DRH - Earnings call transcript Q1 2024 | DiamondRock Hospitality Company

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Operator

Good day, and thank you for standing by. Welcome to the DiamondRock Hospitality Company's First Quarter 2024 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Briony Quinn, Executive Vice President and Chief Financial Officer.

Briony Quinn

Joining me today are Jeff Donnelly, our Chief Executive Officer; and Justin Leonard, our President and Chief Operating Officer.

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

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

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

Jeffrey Donnelly

Before we highlight we briefly organizational discuss to changes first our announced last I'd like leadership and results, the month. quarter

is XXXX. As continuing into today's you strong saw from earnings release, performance DiamondRock's

appointments us Our momentum and on the position are organizational build structure we to seeing. new leadership

CEO have are talent to in deeper we way. We I that this opportunity new experience now role. in able DiamondRock's excited the and honored talent across tap into to leverage a and outstanding am my by the organization, to lead

and to DiamondRock his President both industry deep contributions underscores to promotion expertise. Justin's his

most he's For hotel met, haven't you the and chance those investment meet he on proud is the sharpest and of professional Justin, I'm our team. I'd had perhaps to who talented

In be addition Operating assuming Chief well. to will continuing his Officer, responsibilities as Justin responsibilities as for transactions

Briony organization, and a trusted her been finance a the over career Accounting partner has of in has and she DiamondRock. As XX-year Officer, the excelled Chief positions Treasurer company's me, leader in accounting and at her to each

next the Chief To the Officer. for is company's me, Briony ideal choice Financial

world even organizational will previous than establish great accelerate this in performance value was we team, experience can X-member In we it, more expedite dynamic a leverage creation. and had to better. more new and in opportunity investment with be DiamondRock our and all ways opportunistic this the a short, we before and decision-making executive transition with and structure simplified With

drive resort superior maintain in to To is lifestyle this, different goal we shareholder investment past. urban the return. than have and do no long-term Our on total our hotels, primarily will focus we

independent of with We mine resorts, favor urban will continue to market uncovering in but network unearth potential. destination attractive are we owners equally opportunities our unique growth to of

and We growth, from will is independent proceeds Mark make be me creation industry more share that shift. recycling internal and investments capital an recognize to we ROI assets DiamondRock Their as north. as leader, higher magnetic and investments. Troy is projects such important was and new today. slower team deliberate return I or Mark harvesting repurchases, in capital-intensive into our as Value this instrumental assembling contributions established personally we individual the have and It Board

wish DiamondRock them at us endeavors. best their both in future the of All absolute

to our Beach. I quarter are the teams of and X recognized Before These want recognize Guide. Michelin at Michelin our by results, rating, honors. I the Key hotels to Gwen, Key rating a rare first One who Point, the in the X earned who Michelin Shorebreak are turn Huntington the Cavallo

XX only achieved Key multiple among few of hotels the X winners One and received DiamondRock XX status status. Just Key was keys.

in our the than the This and prior uncertain steady quarter quarter into was the top resorts. line production the remained weaker Okay, inflation, interest original compared little pressure year. a to of year. slightly to get expected RevPAR than versus demand let's softness due and expectation rates Overall, at with first segment a little strong the leisure softer QX. from an higher sales group last picture. proved X.X% economic declined Group

over volumes increased beverage X%, group from little expenses QX driven large banquet by X.X% strong the on last RevPAR performance were and the year. over part decline, in XX% up increased group small increased Despite Total total activity. revenues food a that

expense higher those beverage in drove That just the we and food of highly beverage segmentation significant growth dependent overall great the due Overall, profit, Boston quarter. Chicago Marriott, does on both where expense less profitable evident spend. our beverage and growth drive X.X%. portfolio food If is growth. shift and our and group expense increases largest a growth rooms. hotels expense business revenues and overall mix, an food driving part higher was Westin over of revenue exclude our with that and in Lauderdale, erosion, beverage than X segmentation Fort grew to overall food hotels, and at given increase to While in food increased to beverage Westin XX% growth group X headline overall a increased expenses to margin revenue and with is margin these shift most

increase our group group at expect our around we Given significant X% will in year-over-year, and in for the pace remainder food corresponding expense spend keep rate run the of year. beverage the

Turning to resorts.

