DRH - Earnings call transcript Q2 2022 | DiamondRock Hospitality Company

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Operator

Good day and thank you for standing by. Welcome to the DiamondRock Hospitality Company Second Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please hand over to would now speaker conference to like Quinn. I your the today, Briony ahead. go Please

Briony Quinn

Thank webcast. everyone. XXXX morning, you, DiamondRock's Michelle. quarter second Welcome earnings to and call Good

our Before we remind statements considered are me begin, under are Federal historical and be comments many facts everyone not to today that let of forward-looking Securities Laws.

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

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

Mark Brugger

to and of for equity Justin's our including extensive private team will today, welcome of you, capital joined Operating background record allocation strong history intelligence I'm advanced results and of Thank our delivering Chief by continue again shareholders. confident and track earnings in that executive Management. appointed I'm its Officer Leonard, best-in-class DiamondRock's Justin and call. DiamondRock's recently Asset Head

shared clearly Travelers age such are popular together. from cherished, the durable are as expenditures during consumers out of goods, travel on dining are the a We experiences, in are road. golden out seeking briefly Consumer and travel. turning away back pandemic. Today,

a the travel, growth the be Wanderlust maximize from from from several millennial over and we unique robust secular shifts of meetings. the the going things, growth experiences to of the and to to towards expect the Boomers. by workforce resumption lifestyle not over for The We factors, to and secular dispersed is these several more preference likely expect from that DiamondRock urban not a unprecedented before years began group Baby acceleration the trips generation, portfolio consumer the have tonic And of trends. both reposition will for was this underappreciated savings, driven and our multi-generational forward And pent-up mover an but benefit these only rise demand, benefit that of our leisure early travel. small to Each resort to hybrid and gives outperformance DiamondRock destination resorts are hotels. hotels be portfolio pandemic. next

have performance hotel from per I very quarter. the proud of was that are for RevPAR, report today DiamondRock am operations. new funds We We year-to-date second records that total to higher EBITDA XX% of in and has fact than second per QX importantly, XXXX. most happy we and share than most set quarter, set for the In FFO the XXXX recovered FFO more records over share. revenues, XX%

That demand is XXXX. now well comparable to and portfolio extraordinary hotel exceed up EBITDA. acceleration our we We compared Importantly, as is all an at on quarter, the and XXXX June increasing exceed full-year over results for in performance. project for comparable revenue increasing are level with result DiamondRock current a total broad to Based trends, firing saw we total XX% us demand company's sets cylinders. XXXX revenues of the XXXX expectation over XXXX. The

acquired second shows compared Deco in And Comparable last team market iconic recently adjusted RevPAR is for management the to than Kimpton period in Art the RevPAR was Comparable in the off, Lauderdale competitive the year. took the adjusted This million higher $XX.X hotels of best-in-class unique portfolio XXXX. to me same XX-months, DiamondRock Total Resort XXXX. the market off we rebuilt an Let on quarter X.X% us. increased a hotel our period XXXX April quarter in and In trailing resort from few strategy. X, basis margins for asset comparable Fort highlight strategic were XX.X% success hotel in of both EBITDA share a synergistic and the XX.X% record the transaction. the of XXX over successes. and top Beach over EBITDA it and points

for is set Today's on out We We a assets higher demand the permanently travel to believe up In resorts front travel, permanently We generational in especially urban experiential that destination in demand right location in leisure is ways, and the the our travel from have forward the forward in right benefiting DiamondRock a pandemic demand of force, travel. higher for powerful over portfolio. and step recovery. for our well-positioned going deliver up for cycle. We from that that shared many secular portfolio punch follow level travel. will The focused put two with lead has world. this of this XX one, to in was believe for success experiences us entire intensified increase resorts pulled positioned leisure post-COVID portfolio the leisure uniquely knockout. our are a a resort leisure. is the of demand but hotels already The level

The recovery XXXX occupancy Our sequential revenue the the with of $XXX. as XX% these with XXXX. almost X.X% percentage over was urban XX quarterly XX.X% achieving XX% over of their portfolio increasing of astonishing of hotels, change with a up levels rate and ahead which measured second to by comprise EBITDA XX% points room dramatic hotels rates to XXXX in saw our quarter,

XXXX XX% as for room just Importantly, build the XXXX was there in demand as June over for builds. we July RevPAR levels. to Moreover, is run momentum and profitability total significant strong. the saw quarter revenues during of June with hotels urban at

QX group. over million. books That's end into booked is facts, the XX% full-year demand of fast. QX. that increment and first Group Group $XXX a Here the and XXXX the increase on million few the revenue is from of $XX of an was quarter over recovering for

should plus with of business Omicron, of impact power of revenue back as restoration XXXX Our We from BTU the than to Business our par XXXX, second but revenues QX of rate were $XX. Group to earlier by roar XX% of our in approximately was the XXXX QX compared business full-year XXXX Recouping the transient. XXXX with still profitable behind highly XXXX with by XX% banquet Omicron Group profitability. levels in the half higher quarter are the revenues portfolio million. revenue transient XXXX. that impact new second in in saw on $XX is

