30, 2025, was 76.2%, unchanged from the same period in 2024[103]. - Occupancy rate for the nine months ended September 30, 2025, was 73.2%, a decrease of 0.5% compared to 73.7% in 2024[113]. - Average Daily Rate (ADR) increased by 1.2% to $284.93 in 2025 from $281.47 in 2024[113]. - Revenue per Available Room (RevPAR) rose by 0.6% to $208.54 in 2025, compared to $207.36 in 2024[113]. - The weighted average RevPAR for the properties was $208.54, reflecting a 0.6% increase from the previous year[100]. Expenses and Debt - Total hotel operating expenses decreased by $0.9 million to $203.6 million for the three months ended September 30, 2025[105]. - The company reported a 2.9% decrease in rooms operating expenses for the three months ended September 30, 2025, totaling $46.5 million[105]. - Interest expense increased by $0.1 million to $17.1 million for the three months ended September 30, 2025, primarily due to an increase in unsecured term loans[108]. - Interest expense decreased by $2.3 million to $47.1 million in 2025, primarily due to mortgage debt repayments[119]. - As of September 30, 2025, the company had $1.1 billion of outstanding debt with a weighted average interest rate of 5.31%[125]. - The outstanding debt as of September 30, 2025, was $1.1 billion, all of which had a variable interest rate, with sensitivity to changes in one-month Secured Overnight Financing Rate (SOFR)[164]. Capital Management - The company aims to deliver long-term stockholder returns that exceed those generated by peers through dividends and capital appreciation[84]. - The company is focused on aggressive asset management and disciplined capital allocation in high-quality lodging properties[84]. - The company regularly assesses the availability and affordability of capital to maximize stockholder value and minimize enterprise risk[86]. - The company repurchased 4,597,942 shares of common stock at an average price of $7.71 per share for a total of $35.5 million during the nine months ended September 30, 2025[130]. - The company had $145.3 million of unrestricted cash and $50.1 million of restricted cash as of September 30, 2025[135]. - As of September 30, 2025, the company has set aside $50.0 million for capital projects in property improvement reserves[142]. - The company invested approximately $60.9 million on capital improvements at its hotels during the nine months ended September 30, 2025, and expects to spend between $85.0 to $90.0 million on capital improvements in 2025[143]. Risks and Challenges - The company faces risks including elevated inflation, interest rates, and increased competition in the lodging industry[82]. - The company continues to monitor macroeconomic factors that may impact leisure and international travel to the United States[93]. - Inflation has moderated but remains above the Federal Reserve's long-term target, impacting the company's ability to adjust room rates and affecting expenses[161]. - Management believes that actual results could differ materially from estimates due to uncertainties in accounting policies, particularly regarding impairment of long-lived assets[159]. - The company expects some seasonality in its business, with higher revenues varying by property location and customer base[163]. Renovations and Improvements - The company completed significant renovations at multiple hotels, including the Hilton Garden Inn New York and Kimpton Hotel Palomar Phoenix, enhancing guest experiences[149]. - The company’s capital expenditures include costs for replacing and repairing furniture, fixtures, and equipment at its hotels, calculated as a percentage of hotel revenues[142]. Impairment and Losses - The company reported impairment losses of $1.076 million for the three months ended September 30, 2024, and $1.596 million in 2025, with the same figures for the nine months[157]. - The company reported a loss on debt extinguishment of $5.850 million for the three months ended September 30, 2024, with no such loss reported in 2025[157]. Interest Rate Management - The company executed an interest rate swap for a notional amount of $75 million in August 2025, effective January 2, 2026, and an additional swap for $50 million in October 2025, effective January 4, 2027[164].