Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (September 2024)
25 slides from Diamondrock Hospitality's investor presentation, Sep 10, 2024
Slide 1: Investor Presentation September 2024
INVESTOR PRESENTATION SEPTEMBER 2024 CAVALLO POINT
Slide 2: Forward Looking Statements & Use of Non-GAAP Financial Measures
FORWARD LOOKING STATEMENTS & USE OF NON-GAAP FINANCIAL MEASURES 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,” “anticip
Slide 3: DiamondRock at a Glance
DIAMONDROCK AT A GLANCE DIVERSIFIED GEOGRAPHY DIVERSIFIED PROPERTIES FINANCIAL SUMMARYPORTFOLIO 9,760 36 25 ROOMS GEOGRAPHIC MARKETS PROPERTIES 3 MARKET % OF 2023 EBITDA Chicago 12.5% Boston 10.8% New York City 8.3% Florida Keys 7.6% Vail 5.6% Fort Lauderdale 5.0% Fort Worth 4.8% Sedona 3.8% Denver
Slide 4: DiamondRock 2.0
4 DIAMONDROCK 2.0 • Optimizing Capital Allocation & Recycling • Disciplined Capital Expenditure • Driving Overhead Efficiency • Aligned & Expedited Decision Making Our strategy remains focused on delivering shareholder value through a leading portfolio concentrated in drive- to, leisure destinations
Slide 5: Reiterating Full-Year 2024 Guidance
REITERATING FULL-YEAR 2024 GUIDANCE 2024 GUIDANCE UPDATED ASSUMPTIONS METRIC LOW END HIGH END LOW END HIGH END Comparable RevPAR Growth 1.5% 3.0% 2.0% 4.0% Adjusted EBITDA $278MM $290MM $270MM $290MM Adjusted FFO $201.5MM $213.5MM $194MM $214MM Adjusted FFO per Share $0.95 $1.00 $0.91 $1.00 CURRENT
Slide 6: Why DiamondRock?
WHY DIAMONDROCK? 1 2 3 4 6 ALIGNED MANAGEMENT TO DRIVE GROWTH & VALUE STRONG SECULAR OUTLOOK FOR GROUP AND LEISURE FLEXIBLE BALANCE SHEET & STRONG LIQUIDITY HIGH-PERFORMING & LIQUID PORTFOLIO
Slide 7: Streamlined, Aligned & Experienced Management
STREAMLINED, ALIGNED & EXPERIENCED MANAGEMENT JEFFREY J. DONNELLY CEO AND DIRECTOR JUSTIN LEONARD PRESIDENT, COO BRIONY R. QUINN EVP, CFO AND TREASURER DiamondRock announced leadership changes in April to expedite decision-making and increase G&A efficiency • Joined DRH in 2007 as Assistant Controll
Slide 8: Strength & Resiliency of Leisure Travel
STRENGTH & RESILIENCY OF LEISURE TRAVEL 8 1,100 bps premium to industry avg and 1,500 bps premium to inflation NOI CAGR 1972 – 1982 (High Inflation Period) RevPAR Comparison from 1987 – 2022 Source: CBRE Hotels Research U.S. Population Growth in Heaviest Traveling Segments Source: CBRE Hotels Resear
Slide 9: Strong Group Pace & Other Revenue Spending
STRONG GROUP PACE & OTHER REVENUE SPENDING 2024 GROUP REVENUE PACE MARKET % of 2023A EBITDA 2019 2022 2023 2024E 2025E CHICAGO 13% 1,142 1,153 1,047 1,184 1,054 BOSTON 11% 349 330 426 437 399 SAN DIEGO 3% 732 660 797 869 829 PHOENIX 2% 291 305 368 354 307 WASHINGTON, DC 2% 387 400 290 417 343 TOTALS
Slide 10: Business Transient Continues Recovery
BUSINESS TRANSIENT CONTINUES RECOVERY 10 CONTINUED INCREMENTAL GROWTH IN BUSINESS TRAVEL • USTA forecasts 2024 business travel to reach 95% of 2019 levels—up from 89% in 2023, though slowing economic growth may push full business travel recovery to 2026 • Deloitte projects corporate travel spending
Slide 11: Balance Sheet & Liquidity
BALANCE SHEET BALANCE SHEET & LIQUIDITY Mortgages Term Loans SIGNIFICANT LIQUIDITY AVAILABLE AT END OF Q2 2024 NET DEBT + PREFERRED / EBITDA Source: September 2, 2024 Baird Comp Sheet (Net Debt + Preferred / EBITDA 2024) Low Leverage 10.3 9.4 8.4 6.9 6.2 5.6 5.2 5.2 4.2 4.0 3.6 3.3 3.0 AHT BHR PEB I
Slide 12: What Sets DiamondRock's Portfolio Apart?
