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DiamondRock Hospitality Co (DRH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was broadly in line: total revenues $254.85M, diluted EPS $0.04, comparable RevPAR +2.0%, Hotel Adjusted EBITDA $61.3M and margin +39bps YoY to 24.36% .
  • Versus Wall Street, DRH beat EPS and modestly missed revenue and EBITDA on S&P Global consensus for Q1 2025; EPS $0.04 vs $0.0388*, revenue $254.85M vs $256.10M*, EBITDA $52.69M vs $53.57M*; Adjusted FFO per share was $0.19 .
  • 2025 guidance lowered: Comparable RevPAR growth to (-1%)–(+1%) from prior (+1%)–(+3%), Adjusted EBITDA to $270–$295M (from $275–$300M), Adjusted FFO to $198–$223M; Adjusted FFO/share unchanged at $0.94–$1.06 .
  • Catalysts: urban strength (group +10%+, business transient +9%+), ongoing Florida resort softness, share repurchases ($15.9M YTD), and planned credit facility recast to address 2025 mortgage maturities while maintaining dividend at $0.08/quarter .

What Went Well and What Went Wrong

What Went Well

  • Comparable RevPAR +2.0% and Hotel Adjusted EBITDA +2.2% YoY; margin +39bps to 24.36% (cost initiatives offset resort softness) .
  • Urban portfolio led growth: comparable RevPAR +5% with group +14.4% and business transient mid-teens; hotel-level expenses up just 2.1% and margins +54bps .
  • Capital recycling and buybacks: sale of Westin Washington D.C. City Center for $92M (≈11.2x 2024 Hotel EBITDA; 7.5% NOI cap) and $15.9M of share repurchases at ~$7.66/share, enhancing per-share metrics .
    • CEO: “We are lowering our top line outlook… but maintaining our previous outlook for Adjusted FFO per share… repurchased $15.9 million of common shares… harvest capital from low free cash flow yield assets and redeploy proceeds into higher return opportunities.” .

What Went Wrong

  • Resort softness, particularly Florida: Q1 resort comparable RevPAR -2.1% YoY; Florida RevPAR -5.9% and total RevPAR -4.0% amid holiday timing and macro uncertainty .
  • Food & beverage at urban hotels -3.3% YoY due to mix shift at Chicago Marriott; total RevPAR growth +1.6% would have been +2.5% ex-Chicago .
  • Guidance cut reflects tempered group pickup in H2’25 and macro cautiousness; comparable RevPAR lowered by 200bps and Adjusted EBITDA -$5M at midpoint .

Financial Results

MetricQ1 2024Q4 2024Q1 2025Q1 2025 Consensus*
Total Revenues ($USD Millions)$256.42 $279.05 $254.85 $256.10*
Diluted EPS ($USD)$0.03 ($0.07) $0.04 $0.0388*
Hotel Adjusted EBITDA ($USD Millions)$60.05 $75.94 $61.33 $52.69*
Hotel Adjusted EBITDA Margin (%)23.97% 27.08% 24.36% N/A

Note: Values with asterisks retrieved from S&P Global.

Segment performance (Q1 2025):

Segment KPIUrban HotelsResorts
Comparable RevPAR YoY+5% -2.1%
Total RevPAR YoY+1.6% portfolio; +2.5% excl. Chicago -0.4%
Hotel Adjusted EBITDA Margin change+54bps +76bps to 32.5%

KPIs – Comparable portfolio

KPIQ1 2024Q1 2025
ADR ($)$269.95 $277.36
Occupancy (%)67.6% 67.1%
RevPAR ($)$182.50 $186.20
Total RevPAR ($)$287.09 $291.56

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Comparable RevPAR GrowthFY 2025+1.0% to +3.0% (-1.0%) to +1.0% Lowered 200bps at midpoint
Adjusted EBITDA ($)FY 2025$275M to $300M $270M to $295M Lowered $5M midpoint
Adjusted FFO ($)FY 2025$199M to $224M $198M to $223M Lowered $1M midpoint
Adjusted FFO per share ($)FY 2025$0.94 to $1.06 $0.94 to $1.06 Maintained
Corporate expenses (ex-SBC)FY 2025$24–$25M $24–$25M Maintained
Cash interest expense ($)FY 2025$64–$65M $60.5–$61.5M Lowered (facility recast assumption)
Available roomsFY 20253,502,540 3,502,175 Slight reduction
Dividend (common)Q2 2025N/A$0.08 declared Increased vs 2024 run-rate

