Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Conference December 2022
37 slides from Diamondrock Hospitality's conference presentation, Dec 7, 2022
Slide 1: Investor Conference December 2022
INVESTOR CONFERENCE DECEMBER 2022
Slide 2: 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
Slide 3: Recent Events and Highlights
RECENT EVENTS AND HIGHLIGHTS ROI PROJECTS KEY TAKEAWAYS ■ Record Third Quarter Revenue and Profits - +8.7% RevPAR - +11.4% Total RevPAR ■ Declared Common Dividends of $0.09/sh in 2022 3 RECORD REVENUES ■ Expect Total Revenue to exceed comparable 2019 ($936MM) RECORD HOTEL ADJUSTED EBITDA ■ Expect Ho
Slide 4: Acquired Lake Austin Spa Resort (Austin, Texas)
ACQUIRED LAKE AUSTIN SPA RESORT (AUSTIN, TEXAS) 4 ACQUISITION DATE 11/21/22 LOCATION AUSTIN, TX NET PURCHASE PRICE $75.6 MILLION 2023E NOI YIELD 8.1% MANAGER EOS HOSPITALITY KEY DEAL HIGHLIGHTS ■ #3 Best Spa Resort in the U.S., Condé Nast Traveler ■ #5 Best Domestic Spa in the U.S., Travel + Leisure
Slide 5: Why DiamondRock
WHY DIAMONDROCK Henderson Beach Resort
Slide 6: DiamondRock Is Positioned for Outsized Growth
DIAMONDROCK IS POSITIONED FOR OUTSIZED GROWTH POSITIVE MARKET OUTLOOK OPERATIONAL EXCELLENCE 2023 – 2024 SET UP COMPELLING ROI PIPELINE CAPACITY FOR GROWTH ESG EXCELLENCE 1 2 3 4 5 6 THE LODGE AT SONOMA 6
Slide 7: Positive Market Outlook
POSITIVE MARKET OUTLOOK The Lodge at Sonoma, Autograph Collection
Slide 8: Strong Macro Fundamentals
50% 60% 70% 80% 90% 100% 110% 120% 130% 2018 2019 2020 2021 2022 Nominal GDP RevPAR STRONG MACRO FUNDAMENTALS Runway remaining for recovery compared against GDP 8 GDP AND REVPAR INDEXED TO 2018 13% Upside To Trendline 122% 108%
Slide 9: Long Term Supply & Demand Trends
LONG TERM SUPPLY & DEMAND TRENDS 9 Undersupply of Leisure Hotels Should Benefit From Accelerating Demand 0.58% 1.27% Leisure Set Urban Set 2000-2020 Supply CAGR 2.7 1.3 Newly Flexible Days for U.S. Office Workers Total U.S. 2019 Room Night Demand New “Work from Anywhere Paradigm” Incremental Days of
Slide 10: Lodging as an Inflationary Hedge
LODGING AS AN INFLATIONARY HEDGE Hotel NOI growth has historically outpaced inflation, with smaller resorts having consistently higher RevPAR, even during recession years; Household income continues to break away from medium-term trend 10 • Healthy labor market • Wealthier average consumer and high-
Slide 11: Durability of Leisure Rates
DURABILITY OF LEISURE RATES Leisure-focused markets have consistently outperformed during economic crises, Resorts benefit from higher RevPAR starting point relative to 2019 11
Slide 12: Recovery of Urban Markets
RECOVERY OF URBAN MARKETS Remote and hybrid work models are boosting travel with longer, blended trips and more frequent, smaller business travel; Skift estimates Digital Nomads to be a new $1B market in the US Urban Occupancy vs 2019 12 -43% -33% -24% -19% -23% -11% -11% -14% -7% 1Q 21 2Q 21 3Q 21
Slide 13: Operational Excellence
OPERATIONAL EXCELLENCE The Gwen, a Luxury Collection Hotel
Slide 14: 2022 YTD Operating Results
2022 YTD OPERATING RESULTS (1) Comparable operating information excludes the Kimpton Fort Lauderdale Beach Resort as it was not operating in 2019 (2) Preliminary results (3) “Resort/Lifestyle” refers to Luxury Resort, Lifestyle Resort, and Urban Lifestyle hotels (4) “Urban” refers to Urban Gateway h
