Earnings call transcript Q4 2022

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Operator

Good day and thank you for standing by. Welcome to the DiamondRock Hospitality Company's Fourth 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] Please be advised that today's conference is being recorded.

like Ms. the now your over would today, speaker I to conference hand to And Senior President Quinn, Briony Vice and Treasurer. Ms. Quinn, please go ahead.

Briony Quinn

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

comments forward-looking started, let and everyone of historical Before we federal today to securities me not be get are considered under that remind many our statements are facts laws.

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

In addition, found this be certain A GAAP on information today's financial of can discuss measure in call, our comparable we reconciliation directly financial non-GAAP will earnings to press most the information. release.

call and our Mark the With over to Chief Officer. that, President I'm Mark? Brugger, to Executive pleased turn

Mark Brugger

us the thank Good our your Executive team morning and to remarks. we'll for prepared questions entire you take I'm with happy be and after here today. joining

quarter revenues, in The fourth best DiamondRock, margins, record record with year profits. of history and capped off the record

by adjusted comparable full $XX.X pre-pandemic XXX.X% of and million, $XXX.X was this over the EBITDA RevPAR was hotel by hotel increase For $XXX.X comparable better with Results comparable even an million XXXX EBITDA XXXX. surpassed better or adjusted X.X% million. year,

profit points. comparable peak were pre-pandemic margins basis Importantly, XX.XX%, XXX by our surpassing

in The are curate choice hotel trends. operating destination hotels tremendous travel urban that portfolio a be is irreplaceable tailored their to we've execution results particular leading experiential to the uniquely comprised strategy secular of These were on and our made consistent possible assembled the that markets. of of resorts focused the is by portfolio

off. paying is focus Our

operating our to value. lodging total the years, among today As discount past And the nevertheless our during at strong relative the consensus has to while led a net stock than in XX% portfolio REIT few performance the performance sector. trades more shareholder returns best been superior asset

diligently and to to at will of close are we built work discount. proud what we've continue DiamondRock We that

$X.XX during an fourth share. per X.X we shares of quarter the example, repurchased million at For only average price

use will these balance we of ample low-leverage forward, power on opportunities. capitalize liquidity the our types of and Going sheet to

Let's company's in accomplishments at little a look XXXX. closer the

First, we for Bethesda Luxury Margaritaville our Conversion, West, late repositionings Hythe, completed Resort completed Collection Brand the Clio the on Lodge Suites the Sonoma. executing XXXX projects, business of Luxury Key Conversion, and Vail, ROI in resort the Collection numerous including plans in and The in in The

third, incredibly by an bank averaging three $X.X Second, acquired high-quality yield of XXXX and RevPAR over over we X%. in we average And $XXX NOI our hotels billion completed largest-ever with a debt. stabilized in financing recasting lifestyle favorably

lodging portfolio nearly with encumbered balance drive is of REIT value. $XXX an shareholder million all the a sheet liquidity, control -- double-digit pending completed ROI Three, fourth that in public to deliver should earnings which well-positioned high is our XXXX urban our DiamondRock markets is and for in from future. that of an business a with markets; advantages, balanced demand Two, portfolio about and over from projected a segments. just and finally, that enhanced projects the value. including: resort returns. the opportunistically full-service least Note, liquidity to We be advantage to the enter one, group leisure of XX% also us number REITs, XXXX number And gives XX% a optimally and exit incremental mix our

opportunities other in that private With an expect on the advantage buyers the as this pounds of firms remain significant ready dry and for emerge. very growth, year likely markets are external to powder, On XXXX. challenging PE have acquisitions top to our we we debt to are on

on core in finding unique remains the of and off-market low a skill of is deals there deals team volume currently our opportunities. a market, While

a just acquisition, that few ago Our recent most months point. illustrates

not lender walked loan quietly us a negotiate I we up deposit equity its is second an froze as through a very were dollar about and sale uncovered as hard a came the well-known for opportunity a have We debt number Resort originally Austin This completed years over for had want from markets discount in call. have multi-million firm. Spa a created cultivated opportunity with private when then on And seller under spectacular and property contract, placed go resort had for about last Austin Lake their first diligence the the relationship Lake commitment we're was due of a their us. to firm the about that deal. to summer. excited for this to deal did the with come actually They The it. their acquisition

trailing cap bought RevPAR of NOI which almost a of key. high-end unheard a generate one resort and X% our luxury nearly yield property, total rate and per for at will a EBITDA highest We

is, the site, that as considerable home that a one make since closing we possibilities expansion on good run. really As which deal have are there on this the confirmed

As kind we add the of we're for, that and quality, these looking high forward, value returns, deals go are opportunities. great

to the turn in discuss greater call over the detail. Jeff numbers now to I'll Jeff?

