Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (March 2013)
31 slides from Diamondrock Hospitality's investor presentation, Mar 1, 2013
Slide 1: Investor Presentation March 2013
Investor Presentation March 2013
Slide 2: Table of Contents
table of contents Investment Highlights............................................. 4 Strategy and Portfolio Repositioning............................ 6 Internal Growth Opportunities................................... 15 Capital Structure.................................................... 25 Game
Slide 3: Investment Highlights
3 INVESTMENT Highlights
Slide 4: Repositioned Portfolio Poised for Long-Term Growth
strong portfolio and balance sheet, internal growth opportunities Repositioned Portfolio Poised for Long-Term Growth Portfolio weighted towards markets with higher forecasted RevPAR growth Well positioned to benefit from group recovery Expect to be net sellers in short-term Revenue/Margin Upside Fro
Slide 5: Strategy & Portfolio Repositioning
5 Strategy & Portfolio Repositioning
Slide 6: Deliver above-average returns across the cycle with balanced portfolio
deliver above-average returns across the cycle with balanced portfolio of premier urban gateway assets and destination resorts Top Urban Gateway Cities and Resorts Markets With High Barriers to Entry and Diverse Demand Sources Balance Brand-Managed and Third-Party Managed Hotels Leverage Global Bran
Slide 7: DiamondRock at a glance
(CHART) (CHART) DiamondRock at a glance 7 Hotels 27 Rooms 11,600 Enterprise Value $2.7 B TEV/Key $230,000 Net Debt/EBITDA 4.8x EBITDA Multiple 12.8x NOI Cap Rate 6.5% KEY STATISTICS 2013 GUIDANCE 2013 GUIDANCE 2013 GUIDANCE 2013 GUIDANCE Pre-Renovation Renovation Disruption Guidance RevPAR Growth 4
Slide 8: Premier portfolio with urban concentration
Premier portfolio with urban concentration 8 Hotel Rex San Francisco Hilton Minneapolis Chicago Marriott Conrad Chicago Boston Westin Hilton Boston Hilton Burlington Courtyard Midtown NYC Lexington Hotel NYC Hilton Garden Inn 42nd Street NYC Courtyard 5th Ave NYC Hilton Garden Inn Chelsea NYC Westin
Slide 9: Urban has historically outperformed
Urban has historically outperformed 9 1993-2012: RevPAR CAGR of 3.9% for Urban vs. 2.9% for US (CHART)
Slide 10: Urban portfolio positioned for above average RevPAR growth
Urban Portfolio positioned for above average revpar growth 10 Portfolio Focused on Markets with Above Average Forecasted RevPAR Growth (1) (CHART) PKF Forecast RevPAR CAGR 2013-2016 Chart excludes Destination Resort and other components of DRH portfolio, for which there is no PKF forecast Weighted b
Slide 11: Portfolio transformed for current upcycle
Portfolio transformed for current upcycle 11 (CHART) (CHART) Represents 2011 data for comparability purposes. (CHART) OVER $16 240 BPS BETTER MARKETS, HIGHER QUALITY ACQUISITIONS $1.3B DISPOSITIONS $0.3B
Slide 12: Increased Manager Diversification
Increased Manager Diversification 12 More Diversified by Manager Goal of 50/50 Brand/Third Party Managers More Flexibility on Best Practices, Increased Overall Portfolio Profitability Legacy Portfolio Current Portfolio
Slide 13: Increased Brand Diversity
Increased Brand diversity 13 KEY STATS AT 11/6/12 JW Marriott Denver Westin San Diego Worthington Renaissance Hilton Boston Lexington Hotel NYC Hilton Garden Inn Chelsea NYC Hilton Burlington Sonoma Renaissance Resort Chicago Marriott Boston Westin Courtyard Midtown NYC Courtyard 5thAvenue NYC Frenc
Slide 14: Internal Growth Opportunities
14 Internal GROWTH opportunities
Slide 15: Significant upside to prior peak levels
Internal growth opportunities: significant upside to prior peak levels 15 2012 Prior Peak Opportunity RevPAR $134 $143 +6.7% ADR $175 $189 +8.0% Occupancy 76.6% 76.0% ----- Hotel EBITDA $218 million $279 million +$61 million Hotel EBITDA Margin 27.2% 32.5% +500+ bps Shift Customer Mix to Higher Marg
Slide 16: Group business positioned to outperform
Group business positioned to outperform 16 (CHART) Industry Group Demand Trails Prior Peak DRH Convention Calendars Strong in 2014 (CHART) Group Demand Trails Prior Peak Levels Despite a Surge in Transient Demand Group Out-of-Room Spend Offers Upside Potential Banquet revenues at DRH hotels are 12%
Slide 17: Capital improvements targeting 1/3 of portfolio in 2013-2014
capital improvements targeting1/3 of portfolio in 2013-2014 17 HOTEL NAME START ESTIMATED COMPLETION EXPECTED BENEFITS The Lexington Late 2012 Mid 2013 Rate upside: $90 gap to comparable Marriott Westin Washington DC City Center Mid 2013 Early 2014 Increased market penetration, reclaimed market shar
