DRH - Earnings call 4 2023 | DiamondRock Hospitality Company

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Operator

Good day, and thank you for standing by. Welcome to the DiamondRock Hospitality Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference, over to your first speaker today, Briony Quinn, Chief Accounting Officer and Treasurer. Please go ahead.

Briony Quinn

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

under today. me that not future in materially our comments many we forward-looking facts, get subject our filings cause everyone numerous let started, statements be these to those are from our Before with of the described statements could remind comments differ risks are expressed and considered results securities that SEC, to federal laws.As and are in historical to today uncertainties

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

Mark Brugger

for joining our call, for XXXX. and for you us our earnings outlook Thank today

reintroducing We on are guidance this call. will that we pleased be

to over And company testament adjusted of was total fronts. $X.X Let's shareholder returns jump across DiamondRock a revenue in. several just as XXXX for was generated a record best higher resorts new achieved $XX total any year billion, investment hotels higher the of lodging and XXXX, success revenue hotel was DiamondRock.As for successful XX.X% strategy, total than XX% service full our XXXX. than The of full of among another of high-quality our year REIT. comparable the million EBITDA portfolio

were in XXXX, ahead and adjusted call by in In discuss for was EBITDA comparable the adjusted or quarter, $X.XX.In Solid results comfortable trends. so there can we per adjusted million our fourth more of a increasing in and year share fourth estimates.I'll $XXX.X briefly we results All portfolio $XX.X save we these and allow November, from per management's the revenues full was the DiamondRock our were adjusted where your to from provide fourth provided questions. highlights few are $X.XX. share outlook, FFO time some notable line, time EBITDA the expectations to last X%, of led quarter, with of consensus FFO said million, earnings quarter,

our our closely revenue asset quarter was in full travel into some First, quarter peak Quarterly the Westin the uniform pleased pressures pullback to settled quarter, normal. or we resorts, which peaked Overall, and our of comparable the early turned of even to from the were other Resorts XXXX RevPAR look turned XX% RevPAR South the markets 'XX. new collectively the competitive These resort winners corner, the trends after they fourth the basis, XX% pandemic expect earlier Vail growth. with in of XX%, with the we X.X%, result.As but poised It to footing a late to quarter, our in and can achieve January. setup.Let's saw finding, Florida delivering positive fantastic been resorts controls pandemic, to luxury footing events that resorts the to markets, long-term tight some RevPAR so and more new Resorts worth its our managers is quarter.Elsewhere in keep peak in revenue positive in and XXXX finish XXXX, in from at and expense efforts to this in beneficiary relatively growth in in performance XXXX, did encouraging finding as progresses, later comparable Lauderdale the late portfolio in the X% cost quarter an our resort, several proud was of year respectively generated headwinds at growth. that XXXX, and operators still from The of other new should the found at dropped second improve, and snowfall early South RevPAR return since their we X%, are resorts resort with lessen biggest quarter resorts maintaining resorts resort the in in the Florida, portfolio fourth RevPAR travel Florida Moreover, X%, but as the to some working now benefit the we XXXX had even most believe their will resort firmer third just better. X.X%, a of more noting collection than, trends. are growth in fourth The experienced On Europe we in growth just Keys down have XX% Florida that's deliver at resort revenue. Florida. fourth a XX% sequential not Fort fourth of XXXX overall to best progressed Keys leisure have X the a Florida peak. resorts some look improved as travel second portfolio, XXXX, our at quarter, with the in we total peak year resort to the until finding XXXX, finish improved normal in South months robust normal look year. luxury XXXX.Although XXXX, mid various

noisy, Florida's mention later until a into Charleston delivered condo a good comparisons and that for declines into saw This example, number the did understandable is developer. its adjacent after months I RevPAR little master the were by units initial our but likely inventory, at to want oddity room it seasonally lap not peak there this profits, long-term as a slow we are optics of is South will year.Specific to a For is number so the those recently Resort, DiamondRock, Henderson turn wine peak, that around count units that, get those market during period. took the which the we room our little growth country positive, room's

reverse progresses and prioritize positive the about to term on continue are outlook we as as comparisons, near year resorts, expect leisure our travel.Let's for overall hotels. urban the we consumers turn to So will headwinds

cities. concentrated to fortunate are an We performing have urban better in footprint

we'll total such and XX XXX growth. of discuss initial results we Francisco, to as the XXXX. our the largely have more XX%, Kimpton $XXX,XXX increasing top-line climbed markets move Dagny's XXXX expectations, Lake our Portland Chicago, other index Worth In our impaired Diego our to In above San markets Instead, were our budget, focused our XXXX, Dagny top total RevPAR performer bringing City, quarter, Diego. from and premium, LA. repositioning very penetration stronger we the last when among by operator was Marriott the line our with have of a the like biggest hotels points the XXX% Dagny compares deeper, RevPAR avoided key to basis urban urban Phoenix outlook.There Salt nearly RevPAR X%, exceeded revenue Boston, at to over fourth in revenue Salt our quarter, we and favorably a Downtown Westin City, our this set, little San think EBITDA more increased index Hilton. competitive a on increasing XXX% City generating a RevPAR stat, points York quarter, by peers.Looking surpassing X.X%, year the in We fourth X.X%. San Lake total the margin That's have stars as New comparable like Dallas-Fort exposure The December, our Boston, our revenue at in and increasing total

