Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (June 2021)
26 slides from Diamondrock Hospitality's investor presentation, Jun 7, 2021
Slide 1: Investor Presentation | June 2021
1The Landing, Lake Tahoe Investor Presentation | June 2021
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 other
Slide 3: Recent Events
3 Recent Events Strategic Transactions Operations • Created $350MM+ Investment Capacity • Pending Sale of The Lexington for $185MM • 6.3% capitalization rate on 2019 Hotel NOI • 5.8% capitalization rate on 2018 Hotel NOI • Sold Frenchman’s Reef for $35MM plus profit participation • Preserves $175MM
Slide 4: DiamondRock at a Glance
4 2020 FINANCIAL SUMMARY(1) Hotels (Rooms) 29 Hotels (~9K Rooms) Stock Price $10.07 2019 Implied EBITDA Multiple 12.1x 2019 Implied NOI Cap Rate 7.6% Enterprise Value per Key $321K . (1) Share price as of 6/3/21 (2) All figures Pro Forma for sale of Frenchman’s Reef (4/30/21) and pending sale of The
Slide 5: DiamondRock Balance Sheet Profile
5 DiamondRock Balance Sheet Profile 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 LEVERAGE BELOW PEER AVERAGE(2) (1) As of 3/31/21 (2) Source: Baird. Net Debt plus preferred / 2019 Consensus EBITDA Note: Leverage calculation is not adjusted for estimated EBITDA cont
Slide 6: Superior Asset Management: Tightest Cost Controls
6 $914 $1,070 $1,593 $1,620 $1,660 DRH XHR SHO PK PEB Superior Asset Management: Tightest Cost Controls Average Monthly AFFO Burn Rate Per Key(1) (2) (1) Q2 2020 through Q1 2021 AFFO per key per month. (2) Third Quarter AFFO excludes noncash income tax valuation allowance recognized in the quarter o
Slide 7: Mitigating Cash Burn and Extending Runway
7 Mitigating Cash Burn and Extending Runway Quarterly Operating Metrics Q4 2020A Q1 2021A Improvement Occupancy 21.8% 26.9% 51 bps Average Daily Rate $200.92 $216.85 8% RevPAR $43.78 $58.34 33% Total Revenue $59.3MM $72.9MM 23% Monthly Burn Rate ($MMs) Q4 2020A Q1 2021A Improvement Q2 2021E(1) Hotel
Slide 8: All Demand Segments Improving
8 All Demand Segments Improving Group • Room Nights Up 71% in Q1 2021 over Q4 2020 • Lead Volumes at 61% of Pre-Pandemic Levels • City-wide room nights up 8.6% over 2019 in Boston, Chicago, and DC • Industry-wide room rates in 2022 up 10% over 2019 Business Transient • Room Nights Up 25% in Q1 2021
Slide 9: Internal Growth Opportunities
9Renaissance Charleston Historic District INTERNAL GROWTH OPPORTUNITIES
Slide 10: $85MM of ROI Projects at 35%+ IRRs
10 $85MM of ROI Projects at 35%+ IRRs (1) Estimated Capital Spend and Estimated Incremental EBITDA based upon management proformas (2) Estimated IRR is calculated assuming a 3-year stabilization period and a 10.0x terminal multiple Property Project EstimatedCapital Spend(1) Estimated Incremental EBI
Slide 11: Up-Branding Projects Create Value In 2022
11 JW Marriott Cherry Creek Up-Branding Projects Create Value In 2022 Sonoma Renaissance Vail Marriott Project Cost $3.6MM IRR 74% Estimated Completion 2021 Project Cost $9.8MM IRR 25% Estimated Completion 2021 Project Cost $8.4MM IRR 88% Estimated Completion 2021 Note: Estimated IRR is calculated a
Slide 12: Sweeping Marriott Deal Increases Portfolio Margins +50bp
12 Sweeping Marriott Deal Increases Portfolio Margins +50bp Vail Marriott Mountain Resort In 2020, DRH entered into an agreement with Marriott to alter several brand and management contracts. Franchise Conversions The following were converted from brand-managed to franchised properties: • Atlanta Ma
Slide 13: Created $350MM+ of New Investment Capacity
13 Created $350MM+ of New Investment Capacity Frenchman’s Reef The Lexington Hotel Transaction Details Proceeds Received $35MM + Promote Closing Date April 2021 Transaction Details(1) Proceeds Received $185MM Estimated Closing Date Q2/Q3 2021 • Sold Frenchman’s Reef to an affiliate of Fortress Inves
Slide 14: Targeting Resort Micro-Markets and Lifestyle Cities
14 Targeting 50 Resort Micro-Markets and Lifestyle Cities Pipeline of Potential Investments Synergies with Existing Portfolio Mostly Off-Market Transactions Heavily Leisure-Oriented
Slide 15: ESG Leadership
15 ESG LEADERSHIP Cavallo Point, the Lodge at Golden Gate Bridge
Slide 16: Board Refreshment Strengthens Governance
16 Board Refreshment Strengthens Governance Michael Hartmeier • Valuable Resource for Mergers & Acquisitions • 25-Years as Hospitality & Gaming Investment Banker • M.B.A. Harvard Business School, B.A. UCLA Tabassum Zalatrowala • Leader in Construction and Design • Advanced Management Program, Harvar
Slide 17: Responsible Corporate Citizen
17 Responsible Corporate Citizen ISS ESG Rankings(2) ISS-ESG Corporate Ranking Environmental Social Governance 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 (1) Lodging Peer Average
Slide 18: DiamondRock Hospitality
DIAMONDROCK HOSPITALITY
Slide 19: Appendix
APPENDIX Havana Cabana Key West
Slide 20: DRH Lifestyle & Independent Strategy
20 DRH Lifestyle & Independent Strategy RATIONALE FOR TARGETING LIFESTYLE HOTELS, INDEPENDENTS, & SOFT BRANDS Target allocation will be achieved through acquisitions of lifestyle hotels, independents and soft brands and dispositions of traditional boxes CURRENT ALLOCATION(1) TARGET ALLOCATION Balanc
Slide 21: Experiential Travel Leads the Way
21 Experiential Travel Leads the Way Motor Vehicles Jewelry and Watches Home Furnishings Experiences 15-YEAR SPENDING CAGR (2004-2019) 0.8% 2.1% 2.2% 4.8% In the past decade, consumer spending in the US has seen a drastic shift toward experiences, rather than products or “things”. DiamondRock’s reso
Slide 22: The Next Generation of Travel
22 The Next Generation of Travel 20% Nearly 20% of Gen-Z respondents said they have stayed at a specific hotel or destination in order to score a positive response from followers on posts on their own social media channels. 25% 25% of millennials posted a trip on social media before booking in order
Slide 23: The Post-COVID-Recovery Traveler
23 The Post-COVID-Recovery Traveler 87% of respondents agree that having a trip planned in the future gives them something to look forward to 76% of respondents are creating their destination wish list for future travel 64% of respondents miss traveling so much that they are willing to give up socia
Slide 24: Resort Thesis Already Proven Successful
24 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 25: Strong Resort Market Presence
25 Strong Resort Market Presence
Slide 26: High Quality Portfolio in Key Gateway Markets
26 High Quality Portfolio in Key Gateway Markets UNDER CONTRACT
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