Diamondrock Hospitality Company

Good day and thank you for standing by. Welcome to the Diamond Rock Hospitality Company's fourth quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1-1 on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. And I would now like to hand the conference over to your speaker today, Ms. Bryony Quinn, Senior Vice President and Treasurer. Ms. Quinn, please go ahead.

Thank you, Chris. Good morning, everyone. Welcome to Diamond Rock's fourth quarter 2022 earnings column webcast. Before we get started, let me remind everyone that many of our comments today are not historical fact and are considered to be forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from those expressed in or implied by our comments today. In addition, on today's call, we will discuss certain non-GAAP financial information. A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release. With that, I'm pleased to turn the call over to Mark Brugger, our President and Chief Executive Officer.

Good morning, and thank you for joining us today. I'm here with our entire executive team, and we'll be happy to take your questions after the prepared remarks. The fourth quarter capped off the best year in the history of Dimerock with record revenues, record margins, and record profits. For the full year, comparable hotel adjusted EBITDA was $319.8 million. This was an increase of 121.9% or $175.7 million over 2021. Results even surpassed pre-pandemic 2019 with comparable rep are better by 5.5% and comparable hotel adjusted EBITDA better by $38.4 million. Importantly, comparable profit margins were 31.36%, surpassing our pre-pandemic peak by 184 basis points. These tremendous operating results were made possible by the consistent execution of our strategy to curate a portfolio that is uniquely focused on the leading secular travel trends. The portfolio we have assembled is comprised of irreplaceable experiential resorts and urban destination hotels that are tailored to be the hotel of choice in their particular markets. Our focus is paying off, as our portfolio performance has been among the best in the lodging REIT sector. And while the superior operating performance led to strong relative total shareholder returns during the past few years, Our stock today nevertheless trades at more than a 30% discount to consensus net asset value. We are proud of what we have built at Dimerock, and we will continue to work diligently to close that discount. For example, during the fourth quarter, we repurchased 1.6 million shares at an average price of only $7.81 per share. Going forward, we will use the power of our low-leverage balance sheet and ample liquidity to capitalize on these types of opportunities. Let's look a little closer at the company's accomplishments in 2022. First, we completed numerous ROI projects, including the Clio luxury collection conversion, the Bethesda Suites brand conversion, and executing our business plans for the repositionings completed in late 2021. of the Hythe Luxury Collection in Vail, the Margaritaville Resort in Key West, and the Lodge Resort in Sonoma. Second, we acquired three incredibly high quality lifestyle hotels in 2022 with an average rev par of over $450 and a stabilized NOI yield averaging over 9%. And third, we completed our largest ever financing by favorably recasting $1.2 billion in bank debt. Dimerock is also well positioned for the future. We enter 2023 with a number of advantages, including one, an optimally balanced portfolio to the leisure, group, and business demand segments. Note that earnings mix in 2023 is projected to be about 60% from our urban markets and just over 40% from our resort markets. Two, a high number of ROI projects completed and pending that should deliver double-digit returns. Three, a portfolio that is the least encumbered of all the full-service public lodging REITs, which gives us enhanced liquidity, control, and exit value. And fourth and finally, a balance sheet advantage with nearly $600 million in liquidity to opportunistically drive incremental shareholder value. On the topic of external growth, we expect to have an advantage on acquisitions this year, as the debt markets are likely to remain very challenging for PE firms and other private buyers in 2023. With our significant dry powder, we are ready to pounce on opportunities that emerge. While there is a low volume of deals currently on the market, a core skill of our team remains in finding off-market deals and unique opportunities. Our most recent acquisition, just a few months ago, illustrates that point. The deal for the Lake Austin Spa Resort came about through a relationship that we had cultivated over a number of years with a well-known private equity firm. This firm had originally uncovered the opportunity and was very excited about it. They'd actually placed the property under contract, completed due diligence, and were about to go hard on their deposit when their lender walked from its loan commitment as the debt markets froze up last summer. We were then their first call. And this created an opportunity for us to quietly come in and negotiate for the resort with a multi-million dollar discount as the seller did not want to have a second failed deal. Lake Austin is a spectacular acquisition for us. We bought a high-end resort at a trailing NOI cap rate of nearly 9%, an almost unheard of yield for a luxury property, one which will generate our highest total rep bar and EBITDA per key. As good as that is, Since closing on the deal, we have confirmed that there are considerable expansion possibilities on the site, which will really make this one a home run. As we go forward, these are the kind of deals that we are looking for. High quality, great returns, and value-add opportunities. I'll now turn the call over to Jeff to discuss the numbers in greater detail. Jeff?