• Comparable Total RevPAR: Increased 5.5% over 2023.
• Urban Hotels RevPAR: Increased 8.2% with a 5.4% increase in average daily rate.
• December RevPAR Growth: Up 13.2% in urban markets.
• Resort Hotels RevPAR: Declined 150 basis points in the quarter.
• Florida Resorts RevPAR: Declined 5.8%.
• Chico Hot Springs RevPAR: Grew nearly 18% with over 12% ADR growth.
• Group Room Revenues: Increased 8.1% over 2023.
• Hotel Adjusted EBITDA: $75.9 million, reflecting 16.4% growth over 2023.
• Corporate Adjusted EBITDA: $68.7 million, representing almost 20% growth over 2023.
• Adjusted Funds from Operations (AFFO): $0.24 per share, 33% increase over 2023.
• Common Dividends for 2024: Total of $0.32 per share.
• 2025 Expected RevPAR Growth: 1% to 3% for the year.
• 2025 Corporate Adjusted EBITDA Guidance: $275 million to $300 million.
• 2025 Adjusted FFO Guidance: $199 million to $224 million.
• 2025 Adjusted FFO per Share Guidance: $0.94 to $1.06.

• Warning! GuruFocus has detected 2 Warning Sign with DRH.

Release Date: February 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Diamondrock Hospitality Co (NYSE:DRH) reported a stronger-than-expected fourth-quarter performance with a 5.5% increase in comparable total RevPAR over 2023.
• Urban hotels showed significant growth with an 8.2% increase in RevPAR, driven by a 5.4% increase in average daily rate.
• Group room revenues increased by 8.1% over 2023, with urban hotels seeing a 10.2% increase, boosting total food and beverage revenue by 6.4%.
• Hotel adjusted EBITDA for the fourth quarter was $75.9 million, reflecting a 16.4% growth over 2023, with corporate adjusted EBITDA growing by nearly 20%.
• The company plans to increase its regular quarterly dividend to $0.08 per share in 2025, up from $0.03 per share in 2024.

Negative Points

• Fourth-quarter results at resort hotels were mixed, with a 150 basis point decline in RevPAR, particularly impacted by Florida's market challenges.
• The company faces upcoming debt maturities, including three mortgage loans totaling nearly $300 million in 2025 and a $300 million term loan in early 2026.
• Florida resorts experienced a 5.8% decline in RevPAR, attributed to post-pandemic challenges and market headwinds.
• The company anticipates a $1.2 million EBITDA disruption in the first half of 2025 due to the redevelopment of Orchards Inn Sedona.
• Diamondrock Hospitality Co (NYSE:DRH) expects RevPAR growth to be modest at 1% to 3% for 2025, with continued softness in leisure markets.

Q & A Highlights

Q: Can you give us a sense of your leisure, business travel, and group revenue growth expectations that aggregate up to the 1% to 3% RevPAR guide? A: Jeff Donnelly, CEO: A lot of it relates to our footprint. In Florida, where our properties are more popular priced, we've seen more weakness. Outside Florida, our properties are more luxury-oriented, facing fewer headwinds. We rank group as better than business travel, which is better than leisure. We budget more by hotel location than by segment.

Q: What are you seeing today on the transaction front, and how competitive was the process for the Westin City Center? A: Justin Leonard, COO: Transaction volume is down about 75% from pre-COVID levels. Few transactions are getting done, and there's a significant bid-ask gap. We haven't seen much forced selling, and the market remains quiet, similar to six months ago.

Q: Does your 2025 guide assume further hotel-level operating efficiencies are achieved? A: Justin Leonard, COO: We expect a slowing of expense growth, particularly in labor, as our group pace has slowed. We've focused on productivity and implemented business intelligence tools to highlight inefficiencies and best practices.

Q: How are you thinking about the Florida resort assets relative to the overall portfolio, given the normalization in resort patterns? A: Jeff Donnelly, CEO: We expect Florida to find its footing in the back half of the year, with year-over-year declines subsiding. However, we remain cautious due to economic uncertainties like inflation and unemployment.

Q: What are your expectations for labor and wage growth in 2025, and how does it compare to 2024? A: Justin Leonard, COO: In 2024, wages were up about 7%, with salaries up 5% and benefits up 12.5%. For 2025, we expect wages and benefits to grow around 4%. The job market has slowed, leading to less wage pressure.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.