Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (November 2023)
30 slides from Diamondrock Hospitality's investor presentation, Nov 14, 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION NOVEMBER 2023 TRANQUILITY BAY BEACHFRONT RESORT
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: Why DiamondRock?
WHY DIAMONDROCK? 1 2 3 4 5 High Quality & Geographically Diverse Hotels Track Record of Driving Internal and External Growth Robust Outlook For Group & Leisure Demand ESG Leadership Strong Liquidity and Flexible Balance Sheet Robust ROI Pipeline and Highly Liquid Portfolio 6 Experienced Management7
Slide 4: DiamondRock at a Glance
DIAMONDROCK AT A GLANCE DIVERSIFIED GEOGRAPHY DIVERSIFIED PROPERTIES FINANCIAL SUMMARY Net Debt2 to TTM EBITDA Total Debt1 $1.2B 3.8x Total Debt to Gross Book Value 29% TTM Revenue $1.1B TTM Corporate Adj. EBITDA $282MM Q3 2023 PORTFOLIO 9,724 36 25 ROOMS GEOGRAPHIC MARKETS PROPERTIES 3. 2022 EBITDA
Slide 5: Well Positioned Portfolio: Leisure as a Long-Term Secular Driver
24 Hotels 4,312 Keys 57% of Portfolio by Revenue 15 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 6: 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 31% of Portfolio by Revenue Strong Conventio
Slide 7: Q3 2023 Performance Highlights
Q3 2023 PERFORMANCE HIGHLIGHTS Q3 RESULTS KIMPTON HOTEL PALOMAR PHOENIX 2023 Comparable Results Q1 Q2 Q3 RevPAR vs 2022 16.8% 0.6% -1.1% RevPAR vs 2019 13.7% 8.0% 7.6% Total Revenue Up 12% vs 2019 and Flat to 2022 RevPAR Ahead of Expectations Q3 Comparable Results: • Revenue: $277.1MM, +0.1% vs 2022
Slide 8: Improving Leisure Demand
IMPROVING LEISURE DEMAND Resort Revenue Still 25%+ above 2019, Q3 Resorts Adj. Hotel EBITDA Up 23% vs 2019 Resort RevPAR vs 2022 Resort RevPAR vs 2019 THE LANDING RESORT & SPA TRANQUILITY BAY RESORT THE HYTHE, A LUXURY COLLECTION HOTEL Q3 TRevPAR vs 2022 +15.2% +10.4% +9.3% 500 bps improvement from
Slide 9: Strong Group Pace – Favorable Footprint
STRONG GROUP PACE – FAVORABLE FOOTPRINT 2023 Comparable Group Revenue Expected to Exceed 2019 (Rates Up, but Room Nights ~10% below 2019) 2024 Group Revenue Pace Up 23% vs 2022 DRH’s Geographic Footprint Well-Positioned for Group Recovery MARKET % of 2022A EBITDA 2019 2022 2023E 2024E 2025E CHICAGO
Slide 10: Modest Gains in Business Transient
MODEST GAINS IN BUSINESS TRANSIENT Q3 Business Transient Demand Up 5.9% vs 2022 - Modest Gains, Though Still Below Prior Peak Corporate Transient Expected to Continue to Improve, Albeit Slowly 10 • Working Closely with Operators • Channel Shift • Occupancy vs Rate Trade Offs Business Travel (GDS) Sh
Slide 11: Drivers of U.S. Leisure Hotel Growth – Demographic Shifts
DRIVERS OF U.S. LEISURE HOTEL GROWTH – DEMOGRAPHIC SHIFTS 11 MORE PEOPLE MORE FLEXIBILITY MORE EXPERIENTIAL EXTRAORDINARY LEISURE DEMAND Per CBRE, population growth in two of the heaviest traveling segments (Millennials & Baby Boomers) with more flexibility, more money, and desire for more experienc
Slide 12: Smart Market Allocation
