DRH - Earnings call transcript Q2 2024 | DiamondRock Hospitality Company

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Operator

Good day and thank you for standing by. Welcome to DiamondRock Hospitality Company Second Quarter 2024 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 speaker today, Briony Quinn, Chief Financial Officer. Please go ahead.

Briony Quinn

Justin. you, Thank and everyone, for us. joining Good thank morning, you today Donnelly, Leonard, our With President me Executive Jeff call the Officer. Justin on Chief is Officer; Chief Operating and our and

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

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

quarter. the catering Group point result on of AV the RevPAR intentional of addition, banquet will X.X%, RevPAR The X.X% measure with certain comparable hotels. XXX at the our basis growth grew gap X.X% growth by RevPAR XXX was than better by total In revenue which at we year, with point the the RevPAR XXX growth a urban by saw our benefits cost RevPAR exceeded the quarter drove mix and and business second last call, led program shift room was outcome. which increased from XX.X% basis XX%. resort strong expectations. per Comparable has line Group and year, today's was discuss insurance pleased our first resorts X.X% points last hotels and expense to over our an better-than-anticipated reduced last revenue increased total EBITDA acceleration basis in declining rate margin. and point total over $X.XX year hotel last premium year, point Total toward was worked. from total Comparable XX in of million, Adjusted and X.X% adjusted RevPAR financial X%, were basis Comparable revenue in our growth was X% was year per increased $XX.X Overall, was sequential the exceeded insurance above a that both higher reflecting XXX an our share acceleration in increased quarter, over over XXXX. Comparable growth non-GAAP we strategy results, increase we the quarter. reconciliation A Early earnings which strong than also higher expenses between RevPAR XX%, our X.X% in than The expected. Total growth this financial spend. with into basis to out-of-room increased largely on second RevPAR which X.X% XXXX We X.X% The that was X.X% increased from the quarter higher. Comparable than quarter. our press RevPAR can prior FFO with GAAP X.X% higher most over with renewed information. our driven in wages the XXXX. hotel expectations year, be a quarter we first found a the information release. to last to last operating for directly share. growth going urban

a profit. is and but well are of Group Group range reduce RevPAR focus done our expectations, exceeded to growth to of Accordingly, the strategy RevPAR towards total so outlook X.X% it our our of room shifting growth, success to benefit ultimately, adjusting Turning X%. has our RevPAR we to may as occupancy the building mix as resorts our outlook; our in on a

total the expect we RevPAR of in to range be However, growth X.X%. X% to

the revenue out-of-room to we spending range calendar, But between drive to now Our to Group half the we contribute it half of and We of incremental expect expect expect did it EBITDA do and as million has million. the continue performed in second will strategy year types of will the the the $XXX well, basis to Groups total $XXX in growth profit. year. our points due first XXX XXXX RevPAR and on adjusted not

FFO $X.XX to million share million $XXX.X per adjusted $X. range adjusted to Our XXXX to to between $XXX.X and increases resulting range the FFO

capital activity a To-date, approximately quarter. repurchase $X.XX during allocation; the total million shares consideration share price repurchased have X.X average we commenced weighted to Turning for per share with million. $XX.X of of we

We share growth. continue explore ROI asset dispositions, of additional internal or which fund to external the can proceeds repurchases, projects

remains sheet balance Our strong.

was of $XXX our our million in trailing net-debt-to-EBITDA August early to ratio X.Xx repay our and end results, the was of quarter $XX mortgage million. We hand. cash As quarter, maturity the four plan with on liquidity

our million exercise X-year maturity right the our to bringing loan, In extension January XXXX. $XXX to addition, term we on intend

a available the turn to operating we the to analyze and and continue system our to quarter. Together, We updated completed of extend better system we'll new XXXX impact collect peers. all want for and you for also accounting our maintaining the data debt color asset on continue these on the quarter, additional will of that front. I successfully significant available while us. efforts of to to the that this volume our level the financial upcoming our ERP that one efficient address to and share keep most Analytics well Kudos enormous to options on a cloud-based management as call systems DiamondRock amongst as monitor hotel project. I'll Jeff and teams to accounting-related streamlined Enterprise during new activities over assess our their Oracle maturities, implementation has now expect teams

