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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission File Number: 001-32514
DIAMONDROCK HOSPITALITY COMPANY
(Exact Name of Registrant as Specified in Its Charter)

Maryland |  | 20-1180098
(State of Incorporation) |  | (I.R.S. Employer Identification No.)
2 Bethesda Metro Center, Suite 1400, | Bethesda, | Maryland |  | 20814
(Address of Principal Executive Offices) |  | (Zip Code)

(240) 744-1150
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Securities Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common stock, $0.01 par value per share | DRH | New York Stock Exchange
8.250% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share | DRH Pr A | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☑ |  | Accelerated filer | ☐ |  | Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
The registrant had 206,311,246 shares of its $0.01 par value common stock outstanding as of May 1, 2025.

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INDEX

| Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited): |
Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024 | 1
Consolidated Statements of Operations and Comprehensive Income for the Three Months Ended March 31, 2025 and 2024 | 2
Consolidated Statements of Equity for the Three Months Ended March 31, 2025 and 2024 | 4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 | 5
Notes to the Consolidated Financial Statements | 7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18
Item 3. Quantitative and Qualitative Disclosures A bout Market Risk | 31
Item 4. Controls and Procedures | 31
PART II. OTHER INFORMATION
Item 1. Legal Proceedings | 32
Item 1A. Risk Factors | 32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 33
Item 3. Defaults Upon Senior Securities | 34
Item 4. Mine Safety Disclosures | 34
Item 5. Other Information | 34
Item 6. Exhibits | 35

Table of Contents
PART I. FINANCIAL INFORMATION
Item I.Financial Statements
DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

| March 31, 2025 |  | December 31, 2024
ASSETS | (Unaudited) |  |
Property and equipment, net | $ | 2,625,136 |  |  | $ | 2,631,221 |
Assets held for sale | — |  |  | 93,400 |
Right-of-use assets | 89,707 |  |  | 89,931 |
Restricted cash | 49,638 |  |  | 47,408 |
Due from hotel managers | 160,991 |  |  | 145,947 |
Prepaid and other assets | 75,504 |  |  | 82,963 |
Cash and cash equivalents | 100,621 |  |  | 81,381 |
Total assets | $ | 3,101,597 |  |  | $ | 3,172,251 |
LIABILITIES AND EQUITY |  |  |
Liabilities: |  |  |
Debt, net of unamortized debt issuance costs | 1,092,941 |  |  | 1,095,294 |
Lease liabilities | 85,674 |  |  | 85,235 |
Due to hotel managers | 123,724 |  |  | 121,734 |
Liabilities of assets held for sale | — |  |  | 3,352 |
Deferred rent | 74,584 |  |  | 73,535 |
Unfavorable contract liabilities, net | 57,793 |  |  | 58,208 |
Accounts payable and accrued expenses | 68,250 |  |  | 79,201 |
Distributions declared and unpaid | 17,334 |  |  | 49,034 |
Deferred income related to key money, net | 7,645 |  |  | 7,726 |
Total liabilities | 1,527,945 |  |  | 1,573,319 |
Equity: |  |  |
Preferred stock, $0.01 par value; 10,000,000 shares authorized: |  |  |
8.250% Series A Cumulative Redeemable Preferred Stock (liquidation preference $25.00 per share), 4,760,000 shares issued and outstanding at March 31, 2025 and December 31, 2024 | 48 |  |  | 48 |
Common stock, $0.01 par value; 400,000,000 shares authorized; 206,972,935 and 207,592,210 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively | 2,069 |  |  | 2,076 |
Additional paid-in capital | 2,253,718 |  |  | 2,268,521 |
Accumulated other comprehensive loss | (4,511) |  |  | (1,360) |
Distributions in excess of earnings | (686,428) |  |  | (679,050) |
Total stockholders’ equity | 1,564,896 |  |  | 1,590,235 |
Noncontrolling interests | 8,756 |  |  | 8,697 |
Total equity | 1,573,652 |  |  | 1,598,932 |
Total liabilities and equity | $ | 3,101,597 |  |  | $ | 3,172,251 |

The accompanying notes are an integral part of these consolidated financial statements.
-1-

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DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share amounts)
(Unaudited)

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Revenues: |  |  |  |  |  |  |
Rooms | $ | 163,118 |  |  | $ | 163,507 |  |  |  |  |
Food and beverage | 66,841 |  |  | 68,381 |  |  |  |  |
Other | 24,894 |  |  | 24,535 |  |  |  |  |
Total revenues | 254,853 |  |  | 256,423 |  |  |  |  |
Operating Expenses: |  |  |  |  |  |  |
Rooms | 43,843 |  |  | 43,968 |  |  |  |  |
Food and beverage | 46,417 |  |  | 47,239 |  |  |  |  |
Other departmental and support expenses | 65,286 |  |  | 64,600 |  |  |  |  |
Management fees | 5,018 |  |  | 5,310 |  |  |  |  |
Franchise fees | 9,048 |  |  | 9,026 |  |  |  |  |
Other property-level expenses | 24,899 |  |  | 26,618 |  |  |  |  |
Depreciation and amortization | 27,892 |  |  | 28,313 |  |  |  |  |
Corporate expenses | 7,683 |  |  | 8,904 |  |  |  |  |
Total operating expenses | 230,086 |  |  | 233,978 |  |  |  |  |
Interest expense | 15,158 |  |  | 16,246 |  |  |  |  |
Interest (income) and other (income) expense, net | (1,464) |  |  | (1,069) |  |  |  |  |
Total other expenses, net | 13,694 |  |  | 15,177 |  |  |  |  |
Income before income taxes | 11,073 |  |  | 7,268 |  |  |  |  |
Income tax benefit | 842 |  |  | 1,090 |  |  |  |  |
Net income | 11,915 |  |  | 8,358 |  |  |  |  |
Less: Net income attributable to noncontrolling interests | (58) |  |  | (30) |  |  |  |  |
Net income attributable to the Company | 11,857 |  |  | 8,328 |  |  |  |  |
Distributions to preferred stockholders | (2,454) |  |  | (2,454) |  |  |  |  |
Net income attributable to common stockholders | $ | 9,403 |  |  | $ | 5,874 |  |  |  |  |
Earnings per share: |  |  |  |  |  |  |
Earnings per share available to common stockholders—basic | $ | 0.05 |  |  | $ | 0.03 |  |  |  |  |
Earnings per share available to common stockholders—diluted | $ | 0.04 |  |  | $ | 0.03 |  |  |  |  |

