DRH - Earnings call transcript Q1 2018 | DiamondRock Hospitality Company

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Operator

Good day, ladies and gentlemen, and welcome to the First Quarter 2018 DiamondRock Hospitality Company Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce our host for today's conference Sean Kensil, Director of Finance. Mr. begin. may you Kensil,

Sean Kensil

Good earnings and call Sarah. first to quarter XXXX and morning, you, welcome everyone, DiamondRock's Thank webcast.

statements today Before to we historical SEC and considered facts. comments to are not the company's uncertainties remind like securities forward-looking are risks participants that These filings. and begin, many of be I may under federal would as subject in law, statements our described

financial results set discuss turn measures, the the In XXXX. on that, greater in it quarter a revised detail to well be our Officer, addition, certain our our as company's I'm release. first pleased will review GAAP management will of helpful the Brugger, and press outlook Jay performance quarter balance. reconciliations earnings provide first non-GAAP to our for Mark. With Mark our and forth discusses our to provide as Chief as morning, call Chief overview may discuss This brief Johnson President Financial to over Officer Executive

Mark Brugger

morning, to hospitality experience He's joining the XXXX a very tremendous brings of and him I'm on about as knowledge call. team. earnings DiamondRock's industries. first pleased quarter with Good you Jay new us CFO. thank wealth our and Jay to Johnson banking and the introduce for a everyone, addition

had at initiatives us with of end success RevPAR along Adjusted another X.X% our on and prior midpoint year Comparable Delving quarter outlook X.X% for points with you, expectations with It's for the at several great EBITDA the to for the million to the gained internal not A those the as to $X XXX quarter to was certain million, market is growth. modestly at a forecast. industry positive asset loading yet thoughtfulness EBITDA quarter. X.X% to to ahead results, trend have of first internal RevPAR a bottom of to outperformed appreciate midpoint $XXX year of fundamentals the XX management who compared before million DiamondRock's to was DiamondRock's basis million allowed prior start as move his insights. came RevPAR and our For guidance. $XXX basis and demand growth that during that of met note. the increase full increase into him? you'll Resorts of I'm raise able has Loading in growth raised RevPAR DiamondRock RevPAR This of X.X%. a encouraging our portfolio share X.X% the points first compared ahead and guidance. quarter. strong $X.X

at City an up XX York were our the Top In at resorts, in service fact, New Resort. the sign. in our Shorebreak back their bolstered the Chicago budget RevPAR were renovation the which quarter, Hotels Star Chicago comp Sedona, X.X% quarter at X.X% Renaissance. results and results and the in XX in inaugural impact line by Charleston of DC our by our RevPAR. in California strong Gwen held included encouraging outperformed up hotels Sonoma, results at open The were the hotels portfolio performers the our and two Marriott. The select Lodge

more discuss well increased performance portfolio this performance line our industry on X.X% will later call. a segment. is ahead roughly upscale with which Jay quarter details RevPAR upper first hotels these in and for in little Excluding of results

compared growth cap non-core plan by into The rate capital. quality on money selling In its potential. capital three overall higher $XXX as quarter deferred company Let's those X.X% recycling hotels $XXX These to for portfolio spend million including four in just X.X%. higher approximately of to XXXX, the DiamondRock' with that RevPAR the we sold multiple superior minute hotels hotels hotels almost hotels at executed sold than dispositions, we a portfolio the of reinvest with the to of on four about $XXX outperforming The average times hotels RevPAR strategic The million. of for new hotels. NAV decision that. required RevPAR collectively current strategic XX.X was a higher than an XX% have made Since is EBITDA enhance had program. RevPAR NOI that growth $XXX $XXX average first

by outperformance. great the first examples first experiential estimate forward In we of on of increase improvement. and The It focusing Lake Arizona. We hours' California Choice ranked Francisco the ago. few market Tahoe luxury RevPAR some the is awards. first Palomar and the we short believe Tahoe gondola supply best its late our in as sustained hotel San X% and Spa has a had walk two times Phoenix, X.X value the of just Area margin Lake resort and [ph], and XX% NAV over since resorts supply its over the first last during to growth cycle Tahoe beach a in basis United TripAdvisor's of the XX strategy key XXX be was in L'Auberge XX%. this Resort is along a Bay few Sedona acquisitions Continuing only of EBITDA Landing recently acquisition is resort valuable both they is year to a hotels The times including multiple Hotel in Travelers' away. on current in EBITDA team market only Lake by recently XXXX These has our now approximately the opportunities, a primarily was executed Sedona. a market EBITDA acquisition entire XX%, a of stabilize in or de US off just in double-digit Inn, on by will resource constraint at one one our at of our of ride ride ownership front times such risk Tahoe Landing Our combined acquisition million XX.X markets with analysis, the ski boutique towards deployment Orchards quarter. what multiple add a has out impressive Moreover in The a CAGR should RevPAR XX% increased top investment. RevPAR has DiamondRock at that & our total years. points States years a reduce and This $XX is redeployment a the with market. XX.X drive back growth program, investment. increases year our results the deal increased last of profit the that quarter The locations at The over five grown led rare hotels Lake multiple our door. of alone, Sedona insulated two of number door the count In trend and year. out Based delivered are

