Earnings call transcript Q2 2023

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Operator

Thank you for standing by, and welcome to the DiamondRock Hospitality Company Second Quarter 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions].

I would now like to turn the conference over to your host, Ms. President of Vice Hospitality. Senior Quinn, and DiamondRock Treasurer Briony Please go ahead.

Briony Quinn

Good Valerie. Webcast. to evening, DiamondRock's you, Second and Welcome Call everyone. Thank Earnings Quarter XXXX

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

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

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

I'd our that, to to Chief over call Mark President With Brugger, turn Executive like the and Officer.

Mark Brugger

DiamondRock's demand reached Global year Thank States quarter second and are you pandemic XXXX of for remained we DiamondRock surpass United are to TSA quarter the why to earnings expand billion stays travel to the joining a well XX% in discuss leader our rooms. been of hotel this expected positioned has in throughput hold levels for record today and the we'll strong. call. in come. years sector in and annual recovery later, leasing RMB X.X us

just adjustments the however, lines and headwind redistribution the destination our international on events, domestic, second these a will some are they business travel backdrop, unfettered momentary cruise and from this until remain impacting of the were is leisure-oriented year. In headwind quarter industry properties. competition macroeconomic but of and leisure of favorable recovery the later environment a in view, is weighing the slowing pace Against the of travel from

after past, is leisure in of seeing travel in are we forward will this firming that new the baseline growth weighted up its towards normal demand XXXX. industry upon new going an build more foundation than However, travel and emerging

urban full portfolio to desires year deeply today's travelers. and we for resonate leisure of of by remains group DiamondRock's each resorts and Measured of is XX% the been XX% were portfolio irreplaceable and be high-quality hotels approximately that hotel the markets, The tailored with competitive destinations, urban in advantage hotels XX mover revenue, many the our the in have DiamondRock experiential choice respective curated of to first The the has hotel REITs. their the XX and resorts these are in cities. business special travelers among resort.

portfolio's that almost properties our XX% our feature Perhaps greater gives management long-term which on up a over the valuation operations control distinguishing is unencumbered are premium hotels contracts, of at sale. the most by us and

portfolio to these modestly to All revenues revenue enable advantages of positive record growth in deliver second DiamondRock achieve the all-time quarter.

hotels represents RevPAR a competitive XXX sets basis with from which XXX%, their penetration, points XXXX. outperformed of gain Our

in Hotel in revenues XXXX. X held a Results closed X% impact upgrades and week second million, was stemming total that Garden onetime during for EBITDA Times the the was $XX.X which $XXX in former or Marriott City quarter second adjusted Salt of were Lake million back nearly electrical quarter Hilton the Overall, XXXX. million quarter. disruption ahead were fire Hilton $X.X the ahead at with Boston, of combined the of Square the from small by the

Okay.

Boston our cycle X.X% XXXX. saw. closer urban the little and hotels, we RevPAR a look trends strong, quarterly was second that At RevPAR this time urban the first exceeded year-over-year, Let's at hotels marked Truest solid up quarter the for the year-over-year hotels, well, hotels at at powering RevPAR XX.X%, RevPAR urban by Westin, which results two and performed urban the group largest Chicago XX.X%. increased which increased year-over-year segment Marriott, The the our

quarter of compared as XXXX. room total, group portfolio to In nights second X.X% increased the

favorable well-maintained is this even there more opportunity hotels having geographic benefiting are year. footprint. after importantly, We and from a But

XX,XXX remains XX.X% behind still that to there group of after just were hit opportunity quarter room peak. nights Second prior and project group nights room XXXX, XXXX we

hotels. emphasize are group calendars we encouraged We want our up in important bookings markets. for our revenues the XXXX strong led very most urban many on by group almost of the XXXX convincing XX%, that by to books is

more period varies the BT in properties like second points our was business in Business cities quarter in transient New the but quarter, mixed significantly occupancy was second market. by urban San demand Francisco. weak the demand basis XXX Midweek increased last York, transient year. but continued versus in strength comparable like at There good places

select in X.X% the our business and as X-week Manhattan hotels Inn. with strong over second impact at of quarter, were even of service stars the Garden in XXXX, RevPAR demand trio XXXX closure Our transient above the pushed Hilton

However, second quarter. to the the that out in BT point we became for comparisons industry difficult want more

there So of for eventually basis. Longer on be allow moderating it XXXX to appears economy business an term, to years get BT. peak, a believe we the nominal rate few a demand to recover require more the but a improvement expanding will bit to will transient

RevPAR but second over resort XX% For year. quarter down last up portfolio, to was compared XX% our XXXX, nearly

access world year, for of and travel redistributing leisure to record is hit to likely While cruise some Americans that demand. lines destinations unfettered international in a is this a post-pandemic

up that As from summer, and are international nearly lines seeing XX% bookings. projected destinations the traveling of year-over-year is evidence U.S. to of trend, outbound number cruise over the Americans to big be last

approach year, redistribution began experiencing leisure of We last comparisons year. late patterns to and impact new normal expect this their we this the later

are already Sausalito, resorts of at this signs in and our We seeing Vail. stabilization Sonoma, summer

