PR Newswire
BETHESDA, Md., Aug. 3, 2023
BETHESDA, Md., Aug. 3, 2023 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 36 premium hotels and resorts in the United States, today announced results of operations for the quarter ended June 30, 2023.
Second Quarter 2023 Highlights
- Net Income: Net income was $39.1 million and earnings per diluted share was $0.17.
- Comparable Revenues: Comparable total revenues were $289.3 million, a 0.9% increase over 2022 and a 9.3% increase over 2019.
- Comparable RevPAR: Comparable RevPAR was $226.41, a 0.5% increase over 2022 and a 8.0% increase over 2019.
- Comparable Hotel Adjusted EBITDA: Comparable Hotel Adjusted EBITDA was $93.6 million, a 9.7% decrease over 2022 and a 3.5% increase over 2019.
- Comparable Hotel Adjusted EBITDA Margin: Comparable Hotel Adjusted EBITDA margin was 32.36%, a 381 basis point decrease over 2022 and a 178 basis point decrease over 2019.
- Adjusted EBITDA: Adjusted EBITDA was $85.8 million, a 6.7% decrease over 2022 and a 5.8% increase over 2019.
- Adjusted FFO: Adjusted FFO was $67.3 million and Adjusted FFO per diluted share was $0.32.
- Share Repurchases: The Company repurchased 262,054 shares of its common stock at an average price of $7.67 per share for a total purchase price of $2.0 million during the second quarter.
Recent Developments
- Hotel Acquisition: The Company acquired Chico Hot Springs Resort located in Paradise Valley, Montana for $33.0 million on August 1, 2023.
- Hotel Rebranding: The Company completed the rebranding of the Hilton Boston Downtown/Faneuil Hall to The Dagny, an independent lifestyle boutique hotel, on August 1, 2023.
"The DiamondRock portfolio delivered a new record for comparable revenues in the quarter even as it made major investments into its portfolio to secure future performance. Our urban portfolio delivered strong total revenue growth of 7.1% with solid performance from group, but the rate of improvement in business transient demand appears to be moderating. Competition from international destinations and cruise lines led our smaller portfolio of resorts to rebalance to a 'new normal' with total revenues declining 8.3%. However, revenues from our resorts remained 33.1% ahead of the comparable period in 2019 as destination resorts remain the biggest winner from an acceleration in the secular demand for leisure travel. After quarter end, we completed the major repositioning of The Dagny in Boston as well as acquiring a very attractive boutique resort in Montana," said Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company.
Operating Results
Please see "Non-GAAP Financial Measures" attached to this press release for an explanation of the terms "EBITDAre," "Adjusted EBITDA," "Hotel Adjusted EBITDA," "Hotel Adjusted EBITDA Margin," "FFO" and "Adjusted FFO" and a reconciliation of these measures to net income. Comparable operating results include all hotels currently owned for all periods presented, except the Kimpton Fort Lauderdale Beach Resort, which opened in April 2021. See "Reconciliation of Comparable Operating Results" attached to this press release for a reconciliation to historical amounts.
Quarter Ended June 30, | Change From | ||||||||
2023 | 2022 | 2019 | 2022 | 2019 | |||||
($ amounts in millions, except hotel statistics and per share amounts) | |||||||||
Comparable Operating Results (1) | |||||||||
ADR | $ 294.66 | $ 300.68 | $ 254.63 | (2.0) % | 15.7 % | ||||
Occupancy | 76.8 % | 74.9 % | 82.3 % | 1.9 % | (5.5) % | ||||
RevPAR | $ 226.41 | $ 225.19 | $ 209.59 | 0.5 % | 8.0 % | ||||
Total RevPAR | $ 333.88 | $ 331.56 | $ 306.75 | 0.7 % | 8.8 % | ||||
Revenues | $ 289.3 | $ 286.6 | $ 264.7 | 0.9 % | 9.3 % | ||||
Hotel Adjusted EBITDA | $ 93.6 | $ 103.7 | $ 90.4 | (9.7) % | 3.5 % | ||||
Hotel Adjusted EBITDA Margin | 32.36 % | 36.17 % | 34.14 % | (381 bps) | (178 bps) | ||||
Available Rooms | 866,411 | 864,323 | 863,014 | 2,088 | 3,397 | ||||
Actual Operating Results (2) | |||||||||
Revenues | $ 291.2 | $ 281.4 | $ 257.9 | 3.5 % | 12.9 % | ||||
Net income | $ 39.1 | $ 52.7 | $ 29.1 | (25.8) % | 34.4 % | ||||
Earnings per diluted share | $ 0.17 | $ 0.23 | $ 0.14 | (26.1) % | 21.4 % | ||||
Adjusted EBITDA | $ 85.8 | $ 92.0 | $ 81.1 | (6.7) % | 5.8 % | ||||