quarter budgeted the in four the has of of in with Phoenix, growth downtown has is We're Arizona. was now on XXXX. space and which to demand and The RevPAR tenants Phoenix with Suns our city Phoenix's a a we downtown development best from Phoenix. multiple acquisition The and hotel first Greater is new in million is and few on deal bullish growth, add our same home a off the price six Palomar in The period. operational believe XXX Phoenix of in group blocks part XX.X begun major less performance the [ph] the in This making changes This changes space other investment. and hotels performance. TripAdvisor market. Phoenix. demand the the hotel America, of since office X% location Basketball remarkable. years X% We've in XX our is US enhance and Diamondbacks and convention Stadium. another center, stabilize city just at pricing. implementing attractive on Phoenix generators. acquisition from diverse has After among rated program in value XXth it been attractive represents implementing growth largest growth best a feet The the we expect a Arena MSA level Downtown, at times square is total the and benefiting supply Phoenix Baseball story over bought over among than XX.X market Lack revitalization XXXX EBITDA. we supply market the It been heart has top times Phoenix. to in Palomar property The hotel is Phoenix we're been to fastest of that office multiple CAGR The

at on in a positive year's the the impact a over continues Jay, have touch pre-hurricane fresh ramp strong the call properties last DiamondRock. hurricanes. for There Frenchman's the we were is over reopened major from than differed substantially do This we results, West once that the consequential, later periods momentum well renovation. as a drive million Key upside Key you Islands. More the resort bookings least product will and closed XXXX. will West our themed to I'm Virgin on Cabana stabilized. Reef turning this concept hurricane in Frenchman's Cuban Before that impact, Resort little Key as and hurricane opportunity sustained creates Havana in in from for an of able conviction result end a in in pleased portfolio newly want and as year up the I damage slower of in completing would know Reef have to about extended hoped. through the West to Resort and let closed we as the $X to long-term. Two for unique imaginative to is after be the market The market hurricane, the its the The inspired believe US back albeit April remain

for have from both cap that with to interruptions. lost profits comprehensive business certain limitations million as subject damage insurance covers $XXX We property well as DiamondRock

we hope our our definitive new result turn disaster XXXX total of of within we over location the in insurance I'll confident a earnings With rebuild told As Jay. the our will for next on the portion that call. likely $XX resort though, investors, Frenchman's more that, discussions important scenario to any it rebuild We any value a on US Islands. to shareholders. claim approximately world insurers begun resort all during update practically will Any business for property with have remain create the class We've in million in outcome claims. anticipate and in recognized previously interruption best in Virgin the natural

Jay Johnson

Thanks Mark.

say Before know it look an investors our to we begin, like analysts forward honor with I time more that spending as the CFO. DiamondRock company. to and was is I great your privilege in feedback quality and of the what getting I'd to and team, portfolio be join balance sheet I'm compelling because opportunistic. to weeks. a capacity coming DiamondRock its high hearing to story excited has DiamondRock forward to and cover looking

remind to that hotel adjusted portfolio like I discuss L'Auberge including metrics Palomar comparable and Resort would everyone our quarter Sedona, Before and first Landing other Orchards results, I de Spa EBITDA Phoenix. margin RevPAR The Inn, and

Reef West Frenchman's Key and presented. excluding for periods While Cabana Havana

good Mark X.X% noted, in market quarter, the occupancy both we hotels combination share and a As first room performed period. had our through of and increases gained a Comparable RevPAR grew during well rate.

Food contraction beat for quarter business. the balance approximately and Chicago was difficult budget and with and basis January inauguration quarter. at because F&B of X.X% While held during February the was and year-over-year. XX% X.X% increasing in expect second and the X% Under our Marriott. with the the Over over May quarter. of space essentially Knife first RevPAR quarter meeting down April growth our RevPAR of due flat revenue beverage began June having renovation respectively. hotels margins which the just comparison results Marriott of strong to were group space primarily growth the back XXX meeting was the Chicago points and the in flat March and displaced to be with We RevPAR strong

down up margins Excluding Marriott XX points. only basis revenue and the was food Chicago beverage X.X% with

let in minutes a couple quarter's spend and major me segments. the our Now trends three discussing of results

tripled year-over-year. Fort Worthington business was Gwen successful X.X% following Western business our Lauderdale, significantly First, includes where Chicago X.X% in contract a Renaissance strongest Marriott. was down transient increase Leisure and Other by outperformed Renaissance, Charleston and transient top occupancy. Chicago with the performance other The growth renovation driven X.X%. segment quarter the revenue this

misleading in DC was our the driver little resorts and in a affecting did particular comparison in decline weak significant inauguration However, overall the our unusually first snow in And is in leisure well quarter. season Vail. leisure Hotels to this the given

bookings in ahead performed the the Short-term was X.X% increase the quarter segment Finally, first our the X.X%. up and for nearly group quarter XX expectations were in in This increase on of trends based basis with our rate in quarter growing encouraging points occupancy. XX%.

most at renovation Our at recent the Chicago The grew effected and as business. Group was the a Renaissance driving in meeting of Sonoma, group particularly the XX%. combined Marriott of Gwen rate Charleston at renovations expected to were Lodge Chicago Shorebreak, due space. challenged

Marriott Chicago up group X.X%. the Excluding were revenues

in Looking for and $XX the approximately booked group our first of quarter on group forward, we business the XX% business million we the approximately year. in books have

Our remains has the improved last modestly group our year. call, it pace since for approximately flat although

