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1. Company Snapshot

1.a. Company Description

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner of a leading portfolio of geographically diversified hotels concentrated in top gateway markets and destination resort locations.The Company owns 31 premium quality hotels with over 10,000 rooms.The Company has strategically positioned its hotels to be operated both under leading global brand families as well as unique boutique hotels in the lifestyle segment.

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1.b. Last Insights on DRH

The recent stock performance of DiamondRock Hospitality Company has been driven by several factors. The company's Q4 2024 earnings report showed a beat on both FFO and revenue estimates, with FFO coming in at $0.24 per share, exceeding the consensus estimate of $0.21 per share. However, a closer look at the company's financials reveals a high debt-to-equity ratio, with debt at $1.1 billion and total assets around $3.2 billion. Additionally, the company's preferred stock offers an attractive 8.15% yield, but this may not be enough to offset concerns about the company's debt levels and interest expense. The recent earnings report did not provide any information on share buybacks, but the company's strong balance sheet and strategic capital allocation are positives. Overall, the company's financials show a robust asset coverage, but the high debt levels and interest expense may be a concern.

1.c. Company Highlights

2. DiamondRock Hospitality's Q3 2025 Earnings: A Strong Performance

DiamondRock Hospitality Company's third-quarter 2025 adjusted EBITDA was $79.1 million, and adjusted FFO per share was $0.29, both exceeding expectations. The company's comparable RevPAR declined 0.3%, beating its low single-digit decline expectation. The actual EPS came out at $0.29 relative to estimates at $0.25, showcasing a strong financial performance. Business transient revenue grew almost 2%, while leisure transient and group room revenue declined 1.5% and 3.5%, respectively.

Publication Date: Dec -02

📋 Highlights
  • Outperformed EBITDA & FFO Guidance:: 3Q25 adjusted EBITDA reached $79.1M and adjusted FFO per share hit $0.29, exceeding forecasts.
  • RevPAR Decline Below Expectations:: Comparable RevPAR dropped 0.3%, outperforming the projected low single-digit decline.
  • Out-of-Room Revenue Growth:: Increased 5.1% from food, spa, parking, and fees, contributing to overall RevPAR stability.
  • Capital Recycling & Debt Strategy:: Refinanced credit facility, paid off $287M in mortgages, leaving portfolio fully unencumbered.
  • CapEx Efficiency & FFO Outperformance:: Spent 7% of revenue on CapEx vs. peers’ 10.5%, driving FFO per share growth since 2018.

Revenue Streams

Out-of-room revenues increased 5.1%, driven by food and beverage, spa, parking, and destination fees. The urban portfolio achieved RevPAR growth of 0.6%, while the resort portfolio declined 2.5%. However, total RevPAR grew in both portfolios, driven by out-of-room revenue growth. The company saw a significant increase in F&B and other revenues as a percentage of total revenues, up 120 basis points, driven by initiatives to rework menus and pricing.

Balance Sheet and Capital Allocation

The company successfully refinanced its senior unsecured credit facility, upsizing and extending maturities, and paid off its last two mortgage loans, leaving its portfolio fully unencumbered by secured debt. DiamondRock repurchased 1.5 million common shares at an implied cap rate of approximately 9.7% during the quarter and 4.8 million shares year-to-date for $37 million, demonstrating its commitment to capital allocation.

Guidance and Outlook

The company updated its 2025 guidance, maintaining the midpoint of its RevPAR and total RevPAR guidance while tightening the ranges. The midpoint of its adjusted EBITDA guidance increased by $6 million to $287 million to $295 million, and the midpoint of its adjusted FFO per share guidance increased by $0.03 to $1.02 to $1.06. Analysts estimate next year's revenue growth at 2.2%.

Valuation

With a P/E Ratio of 29.25, P/B Ratio of 1.19, and EV/EBITDA of 11.75, the company's valuation multiples suggest that the market is pricing in a certain level of growth. The Dividend Yield of 5.16% and Free Cash Flow Yield of 7.36% indicate a relatively attractive return profile. As CEO Jeffrey Donnelly noted, the company's strategic CapEx program has spent 7% of revenue on CapEx, compared to peers' 10.5%, preserving capital for investment and translating to FFO per share and free cash flow per share outperformance.

Operational Highlights

The company's resort portfolio is performing well, with high ADR properties driving growth. Approximately 60% of the resort EBITDA comes from luxury resorts, which have seen significant growth. DiamondRock has a solid base of group and contract business, which accounts for 35% of total demand, with group pace up in the mid to high single digits.