December of booked same coming the RevPAR last is this time XX% fact, Resort up year. the versus for In Vail

we remain enjoy the travel patterns pullback, leading to of And that while near-term impact the destination pandemic, secular this due resorts of will powerful a lodging from the remain strongest new the to leisure year's winner of confident and start normal redistribution resorts factors. and number since a clear is some

of is number annual on the flexibility will more of than by billion touch have continue media created changer. more few than sharing. experiences value social of game powered Let and days One, in partially phenomenon Two, the of things, those. entire disproportionately flexibility states people leisure the hotel X.X work this to a locational There That's properties. been me U.S., hybrid a Xx locational post-pandemic. benefit

powering are leisure active changes end will or wanderlust The in of boomers often there boomers. decade, wave By there millennials by increasing is travel be next more and baby decade XX nearly of people a family demographic the ago. either the starting the retirement a Three, million with was than of underestimated.

build bright in persist imbalance because is markets. limited four, in resort And our product fundamental most in there number reasons the of the most that a one to resorts the often-insurmountable for is of resorts behind imbalance will and powerful supply with a this of conviction U.S. the future new barriers

resorts RevPAR to long-term by of NAV trend increased segment. the In over DiamondRock exploit growth. XXXX second and adjusted EBITDA alone, in had the allocation early hotel was to recognize quarter the a resorts outperformance its our and XX% up early XX%. lot just That's

Hythe Sonoma conversion a We and Denver Hotel we the advantage number drive that Clio have the Margaritaville, Sheraton Luxury the the to West completed continue within the a a competitive up-branding Lodge has and collection, to NAV. increase These last to a the Luxury Turning at believe projects to the impactful to DiamondRock XX of Vail Autograph cash will opportunities ROI Key collection, internal an from growth. months to In flow and large the collection. portfolio. of alone,

and second collective EBITDA XXXX in a start. is XX.X%, increase quarter with over a of generated alone hotels RevPAR adjusted hotel up four the just this Those XX.X%

$X next approaching For to few stabilized of million conversion we days EBITDA announced grow is example, hotel. XXth by double which the million. Boston, just $XX in year's year ago, our EBITDA The a projected with independent successful marks Dagny Dagny ultimately this and The EBITDA

to are Collection completed as Lifestyle to next hotel Burlington Champlain, to be Super and with we urban early the the year, underway repositioning resort French be Orleans actively well Quarter and Curio ROI Bowl early repositionings before in the resort XXXX. lifestyle more be a named New the Margarita Additionally, in a Hotel Orleans the Bourbon such to completed to of Hilton a premium

Behind and to Orchards the the projects are there add There is a to few The in more opportunities. come Inn XX% Lake many Resort examples to is opportunity Landing Lake of of tuned. just expansion Tahoe. so pipeline a ability Austin at of repositioning There these, a The has Resort, Spa keys Sedona. the DiamondRock stay is potential almost large These

reap complete transition benefit of The since have to for expect market for or of total, That's we to XXXX, gains you properties. we of these continue out acquisition several projects to on play an some completed good market. soon million ROI from a profits the $XX often repositionings to will In these update XX at our so increased time efforts years, give share XX come. and

well so been working that diligently find transactions worked have the more We of for us. to have

in hotels experiential unique destinations. Owner-operated

better the first-mover for have have focusing advantage. on a markets destination these decade We of and a been part

a unlocking deep value well have at properties position of which value these us pride about also types We in can to properties, loose. when great of we these types a create understanding of puts

As would something we any have we love. deal be said do year really this call, we last would to

with that deal treasured a Valley, of history, has fiercely are This is respectful of Chico fits Resort the following we part deep community, very bill, independent owner the resort loyal local small Montana. century. one Springs is without a a operated a This Paradise been the a While which Hot Montana resort in preserving. for ,and

NOI projected and at The resort at years rate, to are modern or we system in typically because of current modern at season, advance north of over our system. X an based practices phone did benefits regularly just per will rates XX% booking X in or the the prior operator cap not once reservations reservations made as yield best on GDS it buying owner and rates rates. no We NOI still tools management revenue X.X% demand, a accept is set from place. adjust a there to Most the still stabilize the and

of quarter, X.X%. year-to-date end increased the the Encouragingly, RevPAR through has second

site. to we there add a booking a out. investments special on addition also the the a place of special are number to to type and of opportunity is value opportunities benefits hotel various practices, In seek and the with projects XXX-acre enhancement representative of Chico is related

it let Jeff. over to that, me With turn

Jeff Donnelly

Thanks, understand quality working our apologize resolve. might be Mark. there I I difficulties technical call earlier. for to that issues operators' we're some

start earnings I the breaking into to year-over-year set changes a mentioned a was EBITDA and to QX the little on with revenue by you and down to in help difficult to revenue give comparisons both expense. quarter, want portfolio more our I last comparability given to call, be and peers. As insight challenging