The accompanying notes are an integral part of these consolidated financial statements.
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DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - (CONTINUED)
(In thousands, except per share amounts)
(Unaudited)

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Comprehensive Income: |  |  |  |  |  |  |
Net income | $ | 11,915 |  |  | $ | 8,358 |  |  |  |  |
Other comprehensive income: |  |  |  |  |  |  |
Unrealized (loss) gain on interest rate derivative instruments | (2,548) |  |  | 960 |  |  |  |  |
Unrealized gain on Rabbi Trust assets | 54 |  |  | 299 |  |  |  |  |
Amounts reclassified from other comprehensive income | (673) |  |  | — |  |  |  |  |
Comprehensive income | 8,748 |  |  | 9,617 |  |  |  |  |
Comprehensive income attributable to noncontrolling interests | (42) |  |  | (34) |  |  |  |  |
Comprehensive income attributable to the Company | $ | 8,706 |  |  | $ | 9,583 |  |  |  |  |

The accompanying notes are an integral part of these consolidated financial statements.
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DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(In thousands, except share and per share amounts)
(Unaudited)

| Preferred Stock |  | Common Stock |  |  |  |  |  |  |  |  |  |  |  |
| Shares |  | Par Value |  | Shares |  | Par Value |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Income (Loss) |  | Distributions in Excess of Earnings |  | Total Stockholders' Equity |  | Noncontrolling Interests |  | Total Equity
Balance at December 31, 2024 | 4,760,000 |  |  | $ | 48 |  |  | 207,592,210 |  |  | $ | 2,076 |  |  | $ | 2,268,521 |  |  | $ | (1,360) |  |  | $ | (679,050) |  |  | $ | 1,590,235 |  |  | $ | 8,697 |  |  | $ | 1,598,932 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 11,857 |  |  | 11,857 |  |  | 58 |  |  | 11,915 |
Unrealized loss on interest rate derivative instruments | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,535) |  |  | — |  |  | (2,535) |  |  | (13) |  |  | (2,548) |
Unrealized gain on Rabbi Trust assets | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 54 |  |  | — |  |  | 54 |  |  | — |  |  | 54 |
Amounts reclassified from other comprehensive income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (670) |  |  | — |  |  | (670) |  |  | (3) |  |  | (673) |
Distributions on common stock/units ($0.08 per common share/unit) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (16,781) |  |  | (16,781) |  |  | (91) |  |  | (16,872) |
Distributions on preferred stock ($0.5156 per preferred share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,454) |  |  | (2,454) |  |  |  |  | (2,454) |
Share-based compensation | — |  |  | — |  |  | 1,379,495 |  |  | 14 |  |  | 1,180 |  |  | — |  |  | — |  |  | 1,194 |  |  | 108 |  |  | 1,302 |
Shares redeemed to satisfy withholdings on vested share based compensation | — |  |  | — |  |  | (585,127) |  |  | (6) |  |  | (4,882) |  |  | — |  |  | — |  |  | (4,888) |  |  | — |  |  | (4,888) |
Common stock repurchased and retired | — |  |  | — |  |  | (1,413,643) |  |  | (15) |  |  | (11,101) |  |  | — |  |  | — |  |  | (11,116) |  |  | — |  |  | (11,116) |
Balance at March 31, 2025 | 4,760,000 |  |  | $ | 48 |  |  | 206,972,935 |  |  | $ | 2,069 |  |  | $ | 2,253,718 |  |  | $ | (4,511) |  |  | $ | (686,428) |  |  | $ | 1,564,896 |  |  | $ | 8,756 |  |  | $ | 1,573,652 |

| Preferred Stock |  | Common Stock |  |  |  |  |  |  |  |  |  |  |  |
| Shares |  | Par Value |  | Shares |  | Par Value |  | Additional Paid-In Capital |  | Accumulated Other Comprehensive Income |  | Distributions in Excess of Earnings |  | Total Stockholders' Equity |  | Noncontrolling Interests |  | Total Equity
Balance at December 31, 2023 | 4,760,000 |  |  | $ | 48 |  |  | 209,627,197 |  |  | $ | 2,096 |  |  | $ | 2,291,297 |  |  | (2,036) |  |  | $ | (649,330) |  |  | $ | 1,642,075 |  |  | $ | 6,908 |  |  | $ | 1,648,983 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 8,328 |  |  | 8,328 |  |  | 30 |  |  | 8,358 |
Unrealized loss on interest rate derivative instruments | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 957 |  |  | — |  |  | 957 |  |  | 3 |  |  | 960 |
Unrealized gain on Rabbi Trust assets | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 298 |  |  | — |  |  | 298 |  |  | 1 |  |  | 299 |
Distributions on common stock/units ($0.03 per common share/unit) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (6,301) |  |  | (6,301) |  |  | (31) |  |  | (6,332) |
Distributions on preferred stock ($0.5156 per preferred share) | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,454) |  |  | (2,454) |  |  | — |  |  | (2,454) |
Share-based compensation | — |  |  | — |  |  | 753,860 |  |  | 7 |  |  | 1,895 |  |  | — |  |  | — |  |  | 1,902 |  |  | 433 |  |  | 2,335 |
Shares redeemed to satisfy withholdings on vested share based compensation | — |  |  | — |  |  | (316,624) |  |  | (3) |  |  | (2,904) |  |  | — |  |  | — |  |  | (2,907) |  |  | — |  |  | (2,907) |
Balance at March 31, 2024 | 4,760,000 |  |  | $ | 48 |  |  | 210,064,433 |  |  | $ | 2,100 |  |  | $ | 2,290,288 |  |  | $ | (781) |  |  | $ | (649,757) |  |  | $ | 1,641,898 |  |  | $ | 7,344 |  |  | $ | 1,649,242 |