We the the most like time in a to our challenging major to our of strongest segment expect results due the markets. handful in group third markets. for to convincing discussing calendars quarter quarter be fourth some I'd our be and to spend the key

hotels pace Group this both up of RevPAR performed final Marriott the the Chicago Our of renovation quarter year. combined of combined phase XX% well during Chicago being with for for Hotels the quarter. the completed growth remainder despite is the XX%,

Chicago the year. hotel results remainder ever from bright. as particular, Gwen truly and significantly for the collection. The to is the some QX outperform as of the conversion future of expect the We to luxury remains for in Gwen benefiting In delivered the well best the its

service ahead hotels our New internal this with X.X%. RevPAR select growth performed of expectations generating of portfolio Our City York quarter

the ahead that business some the flat market of of expectations, are of ccontract we process RevPAR primarily in loss behind to the Although Lexington's was growth replacing. non-repeat due

a market of next position market the as City York Boston implemented we half We and the is to the was New the far. approximately should growth. to continue New year, as decline star momentum we're years. bag back The mixed sophisticated should a by over Frankly, we're several supply This for but encouraged next us. next to well the year. the Boston X% strategy RevPAR flat the substantially years expect for five in speaking a positive that York thus on was The revenue led market Hilton be over

redo Western hotel the convincing weaker calendar, However, had the rooms integration. a reasons. related A quarter issues Starwood Marriott transitory modest some the and challenging Boston for to few at program merger

sales the reorganize cluster they organization. As

development We market favorite the of is remains snowfall one impressive markets. resort quarter. average although demand markets expect and long-term, given massive collectively. RevPAR season. this Vail our by in bright this Resorts were occurring the the X.X% finally, generated spot the And Boston area. year our it in Resorts the Seaport which national excluding more Even increasing with still notable, increasing slightly XX.X% underperformed was hurt lower the

Let capital to asset me management turn initiatives expense on our control and investment.

Hotel is there the contracted team basis in entire margins Our EBITDA focused intently on drivers. cost quarter and are key controls. by first points few XXX

First; margin and tax from XXX non-repeating some growth points was money increases hurt amortization. property by basis key approximately

a the the the margins. we all in missed that group point in associated offline all space resulting hotel largest having for asset, meant portfolio Second; Marriott our on banquets at meeting profits XX impact basis Chicago

increases. team and programs and impacted is implementing food negatively Going forward basis labor for number insurance of creating energy margins tax we to combination around premium property the expect of efficiencies, be a a XX asset cost The from conservation. points by full year, approximately management

of successful guidance. midpoint asset assumes revised these year full implementation at slightly guidance negative our programs, Assuming the margins of management

completion it to number renovation of year point our Key season, increases renovation not margins, repositioning. drive its but resorts driving in room rooms the is recognized the year of The Lauderdale ahead in recent provided meeting from full and Lodge the QX on I that and the At At to Fort profit does guidance in impact its this it long-term to our focused Western $XXX enhance like projects Cabana Although There from projects. not exciting we the loss $X market associated original F&B upon hotels of space. the share million Havana and complement ski and ROI complete planned. performance. we This value Marriott Vail figure million Beach out value of company commence to guest DiamondRock Reef, came does will of portfolio Sonoma. approximately with insurance plans income invest West at $X Resort last are would creative maximizing quarter, from impact Frenchman's business million and interruption we expectations.

spaces We and rates joining in set. raise Hotel Francisco to our will the renovate hotel competitive help between average rate Viceroy Rex, collection. At the connection a gap level luxury these to the and the daily close San with luxury

We complete expect a renovation renovation the The comprehensive hotel. close for XXXX. of four property the during final will of months

Francisco. the take of space and expected XXXX JW Denver With guest in the quarter. advantage the Marriott, meeting fourth San rooms, At and in newly to place the we to branding strong renovated rooms expect public beginning in renovate hotel hotels a

the renovation portfolio Creek dedicated the our as of remain hotels. the existing majority submarket. new This conservation high in including XXXX. secure such our projects as end to at grow carrying position the opportunities initiatives the planned of to top well work as With There program. ROI number are wise, NAV hotel's luxury smaller in hotel will finding Cherry energy We

the to has Mark, call no debt EBITDA forma our the like on pro to approximately touch $XXX with company revolving leverage times, of to quarter million would million $XX turning sheet. outstanding ended back credit on Before cash The I only net facility. of over balance and and our X.X conservative

pursue meaningful the debt would Mark. are significant while under creation I interest over XX us opportunistically potential for turn structure In average value to conservative rate embedded just allowing with that, flexibility encumbered well also With potential debt. with schedule, us maturity provides This downturn, XX now protection addition, opportunities. to X% back have call we of a hotels weighted by of and capital [indiscernible] mortgage our

Mark Brugger

Thanks Jay.

on At by touch XXX and $X.X revised guidance to I raised your our our million. points up outlook. opening Before EBITDA adjusted basis midpoint we by year want guidance our the the for call RevPAR questions. did full

the this alone. our quarter onset in fundamentals. original lodging at of above grew transient the is expectations Business I the As raise call, in increased said and trending reflects X% confidence first

up resorts expected flat convention stronger for the in remainder is set own a calendars. remarks, in capital up both which group few But stringent than of its year solid focused remain the generally. for as acquisitions have first stay to To centric meet on it's pursuing well of our strong executing value to prepared quarter allocation to we that Our strategy, pick creating is continues wrap criteria. leisure lower had like the the as approximately group up and includes remains although pace portfolio and quarter segment expected for investing markets the DiamondRock as

We sheet have balance opportunistic capacity going and the a be to terrific forward.

