Diamondrock Hospitality Co Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Dori Kesten - Wells Fargo Securities, LLC - Analyst : Thanks. Good morning. Jeff, I think there tends to be an oversimplification of applying one company's demand trends broadly across all peers. Can you give us a sense of your leisure BT group revenue growth expectations that aggregate up to the 1% to 3% RevPAR guide, and just highlight why your portfolio may not align immediately with peers?

Question: Dori Kesten - Wells Fargo Securities, LLC - Analyst : Okay. That's fair. And then, Justin, you talked about -- I guess, can you talk about what you're seeing today on the transaction front, maybe just highlighting the volume of off-market deals you're seeing today versus, say, six months ago? And then can you talk about how competitive the process was for the Westin City Center? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 3:00PM, DRH.N - Q4 2024 Diamondrock Hospitality Co Earnings Call

Question: Dori Kesten - Wells Fargo Securities, LLC - Analyst : Okay. And then last one. Does your '25 guide assume further hotel-level operating efficiencies are achieved coming off those in '24?

Question: Dori Kesten - Wells Fargo Securities, LLC - Analyst : Okay. Thanks so much.

Question: Austin Wurschmidt - KeyBanc Capital Markets - Analyst : Hey. Good morning, everybody. Jeff, you referenced the drag from the Florida resort assets this past quarter and maybe continuing into the early part of the year. But just maybe broad strokes, I mean, how are you thinking about this subset of assets relative to the overall portfolio as you look out over the course of the year, given there has been a little bit of a normalization in resort patterns? And just curious where we are in that -- where you think we are in that normalization process. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 3:00PM, DRH.N - Q4 2024 Diamondrock Hospitality Co Earnings Call

Question: Austin Wurschmidt - KeyBanc Capital Markets - Analyst : That's helpful. And then just your comments on CapEx at the Westin DC and how you guys have continued to convey your thinking about managing free cash flow. Any other large kind of hotels with mandated CapEx projects that you're staring down and considering, maybe it's better to evaluate other options instead of moving forward with those projects? And that's all for me. Thanks.

Question: Austin Wurschmidt - KeyBanc Capital Markets - Analyst : Appreciate the time. Thank you.

Question: Smedes Rose - Citi - Analyst : Hi. Thanks. I was just wondering if you could share what the increase in labor -- property-level labor and wage and benefits was for '24, what you're expecting in '25? And maybe just any thoughts on kind of the pace going forward? It seems like yours are maybe a little bit lower than some of your peers. So I just wanted to put some numbers around it.

Question: Smedes Rose - Citi - Analyst : Okay. And do you -- would you expect the pace to continue to slow, I guess, as we go into '26 or kind of just your general thoughts? I know we still have -- the year is young, but --

Question: Smedes Rose - Citi - Analyst : Great. And then I just wanted to ask you, on the dividend, you mentioned -- so going to be $0.08 kind of quarterly run rate and then a potential stub dividend. Based on your guidance now, would you expect to pay a stub dividend? Or can be -- I think you have a loss on the sale of the Westin. Does that count against the dividend -- required dividend payouts?

Question: Smedes Rose - Citi - Analyst : Thank you.

Question: Michael Bellisario - Robert W. Baird & Co. Incorporated - Analyst : Thanks. Good morning, everyone. Just want to go back to CapEx for a second, just dig into the potentially refined scope at the Landing and just maybe also in relation to what you did in New Orleans. Are you dialing back spend because of cost inflation and returns are lower? Or are you seeing something different in these markets, fundamentally, that may be changing your view about where and how much you should be investing there?

Question: Michael Bellisario - Robert W. Baird & Co. Incorporated - Analyst : Got it. Understood. That's helpful there. And then just on the group comments you guys made, just aside from Chicago, maybe what hotels -- what markets did you see the pace pick up since 3Q? And where does the potential still exist in the portfolio to continue filling in as the year progresses? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 28, 2025 / 3:00PM, DRH.N - Q4 2024 Diamondrock Hospitality Co Earnings Call

Question: Michael Bellisario - Robert W. Baird & Co. Incorporated - Analyst : That's all from me. Thank you.

Question: Floris Van Dijkum - Compass Point Research & Trading LLC - Analyst : Morning, guys. Jeff, I appreciated your comments on FFO and why it's important to look at the capital structure and the balance sheet, and actually what comes down to what pays the dividends. One of the interesting things, I think, is if we look at your stock and most of your peers' as well, frankly, you look cheap on both FFO and EBITDA. I just want to -- you sort of alluded to this, but maybe if you can expound on the fact that -- are there better opportunities today than buying your own stock back? What would make -- I guess, maybe ROI projects potentially could get higher returns. But if you can talk about your -- as you look out at the -- at your portfolio today, where you find the best or the most attractive returns available?

Question: Floris Van Dijkum - Compass Point Research & Trading LLC - Analyst : Yeah. And maybe my follow-up question. As you think about portfolio composition, you sold another, I guess, a $90 million hotel in DC. How do you see the portfolio of your hotels in two years' time? Is it going to be more concentrated, or do you think it's going to be more diversified in terms of single-asset exposures?

Question: Floris Van Dijkum - Compass Point Research & Trading LLC - Analyst : And in terms of management, is there a -- I mean, you could argue that having fewer assets are easier to manage. How do you look at -- in terms of managing your portfolio and driving growth, is it -- I guess, you're pretty close in contact with all of your local operators. Are you benchmarking across the portfolio? And are you finding opportunities to increase the operations as well?

Question: Floris Van Dijkum - Compass Point Research & Trading LLC - Analyst : Thanks, guys.