Jeff Donnelly

Thanks.

to million a year the in by remains period for revenues in nearly X.X% As portfolio sources $XXX higher fourth DiamondRock. XXXX. for comparable the were quarter points the growth. of growth or for Mark XX% RevPAR and quarter, said, one than This this over of several increase is basis future occupancy gap XX% $XXX Total million XXX an driven record was XXXX. the in over rates it room XXXX. or XXXX, company Closing was of comparable $XX down Comparable record quarter the was above

revenue, identifying of $X.X was the team's over revenue F&B streams or XX% in XXXX. and our up Other million creativity was during management $X.X the income to new driven XXXX, outlets over million several asset by speaks F&B pandemic. expanding above which directly repositioning

new several share will upgraded XXXX profits new will soon drive are we on levels. for that We and outlets or to working you with beyond, continue to

nearly adjusted XX%, up finally, over was $XX.X which was Adjusted quarter points $X million XX%. basis million, $XX quarter million, EBITDA EBITDA $X.XX adjusted share or Comparable $XX.X were beats of million by the XXXX points and XXXX hotel over XXXX. to FFO And of fourth XXXX. margins fourth quarter fourth EBITDA XXXX. per XXX XXX XX% basis Comparable hotel was or

than at the in group in transient improve XXXX to XXXX. portfolio our to still the further our across gains we quarter, XX% and quarter, the forecast. and end urban significant outperforming Short-term at Demand XX.X% demand, in in our citywide quarter remained but in surpassed is fourth urban as was driven period rates. the business stronger urban XXXX, portfolio RevPAR it as of greater expected third finish of resort the specifically have by of continue the footprint XXXX strong robust in XXXX levels. RevPAR throughout a performance in remained across XX% transient increase to Short-term our was XXXX. in to hotels than business that the -- group same our up drove demand room calendar XX% XXXX, and fourth for however, room we the with expectations total at Resort it our has Recall RevPAR over that XX% nearly hotels

and means occupancy It XXXX, percentage resorts. to we XXXX XXXX still behind was run at QX is in note X have our which important room to that points

-- XXXX. fourth resort were quarter XXX profit profit basis margins Our resort points above

barriers strong on travel because of supply. new high premium secular demand forward will performance hold We are the experiential for and resorts the competitive to confident going

variations. talk resort let's were segments. So up the markets rates. quarter in demand some a to about in compared increase revenues Leisure had XX% The XX% great, on the daily XXXX average

this in growth healthy and expect We season like markets Huntington Beach. Vail

mix can Additionally, lock and resorts Beach in group oriented group like Fort Resort shift, Lauderdale performance. our up,

Key periods. XXXX the dramatically Nevertheless, strong growth little Key higher West demand continues shoulder levels and profit in peak incredible with show giving demand, a great we West remains to back relative occupancy performance lower than in flow-through to XXXX in expect at margins.

in but Business story. up a room interesting period quarter, XX% Fourth higher sold revenues QX to daily the of sold BT XXXX, revenues that's most fourth transient XX% revenues increase the in BT were over the of XX% revenues BT significant million XX% were rates. DiamondRock. XXXX, XXXX nearly -- the will rate. nearly probably quarter average same rooms is driven BT on on rooms In of roughly but were over quarter was in We continue by XX% XX% XX% QX in $XX XXXX, XXXX. XXXX. versus in were of a levels, XXXX, and growth be for of full-year source BT XXXX of of believe XX% BT in

is from room significant at travel. So, growth return the of continued how for you matter data, the no corporate there look burgeoning

XX% in of and nearly XXXX. the Fourth growth an the The XXXX. nearly as and was of rate an acceleration significantly XXXX room. year our were in outside at Banquet from total we in come to XXXX quarter. improvement for up XX% spend we they was expect of demand group and the groups accelerate group same full XX% group of from strong room quarter the full XXXX. nearly levels is year they XXXX and XXXX, period move XXX% Group the group through revenues XX% coming, are When quarter, are improving, spending revenue is quality in

Specific our base group ahead Diego books XXXX. over of Washington nights the total for in of are Boston, setup and XXX,XXX room XXXX, this start San Chicago, Phoenix, XXXX. with the nearly the room books to XXXX the the hotels, of calendars to budgeted an XXX,XXX at This room Citywide total to in and a beyond. a line have all business year core our start on for are We positioned. compares well stronger already production expected in nights nights and total pointing of terrific on approximately of or XXXX room in are XXX,XXX production in market. room final markets nights there at production of XXX,XXX D.C.,

in term as the Given growth year a expect and the outsized the Group just in see sales, citywide saw we throughout short for availability XXXX. our year to we increased calendar, strong calendar in

to Curio hotels West, in continue $XX.X -- be the award-winning the XX% Key Creek. ahead local Clio these Switching overseen restaurant our The reimagining growth This Collection. of involve as producing in Lifestyle four more the XX% XXXX. adjusted initial upgraded a This year, Burlington Vail, adding two the Lodge Sonoma, hotel We years, in are well excited EBITDA including Cherry Projects. gears, hotels This to past four in in Collectively completely and and in lobby as a they Beard increase we arrival the of than will by of ROI The a convert experiences, James is did chef. Hythe by profit the our Margaritaville we million will Hilton and new underwriting.