Slide 18: Growth driver: Lexington Hotel Rebranding
Growth driver: Lexington Hotel Rebranding Rebranding to Autograph Collection $40 - $45 Million Capital Plan for Upgrade Completion in Mid-2013 Rate Upside $90 Rate Gap to Comparable Marriott Each Dollar = $250k Revenue 25% Rate Growth to Prior Peak Anticipate Multi-Year Growth in EBITDA to $30 milli
Slide 19: Growth driver: Westin Washington DC
Growth driver: Westin Washington DC Urban/City-Center Location with Strong Demand Generators Reposition Hotel with Renovation to Benefit From Enhanced Citywide Convention Penetration from New Headquarters Hotel Team with Starwood Citywide Sales Force to Gain Group and Transient RevPAR Penetration Up
Slide 20: Growth driver: Hilton Boston Downtown
Growth driver: Hilton Boston Downtown Urban Location with Numerous Demand Generators and Virtually No New Supply Growth NOI of $2 million from In-Place Lease Income Upside Opportunities From: Rate increases following planned renovation Change in manager Outsourced food and beverage operations to imp
Slide 21: Growth driver: Westin San Diego
Growth driver: Westin San Diego Urban Location with Multiple Demand Generators for Legal, Convention Center and Gaslamp District Leisure Business Team with Starwood Citywide Sales Force to Enhance Group and Transient RevPAR Penetration Increased Demand from New Federal Courthouse for High-Rated Law
Slide 22: Growth driver: Frenchman's Reef Repositioning
Growth driver: Frenchman's Reef Repositioning Repositioning Having Positive Impact on Group Meeting Planner Decisions: 2013 Group Pace: +13.3% 2014 Group Pace: +42.6% Upside to Margins from Ongoing Initiatives to Self-Generate Energy and Water Hotel will Surpass Prior Peak in 2013 Renovated Resort D
Slide 23: Growth driver: Hilton Garden Inn Times Square
Growth driver: hilton garden inn times square 23 Irreplaceable Location (42nd St & Broadway) Below Market Cost ($450,000 Per Key) 282 Keys - Expected 2014 Delivery Immediately Accretive (9% Initial EBITDA Yield) Contemporary Design (275 SF Average Size) Bryant Park Times Square 42nd Street Broadway
Slide 24: Capital Structure
24 capital structure
Slide 25: Best-in-class capital structure
Best-in-class capital structure KEY EXECUTION ELEMENTS Take Advantage of Low Interest Rate Environment Target 20% Floating Rate Debt as Cyclical "Hedge" Ample Line Capacity for HGI Times Square (2014) Maximize Liquidity with Revolver 15 of 27 Hotels are Unencumbered Maintain Low Leverage to Support
Slide 26: Game Plan: Next Five Years
26 Game plan: next five years
Slide 27: The Next Five Years
THE NEXT FIVE YEARS Profitability: Have Best-in-Class Margin Controls With the Most Respected Asset Management Function Balance Sheet: Achieve Leverage Target of 3.5x Net Debt-to-EBITDA, Continue to Stagger Maturities, and Minimize Corporate Debt Portfolio Exposure: Continue to Increase Exposure to
Slide 28: Profitability outlook supported by strong supply/demand dynamics
profitability outlook supported by strong supply/demand dynamics 2013 US Supply Growth of 1.1% is Well Below Historical Average Expect Low Supply Growth to Persist Given Visibility/Long Lead Time Demand Recovering, Growth Projected to Exceed Supply and Historical Average Through at Least 2016 28 (CH
Slide 29: Strategic Game Plan
STRATEGIC GAME PLAN 29 Opportunistic Acquisitions of High Quality Hotels Harvest Acquisitions Invest to Drive ROI Growth Capital Recycling Sell Non-Core Assets Reduce Leverage Strategic Alternatives Select Acquisitions Buy Stock 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 PHASE I EARLY CY
Slide 30: Driving value with portfolio repositioning, internal growth and low leverage
Driving value with portfolio repositioning, internal growth opportunities and low leverage Repositioned Portfolio Poised for Long- Term Growth Revenue/Margin Upside from Investments in Key Properties Best-In-Class Capital Structure Supports Sustainable Dividend and Outperformance Currently Entering
Slide 31: Safe Harbor
Safe Harbor Certain statements made during this presentation are forward-looking and are subject to risks and uncertainties. Many of these risks and uncertainties are discussed in the prospectus supplement and in the Company's filings with the Securities and Exchange Commission, all of which you sho
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