BTU $XX get on their million ROI the the capture embedded completed road. to or we from benefits back have lot is more nearly While trend underway. powerful you of there's XXXX, include as of projects this this folks And not employers even that than upside $XXX are million a a revenues year-to-date tells recently XXXX that does still more behind the in

rates profit are basis in demand strong second big result permanently the bring asset Now factors. of gain and let's spend a finding winners several time the margin the quarter initiatives through record by market innovative This at XXX The margins dollars higher EBITDA hotel the margins fee XXXX and and bottom Profit little share adjusted XX.X% streams. our of other a management into controls tight flow-through. long-term as allow higher to with line resorts be going success to points. to beat delving levels will profit for a was those margins cost comparable whopping

closely upside full-year Our XXXX, levels. we basis XXXX adjusted have Hotel and $XX believe in describe compared urban close at XX.X% terrific to by more below and to from our want multiple urban the recruit the months second quarter To resorts and from record adjusted our to at way, about recovery that continued XXXX hotel to sales. basis project points for we margins million nearly cost the by to new continued expanded to points gap hotels minute restaurant results. still models be next opportunity can hotels superior team. total XXX to operators implement we that EBITDA by a share, professionals to margins streams, the at leaders programs, $XX management work revenues labor Group, and the gain importantly, our months strategies the EBITDA banquet increased quarter adjusted and These the about EBITDA. return asset Transient upside implement hotels margin high to around deliver catalysts, including brag business market to containment first in of with X,XXX XXXX. identify hotel XX income the Business retain of We new the most million and I sales over another take reach and XX

profit results of of leverage high our the you management seeing to which Our prior deliver team agreements, our the full foundation portfolio, XXX today. the portfolio management believe expertise on more margins asset lodging DiamondRock the favorable any stabilize will short-term our peak. as the of strength excellent we trends, report the points upon basis at we is concentration best higher very than that Based than are and REIT service

comparable year-to-date ahead XXX points margins at Just XXXX. of basis are

While margin future some with unnamed year, new DiamondRock profit expansion setting some of have records is peers promises our in portfolio. about margin made profit already its

deliver now growth over about year, to delivered on they're and repositionings more Margaritaville we three Clio REIT, Suites Before three the our adjusted quarter completed XXXX. opportunities generated other creating going compared investment lodging our generate collection we Vail hotels. are over hotels more secret several and West. Resort the properties more The the a and Sonoma, I initiatives. Earlier EBITDA the call the means $X.X will the Key of little manager turning major The Jeff to I'll conversions completed have cash-on-cash we those talk XX% we to at growth have Embassy tracking of Last collectively detail. Year-to-date, incremental yield forward. to tap. This Hythe $XX hotel, our luxury over the over outperform for repositionings: million Jeff? year, tremendous us than any full to Denver, to XXXX full-year another at hotel Jeff, service Lodge sauce. Luxury bit three RevPAR of total executed DiamondRock value advantage, brain which XXXX, on turn have is Bethesda Collectively, it to internal more in a million this and discuss in XXXX a two positions incremental want and forecasted These EBITDA to which

Jeff Donnelly

the company. quarter a was It for Mark. terrific Thanks

prepared open the that our that the look Lauderdale was results not throughout because Kimpton give it XXXX, Let's stats and comparable and is when we hotel XXXX. to new Resort at in excludes Fort remarks, note

higher Occupancy was of the the revenue, exclusively with and restaurant I growth million. or EBITDA room portfolio of than our $X higher XXX X.X% $XX comparable second just is $X.XX adjusted the hotels. RevPAR Hotel nearly our in out This sales business pandemic Total Vivian improvement directly points. below upside during Michael million, quarter and strong is million EBITDA beat nearly basis of expanding the the million double-digit to million, proud am were over for Comparable was by basis X,XXX XXXX. nearly which to due driven fact XXXX. over profits. this XX.X% the several prior most is is increase first XXXX. points Howard per opened identifying almost the FFO down point the dramatically margins XXXX the XXXX. for and XXX streams XXXX, created comparable over year. share $XXX like XXXX, management Other revenues by still to Okay. And company $XXX we Adjusted up adjusted chefs to the which the revenue quarter of Mina, was want EBITDA quarter, This is or and Sandoval, million are in XX% was nearly or over momentum more $XX $XXX XXXX QX significant but future stat that XXXX. above prior in $X also driving new a XXX XX% that well-known by an increase venues in $XXX was to F&B above the to period XX.X% Richard sources Same-store revenues from was one team's to were points in quarter. above rates I was and the Closing million bar speaks asset was outlet or beating gap with occupancy despite restaurant basis XXXX. that gap creativity second income point basis

to a and talk the performed what year. me our performance seeing the of the major remainder well in in bit quarter. segments in for some little Each insights Let second three about of provide major the segments us we're