The accompanying notes are an integral part of these consolidated financial statements.
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DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

| Three Months Ended March 31,
| 2025 |  | 2024
Cash flows from operating activities: |  |  |
Net income | $ | 11,915 |  |  | $ | 8,358 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 27,892 |  |  | 28,313 |
Corporate asset depreciation as corporate expenses | 34 |  |  | 33 |
Non-cash lease expense and other amortization | 1,299 |  |  | 1,518 |
Amortization of debt issuance costs | 535 |  |  | 513 |
Amortization of deferred income related to key money | (96) |  |  | (108) |
Share-based compensation | 1,302 |  |  | 2,335 |
Changes in assets and liabilities: |  |  |
Prepaid expenses and other assets | 3,692 |  |  | 4,527 |
Due to/from hotel managers | (12,145) |  |  | (8,398) |
Accounts payable and accrued expenses | (6,822) |  |  | (5,858) |
Net cash provided by operating activities | 27,606 |  |  | 31,233 |
Cash flows from investing activities: |  |  |
Capital expenditures | (25,562) |  |  | (18,867) |
Net proceeds from sale of hotel property | 89,019 |  |  | — |
Net cash provided by (used in) in investing activities | 63,457 |  |  | (18,867) |
Cash flows from financing activities: |  |  |
Scheduled mortgage debt principal payments | (2,114) |  |  | (2,461) |
Payment of financing costs | (450) |  |  | — |
Distributions on common stock and units | (48,571) |  |  | (6,471) |
Distributions on preferred stock | (2,454) |  |  | (2,454) |
Repurchases of common stock | (11,116) |  |  | — |
Shares redeemed to satisfy tax withholdings on vested share-based compensation | (4,888) |  |  | (2,907) |
Net cash used in financing activities | (69,593) |  |  | (14,293) |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 21,470 |  |  | (1,927) |
Cash, cash equivalents, and restricted cash at beginning of period | 128,789 |  |  | 167,171 |
Cash, cash equivalents, and restricted cash at end of period | $ | 150,259 |  |  | $ | 165,244 |

The accompanying notes are an integral part of these consolidated financial statements.
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DIAMONDROCK HOSPITALITY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(In thousands)
(Unaudited)
Supplemental Disclosure of Cash Flow Information:

| Three Months Ended March 31,
| 2025 |  | 2024
Cash paid for interest | $ | 14,460 |  |  | $ | 16,235 |
Cash (refunded) paid for income taxes, net | $ | (385) |  |  | $ | 555 |
Non-cash investing and financing activities: |  |  |
Unpaid dividends and distributions declared | $ | 17,334 |  |  | $ | 6,186 |
Accrued capital expenditures | $ | 1,514 |  |  | $ | 9,259 |

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets to the amount shown within the consolidated statements of cash flows:

| March 31, 2025 |  | December 31, 2024
Cash and cash equivalents | $ | 100,621 |  |  | $ | 81,381 |
Restricted cash | 49,638 |  |  | 47,408 |
Total cash, cash equivalents and restricted cash | $ | 150,259 |  |  | $ | 128,789 |

The accompanying notes are an integral part of these consolidated financial statements.
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DIAMONDROCK HOSPITALITY COMPANY
Notes to the Consolidated Financial Statements
(Unaudited)
1. Organization
DiamondRock Hospitality Company (the “Company” or “we”) is a lodging-focused real estate company that owns a portfolio of premium hotels and resorts. As of March 31, 2025, we owned 36 hotels with 9,595 guest rooms. Our hotels are concentrated in major urban markets and in destination resort locations and more than 60% of our hotels are operated under a brand owned by one of the leading global lodging brand companies (Marriott International, Hilton Worldwide, or IHG Hotels & Resorts). We are an owner, as opposed to an operator, of the hotels in our portfolio. As an owner, we receive all of the operating profits or losses generated by our hotels after we pay fees to the hotel managers and hotel brands, which are based on the revenues and profitability of the hotels.
We are a real estate investment trust (“REIT”) for U.S. federal income tax purposes. We conduct our business through a traditional umbrella partnership real estate investment trust, or UPREIT, in which our hotel properties are owned by our operating partnership, DiamondRock Hospitality Limited Partnership, or subsidiaries of our operating partnership. The Company is the sole general partner of our operating partnership and owned 99.5% of the limited partnership units (“common OP units”) of our operating partnership as of March 31, 2025. The remaining 0.5% of the common OP units are held by third parties and executive officers of the Company. See Note 8 for additional disclosures related to common OP units.
2.Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim consolidated financial statements and related notes have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”). We have condensed or omitted certain disclosures normally included in annual financial statements presented in accordance with U.S. GAAP; however, we believe the disclosures made are adequate to prevent the information presented from being misleading. These financial statements should be read in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2024. Interim results are not necessarily indicative of full-year performance, as a result of the impact of seasonal and other short-term variations and the acquisitions and/or dispositions of hotel properties.
Use of Estimates
The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Recently Issued Accounting Pronouncements
In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03 ("ASU 2024-03"), Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of ASU 2024-03.
In December 2023, the FASB issued ASU No. 2023-09 ("ASU 2023-09"), Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires, among other things, entities to disclose additional information with respect to their effective tax rate reconciliation and to disclose the disaggregation by jurisdiction of income tax expense and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted.
3. Property and Equipment
Property and equipment consists of the following (in thousands):
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| March 31, 2025 |  | December 31, 2024
Land | $ | 570,386 |  |  | $ | 570,386 |
Land improvements | 2,400 |  |  | 2,400 |
Buildings and site improvements | 2,824,650 |  |  | 2,812,461 |
Furniture, fixtures and equipment | 204,644 |  |  | 200,415 |
Construction in progress | 30,127 |  |  | 24,969 |
| 3,632,207 |  |  | 3,610,631 |
Less: accumulated depreciation | (1,007,071) |  |  | (979,410) |
| $ | 2,625,136 |  |  | $ | 2,631,221 |

