Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (May 2018)
27 slides from Diamondrock Hospitality's investor presentation, May 4, 2018
Slide 1: Investor Presentation May 2018
INVESTOR PRESENTATION May 2018
Slide 2: DiamondRock at a Glance
DiamondRock at a Glance KEY STATISTICS RAISED 2018 GUIDANCE Hotels (Rooms) 30 (9.9K) • Raised 2018 Full-Year Guidance: Enterprise Value $3.0B − Comparable RevPAR Growth of 1.5% to 2.5% Market Cap $2.2B Enterprise Value / Key ~$300K − Adj. EBITDA of $254M - $263M Dividend Yield 4.5% − Adj. FFO per sh
Slide 3: Why DiamondRock?
Why DiamondRock? 1 Top Tier Quality Portfolio & Growth • Top tier quality portfolio as measured by ADR • Top tier growth with 2017 RevPAR growth of 2.5% (top two of peer set) 2 Compelling Valuation • 12.1x 2018 Consensus EBITDA multiple 1.0x discount to 13.1x peer average • $300K EV per key ~30%
Slide 4: High Quality Portfolio in Key Gateway Markets
High Quality Portfolio in Key Gateway Markets Approximately 2/3 of DRH’s portfolio EBITDA is concentrated in top, gateway markets. 4
Slide 5: Strong Resort Market Presence
Strong Resort Market Presence DRH’s Resort Portfolio represents 1/3 of its pro forma EBITDA concentration. 5
Slide 6: Top-Tier Performance
Top-Tier Performance 2017 RevPAR Growth Among Best in Peer Group 3.6% 2.5% 2.3% 1.4% 1.3% 0.7% Peer Average: 0.5% -0.5% -1.8% -2.2% Top Tier -2.4% SHO DRH HT XHR HST PK RLJ LHO PEB CHSP • DRH comparable 2017 RevPAR growth of 2.5% among best in peer group - Portfolio gained 2.6 percentage points of m
Slide 7: Top-Tier Portfolio Quality
Top-Tier Portfolio Quality 2017 Portfolio Average Daily Rate $246 $243 $229 $227 $225 $220 $211 $209 Peer Average: $215 $202 $171 PEB LHO DRH HST CHSP HT SHO XHR PK RLJ Top Tier Source: Company Filings as of Q4 2017. 7
Slide 8: Compelling Valuation
Compelling Valuation 2018 Consensus EBITDA Multiple Trading at 1.0x Discount to SHO… 13.1 +1.0x 12.1 14.9 14.6 14.3 13.8 13.1 Peer Average: 13.1x DRH SHO 12.2 Valuation at SHO’s multiple would translate 12.1 12.0 into ~$12.26 share price or >10% premium 11.4 11.4 to current price. …Despite Relative
Slide 9: Diverse Operator Base Drives Best Practices
Diverse Operator Base Drives Best Practices More than half of portfolio is subject to short-term or terminable management agreements. HEI 16% Recent Operator Changes Driving Value Interstate 8% • Two Roads Hospitality brought in as new operator for L’Auberge de Sedona and Orchards Inn in Highgate 7%
Slide 10: Recent Acquisitions Driving Value
Recent Acquisitions Driving Value
Slide 11: The Landing Resort & Spa (Lake Tahoe, CA)
The Landing Resort & Spa (Lake Tahoe, CA) $42M Acquisition of Luxury Hotel in Premier Resort Market • Numerous awards including 2018 TripAdvisor Traveler’s Choice Award as a Top 25 Hotel in the US and 2016 Conde Nast Readers’ Choice #1 Northern California resort • Beachfront location and walking dis
Slide 12: Hotel Palomar (Phoenix, AZ)
Hotel Palomar (Phoenix, AZ) $80M Acquisition of Boutique, Lifestyle Hotel in High-Growth Market • Attractive Deal Metrics: ‒ 12.6x EBITDA multiple for first year of ownership ‒ 10.8x EBITDA multiple by 2022 • Terminable management contract in 2020 • TripAdvisor ranked #2 of 174 Phoenix hotels • Cent
Slide 13: DRH Resort Portfolio Overview
DRH Resort Portfolio Overview
Slide 14: DRH's Differentiated Resort Portfolio
DRH’s Differentiated Resort Portfolio Resort Portfolio Overview Hotels 12 Rooms 2,536 2017 RevPAR $193 2017 EBITDA $90 Million EBITDA Multiple on Investment 9.2 L’Auberge De Sedona Orchards Inn Sedona Shorebreak Hotel 1 Low-to-zero supply in majority of resort markets 2 Diversified demand drivers So
