Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (July 2020)
32 slides from Diamondrock Hospitality's investor presentation, Jul 20, 2020
Slide 1: The Landing, Lake Tahoe Investor Presentation | July 2020
1 The Landing, Lake Tahoe Investor Presentation | July 2020
Slide 2: Forward Looking Statements
2 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 o
Slide 3: Key Takeaways
3 Key Takeaways 2 3 4 5 22 of 30 Hotels Open as of 6/30/2020 $360MM of Liquidity available as of Q2 Q2 Burn Rate Beats Expectations by 15% Bank Amendment and Loan Extension Complete Exploring Accretive Growth Opportunities
Slide 4: Recent Events
4 • Acquired leasehold interest in Shorebreak for 8%+ cap rate • Named Top 5% Worldwide Real Estate platform by ISS - OEKOM • Implemented COVID - 19 Action Plan • 20 Hotels suspended operations, leaving 10 hotels operating Recent Events March/April 2020 May 2020 June 2020 • Reopened Charleston Renai
Slide 5: 2019 Financial Summary
5 30% Resort Frenchman's Reef 14% Boston 14% Chicago 11% New York 11% Other CBD 4% San Francisco 4% Other 4% San Diego 4% Washington DC 3% Denver 2019 FINANCIAL SUMMARY (1) Hotels (Rooms) 31 (>10K) Total Revenue $932.1MM Room Revenue $656.3MM Hotel EBITDA Margin 29.6% Outstanding Debt $1.09B Net Deb
Slide 6: DiamondRock Balance Sheet Profile
6 2020 2021 2022 2023 2024 2025 Secured Debt Term Loan Revolver Undrawn Revolver 10.4 9.5 8.8 6.3 4.7 3.9 3.7 3.5 1.5 1.2 AHT BHR HT INN PEB XHR DRH RLJ HST SHO DiamondRock Balance Sheet Profile LEVERAGE BELOW PEER AVERAGE (3) (1) Does not reflect extension options; revolving credit facility based o
Slide 7: Operations Update
7 Renaissance Charleston Historic District OPERATIONS UPDATE
Slide 8: Resuming Hotel Operations
8 Resuming Hotel Operations Projected as of 8/1 7 Operating Urban Hotels 14 Operating Urban Hotels March/April +2 Charleston Renaissance Orchards Inn May +10 Havana Cabana Barbary Beach House Denver Courtyard JW Marriott Cherry Creek The Landings Resort The Gwen, Chicago Vail Marriott Kimpton Phoeni
Slide 9: Cash Burn Better Than Expected
9 9 Cash Burn Better Than Expected Hotel Level Cash Burn Corporate Level Cash Burn • Cash burn was originally forecasted to be $11 - 13MM per month • Q2 2020 expected to average $10.2MM per month • Cash burn was originally forecasted to be $ 13 - 15MM per month • Q2 2020 expected to average $12.2MM
Slide 10: % Share of Bi-Weekly Cancellations
10 % Share of Bi-Weekly Cancellations 3/23/2020 4/3/2020 4/17/2020 5/1/2020 5/15/2020 5/29/2020 6/12/2020 6/26/2020 Totals To Date Feb-20 0% 0% 0% 0% 0% 0% 0% 0% 0% Mar-20 37% 6% 0% 0% 0% 0% 0% 0% 15% Apr-20 37% 12% 1% 4% 2% 0% 0% 0% 17% May-20 14% 44% 10% 16% 8% 6% 0% 0% 17% Jun-20 11% 13% 38% 23%
Slide 11: Group Business Lead Generation
11 Group Business Lead Generation % Share of Group Business Leads (1) April (2) May (3) June (4) Q2 2020 14.7% 3.2% 2.8% Q3 2020 13.7% 12.6% 6.9% Q4 2020 9.8% 7.2% 6.5% Q1 2021 15.0% 26.1% 22.1% Q2 2021 12.1% 8.8% 16.3% Q3 2021 6.3% 7.0% 9.9% Q4 2021 5.8% 6.4% 5.9% 2022 & Thereafter 22.8% 28.6% 29.7
Slide 12: Hotel Occupancy Gradually Rebuilding
12 6.8% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 2/29/2020 3/10/2020 3/20/2020 3/30/2020 4/9/2020 4/19/2020 4/29/2020 5/9/2020 5/19/2020 5/29/2020 6/8/2020 6/18/2020 Hotel Occupancy Gradually Rebuilding Trailing 7 Day Average Portfolio Occupancy 27.9% * Occupancy based on operating
Slide 13: Operating Trends Improving
13 Operating Trends Improving Total Portfolio Resort Portfolio Total Portfolio Resort Portfolio Week Ending Open Properties Open Resorts 2020 Occ 2020 ADR 2019 ADR 2020 Occ 2020 ADR 2019 ADR 2020 Occ 2020 ADR 2019 ADR 2020 Occ 2020 ADR 2019 ADR 5/2/2020 11 4 20.0% 165 227 8.1% 232 270 21.4% 175 204
Slide 14: Covenant Waiver and Mortgage Extension
14 Covenant Waiver and Mortgage Extension Covenant Waivers • Successfully finalized an amendment on $400MM credit facility and $400MM in unsecured term loans: • Waiver of existing financial covenants Q2 2020 through Q1 2021 • Modified quarterly - tested covenants Q2 2021 through Q4 2021 • Acquisitio
Slide 15: Growth Opportunities
15 Hotel Emblem GROWTH OPPORTUNITIES
Slide 16: Select Service Positioned To Capitalize Upon Distress On The Horizon
16 Select Service Positioned To Capitalize Upon Distress On The Horizon Percent of Loans By Original Loan - to - Value 65 - 70% >70% Full Service 17% 13% Resorts 54% 15% $98 Billion in 8,500+ CMBS Hotel Loans 11 11 Full Service and Resorts 2020 - 2023 Maturities: $24 Billion (over 2,000 loans) Sourc
