DiamondRock Hospitality Company (DRH) Q4 2019 earnings summary

Executive summary

• FY19 delivered 29.7% total shareholder return, outperforming the Morgan Stanley REIT Index by 880 bps and the lodging REIT index by 2,040 bps.

• The 31-hotel, 10,102-room portfolio recorded modest comparable operating growth amid slower lodging fundamentals; conservative leverage and active renovations supported the strategy.

Financial highlights

• Revenue rose 8.6% to $938.1M; excluding non-comparable hotels and periods, revenue increased 2.9%.

• Net income was $184.2M, or $0.91 basic EPS, versus $87.8M and $0.43 in 2018; FY19 included a $144.2M property insurance settlement gain.

• Adjusted EBITDA was $260.4M versus $254.1M; reported EBITDA was $370.9M, including the insurance gain.

• Comparable occupancy was 79.0%, ADR $238.52 and RevPAR $188.51, up 0.1%, 0.8% and 0.9%, respectively.

• Dividends declared remained $0.50 per common share for FY19; quarterly payments were $0.125 per share/unit.

Outlook and guidance

• FY20 RevPAR growth was expected to decelerate modestly, with travel demand risks from Coronavirus and the U.S. presidential election.

• Group booking pace entering 2020 was 14.1% ahead YoY by revenue; group revenues represented approximately one-third of total rooms revenue.

• FY20 operating-hotel capital improvements were projected at $90M–$100M, with modestly lower renovation disruption than in 2019.

• Destination resorts were expected to outperform broader U.S. lodging, while urban hotels were positioned to benefit from favorable citywide event calendars.

• Rising labor costs were expected to challenge industry profit growth; operating efficiencies remained a focus with hotel managers.