Earnings Call Themes & Trends

TopicQ-2 (Q3 2024)Q-1 (Q4 2024)Q1 2025Trend
Group demand & paceGroup +15% YoY; strong citywides; updated FY RevPAR outlook Group room revenues +8.1%; H1 pace mid-to-high single digits; Chicago DNC comp headwind Group room revenues +10.4%; lead volume strong but conversion paused late March; booking window 4–6 months (small) / 8–12 months (large) Moderating but still constructive; cautious H2’25
Resorts/leisureHurricanes weighed; Florida headwinds; mixed resort performance Florida softness; mixed resorts; expect Q1 mid-single-digit Florida RevPAR declines Resorts -2.1% RevPAR; Florida -5.9%; holiday timing drove March declines; margins preserved Continued softness near term; margin resilience
Tariffs/macroNot highlightedInflation/macro uncertainty; cautious outlook; financing conditions tight FF&E timing adjusted to avoid tariff impact; unsettled macro tempering group pickup Macro/tariff sensitivity impacting procurement and demand
Capital allocationShare repurchases YTD; term loan extension $0.24 AFFO/share; $0.20 stub dividend; $0.08 quarterly 2025 dividend; evaluate preferred call $15.9M buybacks YTD; more likely credit facility recast; CEO favors buybacks over acquisitions Prioritize per-share accretion
Repositioning/ROIChamplain/Westin SD/Bourbon projects noted Dagny EBITDA +90% Q4; refined scope for Landing; Orchards disruption in H1 Orchards rebranding progress; Westin SD lobby/F&B tweaks; Times Sq renovation displacement ROI focus; disciplined scope

Management Commentary

  • CEO (press release): “Lowering our top line outlook for 2025 by 200 basis points, but maintaining our previous outlook for Adjusted FFO per share… optimistic DRH can drive earnings growth through continued operating performance and accretive capital recycling.” .
  • CFO (call): “We intend to continue to pay an $0.08 per share quarterly dividend in 2025 and… a stub dividend for the fourth quarter.” .
  • CEO (call): “Urban hotels: business transient demand increased in the mid-teens… Group lead volume higher than last year, but we saw a pause in group pickup into the end of March… revised 2025 RevPAR outlook to -1% to +1%.” .
  • CEO (call on capital allocation): “Repurchasing our own shares is superior to… buying acquisitions in the marketplace.” .

Q&A Highlights

  • Tariffs/FF&E: Accelerated shipment of Vietnam FF&E before tariff reinstatement; projects starting in November paused pending clarity .
  • Group conversion & booking windows: Smaller groups book 4–6 months out, larger 8–12 months; conversion paused late March; markets like Denver/Salt Lake/San Diego showing strength .
  • Consumer behavior: Shorter booking windows; resort F&B spend up; stable on-property spend across tiers .
  • Cost levers: Hiring freeze at most hotels; flexibility via outlet hours/housekeeping standards; wages/benefits expected +3%–3.5% for FY 2025 .
  • Dividend/stub: Management expects a Q4 stub dividend in addition to $0.08 quarterlies (from Q4 call) .

Estimates Context

  • Q1 2025 vs S&P Global consensus: EPS beat, revenue/EBITDA slight miss.
    • EPS: Actual $0.04 vs $0.0388* (Beat)
    • Revenue: Actual $254.85M vs $256.10M* (Miss)
    • EBITDA: Actual $52.69M vs $53.57M* (Miss)
MetricQ1 2025 ActualQ1 2025 Consensus*Surprise
Primary EPS ($)0.04 0.0388*+0.0012 (Beat)
Revenue ($USD Millions)254.85 256.10*-1.25 (Miss)
EBITDA ($USD Millions)52.69*53.57*-0.88 (Miss)

Note: Values with asterisks retrieved from S&P Global.

Potential estimate revisions: Street may trim full-year top-line and EBITDA trajectories (consistent with guidance reductions) while maintaining AFFO/share ranges given buybacks and interest expense savings from anticipated facility recast .

Key Takeaways for Investors

  • Mix shift continues: urban strength (group and business transient) offsets resort softness; near-term RevPAR trajectory more favorable outside Florida .
  • Bold discipline on capital: asset sale at attractive metrics and repurchases (~$16M YTD) support AFFO/share; management prefers buybacks to external M&A at current market economics .
  • Guidance prudence: Lowered RevPAR and EBITDA outlook reflect slower group conversion in H2’25; offsets include interest expense savings and margin management .
  • Margin resilience: Despite resort top-line headwinds, hotel-level margins expanded (urban +54bps, resorts +76bps) via cost controls and productivity .
  • Dividend visibility: $0.08 quarterly dividend reiterated, with potential year-end stub; supports income case amidst cautious macro .
  • Watch catalysts: Citywide calendars (Chicago/Boston), tariff developments impacting CapEx timing, and financing recast progress to address 2025 maturities .
  • Trading lens: Near-term narrative likely keyed to group pickup recovery and Florida stabilization; beats/misses vs consensus are small, making guidance tone and capital actions the stock drivers .

Links and additional materials:

  • Q1 2025 results press release (RevPAR, margins, guidance, balance sheet, buybacks) .
  • 8-K 2.02 (press release furnished) .
  • Q1 2025 earnings call transcript (themes, segment detail, Q&A) .
  • Prior quarter references (Q4 2024 results/guidance; Q3 2024 results) .