All of will the basis. on are discuss I statistics comparable a

the RevPAR X.X% portfolio. X.X% an increase increased This down in quarter. X.X% X.X% hotels in revenue our urban breaks for total and resort revenue Portfolio and our increased to for total a decrease

If same the X.X%, to were nearly trend since were continues exhibit and hotels which we flat revenue hotels resorts down our we've XX% all hotels, in Florida excluded of discussed few Florida urban higher. increased XXXX, the quarter, a RevPAR last total our increased Our speaking, X X.X%. X.X% year. robust of year-over-year up just were year-over-year late non-Florida for but Broadly to our

Inn disruption Garden had for was We to few quarter. the June a in MEP minor during week Hilton of originating Times and in an due Square sources from a electrical The displacement fire repair. a closed

rooms completion about metrics also the have the points Salt at our X.X% these to revenue the been about implying We of quarter, portfolio. for shaved would Collectively, and portfolio for growth XX experienced entire events and X% the Boston Dagny City revenue non-Florida closer the the Lake for in some the disruption Marriott. from basis off upgrade

remain was tax EBITDA challenging adjusted difficult particularly Hotel below and by but It basis at QX XXX points XX.X% million. disruption was the last Comparisons achieved EBITDA. year, XXXX. mentioned were XXX to below million even EBITDA quarter, year several $XX.X basis appeals. was this only margin. $XX.X last points a they more property Switching from events, two and refunds Adjusted earlier

in the variance of break year. versus last adjusted EBITDA hotel me bulk the Let down $XX million

QX Disruption million a in in we headwind EBITDA shaved and prior year. refunds created about property $X.X the the in this of QX for $X received million periods, from of tax quarter year last

be would Importantly, these a our were margin consensus. little have and been adjusted estimate $XX for higher, factors, we than basis would of hotel our points or XXX ahead EBITDA adjusted million not two EBITDA better

QX our higher Continuing our $X full over more XXXX X reflect of the with impact with significantly the million insurance expense renewed a quarter. than of in so bridge, policies on April premiums this results

that such X.X% year-over-year items benefits million. offset other costs up management Finally, as wages These initiatives aggressive were or profit partially parking. and from were by incremental $X.X asset generated income

to must was our quarter. expected I our their managers DiamondRock be commend the asset what during properties at third-party at exemplary performance and difficult here a for managers

capital about ROI and have a evaluate preferred and on internal which opportunities. highest We common projects, talk finally, above yields share We Okay, basis. capital opportunities let's transition allocation. growth to XX%, generally IRR prioritize towards constantly the external leverage-neutral repurchases,

a projects the shares Mark we an $X.XX the already per ROI to in our In of months, spoke XX announced. share. total deal approximately as X.X X% of for well we several $X we per share In have as float million shares nearly at of for very repurchased Montana or $X.XX average over our million of quarter, special past repurchased million. the XXX,XXX price or $XX.X

Our equates capitalization to XX% purchase rate. price approximately a

remain We are we fund of additional of repositionings, which external future exploring will the proceeds to on capital allocation, or Regardless dispositions, can used the repurchases, ultimate fronts. growth. be all opportunistic

a having strong, balance committed sheet. flexible remain We to

X.Xx. We have demonstrated by as trailing our of low ratio debt-to-EBITDA leverage net

East a XX of Manhattan. mortgage on Midtown mortgage maturing $XX Courtyard in next months, the about small our have We in debt million

is cap, consisting undrawn cash our plus XX% over revolver. million $XXX liquidity hotel strong million corporate million very $XXX $XXX and market at of a of of Our or level fully

It provide range to the remains feel year. useful is some balance guidance me difficult walk through the so you in on of that thoughts let we a

first normal, group Visibility Leisure the demand may the is biggest gains year. of but to our it we well of is will San the Chicago, Boston, some Washington, Diego, the half and people half the the expect Labor pickup XXXX new little can First, on to return demand ahead short, of in out be more to remainder XXXX materially normalization continues but stronger market, group reset Day in play we transient this but off. D.C.; we are was than see a revenue, Business are behind leveling second solid a hopeful office. after and as year. in

with of Between the second resulted the demand to Taken quarter half in we quarter two quarter. XXXX growth, together, saw remaining has but the comparison. quarters, a that back the is poised than nearly in currently is more the X% revenue outlook line difficult stronger the in fourth slightly the finish third revenue

repositionings XXX RevPAR. to additional per million and on by renovations total $X headwind growth negatively note, revenue or basis final are second points an One projected quarter half impact roughly of

that or impact year, full to the million basis expected over For little is points. $X a XXX be