Our entire that, With time it any committed Sarah? value is open you, to to create we're for shareholders. working now to our for up happy hard questions.

Operator

Jeff our [Operator Donnelly with question comes Fargo. Instructions] first from Wells

line is now open. Your

Jeff Donnelly

in think ahead dollars Question absolute one the posted Gwen them, online. some move against comping and negative renovations coming done. EBITDA the of Chicago, on, facing the I not Chicago and of best the I curious just with these margins about and and we you supply what hotel realize the just in you've is with through QX is properties as Marriott but Chicago, XXXX year weak for of from the one I'm expected and other how guess environment renovations, quarter. the maybe know is Chicago's benefit should kind season maybe the XXXX just

Mark Brugger

this is Jeff Mark. Sure,

profits that's key on money amortization brink to way in what's if number, going things you comping onset. there out, years $X $X has hotel the up margins version the stabilized look the back up from that think of there's is still There coming impacting the year-over-year over but We to story. non-repeat get that and pretty Gwen it's a over renovation. going about say we're on, XXXX million excited of with and good ramp couple from in there, I'll So backed million be next actually some

So be of one performers it strongest our QX. will in

as I the XXX% back your performer good I is think as will year. painful space - we Chicago be move will it's and through a you hotel good margins QX. think story a obviously group having very be a this through Knife loss Under it will throughout strong and meeting experience, that work net all

those should first QX continues the The international both Chicago of going on to We're crossover what's XX% in [ph]. leisure threshold a great, think I occupancy QX, substantially encourageous basically be which So of in time bleak the pretty the were Chicago. in was ever kind has and positive be in inbound updated trend. been actually decreased positive

driver for some of on I transient think there. going the that's

Chicago So right I more we're bit think little constructive others on than now.

Jeff Donnelly

And Does that? we you were you in pre-renovation? be the grow in put just XXXX XXXX, that continue think think was bring like clear, to it to and where EBITDA to maybe will should context. about back just to saying, How it

Mark Brugger

stabilized from haven't year, a so at to think of comparison, I an good It $X number year. Gwen. have have a QX, Chicago we February of done The this that easy number quick will million will January, comp last there's year's the for upside XXXX.

it's Now more city wise of internally are obviously so year, up balance down go have we but as group XXXX, for to constructive. we up into next the set very XXXX,

Jeff Donnelly

last superior curios, you one need deck is that up, guys that have there things gap? was your valuation to reasons close metrics, your to in hold that DiamondRocks' is and about I the saw I presentation specific portfolio particular. relative kind that question, choose change slide of - put made there of one of you that some just Just peers, I something given you you in are on you to there your back guess comparison guys or in kind think

Mark Brugger

inquiries put to deck, be investors. we responsive together and/or we we inbound and So from that the questions investor try receive analyst to

to trying out decisions. these of we to clearly we're points two their as of to people facts make responding got lay from or kind for could question as investors, repeat so particularly couple one we a of the So we're own

Jeff Donnelly

guys. Thanks great. Okay,

Operator

you. Thank

from with [indiscernible] Rose Citi. Our next question comes

open. Your now line is

Unidentified Analyst

kind with that wanted it across? issues to said about that Is your in specific the ask, Was Marriott to Starwood some you just remarks so integration. you're do I something Boston on group seeing something in bookings around kind little just that maybe was Boston the detail integration provide now in sales to terms of just thought bookings? group because could of us the and I more of you a behind or

Jay Johnson

transitory only market problem integration. we're that Boston's where seeing with So

So of jobs the XXXX and of any cluster for the new force redone jobs, is, they repost XXXX, which announce there sales issue they up made interview basically in organization in early their November they've sales the for most that's a event. obviously April very out X, so up the employment distracting January structure interviews wasn't really end and the conducted [ph] They go and March finalized till till force sales and people seats new to December, letters XXXX.

So of we that in of did and experienced during major not use booking little market. it will our experience in to a period, Chicago share that another market kind lost X, have issue loss so place focus April marching hotel be everyone's towards. of on We that bit transitory now and as

Unidentified Analyst

sticking Marriott group parties. has moment, then announced just intermediaries? book bookings maybe Okay your What a come you to now group groups with reducing for and commissions through of as percent through third

Tom Healy

to about received comes of business the We This the intermediaries. Tom. is that XX%

evaluate measure before modern as trying when book we X and priority forward. their how assume we just and we that think our was I be group and big fine. saw trying that, some believe bookings get first of spike of going We a the to change because it's we believe before, people [ph] we're continue obviously the April that quarter booking see, in because to top rooms and place our to move in that are to that, in business

Unidentified Analyst

those a outside being about by mean alternatives move, concerned able as folks you Marriott system? positive I you Marriott, as are a team spaces this do to the see of So find

Mark Brugger

Hilton think is following I suite. And going

the forward that stuff we at the of to double time. make I the size system Obviously cognizant premier the still box United hotels. size the big and States. make we to the pull they're of than that So the group have to thing up But hotels. to means some of them have in we're quality encouraged shift most come to into it's the I right it's of period to XX% sure the thing the clients long-term. think they there, increase be a The system very really margins choice, that short that look that that when over the of the efforts QX business Right, lot of and a we for you book in need to more some hotels going do those their sure locations, Marriott of in share groups doesn't a mean boxes really don't big profit these want these to to

Unidentified Analyst

Great.

