Diamondrock Hospitality Co. (NYSE:DRH) Q3 2019 Earnings Conference Call Transcript
Nov 08, 2019 • 11:00 am ET
Ladies and gentlemen, thank you for standing by and welcome to the DiamondRock Hospitality Company Third Quarter 2019 Earnings Conference Call. At this time all participants lines are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]
I would now like to hand the conference over to speaker today Ms. Briony Quinn, Senior Vice President and Treasurer.
Briony R. Quinn
Thank you, Howard, and good morning everyone. Welcome to DiamondRock's third quarter 2019 earnings call.
Before we begin, I'd like to remind everyone that many of the comments made today are considered 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 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.
Mark W. Brugger
Good morning, and thank you for your continued interest in DiamondRock. We are pleased to report solid operating and financial results for the third quarter.
Before I get into the results, I'd like to first provide an overview of the economic and industry backdrop, after which I'll turn the call over to our new Chief Financial Officer, Jeff Donnelly, who will provide additional color on the portfolio performance as well as a balance sheet review. I'll then conclude the prepared remarks with commentary on guidance and our outlook for the future.
The current economic expansion continues to set records for duration, but the cloud of uncertainty around the political landscape and trade environment is creating a pause on business fixed investment and has tempered the near-term outlook for growth. Encouragingly, corporate profits continue to see steady gains and employment rates remain exceptionally strong and this is fueling outsized disposable income and personal consumption growth. We believe these factors should continue to benefit our destination resort hotels and help support our portfolio results until the cloud of uncertainty clear and business consumption can hopefully reaccelerate.
Lodging industry fundamentals were muted in the recent quarter. According to STR, RevPAR growth in the US overall for the third quarter was up 0.7%. This growth was uneven with the top 25 markets declining 0.4% and all other markets registering 1.3% growth. Importantly, demand continues to be healthy in the major markets, increasing 2.3% versus 1.6% growth in all other markets. While demand was in superior in the top 25 markets, underperformance of RevPAR growth in the top markets was primarily attributable to new hotel supply as these markets are the most desirable for investors, developers, and lenders. Rooms available in the top 25 markets, increased by 2.6%, which is nearly 100 basis points higher than the supply growth in all other markets. We expect that these supply pressures will persist