Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (September 2018)
30 slides from Diamondrock Hospitality's investor presentation, Sep 25, 2018
Slide 1: DiamondRock at a Glance
DiamondRock at a Glance KEY STATISTICS Hotels (Rooms) 30 (9.9K) Enterprise Value $3.3B Market Cap $2.5B Enterprise Value / Key ~$330K Dividend Yield 4.2% YE18 Net Debt/EBITDA(1) 3.1x Based on PF 2018 EBITDA at guidance midpoint and current pro form net debt. Based on 2017 EBITDA. Pro forma for acqui
Slide 2: Why DiamondRock?
Why DiamondRock? Top Tier Quality Portfolio & Growth 1 Top tier quality portfolio as measured by ADR Top tier growth with 2017 RevPAR growth of 2.5% Vail Marriott Mountain Resort The Gwen, A Luxury Collection Hotel 3 Frenchman’s Reef rebuild an opportunity to build world-class resort with high-growt
Slide 3: Strong Resort Market Presence
Strong Resort Market Presence 5 L’Auberge De Sedona Orchards Inn Sedona Westin Ft. Lauderdale Beach Havana Cabana Key West Key West Suites Frenchman’s Reef Resort Charleston Renaissance Vail Marriott The Lodge at Sonoma Shorebreak California The Landing Lake Tahoe DRH’s Resort Portfolio represents 1
Slide 4: Top-Tier Performance
Top-Tier Performance 2017 RevPAR Growth Among Best in Peer Group Peer Average: 0.7% 6 DRH comparable 2017 RevPAR growth of 2.5% among best in peer group Portfolio gained 2.6 percentage points of market share during the year EBITDA margins approximately flat excluding property taxes Top Tier Source:
Slide 5: Top-Tier Portfolio Quality
Top-Tier Portfolio Quality 7 2017 Portfolio Average Daily Rate Peer Average: $216 Top Tier Source: Company Filings as of Q4 2017. Note: Pebblebrook data is not pro forma for LaSalle merger. $246 $229 $227 $225 $220 $211 $209 $202 $171 PEB DRH HST CHSP HT SHO XHR PK RLJ
Slide 6: Compelling Valuation
Compelling Valuation Source: Baird, FactSet. Data as of 9/14/18. 2018 Consensus EBITDA Multiple Peer Average: 13.3x 8 15.4 14.6 13.8 13.4 12.8 12.8 12.7 12.5 11.7 CHSP PEB HT SHO HST DRH PK XHR RLJ
Slide 7: Diverse Operator Base Drives Best Practices
Diverse Operator Base Drives Best Practices 9 Two Roads Hospitality brought in as new operator for L’Auberge de Sedona and Orchards Inn in December 2017 Viceroy Hotels brought in as new operator for Hotel Rex in October 2017 Courtyard Midtown East converted to franchise and Marriott replaced with HE
Slide 8: Recent Acquisitions Driving Value
Recent Acquisitions Driving Value
Slide 9: Pending Acquisition of Luxury California Resort
Pending Acquisition of Luxury California Resort 11 Currently under contract to acquire luxury resort hotel in California Average daily rate over $400 Independently branded with third-party operator Low-to-zero supply growth market Off-market transaction Deal value of approximately $150M EBITDA multi
Slide 10: The Landing Resort & Spa (Lake Tahoe, CA)
The Landing Resort & Spa (Lake Tahoe, CA) 12 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 distance to Heavenly Ski Resort (Vail Resorts) and both Harrah
Slide 11: Hotel Palomar (Phoenix, AZ)
Hotel Palomar (Phoenix, AZ) Attractive Deal Metrics: $331K per key purchase price 10.8x stabilized EBITDA multiple by 2022 Terminable management contract in 2020 TripAdvisor ranked #2 of 174 Phoenix hotels Centerpiece of the 1.2M SF CityScape mixed-use development in downtown Phoenix; City Scape pha
Slide 12: DRH Resort Portfolio Overview
DRH Resort Portfolio Overview
Slide 13: DRH's Differentiated Resort Portfolio
DRH’s Differentiated Resort Portfolio 15 L’Auberge De Sedona Orchards Inn Sedona Westin Ft. Lauderdale Beach Havana Cabana Key West Key West Suites Frenchman’s Reef Charleston Renaissance Vail Marriott Sonoma Renaissance Shorebreak Hotel The Landing Lake Tahoe Hilton Vermont - Burlington Hotels 12 R
Slide 14: DRH Resorts Have Proven Successful
DRH Resorts Have Proven Successful DRH Resort RevPAR Has Outperformed Broader Portfolio by Average of 300bps With Clear RevPAR Premium Diversified With Strong Base of Group and BT Business ~$10 Note: Historical RevPAR for ten resort properties. RevPAR excludes resorts under renovation during quarter
Slide 15: Strong Return on Investment
Strong Return on Investment Note: Historical RevPAR and EBITDA results pro forma for acquisitions for full period year prior to acquisition. Frenchman’s Reef and Havana Cabana excluded due to natural disaster closure. Landing uses stabilized EBITDA as proxy for multiple. Landing uses stabilized EBIT
Slide 16: Strong Return on Investment
0 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 se16 16.5x 89x $37 Charleston Renaissance sana 11.9% 7.