Okay. Thank you.

Operator

you. Thank

Our next question comes from Baird. Michael Bellisario with

Your now line is open.

Michael Bellisario

go group Just or question, Marriott? the of clarify, last just our intermediary all want to Tom just to is back business that XX% of

Tom Healy

independent box I varies small big versus on and think based it brand. box and

percentages - Marriott roughly of ones that going it's their from, to third bookers and So they then the big not but the will party two-thirds the are - basically the staying that smaller the come The XX from represents ones lot one-third of on through third short-term. same side, the and party, business are seven. it's and XX% of - were they comes the business group Helmsbriscoe

changes. if move it monitoring we're when forward this, on and So there we'll any certainly we report are

Michael Bellisario

then do the your success for a value basis. that. pencil property here think make thanks the about buyout. Yes, union maybe investing go maybe more City this sharpen Process Lexington, dollars on forward and your the the effecting at York of does how on in you Mark thought the New change

Mark Brugger

question, Great good catch.

just back benefit. up me let for everyone's So

$X.X with operator the $X million story. productivity in a agreement working expect in we to early to we've and the in related employees So to We But we worked million severance local We retirement kind booked to cost will year. of profits reached Lexington be the overall a last Lexington. that, our already overall, up about increase this offer of out $X the in hotel to this at way part union win-win is think in DiamondRock - there. XXXX million over

all move these for On next move profits in several We're years so still productivity. nothing. contract York so take of rent good the think has of hotels side of we XXXX arrangement space first New of one we non-revenue employees, for this We year, and good basement to the in with particular economics a over almost it's to it that the set Lexington, another it's and going drive will on build earning New a So a back as rollout from think but kind $XXX,XXX recently kind about several in happy ability there. makes lease out play up open to months forgot of Lexington, report definitely the the nugget City. kind a up constructive a more space to and and get to labor return generate we move be up us the news year of on I this and of up Crunch success Fitness good it forward, at to we'll currently York to the profits early mention there it's that's the

will help that as XXXX well. So

Michael Bellisario

front. big also and That's thinking about about longer markets guys gears kind properties think been resort helpful. through then to related smaller drive the just to as you And you in and cyclicality underwriting of these well. that higher some term switching how of the risks then Maybe picture, how you've are assets acquiring

Mark Brugger

big stuff portfolio some outperformed investor into of they Starwood we with a So data, put skew historically golfing so resorts you're the the I'll little resorts downturn. big I'll the but our because say urban of the of of of - going actually be call the and some what of that last the our the maker they kind then data other careful historically, our some to with day, outperform data actually some information that experience

resilient these and we constraints that So kind our be to - actually we the and they're resort was actually the go proven more vulnerable that supply probably as giving less markets of forecast resorts. in forward lease the supply in

We in experienced or assets in RevPAR Sedona resorts to have remarks also think the resorts United is going to that particular the to that going kind five kind increases the and the in about of strong that prepared to years. generally over next experience mentioned States predictions outperform Sonoma is these continue demand outperform of XX

Michael Bellisario

you. Thank helpful. That's

Operator

you. Thank

Our from next Hightower Rich question ISI. with Evercore comes

now line Your open. is

Mark Brugger

We remain cautiously optimistic.

Rich Hightower

do to its of so I'm about semantics ask, I to Actually want test here.

front. of maybe the to that think trend at for the be so pockets. want from portfolio appeared lot trend been, far from It earnings first last quarter picture that numbers sense quarter up of companies seeing of yes some really the in momentum parts confirmatory finally DiamondRock's just on the other here hoping within the statements I maybe perspective obscure least and in place quarter your a because relative least it's really underlying in so underlying to is want So bit this your that we're is, we what get at and I in to pair a were release moving and what to I

curios just detail, you So little there if mind. more for don't

Mark Brugger

group in we there really supply know available. all very quarter, little we push That's revenue sign. the those up good markets. rate little bit strategies, a give availability quarter a where Hilton was was budget sign are year. that's business a now that Boston kind beat that piece, several signs us where and good certainly things into the then hotels we've XX so see a and XX building increased were on about mean development recent I resort in and transient that's over that's good the very more space so all the most to But helped Sure, see continue in the and talked the of our no we we're so going conviction beat and side, encouraging should we it's budget bit the number optimism, stuck, of We some X% some you had we about memory, some good, was had

balance remain on We constructive how of they're perform continue the year. to the for to very going

I'd constructive than the the So call. earnings last think on we talked were we're time say more we modestly I overall

Rich Hightower

here's said I get And probably we Frenchman's. update question that next detailed more you know my that's Mark. helpful now. on Okay, quarter a the then around from

Just this asset rebuild, a of would does sell year, logical buyer pro more forma if be where give proceeds, us a try and we who or the about then that to you cost calculation? the value sometime to if to the the in today into that don't factor and the how thinking you're how you little insurance and mind process, were asset detail, are the