for segment behind going new real resorts over most opportunity a our highs. with Of XXXX over course, resorts points XXXX. Rates is for almost portfolio X.X many Occupancy percentage robust XXXX and resorts our still and setting were were forward. remains up X.X% XX% us

and Marathon XX.X%. Our at from in conversion basis, growth three the of high nearly Beach Comparable acquisitions exceptional business States. basis in success Margaritaville growth a the than Midweek from in a or On one the XXXX it in is quarter-to-quarter hotels at in XX% have Florida a Florida, has two give recent performers. at rated shout Park Henderson occupancy been Inn the points terrific has United XX% the Urban The Henderson Destin a Beach strong XX% resort highest Resort. rate was improvement of ranged second first must to the key quarter. of return rate revenue in and urban I the delivered higher our XX% Margaritaville, came out also XXXX. June. Average which sequential over XX a growth total increase the urban in saw been was to traveler the hotels on points indicator key the occupancy hotels X.X% XXX quarter. percentage to

exceeded this to pre-pandemic with snap the of travel, increasing from show to quarter. business Transient occupancy XX% to Business for pleased see the roughly of XX% are expectations continues in recovery in contribution our We steady back occupancy normal second quarter. levels the which

New XXXX urban our our the Hotel as York our in of As our such had in Chicago. two strength Denver, a Collection three actually that RevPAR City, a testament number hotels and of hotels of urban to hotels all in our footprint, Luxury exceeded levels,

While window outlook are the short, remains the we BT booking for fall. encouraged for for

second first has during to demand from in with the optimism combined the occupancy been occupancy Group the on the the compared Our days the stems in growth performance XX strong next BT sequential in books quarter. quarter, robust. BT

our par XX% with the first are quarter group outlook which for incremental full-year window short. mentioned, increased over QX, since million revenues. group remains QX revenue XXXX Mark into As and The on $XX room and these revenues booked were end of the now XXXX booking of room

our have seven XXXX but longer XX-day we seeing a Among for sizes XXXX XX% business of than QX, the leads we hotels. example, larger book are pieces seen figure notice, in also on business to For the were the dated quarter return XX,XXX second own. and XX% remainder XX% which or XX% well to group about later. levels were of Average hotels the the smaller pre-pandemic for for we half are XX% works for

meet the new the We of to have sales change record portfolio. and ahead nights patterns. the are a curve million We to adjusted in XX% our a increase group first quarter, leads $X.X second booking programs room sequential from for of generated in the the in quarter

up levels tracking trend a and for beyond. the Omicron recovering year, despite the of a us XX% As revenue. to capturing almost this demand XXXX sets testament encouraging XXXX portfolio impact the was even earlier group is and of reach to This group successful

for ahead single-digits mid on remainder the and ADR currently third portfolio RevPAR books is the of for to XXXX compared growth the the quarters. in the high books to the is over in to the maintaining XXXX. Looking on months, pace XXXX, ADR XXXX. premiums divided the RevPAR over rate the resorts books low-teens very year to with In gains XX compared occupancy is the on the and prior strong up equally next between fourth XX%

our As earlier, outlook we for Mark raising mentioned are the year.

comparable excellent of XXXX information revenues comparable now Moreover, guide full-year release is Page exceed hotel current to trend. to believe basis. XXXX expect on we a The for on on our adjusted an exceed We EBITDA XX total will full-year XXXX a basis.

in expense $XX to of $XX be to add, we range the expense income range expect also me and million million million. in the full-year $X.X be to tax will of million G&A Let $X.X

Let me our on touch balance strength. sheet

covenant all result will savings term restrictions and a We basis revolver This have month. XXX point in balances. change exited on this loans approximately

capital over to swaps we focus be our taking market any liquidity powder the including and balance million. interest dry estimate full-year and created acquisitions, market strong debt by to $XXX I benefit dislocation the expect for changes. advantage in million on have on $XX For Based million judicious expense, we approximately current allocation that XXXX, of $XX we'll sheet, but of of be

dividends. conclude Let's with

performance, Given company's the the reinstituted Board has strong our dividend.

based paying floor per dividend begin me a the that, Mark. income will back the and current taxable pay We well. will to as by share, quarterly on With $X.XX XXXX a dividend let forecast of special for XXXX, we in for hand

Mark Brugger

Jeff. Thanks,

highly Our for remains outlook constructive travel.