As of March 31, 2025 and December 31, 2024, we had accrued capital expenditures of $1.5 million and $5.4 million, respectively.
4. Hotel Dispositions
On February 19, 2025, we sold the Westin Washington, D.C. City Center to an unaffiliated third party for $92.0 million. During the fourth quarter of 2024, we evaluated the recoverability of the carrying amount of the Westin Washington, D.C. City Center as a result of our assessment that it was more likely than not that the hotel would be sold significantly before the end of its previously estimated useful life. As a result, we recorded an impairment loss of $32.6 million during the fourth quarter of 2024 to adjust the hotel's carrying amount to its estimated fair value less cost to sell. The fair value was determined based on the contractual sales price pursuant to an executed purchase and sale agreement. For the three months ended March 31, 2025, there were no incremental impairment losses. We received net proceeds of approximately $89.0 million from the transaction, which included credit for the hotel's working capital.
5. Debt
The following table sets forth information regarding the Company’s debt (dollars in thousands):

|  |  |  |  |  | Principal Balance as of
Loan |  | Interest Rate |  | Maturity Date |  | March 31, 2025 |  | December 31, 2024
Worthington Renaissance Fort Worth Hotel mortgage loan |  | 3.66% |  | May 2025 |  | $ | 71,254 |  |  | $ | 71,766 |
Hotel Clio mortgage loan |  | 4.33% |  | July 2025 |  | 54,279 |  |  | 54,657 |
Westin Boston Seaport District mortgage loan |  | 4.36% |  | November 2025 |  | 168,161 |  |  | 169,385 |
Unsecured term loan |  | SOFR + 1.35% (1) |  | January 2028 |  | 500,000 |  |  | 500,000 |
Unsecured term loan |  | SOFR + 1.35% (2) |  | January 2026 |  | 300,000 |  |  | 300,000 |
Senior unsecured credit facility |  | SOFR + 1.40% |  | September 2026 (3) |  | — |  |  | — |
Total debt |  |  |  |  |  | 1,093,694 |  |  | 1,095,808 |
Unamortized debt issuance costs (4) |  |  |  |  |  | (753) |  |  | (514) |
Debt, net of unamortized debt issuance costs |  |  |  |  |  | $ | 1,092,941 |  |  | $ | 1,095,294 |
Weighted-Average Interest Rate (5) |  | 5.08% |  |  |  |  |  |

_______________________
(1)Interest rate as of March 31, 2025 was 5.12%, which includes the effect of interest rate swaps.
(2)Interest rate as of March 31, 2025 was 5.76%.
(3)Maturity date may be extended for an additional year upon the payment of applicable fees and the satisfaction of certain customary conditions.
(4)Excludes debt issuance costs related to our senior unsecured credit facility, which are included within Prepaid and Other Assets on the accompanying consolidated balance sheets.
(5)Includes the effect of interest rate swaps. See Note 6 for additional disclosures on interest rate swaps.
Mortgage Debt
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We have incurred limited recourse, property specific mortgage debt secured by certain of our hotels. In the event of default, the lender may only foreclose on the secured assets; however, in the event of fraud, misapplication of funds or other customary recourse provisions, the lender may seek payment from us. As of March 31, 2025, three of our 36 hotels were secured by mortgage debt with the three mortgage loans maturing in the next 12 months. Our first mortgage loan maturity is on May 6, 2025, and we intend to repay that mortgage loan using cash on hand. We are actively pursuing a financing transaction, the proceeds of which we plan to use to repay the remaining mortgage loans that mature in 2025. If we are unsuccessful in obtaining this new financing, we may repay the mortgage loans using a combination of cash on hand and proceeds from our senior unsecured revolving credit facility.
Our mortgage debt contains certain property specific covenants and restrictions, including minimum debt service coverage
ratios or debt yields that trigger “cash trap” provisions, as well as restrictions on incurring additional debt without lender consent. Such cash trap provisions are triggered when the hotel’s operating results fall below a certain debt service coverage ratio or debt yield. When these provisions are triggered, all of the excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of our lenders until a specified debt service coverage ratio or debt yield is reached and maintained for a certain period of time. Such provisions do not provide the lender the right to accelerate repayment
of the underlying debt. We had no cash traps in effect as of March 31, 2025 and December 31, 2024.
Senior Unsecured Credit Facility and Unsecured Term Loans
We are party to a Sixth Amended and Restated Credit Agreement (the “Credit Agreement”) that provides us with a $400 million senior unsecured revolving credit facility and two term loan facilities in the aggregate amount of $800 million. The revolving credit facility matures on September 27, 2026, which we may extend for an additional year upon the payment of applicable fees and satisfaction of certain standard conditions. The term loan facilities consist of a $500 million term loan that matures on January 3, 2028 and a $300 million term loan that matures January 3, 2026. We have the right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions.
Interest is paid on the periodic advances on the revolving credit facility and amounts outstanding on the term loans at varying rates, based upon the adjusted Secured Overnight Financing Rate (“SOFR”), as defined in the Credit Agreement, plus an applicable margin. The applicable margin is based upon our leverage ratio, as follows:

Leverage Ratio |  | Applicable Margin for Revolving Loans |  | Applicable Margin for Term Loans
Less than 30% |  | 1.40% |  | 1.35%
Greater than or equal to 30% but less than 35% |  | 1.45% |  | 1.40%
Greater than or equal to 35% but less than 40% |  | 1.50% |  | 1.45%
Greater than or equal to 40% but less than 45% |  | 1.60% |  | 1.55%
Greater than or equal to 45% but less than 50% |  | 1.80% |  | 1.75%
Greater than or equal to 50% but less than 55% |  | 1.95% |  | 1.85%
Greater than or equal to 55% |  | 2.25% |  | 2.20%

The Credit Agreement contains various financial covenants. A summary of the most significant covenants is as follows:

|  |  |  | Actual at
| Covenant |  |  | March 31, 2025
Maximum leverage ratio (1) | 60% |  |  | 26.0%
Minimum fixed charge coverage ratio (2) | 1.50x |  |  | 3.12x
Secured recourse indebtedness | Less than 45% of Total Asset Value |  |  | 8.6%
Maximum unencumbered leverage ratio | 60% |  |  | 28.4%
Minimum unencumbered implied debt service coverage ratio | 1.20x |  |  | 2.67x

_____________________________
(1)Leverage ratio is net indebtedness, as defined in the Credit Agreement, divided by total asset value, defined in the Credit Agreement as the value of our owned hotels based on hotel net operating income divided by a defined capitalization rate.
(2)Fixed charge coverage ratio is Adjusted EBITDA, generally defined in the Credit Agreement as EBITDA less FF&E reserves, for the most recent trailing 12 month period, to fixed charges, which is defined in the Credit Agreement as interest expense, all regularly scheduled principal payments and payments on capitalized lease obligations, for the same 12 month period.
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The components of the Company's interest expense consist of the following (in thousands):

|  | Three Months Ended March 31, |  |
|  | 2025 |  | 2024 |  |  |  |
Unsecured term loan interest |  | $ | 10,762 |  |  | $ | 11,387 |  |  |  |  |
Mortgage debt interest |  | 3,092 |  |  | 4,034 |  |  |  |  |
Credit facility interest and unused fees |  | 308 |  |  | 312 |  |  |  |  |
Amortization of debt issuance costs |  | 535 |  |  | 513 |  |  |  |  |
Finance lease expense(1) |  | 461 |  |  | — |  |  |  |  |
|  | $ | 15,158 |  |  | $ | 16,246 |  |  |  |  |

_____________
(1)In October 2024, we extended the term on one of our ground leases, and, as a result, the lease classification changed from an operating lease to a finance lease.
6. Derivatives
We have the following derivatives (dollars in thousands):

|  |  |  |  |  |  |  |  |  |  |  |  |  | Fair Value of Assets (Liabilities)
Hedged Debt |  | Type |  | Fixed Rate |  | Index |  | Effective Date |  | Maturity Date |  | Notional Amount |  | March 31, 2025 |  | December 31, 2024
$500M Senior unsecured term loans |  | Swap |  | 3.36 | % |  | SOFR |  | March 1, 2023 |  | January 1, 2028 |  | $ | 75,000 |  |  | 487 |  |  | 1,328 |
$500M Senior unsecured term loans |  | Swap |  | 3.50 | % |  | SOFR |  | March 1, 2023 |  | January 1, 2027 |  | $ | 75,000 |  |  | 271 |  |  | 747 |
$500M Senior unsecured term loans |  | Swap |  | 3.27 | % |  | SOFR |  | October 1, 2024 |  | January 1, 2028 |  | $ | 37,500 |  |  | 330 |  |  | 757 |
$500M Senior unsecured term loans |  | Swap |  | 3.27 | % |  | SOFR |  | October 1, 2024 |  | January 1, 2028 |  | $ | 37,500 |  |  | 331 |  |  | 758 |
$500M Senior unsecured term loans |  | Swap |  | 3.07 | % |  | SOFR |  | January 2, 2025 |  | January 1, 2027 |  | $ | 25,000 |  |  | 274 |  |  | 456 |
$500M Senior unsecured term loans |  | Swap |  | 3.25 | % |  | SOFR |  | January 2, 2025 |  | January 1, 2026 |  | $ | 75,000 |  |  | 434 |  |  | 628 |
|  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 2,127 |  |  | $ | 4,674 |

Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2025, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.
The table below details the location in the consolidated financial statements of the gains and losses recognized related to derivative financial instruments (in thousands):

|  | Three Months Ended March 31, |  |
Effect of derivative instruments | Location in Statements of Operations and Comprehensive Income | 2025 |  | 2024 |  |  |  |
Loss (gain) recognized in other comprehensive income | Unrealized loss (gain) on interest rate derivative instruments | $ | 2,548 |  |  | $ | (960) |  |  |  |  |
Interest (income) for derivatives that were designated as cash flow hedges | Interest expense | $ | (821) |  |  | $ | (2,357) |  |  |  |  |

During the next 12 months, we estimate that $1.8 million will be reclassified from other comprehensive income as a decrease to interest expense.
7. Fair Value Measurements
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The fair value of certain financial assets and liabilities and other financial instruments are as follows (in thousands):

| March 31, 2025 |  | December 31, 2024
| Carrying Amount (1) |  | Fair Value |  | Carrying Amount (1) |  | Fair Value
Debt | $ | 1,092,941 |  |  | $ | 1,091,988 |  |  | $ | 1,095,294 |  |  | $ | 1,092,443 |