The revenue adjusted of segment total approximately Resorts quarter a XX% XX% quarter season resorts. our of but First contributed first critical is hotel EBITDA. for

expectation increase decline we resorts. last a segment highest-rated X.X%. in versus quarter year, a resort resorts outside-of-the-room resorts. driving spend declined which at well, weaker our due revenue performed the than little to total in of our first call, nearly As the resorts the be X.X% for from toughest X% the said lifestyle flat RevPAR Favorably, our RevPAR at for very was our quarter original the luxury prior a would outlet our the

below quarter, quarter. for growth we to The QX still were Keys million $X in the experienced Sonoma to Despite up down 'XX. with XX% manage F&B RevPAR trio revenues, decline, collective highlight, pushing with were EBITDA At last a a in Lodge to a in able shift this the RevPAR X.X% lower-margin The growth Florida expense the consistent year. X.X%

XXX points Excluding would this RevPAR one segment our hotel, resort have been better. basis

last but faced very call, was Sonoma underperformed quarter, QX the this earnings difficult 'XX As we a in in Country because Wine discussed comparison. the weak we market we particularly

setup. for stabilizing, to our The was visitation is is is books than adjusted in Hythe in our seen well available to owing quarter the to the drop-off redemption was return and have on first aggressive destinations simply described quarter, behind our RevPAR patterns, the was The revenue for EBITDA market season snowfall as expectation in ski was group team a and nights. strategy more what X% less we $X Vail course in-line hotel loyalty as the performance. lumpier had lower results market management prior best XXXX. We this behind also as million recent corrected, and down too due

Loyalty resorts this XX% were turning on to on The compared over up and down at Encouragingly, pace the in our hotel books last the redemptions channels. group our of is XX% rest room A year profitable prior XX% note OTAs other at less and sharp fill redemptions. from of that means XXXX for number a redemptions larger from sometimes or to to XXXX. reduction means there's year. nights

of drive on domestic spending, destinations. end drive better to the we believe interest positioned to deliver Keys half will same in year. lapped, XXXX. resort Florida consumer travel rates pressures preference to pressure have inflation are placing resorts our travel been over comparisons and the ahead, for high these second Looking expect by and should follow but are international the of over incremental remaining and we difficult markets the destinations results The South the recognize fly and We in suit

increase and markets the total in Based latest XX% fewer a Airless XXXX foreshadow versus into loyalty could international redemptions was there on year-to-date arrivals outbounds destinations. international our the for data, data

Turning to our portfolio. urban

RevPAR total increased and First revenue X.X%. the increased nights quarter spend out-of-room X%. growth room up pushed Group XX.X%, strong accompanying

staffing the to follow-through The to BT Boston prior Boston on the but outperform still X.X%, in see to is Dagny urban a the X.X%. top and elated X forma. was placed Expenses increased renovation. Last hotels to performance. has revenue Overall expected, DiamondRock we increases in at the team been the has the in transient market hotel banquet well-executed at #XX than revenues. transformation renovation This to the Business pro the compared in hotel, behind are XX% as continued that TripAdvisor by in market up were EBITDA increases accompany and entire higher Dagny year's owing mainly our XXXX. the

revenues The year. Westin XX% Boston, also increasing in RevPAR prior in million the the total $X quarter, Seaport, delivered growth over

quarter the point total up over result up Group Marriott RevPAR RevPAR was year XX.X%. than room were XXX a had Our excellent margin. better banquet XX% contribution and basis The with in with increase net group up per and Chicago X,XXX-room up last X.X% nights XX%. XXX% improvement an room EBITDA in

depressed Downtown was and total better turned D.C. level at market albeit are last corner, in almost over of just RevPAR improvement quarter, Accordingly, than but in million a X% group from Westin. shy the year. our on activity. XX% revenue increased seeing Washington, increased the improvement, EBITDA $X.X we a

At of We budgeted XXXX. the the for the are is business positive end the increase books on strong competitive the a point XX% outlook a our year group the same volume on We our we quarter, in advantage. over of had revenue books, XX% representing on group most XXXX. of full believe

in and group over XX% is the up and up and was XX% in at QX breakdown, Looking third X% quarterly QX the our pace approximately revenue fourth in quarters.

up most notable points and XX%, Westin Chicago-Marriott, box Looking XX%, about XXXX Lauderdale XX%; the portfolio. Hythe, XXX for better up XX% the XX%, up The at our Renaissance big or D.C., over group performers up our XX%. up our our just basis is pace than hotels, Washington, total Worthington up of Fort

end the at QX, big-box XXXX pace is of go. XXXX room year, for with next our to ahead to flat time Looking night with

over talk about guidance. and turn our Briony Let the floor me revised to highlights to financial

Briony Quinn

able our FFO original our mentioned were Jeff results original previously, slightly As top nonetheless $X.XX achieve we below expectation to expectation, per but share. of were line of

increased flowed contribution quarter quarter, XX% gross food driven Approximately the revenues an F&B our and the total on RevPAR expectation to by operating expectations. declined profit. exceeded strong XX% income, beverage of first incremental the group slightly, revenue above on our Although is which increase in X.X%

required and profit. rooms expense on awards were EBITDA we our General the expenses million was behind $X.X point year G&A retirement Gross compared and do our in offset Counsel's due X% to compensation of to was profits million in the Comparable G&A. on $XX.X Unlike a This support of adjusted not the savings severance Food prior or to the cost our in first margin. to XX. decline hotel quarter. June accelerate which outstanding up million, XXX than nearly the approximately basis were during operating quarter expectations. we profit decline costs below $XXX,XXX beverage XXXX, but Corporate add announcement originally department costs, equity which $X to slightly all his approximately the higher retire us back intention expected was

