Executive Summary

Q4 2024 delivered strong comparable growth and margin expansion but a GAAP net loss due to a $32.6M impairment on Westin Washington D.C.; comparable revenues rose 5.7% YoY to $280.5M, comparable RevPAR was up 5.4%, and comparable Hotel Adjusted EBITDA grew 16.4% with margins +253 bps to 27.08% .
Adjusted EBITDA was $68.7M (+19.9% YoY) and Adjusted FFO/share was $0.24 (+33.3% YoY); GAAP diluted EPS was $(0.07) driven by the impairment .
Management introduced FY2025 guidance: comparable RevPAR growth 1–3%, Adjusted EBITDA $275–$300M, Adjusted FFO $199–$224M ($0.94–$1.06/share), and will exclude share-based comp from Adjusted EBITDA/FFO beginning 2025 to align with peers .
Strategic actions highlight capital recycling and cash return: sold Westin Washington D.C. City Center for $92.0M (about 7% trailing NOI cap rate, ~12x EBITDA), increased regular quarterly dividend to $0.08, and reiterated focus on free cash flow per share growth and share repurchases .

What Went Well and What Went Wrong

What Went Well

Urban strength and calendar tailwinds: “December RevPAR up 13.2%” with urban RevPAR +8.2% (ADR +5.4%); favorable December business days and later Hanukkah supported outperformance .
Margin and profitability improvement: Q4 comparable Hotel Adjusted EBITDA rose 16.4% YoY to $75.9M and margins expanded +253 bps to 27.08%; Adjusted EBITDA +19.9% YoY to $68.7M; Adjusted FFO/share +33.3% YoY to $0.24 .
Capital recycling and return focus: Sold Westin Washington D.C. City Center for $92.0M (~11.2x 2024 hotel EBITDA; ~7.5% cap rate NOI; ~5.6% cap rate incl. projected capex), avoiding a potentially >$30M mandated renovation; dividend step-up to $0.08 per quarter .

Management quote: “Fourth quarter operating results exceeded our expectations… This strong revenue growth coupled with cost savings initiatives led to fourth quarter results exceeding our guidance range” — Jeffrey J. Donnelly, CEO .

What Went Wrong

GAAP earnings impacted by impairment: Net loss to common of $(13.7)M; diluted EPS $(0.07) due to a $32.6M impairment at Westin Washington D.C. City Center .
Resort softness, especially Florida: Florida resorts RevPAR declined 5.8% in Q4; leisure headwinds expected to persist into early 2025; resorts broadly mixed, though non-Florida resorts showed growth .
Wage and benefits inflation: 2024 wages up ~7% YoY (salaries ~5%, benefits ~12.5%); guidance assumes ~4% wage/benefit growth in 2025, with 2026 NY union reset a minor headwind for limited-service properties .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Total Revenues ($USD Millions)	$263.547	$285.129	$279.051
Comparable Revenues ($USD Millions)	$265.428	$285.129	$280.474
Diluted EPS ($USD)	$0.04	$0.11	$(0.07)
Net (Loss)/Income to Common ($USD Millions)	$8.493	$23.978	$(13.697)
Adjusted EBITDA ($USD Millions)	$57.291	$75.600	$68.697
Adjusted FFO per share ($USD)	$0.18	$0.26	$0.24
Hotel Adjusted EBITDA ($USD Millions)	$64.818	$82.259	$75.453
Hotel Adjusted EBITDA Margin (%)	24.55%	28.85%	27.08%
ADR ($USD)	$280.55	$282.02	$290.02
Occupancy (%)	67.8%	76.0%	69.1%
RevPAR ($USD)	$190.18	$214.44	$200.46

KPIs and segment dynamics:

KPI/Segment	Q4 2024
Comparable Total RevPAR Growth YoY	+5.5%
Urban Hotels RevPAR Growth YoY	+8.2%
Group Room Revenue Growth YoY	+8.1% (room nights +5.9%)
Urban Group Room Revenue Growth YoY	+10.2%; F&B revenue +6.4%
Florida Resorts RevPAR YoY	−5.8%
December RevPAR (portfolio)	+13.2% YoY

ADR/Occupancy/RevPAR comparatives:

Metric	Q4 2023	Q4 2024
ADR ($USD)	$280.55	$290.02
Occupancy (%)	67.8%	69.1%
RevPAR ($USD)	$190.18	$200.46

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Comparable RevPAR Growth	FY 2025	N/A	1.0%–3.0%	Introduced
Adjusted EBITDA ($USD)	FY 2025	N/A	$275M–$300M	Introduced; now excludes SBC
Adjusted FFO ($USD)	FY 2025	N/A	$199M–$224M	Introduced
Adjusted FFO per share ($USD)	FY 2025	N/A	$0.94–$1.06	Introduced
Corporate Expenses (ex-SBC)	FY 2025 Assumption	N/A	~$24M–$25M	Assumption disclosed
Cash Interest Expense	FY 2025 Assumption	N/A	~$64M–$65M	Assumption disclosed
Income Tax Expense	FY 2025 Assumption	N/A	~$1M–$2M	Assumption disclosed
Diluted Shares & Units	FY 2025 Assumption	N/A	211M	Assumption disclosed
Available Rooms	FY 2025 Assumption	N/A	3,502,540	Assumption disclosed
Methodology Update	Effective 1/1/2025	N/A	Exclude SBC from Adjusted EBITDA/FFO	Alignment with peers

Q4 call reiterations of FY2024 guidance (for context):

