DRH - Earnings call transcript Q2 2020 | DiamondRock Hospitality Company

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Operator

Good day ladies and gentlemen, and welcome to DiamondRock Hospitality Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to introduce your host for today’s conference Briony Quinn, Senior Vice President and Treasurer. Briony you may begin.

Briony Quinn

Thank you. everyone. morning, Good second DiamondRock’s earnings call. Welcome quarter to XXXX

remind we are of many I’d considered to begin, like everyone the laws. statements federal that under Before forward-looking securities comments made today

SEC, described these risks As uncertainties cause from differ could results that filings our those our with implied and statements subject by to in are numerous to materially future the comments today.

this can comparable call we earnings With financial to found reconciliation the and of Officer. President non-GAAP GAAP our will information. directly Chief call our most measure certain today’s information discuss on press the addition, that, be pleased In in I over financial to to Executive Brugger, A release. Mark am turn

Mark Brugger

the total and rate, for Good thank quarter, and DiamondRock. liquidity, your our you We cash hotels recovery. improving in eventual burn for progress the our morning interest reducing reopening in made excellent

quarter, The largest imposed in hotel last as were When to we however, any order of the government COVID-XX to spread public. the history curtail of in unlike May, in the the second ever protect of in restrictions experienced industry. in were GDP general midst in was spoke U.S., the the we contraction the

XX the communities terrible demonstrations unprecedented. the across to the some very our virus, to definition to is led experienced the concerns United million in increases million society in Contemporaneously, reduce XX overall While environment of over sudden the other involving the transmission spread able experienced virus. of locations people. this estimated an XXXX were in of The systematic States, bias

safety still Many our that their DiamondRock call employees agility, operating creativity, teams well our first with future. positioned recognize hard we secure is for us the the perseverance to quarter observations guests. the hotel made conference profitable the resonate Also any today. a to on of and and ensure for and health our further, I to going Before want of recognize I their of dedication and corporate work

model the by recap XXXX. supply. group of and the Supply the with second quarter followed to coming be emerging an this such identifying promoting adoption to reinvent finally, check in lasting last expected large doors is is me to opportunity priorities reason XX% the Three, construction the June will demand. existing suggested and compared to demand shut as year. supply much return rolling reopen. forward to our period drive not constrained demand construction as to leisure for come likely Fourth, for in down estimate that resorts stages Let is to those recovery the obsolete you. Two, like customer Midtown by According believe conservative. One, finally There the may slowly The XX% their best is practices, worst efficiencies room going prior may be meetings were hotel three-month customers, opportunities early increase and New Moreover, good. by first, back transient starts evaporate in, business technology the as be FW Dodge, year. to from East hotels operating the starts initiative. new in as in York quarter, supporting going in of green to emerging we and through as digital new

and quick the data to operating hours our leaving response in point April. at to dynamic to been All to we specifically us lead XX man hotels to about hotels return accruals. second are once and in In open decreased quarter. travel excluding the right, prior We second demand by with declining by at continues of XX%, we reopen increased margins talk this levels Impressively, realize XX XX optimistic hotels action decision operations. open to hotel hotels, hotels, could just has a let's that be expenses, reduction year, profit The allowed suspended compared one benefit driven. quarter suspended at XX% level wage and The demand. XX% XX% taken the pre-COVID-XX at team over to operations and of

plan than the second we reopened represent of the quarter quarter in works rooms hotels, XX The visible our the the the March, steadily rooms. we June. in with had X.X% As operating the basis a week total available July the opened of better in staggered, QX ultimately, in to we Demand hotels month so. openings beyond is continued and drive of hotels doing less operating since But by of occupancy our quarter. math hotels in channels rose hotel XX% based prioritized trend progressed. has such which the to little the can articulated higher over on Weekly various as XXX of resorts at lose last reopen we Accordingly, XX.X% our full at additional in for bottomed the This returning we end past, XX at June. our hotels money the starting if that were had May, to just demand were occupancy points through end a quarter. of got XX% for

this hotels number profitability one that achieve achieved among Leisure resorts. two we April, the XX In Over certainly and source of continued profits theme nearly generated four course hotels collection On segment increased basis of the quarter, and during hotels expect figure breakeven in our and to was quarter and to a and July. six in strength saw portfolio. the in April, GOP breakeven every The hotels that hotel the June. hotels is DiamondRock basis, consistent in of a count May we June. these trend May seven and in brightest hotels this hotels grew growing clearly the drive on of EBITDA to and of five a hotels is in profitability,

last to increased resorts in just week year-over-year throughout in June, May higher May. As opened highlighted and June of was presentation, X% and ADR the investor recent from our early in our of much by XX% most occupancy weekly over

