DiamondRock Hospitality Co Q1 FY2025 earnings call

• RevPAR Performance: Urban portfolio drove 5% RevPAR growth with strong group and business transient segments. Resort portfolio had RevPAR softness due to calendar shift, but outside Florida saw growth. • Renovation Projects: Completed renovations at Westin San Diego Bayview, Bourbon Orleans, and Hilton Garden in Times Square; rebranding of Sedona Orchards to Cliffs Sedona is underway. • Transactions: Sold Weston City Center Hotel and is pursuing opportunistic dispositions and accretive recycling. • Market Trends: Urban business transient demand up, group lead volume high but conversion paused in March; resort demand affected by holiday shifts but long-term drivers remain strong.

Comparable RevPAR increased 2% over 2024, and total RevPAR increased 1.6%. The urban portfolio was the primary driver of RevPAR growth, up 5% with strong contributions from group and business transient segments. Food and beverage revenue at urban hotels declined 3.3% year over year, but excluding the Chicago Marriott, it increased 5.5%. The resort portfolio had comparable RevPAR decline of 2.1% over 2024, total RevPAR down slightly by 40 basis points. Florida assets saw first-quarter RevPAR down 5.9% and total RevPAR down 4%, while outside Florida, resorts saw RevPAR increase 1.7%. Hotel adjusted EBITDA in the first quarter was $61.3 million, reflecting 2.2% growth over 2024. Corporate adjusted EBITDA was $56.1 million flat to last quarter. Adjusted FFO was $0.19 per share, $0.01 or 5.6% over 2024. Free cash flow per share in the trailing four quarters increased 10% to 63¢ per share.

• FFO per share guidance remains unchanged at a range of $0.94 to $1.06 per share. • Full-year 2025 RevPAR outlook revised to a range of minus 1% to plus 1% growth. • Corporate adjusted EBITDA expected to be in the range of $270 to $295 million, with the midpoint at $282.5 million, including a $3 million savings from insurance placement. • Adjusted FFO expected to be in the range of $198 to $223 million. • Assumes credit facility recast to address debt maturities, lowering interest expense outlook by approximately $3 million.

• Macro economic uncertainty impacting group booking conversion. • Tariffs and trade policies potentially increasing renovation costs. • Soft foreign visitation possibly affecting resort demand. • Potential delay in economic improvement affecting group revenue realization.

Q: Please share preliminary portfolio-wide RevPAR for April?

A: Briony Quinn stated that the preliminary April is showing a little better than 2% growth.

Q: Would renovation costs go up due to tariffs?

A: Jeff Donnelly responded that it depends on the type of renovation, with some orders on hold and stuff on order likely to come in before tariffs are reinstituted, while stuff slated to start in November is paused to assess the landscape.

Q: Profile of the average group?

A: Jeff Donnelly said the group profile ranges from associations to corporate, with the average hotel being 200 - 250 rooms, and groups tending to be shorter and book closer in.

Q: Average booking window for group?

A: Jeff Donnelly mentioned that the booking window for smaller groups is 4 - 6 months out and for larger groups is about 8 - 12 months out.

Q: Wages and benefits growth expectation?

A: Briony Quinn said wages and benefits came in as expected, with full-year growth expected to be around 2% to 3.5%.

Q: Competitive supply growth?

A: Jeff Donnelly said 40% - 50% of markets have little to no supply growth, and other markets have development that doesn't pencil, with brands focusing on acquisitions.