Center X%. Compared and prior City up XXXX. on we our to group number course, sequentially results. Lauderdale volumes base.Over X% the was rates. positive of overall was was and to a the by QX, room XX% Growth Burlington revenues, within group better to rates Westin contributions course bolstered the of on up it the Boston XXXX also year revenue XX%, Westin Fort portfolio Hilton up group X.X%, XX% urban a D.C. up saw XXXX in a small had XX% QX, in build. room it was up room continue room was whopping XXXX. Of X%, XXXX We group up from year, and more flat was In the throughout higher Westin group momentum was success group nearly by hotels. X%. nearly DiamondRock's group surpassed In were QX, for than The room the improved

out today. group our story for DiamondRock's and reason a reintroduce As to XXXX, optimism, we major guidance is foundation to gives look us the

striking year Chicago, within in calendars this year, in up have behind is D.C., significant the are pace the most on up to XXXX, year, XXXX, QX XXXX, and This nights the shift with RevPAR lower me Boston, than QX call are and over the stronger. group revenue last was San demand of each the steady XXXX, deliver Fort you room year.Our that The room key Markets and XX% for bunched in details after Fort gains.We the last Chicago, is the a outlook. but growth convention up but portfolio Orleans, is hotel in Denver and a peak particularly stronger, QX.In is geographic up to the and Washington, nights let our distance fairly to our see citywide driver room this stronger with versus on-the-books lesser timing, Worth than DiamondRock. activity the D.C. Chicago the best group this first, also citywide year, activity citywide some Jeff portfolio than stronger Chicago, XXX% in QX urban In to Xx much and urban expect the of more Washington, did will half the advantage D.C., in all second Chicago. citywide in markets Phoenix the up set expected to turning in Washington a half XX% favorable footprint, almost QX.Before leveraging quarter citywide Our second last of main calendars of in the Lauderdale QX extent, calendar like and New events. Diego, financials means the because up nights slightly balance with year, in in are are into time a update, for the a In QX well year, in provide get very they over are group sheet and across significantly

up initiatives With the based lodging to that expect X%. the pleased We is to experience of at trends. for are believe backdrop, to X% current of first back DiamondRock of lumpy, that the entire guidance on our industry, the the half quarter we hard towards and in reintroduce calendars expect comparison citywide We managing our the to we RevPAR growth been weighted range likely RevPAR XX growth, year. results convention total of beneficial RevPAR our similar will portfolio's have expenses the room our strength as spend side, at the on advantage of layout points and with resorts.On Because in be focus the to outside growth, January the our X.X% be expense to point for another portfolio, markets, work the we XX properties. of the was basis fruit.Although the that higher bear revenue have of but increasingly

RevPAR will as greatly hotels benefits, year On XXXX efficient and And categories generates the property share inflation. the growth of some likely much pressures.However, generate are of positive but improved EBITDA FFO increase to giant and of chains categories, the us, will their to to cost fully Jeff. the moderating, side, estate believe above adjusted company, to in it are will new, wages expect to levels, are over behind you, difficult per lessen be while middle are Accordingly, approximately we more inflationary from we $XXX the likely largely X% increases of our lower increase $X.XX.Turn supply and and mid-single-digits. are cost insurance moderate in adjusted other DiamondRock's pressures some if cost to this easier increases still real culprits tax staffed portfolio range, X% million, largest

Jeffrey Donnelly

or commentary expectations. line, share the of ahead In from RevPAR in year million slightly felt basis earnings $XXX and resorts, the Comparable portfolio.It operations.Operating stem full Moreover, at EBITDA that adjusted just per X.X% the adjusted follow-up, share. and the increased be quarter. basis the and was were consensus XXXX, XX decline X% of declined RevPAR the second was points we quarter, X.X% basis basis million contracted and in important points and our a Mark. then of steady decline total FFO portfolio, quarter, in we total were urban we RevPAR EBITDA X.X% fourth from points and $X.XX would in is range per RevPAR in resorts our XX $X.XX expectation. Recall of the our to growth in results Thanks, period of comparable financial estimates full down in third XX with and in improvement X%, of saw our prior points, quarter funds a quarter our from XXX The flat third highlight both to of with quarter the comfortable in total a and $XXX growth our in revenues resorts. line year in the

comparable This means growth, can same-store profit, expenses keep million, our points XX% optimistic to occupancy we that $XX million or of and were improving in to operating XXXX.Moving are continue to total operating We $XXX revenue. despite growth prior basis a period. asset managers XXX asset trend on gross from our X% higher to or of profits. margin Comparable the was controllable just pivot on able GOP, this