$XXX now profit of we new fact, increased EBITDA to full-year revenues and XXXX with earnings adjusted for hotel levels comparable for exceed In to a $XXX comparable year for for high the and for have total from last of levels hotel potential the margins. of million expectation watermark calendar our XXXX our million this XXXX call exceed project

to stabilize resorts portfolio's will implementation transient while at travel we at the demand push practices that continue the the this urban is our positionings ROI kicking trajectory. believe benefit best trends, profit of continue we in based group the Our higher recovery portfolio's provide from downturn, and new portfolio on Ultimately, a to boost demand, hotels margins ahead projects. double to record from in for with and business strategic

Burlington smaller those the doesn't three Boston. of This many numerous throughout associated progress the record that this good at that underway in margins ROI stead achieve or we put other certainly is include in Sedona, even other high should us goal. projects Collectively, in the our quarter incremental evaluation our million. with in $X to Our and mention properties. profit projects have hotels note, On stabilized under projects about second EBITDA several from I benefit

opportunities team Our asset our finding hotels. is in management quite value-add at relentless

Resort acquisitions approximately capped All the $XXX we last management that with growth over acquisitions Kimpton recent and Fort completed seeking. the benefit the April. Lauderdale lifestyle management. million This five level the of external operations front, independent, located acquisition superior are off in in markets hotels deal have asset Beach of agreements in qualities could the the barrier-to-entry are we On They terminable high year. from

we While future acquisitions, we remain powder dry for disciplined. will have significant very

In fact, demand. based wrap due an during pent-up significant terminated still emerging intensive we diligence. in are travel early To on the West quarter, valuation we Resort, Boutique completing a the that Coast sheet with time, with after with would this carefully At up, balance recovery And evaluated that unique backdrop, to questions. confident and in continue strategy open we going we DiamondRock XXXX itself to call are and forward. up portfolio a has any right like for distinguish the but to

Operator

Thank Instructions]. you. [Operator

first comes Fargo. question Our Dori from line Wells Kesten the of with

Your line open. Please is go ahead.

Dori Kesten

Good Thanks. afternoon.

for margin look you the XXXX gains to your of expect the the at out would remainder elevated you As year, resorts? levels be able of to maintain versus

Mark Brugger

is Yes. this Dori, Mark.

margins So the vary a the little to going bit rated are. depending are on what seasons higher

seasons, rated EBITDA vary gains similar to it'll But the but lower So resorts about higher that XX% anticipate harder then in rated this it'll they season would end month-to-month, at would expect in our the than are we we margins. higher by be year margin XXXX. the push going and collectively, to did

Dori Kesten

Okay. more you dividends you Jeff, QX? give may range on special the payout in can of detail

Jeff Donnelly

taxable that give be will point, dividends. our don't dividends the guidance won't but full-year year on at preferred have want this by I to covered income this we

obligation, the $X.XX that's possible dividend So out that or a our it's quarterly in paying will QX. that quarter the that quarter, exceed we're paying think fourth quarterly whether special plus the quite I $X.XX a we're in

Dori Kesten

Okay. repeat said regarding And for what swaps for just year? this interest can you you

Jeff Donnelly

Sure.

is is of XXXX I to clarify sure guidance that cash Just to million $XX full-year And folks the reduced about expense the just interest. speak purely rate interest $XX of for exclude that to year-to-date interest the include didn't adjustment million be FFO. calculation mark-to-market interest million. the from our of expense not our by $XX which swaps, adjustment mark-to-market does adjusted We for

was benefit about income $X.X which you includes reconciliation. of in see So which FFO the swaps, interest EBITDA on it that for $XX.X interest the of you'll mark-to-market the our example that the the million in cash can Eliminating expense adjustment from benefit QX, our on statement million. cash is find QX $X.X to million,

that again, $XX annualize So it's you about if million.

the higher million So the $XX out. the of expecting year we're the a million guidance front back than $XX thus of just half is half little be to helps rates because year. Hopefully in of interest bit that will the

Operator

of Thank from Michael you. with next And our question Baird. comes Bellisario line the

line Your open. Please ahead. go is

Michael Bellisario

are formal you up specific the what XXXX industry kind guidance so half you the you potentially know the I relative guidance, those or whether would just let Mark, ranges didn't of of provided or kind short qualitative metrics of either of of did macro provide but big exceed to in focused year of on end that back sort kind give you that picture risks, you've far?

Mark Brugger

the I Yes. by mean take let's segments. three

The room outside the has weeks. group our So certainly exceeded XX week looks solid. every the expectations spend kind pretty last for of

So kind has excuse balance Business that feels of a a of the year. strong. -- the been risk coming low me, like on that risk Transient low proposition for

end out lot the that make that extended kind the will seasons, the good think shoulder if the September of of hotels. investments just Pepsi Wall And seem have by are morning this capital the the I think come that, are read here then good. as play up a see calls, But encouraged rest into earnings Journal day, they in we'll resorts we'll it'll some we fill stats exactly have see corollaries which GM I we We've of how you and we sure at and and to that had bookings in materializes continue. all usually the strong leisure October. And of to the of the have continue to September/October. and to good of Street believe I we're on mean,

Michael Bellisario

like So side? the rate that for or you on on is risk, side demand the leisure sounds is the it

Mark Brugger

Yes.

did segment, BT, of rate. group, you it's if think by leisure probably I kind

Michael Bellisario

within of Justin, kind skillset, Helpful. just what And Got today. the DiamondRock see just a your maybe just you on you expertise, it. and/or more little for kind background and portfolio then opportunities maybe your bit