WHAT SETS DIAMONDROCK’S PORTFOLIO APART? 1 2 3 4 12 LOW RISK PROFILE ENHANCES LIQUIDITY & PERFORMANCE WELL-MAINTAINED, HIGH PERFORMING PRODUCT LOW SUPPLY THREAT ROBUST GROWTH FROM ROI PIPELINE
Slide 13: Most Liquid Portfolio Amongst Peers
MOST LIQUID PORTFOLIO AMONGST PEERS BENEFITS OF SHORT-TERM, THIRD-PARTY AGREEMENTS ■ Terminable at Will ■ Enhanced Flexibility to Optimize Performance ■ Superior Cost Controls ■ Asset Liquidity Enhanced ■ 50 to 100 bps Better Exit Cap Rate VALUATION PREMIUM: UNENCUMBERED VS. ENCUMBERED HOTELS 15% 20
Slide 14: Strong Q2 Comparable Results
STRONG Q2 COMPARABLE RESULTS 14 PORTFOLIO URBAN RESORTS % Change vs Q2 2023 vs Q2 2019 vs Q2 2023 vs Q2 2019 vs Q2 2023 vs Q2 2019 TREVPAR +4.5% +13.6% +5.4% +4.6% +2.7% +31.3% REVPAR +2.2% +10.0% +2.2% +2.6% +1.9% +30.6% ADR +0.6% +16.3% +2.6% +9.9% (6.1)% +31.5% OCCUPANCY +1.6% (5.5)% (0.4)% (6.7)
Slide 15: Peer Outperformance
PEER OUTPERFORMANCE Q2 2024 COMPARABLE HOTEL ADJ. EBITDA GROWTH VS 2023 TRevPAR RevPAR Occupancy ADR Hotel Adj. EBITDA Margin DRH 4.5% 2.2% 1.6% 0.6% 20 bps PEER AVERAGE 1.8% 1.2% 1.3% -0.01% -69 bps RLJ 3.5%1 2.6% 2.1% 0.6% -245 bps PK 3.2% 2.0% 0.1% 1.8% 10 bps APLE 2.7% 2.5% 2.2% 0.3% -50 bps PEB
Slide 16: Market % of 2023 EBITDA and Supply Forecast
MARKET % OF 2023 EBITDA SUPPLY FORECAST1 URBAN MARKETS Chicago 12.5% Boston 10.8% Manhattan 8.3% Fort Worth 4.8% Denver 3.7% Salt Lake City 3.7% Sausalito 3.7% FAVORABLE SUPPLY BACKDROP 1 Methodology: 5 year average of CoStar 12 month supply change forecast (2024 – 2028); green light < 1%, yellow li
Slide 17: Robust ROI Pipeline: $10-20MM Annual ROI Spend
ROBUST ROI PIPELINE: $10-20MM ANNUAL ROI SPEND • Commenced 4 Repositionings: ⁻ Sheraton Key West (Margaritaville) ⁻ JW Marriott Cherry Creek (Hotel Clio) ⁻ Sonoma Renaissance (Autograph) ⁻ Vail Marriott (Luxury Collection) • Unencumbered 6 Marriott Management Agreements • Acquired 3 Resorts ($180MM)
Slide 18: 2024 & 2025 ROI Projects in Progress
2024 & 2025 ROI PROJECTS IN PROGRESS TRANQUILITY BAYHAVANA CABANA Addition of New Bar Outlet • Est. Completion: Summer 2024 • Total Est. Cost: $1.5MM • Enhances guest experience and expected to significantly increase F&B revenue at a 25%+ margin THE LANDING LAKE TAHOE 18 BOURBON ORLEANS HOTEL Adding
Slide 19: 2024 & 2025 ROI Projects in Progress: Sedona
