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DIAMONDROCK HOSPITALITY COMPANY REPORTS FOURTH QUARTER AND FULL YEAR 2021 RESULTS

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Increases Adjusted EBITDA by $148 Million over 2020

Completes $500 Million of Capital Recycling Transactions

BETHESDA, Md., Feb. 17, 2022 /PRNewswire/ -- DiamondRock Hospitality Company (the "Company") (NYSE: DRH), a lodging-focused real estate investment trust that owns a portfolio of 33 premium hotels in the United States, today announced results of operations for the quarter and year ended December 31, 2021.

(PRNewsfoto/DiamondRock Hospitality Company)
(PRNewsfoto/DiamondRock Hospitality Company)

Fourth Quarter 2021 Highlights

  • Net Loss: Net loss was $2.9 million and loss per diluted share was $0.03.

  • Comparable Revenues: Comparable total revenues were $196.8 million, which represents a 13.3% decline from the comparable period of 2019.

  • Comparable RevPAR: Comparable RevPAR was $158.53, which represents a 12.5% decline from the comparable period of 2019. Comparable ADR increased 7.6% from the comparable period in 2019.

  • Comparable Hotel Adjusted EBITDA: Comparable Hotel Adjusted EBITDA was $43.1 million, a 33.1% decline from the comparable period of 2019.

  • Adjusted EBITDA: Adjusted EBITDA was $34.4 million.

  • Adjusted FFO: Adjusted FFO was $19.1 million and Adjusted FFO per diluted share was $0.09.

  • Hotel Acquisition: The Company acquired the Henderson Beach Resort in Destin, Florida for $112.5 million on December 23, 2021.

  • Mortgage Loan Extension: The Company executed a one year extension of the mortgage loan secured by the Salt Lake City Marriott, which takes the maturity of this loan to January 2023.

Full Year 2021 Highlights

  • Net Loss: Net loss was $195.4 million and loss per diluted share was $0.96.

  • Comparable Revenues: Comparable total revenues were $611.7 million, which represents a 33.5% decline from the comparable period of 2019.

  • Comparable RevPAR: Comparable RevPAR was $124.74, which represents a 32.6% decline from the comparable period of 2019. Comparable ADR increased 2.4% from the comparable period in 2019.

  • Comparable Hotel Adjusted EBITDA: Comparable Hotel Adjusted EBITDA was $129.1 million, a $144.1 million decline from the comparable period of 2019.

  • Adjusted EBITDA: Adjusted EBITDA was $83.5 million.

  • Adjusted FFO: Adjusted FFO was $26.3 million and Adjusted FFO per diluted share was $0.12.

  • Liquidity: The Company ended 2021 with $441.3 million total liquidity. The Company has remained cash flow positive at the hotel level since March 2021.

  • Capital Recycling Transactions: Completed six transactions to recycle $220 million from low-yield, encumbered, capital-intensive properties into $293 million of high-quality, unencumbered, independent hotels and resorts.

Recent Developments

  • Hotel Acquisition: The Company acquired the Tranquility Bay Beachfront Resort in Marathon, Florida for $63.0 million on January 6, 2022.

  • Hotel Brand Conversions: The Company completed the conversion of the Bethesda Marriott Suites to the Embassy Suites by Hilton Bethesda in February 2022. The Company is currently completing renovations to rebrand the JW Marriott Denver Cherry Creek as Hotel Clio, a Luxury Collection Hotel at the end of the first quarter of 2022.

  • Loan Amendments: The Company executed further amendments to the credit agreements for its $400 million revolving credit facility and $400 million in unsecured term loans to extend the waiver of financial covenants through the first quarter of 2022 and the modification of certain financial covenants through the second quarter of 2023.

"The results for 2021 far exceeded our original expectations with Comparable Total RevPAR within 1.5% of 2019 levels in December. Our strategic decision over 7 years ago to pivot to destination resorts and lifestyle hotels has paid off as those properties have collectively exceeded prior peak revenues from robust leisure demand. Gateway hotels improved as well but due to restraints on corporate travel their best days lie ahead. Forward bookings into 2022 were strong, although the Omicron variant likely delayed the emerging business and group recovery by a few months," said Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company. "We are particularly proud of the $500 million in transformative real estate transactions completed over the last year. These transactions are expected to add an incremental $20 million of Hotel Adjusted EBITDA in 2022 and continue to build the Company's resort and urban lifestyle hotel portfolio, which now comprises over 60% of the Company's hotels."