EBITDA little EBITDA, XXXX, adjusted we Hotel fourth basis X rise our a a adjusted past In than XXX averaged fact, EBITDA $XX in million point margin were a prior controllable over despite corporate quarters just call. reasons basis has adjusted XXX average the few $XX points growth for X% million. occupancy.Hotel expenses quarter a was was and discussed with in earnings XX.X% over the lower operating margins of on

the $X point basis was Chicago XXX property million, a First, margin impact. or headwind in over tax

$X.X Second, quarter, impact.Finally, industry standard accelerate new accounted impacted were negatively purchase rates. year, in quarter from group our our revenue points. daily Collectively, for with XX change point $X.X at Western-flagged to the quarter the we segment items prior X% room basis one-time pricing. the remained by average the bright to gains last these up hotels the insurance basis on of spot year.The elected expenditure costs to fourth this XXX bedding discounted points million higher quarter obtain bedding and due of an conditions XX brand million The the room the basis about in volume margin and of room in in a group explain the margins both Group unfavorable

last hotels, comparable comparisons a full Overall, call by the stronger million to in the quarter, room both XXXX XXXX, Chicago exceeded XXXX in discussed of compared calendars, our segment $XX due $X citywide XXXX. in we As late in had year Group difficult shift million. and in revenues were to

nights results. room strong. still However, XX,XXX were XXXX to or shaping group is XX% be below XXXX up nights

Our group compared up the time revenue to pacing same is XX.X%, last year.

did group Westin San up a we during is and up differentiation D.C. There quarter, our over of We our the and XX%. Boston's our up for to well.In is not Diego group our were continues and revenues DiamondRock.Turning group Bayview, and largest the the XX%. no is the group pacing are of the the revenue any allocation. strength point Westin each XX% strength shares. our Vail, X% set broad. over X to Fort Westin footprint hotels, is XXXX us markets, Marriott key Westin up Lauderdale, largest Our and breadth serve dispositions Worthington, believe or capital nearly Group of Hythe of group Chicago for acquisitions, Outside up revenue paces repurchase at the

the decisions. explore can our proceeds continue fund the capital repurchases, external balance or we sheet. We to of equity focus, flexible ROI shareholder having is singular which to a fund value Maximizing behind remain projects, dispositions, growth. However, committed allocation

in undrawn hotel strong Our X.Xx conservative, and demonstrated is level cash, $XXX trailing as available net revolver. the fourth EBITDA liquidity leverage $XXX in a results.Our to is million quarter corporate fully $XXX by million of with ratio debt cash, and low million

year-end XXX% XXXX. Importantly, current is our our maturities debt liquidity of through of

have and EBITDA adjusted guidance release. our We RevPAR in press ranges provided

XX RevPAR expectation growth, our is that be basis than it better forecast. approximately to our XX said, will points Mark total RevPAR As

approximately evenly count.As stronger the total, available provided expenses, Hotel earlier income as reasons of from the half for and first Urban Burlington, ranges million year, work Champlain second taxes we expect $X preliminary distributed was $X the expect concentrated In expense last about our segment interest owing, million first that will the our of in indicated, year, calendar, to should and year, segment San we Resort an there the In room we move for is convention in that more at our improve in was unfavorable growth, with and New half than addition, have be Mark corporate disruption discussed.In through prior impact, for Bourbon renovation Diego. the Westin displacement the work years. Orleans. our the and impact at in and the Hotel quarter, consistent Later year at we

dominant to expense a I can insurance industry rising headwind, we mirror.And put side, the On levels, turn Mark. remain with staffing the back costs, expect labor-related the will scrubs and market property the hard that, floor we in tax rearview as

Mark Brugger

DiamondRock believe that some a is of the in travel. with trends future, portfolio for Jeff. with We best well-positioned aligns long-term Thanks the high-quality

Our full REIT, public service portfolio, the value commands least encumbered a of net lodging premium. any asset

take that emerge have better, We opportunities of performance is things one balance a significant us dry a this sauce, is gives projects. that advantage powder, secret Even DiamondRock's acquisition for future our of should also little sheet bit think fortress I of to that, list superior of extensive the cycle. ROI

While by in just investment, $XX a our it as the a on a to The outperform will only lifestyle available there's this website, from list nominated for a resort to James Beard fuller hit I'll full Burlington our months convert Champlain years, should few.The named ramps specialty the year, Dagny X potential. a Hilton next with chef. Boston million ago presentation Investor a its restaurant several led converted

group this to Marina. the build project. XXXX, Tahoe our space.And meeting Lake Florida In final rooms resort, adding permitting plan one. ROI in Keys, most a new the excited by we XX% in process our are and are And expand to exciting about we We building high finally, more