the fully and level off increases expenses. peak Cost leader inflation, the property recovery same. peers of ultimately returning eventually to we exceeding On our benefit the and income, QX. we controls wage market increases values, and labor a and replacement in Switching factors and remain cost. up. we're DiamondRock to to expense, staffed, priority. has taxes cost the in prior are moving seen been suspect costs see dependent costs, largest insurance first tied are should like expect will among single I so Property at revenue value naturally, our a performance the and to see

with increasing period The a April beginning $X cost XX-month renewal property of our is on X. insurance million full our on

a will was my headwind Second of a second the periods earlier, tax Property XXXX. bridge that increase received comparisons this quarter. than this also in We I new in of reflected be which cost, abatements quarter $X will greater in million in in mentioned of these fully XXXX, we Chicago prior half the year. successfully repeat but half not million second the negotiated for $X

basis XXX will we do adjusted the We hotel tax else headwinds tax expect EBITDA margins the XXXX. second impact by and XXXX. to All points year-over-year property increases of insurance second expect in approximately half half equal, property not compared

XXXX, let service just $XX million about to the me dividends overhead back Finally, be million. will turn are costs And for with million. under $XX to full our call Mark. that, and expect year we debt $XX.X corporate Preferred be

Mark Brugger

we on travel headed thoughts XXXX. on DiamondRock why and specifically few remain constructive a with conclude generally, I'll Jeff. into Thanks,

outperformance. U.S. new of leisure its For the U.S. occupancy cost new overall long-term The will it many the year years of to new hit X.X And its more behind the the to construction to in is industry, supply resume the benefit billion than limit costs, X projected have a borrowing industry next line and travel hotel record projects. nights. should high of adjustments as normal from constrained segment X viability year with fundamentals next trend can hotel next and over U.S. high

run. room will For is occupancy resort back revenue. alone and If and also to peak in to our spend associated $XX prior $XX DiamondRock, incremental we properties that worth have nights room get that pay back million revenue. in projects just urban off. to levels, ROI to continue get Group is worth incremental just XXXX million

Dagny about year this the repositioning to XX% up in revenues example, is grow million. with For XXXX projected $X.X Boston profits

pace XX%. for DiamondRock, year. we our revenue is for importantly, are next excited terrific about up prospects group Group a And

Our Washington This we million nights these markets so Urban room X.X encouraged generate than Phoenix XXXX. and Hotel XXX,XXX nearly books on in group are D.C., EBITDA. by the or San hotels for a Diego, XX% room XXXX. our XX% in in of is trajectory Boston, Chicago, nights have Currently, obviously citywide more XXXX

one As on tell, of strategy believe well DiamondRock positive travel. future ample the we is high-quality highly to and Travel opportunistically. our cycle a of world, move is a portfolio, most in and remain the around can with and assets that for valued positioned society the focused liquidity we this you

At your questions. to up we like it this open time, for would

technical could I there's know Just if summarize, some difficulties. been I

So transcript we this of will X-K the call.

Operator

Instructions]. [Operator

of line Our first Pfennigwerth. question comes Duane from the

Your is line open.

Mark Brugger

Duane, there? are you

Duane Pfennigwerth

but I name hear Sorry, speak with nice didn't you. the to they called,

Mark Brugger

issue. the for Sorry

Duane Pfennigwerth

this this like from maybe the could contribution no year-over-year No, expect ROI and basis year-over-year look that What you underway that acquisitions us into projects that help year the XXXX? a completed are size year. on the Can worries. impact you'd you've

Jeffrey Donnelly

in to head. we which Austin. because a trying were year few year, from the it I'm for all it's you the going build had dollars thinking Chico, our just think closed I'm million suspicion is Lake acquisitions in is be about and then have the My about And it. effectively that to late last answer this just happened acquisitions when that we up obviously,

If this be ROI And year, you're that about think as chunk some disruption was reverse. Boston that. There of mentioned, also dollars the I going year. good to of a year, $X Dagny be back top then and million begin think come would are Duane, kind next of have another of the see this projects I far. that that probably we million but some few offsets in, you of should on then will I

Mark Brugger

could here. couple Yes. jump a of just in, pieces If I

and to Dagny probably the the So are Chico here. easiest one bridge

said expect get of we and in is we X next numbers up So its we be which to to million at on well. renovation to that was On The at And probably that Dagny probably conversion up least of Dagny, is from number. years back independent gave XXXX. $X.X EBITDA all disruption do million ramp an to Garden year, would since And will we rooms the in in Lake on, expect million which and $X the return obviously, Hilton that disruption, year-over-year. as fully revenues closure then XXXX City X-week our we a acquisition the stabilized this specific the take year north to $X XXX% we Chico expected for year. brand that in to next Salt expect from its and to a EBITDA

