Diamondrock Hospitality Co. (NYSE:DRH) Q1 2020 Earnings Conference Call - Final Transcript

May 12, 2020 • 09:00 am ET

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Diamondrock Hospitality Co. (NYSE:DRH) Q1 2020 Earnings Conference Call - Final Transcript

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Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the DiamondRock Hospitality First Quarter 2020 Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference to your speaker today, Briony Quinn, Senior Vice President and Treasurer. Please go ahead, ma'am.

Executive
Briony R. Quinn

Thank you, and good morning, everyone. Welcome to DiamondRock's first quarter 2020 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.

Executive
Mark W. Brugger

Good morning, and thank you for your interest in DiamondRock.

I want to start by extending our thoughts and prayers to those who have been affected by the ongoing pandemic. At our core, we are about bringing people together and sharing experiences. It is personally painful to see people isolated and hotel associates out of work. Based on the current flattening trend lines, we are hopeful that the US has seen the worst of the pandemic. Together, we will make it through this, and we eagerly look forward to welcoming back the thousands of valued hotel associates and the tensof thousands of hotel guests through the front doors of our hotels and resorts.

Today, I'll focus my remarks on the steps we've taken here at DiamondRock to respond to the COVID-19 crisis, after which I'll turn the call over to our Chief Financial Officer, Jeff Donnelly, to review first quarter results and our liquidity. I'll then conclude with a few thoughts on the future.

In understanding DiamondRock's COVID-19 action plan, it is helpful to review where we were before the epidemic started impacting us. Probably most importantly, as at the end of 2019, DiamondRock had low leverage with about 30% debt to asset value, net debt to EBITDA of only 3.7 times, no preferred equity, and fixed charge coverage on our debt was nearly 3.5 times. We also had $325 million untapped on the credit facility and only one small debt maturity in the next three years. Operationally, pre-crisis, our high quality and diverse portfolio was outperforming. Our geography and ROI projects were paying off with portfolio RevPAR up 13.9% in January and 7.2% in February.

This strong starting point did not slow us from rapidly responding to the impact of the healthcare crisis that gripped the US with unprecedented force starting in March. Almost immediately, we enacted far-reaching action plans to fortify our balance sheet by building cash and dramatically curtailing costs at every level. Let me review for you the steps we have taken