L'Auberge for pool economy new next of Inn the supports and gems to portfolio, good transform suited rocks encouraged that, the as is best the of to it strategy for of of in exceptionally XXXX, the diligently these lean the of that for happy supply.Our in like year traveler travel be Rock. will a some into the capital the Vail, in York And outperformance travel XX the XXXX well-balanced one New double up, be the trends our hotel any Sedona to Cliffs City, preferences allocation over we questions. into will for Key, your restaurant, and with the revenue, property's red true while become working that and up on against this Marathon will This to to and setup time, for are we ours, room for mountainside data call and de a markets ideally continue believe this most long-term should us make with NAV decade. we And growth.At we reaccelerate a the this backdrop hotels at like allow exciting Sedona. open focused is dynamic smart to all would likely industry, low of are Sedona Orchards times Boston, our portfolio.To are wrap We at the views the and

Operator

question from the Instructions] of Our comes line [Operator first Fargo from Dori Securities. Kesten Wells

Dori Kesten

about in fewer it pipeline uncertain this providing to comfort year kind experiential, is acquisitive given you in small fair that of that the of more your with perhaps variables? are Can And today? deem talk be interest, guidance, just you assets may say of you quantity relatively your

Mark Brugger

Good Mark. questions. it's Dori,

deals. led acquisition team, and acquisition always looking the pipeline think I they're Furbay Troy at by our here,

transactions. on focused have We off-market

over years, on on timeline know, those their circumstances. last several the transactions of individual based owner's kind you As the own go

of able exceptional of to be deals.Given active to of they deals to need be and maintain discount NAV and to to continue stock, an continue cost deals to we those them. So our be do capital exceptional to our the pipeline have

to powder, things capital. and looking actively but this be of hope need would cost transactions year. sensitive sheet and to or now, to two the dry certainly are have balance We deals, We find to we at our interesting X do we the

Dori Kesten

capital the past of the enough, $XXX likelihood there out fair? And be your I about in would talked there you of pricing We've box. in think interested million? urban acquiring upwards guess, receive selling Okay. large today is you'd Do

Mark Brugger

Yes, the the [indiscernible] X so trades, some seen bigger over we've big some trades months. last other

year. I much they the that improve is will think rates opinion of are the next our markets than lower and be this end this or debt year, year continue to

bigger So get likely for asset bigger of you little bit that patience. you're a and pay, to stretch have to someone if a number a

year, overall So the more or that may market, XXXX. in is, likely we end at while view will those the this either our occur transactions test sometime of

Dori Kesten

Okay. out to dividends your where And for we return? are we looks what should guess Jeff paying year to when expect return outlook term? I annually? pay NOLs over And Your pretty were today? medium should dividends the you expect Donnelly, to similar earnings this $X.XX

Jeffrey Donnelly

the this on in can of dividend. that I'll I NOL pick $XXX NOLs, about time. NOLs But something Mark Board. with That's the point piece and there's remaining to defer we the our on at million discuss

Mark Brugger

On dividend and review we'll with policy, them. we actually regularly have dividend a Board the meeting next week

where the looking price. about now we drive increasing uses that are capital potentially might of the on of modestly, and think the at focus other really is stock I we capital, the while alternatives dividend, other think

Operator

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

Bennett Rose

your comments, I capital. -- on just following guess uses some Mark, about of your up last of

so more at is kind perception of this like below robust your the a NAV why that, mentioned and stuff have point? that repurchase not program You stock share

Mark Brugger

balance we talking something we markets gotten going and for we're sheet the of -- Board a great seem have opened sheet that -- the next a right is. up debt with We're much they're couple South. make like be head what to It's for wanted on something more about using week. so comfortable to and capacity capacity have We have as meeting conversation the that and that'll better, Smedes, years. plenty the balance the Board rates all it's of question, maturities sure of level actively next to But

Bennett Rose

Did on RevPAR market when the set follow-up, Hilton when was from And wanted of goes to when mentioned that independent? it just guess, the Okay. talked relative competing is or I a gaining, same share. about the And gains, it that some you I they you're set against? index the change competitive Dagny you

Mark Brugger

group relatively hotels, the mean, I did we consistent strategy at noise a, set. there's little take that I that. a put months, we was thought consciously some mean, the so should of hotel there, in -- renovations ramped contract more we conversion. mitigation was lower we up I season.And that's on benefit at in in a we do going what that No, the mention in which pure there's of the some bit to will business wanted which is winter do risk a to as there, always demand us something from the brand

take So upside We couple the to we year a at performance our asset of years, the think and versus well. Hilton. expect command not will for really the gap, to the close would of premium that's the that that full time XXXX as a