Duane Pfennigwerth

pick just path quarter? the you taking later a look Key at year, see the give up questions. follow-up, the particular, my interesting. ex-Florida sense, fourth year, do Or thinking this Thanks normalization? of maybe markets the in But of And performance you portfolio balance it's as same you to any for us West, just thought the you potential for maybe are more could Okay, thanks. like I then was

Mark Brugger

Duane.

let too. interesting. is I'll jump floor So in here, Justin

some The it Bay, is is in July, and decline we're from So It's we kind that a in actually what's so seeing there deterioration may every year, And as were little pace summer. getting on in better of recall asset the Florida and of they've gotten seeing Tranquility better as results crazy our it there. And different. encouraged Marathon a by we end the Keys at just negative earliest Key, of saw get the still Keys which we're is year-over-year. in stabilize comments going you high. last

would of start November, kind of get was the the it new normalized we we December more getting so start to to first one will, the So to year. expect we it normal we be of as if markets to readjustment, this that

do you to add anything want Justin, to that? add to

Justin Leonard

the Yes, the comparable year. I the get it's more think back the really sort we as normalization of of year of half to

being off and our start year-over-year a mentioned, to As saw had we half assets of fell in other some first Keys Mark the summer. drop of year the of we basis assets the Florida one the the of leisure off summer that last from back of sort

work quarter through gets and just as on us the year-over-year quarter, we fourth easier comparable. a get for So third comp to

Duane Pfennigwerth

thank Okay, you.

Operator

you. moment, Thank please. One

Our Anthony next question comes of of Barclays. Powell from the line

Your is line open.

Anthony Powell

guess Hi, bit, you're good kind others. transient, San different a Business evening, we're observing? you're from Francisco, comment slowing that everyone. guess, broader Thanks or of you more of that, for of any moderation? it a that slowdown markets I the there or I plateauing is of a commentary a are kind where seeing other mentioned that Or hearing outside question. bit

Mark Brugger

in industry-wide varies business and in Francisco about is data XXXX New -- transient Obviously, the is XXXX, looking City, actually we kind were vary where San behind. for it dramatically. on at corporate It levels. is tragically of above down is focused York mean we're can RevPAR I XX% the Yes. to special on we're

on market markets. those So driving a lot varies the it individual depending what's and

it as where it year back than travel Our There's get was last Labor encouraging the Day kind people in post fall jump relatively a the of and of half there's this of is more year. the seeing recovery QX even in summer. rate in BT in back to improving it of the moderate optimism good business and now. starts that office, We're very

we we're So are seeing in you it what fall, hopeful seeing time. we and tell real to moderate to we remain want but

Anthony Powell

doing years. recent hotel more these the why Maybe Montana, maybe in situations Yes, comment are to your the special and the of of branding of and these thanks. in kind some decline? more much your on brands heavily in independent hotel of impendent of are gone conversion in acquisition And independent Boston acquisitions the you've that? view? in seeing you kind the you're And Or value on your

Mark Brugger

Yes.

I think on the are brands on most still valuable they demand have thing think the big in the as don't hotels each brand the In case places some from are and brands obvious their But we'd brands get material at see ways, But we great they its where the are in group houses the most a value. would Certainly, our are the of of see own a and Chico hotels expensive. example, wouldn't I on be a and add -- cases, to we and appropriate brand lot you look them. still the individual and brand, do. it's hotel return a great and uplift some cost.

put whether have brand most our a without better top are it would to So hotels performing we the to and line. think they bottom not on significantly brands it. I than a We a more are each that think that the makes brand, do. individual message both brand try -- we It's don't really that of asset Clearly, message it's tailor a sense valuable. to

Anthony Powell

I guess, what's drove that particular I guess maybe Boston, in decision?

Mark Brugger

business looked It's not a brand great and it group thought it performs what associated a building, a X And also material it's branded have can the does week a historic well, as and is in less week, relatively Faneuil perform of to well that to reason but It's we with to a location it. have a location. it with which It's Hall. leisure as X-day And the close well component, Boston very a Yes. is kind at a unique often days equally we groups. location. a attract great location. it's cost a hotel

probably The XX, of even basis points hotel XXX the equal the if back was nature having it other that thing on profitability, XX%, end. unencumbered just adds is

million. increases So probably to hotel NAV it the the million $XX by of $XX

led those So this were us that factors embrace the conversion. to

Anthony Powell

All right. Thank you.

Operator

please. One moment, you. Thank

Dijkum Our line of next Point. question Floris the comes Van from of Compass

open. Your line is

Floris Van Dijkum

guess bit else with been little just is is the a you as maybe acquisitions bit to of was couple little you? -- little And this who caused get a you what an bidding Thanks years. I it you to about did environment this transaction? tracking How owner on question. for yield, is more. You sell touch What say taking now what the new you've for this right the perhaps the for think a and about well? talk a maybe this? talk the X.X% the bit see Do -- yield acquisition

Mark Brugger

Sure.