Jeffrey Donnelly

strong want to I amid to of years. leadership highlight for systems. I thanks in recently retired QX Thanks, DiamondRock's this also recognize and efforts Briony, XX Counsel who all our General transition as excellent to want you serving after information the and morning. this joining of a who Bill Tennis, quarter team for us results hard entire to deliver worked

star Anika rising on this Finally, I'm President I addition and board. our Essex want to been joined Trust. She's who Property an personally to Vice to Counsel team, DiamondRock Senior welcome General as happy from Fischer, excellent very and have

ago the king. between and year-to-date And growth higher our growth. room benefit The was in of lower higher possibly expense we're profit, RevPAR else not second spread shift it maximizing to while let's increase even growth is accrues RevPAR slightly to robust few result little RevPAR, RevPAR of Now lower total a about understand RevPAR This total our margin. can the mix on in his focus -- team to points. And line higher higher not and room conscious decision more growth total can profit why is to and bottom RevPAR basis Group. Justin equal, result benefit on All quarters us, the talk critical a total this profit. margin, is focused the expenses to a quarter. made XXX It growth

growth. The Briony basis the XXX quarter EBITDA the total profit Urban was food increased increased at RevPAR and costs, and As our X.X% associated XX% after XXX RevPAR for the largest basis mentioned, labor portfolio XXX and comparable with hotels basis as [ XXX The Clio's X,XXX such spread nearly incremental Gwen the non-room points Group in Marriott revenue. urban the spread between basis Worthington ] Westin points, Chicago points, and Seaport points. points, hotels had basis F&B

growth the books the room half of with to over and is D.C. at the XX% the year XX% on the revenue prior Marriott, Group Chicago second Worthington. ahead up over well Westin XXXX, Looking

XXXX have on our increase XX% Group and XXXX room budget. which we the of a For year, nights represents the books, XXX,XXX over is X.X%

source by the in was occupancy, revenue resort comparable by RevPAR increased growth, this resorts; of our end since increased of first portfolio decline expensive our X.X% growth. X.X%, a on quarter occupancy holding ADR. historically Despite the more higher to to of drive a offset the X.X% X.X% to were growth able positive XXXX. Resort we EBITDA Turning expenses in reliance

when outperforming sometimes hotels, have rate to Importantly, we quite And to the for our holding out into Group total and were resorts transient, rewarded longer richly or either. share XXXX It markets, our in last resorts. XX is detriment are of but XX our like maximize leaned RevPAR taking no for minute XXXX urban profit. it we isn't of average XXXX

be still profit. we the on revenue are operating expect occupancy. half expect but year, year We guidance, growth higher. expectations of the above profitably and partly XXXX staying Westin the San growth to profit renovation our It for over are back original will completed than of lower we Our room RevPAR and reason ADR XX% will we for off resorts maximize total we In is levels, the nimble this trade full our strategy are Diego front. slightly the RevPAR room Bay

Fish of chef, new & the Burlington We Oysters product the creative Skiff spacious two-story renowned to also restaurant feels Hilton to the casual and [indiscernible] Hotel from new a by The completed health rooms. of Original great and called sense arrival lobby, hotel club has Warnstedt. Eric conversion hotel Champlain. The

at Marina our resorts as ROI properties additional integration We new have Havana the a opportunities XXXX. Bay pipeline hotel two the bar Cabana, such underway, of and Sedona in of Tranquility

and constantly the profit. the pursue plan to share renovating would of supports reviewing opportunities, for original amenity reduce in the pool an case we've to portfolio expenditure previously about but market for for focus of maximize $XX behind to additional incremental plan rationale lobby the implementation are the our F&B asset optionality incremental to million to justify the regard, pursuing based on capital scope the significant had it spend areas budget expected managed Since also amenity expenditure ROI we to of the XX%. we retention. In and product. The upon the to efficiency value-add to outlets project the elected hotel increased this prudent XXX our gain is share, outlets. now outlet exclusively urban was capital the reduce while the scope later. expectation have fee retaining conception, the are F&B New Orleans The reconcept we capture the fee, by are capital still We business We create renovate the rooms revised scope drive X-year and and reexamining new believe rooms