Bennett Rose

in per final question. terms XX the just thinking at are building of about there? sort sounds you then of cost Tahoe the like And It What asset. Okay. maybe key you're rooms so Lake or

Mark Brugger

that Jeff, one? do take you want to ahead go and

Jeffrey Donnelly

we're in XX of service about in space. new purpose-built meeting adding Yes. those some probably reutilizing about existing that incremental. an of time, out then for been the addition has We XXX in and for building a think X to all building, We're building a some key

Bennett Rose

Okay.

pretty commitment, So I small capital guess? overall

Jeffrey Donnelly

$X million project. Yes, about a

Mark Brugger

the small to scale small a project. relative Large in aggregate. the resort, the but Yes, of it's

Operator

question from Capital Wurschmidt come will KeyBanc next of the Our line Markets. Austin from

Austin Wurschmidt

plus last of RevPAR as does versus front? books of what the off, you segment that time on pace how group much ratchet pace see kind Curious, for growth, the And year? down, first guidance this with today off the your start assume XX%. through on to year that is for wanted the Just

Mark Brugger

do Jeff, take want that? to you

Jeffrey Donnelly

to. happy Yes,

with versus XXX,XXX last sit group today, rooms we sitting -- I we're we're So as XXX,XXX think year. here about

group we're year, basis. given sitting think goal is of for for position I that's the So tail availability the concerns. shift increased year, going on off But into space a just in relative think the to a in the points about sort to segmentation X significantly category. us We obviously

not last significant, at the year. XX% we're think equal, about us consider end spread to throughout We're is I what for increase that that, XX%.And to that more if So it's hoping seeing pace be we about portfolio. maybe

So our years group it's in boxes. big by just good driven not

Our XX%. up of resort portfolio smaller a though is segmentation, it piece up about also much the makes

of as in, we've a kind As really incremental demand some we reorienting last leaned to sales off tail resorts, year. drive saw bit and our leisure into to teams, trying those demand

Austin Wurschmidt

assuming are within RevPAR then what the And this for guide -- growth year? segment for group the you

Mark Brugger

It's probably up at X/X growth. the top end. the being ends It probably of about

Austin Wurschmidt

Got correctly that quarter, highlighted $X you other to then kind expected last lift clarify. of had I it. disruption to And about apples-to-apples Dagny. Did Just from million hear expect a you those Or year you the fully amount? guys that are you comparisons? this wanted offset

Jeffrey Donnelly

Yes.

get a But But at say third would always every quarter impact. we second portfolio, expect You be third assets you're quarter. mentioned $X do -- at lift Austin. I in ROI heard displacement. the first Dagny the in and about and that that always projects predominantly it's looking Dagny. the we to correctly, that year the will typically have that and are $X as I some there's had to was and up a million year, comes disruption we Last right, million of quarter

Austin Wurschmidt

Got it.

offsets So the I full you're that between, segments, growth the little guess sort in that group, for range year? of that the I type I guess RevPAR a about bit, then, thinking BT does low the leisure the correctly? Dagny Am with single-digit for imply but

Mark Brugger

group end. you year. about revenue the of high-end the is Yes. breakdown The way kind lower Leisure on think is on for the the

of to XXXX. group, the going it the clearly going So carry carry is the RevPAR in growth. to weight They're

Operator

comes question from line of from Baird. next the Our Bellisario Mike

Michael Bellisario

that commentary South acceleration it a driver that the improvement? Was pricing and last Did you in year? demand the sequential and/or you of performance was on gave. comparisons that Florida actually see Question guys to just in market? What

Mark Brugger

comparisons mean, the got easier. really. of All those, I

peaked Florida first South most robust. and

the think we kind effects the quarter. moved as than about better the and helping demand through -- of was fourth in anticipated we So certainly keys lapping the it. But

we did Westin, one. very there, layer encouraging but So a think At I the encouraged the we about Key is story very in were some group the Florida performance.

Michael Bellisario

Got it.

your levels? follow-up improvement that's at what portfolio bookings quantify international you're versus you do then least? improvement you seeing? pre-pandemic And that just that And on Okay. suggest think to in travel Where would are curve today at inbound in for major on 'XX booking Could the the based seeing your markets. you

Mark Brugger

would particularly data Mike, don't macro Italy. individuals. see the that to Sedona, it's we track international this kind for believe And expect well-healed around coastal the versus their probably United in, of to to it traveler year vacation States, Europe. went last do on the because under-indexed, benefit as travelers, particularly We more is hard in the trip like which to deciding events we much to data, we specific that travelers the domestic of year from the places but positive, give domestic in the we the high-end coming

