DiamondRock Hospitality Company (DRH) Q4 2012 earnings summary

Executive summary

• Portfolio comprised 27 premium hotels and resorts with 11,590 rooms; five hotels were acquired and four non-core hotels sold during 2012.

• 2012 revenue rose 20.5% to $749.6M, comparable RevPAR increased 5.2%, and net loss widened to $16.6M.

Financial highlights

• Revenue increased $127.4M YoY to $749.6M; rooms contributed $526.1M, food and beverage $180.4M, and other revenue $43.1M.

• Operating income was $31.1M versus $40.1M; interest expense rose to $53.8M from $45.4M, and net loss was $16.6M versus $7.7M.

• Adjusted EBITDA was $189.7M versus $162.1M; Adjusted FFO was $140.2M versus $103.6M, excluding listed unusual and non-cash items.

• Hotel operating expenses rose 17.5% to $555.8M, including acquisition costs; comparable property costs also reflected higher wages, benefits, sales and marketing, and maintenance.

Outlook and guidance

• 2013 outlook anticipated lodging recovery, increased travel demand, and RevPAR gains driven more by room rates than occupancy; group demand could be volatile amid macroeconomic uncertainty.

• Approximately $140M of capital improvements was planned for 2013 and early 2014, with $100M expected from corporate cash; renovation timing and returns remained uncertain.

• The Times Square hotel was expected to open in mid-2014 at a fixed contractual purchase price of approximately $128M; acquisition remained subject to project completion and closing conditions.