DiamondRock Hospitality Company (DRH) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues increased 6.2% year-over-year to $309.3 million, driven by higher occupancy and ADR, especially at resort and urban hotels, with comparable RevPAR up 2.2% and adjusted EBITDA up 7.8%.

• Net income for Q2 2024 was $22.1 million, down from $36.5 million in Q2 2023, primarily due to $20.4 million in severance costs from leadership changes.

• Leadership transition included a new CEO, CFO, President, and General Counsel, with significant severance expenses recognized in Q2.

• Implementation of Oracle Cloud-based ERP and enterprise analytics systems streamlined operations and improved benchmarking.

• Share repurchases totaled 2.8 million shares at an average price of $8.36, totaling $23.5 million.

Financial highlights

• Comparable RevPAR grew 2.2% year-over-year, with total RevPAR up 4.5%; Q2 ADR was $294.55 and occupancy 77.8%.

• Adjusted EBITDA for Q2 2024 was $92.5 million, up from $85.8 million in Q2 2023; adjusted FFO per share rose 6% to $0.34.

• Six-month total revenues grew 5.8% to $565.7 million, with adjusted EBITDA up 3.5%.

• Group revenue rose 7.2% and banquet/catering/AV revenue increased over 20% year-over-year.

• Comparable hotel operating expenses increased 4.5%; wages and benefits up 7%; insurance expense declined 14.5%.

Outlook and guidance

• Full-year 2024 comparable RevPAR growth expected at 1.5%–3.0%; total RevPAR growth at 3%–4.5%.

• Adjusted EBITDA guidance raised to $278–$290 million; adjusted FFO per share to $0.95–$1.00.

• 2024 capex expected at $90–$100 million, with $35.8 million invested in H1.

• Q3 RevPAR growth expected to be slightly higher than Q2.

• No additional severance expenses expected in H2 2024.