is transformation There is repositioning downtown, lifestyle Seaport leisure exciting to the at adjacent Faneuil a and in Sedona down present most next of Boston, opportunities. to the Franchise financial exciting panoramic the to Inn few at Orchards expire Boston Orchards unveil district will formations. Courtyard creation business the Orchards unparalleled later underway we'll years Resort major travelers. Hall Denver involves agreements hotel we reinvent our the Hilton both of opportunity Westin the Sedona's in L’Auberge value views ran Sedona. year and Downtown discount has red more and Last year, In in this de serving the come road. the night $XXX and our and An rock

our capture much to rate reposition to that is differential. of hotel plan So that

our We to plan master as will have share more develops.

XX of hotels strong. the We in new have months active acquirers past our been and performance been have

In exceeding in resorts underwriting XX.X% its NOI or in fact, initial Destin collectively BAY XXXX, by EBITDA full-year its million, in at ahead XX% year. Marathon, $XX of price the of on purchase was million XX%. initial generated two Our underwriting tranquility $X.X first yielded by over Resort tranquility in

right of Austin, three Lake of positioning surpass line is Shorebreak weeks in and expectations acquired new forma in pro about late which the spoke final manage on levels still Bourbon initial achieve The year Fort Orleans business XXXX. to in New to enhance the and Mark was in our just plan with November executing the like in Lauderdale, to from underwriting profitability.

matters. ESG Switching to briefly

more new consecutive website third net proud by published the found hotel are well can named to goal We Americas introduced our be leader zero We become much environmental XXXX, as the for GRESB as for Responsibility company and in in we be sector our December. Report XXXX. This XXXX social targets by year. to the to Corporate our in and a

credit As our expanded Mark facility recast we in mentioned and XXXX. earlier,

revolver, $XXX hand nearly which have our liquidity fully to cash us. between of on available our million undrawn We total in is

During million, million the placed I’d during interest say, the swaps. $XXX placed quarter, quarter, of first we $XXX incremental rate we

to either XXXX to fixed leverage most total And effective maintain of maturity debt to the with on net capital is this debt manage of point, As of debt this course, years. and of way or XX% moment, interest average we a rate times and concluded EBITDA swapped. of start. is, from low The X weighted preferred our exposure X.X

have maturities our of assets We debt near-term by no XX debt. XX and are material unencumbered

capital taking pressure Moreover, particularly opportunities leverage markets. our no a of significant hidden a maintenance, size true put that capitalizing These on the on position, unique or is dislocation preferred estate opportunistic for ROI real DiamondRock of in we a of have whether allocation, securities, are company. value-added and pursuing can the be be investment to in deferred pricing projects capacity our company advantage upon qualities which common

are prudent recycling to to but continue value. maximize being We portfolio, our review accretive we shareholder opportunities within

Mark. to On will that note, I back floor the turn

Mark Brugger

Thanks, Jeff.

constructive. Our outlook remains

from are we Importantly, a strength. of position starting

record as favorable is our quickly performance. portfolio all-time recovered portfolio composition to led Our

We prior XXX with XXXX margins, great points peak. ended also profit above basis

significant providing staffing XXXX. as Like variability costs, overall rest and the margins throughout occurred economy US makes at profit as value year taxes we to rising challenges in from well guidance increases and of insurance view from the industry, wages expect of hotel in growth XXXX, some this the property that this little the our For time. do progressively

By to expect and for normalize. be the expense end this G&A year, comparisons of be million. corporate million interest roughly are we $XX.X to $XX XXXX, expense projecting approximately to we Also

in headwinds, these growth to segment strong very and business continues the travel operator-prepared every despite our budgets XXXX. show demand of However, in be

records revenues and total this for year. adjusted new strive comparable hotel to again set will EBITDA We

believe ability world of unique on look out assets is remain to optimistic travel decline particular, in we and highly future was trend our the XXXX to This in we come. travel upon of positive sought-after leisure the maintain cycle. pandemic, As consumer a a industry this and will performance are to that heights line generally further, that forward. We well that high trend remain we need. conviction base outperformance the travel continue satisfy will even premium us on that and only for valued to of and expect Leisure experiences significant properties years we long-term going onset the the new before this gives build in bullish the its one most and the resort

funnel success attractive will to the That majority looks hotels together need power our hotels revenues take highs business second of have ever. the than for footprint that achieved tailwind the new [Technical urban us a teams with at in which to urban more future to has Difficulty] constitute now our portfolio as the DiamondRock. an combined and our profits. necessary The get Our great, still drive group at resorts for is already