So a there are of lot questions guess I in there.

time marketplace. for company The broadest advantage. equity borrowing We're of our over just for it's start is at generally. is let public a in to so because the is XXX. volume great plus So me XXX, cost aren't some ways, environment acquisition debt profit which the with a acquisition In be the down XX%. There of borrowing plus very trades many

obviously capital We have allocation So there's clear advantage consider there. choices. to other

more This properties. owner-operator is has two like We We things priority for it. We Bozeman. This we special Paradise Valley. than one and institution for like for a Sky, an like small he's Hole love of famous is interesting. and It's We Montana. owner-operator the in been Yellowstone decades tracking Jackson in been retire. to Montana. Big looking been a us We've resort. kind in relatively high our love The search has

staying the and going and at the leverage we're it time. involved He in opportune So property with relationship that to property, an was the community.

We We it, we buyers, we you that see private ago. understand Interesting, X months it a a, looked I'll this we're of were And risk. special we reasons didn't financing choice. have than equity right? for because how went million was originally there's with more willing we were could and at disappointed kind to not the very We about And pay. selected contract We were call buyer we that it's under at $XX were could to, pay privy of a cash, fell apart, really a any place. -- deal, because were it. --

think we to the top we were in were price, in not but probably certain the X I most even close.

So an that enormous process. in the gave us advantage

value I we've deal. got on think the a tremendous

to our professional our systems. property, before. put constrained kind the reservation Enhance buyer practices, a there is So was plan in put it of in best modern

So And revenues improve are the customers leads hopefully, the demand that we to to satisfied the increased ability property. property. increased have more and that at

Floris Van Dijkum

you there expansion it on acres. I I And here road? mean XXX the think mentioned opportunities was is down

Mark Brugger

we've owned I mean I it XX There think, first, at are. for hours.

it. make is and understand opportunities, plan. Our sure our land want that's here, are lot we first plan so we a of There initial not but to is there

make Our it and initial is -- of about kinds that to can nice internally what plan ways it there's value better version has thing arms and a this these kind and so lot it. opportunities. a is properties, get a of of those around lot And of we our talk of the get about itself, when you is lucky creation

And But for again, DiamondRock. that, better make that our itself. other very this version alone initial promising think successful than make a do game of a plan, going I anything we're to we're it will investment not

Floris Van Dijkum

say, have does this having does nearby Are allow to to and more we're you Montana. other that -- one more get last mean of properties or And this does "no, opportunities? a other Does more of the ground in you make Montana? in area follow-up. stake clustering? sort that interested basically to properties done maybe are in you get a the you like And with in that Or would -- that there

the of part another to country"? go Let's

Mark Brugger

whole million is this got company Remember, assets. that's $X for billion a investment $XX

we're the pursue other We We we'd the We of Big like like Yellowstone. allow good hope community. would And relatively and will deals By off-market -- hopefully, transactions. like small Montana, asset plenty not of state, grow to to There love on more stewards get love We we full to that we Sky. Montana. We're relationships. being our So opportunities love emerged. in and we absolutely like prospects. Bozeman. us It's where relationships, that, there trying within that We get those good opportunities no, our reputation expand are building it's footprint community. up and would to community. that if would us that a allow build

Floris Van Dijkum

Mark. Thanks,

Mark Brugger

you. Thank

Operator

please. moment, One you. Thank

Our Gregory the next from of question comes Miller Truist. of line

Gregory Miller

Thanks, to to your internal quarter briefly you've 'have a a question about the you particular, And leisure last today How the that NAV, about spoke be you you're been. to prepared well. on in I years, as of NAV hear able thought do the about so in if assets drive-to I'd Mark, relative ask comment you to view remarks, ago? curious in acquired it. number

Mark Brugger

that's about week great issue. Yes, say points the a just guessing. with value data the is really low so volumes you Board I it's Meeting I'd the same change were just We a we anyone had that so in there's that row telling a think talking truth question. is this and being market few in

a the be tremendous billion is seems estate sidelines, money amount equity There that to on private in of poised. real dollars of that's several hundred interested

lot from I of X, seller's the a there's lot sidelines then now, perspective, would sitting so to I sitting going a why the assets that in get from bring think like So and market. of to feeling are my that's them more months XX buyers efficient cheaper there. And potential are

It's and remains So yesterday. the the low. the changes leisure value. they -- still still hotel valuation fund some volume of is performance one remain the It interesting theses be of of investments. and there. private equity there's conversation know going fading -- most in the some change of the to resorts the Obviously, But hard what to

place be going to believe over I the to it's be think X years. generally, X people to next still the

a these even great like San San market trailing Jose Francisco X%, say, have a X% remember, X% cash And unlike now. Francisco, let's right to flow, compared these assets or in, San hotel assets, in buying

they're financeable. So still

still there's that of Troy, become traded know assets. kind recent very the what that lease-oriented totally looked at? for a trade that the -- in So cap we We interesting they a was I asset asset call rate Nashville.