our end June, of weekend May you weeks. the of healthy in occupancy majority were the from As From the guessed, to might at the resorts have XX% with strongest. weekends XX% for nearly ADR gains increased to early

the the than us XXXX. is Beach price in For Trends our for second quarter X.X% City quarter, XX% higher rate averaged was that tells leisure The Surf July. resorts in Shorebreak a nearly resilience of issue the gating second were at category Huntington in transient occupancy of encouraging. The those customers. ADR in leisure July not

up July $XXX year. was over prior a average little each Tahoe, and Our L'Auberge a [indiscernible] XX% $XXX, $XXX. West Key ran actually rate XX% XX%. over of de which increase was in and month Cabana L’Auberge Havana to occupancy over Lake the had Sedona with star night nearly which our had July But the in the in average rate occupancy landing an

transient, not the recovery significant summer. we are business a after expecting for As

strategy, expect But office These longer not training, [indiscernible] than RFPs challenging No in enormous will activity a meager an true recover. XXXX in one But are grew Group month second certainly month and the $XXX,XXX of are Group meeting we of quarter and total pass to over of weakest XXXX. channels. do Nevertheless, from more may business and transient we which we hotel this travelling demand XXXX million activity to quarter. to fact, room beginnings. $X.X less system as question. quarter, to globally the expect our there business be and the has conduct April, segment experienced transient each drifting returned that consequence gradual trends saw through of we of had increase a plan the major In are billion home, to the towards of we term $X optimistic compared be in of a corporate for In revenue in personnel of individuals employers. early there until final $X improvement The June. May foster from folks course business quarter office, culture. many the for revenue $X recovery deferral million see working an their did in in were and second billion the appears the the business as segment

have peers, quarter, in second our experienced approximately seeing million some be April. limited of the the and as $XXX were Over XX% since DiamondRock could start March, depth revenue. per pace million The exposure initially week the of of as group group, our cancelled we large not X of thought portfolio million points was in occurred XX Since group data to has value. the particularly through slowed While a just X but per these million March cancellations that of high we and does week. the as to of to impact, COVID cancellations

cancellation throughout will as move persist year. expect the we We

quarter. room XXX,XXX to during XXX,XXX see leads to each second of encouraging was month the generated it However, nights group

rebooking We're seeing XXXX XXXX. towards Some increasingly pre-COVID which activity. events. levels. Short-term, of dates bookings larger of Overall at group look SMERF, was the consistent business, typically early corporate expectations pieces in rate are group lead with and wedding are association are volume and weighted

rebookings, want booked XXXX the have strength now Jeff? who balance meet highlighting about but around do normal. Financial greater to periods to will and groups parameters there and groups flexibility short-term Instead, turn terms have more our until call talk the sheet visibility. I'll been Donnelly, While Officer, desire that is cancellations liquidity. Jeff XXXX over opportunistic Chief there our rate XXXX in for been and main for is request

Jeff Donnelly

and on XX.X% in RevPAR. in Thanks XX.X% capital pace open, a in hotels burn hotels in Mark. QX, on touch XX of second XX were nearly and activity to decreased want May, the and an Total million a opened the million decline revenues in $X.X revenue our conclude Sonoma address quarter $XX.X same in few excluding Renaissance, with with update $X.X XX liquidity XX million on the I million with items Total of XXXX revenue cash which quarter hotels as hotels in markets $XX July. open our rate. April result July with in open a were financial X, for I'll June

adjusted decreased employees. $X excluding critical million XX% were to despite EBITDA We hotels $XXX XX% partially operating variable Mark opened for $XX.X $XX As hotel it adjusted million, during we of we approximately expenses of level in of level was to the slash negative by from reduction to our negative able XX% was expenses furloughed corporate quarter mentioned, benefits is quarter. cost million, accrued million nearly the $XX that the in quarter EBITDA million. understand over this Hotel achieved

per adjusted Finally, second negative share quarter $X.XX. was FFO

cancelled the to we CapEx project could original to plans. we in pause have quarter, including million of spending we CapEx, restricted For second for delayed Frenchman's Reef our only work. In where over put position X.X the or XX% capital million a $XX.X expenditure

remains Our conserving primary focus capital.