demand there is settle transient, clearly and business our will but there ultimately out, on still for where momentum. room is positive As improvement uncertainty

ample that model strategy, we to and industry. liquidity was To with the a a focused we wrap positioned cycle, quickly. believe It be in this remains for great and travel a to XXXX for up, are time record portfolio, year DiamondRock well move

to up Now open questions. it like we your for would

Operator

Instructions] [Operator One our first question. you. for Thank please moment

will Our question Citi. Rose from first come Smedes of

open. is line Your

Smedes Rose

you kind Hi. to ask believe I XXXX. of Thanks. Mark continue I'm sounds Jeff, bit gap more gap And you occupancies you, morning. business that in a or Do just to gives XXXX, wondering and the feel on you Good there? there with margins end. margin little it's close you just can XXXX talked and to to about kind are confidence If be like that that side the in it leisure wanted XXXX? what I couple your at of you a just decline of bit. right you I in And pressures lost kind remarks or little mean, speak on the I versus maybe in you could more expecting side? flat if you could around guess, the that XXXX? just to like

Mark Brugger

is Hi, morning. Good Smedes. This Mark.

be this in take to the we Yes, year So at expect question hotels. to first the the gain of majority on the occupancy, urban particularly occupancy.

January last properties. year urban up and at come harbinger. all a you that we're the -- of Occupancy look was seeing is versus through If almost XX.X%

is talked to we the sell were to at room about you in concluding quarter as remarks prepared through where is component run there. -- big building momentum as we the that XXXX, almost move in there we to be and Jeff part of a So, Group going XXXX. fourth parity as

move So, the going are I think into the occupancy and data the line momentum clear as significant trend that we and are pretty be to gains XXXX.

concluding property remarks we the like things kind going I affected are (ph) of wage are mentioned are industry of seeing On my in the pressures taxes, that pressures, to of normal margins, rest inflation. be insurance that the [cadre] by there

those properties, on have food things replace differently, to we haven't same do food, have we gains, are cost changed tight eliminate we've controls of of we are this number the energy the productivity the pressures. We at we've by inflationary kind less expensive and offsetting things menus with had managers initiatives, doing that more items

mitigate things So try on the we're pressure inflation of a doing to number to expenses.

looked if that I we could on would success. think we total, hold flat, XXXX, margins GOP if consider at we

Smedes Rose

just can you the follow percentage property guess So, are say level and wages you of and expecting just for features what and to at sort XXXX? I in benefits up,

Mark Brugger

guidance, ranges So, from it we've in but our given properties. XX% we've to X% not seen specific

percentages, higher. some it's little actually of So, on percentages a bit markets the the misleading the low-cost been

be move of then already. might might markets at $XX $XX wage from some the you And to higher $XX. in So you

on So, the a but much increase it's base. larger smaller is

high industry variability be expenses would wide the year. this up digits, in we're we So within to certainly, seeing But expect the single portfolio.

Smedes Rose

right, thank you. All Okay.

Operator

again. question. our One you. Thank moment moment for please next One

Bank of Asad of Dany from come will America. question next Our

Your line is open.

Dany Asad

just clarifying. morning Hi, everybody. good Mark,

budgets true XXXX. this every for year XQ talking this is you of of quarters prepared kind showing are the a I segment your all Does growth think about lot hold driving were that? four in in operator of prepared remarks, or for

Mark Brugger

The good. going mean, resorts, operating XX% to in this growth first consistent every every group going year of weighted this year, but the be looks month in I for towards showing January to budgets. prepared last the Certainly, whether half comps on be it year. or we had of isn't increase growth for we're given year, segment it's business the the RevPAR in is the

So, we're encouraged by trend. that

Dany Asad

in you Awesome. rates XXXX? of you as question year as for my leisure all you look for how -- other then we are Great. this budgets, And into is, kind of kind underwriting of your

Mark Brugger

very Leisure interesting. is this disparate it's Yeah, year.

while, Jeff Key at Vail, in the strong Beach, instance, Huntington Sonoma, for accelerate their remarks, all We're see to a shoulder continue performance QX the ability in in So to higher softer. little to talked about record charge prepared and is West very seasons performance going getting rates. new in

market. So, at specific drivers as very that in really I specific we question, individual to underwriting the look leisure think particular your and market demand it's what are

Dany Asad

you Thank much. it. very Got

Operator

you. one from next come please question. Thank of will Baird. moment Michael Again, our question next And Bellisario for our

Your line is open.

Michael Bellisario

trends. morning, your at you're for spend everyone. Thanks. group and your could you of hoping perhaps on box behavior Mark or Jeff, was versus of properties? differentiate side big I booking in terms the group seeing seeing resort what you're what Good maybe on just hotels

Mark Brugger

take do that want you Jeff, to one?

