DiamondRock Hospitality Company Q4 FY2025 earnings call

• Bill McCartin will retire from the board, Bruce Wardinsky to be new chairman. - 2025 was exciting, celebrated 20th year as public REIT, achieved company record FFO per share and outperformed peer average. - Introduced Diamond Rock 2.0 strategy, focus on discipline capital allocation. - Five-year CapEx program: annually 7% - 9% of total revenues, about 80 - 100 million dollars per year, expect 4 - 5 meaningful renovation projects annually. - Capital recycling: transaction market showing improvement, looking for value creation opportunities, likely net seller of hotels in 2026. - 2026 view: benefit from easier comps, holiday calendar, special events, higher-end portfolio benefits from affluent travelers, spring break demand developing favorably.

For the full year 2025, corporate adjusted EBITDA was $297.6 million, adjusted FFO per share was $1.08, free cash flow per share was 69 cents (6% increase over 2024, 22% increase since 2023). Full year comparable total rev par grew 1.2%, comparable hotel adjusted EBITDA grew 1.1%. Fourth quarter corporate adjusted EBITDA was 71.9 million, adjusted FFO per share was 27 cents. By segment, business transient revenue grew 2.5%, group revenue declined 1%, leisure transient revenue declined 2.5%. Urban portfolio accounts for 62% of annual EBITDA, delivered 0.3% RevPar and total RevPar growth in Q4. Resorts RevPAR declined 1.8%, total RevPAR increased 1.1%. Food and beverage revenues increased 1.4%, margins expanded by 120 basis points.

• 2026 expected REVPAR growth 1 - 3%, total REVPAR growth 25 basis points higher. - Adjusted EBITDA range $287 - $302 million, FFO per share range $1.09 - $1.16. - Expect to spend $80 - $90 million on capital expenditures in 2026. - First quarter 2026 REVPAR essentially flat to 2025, second and fourth quarter group pace growth, third quarter transient to offset group headwind.

• Federal government shutdown impacted Q4 performance. - Uncertainty in macroeconomic environment affecting hotel performance. - Uncertainty around franchise expiration and contractual deals. - Volatility in interest rates and transaction markets.

Q: Smedes Rose with Citi asked about labor and benefits in 2026 and New York exposure.

A: Labor costs up around 3% in 2026, New York contracts represent 7% of overall labor costs. First quarter weakest, remainder of quarters group pace weighted, third quarter transient to offset group headwind.

Q: Cooper Clark with Wells Fargo asked about franchise expiration and World Cup.

A: Still working on finalized contractual deal for franchise expiration, World Cup rate strength early, volume not yet, 30 - 60 days out will have more clarity.

Q: Michael Bellisario with Baird asked about out-of-room spend and group up.

A: Cautiously optimistic on out-of-room spend, group leads up 10% from last year, optimistic for recovery.

Q: Chris Will Ronca with Deutsche bank asked about CapEx and renovation ramp up.

A: CapEx works with brand partners, value engineering expenditures, Sedona has 25 - 50 basis points REVPAR growth tailwind, Havana Cabana EBITDA to recover.

Q: Dwayne Fenigworth with Evercore ISI asked about transaction markets and capital structure.

A: Transaction market encouraging, capital structure clean, preferreds payoff provides 3 cent tailwind to FFO per share.

Q: Austin Werschmitt with KeyBank Capital Markets asked about debt capital and share repurchase.

A: Debt capital availability improving, inclination to lean into share repurchases, Sedona has REVPAR tailwind.

Q: Rich Hightower with Barclays asked about ROE profile and dividend payout.

A: Need to surpass broader equity rate average, goal to spread NOLs out, take 3 - 4 years to revert to normalized payout ratio.

Q: Christopher Darling with Green Street asked about consumer trends and business transient.

A: Affluent travelers likely to continue, business transient mid-single-digit growth, government business low single-digit contribution.

Q: Patrick Scholes with Truce asked about CapEx feedback.

A: For independents no need to run by others, for franchised/managed look at brand standards but value engineer, major brands happy with spending but focus on equitable treatment.