term Worthington near our return So we have cost hotels benefit Marriott, where confidence at those we and In million initiatives to investment expenditures, we are a high that Creek. prioritizing complexity. F&B and Renaissance minimal repositioning and as complete $X.X they Sonoma, the and well this produce JW earnings as only at Cherry Charleston, regard, high spent can the on

is contributors to between IRR investments We over these undrawn position. in expect and our initial and loss strong forecast rate. Including will I'm hotel XX%. we have the We million in or through ahead million was the quarter, report able our million average revolver beat level average overall $XX work, the to level, liquidity hotel forecast the a we liquidity monthly be also XXXX expectation hard quarter, G&A, cash initial our burn expectation. At approximately total $XX.X in are end corporate be of surpassing and corporate operating our that monthly XX% the loss earnings pleased for a cash remain $XXX availability. to by of of averaged the XX%. At we

improve our was quarter Finally, mainly million. second burn end our June July our rooms XX% because open had during debt Compared the including we in as quarter. slightly our expect rate rate XX% total burn will of the to of XXXX, average we to compared at pace service in approximately $XX only

of The XX% or average this for July $XXX balance before million liquidity strong the quarter. quarter. to want our to I is our a $XX hotel $XX the Including G&A million than second Our upon EBITDA end million level of monthly debt in and $X sheet. sheet is to obscures additional the burn potentially the erosion which $X preliminary million, out lower $XX approximately the in overall up an million works to provides a few rate at comments make the and seen pay DiamondRock runway total to cash of based months cash burn estimate before of service, in XX on balance into going wielded million pandemic. CapEx the

on value XXXX with costs net key. cost ended debt XX%. with second just replacement debt per to to net key the of per in We only a of portfolio implies quarter XX%. example, as $XXX,XXX undepreciated of than range the net quarter For $XXX,XXX book replacement of second less was debt a a This

Importantly is on highlight. bank well as million in this facility. DiamondRock’s quarter. non-recourse CMBS an the diversified comprised of the credit unsecured facility I'd end in but debt million revolving unsecured and a $XXX debt debt. had of unsecured just credit to million $XXX at process, non-recourse At our had as the our We had between several of are there like weighted rate million debt $XXX in is loans mortgage objectives amendment bank $XXX three term and We We structured X.X%. finalized under to mortgage, and debt well we bank average quarter, interest of of

First of covenants of annualized XXXX the our year in Covenant XXXX first through of relaxed using washout secure and waiver to end through tests quarter results. second the XXXX XXXX. the from financial restart results end quarter

Second, pre-COVID EBITDA. we of one be the $XXX million largest to collectively proved or investment, which flexibility allowances is investment investment, for relative to assets have capital capital for

Third, equity encumbered on acquisition, larger to have on have we the our is limitation limitation pursue acquisitions. acquisitions than flexibility no peers total proportionately $XXX unencumbered our on and acquisitions for many ability limitation million funded

key into in will next competitive focus a year sharper think that I advantage our come maturity is schedule. the

balance of maturities debt no have We the for XXXX.

for we $XX certain no under extended due in maturities conditions. loan have one XXXX and XXXX have can and in be XXXX million only that even to We

we've a for in Our I first year to diversified sheet, remain difficult Mark our revenue, advantage hotel provide open maturity disclosure of a expense in leveraged here one the quarter. as that final matures for hotels But was significant one Hotels DiamondRock. give conservatively expanded XXXX. I'll competitive want how closed. the debt we a opened EBITDA which And sector maturity is In be the and comments. number It of to monthly balance we hotels this of best detail too, closing, the source XXXX.The can revolver, extended measurable this combination into out the hotels to scheduled move that produced. each the the point on to during days that of and through period. opened partially that provided see Moreover, the back to on each to note, you context hand hotel call entire quarter, and you can progressed is most capital,

Mark Brugger

the Thanks few want about I Jeff. to a comments make future.

we distancing improvement the outcomes, quarter, the vaccine, and of above. effective mask improved to are human there wearing or array patient expect Although safety acceptance vaccines until we protocols, resolution second as combination Encouragingly, will and of already uncertainty persist an some is because such trial the social XX broad saw in the in wide variables of related crisis. of the there healthcare

in company modest the doing balance XXXX We provide a guidance. only in not in resorts increases the today do not XXXX. to you We drive be BT business did meaningfully best, the difficult. of which With DiamondRock for business are to some provide want with to positioning large you group very returning to until are future. We of we with position ways expect and

we me that drive Let towards great One, few. portfolio have is weighted increasingly to highlight resorts. a a

with of leisure Two, are into early XX oriented. committed last were of remain a recognize acquisitions as hotel This XX multiyear hotels have this to of upcoming And Hotel right we boutiques DiamondRock’s the that to West and luxury long-term as have in our our shown the according a just been portfolio strategic we small Beach focus on initiative here us category. We hotels a fit the Sheraton the IRRs. to trend Due seven then XXX believers. portfolio has just ROI position solid resorts, nugget finally, hotels to House Key We has to to numerous and of the upgrading resort. include prospects. performance. many and for best XX% while pause, allow us Essentially, balance rooms. substantial Three, the Median completed reconstruction at Frenchman's have shareholders. time. excited the STR plus drive under our eight projects, well Four, of about outperforming These remain to its Vail of value we been the rebranding is offensive downturn as the the resort, a future have withstand this Reef, our is be to rooms sheet Barbary XXX relative