Slide 17: Unique Drivers to Enhance NAV
Unique Drivers to Enhance NAV 19 $110M renovation substantially completed in Q1 2018 Scope included 1,200 guestrooms and all 60K SF of meeting space 2H18 group pace +8% Chicago Marriott Comprehensive renovation post-hurricane damage Reopened Q2 2018 Refreshed theme and identity Stabilized EBITDA to
Slide 18: Frenchman's Reef Update
Frenchman’s Reef Update Iconic location in Virgin Islands Strong historical performance 2017 forecast of $16.7M EBITDA(1) Impacted by hurricanes in September 2017 Closed until 2020 Remediation and stabilization ongoing Covered under insurance policy(2) Currently negotiating with insurance companies
Slide 19: NYC Market Update
NYC Market Update Quarterly Manhattan RevPAR Trending Positive Source: STR. 21 2.2% RevPAR growth Q3-to-date with 4.4% RevPAR growth YTD (1.7%) (5.0%) (3.1%) 0.5% (2.6%) (0.5%) (1.3%) 1.3% 7.4% 4.2% Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417 Q118 Q218
Slide 20: Upside Opportunities at the Lexington
Upside Opportunities at the Lexington UNION BUYOUT In the process of conducting a voluntary union buyout program at the Lexington Buyout would reduce amount of FTE’s at hotel and significantly increase efficiency Ongoing process, which will take several months to complete Program is expected to driv
Slide 21: NYC Supply Outlook
NYC Supply Outlook 23 Source: STR, CBRE. Supply in NYC remains elevated, but DRH submarkets have minimal supply DRH’s primary submarket of Midtown East has no new supply in 2018-19 with total pipeline of rooms at 1% Less than 1% supply CAGR over last three years Waldorf Astoria (1,413 rooms) came of
Slide 22: Manhattan Building Permits Declining Significantly
Manhattan Building Permits Declining Significantly Since 1988 when supply growth was less than 1.o percent, Manhattan RevPAR growth averaged 10.1 percent 719 keys were permitted in Manhattan in 2017 (522 excluding Roosevelt Island), which is 85.3 percent less than 2011-2016 averages Only 51.6 percen
Slide 23: Chicago Outperforming in 2018
Chicago Outperforming in 2018 The Chicago Marriott and the Gwen are up a combined 12.1% in 1H 2018 Combined group pace up ~11% in 2H 2018 Chicago Marriott completed final stage of $110M renovation in Q1 2018 Average guest satisfaction score of a renovated room is 20 points higher than the pre-renova
Slide 24: Chicago Outperforming in 2018
The Chicago Marriott and the Gwen are up a combined 12.1% in 1H 2018 - Combined group pace up ~11% in 2H 2018 Chicago Marriott completed final stage of $110M renovation in Q1 2018 — Average guest satisfaction score of a renovated room is 20 points higher than the pre-renovation room score — ~500 bas
Slide 25: Focus Asset Management Areas
Focus Asset Management Areas 27 Labor Management Energy Food Cost Working with third-party to reduce labor expenses and improve productivity Study historical productivity and benchmark against other comparable hotels Complete new staffing standards and implement new labor management system to maximi
Slide 26: Focus Asset Management Areas
0 Focus Asset Management Areas + Working with third-party to reduce + Conducting comprehensive hands- Opportunities for food cost savings labor expenses and improve productivity + Study historical productivity and benchmark against other ‘comparable hotels + Complete new staffing standards ‘and impl
Slide 27: Fortress Balance Sheet
Fortress Balance Sheet 22 UNENCUMBERED HOTELS 8 Encumbered Hotels Boston Westin Courtyard Midtown East Salt Lake City Marriott Westin Washington, DC Sonoma Renaissance Westin San Diego Worthington Renaissance JW Marriott Cherry Creek Unencumbered Pool Hilton Boston The Gwen Vail Marriott Courtyard D
Slide 28: Key Takeaways
30 Many Strategic Repositionings Recently Completed and More Potential ROI Opportunities Ahead Top-Tier Portfolio as Measured by Quality and Growth Internal Growth Enhanced by Significant Investment in Portfolio over Last Five Years ($500M) Trading at Significant Discount to Peers, Replacement Cost,
Slide 29: 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
Slide 30: Forward Looking Statements
0 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
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