Troy Furbay

about was it rate. Yes, XX cap

Mark Brugger

Yes.

unencumbered in leisure-oriented trailing stabilized -- asset Nashville. and cash pretty So on X it's independent flow, or cap. at asset relatively a

a of there's not So there. points lot out data

just And think robust we that for assets. so but we kind be if of less, a told guess, still I was you think would X% there's these it demand

Gregory Miller

and some commentary. provided that I for data points, appreciate the thanks You

us how how million top question, walk much depth you get expense the year? specifically to the the versus gains. this outlook you little XXXX. about through more For the a asked Dagny, Could bridge of on operating provided thought is and XXXX you $XX follow-up to you million through that I relative of And by $X underwriting EBITDA reductions driven in the line

Jeffrey Donnelly

into Yes, that's this of a from going year through disruption it some it. going mean, a obviously, from to next the conversion. the of Greg, bit this the that year have to take of some chunk is Jeff is I -- the Donnelly. of I elimination you be you mean I good can of little

we be dollars $X.X that, chunk few there's the that's So of as a going EBITDA, Mark I of a to think mentioned, next big million that. go in million as year, about

think And effectively of to a bottom that be enhances with to the independent able leg it line are in I be effectively positioned comes asset because some that across then we're that to there's channels how position revenue the market overhead And we going from effectively being just come then being operator. down the a in branded that can profitability transient versus we that bring gain business and I going savings more branded we share the how that final of think better and leisure marketplace. and cost asset that removing both is an to

revenue projecting were more this I I an million. we're million asset, 'XX details, year; of right? gross to $XX revenues As at think add $XX think

the upside. over fee given renovated asset revenue franchise brand like to back we're program, this, rooms just a significant represents calling of asset So precoat we're return with In rebranded the general, and 'XX -- that driven as costs on an peak simply between all amount XX%. potential it's a what the

So our million about just revenue independent operating of costs represents $X an we save. as $XX that rooms million brand asset, up

The able the to think to the peak under line. revenues bottom least at of should more I that prior efficient we So and cost combination return drop to at that's be a really structure, bridge.

Gregory Miller

much. very Thank very helpful. you That's all

Operator

Thank you. One moment, please.

Our next question comes from the line of Smedes Rose of Citi.

Your line open. is

Smedes Rose

just little a citywide to of in last general, group, kind update? just what helping you wondering, corporate? is or you're back is what from if were the in bit you around I business group slower guess. about that Is wanted Is terms seeing of you more was has could or it calendars already? Or in a composition. the mentioned of the in in color you, tenor it on And I expecting wondering, thanks. half. more just your then talk little just line with Hi, that kind changed Chicago second of I'm associations coming I group that's just ask that slowing

Mark Brugger

Sure.

in citywides driven in citywide first So Chicago, in the way in just way the year. were layout. is it's quarters the calendar it's the much was very of more the it's two particular, by XXXX And -- focused or the

is And and in XXXX strong. XXXX this expected. we Chicago are in as frankly, terrific So Chicago our bookings very looks in

excited about So we're prospects. the

So particularly just looked of what our and we citywides. of number remarks, expected of And as the this to. in seasonality half QX from QX, a prepared is the I back and year kind markets, the mentioned

Smedes Rose

[Technical Difficulty].

of do short-term you pragmatically wondering keep what Just disruption to of of kind a kind to minimum. sort

Mark Brugger

calls. transition long to strategies. for put weekly decent kind cushion rooms, we significant XX there defensive in period had on Probably we've most been a thing rate. We've had the fall. we we designs. We've state working Yes. of took preparing for Delta the and August had web revenue did I mean is this time. We've the hard a first at

So and what as to you, provided remarks. Jeff's it excited kind the we're hotel in listen, numbers the And during that we on those some we there can of be -- do are disruption I its prepared and he think gave it's -- beautiful, see looks will own.

want add anything? you do to Justin,

Justin Leonard

Yes.

that just significant to period. have the dark during did didn't really we mentioned, a Mark As any loss lot we revenue ensure of work prep

and we intentionally out also reservations against amount and for XX group the we have looking. But the of insure within building, to through sold of actively both the both so active fact, significant and hotel done were hours week all on August do live, a contract that. of on GDS base first the In e-channels sort up side. We've Delta most we

but awareness we a drop forecasting we're of we for Dagny contract. year over build the group $X Delta incremental the books revenue the for back versus last on the as the in addition have million brand So of to half year continue in to rooms

the and same last better the place September sold, in are we for a the of back So time we're and balance both year August the of year. significantly than in XX% half were at

base integrity identity. grow a preserve we've got really brand great So we to rate as

Smedes Rose

the for Thanks detail. Great.