our guidance. to XXXX Turning

outlook. to Let the Earlier million million to $XX of the guidance for in start provided corporate changes me our we with expenses. $XX year G&A year, full

by G&A of XXXX net savings result to $X the corporate nearly leadership realignment expect will our $XX.X expense We the $XX.X reduced XXXX. for outlook a million. from million The reduce is million

with million in raising our XXXX We due range but in million, is to confidence higher EBITDA also are million cost adjusted pace. to $XXX a part than the $X G&A that our prior midpoint guidance our large the guidance group savings, to range, $XXX

increased million rate cuts in to the Our per to share share outlook guidance million–$XX adjusted interest prior million. outlook to our A longer for increasing the from FFO of rate is much by million later $XX midpoint. at year, $X.XX of has shifted the higher interest per $XX expense $XX guidance prospect

the are share. Additionally, current EBITDA comfortable estimates with FFO and per adjusted QX adjusted consensus for we

shares. we were did acquisitions during capital and quarter, allocation. to There Turning any or no not repurchase dispositions the

continue sheet. We capital shareholder repurchases, remain external value having explore committed which growth. this focus the is internal proceeds Maximizing strategy. singular share balance can position, projects to our to ROI allocation We or a flexible the of of fund

by is trailing ratio low demonstrated conservative X.Xx results. the quarter net leverage X Our as of debt-to-EBITDA

corporate million Our an liquidity $XXX of level million with cash cash, undrawn $XXX is of hotel million strong revolver. and $XXX

future Courtyard $XX capital remaining look in corporate million may a to a East, maturities. It our markets transaction XXXX. expectation maturing the this have in our on larger If we on cash mortgage with August. through current early We address is Midtown cooperate, the will CMBS financing maturities near our mortgage repay that we to at loan hand

turn back let floor me the Jeff. that, With to

Jeffrey Donnelly

to Justin, Briony want with points answer I and your a questions. I conclude few before

capital strategy unlock a where path To To more remains that work creativity for I value patients brand-managed First, means be to that I hotel intensity. mentioned our for success, big-box believe actions the situations community borrow us, competitive Justin, outperformance. we and product can a capital investment but we Instead, want long-term has to at ideally and our execution for analytical not our that highly the manufacture limited auctions the select disruptive our investment more will big-ticket renovations. unchanged, to my limited is term drive core deliberate. and partner, will will with onset

and Concerning assets. we be whether thoughtful the to Similarly, value we the into recycled is the the ROI a of we when little will time, in more investment, are project. XX% first will about call uses the transaction of or to dispose internal hear but be market, quarter, I'll what we activity year. a XX% Proceeds repurchases product how at new was that decline up shadow pipeline. down create is a early, elect most It's to believe trickling still last starting the share which

a owners transactions see extra interest To likely may remain it's the the where to may rates path require more creativity. product we distressed emerge higher the extent longer, where market for little bring to ownership

projects. in as continues outperform summer which our third our a courier its to Boston, Hotel ramps restaurant led to of it hotel quarter The Hilton James the continue this nominated ROI Chef. Dagny Burlington will The a the last have We Beard by specialty with year success converted Champlain, full potential. a expectations to convert was with to lifestyle

a we in ROI this at Florida a $X will a Cabana revenue in marina complete margin a Bay, Tranquility and anticipate that building new Havana are making cost. at we West Key Keys, expect million the on small over progress XX% year we at high bar In generate a million a on $X.X summer with to

count is expanding to Tahoe in Landing be at in on ahead expected Resort Lake completed which moving are XX%, room by XXXX. We the the

Finally, believe this upgraded will we integrating We through financial us. luxury into L'Auberge an with a de moving new Inn performer Sedona once and our be also ahead Orchards shared Cliffside are product hotel for and the strong room completed, bar. pool

us We well bookings is to sector. XXXX. to outperform top-tier DiamondRock believe well positioned and in our our market continue group the conclusion, position In in performance footprint

level are will accelerating add growth. Our the as revenue of properties over setup, focused embedded the substantial will are and books really next on conclusion, growth, group RAM. momentum return the in we projects resort see growth we we a singularly In XX–XX our of remainder on ROI as provides significant the optimistic incremental and are and such Dagny in projects enhancing like earnings the months our completed year. our

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

Operator

Wells line question come going Instructions] [Operator Dori Fargo. Our of is to first the from Kesten with

Dori Kesten

that By forward Jeff, DiamondRock you it is more active last capital comments, to likely will say your recycling fair be than going previously. have been

Jeffrey Donnelly

mandate be and the more sales, we no more the under but think I we to used are deliberate be on necessarily we that or in I hold remarks to word assets and say, I the focused thoughtful, my about would acquire. trying We're acquisitive assets more that

to capital. to any moving be in next the do XX–XX as recycle prior us and I presume we've think assets we calls, on said that that to in intend look months, that there's that, mandate I of dispose from wouldn't quicker.