Jeff Donnelly

in we mean group portfolio. to I the see continue Sure. throughout growth demand

incremental over maybe off XXXX [Technical incremental demand. in group mentioned same in Mark of fall higher. going as were are about that quarter of bookings the versus But resort part think forward Difficulty] is I fourth leisure as transient, the in we've at little we X% first, bit XX% success did rates filling a quarter the seen on our side

portfolio, our just as booking about opportunities given booking that throughout portfolio. the throughout see And group So, the group we the continue space trends to we're pretty progresses. shorter larger availability year excited the given and window accelerate

Michael Bellisario

acquisition. the timing follow-up bit, of just then the there Mark, little those Austin property? of a potential at you initial or thoughts and on touched redevelopment maybe some you And provide your can timing Helpful. ROI longer-term Lake a on the projects on some maybe

Mark Brugger

Sure.

with working the property. the We with that Mark. evaluating is November, we this in use others rights in we've So, on and have attorneys been disclosed land the asset but

the this we It expansion significant lines probably opportunities. land user actually the that to take be we that get we it an and couple of to think plan get year, of through us extension feel and have significant confirmed on it would locked to is it. There have master -- in or confident years and kind do we we the that. things So with that silver a have we're we've done, the need to able the to but will fairly get ability execute going evaluate

Operator

Bellisario? Mr.

Michael Bellisario

from all me. That's Thank you.

Mark Brugger

Michael. Thanks,

Operator

please our question. Thank next you. moment One for

Powell Barclays. next come Anthony will question Our of from

is open. line Your

Anthony Powell

good morning. Hi,

and Just a question margins. on revenues

you for more maybe those maybe need you If on be and get ongoing get to your could growth talk basis to basis. on costs GOP given given you about into year margins? what the to this insurance pressures, ongoing RevPAR what think -- wage not portfolio that an to flat And an

Mark Brugger

hard, upper that Sure. upscale saying we the margins be about to X.X%, think are We upper is of to industry hold up environment flat. the because It's of they're not industry -- for guidance. giving industry grow able kind we'd for GOP X%. But over specific generally X kind upscale the [indiscernible] up

will else on I to margins. add of plays So a depend assessment fair kind Jeff, right It But now that's the that anything on think how the that's out. economic environment. that? outlook

Jeff Donnelly

well, going that's single mentioned expense earlier of was I that digit we expecting No, -- as high make to just you comment should be sort the as increases.

[indiscernible] high single digit revenue So get flat same to get margins actually to growth. single GOP margins, digit high

Anthony Powell

some I those it. you group year? opportunity throughout the your guess bookings mean this of more year. in given you good to economic uncertain environment, short-term certain are talked I the Got the have ability to bookings And guess short-term outlook. the I in drive on how about later

Mark Brugger

Yes.

say of the group comments piece. would on couple a I So

the for quarter of quarter So, Justin acceleration in quarter, for bookings as the fourth the quarter the we in saw in mentioned and XXXX. the

this pre-pandemic, be short seems momentum. large for good the booking So, shorter year we're world relatively groups in that we crossed so than on timelines, window even the group order to over the The that remain are with year. of people booking end

I fourth think quarter, the still availability on we're that in attractive we really in momentum remains experienced XXXX but not only the dates. the that encouraged on the that some very fact is

when and date, Boston, best you dates attractive best Sometimes we crossover, still will. we we put available fact groups dates to into summer book us the all like gives time to we -- close still the in that summer high in the group Chicago, have to -- in very gap we're the more quality confidence be time if that booking and able have that the ability going those But open sold have are periods.

Anthony Powell

Great, you. thank

Operator

And one Thank for please next question. you. our moment

question Our Evercore Duane next will Pfennigwerth come from of ISI.

Your line open. is

Duane Pfennigwerth

good morning. Hey, you. Thank

XX.X% think respect with you -- that your investor relative to to the up Just January deck. put out in XXXX I

for from January of relative a the short-term March but context February you and quarter? sort in March, perspective the the question, could balance put of comps to Sorry

Mark Brugger

Yeah. I'll Duane, good comments morning. of This make QX. is Mark. on couple a

So, pre-announced January. we did

fact, the the our be total entire like expect City, fairly New biggest from to XXXX, do over robust and in We all York QX that Phoenix. markets up of easy exceed Salt you and Dallas were at hotels as markets XXXX. XXXX RevPAR year Omicron XX.X% up results expecting over XX.X% be Fort Worth, the with impact. quarter to XXXX QX anticipate the the we're urban levels But in mentioned, will So to Lake comp we

while Vail, growth others. mentioned, to robust moderating we from expect among Sonoma So, in XXXX, up QX XX% as even Beach, power Huntington from that's resorts, Florida help may overall, still be our Keys going from over QX, being resorts I and in the

with we So, to expect XXXX. double up I digits, total think that RevPAR double total QX finish, digits, is low

expect not for January line say us the at results I'd put we peer XXXX quarter among the versus probably the overall with expect pack and quarter the we of what is for front set. of will So, out those the