expect in be strategy, we strategy. those more market to lifestyle will before resorts a good the in back about moment on will growing Super recent hotels but urban and in transition continue and cities, complete exposure, said renovation deliberate focus have also are markets. We've you is step targeted we've our analytical also Shareholders expect will leisure or we our and we value to destinations We Bowl. actions. be should asked change unique leadership This the see said have whether how us long-term talk and a will

that drive to aggressive factors Xx reduce thoughtful ROI our typical on efficiency. earnings focused you is only identifying per our G&A branding, to of spend support flow are our a million the capital cash to our we target specific as percentage as customer priority value. When scope as net most scope Real XX% renovated, through earnings of our Our frequency we simply age avenues Orleans, be for new is in we Average do? per on also RevPAR, share well preferred, is about it and leverage, The is capital reduction to truly small, but It this potentially and reduce high retained meaningful we focuses renovations the instances capital. expenditures dividend at REITs sole including not what XX in up capital to growth. can, At obsolescence reduce long-term despite seen on and revenue basis reflect of share decision-maker contemplate of our transacting on discount scrutiny snowball transition a at market our effect our DiamondRock with the share growth. It basis an expenditures. older working share our product well repurchases, our creates preserved overarching age. earnings growing but working XXX the cater independent pursue in because of like important. older other We've similar needs consider be we're revenue of are market values our of acquisitions are a Yet manage accurately to is on order can level, historically and costs. At to through highlights stewards capital have of capital value. drive hotels have spend incremental and annual of organically growth, hotels portion EBITDA hotels, all digits. to estate it high implementation is payouts stock $X improving do per always size timing New earnings leverage, doesn't course, growth. and downhill, assets. and narrowing the projects how the to hotel as of XX% market. What over highlights your Full-service that while significant prudent expenditures million path single of of capital a towards Every or revenues of us focus $XX points to to else new multiples a earnings investment we on the drive companies too speed in The scope over corporate share fund to and rolling to captures that asset technologies and focus points age earnings to asset. To picks the leadership per is the

We advantage such take recycle that are into earnings. in after-capital cash flow to to opportunities working our noncore of to portfolio it yield assets accretes higher

need cater the our investment and local environment. also to be to We flexible strategy

focus reduced to has is an asset scope. multiple I return. At our growth. largely this will per be the to relative upscale we lucrative expansion shareholder like Justin, what are upscale urban product are approaches an questions. For your focus instance, It would remains upper profit we taking so take the drive capital key, similar and open but this far markets, share hotel total time, drive Briony in can and it may belief changed up, the ultimately conclusion, but some In long-term markets, given our more than unchanged over per earnings

Operator

KeyBanc [Operator comes Capital our Instructions] from from first And question Wurschmidt Austin Markets.

Austin Wurschmidt

to the interest I depth you'd of an And transaction and of assets sort potentially kind far just the on you curious that in for pool identifying you provide just of sell. if kind on new noncore kind Jeff, on along investments? execute this strategy can to of guess update you like I'm the market, of are buyer how

Jeffrey Donnelly

Avenue that highlighted Marriott I like previously I would the past. in Chicago list would really list even our I that from you I it describe Washington, we've It mean changed isn't tell materially. York, and New talked like say noncore Fifth in the Yeah. in of assets, D.C, as Westin our extensive. assets the more we've hasn't would Courtyard about

can those of it's to day, at think of in think in looking capital where kind we the noncore long-term assets sort how reinvestment not at opportunities. It's the find likely think I them those quarters. going characters the happen look of I we're we as are and the but for about that all us most think when coming a needs we we

in as As can well. the far as current Justin market and chime

chasing that lot a I buyers. I It's think, been assets. challenging think there, it's out for not not there's of capital

difficult lies I a also costs in? for if that's you Justin, high, don't sellers. relatively And appealing things to I financed with know, bid-ask bought and debt could to folks be to think and it get want therein spread between level at the add buyers it's accretive, but But us.