Metric	FY 2024 Previous	FY 2024 Revised	Change at Midpoint
Comparable RevPAR Growth	1.5%–3.0%	1.5%–2.0%	−0.5% pts
Adjusted EBITDA ($USD)	$278M–$290M	$281M–$287M	Midpoint maintained
Adjusted FFO ($USD)	$201.5M–$213.5M	$205M–$210M	Narrowed
Adjusted FFO/share ($USD)	$0.95–$1.00	$0.97–$0.99	+$0.005 midpoint

Dividend actions:

Q4 cash dividend paid $0.23/share (includes $0.20 stub + $0.03 regular); Q1 2025 declared $0.08/share regular dividend .
Management intends to pay a Q4 2025 stub dividend depending on operating income .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024; Q3 2024)	Current Period (Q4 2024)	Trend
Technology/analytics	Implemented Oracle cloud ERP and enterprise analytics to standardize P&Ls and improve benchmarking; used to mitigate costs	Business intelligence tools improving portfolio productivity; continued cost focus	Ongoing enhancement
Group strategy & mix	Deliberate “grouping up” to maximize total RevPAR and profit; large group pace in H2; group nights +7.3% YTD	Group revenue +8.1% in Q4; urban group +10.2%; F&B +6.4%; 2025 group pace ~+2% overall, stronger H1; Chicago headwind from DNC comp	Positive but moderating; comps tougher in H2 2025
Resorts/leisure	First positive resort RevPAR since 2022; strategy to trade ADR for occupancy; market outperformance	Florida resort softness persists; non-Florida resorts grew; cautious leisure outlook into Q1 2025	Mixed near term; constructive longer term
Capital allocation & recycling	Share repurchases attractive vs asset yields; preference to be unsecured borrower; evaluate dispositions	Sold Westin D.C.; focus on free cash flow/share; ROI discipline; buybacks remain appealing; consider inaugural corporate debt	Accelerated pruning; optionality maintained
Regulatory/legal	SAFE Hotels Act in NY noted; limited impact to DRH due to union status	No incremental impact disclosed	Stable
Wage/labor trends	Wage inflation tied to F&B growth; expected stabilization later in year	2024 wages +7%, benefits +12.5%; 2025 ~4% growth; 2026 NY union reset limited impact	Moderating cost growth

Management Commentary

Capital recycling and avoiding value-destructive capex: “We closed the 410-room Westin for $92 million… We anticipated the room renovation may have surpassed $30 million… our free cash flow yield cap rate on sale is closer to 5%” .
Free cash flow focus: “Our focus is on increasing earnings per share… focusing on free cash flow per share… The more free cash flow DiamondRock can preserve and create, the more we can return to shareholders…” .
Urban strength and outlook: “December RevPAR up 13.2%… led by our hotels in Chicago, Salt Lake, San Diego and Boston” .
Dividend clarity: “We announced our common dividend for the first quarter of $0.08 per share” and expectation to pay a Q4 stub dividend .
Portfolio strategy: “We are not collectors of hotels… We are here to invest, harvest and reinvest your capital” .

Q&A Highlights

Florida resorts and leisure outlook: Expect mid-single-digit RevPAR declines in Florida in Q1; broader leisure softness near term, improving back half as comps ease and rates decline .
Group pace dynamics: 2025 group revenue up ~2%, stronger first half; Chicago Marriott creates a H2 headwind given 2024 DNC comp; excluding Chicago, 2025 pace would be ~6% .
Capex discipline: Scope reductions (e.g., Bourbon Orleans) to optimize ROI; refining Landing Lake Tahoe expansion; emphasizing projects with best cash-on-cash returns .
Labor and wages: 2024 wages +7%, benefits +12.5%; 2025 wage/benefits ~4%; job market cooling reduces wage pressure; limited 2026 NY union impact .
Capital markets and buybacks: Share repurchases remain attractive vs current asset yields; considering corporate debt issuance and refinancing of 2025 maturities .

Estimates Context

We attempted to retrieve S&P Global Wall Street consensus for Q4 2024 (Primary EPS, Revenue, FFO/share) but the data was unavailable due to SPGI daily request limits at time of query. As such, estimate comparisons are not shown. Values would be retrieved from S&P Global if available.

Key Takeaways for Investors

Mix-driven outperformance: Comparable revenue and margin strength in Q4, led by urban and group, despite leisure softness; Q4 comp margins +253 bps YoY to 27.08% is supportive for 2025 margin resilience .
GAAP optics vs cash metrics: Q4 GAAP loss stems from one-time impairment; underlying cash metrics (Adjusted EBITDA, Adjusted FFO/share) grew double-digits YoY; focus valuation on FFO/free cash flow rather than EBITDA .
FY2025 guide skews conservative: RevPAR +1–3% and Adjusted EBITDA $275–$300M (with SBC exclusion) reflect financing headwinds and Florida softness early; monitor H1 group actualization and Florida trajectory .
Capital recycling is working: D.C. asset sale at ~12x EBITDA/ ~7% NOI cap avoided a large renovation; redeployment into higher FCF yield opportunities and buybacks likely accretive to per-share metrics .
Dividend visibility and potential stub: Regular quarterly dividend raised to $0.08; management expects a Q4 stub dividend subject to operating income, supporting income investor interest .
Watch 2025 financing milestones: Three mortgages maturing in 2025 (~$296M); management planning mix of corporate issuance, facility recast, and property-level options; guidance assumes high-6% replacement rates, with swaps tempering overall interest expense .
Near-term trading set-up: Urban momentum and dividend step-up are positive catalysts; Florida softness and Chicago comp in H2 2025 are the key near-term overhangs to monitor .

Citations:

DiamondRock Hospitality Co (DRH)·Q4 2024 Earnings Summary