_______________
(1)The carrying amount of debt is net of unamortized debt issuance costs.
The fair value of our debt is a Level 2 measurement under the fair value hierarchy. We estimate the fair value of our debt by discounting the future cash flows of each instrument at estimated market rates.
The fair value of our interest rate swaps is a Level 2 measurement under the fair value hierarchy. We estimate the fair value of the interest rate swaps based on the interest rate yield curve and implied market volatility as inputs and adjusted for the counterparty's credit risk. We concluded the inputs for the credit risk valuation adjustment are Level 3 inputs; however these inputs are not significant to the fair value measurement in its entirety.
The fair values of our other financial instruments not included in the table above are estimated to be equal to their carrying amount.
8. Equity
Common Shares
We are authorized by our charter to issue up to 400 million shares of common stock, $0.01 par value per share. Each outstanding share of common stock entitles the holder to one vote on all matters submitted to a vote of stockholders. Holders of our common stock are entitled to receive dividends out of assets legally available for the payment of dividends when authorized by our board of directors.
In August 2024, our board of directors approved an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. No shares were sold under the ATM Program during the three months ended March 31, 2025.
Our board of directors has authorized the repurchase of up to $200.0 million of our common stock under a share repurchase program. The timing and actual number of shares repurchased will depend on a variety of factors, including price and general business and market conditions. The share repurchase program does not obligate us to acquire any particular amount of shares, and may be suspended or discontinued at any time at our discretion. The share repurchase program will expire on May 1, 2026. During the three months ended March 31, 2025, we repurchased 1,413,643 shares of common stock at an average price of $7.85 per share for a total purchase price of $11.1 million under this program. During the year ended December 2024, we repurchased 3,114,876 shares of common stock at an average price of $8.33 per share for a total purchase price of $26.0 million under this program. Subsequent to March 31, 2025, we repurchased 661,689 shares of common stock at an average price of $7.26 per share for a total purchase price of $4.8 million under this program. As of May 1, 2025, we have $158.1 million of authorized capacity remaining under the share repurchase program.
Preferred Shares
We are authorized by our charter to issue up to 10 million shares of preferred stock, $0.01 par value per share. Our board of directors is required to set for each class or series of preferred stock the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, and terms or conditions of redemption.
As of March 31, 2025 and December 31, 2024, there were 4,760,000 shares of 8.250% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred Stock”) issued and outstanding with a liquidation preference each of $25.00 per share. On or after August 31, 2025, the Series A Preferred Stock will be redeemable at the Company's option, in whole or in part, at any time or from time to time, for cash at a redemption price of $25.00 per share, plus accrued and unpaid dividends up to, but not including, the redemption date.
Operating Partnership Units
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In connection with our acquisition of Cavallo Point, The Lodge at the Golden Gate in December 2018, we issued 796,684 common OP units to third parties, otherwise unaffiliated with the Company, then valued at $11.76 per unit. Each common OP unit is redeemable at the option of the holder. Holders of common OP units have certain redemption rights, which enable them to cause our operating partnership to redeem their units in exchange for cash per unit equal to the market price of our common stock, at the time of redemption, or, at our option, for shares of our common stock on a one-for-one basis, subject to adjustment upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions. As of March 31, 2025, there were 421,244 common OP units still outstanding; the other 375,440 common OP units issued in connection with the acquisition have been converted to common stock.
Long-Term Incentive Partnership units (“LTIP units”), which are also referred to as profits interest units, may be issued to eligible participants under the 2024 Equity Incentive Plan for the performance of services to or for the benefit of our operating partnership. LTIP units are a class of partnership unit in our operating partnership and will receive, whether vested or not, the same per-unit distributions as the outstanding common OP units, which equal per-share dividends on shares of our common stock. Initially, LTIP units have a capital account balance of zero, do not receive an allocation of operating income (loss), and do not have full parity with common OP units with respect to liquidating distributions. If such parity is reached, vested LTIP units are converted into an equal number of common OP units, and thereafter will possess all of the rights and interests of common OP units, including the right to exchange the common OP units for cash per unit equal to the market price of our common stock, at the time of redemption, or, at our option, for shares of our common stock on a one-for-one basis, subject to adjustment upon the occurrence of stock splits, mergers, consolidations or similar pro-rata share transactions. See Note 9 for additional disclosures related to LTIP units.
There were 1,027,145 and 994,653 common OP units held by unaffiliated third parties and executive officers of the Company as of March 31, 2025 and December 31, 2024, respectively. There were 107,635 and 140,127 unvested LTIP units outstanding as of March 31, 2025 and December 31, 2024, respectively.
Dividends and Distributions
We have paid the following dividends to holders of our common stock during 2025 as follows:

Payment Date |  | Record Date |  | Dividend per Share/Unit
January 14, 2025 |  | December 31, 2024 |  | $ | 0.23 |
April 11, 2025 |  | March 28, 2025 |  | $ | 0.08 |

We have paid the following dividends to holders of our Series A Preferred Stock during 2025 as follows:

Payment Date |  | Record Date |  | Dividend per Share
March 28, 2025 |  | March 20, 2025 |  | $ | 0.515625 |

9. Equity Incentive Plans
We are authorized to issue up to 7,900,000 shares of our common stock under our 2024 Equity Incentive Plan (the "2024 Plan"), of which we have issued or committed to issue 2,449,628 share s as of March 31, 2025. Shares underlying awards that are granted under the 2024 Plan that are forfeited, cancelled, reacquired prior to vesting, satisfied without the issuance of stock or otherwise terminated (other than by exercise), including shares tendered or held back upon settlement of an award, other than a stock option or stock appreciation right, to cover the tax withholding will be added back to the shares available for issuance under the 2024 Plan.
Restricted Stock Awards
Restricted stock awards issued to our officers and employees generally vest over a three to five year period from the date of grant based on continued employment. We measure compensation expense for the restricted stock awards based upon the fair market value of our common stock at the date of grant. Compensation expense is recognized on a straight-line basis over the vesting period and is included in corporate expenses in the accompanying consolidated statements of operations and comprehensive income. A summary of our restricted stock awards from January 1, 2025 to March 31, 2025 is as follows:
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| Number of Shares |  | Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2025 | 621,595 |  |  | $ | 8.90 |
Granted | 464,765 |  |  | 8.23 |
Vested | (249,994) |  |  | 9.27 |
Unvested balance at March 31, 2025 | 836,366 |  |  | $ | 8.50 |