Slide 15: Consistent Outperformance Against Peers
CONSISTENT OUTPERFORMANCE AGAINST PEERS QUARTERLY REVPAR GROWTH (vs. 2019) 15Source: Company filings (1) Excludes DRH Q3 2022 PEER PERFORMANCE (vs. 2019) DRH XHR HST APLE PEB RLJ SHO PK AVG1 ADR Growth +18% 16% 21% 13% 20% 6% 16% 8% +14% Occupancy Growth -8% -16% -14% -5% -15% -10% -15% -15% -13% Re
Slide 16: Robust Revenue and EBITDA Recovery
34% 41% 48% 50% 56% 64% 92% 82% 76% 82% 84% 100% 78% 98% 106%104%107%110%113%110%112% 0% 20% 40% 60% 80% 100% 120% 140% % o f 2 01 9 Co m pa ra bl e To ta l Re ve nu e ROBUST REVENUE AND EBITDA RECOVERY 16 ■ CONSUMER SPEND SHIFT Consumers continue to spend on experiences rather than goods REVENUE RE
Slide 17: 2023 – 2024 Setup
2023 – 2024 SETUP Kimpton Palomar Phoenix
Slide 18: 2023-2024 Positioned for Outsized Growth
18 2023-2024 POSITIONED FOR OUTSIZED GROWTH 18 LIFESTYLE/RESORT PORTFOLIO DRIVERS URBAN PORTFOLIO DRIVERS HOTEL CLIO, A LUXURY COLLECTION HOTEL STRONG URBAN RATES & POSITIVE DEMAND TRAJECTORY • ADR up +5% vs Q3’19, Over 6pp of occupancy upside to Q3’19 BUSINESS TRANSIENT GAINING MOMENTUM • Q3 BT rev
Slide 19: Diversified Segmentation & Positive Operating Trends
DIVERSIFIED SEGMENTATION & POSITIVE OPERATING TRENDS Group 23% Business Transient 28% Leisure Transient 49% 2022 YTD SEGMENTATION Q3’22 YTD Revenue BUSINESS TRANSIENT RECOVERY MID-WEEK URBAN OCCUPANCY IMPROVING GROUP BOOKING PACE LEISURE DURABILITY 0% 2% 4% 6% 8% 10% 12% Q1'20 Q2'20 Q3'20 Q4'20 Q1'2
Slide 20: Improving Group Trends
IMPROVING GROUP TRENDS WELL-POSITIONED FOR GROUP RECOVERY 20 ■ ENCOURAGING CITY-WIDE TRENDS Convention centers in major-markets forecast to surpass 2019 room nights CITYWIDE CONVENTION ROOM NIGHTS MARKET % of 2019A EBITDA 2019 2022E 2023E 2024E BOSTON 15% 349,030 330,927 438,015 394,007 CHICAGO 15%
Slide 21: Compelling ROI Pipeline
COMPELLING ROI PIPELINE Margaritaville Beach House Key West
Slide 22: ROI Pipeline: $85MM+ of ROI Projects at 40%+ IRRs
ROI PIPELINE: $85MM+ OF ROI PROJECTS AT 40%+ IRRs 22(1) Estimated Capital Spend and Estimated Incremental EBITDA based upon management proformas (2) Estimated IRRs are calculated assuming a 3-year stabilization period and a 10.0x terminal multiple PROPERTY PROJECT ESTIMATED CAPITAL SPEND(1) UNDERWRI
Slide 23: Recently Completed Projects
PROJECT COST IRR Completed $3.6MM 74% Mar 2022 PROJECT COST IRR Completed $9.8MM 25% Jul 2021 PROJECT COST IRR Completed $8.4MM 88% Nov 2021 JW MARRIOTT CHERRY CREEKSONOMA RENAISSANCE VAIL MARRIOTT 23Estimated IRRs are calculated assuming a 3-year stabilization period and a 10.0x terminal multiple P
Slide 24: Capacity for Growth
CAPACITY FOR GROWTH L’Auberge de Sedona
Slide 25: Completed $1.2B Refinancing in September 2022
COMPLETED $1.2B REFINANCING IN SEPTEMBER 2022 PROFORMA BALANCE SHEET BALANCE SHEET ENHANCED WITH SEPTEMBER REFINANCING 25 • Doubled weighted-average debt maturity • No meaningful debt maturities until 2025 • Increased liquidity and balance sheet flexibility with undrawn revolver • Retained attractiv
Slide 26: Debt Target Leverage Strategy