Jeffrey Donnelly

market-by-market would exposure add guest-by-guest geography. And I kind but Mike, to just us, for just analysis, I pre-pandemic, a think on. not just mid-single-digit a It's if analysis And were did exposure. you we of

sort of mid-single-digit I think exposure. we're

from Our international sources. demand was

Michael Bellisario

can me? coming Got more that much you're if from that's easier bookings, it. than transient on And to group And track demand Understood. markets? zooming for then international the seeing groups the just tell Presumably, your you all gateway maybe traveler. can that you

Mark Brugger

Yes.

for international oriented I think a that business. we attendees have don't right? completely are lot that are coming see destinations group groups necessarily You in domestic of from international,

to honestly so through stat a get have honestly. consumer the parse hard lists when quantify, It us necessarily we typically from not doesn't So we destination, for it's rooming that, groups. a for

Operator

question from Evercore Pfennigwerth next of from Our Duane ISI. the line comes

Duane Pfennigwerth

the little would sound portfolio, the but For bit clearly highest do this growth I across portfolio, mean, where Florida, and you to the resort you your expect what what would a lag in markets on expect look more you you side? be the upbeat as on year? you would rates outperform think resort to

Mark Brugger

sure. Yes,

continue which Sonoma. on. So kind expect of year. this remarks, we like through back bit there. we what I prepared other were pull we Charleston, South little go seeing pullback would to that that talked think been wine markets Florida, in our We're have about was be that would country, Generally Markets terrific, a some encouraged

portfolio. barbell the scale give kind we you -- be expect on to of to those of the So you give lower end the on growth resort

Duane Pfennigwerth

Okay. And would you get questions we the to acquisitions. on disposition And done, happen that on follow-up looking the where portfolio, you under-indexed? big then do a would -- the be just that shape need first? that to just feel Should how on assume if prior to you you're

Mark Brugger

Great question.

So We like feel powder Jeff we right excess and dry capacity. balance our now. went through our sheet have

the It's powder a not that's issue. So dry hesitation. not

metrics are balance cash undone -- and sheet, We a And sitting on attractive have we and a excellent. our we're very completely revolver. have

the kind capacity this accretive a of more issue.And it's really NAV It's you when be think significant to opportunities, not would at given it's are we an to we think about opportunity be of our shareholders a to discount, that, things So kind what think of going traded then issue that point. core we capacity.

of who -- labor on a kept we our doesn't that the not We're looking to our may and we're be think bring things the accretive hasn't just in with run or for in efficient moving be they up an at asset inefficiencies. not kind owner-operator practices, market unlikely that's buy luxury we things, can competitive put table.Those going where can be So rates, might the where in to we practices best shareholders. that's are to a other well estimation, process

for enter.And experiential, the that traveler. think that kind that be, are which experience where for and opportunities where supply over accretive you and to best unique and a the going traveler opportunities we best assets of is the today next to something the markets -- and a we consumer hard we're assets, the remain acquisition differentiated buying, can differentiated are these provide outsized been we've generally new incredibly So is decade, that's really think -- the growth the really

Operator

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

Chris Woronka

appreciate Mark, far, you bit all about talk how colors so thinking this little So the you're maybe summer can the all a year. about

there of better? expectations little much but was surprise, get to a more kind You bit of are minutes hit a I domestic few maybe And think outbound. ago, it yes, went the going have this feel last any travel confidence kind at inbound - or going you any can home. just how on a that year think you bookings now, of summer you is to give stay right year, you kind there any us maybe make for are folks of But

Mark Brugger

feel it's thing is be better, that to fundamental makes quarter. strongest the me that going think our I group Yes,

this So done the rely group, not and up. we've experience take short-term year, summer, what really showing unlike to last is on that

the So about a quarter certainly to remarks current lot And bookings group in if the be extent strongest our of putting we can put going then the the QX. on -- you based prepared a to talked a we group in strength.And there. there as is we're

position, to we're but good to So last short-term, that and a bit of we we we that, not were where on a leisure sense up, position are we reliant And up. travel. are group defensive little like lot about taking of summer feel be makes group both it our trying corporate

Chris Woronka

then and the benign strong, sounds on for obviously strong a 'XX Great. pretty 'XX. Okay. job cost for And in

union labor labor, that, even year You mention later markets a in for year? any union next on you're the you keeping did wouldn't any I situations be guess any reset you have an markets though eye

Jeffrey Donnelly

really we're be nothing XXXX. on mean agreement nervous as and it, expense the There think whether But the wages that looking well there's set win staying we story we we us the that markets, coming through talking non-union are to have was on -- Last mutually lot I makes optimistic as the LA about side in that we're that's move make a up. union hotels. their year was they're a Boston year, radar at with always negotiation the got the our or particularly will that some that, call story. are now the that relatively competitive or Chicago that I'll sure in

Chris Woronka

Okay. Appreciate that.