Slide 17: Emerging Pipeline of Opportunities
17 Emerging Pipeline of Opportunities Recent Deals Evaluated at DiamondRock WEST LOS ANGELES BOUTIQUE HOTEL SOUTHEASTERN INDEPENDENT LIFESTYLE BOUTIQUE ARIZONA BOUTIQUE RESORT SMALL SONOMA INDEPENDENT RESORT Seller proposed DRH assume existing loan & give OP units for equity at implied stock price o
Slide 18: Growth Oriented ROI Projects
18 Growth Oriented ROI Projects Vail Resort Upgrade Vail ROI Projects Landing New Rooms Hilton Boston New Rooms The Lodge at Sonoma Upgrade Existing Marriott franchise agreement expires next year. With capital, opportunity to up - brand to luxury brand and capture significant rate gap ($130+/ - ) to
Slide 19: ROI Projects Drive Shareholder Value
19 ROI Projects Drive Shareholder Value Property Project Estimated Capital Spend (1) Estimated Incremental EBITDA (1) Estimated Incremental Value (2) Estimated IRR (3) Boston Hilton Downtown 29 Additional Guestrooms $6.7 $1.0 $10.0 28% Hilton Burlington F&B Renovation $1.5 $0.4 $4.0 59% Chicago Gwen
Slide 20: Corporate Citizenship
20 CORPORATE CITIZENSHIP Cavallo Point, the Lodge at Golden Gate Bridge
Slide 21: Responsible Corporate Citizen
21 Responsible Corporate Citizen GRESB Annual Results ISS ESG Rankings (2) ISS - ESG Corporate Ranking Environmental Social Governance 2016 2017 2018 2019 DRH GRESB Score 50 53 75 81 Peer Score Average (1) 51 57 58 69 Index to Peer Score Average 98% 93% 129% 117% Currently Ranked #2 of 174 US Real E
Slide 22: DiamondRock Hospitality
DIAMONDROCK HOSP!
Slide 23: Appendix
APPENDIX Havana Cabana Key West
Slide 24: Research Demonstrates Small Resorts Outperform
24 Research Demonstrates Small Resorts Outperform • According to CBRE/PKF research study, small resorts (1) have: • Less downside risk due to larger stream of reliable non - rooms revenue • Preserved the most ADR through the recession of the early 2000s • Achieved superior levels of ADR growth since
Slide 25: DRH Lifestyle & Independent Strategy
25 DRH Lifestyle & Independent Strategy RATIONALE FOR TARGETING LIFESTYLE HOTELS, INDEPENDENTS, & SOFT BRANDS • To grow with shift towards experiential travel • Reduces reliance on traditional brands • Balances portfolio • Greater opportunity for smaller deals • Target allocation will be achieved th
Slide 26: Consumers Spending More on Experiences Than Material Goods
26 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Motor Vehicles Jewelry and Watches Home Furnishings Experiences 100 200 300 400 500 600 700 800 900 1,000 1980 1985 1990 1995 2000 2005 2010 2015 Motor Vehicles Home Furnishings Jewelry and Watches Experiences Consumers Spending More on Experiences Than Material Good
Slide 27: Resort Thesis Already Proven Successful
27 Resort Thesis Already Proven Successful EBITDA Multiple @ EBITDA Increase Investment ($MM) Purchase YE 2019 $MM Burlington Hilton $64 16.5x 8.9x $3.9 Charleston Renaissance $43 11.9x 7.0x $2.9 Fort Lauderdale Westin $167 14.8x 10.7x $5.5 Havana Cabana $54 12.2x 15.8x ($0.5) The Landing Resort & S
Slide 28: Strong Resort Market Presence
28 Strong Resort Market Presence Approximately 1/3 of portfolio located in destination resort markets.
Slide 29: High Quality Portfolio in Key Gateway Markets
29 Approximately 2/3 of portfolio located in top, gateway markets. High Quality Portfolio in Key Gateway Markets
Slide 30: Non GAAP Measures
30 Non GAAP Measures The Company considers the following non - GAAP financial measures to be useful to investors as key supplemental measures of operat ing performance: EBITDA, EBITDAre , Adjusted EBITDA, Hotel EBITDA and Hotel Adjusted EBITDA. These measures should not be considered in isolation or
Slide 31: Pro Forma Net Debt / 2019 EBITDA Reconciliation
31 Pro Forma Net Debt / 2019 EBITDA Reconciliation As of December 31, 2019 Actual Principal Balance Salt Lake City Marriott Downtown mortgage loan $53,273 Westin Washington D.C. City Center mortgage loan 60,550 The Lodge at Sonoma, a Renaissance Resort & Spa mortgage loan 26,963 Westin San Diego mor
Slide 32: EBITDA and Hotel Adjusted EBITDA Reconciliation
32 EBITDA and Hotel Adjusted EBITDA Reconciliation Note: $ in thousands. (1) Represents legal and professional fees and other costs incurred at Frenchman's Reef as a result of Hurricane Irma that are no t c overed by insurance. (2) Represents payments made to unionized employees under a voluntary bu
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