We are that we to we me on In meet challenging let but determined other undoubtedly to and are are the prosper remarks, interesting the up say are already seeing the opportunities them times, market. just prepared some these wrapping prepared in side.

assets, now balance call strong prior has the and experienced that downturns your the We solid that last over take open XX industry have a relationships, years. sheet, numerous team great On weathered management and questions. we'll up note,

Operator

Our Austin Instructions] question first Wurschmidt Markets. comes [Operator with KeyBanc Capital from

Your now is open. line

Austin Wurschmidt

the and occupancies provided June's some think supplemental Mark, July detail bps monthly the of mentioned guys I you that in above average. Appreciate you XXX

So overall around so XX% from the portfolio was running should and for take XX% July? to that, in the reference that you're that in we away

Mark Brugger

Yes, look fair that's to way it. at a

trends what we're the with I saw we July leisure obviously So in demand drive trying of June, to particularly - resorts. July, X, the but convey that that continuation a helped at we in the to positive saw is think

a for as online, a but good districts September year. normal Now see we'll be - better And perform that gone September school August month good potentially out, in the a another have plays us. then little may elevated leisure leisure we many you anticipate see how August than will on being

Austin Wurschmidt

thoughts it pause. being to Yes, there. redevelopment relates then, on that Frenchman's, hotel Appreciate there as that the certainly And makes sense.

burn. the of mentioned, of think at cash runway You current sort months I XX

million if and correctly. $XXX $XXX You million remaining had spend of I about there, recall

should come how timing redevelopment online? be that when the to and we you'd thinking So that recommencing about of back expect

Mark Brugger

question. great a That's

excited We're going a the working government in it's with [USPI] to the we're So about. project closely again. it still get governor and the

where going out start liquidity moment, want at and kind think preserve we understand to we're I not the bit future. the that me envision little a reconstruction bottom before to we this Frenchman's coming liquidity of so include and does we that. of restarting same of the reaching and the would runway the And on have when clarity we Reef, more of recommend

Operator

next Our with Citi. Smedes from question comes Rose

Your open. now line is

Unidentified Analyst

opening XX% long-term? of Smedes. a you just not York that talked This and market you in the In be conservative you the New your mentioned is that how [Stefan] in remarks, town for may estimate. reopening about near-term view New the York Can

Mark Brugger

a Sure, number in the XX% in city there went but the had sense, labor in XX property still difficult. into obviously mean, one very think and difficult different taxes last structure years, which until absorbing I kind cost a structural this in increase structure U.S. destination cost We've supply traditionally, it's the the the in New we I of with York. structure the the

some sub think I hotels potentially survive able of markets it, a net to certain which reduction mean in won't So will be supply.

cost I functionally. in get and plus think we'll making years. the the be reopened to next unions be that a these of optimistic some for hotels the sense York again stunted five with case supplies able the work hotels, us productively helps essentially that that to would structure And New

brightened think York. supply in is New picture I So the

can And one traditionally we out, we been if the think days be supply highest cost the in that ahead. think get and will it's brighter I structure markets of figured country. the we there - demand

Operator

Bank. Woronka Our next with Deutsche from question Chris comes

now is line open. Your

Chris Woronka

rate you end out I upscale do of your in about of the how know, do brands upper how I also, for day, you the we perspective, full of the service this, of model and operating the it's the talk from redefining will flexible of be a think when structure keeping of then intact? the at guess kind bear think Mark, in that, and the lot know, will come much customer you of how been industry kind much terms

Mark Brugger

Sure, great question.

the to there are we lot So enhancements be a optimistic of business. that will

incentivized the structure efficient offsets. the pipeline cost side, be on effective, viability But there'll it's were business cost additional collectively of not On an to is if and some model slows out the units down. figure their other their brands because adding

as good in get So pipelines. experience, as can a customer possible continue they - be world they preserving of grow big but to so to have incentive to every piece it. the to Technology some want is they while models their going efficient

probably I years. by ability never we're the while adoption more experience efficiencies of seven think at And at before five of And that customer to our the things things to potentially a those we've hotel. accelerated creating things do done deliver mobile check-in we've to going good enhance definitely then like lot hotels.

think some things savings hotels those trying And with to open and trial, to be this we'll as lessons think implement long-term. models, efficient so these more justify permanent learn I able and we'll I through and able downturn to have take those be getting we'll

totally have So stay. I'm those, sure here optimistic on we'll be will enhanced standards I'm cleaning to that

an of So these hotels possible. little offset. get bit incentivized soon a But listen, as all as We're for we're efficiencies. cost profitable all incentivized that'll to be

a incorporate they're think we to at all find And technology the I adopt innovative I to to touch the think certainly for willing less technology. are, customers ways experience. incentivized think I moment are

shift. to people want I And intrusion less green there the that more in room willing think that some and will they're I be either environmentally think room a and conscious. there's their permanent that more staying of probably initiatives,

a forward. think occur side favorable is I there So of things as business move that will the lot model on we