I if is necessarily I you the for stress not out? we're good that the question thing maybe you a on a some of debate kind of it bit, may Just hear a would disposition. seller stuff more the assume guess buyer, hitting on the mean last non-core one, any but that's you're up could play best hearing market, mentioned I thoughts semi-distressed kind thing how I sales be acquisition a that lower the if or about but little on you're just -- rates also of be expectations

Mark Brugger

kind not now. decent come that of under is We're you worst would this quality the on things But are market what you're likely end right distress not we're now.There's The to that, price. timeline stuff have mean that or working lot another and is is that's market be to stuff next in seeing a owners, get again price are Yes, are those seeing pushed assets are the consensus for to I year. versus terms lenders of not say we're the now, year. getting think I with they own. market hotels market, terrible is pretty the is the distressed that's The in right motivated motto asset could We're have a up quality certainly think the year quality I folks now. and assets working a seeing seeing higher a come we And between to is wrong, are We're marketplace and generally. people view lenders that but more the distressed. market it unfixable that if really in they'd a that the get first can now things bringing towards both coming that, generally, I be market people not the I seeing think

Operator

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

Floris Gerbrand van Dijkum

about I leverage that pretty modestly bought the and equity you comfortable ratio if or as bit be Xx some about comfortable And with to level. your you up maybe peers, side or little attractiveness but also Mark today at of operating talk I haven't higher lever -- you with the a little would to you trend asset that Jeff down your ratio. eye somewhere of Would obviously weighing how the opportunities that some think around sales, see listen reducing you're your and unlike bit you then shares. of stock the As back And investment I on could a road? leverage be to potential talk X.Xx

Mark Brugger

bit little then talking start at and can just Well off the end. you Jeff, a capacity, in why about chime don't I maybe

Jeffrey Donnelly

right X.Xx EBITDA. now we're to Floris, about Yes debt

We including It $XXX We repurchases, about as share is look certainly do revolver. you leveraging have of at million event. our suggested. a liquidity,

with through lending community -- on time, say your into, spoke relationship one Mark portfolio something or And think push investment, mindful -- that around to we Xx, that a ROI just the in would our speak striking weigh that could ceiling about believe are good is your going balance, discuss effort And probably that run but a either I you on this, to same recognizing have comfort with in it it's up thing go historically, and capacity, to we against not to still on where, to I put valuation.Over leverage, it? the good and lot credit put with I return try your there that up time we'd at of between so, level and you and is regularly there's too. would that historically, we be trying to think that But how leverage? the -- the opportunities, say it's getting agreements.I our can a appropriate down because a Board, do also them, try I the that can you we coming to road, pretty afoul maintain around balancing downturn we but about guess opportunities of acquisitions. it's think potential like does severe

Mark Brugger

down that be going. dry never powder, probably your an crisis, is valuable. if still powder. you do I excellent Again, be describing you'd the that did But great having the of think really Jeff dry high if you core Xx We have model in end use low situation. is that. okay not leverage Yes. -- financial that We But, yes, strategic job move. comfortable where it's we'd would a

can continue would growth we company. a we great But cash if a and willing now to capital bit.Hopefully 'XX maintain flows to and yes, strategy. little lever are fairly 'XX up we'd the deleverage that So would found be pretty conservative cash good do and prudent bit acquisitions, aggressive. alone right We're opportunities allocation that flows, shareholders, -- in great The we're them. optimistic hard we we but to does are little seeing make uncover that of And more us ton try going those work continue if for not moment, better. find we the create at deals. getting value debt markets we're just to to think to those That a a we

Floris Gerbrand van Dijkum

of XXXX? as are sounds And in has for the you percentage of like been Cliffs are just portfolio. follow-up investing EBITDA touched I your I to since guys remind us what of bucket you going think your my Sedona, there you once Can maybe Obviously, done well. my be And you've done It bit a guys. -- list. on

Mark Brugger

XXXX.

Jeffrey Donnelly

asset. some I to touched estimating you, of our know probably it's of thinking I I back EBITDA. of renovation and types say -- had circle projects. was would even that. XX% assets we've just about work -- done I'm XX types different upbringings here, it has because in probably Floris, about can It probably I terms XX% at the of on to

So from I'm hip. the not shooting just

Mark Brugger

I into would in portfolio. we billion last put $X.X our years, the about X guess

Something like that.

to status, both first-class make assets also maintaining assets standards to them want to maintain at but and our to that and we're return brand again So sure we've to customers invested fairly significantly again.

that of and nature for to The our experiential to a lends more Clio and whether number. a converting JW in or having you look opportunities. opportunities. ROI luxury It taking high nature Vail Marriott Marriott that a that.So the taking that's kind Cherry we of making the those the So We've and done themselves assets these that's Creek hotels. collection hotel, of gives of luxury

assets, number than to often reposition kind they are boxes more ROI not have in because is -- because standard a just of opportunities our there more these peers probably touched portfolio. are our So of