Operating Results

Please see "Non-GAAP Financial Measures" attached to this press release for an explanation of the terms "EBITDAre," "Adjusted EBITDA," "Hotel Adjusted EBITDA," "Hotel Adjusted EBITDA Margin," "FFO" and "Adjusted FFO" and a reconciliation of these measures to net income. Comparable operating results include our 2021 acquisitions and exclude our 2021 dispositions for all periods presented. See "Reconciliation of Comparable Operating Results" attached to this press release for a reconciliation to historical amounts.


Quarter Ended December 31,


Change From


2021

2020

2019


2020

2019


($ amounts in millions, except hotel statistics and per share amounts)

Comparable Operating Results (1)







ADR

$ 259.63

$ 208.13

$ 241.25


24.7%

7.6%

Occupancy

61.1%

23.7%

75.1%


37.4%

(14.0)%

RevPAR

$ 158.53

$ 49.41

$ 181.27


220.8%

(12.5)%

Total RevPAR

$ 228.81

$ 77.28

$ 264.12


196.1%

(13.4)%

Revenues

$ 196.8

$ 66.5

$ 227.1


195.9%

(13.3)%

Hotel Adjusted EBITDA

$ 43.1

$ (4.5)

$ 64.4


1057.8%

(33.1)%

Hotel Adjusted EBITDA Margin

21.90%

(6.79)%

28.37%


2,869 bps

(647) bps

Available Rooms

860,108

859,833

859,740


275

368








Actual Operating Results (2)







Revenues

$ 189.9

$ 59.0

$ 237.5


221.9%

(20.0)%

Net (loss) income

$ (2.9)

$ (208.3)

$ 134.6


98.6%

(102.2)%

(Loss) income per diluted share

$ (0.03)

$ (1.04)

$ 0.66


97.1%

(104.5)%

Adjusted EBITDA

$ 34.4

$ (14.9)

$ 62.7


330.9%

(45.1)%

Adjusted FFO

$ 19.1

$ (8.3)

$ 54.7


330.1%

(65.1)%

Adjusted FFO per diluted share

$ 0.09

$ (0.04)

$ 0.27


325.0%

(66.7)%


Year Ended December 31,


Change From


2021

2020

2019


2020

2019


($ amounts in millions, except hotel statistics and per share amounts)

Comparable Operating Results (1)







ADR

$ 243.71

$ 216.83

$ 238.10


12.4%

2.4%

Occupancy

51.2%

28.2%

77.7%


23.0%

(26.5)%

RevPAR

$ 124.74

$ 61.19

$ 184.95


103.9%

(32.6)%

Total RevPAR

$ 179.28

$ 94.91

$ 269.75


88.9%

(33.5)%

Revenues

$ 611.7

$ 324.7

$ 919.8


88.4%

(33.5)%

Hotel Adjusted EBITDA

$ 129.1

$ (21.5)

$ 273.2


700.5%

(52.7)%

Hotel Adjusted EBITDA Margin

21.10%

(6.61)%

29.70%


2,771 bps

(860) bps

Available Rooms

3,412,176

3,420,783

3,409,885


(8,607)

2,291








Actual Operating Results (2)







Revenues

$ 567.1

$ 299.5

$ 938.1


89.3%

(39.5)%

Net (loss) income

$ (195.4)

$ (396.0)

$ 184.2


50.7%

(206.1)%

(Loss) income per diluted share

$ (0.96)

$ (1.97)

$ 0.90


51.3%

(206.7)%

Adjusted EBITDA

$ 83.5

$ (64.5)

$ 260.4


229.5%

(67.9)%

Adjusted FFO

$ 26.3

$ (85.3)

$ 217.0


130.8%

(87.9)%

Adjusted FFO per diluted share

$ 0.12

$ (0.42)

$ 1.07


128.6%

(88.8)%



(1)

The amounts for all periods presented does not adjust for hotels that had suspended operations. The amounts for all
periods presented also include pre-acquisition operating results for Bourbon Orleans Hotel from January 1, 2019 to
July 28, 2021, Henderson Park Inn from January 1, 2019 to July 29, 2021 and Henderson Beach Resort from
January 1, 2019 to December 22, 2021. The pre-acquisition operating results were obtained from the sellers of the hotels
during the acquisition due diligence process. We have made no adjustments to the amounts provided to us by the seller.
The pre-acquisition operating results were not audited or reviewed by the Company's independent auditors.