Mark Brugger

lot we on on sensitive what comment little now with we're the saying there with in start insurers, so, response discussions A the limited can we're so call. by the right I'll

engineers, we've of cost stabilized plan, insurers, that in to we've with the while submitted ADA a time, to other a So together. that took coming we've the the It's spent very a quarter a a to moving lot architects, of lot it first get lot codes pieces. the rebuild all out the complicated with and so We've and the we've submitted, designers, millions spent with design site. and several and

in their through set several submitted. are and they're sit experts cost of the So path claim, days makes meetings - with out site they're and the the and for kind of their that's representatives. XX syndicate coming the We've They at expertise, talk taking estimates next we going are, and the that have time forward currently probably will where the own with where about they with they own they spending been are resources both of down sense insurance us. that had with that, face-to-face

what scenario, we're lot we rebuild brand from turns the USVI of the support whatever concept, message as considerable well has that seeing it would the spent be. a rebuilt. which a out on obviously financial On government both as brands time anticipate to We be, and get for it we've

was avenue XX its have I doing location a firm the that of segue Islands. asset from profitable ever to their upside, come it probably for they They're expertise. market like okay PE They of like we firms, our Right resources PE them, this. Right. we rebuild one, something say situation a bring interest this before, this up. take location that with spending of that It could Virgin a of active little of bit right we a and a for A a So story than getting have one have of, but would name doing years and does. pretty advantage could into because it's good questions, an in of the that in before. there's the has it's are your what an too is this plus situation done better advantage US one it There time do take I'd kind other ramped lot in disruption of might they hotel if will you we're and think is

So think this. that of would in there like market something an people will I active be be interested

Rich Hightower

perfect. color. great Okay, Thanks. That's

Operator

Thank you.

Our next question comes from Austin Wurschmidt with KeyBanc Capital Markets.

Your now open. line is

Austin Wurschmidt

XXX Just forecasting year? guidance versus bit, driven the now want by to little the what a in back of much half first for RevPAR you're curios the results on basis guidance was increase how points quarter touch of

Mark Brugger

balance Yes really mean really and I quarter Mark. a first year. the ahead at in basis is of rest points of coming this XX combination and It's of came the the so both. of it's the budgets probably in our

Austin Wurschmidt

And but I you as outperforming due look I are said XX as particular XX what was XX forward, markets that, your to points. you that what through broad expectations driving look out, you about any basis markets mean fairly guess based,

Mark Brugger

little the and originally resorts strengthening probably before, the pace changed. grew renovation second for quarter York that's some had New then better which be hasn't Yes than anticipated very like which Chicago a we look is disruption going we strong. of it's they're And budgeted and offset looks to

bit if assumed more bit the first you about disruption portion through will, little downside risk more confident than the guidance. feel the of getting confident EBITDA little which the renovation is quarter, we So raising

Austin Wurschmidt

sounded the in this upside is thought which so point So York. what assumed I year still like there's New you're City on on New does York your seeing were additional what that in imply assuming flattish based you full guidance, it potentially RevPAR from original for growth some was

Mark Brugger

through so quarter least Yes, flat about for look York, forecast I first significant see. QX quarter when in the the New Obviously we'll is at they're mathematically QX. but

trying quarter York predict and meatiest that's so a task difficult a of short-term obviously New fourth goes the that As you lot in always for know, by is market us. transient to quarter trends and

just, one on yesterday of going our encouraging some concentration basically zero. the supply numbers were the So of and side actually portfolio supply east sound through we the is

that looks it from really so side So too, encouraging. that's positive

Austin Wurschmidt

you'd you One sticking is, that the maybe then expect I'm the backfill And curious seeing market and lost non-repeat strength also what curious lag. mentioned timeframe most some are I'm you business. with York. that business in what at the to you the New then, segments

Mark Brugger

Tom, you'll one. take that

Tom Healy

Sure, this is Tom.

business the far We the and news have we're three in in final backfill the hope we in next expect next contract weeks. the to negotiations here few to and contract to months along

the but backfill, a from that will So transient be standpoint.

XX trends the the and holiday. the quarter month. of New was first demand days York Thanks and City on weekenders leisure obviously for the last stronger the the certainly Easter to

transient, very of is seen QX look was very, and when QX BT the up up portfolio. was very then been X%, last with that XX% at regards positive was business believe year results to the of year X.X%. first strong. this X%, we you So QX We've quarter up your

and active positive City example because lift So were February business come York New then very up about new passionate value's very for in to travel XXX,XXX transient York the international very from X.X%, passengers to New continues domestic in still active, and in we're about was trends XXX,XXX travel seeing international. here. International better gotten were

positive which City. very So York international is we're travel, for New seeing more active

Austin Wurschmidt

one that's for me. last just then Great, helpful and

have end, acquisitions still curious additional dwindled balance did appetite how is roughly the $XX for the million to balances should you we think on have down, but quarter find of sheet Your extent attractive opportunities. cash what that kind the you funding at some about and

Mark Brugger

acquisitions but Sure, so let on up me bit. little just back

across cash So on capital going and buy. our we're been balance disciplined very what we're sensitive and we've to

would a more are we're like find which going accretive, more likely small funded say on I'd deal pipeline cash. if we're small know, that's mid-size makes on market maybe big definitely not bulk those. do as But wildly size, couple. it resorts a to the do deals we pursue to of are Sedona in you could and we As that to so million, say those focused smaller deals. I'd as could from $XX we're off those assets, - focus now, be

individual For our line cash, $XXX the then term obviously loans available million clearly is we and of first think the the but needed, if would use. have obviously I on do loans be first line cash of property still credit more we or source could

Austin Wurschmidt

questions. taking for Thanks Great. the

Operator

Thank you.

