Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (September 2022)
33 slides from Diamondrock Hospitality's investor presentation, Sep 12, 2022
Slide 1: Investor Presentation September 2022
INVESTOR PRESENTATION SEPTEMBER 2022 11
Slide 2: 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
Slide 3: Key Takeaways and Highlights
KEY TAKEAWAYS AND HIGHLIGHTS UPCOMING ROI PROJECTS ■ Reviewing two opportunities to reposition branded- hotels to either independent or soft-brands in 2023 ■ Adding incremental units to The Landings Lake Tahoe KEY TAKEAWAYS 1. Strong Revenue Pacing: Q3 2022 QTD Revenue +11% vs. +7.4% in Q2 2022 2. R
Slide 4: Operating Results
ne Be i a () OPERATING
Slide 5: 2022 YTD Operating Results
2022 YTD OPERATING RESULTS (1) Comparable operating information excludes the Kimpton Fort Lauderdale Beach Resort as it was not operating in 2019 (2) Preliminary results (3) Q3 QTD includes July and August (4) “Resort/Lifestyle” refers to Luxury Resort, Lifestyle Resort, and Urban Lifestyle hotels (
Slide 6: Operating Gains Across the Portfolio
OPERATING GAINS ACROSS THE PORTFOLIO 6 Q3 2022 QTD REVENUE GROWTH IS EXCEEDING Q2 2022, WHILE FUNDAMENTALS REMAIN STRONG (1) Q3 QTD results are preliminary, comparable operating information excludes the Kimpton Fort Lauderdale Beach Resort as it was not operating in 2019 (2) “Resort/Lifestyle” refer
Slide 7: Consistent Outperformance Against Peers
CONSISTENT OUTPERFORMANCE AGAINST PEERS 13% 9% -2% -10% -17% -17% -25% -27% -29% DRH HOST APLE XHR SHO PEB PK HT RLJ Q2 2022 ADJ. FFO VS PEERS (vs. 2019) 7 Median: -17% Source: Company filings Q2 2022 PEER PERFORMANCE (vs. 2019) DRH XHR HST APLE HT PEB RLJ SHO PK MEDIAN ADR Growth +18% 17% 15% 8% 12
Slide 8: Record Growth in Q2 and Continued Recovery
34% 41% 48% 50% 56% 64% 92% 82% 76% 82% 84% 100% 78% 98% 106%104%107%111%113%109% 0% 20% 40% 60% 80% 100% 120% 140% % o f 2 01 9 Co m pa ra bl e To ta l Re ve nu e -30% -15% -5% 4% 40% 74% 69% 100% 113% -60% -40% -20% 0% 20% 40% 60% 80% 100% 120% 140% Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22
Slide 9: Broad Drivers of Portfolio Growth
BROAD DRIVERS OF PORTFOLIO GROWTH Q2 2022 revenue growth fueled by strong operating performance across both Urban and Resort/Lifestyle destinations 9 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% $- $50 $100 $150 $200 $250 $300 $350 $400 $450 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'2
Slide 10: Why DiamondRock
WHY DIAMONDROCK
Slide 11: DiamondRock Is Positioned for Outsized Growth
DIAMONDROCK IS POSITIONED FOR OUTSIZED GROWTH 2022-2024 SETUP COMPELLING ROI PIPELINE STRONG/IMPROVING PORTFOLIO MARGIN IMPROVEMENT POTENTIAL POWERFUL CAPITAL RECYCLING 1 2 3 4 5 11 THE LODGE AT SONOMA
Slide 12: Positioned for Outsized Growth: 2022-2024
TRANQUILITY BAY RESORT ■ Sonoma Autograph Collection Q3 2021 ■ The Hythe, The Luxury Collection Q4 2021 ■ Margaritaville Beach House Q4 2021 ■ Hotel Clio, The Luxury Collection Q1 2022 ■ Under Review – Independent Conversion 2023 ■ Under Review – Upbranding 2024 12 FOUR HOTEL UP-BRANDINGS 2022-2024