• New cliff side pool and bar with some of the best views of Sedona’s red rocks • Significant rate opportunity • Total Cost: ~$20MM • Est. Completion: 2025 Integration of Orchards Inn with L’Auberge de Sedona $294 $927 Orchards Inn L'Auberge de Sedona 2023 ADR COMPARISON 3x Difference in ADRs 19ORCH
Slide 20: Potential Longer Term Capital Projects
POTENTIAL LONGER TERM CAPITAL PROJECTS Courtyard Denver Downtown The Westin Boston Seaport District Exploring Adding More Waterfront Guest Rooms Franchise Expiration in 2027 Potential Upbranding and Expansion Franchise Expiration in 2026 Value Creation Opportunity Exploring Adding New Cabins & Emplo
Slide 21: Completed ROI Project – Conversion from Hilton Boston to The Dagny
COMPLETED ROI PROJECT – CONVERSION FROM HILTON BOSTON TO THE DAGNY • Completion: August 1, 2023 • Total Cost: $32MM • Increase Cost over Hilton Renovation: $5MM • Incremental NOI for Independent hotel: $1MM • Exit value increase: $14MM-30MM (50-100 bps on cap rate) +32% +67% REVPAR EBITDA ($MM) $10.
Slide 22: Completed ROI Project – Conversion to Hotel Champlain
COMPLETED ROI PROJECT – CONVERSION FROM HILTON BURLINGTON TO HOTEL CHAMPLAIN Conversion of Hilton Burlington Lake Champlain to Hotel Champlain, Curio Collection by Hilton • Completed in July 2024 at a total cost of ~$9MM • Scope included: ⁻ New community outdoor spaces and upgraded front entrance ⁻
Slide 23: ESG Leadership
ESG LEADERSHIP GRESB ANNUAL RESULTS VS PEER GROUP 2017 2018 2019 2020 2021 2022 2023 DRH GRESB Score 53 75 81 84 86 82 85 Peer Score Average 57 58 69 69 72 65 77 Index to Peer Score Avg 93% 129% 117% 122% 119% 126% 110% 2023 DRH GRESB SCORE & RECOGNITION 4th Consecutive Year Recognized as Sector Lea
Slide 24: Well-Positioned Portfolio: Leisure as a Long-Term Secular Driver
24 Hotels 4,348 Keys 56% of Portfolio by Revenue 13 Independent Hotels 100% Unencumbered by Management WELL-POSITIONED PORTFOLIO: LEISURE AS A LONG-TERM SECULAR DRIVER LUXURY & LIFESTYLE RESORTS URBAN LIFESTYLE HOTELS SAUSALITO, CA L’AUBERGE DE SEDONA THE LANDING RESORT AND SPA SEDONA, AZ SONOMA, CA
Slide 25: Well-Positioned Portfolio: Group and Urban Demand Recovery
COURTYARD MANHATTAN/FIFTH AVENUE COURTYARD MANHATTAN/MIDTOWN EASTHILTON GARDEN TIMES SQUARE CENTRAL 4 Hotels 969 Keys 9% of Portfolio by Revenue 100% Unencumbered by Management WELL-POSITIONED PORTFOLIO: GROUP AND URBAN DEMAND RECOVERY 6 Hotels 3,853 Keys 32% of Portfolio by Revenue Strong Conventio
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