Duane Pfennigwerth

seasonality you. seeing was then on helpful. there Thank sort the just is and Keys the to we're where for wondering, maybe time peak the of of Florida your relative these forever. normal to the changes coming was taking revenue And a to off-peak management just, of you versus back I'm sort comment what different seasonality no something just that there period questions. Helpful That's seasons? pandemic thanks approach is the And your approach learned off-peak Is through shoulder that past? color. in

Mark Brugger

Hi, Duane.

say Florida ways. we own On some let's the Keys, can't Florida in enough Keys

that So, XX% were about they line. with that rate XXXX to flow ability in the rates higher bottom we're talking incredible to are than higher

floors place take the last and impact variant. back to profitable the pushback could to last -- the incredibly home they week. of advantage seeing XX got minute they to of Omicron will work the caused the didn't couple participated Omicron anticipate we're were by work is, home to from they be. somewhere go they where that of before had from all figure they a think there and What they you And of it's So, office from where days gasp really of another I the last trying to were year that could in sudden people surge drive if days

it. and back are percentage rate. we small XXX% declines. of when strategy week not sometimes anywhere targeting I surge we're bit. we're the back XXXX, our We've ago, get course, is to to are not And -- this we like moderating, we're is, years four what they sounds that -- $X easily. maintain push higher now XX% very going than to retrained is a And were pay that traveler seeing rates it to going to it's we saw that But yes, So that still little unusual mean moderating close can

our that's strategy. So

Duane Pfennigwerth

you very much. Thank

Operator

moment please. One question. next for you. Again, Thank moment, please one our

Our next question of will Securities. come from Patrick Scholes Truist

open. is line Your

Patrick Scholes

answered. questions my morning. good been have Hi, of Most

think comparable margin we increase. versus permanent when to XXXX have about margins Just ability and

been the XXX latest your are six points. So, you. that go XXX thinking what if thoughts that basis still that we something points, that, -- of would maybe back months the you're on industry a sort be ago, Thank specifically year not those, like may but basis on Is plus table?

Mark Brugger

let ended above XXX XXXX details, but basis XXXX. I’ll points Yeah. explains the Jeff we

that hotels think we operate So margins. higher I proves with DiamondRock can

pressures. expense in be Now some XXXX, there will

pressure that substantially some we're than in margin XXXX. against were we be there'll increase. So already But higher

Jeff, in jump do want some with to details? you

Jeff Donnelly

structural just also where area flows chime going I was that earlier, where to that, that's I be on mentioned in continue think better. see to the highest of lot a resort I performance rate reasons Patrick, Mark our Yeah. on our And There's for margins portfolio, side out have to as the premium on our going been think you has strongest. holding that. been and of the growth to that's

everything from But it markets to drive be taxes I those apt you probably margins XXXX. where insurance to relative that. in As in those for -- relates will think and that more to costs see that's held labor premium to

Patrick Scholes

Okay. all Thank set. you. I'm

Operator

Thank next please for our One question. you. moment

question next will of Deutsche Our Woronka come Bank. Chris from

open. line Your is

Chris Woronka

morning resorts is mean that you tougher goes come at Yeah. you back think do for be, question mentioned it have I still want full obviously up, lot you how eventually go room rates -- a function going little or rates to get, the Hey, Mark, which even comments, would of be occupancy do the or margins. a you of that to in resorts? as is I to think a on And there down you is that get the -- prepared you good can in guys. get occupancy. the

Mark Brugger

of own Hi, resorts. at up that resorts Justin different saying Chris. was [indiscernible] In it's some Lauderdale, replace going be kinds for instance, question. grouping The their great leisure. are of Fort to really It's we're a and micro-businesses, to different

gap. max get more allow great that, year Lauderdale, hotel we we're for we're than and the group So to going and that has meeting a to close group is that of which way last us like platform supplement in [indiscernible] going to to more that's kind back going had to

Some have no there we're and group, to maximum little rate on the to profit room harder recover to out going if figure it's hotels, other strategy be that bit is hotel has that going revenues. to the have with mix where play you XXX a

to adding but occupancy So, entirely through close maximize is group the throughout close overall profits. to in We'll some goal gap it XXXX. might portfolio, of the the continue not

Chris Woronka

all that's still a we've hoping having little could go dates. to prime I I bit about Thanks, rates Mark. what -- than are the those if And maybe you from more miss you're thought changes unusual, and that others. selective even mean, it's then macro going closen? again I in where are something mean was is different the group a And Okay. level truly those get to open it at some are we I there because heard do at back worry comment that, to and demand?