Dori Kesten

that if what total where since be I was? Did guidance, guide? it. I April would were has your providing apologize today? If you initial How RevPAR changed that say you missed RevPAR

Jeffrey Donnelly

right of now the changed. total that, the the that at view trending about X%–X%, including basis comparable add flattish. RevPAR XX–XX April is RevPAR out-of-room year comment On spend, question, growth the that RevPAR to hasn't you made points room about we would really and our about beginning is

Operator

is Capital of question Markets. Austin from next Wurschmidt going line Our come KeyBanc to the with

Austin Wurschmidt

year. and start little hotels been bucket of of little on of Just under the ADRs could think to wondering begin has bit year, point you if or a clearly a leisure-oriented off see stabilize we're little bit around increase. assets. The even over for pressure we a for wanted to a resorts just now some where that I'm this at a a here

should Just looks be for from a rate the we that about like curious perspective of pool booking outlook what assets? thinking and how

Justin Leonard

days the of a concerned weakness, nothing little seen first about. too We've but over would be XX say, days of versus XX last bit the the to year, I

the not side. is one segmentation shifting resort the to side, throughout are I think also note just but the on thing urban we on portfolio,

a us, for portfolio-wide transient we do between and think of a rate. group rate discount I have bit

at the demand be transient and require end as is of you're seeing actually deterioration group from it's of resort and them see some make is we'll and these that falloff, saw given not from of up a transient rate to just able last We're hope transient intentional. build Some into and rate of but base continue perspective year. away hotels smaller The a segmentation some we compressed rate what rate. to a stability less trying shift necessarily that's more the we weakness to some

Austin Wurschmidt

You are to you're the comps start you do currently When the some the mentioned with strategy pursuing with of down. mix there that lap on more a year-over-year loyalty comparable redemption nights group. see basis and

Justin Leonard

a redemption probably little bit about a perspective better the I a global from perspective. that Marriott. from had Just more is a solely, they for what question hold balance point disclosure wish they

that a balance optimistic, been bigger has time course last over and into the to we'll deterioration longer seen than stability, of have We the slide of our to get hotels slide expected. summer, we start it continued we years. We're a would by have see hopefully, but some a X the

Austin Wurschmidt

the pipeline markets remain markets building, capital Jeff, transaction in shadow but challenging. the You mentioned

a what for changed alluded of guys when pipeline versus maybe any strategy build sale? prepare you had to for using previous flagged team emerge. the mortgage I are guess later that and which Has curious You some opportunities this dispositions sell on a to assets repay executive to the starting cash potential maybe I'm potential if year. to to

Jeffrey Donnelly

this. both can I to and Justin, speak

prior deliberate market and our using that bit that to discussed but we would to to sale. to are we're their keep prior think sure the calls that, less think planned there either more we're I In that as peaks we we've be dispositions few ahead. be at return as the situations or making to assets of to think away be in than some and dispositions, the the is be to about really, think little around are noncore we best a likely to word more little trying about trying it position for some reacting opportunistic to just in move like are in we when maybe have we think mandate their rather that I move we to and there's positioning I do point, quarters, that next no from, that clear. assets Yes, be a

Operator

Our next the question of with Pfennigwerth Evercore is going line from come to ISI. Duane

Duane Pfennigwerth

Can you at swing to talk or of or structure? a streamlined you'd pitches, little years willing you few of the be over at maybe not the about more with the bit did types what new past some pitches swing

Jeffrey Donnelly

going that weren't be to or opportunities always pursued. we've looked There's situations acquisitions at that disposition

try is to to be think and to as skating I going guess, thought That's, was. puck an about full it. where to puck about we're going line I often how forward, the opposed think the used just going I this where is

I Justin, I we value. when product I that Oftentimes, become I to things that crowded a group at where everyone's give future at example, like how of want the of you around create think where specific there the time. place assets, forward, a to little think term be the you same will do time. really that meaning from in over because last couldn't idea think when terms lodging a that's that in we wish decades, of doing core the one REIT industry the manufacturing I today buying look selling I times the tend I've and I frankly be were but can borrowed often there's always core that find markets in is X X, bit got

Duane Pfennigwerth

you relative June a how bit see April commentary? for to the expand you the comps flattish Could little on May and

Justin Leonard

month outlook a I going is. be think April group perspective. from it's predominantly was group our driven that by our to knew toughest what We

flat, probably that's a base basis. out April perspective, year coming where worst a from given of year-over-year of month we think I the our stood group on

see last because in quarter A. that we're position optimistic X that think months we'll from the just for better the we're pretty of flat growth continued group much a I in range

Assuming basis we we should see the same that booking saw escalation XXX type what point we see of on RevPAR. from trends, transient

Operator

is Anthony Our going next the to of Powell from line with come question Barclays.