Justin Leonard

come hopefully this seat to I Sure, I of the hold approach. side of people bit Mike. opposed as through into lot little a to real a industry, take different side. through bring a I different the really via operation estate Look, than a the in path think post that. Happy this

I XX a private think business sort equity. overall. But worth. XX different I what three, I intend team think four, them job last than of more bit think helpful here collection got over bring to I've worth don't I've years plan. years hopefully the a hotels I I organization. what of within need a currently at to they're of job what new it's heard really DiamondRock, five come really So my about could role a the of this it down approach up with my that to dissimilar perspective, make be the is too to road That's the was to the way I how

my successful that my assets is -- primary estate here. allocation, think allocation and at I them goal I I what be be could look real how That's I to can these we can think doing do been out but hopefully I've valuable. more in what make career and do at really capital helpful how previous also figure and individual to in portfolio

Mark Brugger

for, those I operations and would comes it well-oiled aspects. the when design, pretty value-add Mike, we're all add Yes. to just machine the

kind NAV providing different produce taking a how margins the we layer increase well think another And top very NAV, from pretty really that focus to come Justin and but ultimate oiled quarter-to-quarter private it's can Justin's take hotels. perspective that. whole to business estate going is mind outsized plans. so And hopefully, another NAV well profit accretion do years what what adding growth the these you at right? with with long-term as three, operations is And is then thought And of at of I smart of on next five always out, very we're machine. over we're assets the up equity looking on works real So focus

So track excellent. is and we're just very Justin's record absolutely optimistic

success add just the DiamondRock. it's really of think of we to ingredient future to So another

Operator

Thank you. of KeyBanc. the And Austin Wurschmidt question comes next our from with line

Please Your go line open. is ahead.

Austin Wurschmidt

Great. Thanks.

to back revenue Just your Mark, going hotel EBITDA XXXX. and exceeding about comments

you curious thoughts little the softer? half half what the you it think about X% of were first just your could if year, in bit bit the be to similar versus back you ring fence a I'm around better, Just little XXXX. the The up a of there. a year, think period curious comparable do bit little you were

Mark Brugger

Yes. was I ahead July -- RevPAR today reported remaining mean, our was XX%. that expectations. was It's we of up strong.

be I interesting total in July room too the is in It as had, XX%. week lot the than started contributing profitability. say urban really up at XX.X% think that and spend we better than and what's up on last to was outside And of the I've a better. kicking That's It's was we never in my certainly why I'll could turnaround lot of so. XX to career a based we're on telling put booking you communicating little that it confidence kind and I'm Street it hard such better better it's than better of is. getting to It's XXXX group our be weeks, seems to think business the better. But in quick since we've out so getting much short-term forecast basis. be could turn lot have or a going parameters. every big current in full-year a trends to the confident. the probably RevPAR

continue week's increase of was year. looking year. for of We balance the the adjustment back half the forecast saw it again even for I We at of the last

looks so give because guidance for the want too the don't is to we and booking. encouraging year. good there the pretty But think I balance much much certainly, trend of short-term So in setup was the July

positive very here. feeling we're So

Austin Wurschmidt

finish I XXXX mean year think to think get a BT around level of on where then comments. when quarter monthly the can I either we do that half. quarterly the on taking the -- averages, second revenue, the first levels first right appreciate in of want percent roughly And it was side basis? to revenue and say can and the or back you said BT we I you kind XXXX you XX% guess do I

Mark Brugger

Yes. XXXX macro where trying think could going trends, a I guesswork to out be but BT, we XXX% all of always some settles. what's figure we're mean, the with back but I in to it on there's of

So there's some give and take about.

their, On office. there's -- little the the to got they're the need then positives road, the offset disconnected, more environment especially I think there's in as but from sure busy hybrid their bit to you're is a on get people make clients, of et for you're person cetera, more you

we I to but expectations see fully we're think always all It'll be confident that where been travel sells start ever normal historically. I of fairly Labor going up would overpromise the they've group business is business back think it was things But used to we're that there, higher post that getting hate back I in -- ahead our And and have than a neighborhood of think get in bit where evolving. it'll out little really kind when waiting different, be when accelerate small to but then to be. settle somewhere will QX. And exactly Day, to of like So more it we're travel. to that we're I really, optimistic but out,

reasons move culture, having the of get good work and to needing America. together forward As your launch it to hybrid a all that consequence companies advance it's environments as still people and -- in your products,

Operator

comes question next Barclays. Anthony line of Powell with our And from the

line open. Please is go Your ahead.