Adjusted FFO | $ 67.3 | $ 76.5 | $ 65.1 | (12.0) % | 3.4 % | ||||
Adjusted FFO per diluted share | $ 0.32 | $ 0.36 | $ 0.32 | (11.1) % | — % | ||||
Six Months Ended June 30, | Change From | ||||||||
2023 | 2022 | 2019 | 2022 | 2019 | |||||
($ amounts in millions, except hotel statistics and per share amounts) | |||||||||
Comparable Operating Results (1) | |||||||||
ADR | $ 286.94 | $ 293.47 | $ 241.22 | (2.2) % | 19.0 % | ||||
Occupancy | 71.8 % | 65.4 % | 77.3 % | 6.4 % | (5.5) % | ||||
RevPAR | $ 205.94 | $ 192.05 | $ 186.36 | 7.2 % | 10.5 % | ||||
Total RevPAR | $ 307.45 | $ 285.23 | $ 276.90 | 7.8 % | 11.0 % | ||||
Revenues | $ 529.7 | $ 490.3 | $ 475.2 | 8.0 % | 11.5 % | ||||
Hotel Adjusted EBITDA | $ 155.5 | $ 157.1 | $ 142.2 | (1.0) % | 9.4 % | ||||
Hotel Adjusted EBITDA Margin | 29.37 % | 32.04 % | 29.91 % | (267 bps) | (54 bps) | ||||
Available Rooms | 1,722,727 | 1,718,765 | 1,716,288 | 3,962 | 6,439 | ||||
Actual Operating Results (2) | |||||||||
Revenues | $ 534.8 | $ 478.2 | $ 460.3 | 11.8 % | 16.2 % | ||||
Net income | $ 48.3 | $ 62.8 | $ 38.1 | (23.1) % | 26.8 % | ||||
Earnings per diluted share | $ 0.20 | $ 0.27 | $ 0.19 | (25.9) % | 5.3 % | ||||
Adjusted EBITDA | $ 141.1 | $ 136.9 | $ 130.2 | 3.1 % | 8.4 % | ||||
Adjusted FFO | $ 105.3 | $ 107.3 | $ 107.1 | (1.9) % | (1.7) % | ||||
Adjusted FFO per diluted share | $ 0.49 | $ 0.50 | $ 0.53 | (2.0) % | (7.5) % | ||||
(1) | Amounts represent the pre-acquisition operating results for Bourbon Orleans Hotel from January 1, 2019 to July 28, 2021, Henderson Park Inn from January 1, 2019 to July 29, 2021, Henderson Beach Resort from January 1, 2019 to December 22, 2021, Tranquility Bay Beachfront Resort from January 1, 2019 to January 5, 2022 and Lake Austin Spa Resort from January 1, 2019 to November 20, 2022 and exclude the operating results of the Kimpton Fort Lauderdale Beach Resort as the hotel opened in April 2021. The pre-acquisition operating results were obtained from the sellers of the hotels during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the seller. The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors. |
(2) | Actual operating results include the operating results of all hotels for the Company's respective ownership periods. |
Ground Lease Buyout
On April 20, 2023, the Company acquired the fee simple interest in a land parcel underlying the parking structure at the Renaissance Worthington Hotel that had been subject to a ground lease. The purchase price of $1.8 million represents a 5.2% capitalization rate on the annual rent.
Capital Expenditures
The Company invested approximately $47.9 million in capital improvements at its hotels during the six months ended June 30, 2023. The Company continues to expect to spend $100 million to $115 million on capital improvements at its hotels in 2023. Significant projects in 2023 include the following:
- Hilton Boston Downtown/Faneuil Hall: The Company completed a comprehensive renovation to rebrand the hotel as The Dagny, an independent lifestyle hotel.
- Salt Lake City Marriott: The Company is in the process of completing a renovation of the guestrooms, which is expected to be completed in the third quarter of 2023.
- Hilton Burlington Lake Champlain: The Company commenced a repositioning of the hotel to rebrand it as a Curio Collection hotel. The repositioning is expected to be completed in the first quarter of 2024 and includes a new restaurant concept by a well-known, award-winning chef.
Share Repurchase Program
During the quarter ended June 30, 2023, the Company repurchased 262,054 shares of its common stock at an average price of $7.67 per share for a total purchase price of $2.0 million. Since October 2022, the Company has repurchased 1.9 million shares of it common stock at an average price of $7.77 per share.
Balance Sheet and Liquidity
The Company ended the quarter with $604.8 million of liquidity, comprised of $98.6 million of unrestricted corporate cash, $106.2 million of unrestricted cash at its hotels and full capacity on its $400 million senior unsecured credit facility. As of June 30, 2023, the Company had $1.2 billion of total debt outstanding, which consisted of $800.0 million of unsecured term loans and $383.0 million of property-specific, non-recourse mortgage debt.