(2)

Actual operating results include the operating results of hotels acquired and disposed of for the Company's respective ownership periods.



The following tables provide comparable monthly operating information for the year ended December 31, 2021(1):


January
2021


February
2021


March
2021


April
2021


May
2021


June
2021


Number of Hotels

32


32


32


32


32


32

Number of Rooms

9,349


9,349


9,349


9,349


9,349


9,349

Occupancy

21.3%


29.2%


36.5%


39.4%


47.8%


59.5%

ADR

$193.61


$217.42


$241.35


$236.06


$232.30


$233.32

RevPAR

$41.18


$63.43


$88.08


$92.89


$111.00


$138.76

Total RevPAR

$63.14


$95.47


$126.23


$137.95


$164.37


$195.40

2021 vs 2019

Occupancy change in bps

(4,184) bps


(4,490) bps


(4,241) bps


(4,179) bps


(3,244) bps


(2,621) bps

ADR Rate % change

(3.4)%


0.6%


1.2%


(3.7)%


(8.8)%


(7.4)%

RevPAR % change

(67.4)%


(60.4)%


(53.2)%


(53.3)%


(45.7)%


(35.7)%

Total RevPAR % change

(67.8)%


(61.1)%


(54.4)%


(52.2)%


(45.8)%


(37.2)%


July
2021


August
2021


September
2021


October
2021


November
2021


December
2021








Number of Hotels

32


32


32


32


32


32


Number of Rooms

9,349


9,349


9,349


9,349


9,349


9,349


Occupancy

70.0%


63.5%


62.5%


66.7%


60.2%


56.3%


ADR

$253.06


$234.00


$249.61


$267.90


$238.98


$271.21


RevPAR

$177.06


$148.52


$155.90


$178.63


$143.93


$152.56


Total RevPAR

$244.78


$209.30


$222.31


$254.23


$210.57


$221.05


2021 vs 2019

Occupancy change in bps

(1,232) bps


(1,794) bps


(1,744) bps


(1,483) bps


(1,495) bps


(1,247) bps


ADR Rate % change

8.6%


3.7%


(3.0)%


1.6%


5.2%


18.2%


RevPAR % change

(7.7)%


(19.1)%


(24.2)%


(16.9)%


(15.7)%


(3.3)%


Total RevPAR % change

(9.3)%


(19.3)%


(24.4)%


(18.9)%


(17.1)%


(1.5)%




(1)

The amounts for all periods presented exclude the two hotels sold during 2021, Frenchman's Reef and The Lexington Hotel and does not adjust for hotels that had
suspended operations. The amounts for all periods presented also include pre-acquisition operating results for Bourbon Orleans Hotel, Henderson Park Inn and
Henderson Beach Resort. The pre-acquisition operating results were obtained from the sellers of the hotels during the acquisition due diligence process. We have
made no adjustments to the amounts provided to us by the seller. The pre-acquisition operating results were not audited or reviewed by the Company's independent
auditors.



As a result of the spike in COVID-19 cases from the Omicron variant, we expect the change in total revenues and Hotel Adjusted EBITDA margins as compared to 2019 will be softer in the first quarter of 2022 than in the fourth quarter of 2021. Preliminary January 2022 total revenues are expected to be up 126% compared to January 2021 and down approximately 23% compared to January 2019. January 2022 ADR is expected to be higher than 2019 by approximately 20%, but is offset by a 22-point decrease in occupancy due to the impact on demand from Omicron. The monthly sequential comparison to 2019 for portfolio total revenue is expected to increase for the balance of the first quarter 2022.

Hotel Acquisitions

The Company completed four acquisitions during 2021 and early 2022, which have shifted the Company's portfolio to almost two-thirds leisure-oriented hotels and resorts.

  • Bourbon Orleans Hotel (New Orleans, Louisiana): This 220-room independent boutique lifestyle hotel, located at the heart of the French Quarter, was acquired in July 2021 for $89.9 million or a 7.0% capitalization rate on 2019 hotel net operating income ("NOI").

  • Henderson Park Inn (Destin, Florida): This 37-room beachfront resort Henderson Park Inn was acquired in July 2021 for $27.5 million. The resort has exceeded the Company's initial underwriting and generated a 9.0% yield on 2021 hotel NOI.

  • Henderson Beach Resort (Destin, Florida): This 170-room recently constructed luxury oceanfront resort was purchased in December 2021 for $112.5 million. The purchase price represents a 6.4% yield on 2021 hotel NOI and is expected to stabilize above an 8.0% yield.

