Hotel Management Network

Daily Newsletter

08 August 2023

Daily Newsletter

DiamondRock Hospitality net income dips 25.7% in Q2

The company’s RevPAR for this period was $333.88m.

DiamondRock Hospitality has reported a net income of $39.13m for the second quarter (Q2) of 2023, a decline of 25.7% from $52.7m a year ago.

For this quarter that ended 30 June 2023, net income attributable to common stockholders declined to $36.51m from $50.06m last year.

Diluted earnings per share available to common stockholders was $0.17 versus $0.23 in the year ago period.

The company’s total revenues for the quarter were $291.24m, up by 3.4% from $281.4m a year earlier.

DiamondRock’s revenue per available room (RevPAR) for reported period was $333.88m as against $331.56m last year.

The company’s adjusted funds from operations totalled $67.3m.

Adjusted earnings before interest, taxes, depreciation and amortisation declined by 6.7% to $85.76m from $91.99m in 2022.

During the quarter, DiamondRock repurchased 262,054 shares of its common stock at an average price of $7.67 per share and a total purchase price of $2m.

DiamondRock Hospitality CEO and president Mark Brugger said: “Our urban portfolio delivered strong total revenue growth of 7.1% with solid performance from group, but rate of improvement in business transient demand appears to be moderating.

“Competition from international destinations and cruise lines led our smaller portfolio of resorts to rebalance to a 'new normal' with total revenues declining 8.3%.

“However, revenues from our resorts remained 33.1% ahead of the comparable period in 2019 as destination resorts remain the biggest winner from an acceleration in secular demand for leisure travel. After quarter end, we completed the major repositioning of The Dagny in Boston, as well as acquiring a very attractive boutique resort in Montana.”

Demand for upscale and luxurious products has been rising steadily in the travel and tourism sector

The theme of premiumization, and the upscale and luxury markets, now have the opportunity to thrive in an industry that has had to rapidly change to meet new changes in traveler demands. The increased need for privacy, a greater focus on health and wellbeing, a desire to tick off ‘bucket list’ experiences, unintentional saving of money, the tendency to take longer trips, the focus on eco-tourism, and an increase in millionaires means the theme of premiumization will continue to grow in importance. The travel industry will experience a surge in demand for higher-end and customized offerings as experiential consumption keeps growing. For many, ‘premium’ means a variety of things. However, it refers to first-rate service, extreme comfort, and one-of-a-kind experiences in travel and tourism. Premiumization is closely linked to luxury travel. While premiumization attracts only a small number of global travelers, it is important for companies as it is a valuable revenue stream that is unlikely to be impacted by external factors like economic downturns. Personalization is key in premium offerings, the shift from focusing solely on premium products to an emphasis on delivering exclusive and personalized offerings is apparent. Therefore, smart destinations can help to create hyper-personalized services and products. Leveraging the Internet of Things, destinations can curate offerings based on gathering real-time data on guest preferences and behaviors. This enables the industry to transcend typical offerings and remain competitive.