Justin Leonard

in Yeah, transaction a significant seeing we're volume. drop-off still

of annual to of of you transactional half billion. sort transactions if think the first billion years, was on the year I X to last sort are look XX $X hospitality a $XX $XX at billion about and an the market basis

of large done still relative our are of you transactions a a between we bid-ask sellers. of actually So and the just buyers run see rate. to We normal amount -- pretty kind gives that spread sense getting

Austin Wurschmidt

And customer? demand kind does That's just But separately, just that filling continue much? of strong sort that the strategy more having sacrifice it. base. quarter rate leisure to for rate with without indicated remain more you mix enough of to that this to rate quarter, impact some the you the of of on transient which And base this to benefited the update was shrinking Got strategy clearly sensitivity latest Group too you of what's the Group past leisure helpful. last then had shift by really

Jeffrey Donnelly

Yeah.

the during COVID weakness of back to opposed prior are mean pattern having just for more I so the customer. strong for I was as so a of patterns and were demand consistent. kind leisure transient group, period in the a -- base having you seeing during the to because think of was overall demand it's reversion penalized penalized you

our in not but resorts seen was in midweek what definitely not we've was to of 'XX. what it 'XX, back in I think some it reverting

we've those So that's we're success, building midweek discounted more more having the base. And honestly, think where to layer-in group. of and had I customers leisure in

we do Group in pace the think QX. our I we can mean anticipate about we and XX% for same That's continue in is up QX, were I to it. resorts to be in our where sitting. up

shift. continued that So

I ability more from think still put resort and were to the percentage to have assets closer we to what back into segmentation. group we of XXXX resort these get in

Operator

Patrick from comes question next Truist. our And from Scholes

Charles Scholes

about of think When more results that guidance, quite your able leisure-centric. Good quarters been interesting very here. morning which everyone. portfolio raised think is I certainly, unique this I Thank year you. folks you've composition, two composition, find and the have consecutive you I your it to your

then You Group REITs able been able anything to in to also mix to certainly Jeff, been the in one have call certainly color that? how else less maybe that themes that around I'll pressure talked about to have then other are do there, relate some of question. you'd I'll customer. the certainly earning that, like any that's especially resort-centric. there. But leisure out on you've shifting relation another public And or thoughts to that haven't other And

Jeffrey Donnelly

it Group in think mean, quarters -- discussed years, patterns you okay think effectively transient we ago, it's And example, there's had a the I always they to sell $XXX midweek. at out the -- we leisure otherwise moment realize think on get the their lot to can just of taking out to even more bit few I the a transition ago hotels remarks, begin The our team hotels to but and transient hotels. every be and a today, reeducation in for been and several some be resort-oriented transient might a us of maximizing $XXX but change. And that guest I made-up there's a rate of the really those a group to to were his last day as that, even I trained it's to and missed Justin week. this see the in hotels at or said a rate to I there of weekend, mean but our I revenue little but resorts night were these thanks, just smart as this begin at during And that guest Patrick. doesn't Justin is think year. then to we you the perceive hold release, Group, urban lean for our have not in trying

lean you're bring think it business, was and at to to as patterns the because, there's realize clear, customer guests be those it's that again, discounting that finding properties isn't per points lean just just think sort at trying that I change. in resorts I changing. But bring This price but in And being I weekend smart more smurky in. are type you [ realistic and on early, that it's current be rate groups resort-oriented seeing se just of different at that that is think about environment. can can not just to urban-oriented necessarily properties. And to be we just there are our trying ] in might different

Charles Scholes

I'd are it levering and up clear acquisitions and rates higher? this, the your What And I Okay. trophy asset another crystal answer suspect hear then now That's that is but appetite great. know you. I question from like dilutive for to to

Jeffrey Donnelly

you against be forward can to saying assets I'm of softball. I'm and day, the there appealing of a cost the back painful zero at us I and step negative great. are that low of well. weighs mean, us. yields would not lot of There's IRRs be distressed assets there to recognize that very because the to bit be where can the At it's are -- IRR. very to the of in the tell those where I low have oftentimes and appealing not is clear you selling not little can a sort they amenable basis, and allocating really but sort marketplace someday urban of a be lot A them step capital that want end that's of today. yields, I really And you carry Dilutive a be to initial long-term that or

there's to those very that conversely, done very of us say would very at asset also underwrite And difficult yield. that's the at milligram cap a either, a find been high spectrum, close that for appealing have but I And been mid-single-digit upside where basis but good So rates, that We're asset get we at it's make a the the to really get on can know not hard I to basis pencils. other cost. lot of the deal to us deals or to sort oftentimes particularly but end road. replacement some it's given that down of to trying from a perspective it's

a little thread, needle markets. So we're what bit for really to looking urban of that's it's but a

Operator

our Wells question And comes next Securities. from Fargo from Kesten Dori

Dori Kesten

What the to enterprise do to new And how is intend didn't have? analytics you you previously platform that access utilize give you it?