Mark Brugger

question. good a That's

group I more six is out, portfolio, Chicago dates are prime Boston a shorter it's the nature of bookings like and months months And days think of out. lot in still markets five, that fact window. little a six the the our

year. let geography So question. the it this to of add playing just for details basis I I'll happens on a it's super out portfolio. our the think But with be We're calendar happy any way the actually Justin

Justin Leonard

rather shorter to larger mean, to going down comes maybe those also XXX size. competitors groups the our book XX average smaller it and that and think of I I bit of average rooms there our maybe group plus. a are little are XXX than than hotels, portfolio to [indiscernible] some of maybe

it booking to of business us look ability a So, our from short-term window. higher of that sort gives percentage towards the

Chris Woronka

very Thanks, Okay, helpful. guys.

Mark Brugger

you. Thank

Operator

Thank you. next And one moment our for question. please

question will next Floris van Dijkum Our Point LLC. of Compass come from

open. is line Your

Floris van Dijkum

go up, question. could go by range, you're Thanks the that go I up higher and some could hoping guys providing you're or well. you're know would taking essentially X%-ish saying to operating costs to guidance of EBITDA your in but mean which my would your your margins keep somewhere same as that that not for have costs

way, another question. first you is down, do negative do XXXX? what see my That's there in going DiamondRock hard-to-Heartland scenario under posting a see what scenario EBITDA growth put mean recession, you borrowing I -- EBITDA

Mark Brugger

a margins think that of we we kind environment. that's we're We hold we environment that's the that out. of the mentioned can they're and well not flat industry utilizing do as earlier, how we giving the But That's plays of X.X% for can high in scenario if guidance STR upscale industry GOP has that guidance. for economic think environment. in all, digits the that First single upper

So hopefully that's helpful.

Floris van Dijkum

guess, is, two noticed still posted negative second It question this -- is hotels had I just last I EBITDA. that It is, Mark. I is. you my actually year

doesn't which a take touch fit which and that that represents of that and out Chicago forward -- bit you Marriott, in company think if that into, which would your your really replace of how upon we Suites about in think how XX% you over out of going what talk want EBITDA, the little is should income to where asset. Fort producer hotel highest maybe and Embassy Kimpton Lauderdale. about EBITDA your Bethesda I Maybe Your also actually you you're lost the to -- were trade

Mark Brugger

the you had was brand which Bethesda transition two Suites on that So disruptive. a mentioned,

asset. year. -- up Lauderdale, reason break that short and the we're The acquired, that's this Fort we negative repositioning ramping in it's So EBITDA, back

So and -- reason. but end as tiny smart, overall roof quarter until probably that's anticipated, won't Repositioning this are in we're that. the assets of transition, But portfolio. both be second year it's the are doing for these the the the in both were done

leisure exceeding Chicago the year market Chicago On our as for summer it the and to expectations, a the ability the ahead had in over group the went were and Marriott, year bring rebound expectations. great of us then our and

very performance And that with of so, pleased asset. we're the

better Chicago, mentioned, about composition us Chicago assets do you thinking in Right position to secure about the sales, of do a results that monetizing not the on. some progresses very clearly for loans large will is the asset we given better market as to accommodating that. puts and portfolio As year think our the but large move forward, we change inability having now, probably as

think So the to recycling. debt things markets and capital monitor we'll about those continue and

back going monetize where to there's experiential think growth did assets branded And Lifestyle hard we a -- that's to we very high-barrier asset, decade. be it's continuing to areas the in into next the that over entry putting markets. outsized if And in branded dollars going be

what to in Orleans So like Beach, be Henderson it's going to been going the more Quarter. unique assets we've going more the It's be be Bourbon buying. going Lake French to it's to of it's Austin, and in be more

the you're We seeing continue it. and direction company move in that to

because really the the XXXX been portfolio have part in in large years. those couple tremendous compelling last for were of results trends demand Our over we've positioning been positioning that the --

Floris van Dijkum

Thanks, Mark.

Mark Brugger

you. Thank

Operator

moment for Thank next you. our One question. please

come will Street. of from Darling question Next Green Chris

open. is line Your

Chris Darling

everyone. Related in the or is today the terms right be you to morning, portfolio? more levels, less across more there staffing at headcount or of done Good work are hiring running Thanks. to

Mark Brugger

do want Justin, one? take that you to

Justin Leonard

Yeah.

at running required staffing levels business we to we're the generally, levels think anticipate what to I be.

early on As way of not through we basis, progressed through the that sort year, levels same we given Omicron perfect will the last comparables have country year worked a business just as its where year-over-year time were XXXX. in are some

up by levels think we in are of much last lot I in pretty cases, these significantly business a able back see year, of the XXXX. perspective We've to pandemic. been But a the terms and as built fundamentals from what But level significantly ramp reduced was we're pretty a streamline end the really fast fully ramped where rethink staffing operating we of going below forward. from during those

our think the We're level. probably Boston, that. of XXXX budget versus hotel, about example it's Westin a I XX operating in managers in great XXXX forecasting less

of in to the So, streamlined business especially we've find more really found efficient and portfolio, assets larger roles some the throughout to model. complex ways a