Barclays. from with Our Anthony question Powell next comes

now Your open. is line

Anthony Powell

question. last Just the on follow-up

and go the it in sense and capital some now. deployed make it deals, doesn't you market sub hotels Given right to more sell back

Mark Brugger

a market It's a question. It's right seller's a of great now. bit little

So we're opportunities. where there's evaluating

we and do look stronger may on the that deals dispositions. to we create shareholders, finding for think conviction value more good I have

but earlier internal to As you acquisitions. were of meet shareholders more tapping with discussions one the we seems our know dilutive given that have add board criteria, future set $XXX that we about that and is up, fund to it we source acquisitions sitting find for value million would our as on cash think

Anthony Powell

thanks. and it Got

the group kind at do at mix you boxes, segments big long-term service. types have you portfolio, any increase you those of a those of assets, Looking of a hotels, of to maybe want or exit some look you mix boutiques, resorts, of select of kind When do see having? broad lot what

Mark Brugger

we of I question. like one because for make over on happy to to all very our we'd that really internally. resorts diversified would bullish The our a to if we scenario we're period could We're of portfolio, we shareholders as segment area want Great sure mid-sized the risk time. heard, we just XX% mean I have that over you be portfolio like the experiential extended increase that now, things years that We particularly reduces we resorts right about we XX% increase. think strive think

Anthony Powell

select the cities? of right, kind kind be resorts. of you upper go All upscale it so will service, in be XX% standard What of would What kind would reduce? would down? It

Mark Brugger

we we're it's a boxes, just it's until lot asset. lot size, a certain of to think big more reluctant in because of got I concentration a one just

big rather small put another [ph] to assets would we many question eggs more in So center than basket, hotel. diversify mid-size with too

Anthony Powell

you. Thank Great.

Operator

you. Thank

Sachs. Our Goldman next from comes Stephen Grambling from question

Your line is now open.

Unidentified Analyst

look two growth some maybe the targeted of was just challenges times you and the if at around new more wondering discuss multiple. properties you if the I XX.X could and development,

Mark Brugger

year we $XXX,XXX and metric above I'll which bone. really there's of start of recently let here last lot that in. underwriting, me let about that meat every know jump and then so a kind you hit Sedona on bought So one's still as Tom

the of a fantastic have very of that start year the and super market We and the comp end continue manager two actually some our changes with and final Andrew action we're Landing, that there Tom for add so it's an we we're of plan focuses QX there focused, a quarter new beginning practices. how four best was going and and little lot There's acquisitions Phoenix of we're which value it. is operational let just over QX to kind implementing making to with on for a on QX Tom, it QX, but difficult in that bit the location looks one's calendar the [ph] margins good going going and excited this hotel, to and first same because waiting and healthy I'll plus switching of that story opportunities place I'll really in you. outperform talk very turn is A and jump in I'll The So forward hotel. with a the to drive Palomar about the the got about

Tom Healy

revenues think food opportunities align and the the in opportunities about It's get We're and with there our fitness, initiatives we're portfolio Yes excited. are evaluating location and management week XX goals. as to We're we actually in our still as looking GM, parking into Palomar, new and on brought We path. labor he's to plans a beverage there we we're we energy But team well. downtown. all a the in put so are throughout best hotel, the and add get at the all program cost started, that the fees we're we'll action together initiatives, days been really food facility costs, critical look bring there. be there using other

in in QX through place absolutely hit the year Mark our four, April. get in we kind mentioned impacted obviously as that - figure through of RevPAR were I the So plan comps our final March the of beginning and and the place. But of end after beginning of QX comps the get and different in and team we tough the half of first

says lake are that the QX. back we on this and the Mark my It's particularly have great XXXX, backdoor walk just at results gem. a of He small the out room be and other and I coined I where a probably go ski you stronger this half is Landing, phrase one fact door much spectacular. day. expect is front We portfolio. can in the think And the comfortable in have the These a to rooms else rooms our expand a resort. can exciting. and It's out and say, favorite

job obviously in - very we [ph] here. two Sedona place us. doing and have We [ph] used two roles good obviously in is roles We've they're for

in transition background fee value GM We're place, We think is program, solid. who very implementing we and strong marketing add our very increases. is sales resort is have and new the

add keys We shortly pits and have on facilities into working fire space. can additional programming five the that we're and experiential around we the

center fitness the an move and front to opportunity add suite. ocean an have also We

this look the a wonderful a is are a we a deal, underwriting very there We're and Sedona. we of and opportunities success unique similar at and expect at has opportunities have asset as well overall just little special attributes. tricks that location. beverage think said, here. food we and I Sedona in $XXX,XXX evaluating that had these you is So lot We're Landing of a look lot this When like place. while We

excited. really So

Unidentified Analyst

Thank me. you. Great, from that's it

Operator

you. Thank

comes question with next Our Advisors. Lukas Green from Street Hartwich

Your line open. is now

Lukas Hartwich

increase in the the all Can about that a you Lex? guidance, is talk to little related bit $XX severance million more

Mark Brugger

XX?

Lukas Hartwich

XX.