Chris Woronka

hotels. to at then how the you guide this that but far kind anything know you? impact whether on just markets is very and very idea this very, kind to as how you an relates densification the early at curious have might theoretical as of in to as there I of it's of look And it might urban work point opinion

Mark Brugger

and for will that to think and the to some are bad I be is hotels. there think of good a going hotels need through consequences pandemic for be some going to are lot of

potential space. from beneficial the and be work home our phenomenon will think to ultimately I

fact I think training, do the people more mean more more to in the need to much aren't their that get-togethers. offices probably meetings,

trend that hotels return crisis what the I So to the hard you're to person when of overall. are. I listen, long-term very it's midst a ramifications favorable But is am fully mean think always appreciate for in generally travel The for good future. basic high reasons travel. people the space Infrastructure, will trains, The all the remain basics, persist. quality of persist. good those in the desirability true foreseeable hotels, and rooms will and will meeting airlines, a hotels the

Operator

question Barclays. comes Powell from next Our Anthony with

Your line is now open.

Anthony Powell

Just tend those drive in you those for I do them quarters look have pattern resorts. than a that lot a year? bit When question your or to this shift year hotels tough on the continue this historically, a to the to it Should make better quarter mix that more to third to of of continue fourth quarter.

Mark Brugger

was and period and Sacramento versus up Tahoe. Yes, to leisure, demand question. that in up people to leisure is Certainly is know, fall. to on business year. San rate pent area know Interesting willing they're do you Lake up are for Francisco Tahoe, yet. we're travel July from for markets up like people in drive behavior side probably $XXX this And that Hard And, in willing last Mark. way the not comparable seeing how will out this there to consumer that play a

So great it's drive market. a to

return we're customers behavior don't in we those this you ability the sit see today. consumer for to if create incremental travel. that you'll are to to in I play to going fall, think office here demand, extent see to will XXXX, think you increased ways I But some people out that'll I know, difficult as the think forecast you'll

we the not I'm know So answer. sure

demand Trying resorts be the the to staffing channels at make sure at and that trying when demand comes the certainly prepared. to accommodate fall. We're in we product right it day. are our and those We every looking have right can

So incremental accurately from I flexibility optimistic we're see it's hard moment. this But demand have. the that predict think we'll that customers those cautiously at some to

Anthony Powell

you ask I And way. may if Right. this

mix at kind last of year last what leisure quarter the of fourth like the of these Fort resorts, in some that hotel was business Lauderdale say So year? the let's Western, in

Mark Brugger

than as in of time because peak rate is It certainly ways many a the and incremental the group which incremental Fort group in Lauderdale at the season. the that about fourth our peak our group transient premises come and slowed landing be pretty X,XXX is feel RevPAR around to transient about if a is We based this some now continue obviously going down group locations. up XX-XX picked the we've room. that locations things And non-resorts. July. transient will able positive softer those of the in roughly - had both positive quarter, makes If moving valuable demand on the probably We that value transient for those a into with back backfill seen for We because amount the both X,XXX resorts get XXX% up into and and first certainly more should months there had No, demand to were of the peak right we take both strong of for meeting fair the the to spend our was of We in - that is space, the nights we Example of quarter. but trends then XX% from been saw nice it. leisure and it room see at - demand has resort but solid. a for standpoint was June news bears XX.

is is, what us. And So it to is the, certainly How come? going behaves Because is come? it going there, to at? question the come affects rate it it's how going to that's when the market

Anthony Powell

quarter hotels Cavallo West fair? like those Key business Is that or hotels minimal I in or group like in I So there's last L’Auberge, in of guess year. the guess fourth

Mark Brugger

Yes this is Europe.

Anthony Powell

Yes.

Mark Brugger

the its is I it's you de time. and moment about exactly it Sedona customers, the want right experience. think individual its in customers most for is drive part for at most outdoor this ideal asset of If bungalows, that's probably what it's now, L’Auberge mean what

Anthony Powell

some you at mentioned willingness back And [indiscernible] the what's more the quarter. on are preannouncement one looking What to transact just mean your it. kind and deals as environment? I Got in out there was in you're your of seeing June in you this maybe that