Chris Darling

the to shifting net of in Got on today. preferred transaction you've But there's mentioned market considered work you capital that's if putting And then form not debt, the maybe gears, too it, available much equity. curious Mark helpful.

maybe Just you to in term. like foot the own thinking over get of about door other assets might longer a to ways the

Mark Brugger

the of But question. of the the clean a love balance do our all kind is Chris. other about today. actually, competition have private strategic of And there's time competition there equity of -- Hey, buying net we DiamondRock We story capital We sheet. deployment. great It's love a the places. in debt is tranches in intense. fairly conversations debt lot doing from and frankly, And tranches of

wouldn't not that relatively be high we us front. that creative overcome it it for But move has to very think I to to keep to that. on likely most down very, simple, something that do we're a bar So,

the opportunities that low deals, having acquisitions months. volume opportunities, And six XX primarily off-market in great we about find active right frankly, the the that now. on And conversations we've while deals we're is found last market,

advantages it need few to move this deals of it's only with having zero. like So of XXXX. if one REIT for we in being year, not of our a assets billion can do the it's do needle can really XX the be to of size, top-performing the And $X acquisitions the us

I smart think continue deals. we'll find So, to

of is number have deals. we to One And things those find that in today. dialog off-market a been looking we're we've of active do at the able pipeline, our on

Chris Darling

from all That's thoughts. the me. appreciate I it. Got

Mark Brugger

Chris. Thanks,

Justin Leonard

Thanks, Chris.

Operator

for question, One you. moment next Thank our please.

Stanley. will Morgan question Grambling Stephen next of Our come from

open. Your line is

Stephen Grambling

can remainder as consider The it's citywide additional the the of other comments provide helpful. on factors for Hi, quarter cadence first thanks. you revenue big we or year there Are about whether for margins quarter? thoughts quarterly by the the on were to or any think

cancellation And contributed XXXX, fees about there outside basis whether as way it think on may related follow-up, to year? were is quarterly have last fees how in cancellation to any a

Mark Brugger

one? Jeff, want that to do take you

Jeff Donnelly

going going going given guidance and how is and growth say, Mark I terms more weighted, think business quarter. to last our ramps of EBITDA year by to comparisons the year-over-year year. see, growth. I front-of-the-year that to margins the I'd we're first quarter just revenues actually probably give on is revenue last be But to of probably Yeah. mean, said, not be as significant in over

risk-adjusted a is encouraging from weighted standpoint think having think more I earnings So front-end our sign. I an

handy cancellation at looking revenue I'm sure offline. if I'm fee we Justin, always if follow or not you the can with we have up

Justin Leonard

more was Yeah. We XXXX, $X most I of over did more think have competitors, in our than it billion a XXXX. versus little we but like, cancellations had

has probably some. it's $X that material to not, in And it's I to but it think us, billion to less So material over revenue.

Some of our group with larger others component. the

Stephen Grambling

it so from That's much. me. Thanks Makes sense.

Operator

moment our please one And you. Thank next question. for

from come will Crow of question next Raymond Bill James. Our

open. is line Your

Bill Crow

kind Yeah, would number. kind but the up of you. flattish or in of made we I portfolio is, a If which baseline slight have thinking expenses the just range, And you think positive about I'm bias, Jeff. we number, single-digit excuse to similar Good additive course morning. get industry to be a mid up -- Hey, maybe how of high about think a the EBITDA then the me. just changes transactions the amount. think year. we over the to And and established for in thanks. One revenues you've then about

Mark Brugger

would on or guidance on I portfolio mean, I in store say, we're comparable called that about think I the it Yeah. that Bill, giving same all of is the tend I this to talking guess way, we level. a when that guess basis.

I the the made already of of and think as how as of and outside or about to that. in our forward. year that trying as we've past incremental adjust possible sort So transparent transactions be going wouldn't think we acquisitions the We're numbers

So, helpful I don't know to if that's you.

Bill Crow

right? for I it to benefit that short get you for time, of example, owned guess, going a this through rolling year? you're Austin in only So, period but

Mark Brugger

we But when it's looked extent very obviously asset. at contributions prior would had periods. our it the growth, we that year-over-year we owned profitable a historical made about think for Certainly, to the asset have all

Bill Crow

you. That's all Okay, Thank it. right.

Mark Brugger

Thanks.

Operator

remarks. Thank you. back I I questions further to Brugger conference would queue. to the speakers And now in for closing no the turn see like Mark

Mark Brugger

you. Thank

we you Have and the great quarter. look to appreciate in updating we your call, on everyone a For next interest DiamondRock, forward day.

Operator

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

You day. a may pleasant have and now disconnect

DiamondRock Hospitality (DRH) 21 Feb 232022 Q4 Earnings call transcript