Operator

moment, please. One you. Thank

next Green of the from Our question Chris Darling Street. comes line of

Your open. line is

Chris Darling

you assets? remarks, near thinking how prepared term. exploring in the markets, could a the dispositions the And few you if about today? transaction what in what Mark, you. Thank you Wondering terms of financing are on in then perhaps maybe seller effectuating mentioned elaborate

Mark Brugger

Yes.

question. great So

that, committed not to So some resort down We'll on be list. urban think and will our of we disposition continue are long-term the is leisure-oriented to best the place properties. pare to exposure. the We those that so be

this difficult. want market assets that are ones that identify they'll we think in the which I assets smaller large are very be to but are are, publicly financeable. loans The

not assets will smaller to that of core it couple So the are a portfolio. be

it do about to financing, as your reasons we'd We not be we're seller a they capacity. question to financing. the offer small we're as that don't the so capital seller any out If but financing. assets of we'd need the are one preserve something financeable and going rather gap, might entertain piece As seller and of kind not market involved fill smaller far prefer selecting that and to

Chris Darling

That's it. And Got maybe. Jeff for helpful. then one

view just beyond, maybe do taking on in lot expense good and a of different gave moving side year. But, what pieces this terms curious, the view, You you for for a longer-term overall backdrop? sort Is as normalized maybe of about? reasonable X% kind us line growth, rate to think a a more detail of the annually, expense betting assuming demand decent to of 'XX run a X%

Jeffrey Donnelly

decent sort macro. a relate to you is think it's course, at But mean, range. probably of going ultimately It's the of I to what inflation when about it,

are factors going use look taxes you properties a I taxes. sort largely I think for a recovered see recovered time. over to at like lot when of our our how don't municipalities expect revenues earnings, our us, period outsized that to increases things and drive of we've of long and have the

you I'd it's And significantly like saw a a year costs a forecast was are like slowing this then more past maybe because little you big year. where forecast. is decreases bit or to renegotiated insurance spike those rates believe But hard property thereafter. year, event a post-Katrina-type had and to difficult to that in every

that There to my some of labor tends but I can't head, necessarily industry. up think off I the top follow same but time. might catch thing speak us be the on in to over cost, inflation

If to of I that, just probably that's man, but reasonable. was I end be betting So think towards guess. a range lower middle I'd the your a is

Chris Darling

very Right. you. That's helpful. all Thank

Operator

Thank moment please. you. One

Baird. the from comes question Bellisario RW of line next Michael of Our

open. lines is Your

Michael Bellisario

Thanks. Good evening, guys.

Just to Chico front. a of quick something first follow-up Any need on this back Was up one? sell as pressing reverse the transaction on the end XXXX? set a

Mark Brugger

set a not XXXX. It up was as reverse

Michael Bellisario

Got it.

then what you states repeat Okay. just people on if any the on maybe come who give customer to can And of that on transaction, are background from? a then the is? Maybe just property? have And guests it bit a percentage you us little the of number coming

Mark Brugger

the to time really is remarkable because the the of to institution. an springs close are Obviously, It Yellowstone. entrance year-around is. asset how season clientele is Yellowstone, people obviously changes of an is in year. this when the this to Yes, The peak this hot the on going depending

get folks. greater of the rest a of fair of location. the summer, it then draw. And than amount local is you you got of within XX the miles but restaurant more probably year, repeat out the kind the in in get of You XX%, best It's the

of a states kind in it's But from U.S. over average, country following areas. the XX% from probably on over other -- the in from other So got all local it's about out all Livingston great

Justin Leonard

to out the popular with soak hang Michael, I'd and to it's a the a even saloon just go locals, very add, hot in spring. take

Michael Bellisario

tour. that guys you on won't I did if your too ask

Justin Leonard

you. Thank

Michael Bellisario

day, that minus your that or page assumed there? does to does and versus your long plus point in take put how What And you comp set XX out it the one maybe a Chico referenced delta. in is underwriting percentage other the you RevPAR get

Mark Brugger

revenue though, sum in it be to mean, there. both practices I going think gains, implement best on done system up, been we just things but we the I haven't to that do probably putting and on the that expense revenue can is and Yes. can having productivity in the side the there's gap is

be a it, to XX% going get both in started is But about to that not -- to if think at those. it's to we cap on there time. have of So we over X.X% very don't gap NOI rate you and getting bridge much

-- it's Gardiner -- pretty bit little kind it's comp you'll broad in see rate a go you've set got comp that ability time over and the down so the the -- But of to Livingston, summer So probably broad in move set. more because seasons. to area than there's a other

Michael Bellisario

Helpful. Thank you,

Operator

any Thank you. to remarks. turn like questions over for to Mark the further back call I'm I'd time. showing this Brugger at no closing

Mark Brugger

look forward thank to Take we great tuning and evening. call, and earnings have you, quarter. care, updating a in our you for next on to everyone, Well, our

Operator

this Ladies you. conclude you participating. Thank conference. gentlemen, and today's all does Thank for

disconnect. Have great now day. may You a

DiamondRock Hospitality (DRH) 3 Aug 232023 Q2 Earnings call transcript