  • Tranquility Bay Beachfront Resort (Marathon, Florida): This 103-unit luxury beachfront resort was purchased in January 2022 for $63.0 million. The resort has a total of 231 bedrooms in 87 two-bedroom and three-bedroom beach houses, as well as 16 tropical garden guest rooms. The purchase price represents an 11.6% yield on 2021 hotel NOI.

Loan Amendments

On December 27, 2021, the Company extended its only near-term debt maturity, the mortgage loan secured by the Salt Lake City Marriott, to January 2023.

On February 4, 2022, the Company further amended the credit agreements for its $400 million revolving credit facility and $400 million in unsecured term loans to extend the waiver period for the testing of financial covenants from December 31, 2021 to March 31, 2022, unless terminated early at the Company's option. The amendments also extend the modification of certain financial covenants, once quarterly testing resumes, to June 30, 2023. The amendments also provide the Company with the ability to acquire up to $550 million of unencumbered properties upon certain conditions.

Capital Expenditures

The Company invested approximately $44.5 million on capital improvements at its hotels during the year ended December 31, 2021. In addition, the Company spent approximately $2.7 million on the rebuild of Frenchman's Reef during the year ended December 31, 2021, but has no further obligation to fund any additional amounts related to the rebuild following the sale of the property on April 30, 2021. Significant projects in 2021 include the following:

  • The Lodge at Sonoma: The Company completed a renovation to reposition and rebrand the hotel to an Autograph Collection Hotel in July of 2021. The renovation includes a new restaurant by celebrity chef Michael Mina.

  • The Hythe Vail, a Luxury Collection Resort: The Company completed the final phase of a multi-year renovation to rebrand the Vail Marriott Mountain Resort as The Hythe Vail, a Luxury Collection Resort, in the fourth quarter of 2021.

  • Margaritaville Beach House Key West: The Company converted the Barbary Beach House Key West to the Margaritaville Beach Resort Key West in the fourth quarter of 2021.

The Company expects to spend approximately $100 million on capital improvements at its hotels in 2022, which includes the completion of certain projects that commenced in 2021. Significant projects in 2022 include the following:

  • JW Marriott Denver Cherry Creek: The Company is completing renovations to rebrand the hotel as Hotel Clio, a Luxury Collection Hotel at the end of the first quarter of 2022.

  • Hilton Boston Downtown/Faneuil Hall: The Company expects to commence a comprehensive renovation and repositioning of the hotel commencing in the fourth quarter of 2022. The hotel's franchise agreement expires in 2023.

  • Orchards Inn Sedona: The Company expects to commence the first phase of the upgrade renovation of the resort in mid-2022.

  • Hilton Burlington Lake Champlain: The Company expects to complete a renovation of the hotel to rebrand it as a Curio Collection Hotel in late 2022. The renovation is expected to include a new restaurant concept by a local renowned chef.

Balance Sheet and Liquidity

As of December 31, 2021, the Company's liquidity was $441.3 million, comprised of $38.6 million of unrestricted corporate cash, $92.7 million of unrestricted cash at its hotels and $310.0 million of capacity on its senior unsecured credit facility. As of December 31, 2021, the Company had $1.1 billion of total debt outstanding, which consisted of $580.5 million of property-specific, non-recourse mortgage debt, $400.0 million of unsecured term loans and $90.0 million of outstanding borrowings on its $400.0 million senior unsecured credit facility. Subsequent to December 31, 2021, the Company drew an additional $70.0 million on its senior unsecured credit facility to fund the Tranquility Bay Beachfront Resort acquisition.

Dividends

The Company declared a quarterly dividend of $0.515625 per share on its 8.250% Series A Cumulative Redeemable Preferred Stock to shareholders of record as of December 20, 2021. This dividend was paid on December 31, 2021. The Company has suspended its quarterly common stock cash dividends. The resumption in quarterly common dividends will be determined by the Company's Board of Directors after considering the Company's obligations under its various financing agreements, projected taxable income, compliance with its debt covenants, long-term operating projections, expected capital requirements and risks affecting the Company's business.

Earnings Call

The Company will host a conference call to discuss its fourth quarter and full year results on Friday, February 18, 2022, at 9:00 a.m. Eastern Time (ET). To participate in the live call, investors are invited to dial 844-287-6622 (for domestic callers) or 530-379-4559 (for international callers). The participant passcode is 6819388. A live webcast of the call will be available via the investor relations section of DiamondRock Hospitality Company's website at www.drhc.com or www.earnings.com. For those unable to listen to the call live, a taped rebroadcast will be available two hours after completion of the live call through March 11, 2022. To access the rebroadcast, dial 855-859-2056, or internationally at 404-537-3406, and use conference ID 6819388. A replay of the webcast will also be archived on the website for one week.