Anthony Powell

there. hotel your hit out? ago, Coast your months that you evaluations bit Is West few underwriting Mark, changing afternoon. didn't and work on is the about comment just something that's maybe that question a would've or are a you a or concerns Hi, good Boutique

Mark Brugger

things some was hotel We Yes, there thought to an irreplaceable we a value-add enhance. It It really was fee great that's a question. was independent, location, liked. simple.

the boutique and it ability do value some, I'll deal the ability the the use that we we of units with about land for the components than restrictions more willing diligence, thought to essentially. had of One would've major that was to due for and expand weren't to we hoped based add our limited more XX% say after on pay

direction would've been positive upside a it been significant out of a that really It's And very had for the that asset. been a asset, to was flesh we It had our because done that in not due saw an So value the additive hotel would've the diligence of we would've in gap. of it company. and that kind the way. amount

Anthony Powell

conservative like. more sounds issue That the pure specific getting just resort. not you're was So it on asset a

Mark Brugger

issue Yes, of cap use rates. a land it valuation on than issue more a was

resorts, with -- we're Now the think that pre-COVID. They're as long-term to I stabilize versus are remarks, still the higher are going margins. in still ones they mentioned as that winner I prepared

has I think if where country. kind under we you think incremental forever, to It macro profitability to mean or every resorted quarter go I think where they're a the and change doesn't about of be but resorts, basis occurred. going will secular like the a are as continue up on demand

think risk capital. resorts an in still to investing excellent are your I place adjusted be

Anthony Powell

to sense but group you're recovery seeing. you of some down I I of seeing Chicago Kind maybe a the make selling know even about group given and of in those doesn't mean, related and good Right. you're in those on recovery stronger and kind that talked markets the and hold the hotel hotel, road, Boston, some to group

Mark Brugger

right now. a point. It's that having conversation good actively We're

urban We -- basis, like adjusted kind resort, public lodging the urban we on probably a doing doing. for and returns how of monetize -- somewhere risk assets the XX% -- balance think think you we've think of XX% XX-year things whole properties some I the continue kind to optimal about we the around REIT is would lifestyle do a been of cycle maximizing the for shareholders.

is for happening right of the debt activity the some having markets? value actively question in you the conversation. the we're disposition the think dislocation can And I given now maximize

and one the if monetizing would more as certainly asset. year, at consider the next markets move get early think fall least I into we cooperative we debt

Operator

the our question Bank. Deutsche you. line Chris comes Thank from of And next Woronka with

Your line is open. go Please ahead.

Chris Woronka

that afternoon, going risk good the resorts on do Mark, the I've you demand see with costs more any lot front, Hey, of it's heard of all guys. some different your going agree actually risk you but than in but up these demand generally a markets? or materially on whether comments mean is yes, labor the of I is bigger ways, come I taxes yes, things, other know could that -- in suddenly away? that

Mark Brugger

cost I mean, there's category. different

ferocious the are tax major collectors cities. mean, I the So in think I most

of it's real of in more a would asset time the risk the don't it be a it's than top you're estate But going tax But in think think I pay to words appreciations less So base as probably I XX asset some are increased. over the less markets. these CBDs. Obviously other, most of my choose listen, call risk or well MSA labor market here.

U.S. while bit a It's it's to difficult everywhere better. in the think I get still little getting labor labor markets, the

there more the employment often diversified pool think markets there's is flexible. I resort a that

a the think the And for big don't just one tap. that the is -- of I there's and on streams revenue the one disadvantage as we over flow-through so with helps -- of time I to And see other others resorts. profitability that features resorts don't other

have higher that. -- pull place a market, to just there's levers you a If no in other there's at

market bikes. and fees. charge increase we a have have these a added can can second added rent different bar, ways more you retail in stream there. Key -- We West, We other amenities a resort offer to in margins a because ways you other If There's amenity shop. we just well, Margaretville potentials. to There's just more a there's things all revenue in lot

good continue opportunities more particularly think something exist urban So that's simple something find the to at and will the the run allow just that I'll call frankly boxes. to I of that some we're don't resorts in and

Chris Woronka

from doing one And to with still markets road that on sounds for you if your much might guess, might if you discuss, resorts does you finally you the down going preclude might like or especially versus of pretty you're get acquisitions if Mark. wise, something sell you urban obviously sell, focused you -- then strictly urban balance more acquisitions. you would you're performance it buys. resorts enough. replace on right, but I back Okay. of I Thanks, Thanks. to But it urban do mean just kind to Fair of pop. where really circling are starting hotels, that urban your

Mark Brugger

Yes.

internal our If doing I we're have it. from half it it's pipeline, But about precluded I -- price for you right mean both looked We now, resort of at all half urban available, not soft think about in you I at are probably the branded XXX asset -- half typical restaurant are of it, pipeline is those good urban half rooms has and independent. has the management those. in probably now. our to a a think

have think to something something different on markets pursue it's our is we'll very But price right. we radar is, when no, no, continue the and viable, that it's definitely profiles. different risk screen So urban

Operator

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

Your go open. line Please is ahead.