The total unvested restricted stock awards as of March 31, 2025 are expected to vest as follows: 7,986 during 2025, 396,748 during 2026, 267,484 during 2027, 162,887 during 2028, and 1,261 during 2029. As of March 31, 2025, the unrecognized compensation cost related to restricted stock awards was $6.5 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 29 months. We recorded $0.7 million and $1.0 million of compensation expense related to restricted stock awards for the three months ended March 31, 2025 and 2024, respectively.
Performance Stock Units
Performance stock units (“PSUs”) are restricted stock units that generally vest three years from the date of grant. Each executive officer is granted a target number of PSUs (the “PSU Target Award”). For PSUs granted in 2025, the actual number of shares of common stock issued to each executive officer is based on the Company's achievement of certain levels of total stockholder return relative to the total stockholder return of a peer group of publicly-traded lodging REITs measured over a three-year performance period. There is no payout of shares of our common stock if our total stockholder return falls below the 30th percentile of the total stockholder returns of the peer group. The maximum number of shares of common stock issued to an executive officer is equal to 300% of the PSU Target Award and is earned if our total stockholder return is equal to or greater than the 90th percentile of the total stockholder returns of the peer group. There are limitations on the number of PSUs earned if the Company's total stockholder return is negative for the performance period.
We measure compensation expense for the PSUs based upon the fair market value of the award at the grant date. Compensation expense is recognized on a straight-line basis over the vesting period and is included in corporate expenses in the accompanying consolidated statements of operations and comprehensive income. The grant date fair value is determined using a Monte Carlo simulation performed by a third-party valuation firm. The determination of the grant-date fair values of our PSUs included the following assumptions:

Award Grant Date |  | Volatility |  | Risk-Free Rate |  | Total Stockholder Return PSUs |  | Hotel Market Share PSUs (1)
February 22, 2022 |  | 71.4% |  | 1.74% |  | $9.84 |  | $9.56
August 9, 2022 |  | 73.3% |  | 3.20% |  | $9.65 |  | $9.32
February 23, 2023 |  | 74.5% |  | 4.40% |  | $9.22 |  | $8.94
May 7, 2024 |  | 36.5% |  | 4.64% |  | $8.03 |  | $8.72
March 3, 2025 |  | 32.0% |  | 3.93% |  | $10.53 |  | N/A

______________________
(1)There were no hotel market share PSUs granted in 2025.
A summary of our PSUs from January 1, 2025 to March 31, 2025 is as follows:

| Number of Target Units |  | Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2025 | 1,108,574 |  |  | $ | 9.02 |
Granted | 607,533 |  |  | 10.16 |
Additional units from dividends | 29,073 |  |  | 8.77 |
Vested (1) | (304,125) |  |  | 9.64 |
Unvested balance at March 31, 2025 | 1,441,055 |  |  | $ | 9.36 |

______________________
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(1)The number of shares of common stock earned for the PSUs vested in 2025 was equal to 99.29% of the PSU Target Award.
The total unvested PSUs as of March 31, 2025 are expected to vest as follows: 37,129 during 2025, 382,284 during 2026, 414,109 during 2027, and 607,533 during 2028. The number of shares earned upon vesting is subject to the attainment of the performance targets described above. As of March 31, 2025, the unrecognized compensation cost related to the PSUs was $7.7 million and is expected to be recognized on a straight-line basis over a weighted average period of 31 months. We recorded $0.5 million and $0.9 million of compensation expense related to the PSUs for the three months ended March 31, 2025 and 2024, respectively.
LTIP Units
LTIP units are designed to offer executives a long-term incentive comparable to restricted stock, while potentially allowing them a more favorable income tax treatment. Each year, executives have the option to elect to receive their annual grant of share-based compensation as either LTIP units or restricted stock awards. Each LTIP unit awarded is deemed equivalent to an award of one share of common stock reserved under the 2016 Plan or 2024 Plan, as applicable. At the time of award, LTIP units do not have full economic parity with common OP units, but can achieve such parity over time upon the occurrence of specified events in accordance with partnership tax rules.
A summary of our LTIP units from January 1, 2025 to March 31, 2025 is as follows:

| Number of Units |  | Weighted- Average Grant Date Fair Value
Unvested balance at January 1, 2025 | 140,127 |  |  | $ | 9.85 |
Vested (1) | (32,492) |  |  | 8.72 |
Unvested balance at March 31, 2025 | 107,635 |  |  | $ | 8.96 |

______________________
(1)As of March 31, 2025, all vested LTIP units have achieved economic parity with common OP units and have been converted to common OP units.
The total unvested LTIP units as of March 31, 2025 are expected to vest as follows: 14,217 during 2025 and 46,709 during both 2026 and 2027. As of March 31, 2025, the unrecognized compensation cost related to LTIP unit awards was $0.9 million and the weighted-average period over which the unrecognized compensation expense will be recorded is approximately 25 months. We recorded $0.1 million and $0.4 million of compensation expense related to LTIP unit awards for the three months ended March 31, 2025 and 2024, respectively.
10. Earnings Per Share
The following is a reconciliation of the calculation of basic and diluted earnings per share (“EPS”):

