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DiamondRock Hospitality Company Reports Operating Results (10-K)

February 29, 2012 | About:

DiamondRock Hospitality Company (NYSE:DRH) filed Annual Report for the period ended 2011-12-31.

Diamondrock Hos has a market cap of $1.73 billion; its shares were traded at around $9.99 with a P/E ratio of 18.1 and P/S ratio of 2.8. The dividend yield of Diamondrock Hos stocks is 3.1%.

Highlight of Business Operations:

In addition, our hotels are mostly in the premium full-service segment of the hotel business, which, historically, tends to have the strongest operating results in a growing economy and the weakest results in a contracting or slow growth economy when many travelers might curtail travel or choose lower cost hotels. In periods of weak demand, profitability is negatively affected by the relatively high fixed costs of operating premium full-service hotels as compared to other classes of hotels.

During 2011, 74% of our earnings from continuing operations were derived from our hotels in six major cities (New York City, Boston, Chicago, Denver, Los Angeles and Atlanta) and three destination resorts (Frenchman's Reef, Vail Marriott, and the Lodge at Sonoma), with 21% of our earnings from continuing operations being derived from our properties in New York City. As such, the operations of these hotels - particularly the operations of New York City properties - will have a material impact on our overall results of operations. This concentration in our portfolio may lead to increased volatility in our results. If lodging fundamentals in any of these cities are poor compared to the United States as a whole, the popularity of any of these destination resorts decreases, or a manmade or natural disaster or casualty or other damage occurs to one of our key hotels, our overall results of operations may be adversely affected.

Calculated as a percentage of operating profits in excess of the sum of (i) $8.3 million plus (ii) 12% of certain capital expenditures plus (iii) 12% of working capital provided by the owner. The incentive management fee payable in any year can be reduced by 25% if the actual House Profit margin is less than budget or if the trailing 12-month RevPAR Index is less than the previous year.

Individual hotel revenues comprising our revenues from continuing operations for the years ended December 31, 2011 and 2010, respectively, consist of the following (in millions):

Income Taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted.

Read the The complete Report

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Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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