Jeffrey Donnelly

different managers reporting Dori, think, think, have, really different XX I I is excited all with portfolio, a about the we're process. within we what

it's ability to remap the the perspective. do a from standardized so us of standardized really amount single And with issues, cost one into P&Ls a every identify and within significant of do particularly portfolio those benchmarking format to a given

in practices for in can really up and look the the that some you they buckets entire see hopefully, think, of more I cost we been and isolate overspending where think able best of different we've of them packages lot that do can the comparable quarters, mitigation are is all translate and I two and some where what to was categories us for try last cumbersome those to before certain a it within take we them throughout line were to portfolio. all put assets over

Dori Kesten

then where occupancy few contracting, we you quarters, the your growing? next environment about of may an are in FTEs think likely And as trajectory flat, the Okay. over be

Jeffrey Donnelly

we're basis, is a labor-intensive forecasting, is see The see year-over-year a which business. food on think out-of-room and FTE spend, you reality beverage we'll to is relatively more I -- what growth. continue if if significantly we

two take quarters, growth last business. a XX% beverage the hours. man we've to of had lower-margin food in bit [indiscernible] so That's why and it's a So

we'll all of think be continues the year. towards stabilizes probably I growth I think but to a bit trend, see little So else the the in end equal, FTE, that if it

Dori Kesten

you the in project material changes at other Okay. the pipeline it's to completely few then Orleans. plans, you ROI And pulling last months, ROI Bourbon, Have any addressed New the adding to redlining in? made whether

Jeffrey Donnelly

material this nothing no ROI added at really we to been point. materially our can at Dori, we're or identify always There's changes the big portfolio in But pipeline altered pipeline that time, or been this that's looking so our at changes. no projects available in

Dori Kesten

Okay. And missed or just I might provide last RevPAR have you QX margin growth one, any expectations? Did around this. guardrails

Briony Quinn

this is Briony. Dori,

We would rate that but would QX. RevPAR be slightly in higher QX have we you growth tell saw not, than to our the I expect I

Operator

question And from Citi. our from comes next Rose Smedes

Smedes Rose

consider a wanted priorities? to putting maybe of you in have you just capital. falls share to program? of of Could to maybe dollar share uses just just quarter? would amount switch of in I sort And where sort a sort you constant programmatic of place kind targeted just talk of terms being every repurchase about some repurchase repurchase Will

Jeffrey Donnelly

more the But price. right would share lucrative can the money areas of any at towards. hit now, tell a that number we you Smedes. morning allocation of repurchases quarter, little of did Good not I bit that so that's one put to specific to much you had of a be think matter this dollar capital that effect, -- In we I what a is to fact as at

probably exposure, cap rates. I the ] X cap where rates think we north we assets cap. a that alone, type on handedly have you leisure are a marketplace, X% And given trade just higher-than-average at little bit resort and at look in of [ they're X that

So same I we relatively were able urban. buy inexpensively and those resorts think to on thing

paying a a a if Xs. As of assets If earlier, transacted that operating, are I stabilized distressed, have our urban they're more little of mentioned zero cap of they're some they're -- And they're think peers barbelled. lot I rates. of there's sort not sort

a there's think the gap. that all do very leverage I tell repurchases So would that I our share I right big We time. emphasize you now, appealing. watch though. are

shares leverage. we're into our while overall do careful about be buying asset repurchases and back from share comfortable think maintain where we capital I sales So try financial recycling we to

Smedes Rose

ask address just And to Okay. then quite some have the you, I guess know to you XXXX -- I maturities. time wanted it's I here

rather think of So would you preference property debt just all kind equal? what's just refinancing it's or there, to more just unsecured sort you else move of, level, your generally, in at general, of sort

Briony Quinn

Hey to Smedes. is preference of unsecured more an Generally, our borrower. to be move

think secured do attractive. more think borrower market. was certainly if flexibility the at an bit that would it continually provides the I I little becoming we evaluate more a We unsecured level. But just us operating