Anthony Powell

a think interesting I are wanted more and dig comments, on I important. bit to in redemption the which

control I that there? the In it terms as gone points have to the values. a much points issue have owner know an I whole up. guess, the redeem per you driving night, of per do point room, Is required on myself that Also how

Justin Leonard

it accumulations on they've the think spend. large people not I as credit you a is we're that middle hotel pandemic, traveling more lot while the programs In not think the I have are ways, become balances focused these utilizing cards of their on way just card of about really about spending evolved, stay. a these In not them. generating credit the point of had and lot the

seeing of we I is pandemic, just years the accumulation just uptick a event why some started of required. a well. the that's point points the We've as we're X increase that opposed off that as and burn part continued of big is during seen off that in since a as happened think saw to what There fall travel ago. that the

to the in brands programs risen hotels. required the loss to the a run at return an occupancies as to and get basis. There's annual think have been into have order rates uptick of reoriented as those a on programs points their significant try I not number

I of In terms our say, fairly little. control, would

the a the the for program, where changes totals but ability of black set. have are are bit We in a point to of lobby to box terms they

Jeffrey Donnelly

independent more at more those would little I I in think our of a liked resort think that's the of properties. destination why future we're control in chime reasons where I of that locations these some one we've own

Anthony Powell

next discussion broad as reducing past couple hotel years. well can know Maybe years what the about your one done to in bit. of you mix. discuss guess, been group past your over the a Group is approach group on, exposure. picture couple there's percentage asset of has in more the of Maybe I and I it the over good looks

Jeffrey Donnelly

X/X about I not does it give business. or an stability on that, I provide exit right roughly heard part We portfolio. reduce assets, intention correctly, that our to our take. group now, do We're to meaning if there's like you group like don't think

about are have it's being that positioned heard excel assets making all sure I we're that good well we Yes, think portfolio. I our if concentration in with question at happy houses. your correctly, that in group

Anthony Powell

Like now properties still as core opposed Chicago are maybe to at Marriott potential asset sale?

Jeffrey Donnelly

I wouldn't necessarily exit per or I say other group that I'm saying we're Marriott trying segment. that any just think Chicago not core. the se are assets to

It's I think well actually property. for we the that Marriott talked about a it's very located. in past terrific run. it It's well Chicago us very

think That's our Chicago portfolio. questioned or thinking our been fits rest whether really the we it not with on I of Marriott.

Operator

to Our question Rose with is come of going the Smedes Citi. from line next

Bennett Rose

You kept than quarter. it lighter your expected RevPAR outlook the X%–X% sounds in unchanged, things but first were like

the end color of it more little you the on to What that Or would second kind see transient? sounds Is group range? high get What more like business do to need of to is happen? leisure? locked in. a need mentioned of quarter. to bit You is it It

Jeffrey Donnelly

it's of think factors. combination a I

very have a I strong group think pace. we

Obviously, depending obvious, the the shaping can downside in in is both Of course, year how risks are year up. above group the or leisure for to and in on that come at group. the in

would and the pronounced expecting leisure with very end, and leisure. anything attrition not We're our come high group continue to back too in probably. we ramp fewer cancellations half the see have less to strong the to think a get have for of year dramatic to more I in to

Bennett Rose

expected? was that it end for an hearing seeing issue? overall the just it just more user a think you suggest in do customer came you comp anything weaker your than Or of or Then higher it's pullback? of that would sounds leisure, Are economic

Jeffrey Donnelly

our because that Vail. I to think necessarily is it's that's case that to X remarks, Sonoma type we're we're very a little of of in very one, make asset-specific the sure have the source in lens of bit of issue, aware able affect broad level. I of as I'm some that there's so I'm are a of The not more in the we frankly, for majority examples case, that seemed the a solely was people's by called out determination. were my size trend be Those purchases don't really think the a specific the in don't X, I group. our I resort at that. broader we there would think what economy particular, luxury necessarily impacting it concerns call though that driven comp weakness

Operator

question come America. Dany from of line with Asad of Bank Next to going is the

Dany Asad

that on books your prepared rooms the you in Jeff, much end How XX% of at this time? mentioned remarks, at would budgeted year for you the you're of on books have QX. at the normally the

Jeffrey Donnelly

certainly were I year-over-year. point, think last We're up year, we around XX% this at maybe the XXs. high

Dany Asad

just color in historically, terms What a resulted the I prepared clean RevPAR. pace thinking in group this of has that you about for group answer gave but group historically know your it's very not this, remarks. probably actualized pace

Jeffrey Donnelly

as it the that begins through As you course, year, progress averages number naturally you of to realize group down. up,

could up, if end roughly you point, this is we where a just guess high you're I would of X/X say is our for business, probably in total I the think group. think it about this revenue at growth single if digits

Operator

is come of line to Michael Bellisario with from question next Our Baird. the going

Michael Bellisario

you redemptions. the it just what actual nights? percentage your is what Can that important resorts one redeemed of rest up on ex more resorts? the for of are is Then size portfolio, for loyalty that, How Just night at us?