Slide 15: DRH Resorts Have Proven Successful
DRH Resorts Have Proven Successful DRH Resort RevPAR Has Outperformed Broader Portfolio by Average of 300bps… 8.4% 8.8% 4.0% 3.1% 3.3% 1.9% 2.5% 0.8% 3.8% 1.7% 0.8% (0.3%) 2.9% 1.9% 2.0% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 (2.1%) Total DRH Resort Outperformance Note: Hist
Slide 16: Strong Return on Investment
Strong Return on Investment DRH’s resort portfolio EBITDA multiple has improved approximately five turns since acquisition with over $280M of NAV created. EBITDA Multiple @ EBITDA Increase Investment ($M) Purchase YE 2017 $M Burlington Hilton $61.6 16.5x 8.9x $3.7 Charleston Renaissance $41.1 11.9x
Slide 17: Westin Fort Lauderdale Beach Resort & Spa
Westin Fort Lauderdale Beach Resort & Spa Asset Overview Location Fort Lauderdale, FL Rooms 432 Acquisition Date December 4th, 2014 Meeting Space (SF) 40,000 Operator HEI Hotels Purchase Price $149 million Purchase price per key $344,000 • Increased NAV by $44M • Investment currently represents a 9.
Slide 18: 2018 Highlights
DIAMONDROCK HOSPITALITY 2018 Highlights
Slide 19: 2018 DRH Key Market Drivers
2018 DRH Key Market Drivers Market 2018 Outlook DRH / Market Commentary: (% of 2017 EBITDA) Chicago The Gwen to outperform off of renovation tailwinds; final phase of Chicago Marriott renovation completed in Q1. (11%) Strong Chicago citywide calendar in 2018 (+25%) combined group pace up 13% for r
Slide 20: Unique Drivers to Enhance NAV
Unique Drivers to Enhance NAV 1 Chicago Marriott 4 Westin Fort Lauderdale • $110M renovation substantially • 2018 guestroom upgrade completed • Opened popular, new restaurant Lona • Scope included 1,200 guestrooms and all 60K SF of meeting space • Elevated product to drive market share • Post-renova
Slide 21: Frenchman's Reef Update
Frenchman’s Reef Update • Iconic location in Virgin Islands • Strong historical performance (1) • 2017 forecast of $16.7M EBITDA • 2018 pre-hurricane budget of $19.6M EBITDA • Impacted by hurricanes in September 2017 - Closed through at least 2019 - Remediation and stabilization ongoing (2) • Covere
Slide 22: Intense Asset Management
i (| : _ DIAMONDROCK | Y TALITY TDS s i LW yi Intense Asset Management
Slide 23: Focus Asset Management Areas
Focus Asset Management Areas Labor Management Energy Food Cost • Working with third-party to reduce • Conducting comprehensive hands- • Opportunities for food cost savings labor expenses and improve on energy efficiency audits through purchasing management productivity throughout the portfolio and o
Slide 24: Fortress Balance Sheet
DIAMONDROCK HOSPITALITY Fortress Balance Sheet
Slide 25: Fortress Balance Sheet
Fortress Balance Sheet CONSERVATIVE BALANCE SHEET STRATEGY 22 UNENCUMBERED HOTELS • Completed 2017 financing program in 1H17 with 5- Unencumbered Pool 8 Encumbered Hotels year $200M term loan Hilton Boston Boston Westin The Gwen Courtyard Midtown East Vail Marriott Salt Lake City Marriott • $300M Li
Slide 26: Key Takeaways
Key Takeaways Top-Tier Portfolio as Measured by Quality and Growth Trading at Significant Discount to Peers, Replacement Cost, and Company’s NAV Est. L’Auberge de Sedona Internal Growth Enhanced by Significant Investment in Portfolio over Last Five Years ($500M) Many Strategic Repositionings
Slide 27: Forward Looking Statements
Forward Looking Statements Certain statements made during this presentation are forward-looking statements that are subject to risks and uncertainties. Forward-looking statements generally include the words “believe,” “expect,” “anticipate,” “plan,” “estimate,” “project,” “will,” “intend” or other s
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