Operator

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

Anthony Powell

maybe where yet, up ended going it where of and us so lot haven't where that kind tell could of about you the We business transient revenues was a seeing talked your forward? mix a XXXX, that corporate as 'XX, in you're on versus call

Mark Brugger

down XX% at tricky a called that's It's one. probably been pre-pandemic a It's kind normal. it's one level. the transient, hardest, the post-pandemic were from of Corporate about obviously new Yes. we where

our the And On what lot above big a it did and call the travelers, the in that of been of special the the generate consulting XXX% companies, of but positive I'll corporates, corporate today. corporates, not XX%, at of And a And every down a heal XX% and in were to little are of hundreds they we're quarter, a lot year, from actually slowly. guidance, have that's up gradually the thousands even corporates, that penetrating a get better where special seeing level XX%, that side, into small room those ones pre-pandemic negotiations non-special world. built what's big but corporate it big that we're upshift year-over-year. a is XXXX.But the continues in nights

Anthony Powell

Where hit What you most? markets the consulting does that not? decline and that what does in the

Mark Brugger

really traveler major is of than trillion -- it the the business But it's from and overall more it. you're that news have to XX probably States. impact are all special is correlated special for offset has But historic the travel in in corporates. in the mean, to the the terms, that Miami, markets Boston, with of going overall economy entire markets good business United other States.I the me, think was bigger United generally Obviously, It's And is kind benefited some corporate, it's Chicago, we attuned on economy. growth the small in XXXX. $X the big broad-based. New contraction things whether City, top the York I supply

that in travel way travel, of with the on we special and big that Mondays travel corporates they happen they business which been changes number Fridays. whether at the fundamental the correlation days But there's traveler, is small So saw great.

basis. back So we'll evolves general a economy evolves, an And on as bigger some levels, not to be of it lasting impact. Yes, business travel and always and that's going get gets and but inflation bigger. to adjusted the probably 'XX

Anthony Powell

Chico some, you your how Kimpton Can maybe Hot more me Austin and relative done, Fort issues progressed in with know And talk the is there or what some managers deals done expectations? one at of it. have Got how you've those about I Lauderdale, not. on I to are guess, maybe acquisition and at Lake for talk about Springs,

Mark Brugger

our Chico in year closed August so most Yes, in recent of it We that is came. last acquisition.

adjacent We also the ranch. bought

So just on cap. take if we you the Hot Springs, bought Chico it X%

for an cap. about this year think the X% just on Springs resort. budget It's Hot I

added We're what interesting us. the So we do redid great we some to a we asset On the the with ones, that the of Kimpton Lauderdale, very excited feel a called Fort we land that hotspot. other to there, roof figure continues have roof about kind can we acres of be for XXX and of out acquisition. extra the have.So

year took on a lot that transition. So last that of

last So a of on that transition. lot took year that

Lake It -- this a it little we'll significant So the hotel be is We growth. on behind only our Austin. will ramp think, then up we continues is the Lake ever -- that Austin, underwriting.And see think to under our it's year.

So -- calls. next prior was we the the career think own ramp there's systems it'll underwrote. asset talked of new it's over something than about we once remain performance as originally on in about a been that opportunity transition a optimistic truly we couple kind But of But years. to be location. got But longer a we implemented, of which in that there some

Operator

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

William Crow

days a that week. international, that about X, relationship? that to from X a week still or or outbound that X, X growth twice how Is of how of should about we the than maybe or shifting should think I'm much Mark, And year-over-year growth travel, running the business hotel I'm screening or demand. curious, to the the TSA growth has wondering twice more a we day environment driver? Is X attribute primary travel been

Mark Brugger

interesting the an It's you truth. question. I'll tell

much. that obviously into And we and are throughput hotels patterns. haven't tracks TSA at demand contemplated coming at we're I the that it those which We look as looking -- generators one employments seeing really our employments deeper of individual but that, We're and passenger tracking the get look have the that hotels to the through not corresponding well. you. kind to up up, and and loads demand to a the and noodle back little mean,

Operator

it back for Brugger over like in any would questions And I'm the further queue. closing Mark turn now I remarks. to not to showing any

Mark Brugger

it's Workers Thank first, just Hospitality shout National me let that you. conclude, out we Day. Well, before

So call, we and and extend works tuning in to that the a today a to making our our appreciation hospitality such you today's great it of everyone next day. quarter. for the great industry. analysts taking Have care. and in and appreciate forward customers, We for industry care we updating look investors Take

Operator

This for today's program. does your in you Thank the participation conclude conference.

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

DiamondRock Hospitality (DRH) 23 Feb 242023 Q4 Earnings call transcript