Bill Crow

are normalizing for earlier Hey, hopefully you got ones good as I've for travel leisure today quick Mark and business as on Jeff. as is The and weekday what seeing weekends. fewer demand consumers also days leisure consistent taking something travelers Is that the there normalization we're two afternoon. two Mark, for heard We on Two, for you. is are seeing well? shoulder and long resorts you some and you're that normalizing again. one with that that

Mark Brugger

incredible for urban extended but saw Yes. demand, in terrific I of I'm kicking so weekend both portfolio read-through we in markets June off we're and the a leisure August. and July Chicago was not we entire of markets have in even seeing a industry, in hotels, our it's demand kind the three-day like XX mean, sure

trend seems created be equal. I to good. looking all resorts aren't So that our at was

result but to to seem So be strong. continuing all versus maybe you'll very a have Vail the Florida in they different Keys Sedona, versus be

when pretty sold see yes. actually know how it post to gets impacted. out out, dynamic The may turns fall. advanced we'll a more months they're again to this over XXX% see good, it how overpromise. we'll out it levels. more relatively not optimistic, as so It'll it's XXXX see you -- when look we'll significantly hate think seasonality Day be How but I it -- Labor but bookings that's we're But to be dynamic I exactly it is. certainly But plays we'll

Bill Crow

looking to that's a when is numbers, that give because next you the good transition XXXX, really the I of No, think -- going comp comparison. when on the And kind XXXX Yes. talk like okay. I we're it better gives people seems XXXX. XXXX year are me about up at

comparison that does you so that XXXX. Can have RevPAR portfolio to resort And Can do you think your in in XXXX? -- positive how to next year? XX you -- portfolio growth yes,

Mark Brugger

a we we repositioned several it's Sure. of also I of our normalized DiamondRock, our could, sense lot macro to have a earnings we'll have resorts. the out resorts I But see in of a how better I next playing call trends, November remember our how on think we'll think mean more in for world.

a done. that Margaritaville and had So we et repositions full really outsized hotels, even would the chance like we've in the cetera, expect growth get Vail, of to that haven't benefit

stated they out, our levels benefit resorts I that So we I as that we leisure in go are resort I stats demand. big certainly permanently of the comparisons, may overall as outperform well. year-over-year our United U.S. see based exactly have and we'll believe that fundamentally should we're but how at play I trends But But the macro we'll repositionings. do on help how have mean States. higher resorted. in under to believe

Bill Crow

the less didn't than you go left Jeff, six Okay. months got to year guidance. give And we've Thanks. balance the

did. peers Some

the per had peers you to not. year as did Some share overall. wide the about add think I maybe wondered anything FFO if we on

Jeff Donnelly

Yes. way achieve I the you expense, our EBITDA. per in think number say but EBITDA, backing million release didn't building and the do won't of We said look I of gave provide if Mark likely sort FFO the the math is but a good are cash that we public, to provide tax think I I an guidance, And share expense G&A interest that income -- the in there We about hotel comparable $XX into that I in we number. the it. you comment for which in we a think give schedules tell $XX you I obviously, blocks would good where if his way back that in there, off this guess. adjusted just XXXX to press FFO that's million, of would XXXX

Operator

And Street. question line of the from our next comes Darling Green Chris with

go ahead. line Your Please open. is

Chris Darling

in than X% for higher operating being It XQ despite comparable lower. like Thanks. about expenses portfolio occupancy XXXX, the Good about afternoon. X% were still looks XQ

of So couple a questions.

give helpful how buckets understand us also relative of stand First, just would can to expense hoping some to things the XXXX. occupancy then some it might a continues grow? drill different of sense those be to you of And into where as and move buckets

Mark Brugger

to into Sure. that. to delve try Happy

big a on goes is mix some on shift margin. So with what

levels where on restaurants record So it some but about banquets mix our XXXX is occupancy. in run still was XX% the in that individual at at the generally it a was look runs would and in expense margin. We of restaurants to probably categories, below talked are more margin, other and on well that XX% urban thing came portfolio. say more, big the And I

up look going on So at the kind less In group when make depending the different particularly the and mix stronger quarter-to-quarter, in is about if mix F&B of think profitable, look highly kind banquet, expense it's individual what's on a little of to you they're quarter. little wages, less in the you side with that numbers categories, which mid-single-digits.

we quarters our the cost look the will X%, year and we're is try doing at Overall, operators. pretty X.X%, cooperation total there. really kind are like costs of in some to more more but result we're restaurant, what to again with our you expense food XX% management they're which of our restaurants, I be If testament up terrific seeing XX% a to it's think because kind think growth normalize asset for doing

the going -- So a the how be for pleased is expense you're I yes, on to think total that's growth full-year.

Operator

our from with Evercore And line question Pfennigwerth next comes you. of the Thank ISI. Duane

go Your open. line is Please ahead.