Mark Brugger

program predict ultimate take to there's return the the decent a on related we'll better difficult more basically to XX Yes because know what Frankly next is variety that hotel they the number it, to the it a all number wide is. is is. offer The days Lex. employees. of it the in But number. But the we

Lukas Hartwich

it me. that's from Thanks. Great,

Operator

you. Thank

comes from Humphrey. with Robinson Our next question ‎SunTrust Gregory Miller

Your now is open. line

Gregory Miller

acquisition, Palomar like and seems deal hotel the about and market are economics. attributes a positive with along the lot it Pitching there of

could brand Kimpton challenges integration? about made confident you you call some would recent IHG's provide with in what acquiring However another about your thoughts what light

Mark Brugger

a Yes I productive have say very we would IHG. relationship with

the pretty numbers they're a impressive doing we've limit been at we've exposure It's owned one owned look our Shorebreak here you we've what what have and while. there. and able Kimpton pretty that's If for to but accomplish - that's we

Kimpton Shorebreak a a so for profits Made they kind made numbers So of the transition with feel ability us work in QX. the feel good way we've which to not about of us see we're integrate you right feel small the lot productive we very as get that, experience Shorebreak good our good on we'll owned native and about and hiccups, be at experienced of could to There's able had able any drive be the we issues transition at couple it and that but profits, our going partnership. to based with a to drive hotel. be to with

a is so right feel relationship termination is work we valve. like forward. to we with we our years there and going at little there safety bit them But about our two our Phoenix, of a like good Now Kimpton, ability in

Gregory Miller

post property starting if little that Worth. growth onto and Great questions, bit see a quarter The Fort the RevPAR moving Worthington renovation. last Renaissance I'm of moderating one of more in had and sure more stabilization you're to

Mark Brugger

good. pretty is X.X%

Gregory Miller

fine. It's

digits, double Relative it. course. Of maybe

Mark Brugger

Tom this continually is over in had that renovation. value Fort coming the renovation for a we one drive to hold to in as comps while enhance continues helping in so year anticipate excited of that do we as portfolio share about going It opportunities market. drive the this will assets to things help disruptions gain Sundance So on were space post our us. meeting market market lot entire there's hotel probably sits is can about well, we our meeting it's we'll that We're as move It the Square, years. that of should XXXX share which terrific Worth

Tom, add So you anything? want to

Tom Healy

of bones are from for things [indiscernible] and my and my entire [indiscernible] space. hotel it certainly meeting it's added space, a the value had I tenure the opportunity. remembers the is of - there the past The of strategic. This where this everyone intercom Worthington fantastic lot some has group

we're said the renovating the done. year, are rooms meeting all this Mark space As

obviously room have then of there's also between the helps inquiries sense a sense to out restaurant We helps obviously help correlation and your business, your on opportunities to some experience, direct that of experience to offering meeting revenues group closing more arrival, close percentage. the more - arrival, and improve group drive

very that's lot hotel the of and and and there's spend excited market. and the but the some it nuggets this expand meeting labor to in in It's a the and very it so market group portfolio. some a space you not one that this - is we're of get So the all, opportunities unique when have evaluating the business flows. I'm love about, and space hotels great incremental market

Gregory Miller

That's Thanks me. very much for the all color. from

Operator

Thank you.

from Our last Bank Sean comes with Kelly of question America.

Your now line is open.

please mute, un-mute If your your on phone. phone is

Sean Kelly

So to real prepared want to the back just briefly. remarks I go

I heard that sort through maybe Did think be to I hear you wrong, I that so and far portfolio walking flat? May of caught correct? the was I as spread statistics. up but expected but it think you're X% but June performance I Was April

Jay Johnson

correct. That's

Sean Kelly

I'm the something the Could a give walk bit? kind color or there you that can little - cadence booking [indiscernible] or us is you calendar timing around me sure through of which and you're is activity sort any of seeing.

Jay Johnson

terms of and May In June?

Sean Kelly

exactly. Yes,

Jay Johnson

at the are June renovations we're by and market. and in the Vail May the Boston weakness well impacted Yes, really seeing then

Sean Kelly

is And Boston city-wide? specifically, remind that

Jay Johnson

issues it's that calendar as merger Western we're the Marriott transitory and Yes a it's as the Starwood well particular. in Boston seeing group city-wide specific really

Sean Kelly

expiring or timeline or you off sort one-off, kind you come a reach you Lex. like have for got a own? union there in reached you a - allows to creative terms touch like catalyst then able that. the of I was that there, sort guys for on you were to contract of to wanted that of with at Was Thank was the going of solution back on Okay, you agreement either And thing something the that did it. only your

Mark Brugger

win-win well there a is our This helpful operator the would for year. with been that conversation working open the had [indiscernible] this us solution. partner and agreements has with over in union in up. say So we've very I nothing is our particular

this and have would here, our partner effectuated. us our instrumental but was strategy, I get helping manager I to it's on think So credit design partly really our also

we so of good people just sides. or wouldn't of if model and something for it's be think model other no an behind but we there this conclusion And everyone, to a a all open anything than worked kind other surprised try into for is good because template, contract negotiation it's coming follow

Sean Kelly

the Appreciated great color from Okay, thanks all guys. and for that's me.

Operator

Mark question-and-answer turn session. the to call I concludes further back This like today's now would remarks. for to Brugger any

Mark Brugger

Thank you Sarah.

interest to Just look and conclude you and forward participating in for in thank updating DiamondRock we very much next today's quarter. by call you saying your

Operator

for thank This gentlemen, conference. and today's you today's does Ladies in participating conclude program.

have You day. Everyone may all disconnect. great a

DiamondRock Hospitality (DRH) 4 May 182018 Q1 Earnings call transcript