Jeffrey Donnelly

vary that. that's probably can up be sure like It's company-wide. by I'm going we're not follow with We to able you to going a on number property, to you give something

maybe that examples you give for it. properties Justin of a specific we'll there's share flavor think I can that

really that's manifested us think first I for it the in quarter. where itself

Justin Leonard

portfolio-wide said, a because come I wide, the it's number map. of would the be of it not back season, Jeff high are all height that high in Vail, on of as a it's like assets I XX% as have we for season probably go As It's branded. teens. to say in an in number season over can you segmentation. could as asset X% obviously, resorts the the our in we

it's Charleston, XX% For our which In business, variable comp completely of the for were meaningful very set depending piece like not that an that's significant in asset over your Charleston to it's of branded. but 'XX, that's tough was is redemptions redemption number, in a total our people falloff on share #X might I'd resorts, against it of When surprise XX% say the you the asset, hotel. segmentation. get a maintain segmentation.

Michael Bellisario

with as the -XX-plus% acquiring of you today? about Then turn there it what absolute I or list on well think seem does as you it was markets you urban transactions. provided. gears, like more returns that to focus slower the does renovation figure acquisition change like assets off deeper I maybe just projects urban just target did trying year-over-year list. there but urban wasn't do the previously. underwriting look Maybe much some any to especially recover at looking differently, guys? wasn't on is the how in interest Then or to that a It on know before, understand the just sound one switching

Jeffrey Donnelly

say or to few in that but say would recovery is a on really X difficult to view really product not it per on candidly, appealing last us. was I either urban to rates in you cap a in I strong lot a somewhere be just wasn't it's say I was that key the There mentioned, required really or market that to available there Concerning past, what's little of rich, were away. be buy would some that years X will the there's pricing the the years bought. as could product, high-quality

it into I and you're that X–XX now, in of these see where next more I getting that assets later to starting on months. or some loose little we're that about to a Justin this point stress shape as think start cycle more think I probably to think owners the will we're

risk-adjusted today resource resorts, they lot look is, we have a about speaking, generally The it's similarly we now it produce a currently. the right way think at of cash that benefits is and very they think in flow I return. the all

comfortable bit where want the speaking, there's you add? a more Justin, comes. out where with they'll view more to future don't little I I little but requires think if I settle we can urban, get know, on think, a generally anything

Justin Leonard

little especially the we I is, markets of cost more our a on think leverage other look that sources utilize advantage. think today more capital what focused When also against a a towards basis. maybe It's it's capital advantage about as bit really urban I we do. than lot

may not at to it as I would but something looking Maybe functionally what that think in at it. a to it's relevant, built. significant where I XX-year-old an replacement cost was newer that's issues. mean be discount that's don't asset had obsolete asset costs replace a maybe some market

we would just before carry that find asset to that's the than we against still going market growth the into We carrying opportunity we decision it because gives think for discount to a some us If have that's an to recovery. and gets the go have X that to interesting us bidding give we're a people might of development underwrite with before negative an I up X up something have started to advantage perspective, proper pipeline more at is years again. it we really an against investment a like from think cost. replacement opportunity that until levering

Operator

Our Compass to the next Dijkum Point question Floris from Van LLC. going with of is line come Gerbrand

Floris Gerbrand van Dijkum

about issues new some can part to the see companies. change there? that meaningful as joined maybe, on How which your as you Just a little talk you've discussions Board, share to those glad that I'm you're Jeff, what other if any opposed discussions with around issues? of to you've you able curious, just the that you're the Is well, like about on some are control of focused buybacks. statutes share the of seen ensuring and change Maybe there talk bit

Jeffrey Donnelly

On the tool. out a very and a that's a has that a base but it's to I superior way been new to buying to somewhat it, market say in experience tax-efficient good risk-adjusted shareholders way think me, returning sometimes our useful my shareholder a and asset. returns is to share frankly, do to be on that tool invest relative can capital split repurchases, going the for would valuable I capital

us with we that lean one general dispositions, whether Board areas not share in something to our as think repurchases. that like comment, a discuss is direction. conviction it's they It's necessarily say That acquisitions, in, would have I I on actively we

be I part in to another question? us think decision-making. your to I bold or that, lines. To clear, Was our that for be apologize. looking they along those are there from announcement pending a little not derive I would any there's anything big

Floris Gerbrand van Dijkum

talk Did you The that the the about that? that ensure same make control, participates change to senior team you everybody does? management did of way and sure in

Jeffrey Donnelly

of is control. on making and focus incentives assuming a same leadership executive was company all that the aligned and of and sure same of shares change mine view really the is this That role

Operator

from the Green of Our Chris with line next Darling come Street. will question

Chris Darling

Going each you the back C-suite appropriately of you feel transition, responsibilities of below the just have taken all areas given call to on? level, leadership on in do the the additional the that organization staffed

