Diamondrock Hospitality Company Earnings Call Nuggets: RevPAR Growth, Frenchman’s
On Monday, Diamondrock Hospitality Company (NYSE:DRH) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Sule Sauvigne – Barclays Capital: I am wondering, you mentioned that New York City was part of the original raising guidance given the strong performance there and I’m just wondering what kind of RevPAR growth are you assuming for your hotels in that market.
Mark W. Brugger – CEO: I can tell you that the RevPAR growth in the first quarter was about 10.7% and the market is up 8.3%, the total market and that includes supply up at about 1.9% and demand up at about 9.3%. So the first quarter is typically the softest quarter in New York so that makes us feel pretty good about the balance of the year.
Sule Sauvigne – Barclays Capital: I think last quarter you had said you are expecting New York City hotels to be up 5% to 7%. This year though is it fair to assume may be now you are expecting somewhat higher than that?
Sean M. Mahoney – EVP, CFO and Treasurer: Sule this is Sean. In our release in the first – year end we said 5% to 7% our expectations now for New York City are 6% to 8% for the year.
Eli Hackel – Goldman Sachs: Just have two questions. First just on Frenchman’s, can you give us may be a lit bit better perspective in terms of when the property should really start to ramp, it was down – it was up a lot in the quarter, it was down a lot in last year’s quarter but net-net the past two years it’s about the RevPAR is where it was. Should we really start to ramp through the year and that’s where you really get your return? Also just a quick question on New York, can you give any commentary in terms of what you are seeing on two fronts, one from the financial services industry and two do you guys track international travelers to your hotels and have you really been seeing an increase in the international travel side. And the other thing on New York just your current thoughts about the supply and also specifically supply in the Times Square area which is seeing an increase over the next year or so. Those questions would be great. Thank you.
John L. Williams – President and COO: Okay Eli this is John on Frenchman’s we are seeing dramatic increases in revenue and group revenues, beginning in the second quarter. If you remember the renovation started in the third quarter. So the first two quarters are somewhat comparable, but for the balance of the year we’re seeing revenue — revenue group pace up 104% and that’s about 95% rooms and 5% ADR. So, I think we expect the hotel to come out at or above pro forma this year and then big question is can we continue to ramp it in years two and three which we project on our pro forma. As far as New York international travel we don’t specifically track that except at the Lexington hotel. At the Lexington hotel we are not seen a dramatic falloff in international business as a matter fact Lexington sort of surprised us on the upside in the first quarter. I’d say that’s two Courtyards, Chelsea is a little bit more challenge because of supply in the Chelsea area. As far as supply Times Square. We are much less concerned being that our development project is at 42nd and Broadway the heart of Times Square I think that demand sort of emanates from 42nd and Broadway. So we’re not concerned about it at this point in Times Square. We’re little bit concerned about it in the balance of the city although as I just said. Supply is down to about 1.9% this year and demand is up over 8%. So it appears that demand is keeping up and even staying ahead of supply.