Diamondrock Hospitality Co. (NYSE:DRH) Q4 2017 Earnings Conference Call Transcript
Feb 27, 2018 • 09:00 am ET
Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2017 DiamondRock Hospitality Company Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions) As a reminder, today's conference is being recorded.
I'd now like to turn the call over to Mr. Sean Kensil, Director of Finance. Sir, you may begin.
Thank you, Victor. Good morning, everyone, and welcome to DiamondRock's full year and fourth quarter 2017 earnings call and webcast.
(Forward-Looking Cautionary Statements)
In addition, as management discusses certain non-GAAP financial measures, it may be helpful to review the reconciliations to GAAP set forth in our earnings press release.
This morning, Mark Brugger, our President and Chief Executive Officer, will provide a brief overview of our fourth quarter results, recent acquisition activity as well as discuss the Company's 2018 outlook. Following remarks, we will open the line for questions.
With that, I'm pleased to turn the call over to Mark.
Good morning, everyone, and thank you for joining us on DiamondRock's fourth quarter earnings call. Let me begin by saying that we are pleased to be able to announce fourth quarter and full year results that exceeded management's expectations and were at the high end of revised guidance. In addition to covering details on the fourth quarter results today, we will provide you with color on our pending acquisitions, as well as on our program to mind value from internal investment opportunities. At the conclusion of the prepared remarks, we'll provide our outlook for 2018.
The general economy exhibited solid performance in the fourth quarter. Last year's GDP growth of 2.3% showed good acceleration from the anemic 1.5% growth in the prior year. While I won't get into review all of the economic indicators, the overall picture is that of a growing global and US economy. In fact, I'd say our Company is incrementally more positive on the US economy than on our last earnings call as enactment of tax reform should provide a little more momentum to an already healthy economy.
Turning to lodging. Fourth quarter RevPAR growth was 4.2% for the industry. This was well ahead of most of the industry's expectations and a clear acceleration from third quarter growth of 1.9%. However, the quarter did benefit from the Jewish holiday shift and hurricane recovery tailwinds in the Texas and Florida markets. Without the benefit in those two markets, industry RevPAR growth is estimated by experts to have been more modest at 2.3%. Importantly, we continue to see a trend of higher supply in gateway markets impacting results there. RevPAR growth for urban and upper upscale hotels was about a 100 basis points below the national average.
Let's turn specifically to DiamondRock's 2017 results. Please note that all portfolio stats such as RevPAR and hotel adjusted EBITDA margins are presented on a comparable basis as defined in our press release. Overall, we are happy with the fourth quarter