Slide 13: Improving Group Trends
IMPROVING GROUP TRENDS WELL-POSITIONED FOR GROUP RECOVERY ■ GROUPS ARE LOOKING TO MEET Group sales activity for DRH portfolio was 36% ahead of pre-pandemic periods. No demand for “hybrid” meetings ■ AVERAGE EVENT SIZE IS SMALLER… The average lead in Q2’22 was 15-20% smaller than pre-pandemic periods
Slide 14: Recently Completed Projects
RECENTLY COMPLETED PROJECTS PROJECT COST IRR Completed $3.6MM 74% Mar 2022 PROJECT COST IRR Completed $9.8MM 25% Jul 2021 PROJECT COST IRR Completed $8.4MM 88% Nov 2021 JW MARRIOTT CHERRY CREEKSONOMA RENAISSANCE VAIL MARRIOTT 14Estimated IRRs are calculated assuming a 3-year stabilization period and
Slide 15: ROI Pipeline: $90MM+ of ROI Projects at 40%+ IRRs
ROI PIPELINE: $90MM+ of ROI Projects at 40%+ IRRs PROPERTY PROJECT ESTIMATED CAPITAL SPEND(1) UNDERWRITTEN INCREMENTAL EBITDA(1) ESTIMATED IRR(2) ESTIMATED COMPLETION LODGE AT SONOMA Autograph Collection Conversion $9.8 $1.4 25% Completed THE HYTHE, LUXURY COLLECTION Luxury Collection Conversion $8.
Slide 16: Lowest Exposure to Long-Term, Brand-Managed Contracts
LOWEST EXPOSURE TO LONG-TERM, BRAND-MANAGED CONTRACTS % BRAND MANAGED COMPANY PERCENT OF MANAGEMENT CONTRACTS XHR 86% HST 84% PK 81% SHO 59% PEER AVERAGE 57% PEB 25% DRH-Prior 24% DRH-Current 6% BENEFITS OF LOW EXPOSURE Source: Company filings, Robert W. Baird & Co Note: DRH Prior is prior to the di
Slide 17: Proven Track Record of Creating Value
PROVEN TRACK RECORD OF CREATING VALUE 10 HOTEL ACQUISITIONS IN THE PAST 5 YEARS $48M EBITDA AT ACQUISITION $20M incremental EBITDA generated through active asset management and robust ROI projects $68M 2022 FORECASTED EBITDA BE FO RE AF TE R Hotel Clio, A Luxury Collection Hotel Denver, COMargaritav
Slide 18: Strong Balance Sheet with Historically Low Leverage
STRONG BALANCE SHEET WITH HISTORICALLY LOW LEVERAGE ~$400M $72M Corporate Cash $118M Cash at Hotels $200M Undrawn Revolver SIGNIFICANT LIQUIDITY AVAILABLE 18 (1) As of June 30, 2022 (2) 2022E (Net Debt+Preferred)/EBITDA, Source: Baird Securities MAJORITY OF PORTFOLIO IS UNENCUMBERED 75% 26 of 34 Hot
Slide 19: Acquired Kimpton Fort Lauderdale Beach
ACQUIRED KIMPTON FORT LAUDERDALE BEACH (FORT LAUDERDALE, FLORIDA) 19 ACQUISITION DATE 4/1/22 PURCHASE PRICE $35.3 MILLION LOCATION FORT LAUDERDALE, FL NUMBER OF ROOMS 96 KEY DEAL HIGHLIGHTS ■ Off-market acquisition of a lifestyle resort property with dedicated beach amenities and services for guests
Slide 20: Acquired Tranquility Bay Beachfront Resort
ACQUIRED TRANQUILITY BAY BEACHFRONT RESORT (MARATHON, FLORIDA) KEY DEAL HIGHLIGHTS ■ 2021 TripAdvisor Traveler’s Choice Award and consistently among the top hotels in Marathon, FL. ■ 12 oceanfront acres with 1,000 feet of shoreline ■ Strict development ordinances constrain supply and supports the hi
Slide 21: Acquired Henderson Beach Resort
ACQUIRED HENDERSON BEACH RESORT (DESTIN, FLORIDA) ACQUISITION DATE 12/23/21 PURCHASE PRICE $112.5 MILLION LOCATION DESTIN, FL NUMBER OF ROOMS 170 NUMBER OF RMAs: 46 EVENT SPACE 40,000 SQ FT KEY DEAL HIGHLIGHTS ■ AAA Four Diamond Award in 2019. Consistently recognized by Travel + Leisure, US News & W