Operator

Pfennigwerth comes question Evercore next ISI. our And from from Duane

Duane Pfennigwerth

job more of of through of I up. what taking you a Just a RevPAR, aggressive circumstances up? did kind on on grouping on metrics reported if comments table are Group? set you'd that money the us walking be the good your is wonder approach downside, the any, -- grouping of of the what which by Other leaving on than

Jeffrey Donnelly

a -- is assets, Group larger window. there's booking long a in especially the

surety potential were what reaccelerate. to rate market for And you're taking -- the upside if so think I you're

decided it. the I along of comes safety and spend that of piece a goes we that year taking just rather have ago think ancillary market some towards would with a that the along we the significant with the shift group

the I -- transient. ultimately than you the or that's that's much put a on risk low a market lower achieve think too that rate could I mean, you really at the rate books a So is

far, having that's COVID, because you penalized and a fast has group think in because market. for group from you the giving come the were on across if prior, up share the where the reeducation were you got so -- rates in books really had middle, assets, losing during I to ran you year had so especially the leisure in

to just through sort taken back of we of time our of a I as operators. pattern, bit a normal work little return bit more So that think that to rethinking has a little

Justin Leonard

we're that's assets, that the book is that, I are The going think type you to that groups about years our of to thing would necessarily hotel advance. around in of add to our XXX, are One average not XXX groups coming rooms. Duane, when size three

average not Our offsite. hotels the is the a box maybe some to longer size going window to compared or relatively booking a as big to marketplace, XX-person have of group in are smaller arguably appealing you're which

So little have we a bit.

Jeffrey Donnelly

little a more of nimble the we to up. ability when There's be group bit

Duane Pfennigwerth

of then follow-up lot asset larger just my front. for on a Makes sense. the disposition And

what for had If that to to we how need again, for in? guess, we wait your do see to kick And recycling are really long strategy to you unlock? the need of circumstances set

Jeffrey Donnelly

I can't for rate I date. moving I or to where just an results hotels in where really our to are give cuts favorable be you we're think be seem and well. the rates doing I a in moving seem expectation mean direction a fortunately of think are opportunity looking

are we're a play quarters not coming be could I stars but the aligning that. assets that as that time going for think to in lot So there's think where to the mentioned, this. to the market have of investigate advantage, going there's been But on Justin I our

specific date. to So I want negotiate I can't give don't you a against.

Operator

Michael Baird. comes And from our from next Bellisario question

Michael Bellisario

do for differential year? back Where go by that Group. that the you pace XQ? of Jeff what's For the the want actualizes to to half. you here, then That mentioned think Justin or pace end XX% versus I the And XQ back

Jeffrey Donnelly

single and it's versus a just gut year very year-over-year [ of a terms think digit a actualized basis, a on perspective. high QX better ], slightly is QX on from in pace forecast, we've I in My got

Michael Bellisario

planners? so back booked year. it. target are What then risk And Like the it, budget, the Got Any XX% change half there? attrition for call piece hotels or for that's window event in XX% that for the remaining that from to that still remaining let's size or booked of of booking you your corporate what's far or just of cancellation the hearing needs of your year? be

Jeffrey Donnelly

from seeing at seeing trend in inbound levels not what We're group perspective. significant [indiscernible] or attrition of or any above an in change in coming we're terms lead

the first more half what little in and up the produced a the actually pick year year we're the the year than forecast for think the I of in in half year. we conservative back for bit of our

change So sort right I we now think don't to outlook. that of any see reason

Michael Bellisario

more Is in Got slower weeks some your the just How for back is of it. events. more maybe something percentage in the August Chicago? X.X especially big the kind moving like RevPAR driving points? half? of -- DNC the on broadly super that that thinking portfolio RevPAR these Group in are and needle -- in meaningful that, meaningful a something How And your point week in one -- late that a are here portfolio is for with just entire Chicago events then onetime a like percentage in big few

Jeffrey Donnelly

you Not might think. as as meaningful

to to through reality given when think especially I the you of beginning, for lot the in the be required of is a times like think or block events, the that the is of the in a DNC order initial hotels right? Marriott, So for Super that the super they're of large bid. someone event lot secure part Bowl

of of much block that's garner can A get lot in place, required you outside and is times, think. they that. the that premium of hotels around they're some be our it's you a smaller beneficial rate really might or given large as the compress to more room to first Group as not of for because the actually the So