About the Company

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 leisure destinations and top gateway markets. The Company currently owns 33 premium quality hotels with over 9,400 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. For further information on the Company and its portfolio, please visit DiamondRock Hospitality Company's website at www.drhc.com.

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," "plan" and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: the adverse impact of the novel coronavirus (COVID-19) on the U.S., regional and global economies, travel, the hospitality industry, and the financial condition and results of operations of the Company and its hotels; national and local economic and business conditions, including the potential for additional terrorist attacks, that will affect occupancy rates at the Company's hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the Company's indebtedness and its ability to obtain covenant waivers on its credit agreements for its senior unsecured credit facility and unsecured term loans; relationships with property managers; the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; and other risk factors contained in the Company's filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release, and the Company undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)



December 31, 2021


December 31, 2020

ASSETS

(unaudited)



Property and equipment, net

$ 2,651,444


$ 2,817,356

Right-of-use assets

100,212


96,673

Restricted cash

36,887


23,050

Due from hotel managers

120,671


69,495

Prepaid and other assets

17,472


28,403

Cash and cash equivalents

38,620


111,796

Total assets

$ 2,965,306


$ 3,146,773

LIABILITIES AND EQUITY




Liabilities:




Mortgage and other debt, net of unamortized debt issuance costs

$ 578,651


$ 595,149

Unsecured term loans, net of unamortized debt issuance costs

398,572


398,550

Senior unsecured credit facility

90,000


55,000

Total debt

1,067,223


1,048,699





Lease liabilities

108,605


104,973

Deferred rent

60,800


56,344

Due to hotel managers

85,493


95,548

Unfavorable contract liabilities, net

62,780


64,796

Accounts payable and accrued expenses

51,238


46,542

Deferred income related to key money, net

8,203


10,946

Total liabilities

1,444,342


1,427,848

Equity:




Preferred stock, $0.01 par value; 10,000,000 shares authorized;




8.250% Series A Cumulative Redeemable Preferred Stock (liquidation
preference $25.00 per share), 4,760,000 shares issued and outstanding at
December 31, 2021 and 2020

48


48

Common stock, $0.01 par value; 400,000,000 shares authorized; 210,746,895
and 210,073,514 shares issued and outstanding at December 31, 2021 and
2020, respectively

2,107


2,101

Additional paid-in capital

2,293,990


2,285,491

Deficit

(780,931)


(576,531)

Total stockholders' equity

1,515,214


1,711,109

Noncontrolling interests

5,750


7,816

Total equity

1,520,964


1,718,925

Total liabilities and equity

$ 2,965,306


$ 3,146,773

DIAMONDROCK HOSPITALITY COMPANY

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)



Three Months Ended December 31,


Year Ended December 31,


2021


2020


2021


2020

Revenues:








Rooms

$ 133,004


$ 38,670


$ 399,055


$ 196,736

Food and beverage

41,690


12,037


117,742


68,566

Other

15,240


8,340


50,337


34,186

Total revenues

189,934


59,047


567,134


299,488

Operating Expenses:








Rooms

34,447


14,015


102,183


68,603

Food and beverage

31,704


12,546


89,795


58,391

Management fees

3,694


934


10,208


3,578

Franchise fees

6,472


1,729


18,665


10,131

Other hotel expenses

73,610


41,872


240,818


213,631

Depreciation and amortization

25,754


27,319


102,963


114,716

Impairment losses


174,120


126,697


174,120

Corporate expenses

8,762


7,751


32,552


27,401

Business interruption insurance income

(705)


(2,208)


(705)


(2,208)

Total operating expenses, net

183,738


278,078


723,176


668,363









Interest and other income, net

(487)


(449)


(947)


(391)

Interest expense

7,797


10,330


37,043


53,995

Total other expenses, net

7,310


9,881


36,096


53,604

Loss before income taxes...

(1,114)


(228,912)


(192,138)


(422,479)

Income tax (expense) benefit

(1,834)


20,599


(3,267)


26,452

Net loss

(2,948)


(208,313)


(195,405)


(396,027)

Less: Net loss attributable to noncontrolling
interests

9


871