Jeffrey Donnelly

be positions don't I There any were anticipated. are will that think no this would be those changes but X some are that X and major had continue the pursued, announcement, do. prior major we open staffing We in there staffing there to to or organization. changes

Chris Darling

really to was private one wonder interest higher talked the dynamic if really beginning $XXX point or Can move that scale is hear. maybe around that appetite changing Any I that the of buyers spot. Jeff. would Then today? at know sweet be year, transact half, to we've price interesting or maybe the and have in before Justin talk about change year the just better for you you recent less it being to or rates. comments either I either million last the among part about for a

Jeffrey Donnelly

they that in for say transactions. upon their talking lot think capital would recently, buyers, much of private brokerage really community tend from reliant for to folks I a the that more I to be debt

Just feel doesn't feel products a equipped a to lot like changing. it is buyers. be not that's environment think now, changing, only coming it don't does I are there just given the though best right that lot market, of not interest rate to that's the not buyers of those

Justin Leonard

No, think that's right. I

spreads expensive market I fact how asset to rate. tightening securitization alive given that, we've feel SOFAR's the overall and that Unfortunately, the of that a cost it ago, debt probably seems seen seen of be are market. X large-scale much than more of think the time, market, just the the months been the it was a in like Despite come a SASB coming the still is bit same sign underlying single base an up. little at is bit. The encouraging there's uptick stalling only does we've

think I bit coming a to little to the we're happy see more market. liquidity

Just need we where and feel assets, like before move given lower will and leverage Fed's to to and movement start that trajectory would some we people see SOFAR our transact really that becomes accretive see like the to drive of pricing.

Operator

question is of from line the going Stanley. to Our next Morgan Stephen Grambling come with

Stephen Grambling

any about property inflation over that line comments the Then other SMB, heard sight on but impact any and and year wondering have just of think types. cost broader wages on? cetera, other across you I of from about different if factors, property half taxes, the comments other around et expenses as major insurance, the mix I'm shift we margins the there's considerations back

Jeffrey Donnelly

increases to any as really to just I have we would pretty we do headwind, about we are portfolio want don't major there's I you tax I that have that you particularly think today rebates know, that there. but will that concerns mean talk say our tax would say really cause labor? surprise none I or can disruption no can, notable

Justin Leonard

Yes.

think rate course months. XX growth pre -- the last above the nothing like what seems at wages still little a to definitely I but pandemic, we definitely have over saw I of bit. rate prior run least cooled have of the

wage rate the as rate X%–X.X% I in a shift deliver first that creep are just hours added given think that quarter. lot that food to we required mentioned, the towards were of the hours product. and obviously, encouraged beverage down more and to Jeff see inflationary to We that per hour worked work, number

I think encouraging. that was

maybe us at to in caused one the numbers benefits, I an think run costs think thing specifically sees continue in growth see a those concern that for continue operating I is and just high everyone business year-over-year that we welfare single-digit health to that and basis. on it little a

Stephen Grambling

just to Maybe sure want I make one correctly. you unrelated I understood follow-up.

think comments being I reacting? have inbounds on more assets of point? made terms had you If transactions, in this maybe being terms that of more offensive rather but unsolicited at referencing any you deliberate you in than some were

Jeffrey Donnelly

Yes.

assess benefit, lots assets well. months unsolicited few and There's terms the those of buyer I get their in We have last think of that had of the our your you no that the you to times just do really can requests for pricing just requests quality of. for but have beyond as any

Operator

Woronka Our is next from line going the come question of with to Deutsche Bank. Chris

Chris Woronka

your there's segment? reservations booking on actually there's Jeff, there heard the in, of market I little portfolio, like a guess a cancellations are the you're any just shortening in that more what that going at are and windows bit. or would in that not which but anything churn, whether Is you think it's your a I guys serve seeing in world, I select we've increase call on hotels? level churn more

Jeffrey Donnelly

No.

a we've say have building. couple think a no. of in focused probably base Candidly, in been very I'd We seen little I selective the places. on maybe aggregate, more bit

per to those more prepay, can't leaning and we really addition group, that have term sticky us stack we insurance in cancel gives that clients policy in are short gives seen to entire It aggregate, effectively us advanced in date. hotel which cancellation the the say example, a a on haven't change bit the little For rate to that without keep and I against high the When flushing race just the reservation in in basis. would on really into are ability we've through booking rebook. some a been bottom. a hotel in a given the

Chris Woronka

look revamped would good guys smaller assets, that? call new theme but take returns back some those, I probably and conclude there's of perhaps. lot costs. know Or a that that for? there's we necessarily not imply of chunk friction at going Is Should we acquisition just also should guess, won't I strategy more could Then obviously that I have we to You done assets? the, your a that, away