3. NewsRoom

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DiamondRock Hospitality Company $DRH Position Cut by Fisher Asset Management LLC

Dec -05

Source: defenseworld.net

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DIAMONDROCK HOSPITALITY DECLARES FOURTH QUARTER DIVIDEND

Dec -03

Source: prnewswire.com

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A Fed Divided

Nov -23

Source: seekingalpha.com

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DIAMONDROCK HOSPITALITY ANNOUNCES REDEMPTION OF 8.250% SERIES A CUMULATIVE REDEEMABLE PREFERRED STOCK

Nov -20

Source: prnewswire.com

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DiamondRock Hospitality Company (NYSE:DRH) Given Consensus Rating of “Hold” by Analysts

Nov -15

Source: defenseworld.net

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DIAMONDROCK HOSPITALITY ANNOUNCES TRANSFER TO NASDAQ

Nov -13

Source: prnewswire.com

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REIT Replay: REIT Indexes Outperform Broader Markets During 1st Week Of November

Nov -11

Source: seekingalpha.com

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When The Stimulus Stops

Nov -09

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.21%)

6. Segments

Rooms

Expected Growth: 3.5%

DiamondRock Hospitality's 3.5% rooms growth driven by strategic acquisitions, increasing RevPAR (Revenue per Available Room) from renovated properties, and expansion in high-demand markets. Additionally, the company's focus on premium-branded hotels, such as Hilton and Marriott, contributes to growth through increased brand recognition and loyalty.

Food and Beverage

Expected Growth: 2.8%

DiamondRock Hospitality Company's Food and Beverage segment growth of 2.8% is driven by increasing demand for upscale dining experiences, strategic hotel acquisitions, and effective cost management. Additionally, the company's focus on renovating and rebranding its properties, as well as its loyalty program, contribute to the growth.

Other

Expected Growth: 2.2%

DiamondRock Hospitality's 2.2% growth is driven by increasing RevPAR (Revenue per Available Room) due to strong demand, effective yield management, and strategic asset acquisitions. Additionally, the company's focus on cost containment, renovation initiatives, and expansion into high-growth markets contribute to its growth momentum.

7. Detailed Products

Hotel Operations

DiamondRock Hospitality Company operates a diverse portfolio of premium hotels and resorts across the United States, offering a range of accommodations, dining, and recreational activities.

Hotel Management

The company provides comprehensive hotel management services, including operational oversight, revenue management, and sales and marketing support.

Hotel Development

DiamondRock Hospitality Company develops and redevelops hotels, leveraging its expertise in hotel operations, design, and construction.

Investment Management

The company provides investment management services, including asset management, financial analysis, and strategic planning.

Hotel Renovation and Restoration

DiamondRock Hospitality Company offers renovation and restoration services to upgrade and modernize hotels, improving their competitiveness and profitability.

8. DiamondRock Hospitality Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for DiamondRock Hospitality Company is medium due to the availability of alternative accommodations such as Airbnb and vacation rentals.

Bargaining Power Of Customers

The bargaining power of customers is high due to the high demand for hotel rooms and the ability of customers to easily compare prices and amenities online.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's large scale of operations and its ability to negotiate favorable contracts with suppliers.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the hotel industry, including the need for significant capital investment and regulatory approvals.

Intensity Of Rivalry

The intensity of rivalry is high due to the competitive nature of the hotel industry, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 45.52%
Debt Cost 5.06%
Equity Weight 54.48%
Equity Cost 11.98%
WACC 8.83%
Leverage 83.57%

11. Quality Control: DiamondRock Hospitality Company passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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RLJ Lodging

A-Score: 6.1/10

Value: 8.3

Growth: 4.7

Quality: 6.1

Yield: 8.0

Momentum: 2.5

Volatility: 7.0

1-Year Total Return ->

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Summit Hotel Properties

A-Score: 5.8/10

Value: 7.4

Growth: 5.6

Quality: 5.5

Yield: 8.0

Momentum: 3.0

Volatility: 5.3

1-Year Total Return ->

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DiamondRock Hospitality

A-Score: 5.7/10

Value: 5.3

Growth: 5.0

Quality: 4.9

Yield: 7.0

Momentum: 3.5

Volatility: 8.3

1-Year Total Return ->

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Chatham Lodging

A-Score: 5.5/10

Value: 6.2

Growth: 5.3

Quality: 4.7

Yield: 6.0

Momentum: 2.5

Volatility: 8.0

1-Year Total Return ->

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Xenia Hotels & Resorts

A-Score: 5.1/10

Value: 5.5

Growth: 4.7

Quality: 3.5

Yield: 6.0

Momentum: 4.0

Volatility: 7.0

1-Year Total Return ->

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SVC

A-Score: 4.9/10

Value: 9.8

Growth: 3.2

Quality: 5.2

Yield: 6.0

Momentum: 1.5

Volatility: 3.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

9.08$

Current Price

9.08$

Potential

-0.00%

Expected Cash-Flows