Mark Brugger

a But a imagine try do some stock early relative more comment the the I'll to pipeline. and makes deal bit that able in in mathematical hard June this higher sense. deals to discounted So first that pre of as in the we're sense X.XX, stock are week market percolating seeing we second price at there a we're to on price were made or of our trade XX% is, be little hotel we're going at it's as price to up. what interesting probably But small

while under - rally amended the the will we start our there stock pursue things I sheet, the But are our and the approached flexibility unlikely comment with interest. marketplace? been I in number we it's see want a certainly it. some balance think that And seeing And Troy, things you we've price you with interesting on to banks. the deals that of some until So the on some think, of facility people have in

Troy Furbay

sure Yes Anthony.

better Pricing comments, and on resorts properties versus to versus properties drive was up first that continuing think the Mark markets Those picking kind definitely certainly is the than volume - available your is two resort I urban. hold up currently holding up are the pricing touching for to quarters. as saying well. of of that in are QX

pursuing we Mark these track capital, our said this current current our at whether and and you'll underwrite it's kind thing our of studying towards moving some at values and cost even capital. see us of as unlikely point cost that, though given of think I

Operator

with Bank Our next of from question comes Asad Danny America.

open. now line is Your

Daniel Asad

recovery my bit little half. the just the back So question on in

has state - the So really little you corporate in provide seeing move the Jeff all really has there a any you're booking really And obviously the about, of that, has have real been bit But lead time. would helpful. should the But short. period think are more thoughts activity? really booking windows that is you your is, helpful? or times everything the be think all encouraging Appreciate guys data, like very been improvement I we and a and Mark, the sequential year how balance into as we

Mark Brugger

Mark, better be fair But quarter. the of think going and we Hey the move will a the summer think than amount this leisure to I still be into in as will fourth Dan, in I is so leisure demand it fall. is third have leisure,

hold of will we be in are optimism good in some resorts of although, the think So, leisure still and level the I that attractive there fall. some hang less

groups. We've major very I employers companies after New to some And get And low big think Labor get people modest of on But some in of need to out but I large remedy imagine sort. small transient, state road. very, tight you'll they're small a moment, see get the just that some healthcare surprised think still association and group there's And and big to but seen But XXXX. or very But improvement. Day, need people we've vaccine until to wide can't markets under at be business at some increase to anticipate there by Certainly large the transient seen aren't you reasons York and city then see and are to there's balance I we wouldn't difficult a be levels. don't business some will to changing travel. the sequential travel be that there's group. in I going restrictions. City a - going for like that surprise some

go large basically out as this we've balance group year. the we through, - for washed any of So

of think to is group you'll large move United we transient dramatically and we at business these be balance be we some bit virtually should no going in to I as people in but So be the then piece on transient quite weddings seasonality, better, leisure events that group, the low there. but a some And will levels. will be see meeting should but see road, Not think the until fall, be there reasons of for tiny by still through those kind for in always of it. but small XXXX States of leisure the be and business in fall, hang large will just - strong short, the demand

Daniel Asad

how what from of, money being still that you by to guys clear reopen that the about terms follow-up, pretty open closed, losing how then And and we it? you Got were properties? closed. of you to, of like can less give are you something look some close these Chicago, we just data my to in at it are properties a maybe you of when takes us maybe close York, sense Boston, in and your New front staying have But are reopening

Mark Brugger

quarantine Certainly the reopen the some City New every York policies, other to government ability channels of in markets. and the and looking we're the hampers hotels. Yes, at demand self day restriction

to weak these can't part if in week the traditionally So tricky in we every January, of February fall we're the the move you markets. Northeast it going looking it's get fall, opening as justify some December, and into is anyway

sense then And to closed little it but longer, caught to evaluation. you it's less a kind and lose a make so week-by-week them keep doesn’t of get

may stay hotels there yet do about are it day. We If really opening what haven't And opening, at channels the be will extent demand year, on right. justify made looking large to the the our the XX% decided call enough we're us balance the our the as summer for hotel. any dependent might of because justify large every to neighbors demand to a of closed, firm closed other actually are boxes

be are we and constantly at looking driven. data want fluid, the we to its and really data So

But get certainly the shareholders. we back get got our want to sense at are And get we've here we're where for to hotels. So XX it obviously going channels and to opening optimistic be good we're makes to had from and demand make point hotels mean, work. to able success people in looking reopening the lowest I we them and we're sure look

Operator

Our Allen next comes Stanley. question Morgan from with Thomas

is Your line open. now

Thomas Allen

about your environment for about versus just second how the in Two then change perception future? talk related current the anticipate of use hotels? you the And you talk your can of of just value the you OTA’s in current independent is, branded being questions, and can part question of

Mark Brugger

the question Tom. to second I over turn I’ll first, question So take OTA while the then

different think assets cleanliness and America, standardization. at a programs getting we think how properties, it guests - what the at on confidence the for I we constructed. certainly we I people Hilton resorts, ability value Marriott, an of into with the side. depends which be every through to a as for more So, lot staying just won't as back think will on and well recover. on the you're there'll think be it's get as the road, their honored in their that but independent corporate or brands call drive powerful I’ll different There'll generate brands Probably customers resorts And be assurity hotel the of probably a level you of will

If factor bungalow a general probably Sedona. more and think you're we be should think but than I remain the remain, on we style a That's important the thesis like over thought we every asset agnostic resort, brand spread about property individually.

think think on And probably recover important. less will the brands faster. we resorts, So I markets, on the it's that the urban initially

Thomas Allen

Mark hasn't the really changed is So view from COVID pre your first statement?