SMART MARKET ALLOCATION 70% 75% 80% 85% 90% 95% 100% 105% 110% DRH APLE HST XHR PK RLJ SHO PEB 2023E 2024E Note: Consensus EBITDA estimates are per Factset database as of 10/30/23, average excludes DRH INDEX YEAR 2019 2023 Average 86% 2024 Average 87% EBITDA CONSENSUS ESTIMATES INDEXED TO 2019 12
Slide 13: Consistent Outperformance Against Peers
CONSISTENT OUTPERFORMANCE AGAINST PEERS Q3 2023 HOTEL EBITDA GROWTH VS PEERS (vs. Q3 2019) Average1: -5% Source: Company Filings 1. Average excludes DRH 2. APLE no longer providing 2019 comparable results Q3 2023 PEER PERFORMANCE (vs. Q3 2019) DRH AVG1 PEB XHR HST APLE2 RLJ SHO PK ADR Growth +17% 13
Slide 14: High Quality, Liquid Portfolio
HIGH QUALITY, LIQUID PORTFOLIO BRAND MANAGEMENT EXPOSURE COMPANY PERCENT OF MANAGEMENT CONTRACTS XHR 84% HST 87% PK 90% SHO 73% PEER AVERAGE 84% PEB 24% DRH 6% ■ Terminable at will ■ Enhanced asset liquidity ■ Superior cost controls ■ 50-100bp cap rate improvement BENEFITS OF LOW EXPOSURE ■ Strong r
Slide 15: No Material Near-Term Maturities, Flexible Balance Sheet
NO MATERIAL NEAR-TERM MATURITIES FLEXIBLE BALANCE SHEET Note: Mortgages reflect balance at scheduled maturity, $500MM+ Total Available Liquidity 29% Total Debt to Gross Book Value 3.8x Net Debt to TTM EBITDA Note: As of September 30, 2023, excludes cash held at hotels DEBT MATURITY SCHEDULE ($MM) SI
Slide 16: Demonstrated Track Record of Driving Growth
DEMONSTRATED TRACK RECORD OF DRIVING GROWTH 16 27.4% 42.8% 2 $500MM+ Invested in ROI Projects Over the Last 5 Years Q3’23 RevPAR Increase vs 2019 for Last 4 Repositioned Hotels1 Q3’23 Hotel Adj. EBITDA Increase vs 2019 for Last 4 Repositioned Hotels1 We continue to drive the identification and execu
Slide 17: Completed Repositionings
March 2022 July 2021 November 2021 JW MARRIOTT CHERRY CREEKSONOMA RENAISSANCE VAIL MARRIOTT November 2021 SHERATON KEY WEST COMPLETED REPOSITIONINGS HILTON BOSTON August 2023 17
Slide 18: ROI Case Studies - The Dagny
ROI CASE STUDIES - THE DAGNY • Completion: August 1, 2023 • Total Cost: $32MM • Increase Cost over Hilton Renovation: $5MM • Incremental NOI for Independent hotel: $1MM • Exit value increase: $14MM-30MM (50-100 bps on cap rate) +36% +83% REVPAR EBITDA ($MM) $9.2 $16.8 2023F 2027F $211 $287 2023F 202
Slide 19: ROI Case Studies – The Lodge at Sonoma
ROI CASE STUDIES – THE LODGE AT SONOMA ADR +49%+27% +24% REVPAR EBITDA ($MM) Conversion from Sonoma Renaissance to The Lodge at Sonoma, Autograph Collection Cottage enhancements, chef restaurant, guest room showers, and landscaping enhancements $7.2 $8.9 TTM Q3'19 TTM Q3'23 $223 $283 TTM Q3'19 TTM Q
Slide 20: ROI Case Studies – The Hythe Vail
ROI CASE STUDIES – THE HYTHE VAIL, A LUXURY COLLECTION RESORT +51%+39% +70% Conversion from Vail Marriott to The Hythe, a Luxury Collection Resort Multi-year comprehensive renovation, new spa, new sense of arrival and F&B experiences ADR REVPAR EBITDA ($MM) $10.0 $17.1 TTM Q3'19 TTM Q3'23 $181 $251
Slide 21: ROI Case Studies – Margaritaville Beach House