Dividends
The Company declared a quarterly cash dividend of $0.03 per common share, which was was paid on July 12, 2023 to shareholders of record as of June 30, 2023. The Company paid a quarterly dividend of $0.515625 per share on its 8.250% Series A Cumulative Redeemable Preferred Stock on June 30, 2023 to shareholders of record as of June 20, 2023.
Earnings Call
The Company will host a conference call to discuss its second quarter results on Thursday, August 3, 2023, at 5:00 p.m. Eastern Time (ET). The conference call will be accessible by telephone and through the internet. Interested individuals are requested to register for the call by visiting https://investor.drhc.com. A replay of the conference call webcast will be archived and available online.
About the Company
DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in leisure destinations and top gateway markets. The Company currently owns 36 premium quality hotels with over 9,700 rooms. The Company has strategically positioned its portfolio to be operated both under leading global brand families as well as independent boutique hotels in the lifestyle segment. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company's website at www.drhc.com.
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," "plan" and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the adverse impact of the novel coronavirus (COVID-19) on the U.S., regional and global economies, travel, the hospitality industry, and the financial condition and results of operations of the Company and its hotels; national and local economic and business conditions, including the potential for additional terrorist attacks, that will affect occupancy rates at the Company's hotels and the demand for hotel products and services; operating risks associated with the hotel business; relationships with property managers; the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; and other risk factors contained in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
DIAMONDROCK HOSPITALITY COMPANY | |||
June 30, 2023 | December 31, 2022 | ||
ASSETS | (unaudited) | ||
Property and equipment, net | $ 2,740,395 | $ 2,748,476 | |
Right-of-use assets | 97,834 | 99,047 | |
Restricted cash | 37,535 | 39,614 | |
Due from hotel managers | 164,193 | 176,708 | |
Prepaid and other assets | 86,224 | 76,131 | |
Cash and cash equivalents | 98,556 | 67,564 | |
Total assets | $ 3,224,737 | $ 3,207,540 | |
LIABILITIES AND EQUITY | |||
Liabilities: | |||
Mortgage and other debt, net of unamortized debt issuance costs | $ 382,157 | $ 386,655 | |
Unsecured term loans, net of unamortized debt issuance costs | 799,271 | 799,138 | |
Senior unsecured credit facility | — | — | |
Total debt | 1,181,428 | 1,185,793 | |
Lease liabilities | 111,233 | 110,875 | |
Due to hotel managers | 119,706 | 123,682 | |
Deferred rent | 67,260 | 65,097 | |
Unfavorable contract liabilities, net | 60,240 | 61,069 | |
Accounts payable and accrued expenses | 39,811 | 43,120 | |
Distributions declared and unpaid | 6,437 | 12,946 | |
Deferred income related to key money, net | 8,565 | 8,780 | |
Total liabilities | 1,594,680 | 1,611,362 | |
Equity: | |||
Preferred stock, $0.01 par value; 10,000,000 shares authorized; | |||
8.250% Series A Cumulative Redeemable Preferred Stock (liquidation | 48 | 48 | |
Common stock, $0.01 par value; 400,000,000 shares authorized; 209,589,638 | 2,095 | 2,094 | |
Additional paid-in capital | 2,287,348 | 2,288,433 | |
Accumulated other comprehensive income | 3,830 | — | |
Distributions in excess of earnings | (670,063) | (700,694) | |
Total stockholders' equity | 1,623,258 | 1,589,881 | |
Noncontrolling interests | 6,799 | 6,297 | |
Total equity | 1,630,057 | 1,596,178 | |
Total liabilities and equity | $ 3,224,737 | $ 3,207,540 | |
DIAMONDROCK HOSPITALITY COMPANY | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenues: | |||||||
Rooms | $ 197,318 | $ 193,025 | $ 357,991 | $ 325,195 | |||
Food and beverage | 68,369 | 68,606 | 128,146 | 114,354 | |||
Other | 25,560 | 19,776 | 48,663 | 38,691 | |||
Total revenues | 291,247 | 281,407 | 534,800 | 478,240 | |||
Operating Expenses: | |||||||
Rooms | 45,116 | 42,645 | 85,319 | 76,475 | |||
Food and beverage | 45,908 | 43,471 | 89,058 | 76,692 | |||
Other departmental and support expenses | 65,445 | 59,521 | 127,413 | 108,058 | |||
Management fees | 6,885 | 6,312 | 11,873 | 10,332 | |||
Franchise fees | 9,403 | 8,693 | 17,480 | 14,503 | |||
Other property-level expenses | 26,934 | 20,977 | 51,051 | 42,949 | |||
Depreciation and amortization | 27,840 | 27,389 | 55,312 | 54,044 | |||
Impairment losses | 941 | — | 941 | 2,843 | |||
Corporate expenses | 8,284 | ||||||
