DiamondRock Hospitality Company (DRH) Q4 2020 earnings summary

Executive summary

• COVID-19 sharply curtailed travel demand; 2020 revenue fell 68.1% YoY, and the portfolio recorded a $396.0M net loss.

• Response measures included suspending hotel operations, reducing costs, preserving liquidity, amending debt covenants, and suspending the common dividend.

• Owned 31 hotels and resorts with 10,102 rooms across 21 markets; Frenchman's Reef remained closed after hurricane damage.

Financial highlights

• FY2020 revenue was $299.5M, down 68.1% YoY; rooms revenue fell 70.2%, food and beverage 68.1%, and other revenue 44.5%.

• Net loss was $396.0M versus net income of $184.2M in 2019; basic and diluted EPS were both -$1.97.

• Adjusted EBITDA was -$64.5M versus $260.4M in 2019; Adjusted FFO available to common stock and unit holders was -$85.3M versus $217.0M.

• Frenchman's Reef impairment was $174.1M; 2019 results included a $144.2M gain on its property insurance settlement.

Outlook and guidance

• 2021 U.S. RevPAR was expected to grow from 2020 levels as vaccines roll out, room supply is disrupted, and travel demand improves; industry profitability was expected to remain challenged.

• Destination hotels were expected to outperform the broader U.S. market; urban recovery was expected to lag, with business travel activity likely to resume in late 2021.

• Expected 2021 capital spending was ~$50M for necessary improvements and selected high-return projects; Frenchman's Reef rebuild alternatives, including a capital partner, were under review.