Diamondrock Hospitality Company · NASDAQ:DRH
Diamondrock Hospitality — Investor Presentation (November 2020)
34 slides from Diamondrock Hospitality's investor presentation, Nov 17, 2020
Slide 1: Investor Presentation
November 2020 1 The Landing, Lake Tahoe Investor Presentation |
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 s
Slide 3: Key Takeaways
Key Takeaways 27 of 30 Hotels Currently Open (88% of Rooms) 2 $435MM of Available Liquidity(1) 3 Q3 Burn Rate 14% Better Than Q2 Burn Rate 4 25 Months of Cash Runway(1) Sweeping Agreement With Marriott International 3 (1) As of 9/30/2020 5
Slide 4: Recent Events
Recent Events October 2020 • Total Revenues up 17% over September Results • Preliminary October Profitability • 19 Hotels GOP Positive vs. 18 Hotels in September • 12 Hotels EBITDA Positive vs. 11 Hotels in September September 2020 • Reopened Chicago Marriott (1,200 rooms) and Westin Boston (793 roo
Slide 5: DiamondRock at a Glance
DiamondRock at a Glance 2019 FINANCIAL SUMMARY(1) TOP TIER PORTFOLIO 2020 YTD ADR(2) Hotels (Rooms) 31 Hotels (>10K Rooms) $242 $225 $209 $206 $204 $196 Total Revenue $932.1MM $182 $153 Room Revenue $656.3MM $126 $125 $116 Hotel EBITDA Margin 29.6% Outstanding Debt $1.09B Net Debt/EBITDA 3.7x PEB HS
Slide 6: DiamondRock Balance Sheet Profile
DiamondRock Balance Sheet Profile FUTURE DEBT MATURITIES (IN $MM)(1) PRO FORMA FUTURE DEBT MATURITIES (IN $MM)(2) $640.0 $584.3 $523.3 $423.3 $284.3 $290.0 $223.3 $179.6 $45.3 $2.9 $2.9 2020 2021 2022 2023 2024 2025 2020 2021 2022 2023 2024 2025 $380MM Estimated year end liquidity available in cash
Slide 7: Operations Update
OPERATIONS UPDATE 7 Renaissance Charleston Historic District
Slide 8: New Franchise/Management Deal with Marriott
New Franchise/Management Deal with Marriott On 8/31/20, DRH entered into an agreement with Marriott to alter several brand and management contracts. Selected terms: Franchise Conversions The following hotels will be converted from brand- managed to franchised properties with agreed to renovation sco
Slide 9: Short Term Agreements Driving Value
Short Term Agreements Driving Value Only two long term management agreements in DRH portfolio 2019 2020 33% Encumbered(1) Unencumbered 29% Highest percent of terminable9 Hotels agreements among any full-service lodging REIT peer Note: Based on 2019 EBITDA (1) Agreements terminable at will. 9
Slide 10: Resuming Hotel Operations
Resuming Hotel Operations (1) September Current Boston Westin July Chicago Marriott Nearly 90% of total Boston Hilton Burlington Hilton June rooms currently Lodge at Sonoma (1) Denver Courtyard operating Denver JW Marriott 15 The Gwen Operating Palomar Phoenix Hotel Emblem Urban Havana Cabana Hotels
Slide 11: Rebuilding Profitability
Rebuilding Profitability Number of Hotels with 18 19 14 14 Positive GOP 10 5 7 April May June July August September October(1) Number of Hotels with 10 12 Positive EBITDA 6 6 8 2 4 April May June July August September October (1) 11 (1) Preliminary Results
Slide 12: Mitigating Cash Burn and Extending Runway
Mitigating Cash Burn and Extending Runway Quarterly Operating Metrics Q2 2020A Q3 2020A Improvement Occupancy 8.5% 18.6% +119% Better Average Daily Rate $175.75 $201.81 +15% Better RevPAR $14.99 $37.55 +151% Better Total Revenue $20.4MM $50.1MM +146% Better Monthly Burn Rate ($MMs) Q2 2020A Q3 2020A
Slide 13: Cash Burn Steadily Improving
Cash Burn Steadily Improving DRH Rolling Three Month Burn Rate(1) (17.5) (16.5) (15.5) (14.4) (13.5) - (14.0) (12.4) (11.5) (10.9) (10.0) (8.0) - (8.5) Jun-20 Jul-20 Aug-20 Sep-20 Dec-20E Hotel NOI +Corporate G&A Cash Burn Before CapEx Average Monthly AFFO Burn Rate Per Key(2) $2,007 $1,803 $1,867 $
Slide 14: Hotel Occupancy Gradually Rebuilding
Hotel Occupancy Gradually Rebuilding Trailing 7 Day Average Portfolio Occupancy 90% 80% 70% 60% 50% 43.2% 40% 30% 24.4% 20% 21.4% 10% 0% Mar Apr May Jun Jul Aug Sep Oct 2020 Total Portfolio 2020 Open Portfolio 2020 Open Resorts 14
Slide 15: Group Cancellations Slowing
Group Cancellations Slowing Four Weeks Ending 15
Slide 16: Growth Opportunities
GROWTH OPPORTUNITIES 16 Hotel Emblem
Slide 17: Positioned To Capitalize Upon Distress On The Horizon