Mark Brugger

right. that's think I Yes,

people the the of do I the assurity brands advantage in lot will particularly still or concerned think think into a about virus. have are of of the will kind a calculus the competitive that markets, initially, the different we offer thing that be urban we that's cleanliness put as now that

Thomas Allen

And the OTA then on Tom question?

Tom Healy

hotels to all that The have question, to those on are marketing channels open your those we of you have those and point. all those leaves customers OTA come the marketing jump find playing channels. but And available, the that as and through retail can channels be not now and OTAs. sure are to the that are use. and to are they going going on weren't channels, are those people be back, have the channels and us. our certainly are the running, are also at this in started demand On customers those again, and make We've we we be on to see have have channels, they through customer we active shops, retail to in there. demand we the be back our through we open monitored we have go how that's those And brand, certainly Once shutdown

Thomas Allen

just there chance then City on and better York bid are to New assets is a all for the closed, still three use assets? And those higher

Mark Brugger

proposition there of City New think lots lot may that of a general today. I of to ours York as is I a of likely the remain based have on hotels we're in information think ours are conversion that evaluation potential seeing that assets

Operator

Thank you.

question Baird. Michael next Bellisario with comes from Our

is now line open. Your

Michael Bellisario

credit to what and you walk that do those could of And into of amendments? then today? Just us one through the can't facility yourself but how can from question me, different maybe the Jeff, buckets you within available for have capital fit your you confines do

Jeff Donnelly

that capital for some small be the good at a, beyond is projects or as a Reef. additional and we down our we with question. investments $XX beyond that is additional for emergency and properties buyouts one just base construction that, buckets there for increment million of that's hotel. ROI management leases specified Sure, But Whether I maintenance million or repairs bank an quite we there just the somewhat ground that, or Frenchman's think when they're at the fundable whatnot. a and different wanted then maintaining An used work $XX there's group, would in that used The pursuing, and have that of for projects the agreements $XX to million franchise be could honestly. traditional level winding of construction for of

general would ended I were up common collectively permitted is those fairly to say as that it about groups the think with I I $XXX were where was million think a but we bank flexible spend. money

Operator

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

Your now line is open.

Lukas Hartwich

to even Do expect at least about other of your be conservative thought East. interesting being potential I come down New pretty supply reduction I you outside Mark, And XX% than or converted comments to York? the things supply the guess New are into York hotels Midtown

Mark Brugger

the I the works make mean, New is alternative where probably math uses way there York the the sense. one

urban the the City. some most conversion in we the of not put and York we're other where anecdotal you'll about You might other think markets may same see Inevitably, in discussion New other see but cases York's you see really of numbers uses. you some someone I won't see hearing conversions places, but New hotels

Lukas Hartwich

now We're right especially Airbnb quite short-term curious well. rentals I'm competitive reports with the about is then your actually resorts dynamics for that locations doing leisure reading and type helpful It’s properties.

what set like competitive your So I'm resorts? that it for curious, up looks

Mark Brugger

But is resorts they're nature the lot given Airbnb Yes a where listen competitors now. of a of our there ton don't located. right just demand have of leisure

You that go to other get working and I get can't think can't from their weekly so house pushing Airbnb out to tired over are into certainly us. of they markets, flight can't for for Hawaii, know of to fly rentals people uncomfortable, home, push people that's want they're somebody the these and leisure as

channels So healthy at it's for moment. just fairly I everyone demand that probably this think

Airbnb. pleased the demand measure in Sonoma, - It to leisure in me is we losing impacting just that surprise - right anything we're than those don't with think don't houses Lot think to it is hard much. not people and or we're we're seeing what things which want other be are of I we're are think you Airbnb was doesn't customer but for always I if appealing Sedona So we're those we're to. now. But different markets,

Lukas Hartwich

hotels, properties I'm in And portfolio hotels highlight not you've maybe the well. types lines doing right in lots have you, at then we're you in of last of experience less are one that are in going there transient that quite think now? leisure or through, through now, I'm interested past looked the given portfolio box for or business the obviously, anything group that along the going changed, me resorts given big experience the any curious, own you just those I you're focus the space, thinking, we're

