On August 1, 2024, Diamondrock Hospitality Co (DRH, Financial) released its 8-K filing for the second quarter of 2024. Diamondrock Hospitality Company is a real estate investment trust that owns lodging properties. Its business is to acquire, own, manage, and renovate full-service hotel properties in the United States. It operates in cities such as Chicago, Boston, New York, Denver, and others. Within DiamondRock's holdings, the majority of the hotel brands include Marriott, Starwood, and Hilton. The revenue is divided between room, food and beverage, and others. The room segment contributes the majority of the revenue. The firm's customers include leisure transient, business transient, and group customers.
Performance Overview
Diamondrock Hospitality Co (DRH, Financial) reported net income of $24.6 million for the second quarter of 2024, translating to earnings per diluted share of $0.10. This performance was driven by comparable total revenues of $309.3 million, marking a 4.8% increase from the same period in 2023. The company also reported a comparable RevPAR of $229.21, a 2.2% increase from the second quarter of 2023.
Key Financial Achievements
Several financial metrics highlighted Diamondrock's robust performance:
- Comparable Hotel Adjusted EBITDA was $99.5 million, a 5.5% increase from Q2 2023.
- Adjusted EBITDA stood at $92.5 million, reflecting a 7.8% year-over-year growth.
- Adjusted FFO was $72.5 million, with Adjusted FFO per diluted share at $0.34.
- The company repurchased 2.5 million shares of its common stock at an average price of $8.39 per share, totaling approximately $20.6 million.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Income | $24.6 million | $39.1 million | -37.1% |
| Comparable Revenues | $309.3 million | $295.1 million | 4.8% |
| Adjusted EBITDA | $92.5 million | $85.8 million | 7.8% |
| Adjusted FFO | $72.5 million | $67.3 million | 7.7% |
Strategic Initiatives and Challenges
Diamondrock's strategic initiatives included the rebranding of the Hilton Burlington Lake Champlain to Hotel Champlain Burlington, Curio Collection by Hilton, which is expected to yield a strong return on investment. The company also continued its share repurchase activity, with a total of 2.8 million shares repurchased in 2024 at an average price of $8.36 per share.
However, the company faces challenges such as economic uncertainties and election-related impacts on group demand. Despite these challenges, Diamondrock remains focused on optimizing efficiency and reducing corporate overhead.
Balance Sheet and Liquidity
As of June 30, 2024, Diamondrock reported $629.5 million in liquidity, including $125.2 million in unrestricted corporate cash and full availability on its $400 million senior unsecured credit facility. The company had $1.2 billion in total debt outstanding, comprising $800 million in unsecured term loans and $373.3 million in property-specific, non-recourse mortgage debt.
Guidance and Outlook
Due to strong Q2 performance, Diamondrock raised its full-year 2024 guidance. The company now expects Adjusted FFO per share to range between $0.95 and $1.00, and Adjusted EBITDA to range between $278 million and $290 million.
"Second quarter operating results surpassed our expectations. Our strategy to focus on building a larger base of group demand drove strong room revenues and significantly stronger food and beverage revenues, particularly at our larger urban properties. Group pace in the second half of the year is strong, but we remain vigilant given the uncertain economic and election backdrop." - Jeffrey J. Donnelly, Chief Executive Officer of DiamondRock Hospitality Company
For more detailed financial information, please refer to the company's 8-K filing.
Explore the complete 8-K earnings release (here) from Diamondrock Hospitality Co for further details.