DEBT TARGET LEVERAGE STRATEGY PEER (NET DEBT + PREFERRED) / EBITDA Source: Baird Comp Sheet (12/5/22), Net Debt + Preferred / EBITDA 2022 26 $550M+ Total Available Liquidity 56% Fixed Rate(1) 89% Unencumbered by Year End(2) 12.0 8.1 8.0 7.2 6.8 6.3 6.1 5.8 4.7 4.4 4.2 4.2 3.0 2.5 AHT INN PEB BHR HT
Slide 27: Recent Acquisitions Outperforming Underwriting
(1) Excludes recently acquired hotels: Lake Austin Spa (acquired November 2022) and Kimpton Fort Lauderdale (acquired April 2022). RECENT ACQUISITIONS OUTPERFORMING UNDERWRITING BOURBON ORLEANS HOTEL (NEW ORLEANS, LA) HENDERSON PARK INN (DESTIN, FL) HENDERSON BEACH RESORT (DESTIN, FL) TRANQUILITY BA
Slide 28: Portfolio
PORTFOLIO Tranquility Bay Resort
Slide 29: DiamondRock at a Glance
DIAMONDROCK AT A GLANCE 9,607 ROOMS 35 PROPERTIES 24 GEOGRAPHIC MARKETS BALANCE SHEET SUMMARY DIVERSIFIED GEOGRAPHY Net Debt1 to LTM EBITDA2 Total Debt1 % Fixed Rate3 PRO FORMA Q3 2022 $1.2B 56% 4.2X 29 (1) As presented in the September 28, 2022 press release. (2) As of end of Q3’22 (3) Includes deb
Slide 30: Portfolio: Data Table
PORTFOLIO: DATA TABLE 30 30Note: 2021A results used for Henderson Beach Resort and Lake Austin Spa Resort, 2022 Forecast used for Kimpton Goodland, 2019A results used for all other hotels. 2019 PRO FORMA KEYS REVPAR ($) TREVPAR ($) REVENUE/KEY ($000s) EBITDA/KEY ($000s) % of 2019A EBITDA LUXURY RESO
Slide 31: Strong Resort Market Presence
STRONG RESORT MARKET PRESENCE 31 MARATHON, FL DESTIN, FL HENDERSON BEACH RESORT CAVALLO POINT TRANQUILITY BAY RESORT VAIL, CO DESTIN, FL THE HYTHE, A LUXURY COLLECTION HOTEL HENDERSON PARK INN FORT LAUDERDALE, FL WESTIN FORT LAUDERDALE BEACH RESORT FORT LAUDERDALE, FL SEDONA, AZ SONOMA, CALAKE TAHOE
Slide 32: High Quality Portfolio in Key Gateway Markets
HIGH QUALITY PORTFOLIO IN KEY GATEWAY MARKETS 32 ATLANTA, GA ATLANTA MARRIOTT ALPHARETTA BOSTON, MA NEW YORK, NY FORT WORTH, TXDENVER, CO CHICAGO, IL CHICAGO MARRIOTT MAGNIFICIENT MILE WASHINGTON, DC WASHINGTON, DC SAN DIEGO, CA HILTON BOSTON DOWNTOWN-FANEUIL HALL BOSTON, MA NEW YORK, NY WESTIN BOST
Slide 33: Portfolio: Operator and Guest Mix Diversification
PORTFOLIO: OPERATOR AND GUEST MIX DIVERSIFICATION 33 BENEFITS OF SHORT-TERM AGREEMENTS ■ SUPERIOR COST CONTROLS ■ Utilize most cost-effective procurement & sourcing ■ Identify cost-effective product alternatives ■ OWNER-CENTRIC CASH/CAPITAL MANAGEMENT ■ Owner controls cash management and distributio
Slide 34: ESG Excellence
akan, ! ¥ a a ) ESG EXCELLENCE ae * he ne hae = pee BO ee ee a] = Cor ser aoe a ye ‘ oe
Slide 35: Responsible Corporate Citizen
ISS ESG RANKINGS(2) ISS-ESG CORPORATE RANKING Currently Ranked in Top 1% of all US Real estate companies DiamondRock ranks in the top 5% of the Worldwide Real Estate Sector, earning an ISS ESG Prime designation 3ENVIRONMENTAL 2SOCIAL 4GOVERNANCE GRESB ANNUAL RESULTS 2017 2018 2019 2020 2021 2022 DRH
Slide 36: Seasoned Executive Team
SEASONED EXECUTIVE TEAM The Hythe, a Luxury Collection Hotel
Slide 37: Extensive Management and Hospitality Experience
EXTENSIVE MANAGEMENT AND HOSPITALITY EXPERIENCE MARK W. BRUGGER CO-FOUNDER PRESIDENT, CEO AND DIRECTOR • Co-founded DRH in 2004 and successfully led its IPO in 2005 • Named Forbes’ list of America’s Most Powerful CEOs 40 and Under and a finalist for the E&Y Entrepreneur of the Year Award • Extensive
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