Release Date: May 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Leadership and organizational changes are expected to enhance decision-making and value creation.
- Strong group demand with first-quarter group sales production steady versus last year.
- Total revenues increased by 3.8% due to strong food and beverage performance.
- Significant increase in group pace year over year, with 85% of budgeted full-year group revenue already on the books.
- Successful recognition of three hotels by the Michelin Guide, highlighting the company's quality of service and offerings.
Negative Points
- RevPAR declined by 0.4% in the quarter compared to the prior year, indicating some softness in the leisure segment.
- Total expenses increased by over 6%, driven by higher group banquet volumes and associated costs.
- Luxury resorts experienced a 7.6% RevPAR decline, underperforming compared to lifestyle resorts.
- High interest rates and inflation are putting pressure on consumer spending, potentially affecting leisure travel.
- Loyalty redemptions at resorts were down significantly, impacting the ability to fill rooms through less profitable channels.
Q & A Highlights
Q: By your last comments, Jeff, is it fair to say that DiamondRock will likely be more active recycling capital going forward than you have been previously?
A: Jeffrey Donnelly, CEO & Director of Diamondrock Hospitality Co, clarified that there is no mandate to be more acquisitive or focused on sales. The company aims to be more deliberate about asset management, planning to dispose of assets and recycle capital over the next 24 to 36 months, but not necessarily moving quicker.
Q: If you were providing total RevPAR guidance, where would that be today? And how has that changed since your initial guide? Did you say what April RevPAR was?
A: Jeffrey Donnelly, CEO & Director of Diamondrock Hospitality Co, stated that the view on total RevPAR, including out-of-room spend, has not changed from the beginning of the year. April RevPAR is trending about flat.
Q: On resorts and some of the leisure-oriented assets, do you think we're at a point where we could begin to see ADRs stabilize or even increase?
A: Justin Leonard, President & COO of Diamondrock Hospitality Co, mentioned a recent weakness in ADRs but nothing too concerning. The company is intentionally shifting segmentation from transient to group to build base, which may affect rate stability positively.
Q: You mentioned the shadow pipeline in the transaction market building, but capital markets remain challenging. Are you starting to build a pipeline of potential dispositions to prepare for any opportunities that emerge?
A: Jeffrey Donnelly, CEO & Director of Diamondrock Hospitality Co, indicated that the company is being more deliberate rather than reactive about dispositions, ensuring assets are in the best position for sale. There are assets considered for future sale, but there is no immediate mandate to do so.
Q: Can you talk a little bit about some of the pitches maybe you did not swing at over the past few years or what types of pitches you'd be more willing to swing at with the new streamlined org structure?
A: Jeffrey Donnelly, CEO & Director of Diamondrock Hospitality Co, emphasized a strategic shift towards manufacturing core assets with limited capital intensity, focusing on creating value through smart acquisitions and avoiding crowded market trends.
Q: In terms of points per room night, I noticed myself that the points required to redeem have gone up. So is that a driving issue there? And also, how much control do you have as an owner on the whole points per night, I guess, values?
A: Justin Leonard, President & COO of Diamondrock Hospitality Co, explained that loyalty programs have evolved to focus more on credit card spend, affecting point balances. The increase in points required is partly due to occupancy recovery, and hotel owners have limited control over these programs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