Positioned To Capitalize Upon Distress On The Horizon Select Service 11 Full Service Percent of Loans By and Resorts 11 $98 Billion Original Loan-to-Value in 8,500+ 65-70% >70% CMBS Hotel Full Service 17% 13% Loans Resorts 54% 15% 2020-2023 Maturities: $24 Billion (over 2,000 loans) 17 Source: Trepp
Slide 18: Growth Oriented ROI Projects
Growth Oriented ROI Projects • Converted from Sheraton in mid-2020 along with $12MM Barbary property renovation Beach • Reduce operating expenses $1.5MM Conversion • IRR 20% plus JW Marriott • Negotiate with Marriott Branding Regulation in 2020 Denver • Planning to convert to Luxury Collection in 20
Slide 19: ROI Projects Drive Shareholder Value
ROI Projects Drive Shareholder Value UPCOMING ROI PROJECTS Estimated Estimated Estimated Estimated Property Project (1) Incremental Incremental (3) Capital Spend (1) (2) IRR EBITDA Value Boston Hilton Downtown 29 Additional Guestrooms $6.0 $1.0 $10.0 33% Hilton Burlington F&B Renovation $1.5 $0.4 $4
Slide 20: Corporate Citizenship
CORPORATE CITIZENSHIP 20 Cavallo Point, the Lodge at Golden Gate Bridge
Slide 21: Responsible Corporate Citizen
Responsible Corporate Citizen GRESB (2) ISS-ESG Corporate ISS ESG Rankings Annual Results Ranking 2016 2017 2018 2019 Environmental Currently DRH GRESB 50 53 75 81 Score Ranked Peer Score 51 57 58 69 Average(1) Index to Peer #2 98% 93% 129% 117% Score Average Social of 174 US Real Estate Companies G
Slide 22: DiamondRock Hospitality
DIAMONDROCK HOSPITALITY
Slide 23: Appendix
APPENDIX Havana Cabana Key West
Slide 24: Research Demonstrates Small Resorts Outperform
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 2009
Slide 25: DRH Lifestyle & Independent Strategy
DRH Lifestyle & Independent Strategy (1) CURRENT ALLOCATION RATIONALE FOR TARGETING LIFESTYLE HOTELS, INDEPENDENTS, & SOFT BRANDS Lifestyle, Independents, and Soft Brands Balances DRH’s Greater opportunity 22% existing portfolio for smaller deals Traditional Brands 78% Reduces reliance Cultural shif
Slide 26: Experiential Travel Leads the Way
Experiential Travel Leads the Way 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 resort strategy capitalizes on this trend by offering the once-in-a-lifetime travel experiences that consumers are willi
Slide 27: The Next Generation of Travel
The Next Generation of Travel (1) GENERATIONAL TRENDS SOCIAL MEDIA FUELED TOURISM The future of travel will be dictated by the trends we see in Millennials (Generation Y) and Generation Z – who now account for 42.3% of the US population. These young generations have introduced the importance of soci
Slide 28: Resort Thesis Already Proven Successful
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 & Spa
Slide 29: Strong Resort Market Presence
Strong Resort Market Presence Approximately 1/3 of portfolio located in destination resort markets. 29
Slide 30: High Quality Portfolio in Key Gateway Markets
High Quality Portfolio in Key Gateway Markets Approximately 2/3 of portfolio located in top, gateway markets. 30
Slide 31: Non GAAP Measures
Non GAAP Measures The Company considers the following non-GAAP financial measures to be useful to investors as key supplemental measures of operating performance: EBITDA, EBITDAre, Adjusted EBITDA, Hotel EBITDA and Hotel Adjusted EBITDA. These measures should not be considered in isolation or as a s
Slide 32: Pro Forma Net Debt / 2019 EBITDA Reconciliation
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 mortga
Slide 33: EBITDA and Hotel Adjusted EBITDA Reconciliation
EBITDA and Hotel Adjusted EBITDA Reconciliation Year Ended December 31, 2019 Net income $184,211 Interest expense 46,584 Income tax expense 22,028 Real estate related depreciation and amortization 118,110 EBITDA $370,933 Corporate expenses 28,231 Interest and other income, net (1,197) Loss on early
Slide 34: 2019 Adjusted EBITDA Reconciliation
2019 Adjusted EBITDA Reconciliation Year Ended December 31, 2019 Net (loss) income 184,211 Interest expense 46,584 Income tax (benefit) expense 22,028 Real estate related depreciation and amortization 118,110 EBITDA/EBITDAre 370,933 Non-cash lease expense and other amortization 7,013 Professional fe
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