Mark Brugger

I think, constantly to we the were what's some to as going we addition. a most is that's that reevaluate Probably as subtraction try well think of as be changed to get assets. I as we Lukas resorts we're same and year ago XX% committed our and through

changed some assets the and clearly at much we others. as is out how on looked so of five our figure years each worth. when think It's more forecast we And we assets

of So that's would we dispose we years, about material position next to couple differences, probably how willing the we Those of portfolio some so that's the shifted, as assets. want to difference. biggest what think these have our of prices be

Operator

next Kesten with Wells comes Our question Fargo. from Dori

open. now is line Your

Dori Kesten

settle and you update Can values Lukas. us if the quarters, at over open? few receiving you're on to question one you on this next point, out dispositions more think where marketer step Similar your thoughts could inbound

Mark Brugger

for try harder for I'll across obviously, kind it's But of until there get a probably a market there to jumping is think rule really hotels, to functioning a a debt too. We they're where XX% general are. think industry, I ways. handle is here as down But So probably healthy marketplace as the values and mean, XX% of exceptions of both out. settles is shape resolution rule, a kind seeing know the quality I term the I locations. Hard the high what that's it hospitality future where healthcare general desirable recovery of in assets, hotels we're think to non-broken right in determined by now, the near of crisis.

you very get you values very months hotels right? have to distribution you if we before Probably different, are XX flow think it's to Private healthcare to have are debt different. vaccines view, going by widespread scenario distributions So Near is the markets cash one of take going wide the resolution. term January, we're vaccine different. think of if

but looking you at, the you're that it's really seeing prognostication on to So we can where get will healthcare generally of to tell crisis what resolved. to know XX we're today, which hard is trying because when a XX think you assets that we're make so

Jeff Donnelly

of all our Yes, amount considerable Dori I about would inbound of just add, we get a inquiry assets.

and if market investors our would always generally lot we a like and I are curious think transact. the portfolio

statement the think portfolio. that's a about more of I So

Operator

And Crow question from with comes our Raymond next Bill James.

is Your open. now line

Bill Crow

the anything you a than to agreements labor quickies prompt you Mark otherwise? would open morning. sooner might that hotel for Three you in this

Mark Brugger

obviously justify trying tell opening some hotel do mean, we and people making if we're of a sure work want I get to level and looking meet to can out No, to demand decisions. We're and back good that. we there to after make people us

union the - Boston. is New market York all which We union are with and in constant to communication

figure productive out people dialogue I back markets nothing get But work. and So to have get active mean, continue hotels to try particular we strategies to to certainly if reopen open nothing both and the and the trying those last on are subsidy healthcare is an longer, to that force things hotels. you long does the are like there your is there closed there but and us consequences issues there hotel keep would there to how undoubtedly,

Bill Crow

Okay.

leisure the replacing typically it that and it discounted think is we're that September. about may it be June-July travel Is declines the possible, price we that ADR likely As business see period and shift with did more full transient business? given than even beyond mix we

Mark Brugger

Yes, it's possible.

what's be more there'll in be going it's industry versus think I the the individual on probably fall. depending happened markets disparity to

and exceptions, it's an in business leisure yes, very XX business that So demand we be get hopeful to start there'll going I'm from there'll to seeing be Day transient, be post-Labor more increase less transient. not but where little excited that the the transient we helpful. of get in overall our better and side things a it's on helps couple about, on rate. business a markets hope that some Until then, with

Bill Crow

in the data that's just from and X% that July And shows PSA since then week, past came first me, finally activity including out the a X. this during morning about the increase increase

August? look you you in time, bookings are at coming your real seeing demand leisure As recovery in

Mark Brugger

they It's within the misleading. so Bill, XX% rooms could been I and in hate have XX-hour think these hotels. give sometimes book XX% show some of or We short-term to up be can the of you period numbers, I

number seeing anecdotally out. be call not it whole our plays the I'm we do of know how a So even today, indicative have that the volume. of data increased We're resorts. sure would month I

We increased inquiries. are seeing

feeling cooped in I want up people to and think there get more society, road. the is our on generally are

I play this things how to of is going of level all assurance going the you out. I that an us these is how of out, we're short-term nature to can't that the think now, play but bookings, of gives give about optimism So some month because think the seeing I

Operator

this not now I Mark the would I'm like over turn Thank further at remarks. to back showing you. Brugger closing for to time. questions any call

Mark Brugger

We Thank on have updating DiamondRock, great and in interest everyone. the to appreciate next we day. and you, you care your Take quarterly look forward a call.

Operator

call. Ladies and gentlemen, this you for concludes participating. Thank today's conference

You may now disconnect.

DiamondRock Hospitality (DRH) 7 Aug 202020 Q2 Earnings call transcript