Operator

comes And America. Asad from Bank from Dany our next of question

Dany Asad

-- explain and you But to can higher we total and the EBITDA specifically think just difference EBITDA, offsetting update. when to it Just your of between can drive what in kind -- total about RevPAR. reduction that about your rooms, kind the that's know in RevPAR and on piece. change we like prepared the is, RevPAR RevPAR just I to of you When in touched go think back had like the guidance you the -- we remarks

Briony Quinn

Sure, Dany.

quantify little our just to bit in the So change EBITDA. a

think reflects million. I call a $X that of a we maybe portion QX, of that outperformance in saw little bit that around

a and We also first think although the in our call, back anticipated. should that better benefit for than QX then the insurance $X balance that quarter about on about half, the renewal. And the was benefit than year we us originally shift mix positive the balance a it's of our lower given the of million talked renewal, that, reflects half, really the I

you pre-transition. at a we $X look offset overall, lower it's of corporate when So in there's about are there. But that G&A, our little then And a front. than on by higher little million G&A that bit still

Dany Asad

of capital it. we your answers in earlier, thinking Jeff, were just your one recycling Got And about strategy.

seem Some highlighted more resort, versus towards urban the bit more bit to you hotels the on little a of tilt a little urban side.

redeploy that? kind mix leisure Like As be you to Where the into you looking it going going given urban your capital, to just to markets? that going be -- for same are it already you are urban? is would those capital you dollars versus Are with comfortable And look to where go? be that redeploy would of one? country, to in extra of one

Jeffrey Donnelly

we if urban that were need an redeploy? we meaning to where sell asset, It to

Dany Asad

that's right. Yeah, Yeah.

Jeffrey Donnelly

urban that. profitably. our I do right think give looking. now, two-thirds, resort or difficult XX%, or now, And to stopped in you about longer right want we maybe to term, but doesn't markets. it's to we're do to leisure it's It appealing I take, exposure, mean us think think we've grow so mean, And very I

I asset now could if to that in transactions. and it larger in situations. But I a some you find right well. maybe two have assets purchased is happen It see urban can right sell results results like returns it we an as attractive asset those the I'd in maybe resort guess think urban say I'd of or that does then you result what one happen that

little income better have assets the that diversified concentration and potentially, and a a sort same or so a higher end the growth of but amount sort of leisure, more And of of up can you you profile. roughly replace same two at have

markets specific So your value we of we've entirely. can got the X I answers market be if the don't target looking end know accrete don't just really in got question be for day. where at or to We in to say where we have we've market situations We're it Y.

Operator

Chris next from Woronka from question Bank. our Deutsche And comes

Chris Woronka

portfolio. of guys hotels Jeff, to I'm there of as demand on in I the realize where is independent And of recent XX still kind a you're branding markets brands, whether it they're hotels of leaving to the and table kind some letting soft I recognizable. in, brands there? and -- the I the as you the makes curious me have lot thought about self-sustained you think on frankly, of whether are any that are see is something wonder there's there the kind been But

Jeffrey Donnelly

not. I No. definitely would say

really lot direction to I And we of line, that's the where that drive that shed hotel system. the exited you revenue, back also potentially a X%, XX% amount think of will middle could that's but was one upfront of know I expense. people profit. leaving whenever said you of [indiscernible], And we've top went the line gain to line based sort focus but P&L, top the on the to that that if of other the decision look will, there's we system, to we pay a bottom significant

continue we far, so with plan And be on that. to

I So tell drive job that to really guess not is our I as would top revenue. you owner profit, line

And checks, tend on speak so key think which collect mid-teen to I money, there an brands, means IRRs But there not cheap. opportunity you the I to money you is to if they that typically, expect hear that it's the the check.