ROI CASE STUDIES – MARGARITAVILLE BEACH HOUSE +56%+60% +92% ADR REVPAR EBITDA ($MM) $6.0 $11.5 TTM Q3'19 TTM Q3'23 Conversion from Sheraton Key West to Margaritaville Beach House, Key West Expanded bar, renovated rooms, added pool entertainment, and new sense of arrival $203 $325 TTM Q3'19 TTM Q3'23
Slide 22: 2023 ROI Projects in Progress
2023 ROI PROJECTS IN PROGRESS Conversion to Curio brand and a new chef-driven restaurant • Est. Completion: Summer 2024 • Total Cost: $8.6MM • Stabilized Yield on Cost: 10% • Adds an additional lifestyle hotel to the portfolio • Expected to enhance exit value Repositioning and rebranding the hotel t
Slide 23: Potential Longer Term Capital Projects
COURTYARD DENVER DOWNTOWNLAKE AUSTIN SPA RESORT ORCHARDS INN POTENTIAL LONGER TERM CAPITAL PROJECTS Repositioning to Integrate with L’Auberge de Sedona Exploring Adding More Waterfront Guest Rooms Courtyard Denver Downtown Franchise Expiration in 2027 Potential Upbranding and Expansion 23
Slide 24: Potential Longer Term Capital Projects
THE LANDING WESTIN BOSTON SEAPORT HENDERSON PARK INN POTENTIAL LONGER TERM CAPITAL PROJECTS The Westin Boston Seaport District Franchise Expiration in 2026 Value Creation Opportunity Currently 37 Rooms Entitled for 135 Ocean- Front Units Exploring Adding 20% More Guest Rooms 24
Slide 25: Potential Longer Term Capital Projects
CAVALLO POINTTRANQUILTY BAY CHICO HOT SPRINGS POTENTIAL LONGER TERM CAPITAL PROJECTS Exploring Installation of a New Marina Exploring Adding New Cabins Exploring Spa Expansion 25
Slide 26: Recent Acquisitions Outperforming Underwriting
RECENT ACQUISITIONS OUTPERFORMING UNDERWRITING HENDERSON PARK INN (DESTIN, FL) TRANQUILITY BAY (MARATHON, FL)KIMPTON FORT LAUDERDALE BEACH (FT LAUDERDALE, FL)LAKE AUSTIN SPA RESORT (AUSTIN, TX) 7 HOTELS ACQUIRED IN THE PAST TWO YEARS $440MM+ CAPITAL DEPLOYED 11.6X 2022 EBITDA MULTIPLE OVER ACQUISITI
Slide 27: Acquired Chico Hot Springs Resort
ACQUIRED CHICO HOT SPRINGS RESORT ACQUISITION DATE 8/1/23 PURCHASE PRICE $33.0 MILLION LOCATION Paradise Valley/Yellowstone, MT NUMBER OF ROOMS 117 NUMBER OF ACRES 748 KEY DEAL HIGHLIGHTS ■ Acquisition of an authentic western-style, geothermal hot spring resort located in Paradise Valley, a major ri
Slide 28: ESG Accomplishments – GRESB Results
ESG ACCOMPLISHMENTS – GRESB RESULTS 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 Average 93% 129% 117% 122% 119% 126% 110% 2023 DRH GRESB SCORE & RECOGNITION 4th Consecutive Year
Slide 29: ESG Metrics
ESG METRICS 13% 18% 27%ENERGY REDUCTION Reduction in Energy Intensity (kWh per ft2) Since 2019 WATER REDUCTION Reduction in Emissions Intensity (kgCO2e per ft2) Since 2019 Increase in % Renewables Since 2019 Common Practices at Properties • Energy Star Portfolio Manager Benchmarking • Preventive Mai
Slide 30: Extensive Management and Hospitality Experience
EXTENSIVE MANAGEMENT AND HOSPITALITY EXPERIENCE MARK W. BRUGGER CO-FOUNDER PRESIDENT, CEO AND DIRECTOR • Co-founded DRH in 2004 and successfully led its IPO in 2005 • Named Forbes’ list of America’s Most Powerful CEOs 40 and Under and a finalist for the E&Y Entrepreneur of the Year Award • Extensive
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