DiamondRock Hospitality pany(US:DRH)2023-05-05 18:30Financial 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]