Duane Pfennigwerth

Mark. Thanks a longer-term afternoon. taking the good question. for one for Hey, Maybe

thinking couple longer-term? changing just kind you a Could How leisure travel patterns spend. higher that? are you the structurally of leisure about call alluded You a on on about expand times

Mark Brugger

just think to and the now used almost shoulder is on as the in seasons I what September, focused are shoulder trends which closed seasons. be secular well, empty run hotel we're that that -- It's XX%. longer no can is Sure. things and Vail

those Destin they're actually seasons in still shoulder -- So Florida, seasons now ways. in be we're prime to seeing you're many Beach what used

in markets this reasons think elongation seeing then is have I the but call urban desirable places skewing at the, we're the to urban industry markets. what more even we're core resort of they within lifestyle, is the flexibility. more And at stay and and So I and the period people markets of want to one

a of stay internal early, capture numbers basis be if that hotels leisure, United leaving, the So leisure. the day. trend day XX like and that more maybe a travel about extra road, that kind to their of in different think States. come remote stay you Incremental looking how going Saturday Fair our maybe this partner is skew have million we're come about they're travel and night more is pitch if weekend. arrive on because per instead there's one conversations, incremental a to appeal that you And frankly, instead people And we that's hotels then to blended to can actually, our half stay an in even probably like and they need on of need a day the families more that work as of are the to remote, secular extra and that do change kind And think ours. at we over of big offering those why they of slightly? just important. think for of And urban in the kind customer? world's differently. in our more experiential arriving of there's People Monday, family, on and how today, we for And hotels, that they do macro our maybe and we more And can work should back but going we lifestyle there kind little an lot do incremental options. towards

the what So -- million jammed total what is into of rooms a XX that's incremental resorts XX% stock.

the funnel. So it's built. hotel they'll that there's nights been lot I have kind of resorts a the are in, another to we're into build. hard lot never of mean permanently be of And a markets incremental increased

really be. that think to good place we So that's a

I you capture we think to think seasons leisure are longer. are to those much you So then going shoulder about on urban to have trend that to and the be we're hotels going to and the side, markets, resort both trying core appeal how forward. And think need outperform that within line resort traveler markets

Operator

comes with Point. Dijkum And our you. the Compass from last of Floris question van line Thank

Your open. go is line Please ahead.

Floris van Dijkum

guys. thanks Hey,

trying as Mark, that's markets of consider a proceeds urban be next -- do could sale, theoretically any Lauderdale magnificent is in is branded, ones. curious, Lauderdale. not resort both that as it look to or mile exposure urban like but The your how the touched don't those exposure urban market? or the resorts? Fort It that Kimpton. Westin asset of Gwen sale brand, If you the contributors as necessarily Boston. more Fort kinds past largest change I Just Western Diego you some sort quite candidates the necessarily deploying the And those been they would you've the It's San like fit The was a upon to might in yet, although thinking you about what potential Chicago. into Miami at and was that as quarter, well of is a pivoting, soft time. It guess Fort was right maybe your market an urban are the market. you're Western over Fort But I for your the that Lauderdale Marriott How It was other Gwen is EBITDA or Lauderdale you a into not about think

Mark Brugger

for a there Well, there's lot us.

I yes, strategy. The exactly is on hotels couple distinction. of So Gwen some about kind say, provide a would to those of talking

where have New terrific. to we So in York hotel, doing like we hotel a want market that really like luxury collection Chicago, that that, is

premium that a in is Chicago. in, consultant city to Marriott the want you consultant, you're and the be of a the If hotel system

So which been are Westin I have the trend lines I you've in like A hotel the Lauderdale, Pablo that Fort going success to, the believe testament Salas. we think to exactly that's there. on but

We a do in year. $XX there revenues have restaurant that probably million will this

think resorts one. I experience. The in that's I Tinto's So what do we're Lona top think a brand to And on evening we three number create of kind restaurants try And on we'll the those always one number is call differentiate TripAdvisor. restaurant. even is hard the

So experience. special around a unique we try resort differentiated do the experience really beach really people to it and enjoy pool create make a things things that and the experience that

that long-term of best necessarily want box Chicago. think It's located I the things that big in a think a those think big, but about probably but be probably the to on outlier are Chicago probably that to Diego, markets It's can eight BT in it an the of beneficiaries box best city a leisure you'd they where So of lot is characteristics in fits successful markets seven with trends. week of hotel. and have have and will our leisure very asset we'll are monetize Austin, kind with it's markets the an our we will kind as do think city brand Miami, San we'll like The do. assets, of kind Chicago we But Marriott those portfolio. of strategy, successful, be mean doesn't very big the of strategy I it continue more our for

I interest skill. think those are higher level on our

Operator

Brugger like And conclude this back for I to to question-and-answer any over Mark the turn conference further And does you. session. would Thank our remarks.

Mark Brugger

call. the next look and Good interest to to updating quarter. Thank you everyone on appreciate forward DiamondRock, We your day. we you in

Operator

participating. Thank for This concludes you call. today's conference

Everyone, disconnect. a day. have now great may You

DiamondRock Hospitality (DRH) 6 Aug 222022 Q2 Earnings call transcript