Slide 22: Portfolio
22 PORTFOLIO Tranquility Bay Resort, Marathon, Florida
Slide 23: DiamondRock at a Glance
DIAMONDROCK AT A GLANCE 9,548 ROOMS 34 PROPERTIES 23 GEOGRAPHIC MARKETS VARIOUS SOURCES OF REVENUE Q1 Q2 Q3 Q4 ■ Contract/0ther ■ Leisure Transient ■ Business Transient ■ Group Note: All operating information is based on 2019 results, pro forma for all acquisitions and dispositions. 23 4.3 AVG TRIPA
Slide 24: Portfolio: Data Table
PORTFOLIO: DATA TABLE 24 24 Note: 2021A results used for Henderson Beach Resort, 2022 Forecast used for Kimpton Goodland, 2019A results used for all other hotels. KEYS REVPAR ($) TREVPAR ($) REVENUE/KEY ($000s) EBITDA/KEY ($000s) % of 2019A EBITDA LUXURY RESORT 930 $281 $489 $179 $48 15% LIFESTYLE R
Slide 25: Portfolio: Operator and Guest Mix Diversification
PORTFOLIO: OPERATOR AND GUEST MIX DIVERSIFICATION Corporate - Group 19% Leisure - Group 7% Leisure - Transient 41% Corporate - Transient 33% 48% LEISURE 52% CORPORATE Note: % of 2019 proforma EBITDA, 2022 projected EBITDA used for Kimpton Ft. Lauderdale 25
Slide 26: Strong Resort Market Presence
STRONG RESORT MARKET PRESENCE 26 OVER 60% OF HOTELS LOCATED IN DESTINATION LEISURE MARKETS MARATHON, FL DESTIN, FL HENDERSON BEACH RESORT CAVALLO POINT TRANQUILITY BAY RESORT VAIL, CO DESTIN, FL THE HYTHE, A LUXURY COLLECTION HOTEL HENDERSON PARK INN FORT LAUDERDALE, FL WESTIN FORT LAUDERDALE BEACH
Slide 27: High Quality Portfolio in Key Gateway Markets
HIGH QUALITY PORTFOLIO IN KEY GATEWAY MARKETS 27 NEARLY 40% OF HOTELS LOCATED IN TOP GATEWAY MARKETS ATLANTA, GA ATLANTA MARRIOTT ALPHARETTA BOSTON, MA SALT LAKE CITY, UTNEW YORK, NY FORT WORTH, TXDENVER, CO CHICAGO, IL CHICAGO MARRIOTT MAGNIFICIENT MILE WASHINGTON, DC WASHINGTON, DC SAN DIEGO, CA H
Slide 28: ESG Leadership
28 ESG LEADERSHIP The Hythe Vail, A Luxury Collection Hotel Vail, Colorado L’Auberge de Sedona Sedona, Arizona
Slide 29: ISS ESG Rankings
ISS ESG RANKINGS(2) ISS-ESG CORPORATE RANKING 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 2ENVIRONMENTAL 2SOCIAL 4GOVERNANCE GRESB ANNUAL RESULTS 2017 2018 2019 2020 2021 DRH GRES
Slide 30: ESG Metric Highlights
ESG METRIC HIGHLIGHTS Female 45% Male 55% GENDER ENVIRONMENTAL SOCIAL GOVERNANCE BOARD COMPOSITION 75% 25% Independent Director Director 75% 25% Male Female • Completed energy-saving pilot programs at two hotels; exploring rollout to remainder of portfolio • Launched composting program at Westin Was
Slide 31: ESG Case Study – Carbon Reduction Pilot
ESG CASE STUDY – CARBON REDUCTION PILOT PILOT DESCRIPTION • Installed sensors throughout the mechanical, electrical, and plumbing systems to gather data and evaluate efficiency and scheduling to identify opportunities for savings • Conducted full analysis of optimization measures • Identifies and pr
Slide 32: Executive Team
EXECUTIVE TEAM Henderson Beach Resort, Destin, FL
Slide 33: 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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