Jeffrey Donnelly

transactions when I'm buy to speaking, this, being new. larger little I assets away of for It's think I from $XX a we've just would to always bigger created because assets. given the a say, like bit million We've $XXX say into aimed start size, issue that than a it for that get company shied we'd are us. little million. funny that million–$XXX I concentration generally not million–$XXX our range

perhaps buyer Sometimes of to our be the risk we're private stretching equity versus given does might comfortable there. firms one to be of it not that one going portfolio the competitive what most who the presents to our more or peers

putting tell We of won't is past, I you thought that little put think smaller I be needle be million–$XXX out to sweet something that the I capital. is come efficiency we've think that million our and certainly range. capital an we but we is a moving. on across interesting, can't understand to people to There how $XX preference more that's assets spot into always our in those assets. want efficient

Operator

come the is going from Our with next of line question to Crow James. Raymond Bill

William Crow

redeemed to or Do on given at of wanted start amount health lean of that consumers down any changes when the get to in are there Is the the more consumer? points time up at points read-through I redemptions being any tougher? with Justin, times you.

Justin Leonard

actually is I find pretty about consumer think the you'd surprise Bill, no maybe it. smart

don't of ability they think when has value about it's their see consumer there's unless idea no value. the the think points. and a what use points they in I perceived use an a mind vacation they have I them just are that

decision you their people on pricing I'm not just decision. ADR. relative form I of at maybe based think the necessarily and It's markets look different them currency, as reallocate more at of that value. lot perceived to to a look their just sure changes if them times, another really

William Crow

the but about chance that into how a asked might portfolio. give answer think already might Jeff, has answer X to box X big topic and question that you fit you or I your to this want or this but not times a question. didn't is hotels I morning, surfaced

of lot really difference between people a are Mark's that at what the philosophy. that's Is think maybe asking. I prior

Jeffrey Donnelly

Really, there. not difference opening remarks think don't there's historically maybe our made what to tendency big I the by I that guess a I meaning necessarily box I pursuing in the is in a I sector brand-managed there's think about hotels. was be a argue just fully what create fully we necessarily find hotel renovated renovated doesn't that to value. think somehow to paid, someone managed. The then situations the that buy worth than we're can brand where and -- have it's I more it trying comment

able Whether it's to is frankly being some under because marketplace smart the buy through we're about in through identifying repositioning owner a renovation, attractive assets moment we that little or at they the more perhaps that see conversely, and improving that so market it's a see mainstream distress, be of think don't something Or going we market. is in to and core. becoming a the more discounts

William Crow

a hotel for me, that little indication calming worker is Then bit? down any turnover finally

Jeffrey Donnelly

away that definitely as see we the hours a shift contract. that to One think are through portfolio. way number continued in we see we have contract of looking coming labor full in We time. the it turnover at is gauge the from opposed what I

loyalty more more intent employees and We shift bit of first We saw helps we from it box, a have perspective and quarter. in build the definitely our a desired productivity in-house. goodwill the just helps bring to that in us and think a of

that hours more I with really that's we're to backfill the have those direct indication labor think that shifting managers probably best less the employees. turnover hours of I not having we're towards work of contract actually

Operator

line to Floris last Gerbrand is Compass the going from Our Dijkum come Van of Point with question LLC.

Floris Gerbrand van Dijkum

can vision for redemption very unbranded. points, get high you versus if really discussion redemptions revenues. to branded fill on use could occupancy maximum compression a obviously, bit get the you talk you your interesting. It and The about that if good and maybe be Jeff, create and little

in incorrectly. sounds control about I'm have revenue. the years' As you're that X you portfolio in you're more think of Or tempted DiamondRock's interpreting time. where It more maybe unbranded to more probably

and branded that you bit the how If vision your forward going unbranded shapes talk on little portfolio. can about a versus

Jeffrey Donnelly

think for can just it's owner just I'm maximize realistic choice. being whether would that brand it's brand. one of the returns I necessarily the a and the our a anti-brand to I about or with not really associated to day, is decision me, end are an around choice being not where pro-brand costs say we At or the the

deliver the they're course, I top think well that there's to the but the structure benefits they through you as on capital costs of can side. expense effectively real line, and on

think I they're consider. to important

the little where answer if we us managed. a remain I I maybe would or likely area not see differently more think brand one you unencumbered probably is cut

brands. the appreciate I of having think we independent like management from the feel flexibility we

we of away I portfolio, we're hotels those. feel we standpoint. think happy think desire have in from more don't think a that and move from our have with lot very do I We predominantly branded them. like to necessarily success franchised, any there's I

I really think down choice said, just as ultimately, to a I comes each for it asset.

Operator

showing questions CEO, time. at would to further hand this I like for Jeff no I'm closing back to conference Donnelly, the remarks.

Jeffrey Donnelly

Well, questions, thank with appreciate and you, forward us everybody, I for you joining to the we today. quarter. speaking next all look

Operator

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

disconnect. may You now

DiamondRock Hospitality (DRH) 3 May 242024 Q1 Earnings call transcript