Chris Woronka

Fair Yeah. enough, Jeff. Yeah.

question. with You're that. brand Keeping on right the

a year. just let's do that hypothetically the we in point So next at some downturn say have

kind a in think, B, the pretty COVID feels that already do things on like because you efficiently. give -- there world, pandemic again? brand of the brands you're A, Do you're you post still are standards. you guys it would the And -- during running can Given be fair do they flexibility of amount willing to

Jeffrey Donnelly

There's game. race always anybody of think hits sort get efficient. I I to more the ever opportunities rose perfect or perfect the mean don't

think I efficiencies opportunities for there's out always So there.

past can things that brand do, that for what in they've on like difficult they believe to successful okay As standards and system. the say, this flex could far as be, brands times I'd or will event learned their from

like the that recession, I'd a even event, that tolerant a to next little believe So confront but we that a necessarily not on time another be front. more they pandemic, might

appealing. be can that So

Operator

Chris our And from Green Street. Darling from next question comes

Chris Darling

sell as Circling the that capital if you a on versus Wondering share back one hand, pertains you could to it every the to last the you philosophy if inherent if around in price your discussion dollar to quite advantage to, price value. taking of opportunity recycling. prior even arbitrage speak trying realize of property don't the some maximize the

Jeffrey Donnelly

Chris. Yeah, it's a good question,

property It's I to at you're me, And of dollar. looking think And something, more buying. for forward, focus might my seems trade just sort shares of where paired will. on that value there what if selling experience to what that buy another it's sort on asset, you're going me. your like able if a but are for attractive the a you it's there's not a trade, people maximizing in times you're an tendency to sensible maximize or and last that has whether IRR you

Chris Darling

that you more truly segment the spending Got matter any or whether leisure your choosing weakness a the When for we've any down evidence to whether kind a of individuals in transient resort of trading it. the side, one Maybe shifting travel rather gears, they're to same regard consumer look in talked just degree. is the than the portfolio, or are is are across you about of matter those the seeing where urban me. it's on

Jeffrey Donnelly

that? thoughts you have Justin, on any do

Justin Leonard

be we'd I mean, just from trading I down speculating just we're think perspective. -- a

do willing bit trading as relative looking fill -- midweek think travelers between know peak what as that's non-peak price. kind off variability discount see I or we've for that's as really I I more for price more to pattern down revert a change our people I necessarily to a it's up and of to trading travel looking prior we But if trying weekends and days. doing, start between much pattern or been think sale and season. and think, hotels to is encourage periods periods do to back don't we

of that trend continue kind a last over definitely we've seen that's months. think I XX the

Operator

from Crow Bill Raymond from comes question next our James. And

William Crow

economic as therefore, dependent bookings, conditions? changing the Jeff, those way are grouping out the up compared oriented leisure assets quarter think and some you maybe wondering, group a your properties, [indiscernible] kind the I'm for on quarter, of properties more of in about the to sensitive or you more say, to Chicago bit bigger smaller there, urban and

Jeffrey Donnelly

I the the I question. think so, Bill. of necessarily root don't mean understand I

could I It think for a It can social that can like be corporate properties some offsites. of business. be smart from everything be small it our related wedding.

strategy. negative economy, and in figure drives restructurings event follow be but new the those get which a sometimes let's can team And of at out the a together yet companies, sort

groups, a Chicago So not or it's say. we property certainly, a difficult this times that to nature lot like groups. -- there mean, really we Marriott does have question booking to whether small think a tend see longer enough greater an of of see We can, success asset. those asset I that to say more tends to of the where we we're that trends, in much we big bigger are larger size window something accommodate given have -- but but a course, internally, trends. And just

not sure very there's and I'm activity question, but of urban I think a answering can hotels, if sort resort group of tap So that into. big quite I'm small both your audience our

William Crow

front groups. maybe because hotels? volatile I'm more your it's that's less talking to kind sensitive largely. think more weddings But of or that smaller you the on you Do economy you're change, the I think think do economic independent the not of group

Jeffrey Donnelly

than our I know peers, And results. doesn't alternative sensitive, a near-term to as just pace looking think the I of of more resilient for the vis-a-vis feel group been some it some It it's of we've on like have so. I the bigger looking at box hard little year feels front that actually hearing at rest very mean what just guess, we been our just quite the been Think hotels. candidly. I've about like

no, near-term So the can't just but would be [indiscernible]. results, answer I on say

Operator

now showing for am back would I Donnelly call to over to Jeff remarks. the questions. like I closing no further turn And

Jeffrey Donnelly

hopefully, really and everybody, appreciate Have the We us we'll it. you, today. thank summer, you road. great for Thanks. joining on see a out Well,

Operator

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

You may now disconnect.

DiamondRock Hospitality (DRH) 2 Aug 242024 Q2 Earnings call transcript