DiamondRock Hospitality Company Provides Update And Announces Steps To Mitigate COVID-19 Impact
The Company is withdrawing the guidance it issued on
- Nearly 85% of the group cancellations are concentrated in March (55%) and April (30%).
- At this time, less than 3% of group business cancellations extend beyond
- Cancellation fees are expected to mitigate a portion of the expected losses.
- Geographically, nearly 41% of the group business cancellations are in
Boston, 8.5% are in Chicago, 8.0% are in Fort Worthand less than 3% are in New York.
In order to mitigate the financial impact of the slowdown in travel activity, DiamondRock is taking aggressive action at both the property and corporate level.
- To ensure DiamondRock has significant funds to meet its ongoing obligations, the Company has drawn the remaining
$360 millionon its $400 millioncredit facility. The Company currently holds unrestricted cash of approximately $380 million.
- The Board of Directors has approved a suspension of the quarterly dividend commencing with the first quarter dividend that would have been paid in
April 2020. DiamondRock intends to pay a fourth quarter 2020 dividend sufficient to cover 100% of its taxable income for the year ending December 31, 2020. Depending upon the ultimate distribution requirement, the suspension of the dividend could preserve up to $100 millionof capital.
In coordination with its hotel operators, the Company has developed actions plans to significantly reduce costs at each of its hotels:
- The Company has suspended operations at hotel restaurants and outlets where demand is insufficient or local prohibitions do not permit social gatherings.
- The Company is proactively "right-sizing" hotels to current demand levels in order to aggressively reduce costs and maximize efficiency.
- The Company has cancelled or deferred the vast majority of its capital expenditures.
About the Company
This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," "forecast," "plan" and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made, including statements related to the anticipated dividend payments. These risks include, but are not limited to: national and local economic and business conditions, including the impact of COVID-19 on occupancy rates at the Company's hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of the Company's indebtedness; relationships with property managers; the ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; and other risk factors contained in the Company's filings with the
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CONTACTS: Jeff Donnelly, Chief Financial Officer, (240) 744-1190, or Briony Quinn, Senior Vice President, (240) 744-1196