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Numerator: |  |  |  |  |  |  |
Net income attributable to common stockholders (in thousands) | $ | 9,403 |  |  | $ | 5,874 |  |  |  |  |
Denominator: |  |  |  |  |  |  |
Weighted-average number of common shares outstanding—basic | 208,509,552 |  |  | 211,669,343 |  |  |  |  |
Effect of dilutive securities: |  |  |  |  |  |  |
Unvested restricted common stock | 328,053 |  |  | 218,366 |  |  |  |  |
Shares related to unvested PSUs | 1,508,465 |  |  | 454,758 |  |  |  |  |
Weighted-average number of common shares outstanding—diluted | 210,346,070 |  |  | 212,342,467 |  |  |  |  |
Earnings per share: |  |  |  |  |  |  |
Earnings per share available to common stockholders—basic | $ | 0.05 |  |  | $ | 0.03 |  |  |  |  |
Earnings per share available to common stockholders—diluted | $ | 0.04 |  |  | $ | 0.03 |  |  |  |  |

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The common OP units held by the noncontrolling interest holders have been excluded from the denominator of the basic and diluted EPS calculation as there would be no effect on the amounts since the common OP units' share of income or loss would also be added or subtracted to derive net income available to common stockholders.
11. Segment Reporting
We have one reportable segment, which is hotel ownership. The hotel ownership segment is mostly comprised of upper upscale and luxury chain scale hotels that offer hotel rooms, food and beverage and other ancillary guest services. The Company’s chief operating decision maker (“CODM”) is the Executive Committee which includes: 1) the Chief Executive Officer, 2) the President and Chief Operating Officer, 3) the Executive Vice President, Chief Financial Officer & Treasurer, and 4) the Senior Vice President, General Counsel & Corporate Secretary.
The CODM evaluates the hotel ownership segment primarily based on hotel adjusted earnings (loss) before interest income and expense, taxes and depreciation and amortization (“Hotel Adjusted EBITDA”). The CODM uses Hotel Adjusted EBITDA to evaluate the ongoing operational performance of our hotels and effectiveness of the third-party management companies operating our business on a property-level basis, in order to make informed decisions on how to allocate resources. Hotel Adjusted EBITDA is also used to monitor budget versus actual results. The monitoring of budgeted versus actual results are used in assessing performance of the segment and in establishing management’s compensation. Hotel Adjusted EBITDA, presented herein, is calculated as EBITDA from hotel operations, adjusted to exclude the following items that are not reflective of our ongoing operating performance or incurred in the normal course of business, and thus excluded from the CODM’s analysis in making day-to-day operating decisions:
▪Non-cash lease expense and other amortization
▪Cumulative effect of a change in accounting principles
▪Gains or losses from early extinguishment of debt
▪Hotel acquisition costs
▪Severance costs
▪Hotel manager transition items
▪Hotel pre-opening costs
▪Impairment losses, gains or losses on asset sales and casualty gains or losses; and
▪Other items that we believe are not representative of our current or future operating performance.
The following table presents revenues for our hotel ownership segment reconciled to our consolidated amounts and Hotel Adjusted EBITDA reconciled to consolidated net income (in thousands):
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| Three Months Ended March 31,
| 2025 |  | 2024 |  |
Revenues: |  |  |  |  |
Hotel ownership revenue | $ | 254,853 |  |  | $ | 256,423 |  |  |
Total consolidated revenue | 254,853 |  |  | 256,423 |  |  |
Significant expenses: |  |  |  |  |
Rooms expense | 43,843 |  |  | 43,968 |  |  |
Food and beverage expense | 46,417 |  |  | 47,239 |  |  |
Other departmental and support expenses | 65,286 |  |  | 64,600 |  |  |
Management fees | 5,415 |  |  | 5,708 |  |  |
Franchise fees | 9,048 |  |  | 9,026 |  |  |
Property taxes | 14,281 |  |  | 13,022 |  |  |
Total significant expenses | 184,290 |  |  | 183,563 |  |  |
Other segment expenses: |  |  |  |  |
Other hotel expenses(1) | 8,899 |  |  | 11,446 |  |  |
Hotel adjusted EBITDA: | 61,664 |  |  | 61,414 |  |  |
Non-cash lease expense and other amortization | 1,299 |  |  | 1,518 |  |  |
Hotel pre-opening and manager transition items | 23 |  |  | 234 |  |  |
Depreciation and amortization | 27,892 |  |  | 28,313 |  |  |
Corporate expenses | 7,683 |  |  | 8,904 |  |  |
Interest expense | 15,158 |  |  | 16,246 |  |  |
Interest income | (781) |  |  | (1,050) |  |  |
Other (income) expense, net | (683) |  |  | (19) |  |  |
Income tax benefit | (842) |  |  | (1,090) |  |  |
Consolidated net income: | $ | 11,915 |  |  | $ | 8,358 |  |  |

_____________________________
(1)Other hotel expenses is principally comprised of cash payments for leases and property insurance.
The following table presents total assets for our hotel ownership segment, reconciled to total consolidated assets (in thousands):

| March 31, 2025 |  | December 31, 2024
Hotel ownership | $ | 2,986,278 |  |  | $ | 3,063,835 |
All other | 115,319 |  |  | 108,416 |
Total assets | $ | 3,101,597 |  |  | $ | 3,172,251 |

Total capital expenditures related to our hotel ownership segment were $25.6 million and $18.9 million for the three months ended March 31, 2025 and 2024, respectively.
12. Commitments and Contingencies
Litigation
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We are subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business regarding the operation of our hotels and other Company matters. While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance will not have a material adverse impact on our financial condition or results of operations and comprehensive income. The outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties.
Commitments
In October 2024, we executed an extension of the ground lease underlying the Courtyard New York Manhattan/Fifth Avenue to add a second renewal option for an additional 36 years. Our ability to exercise the second renewal option is contingent on the Company spending no less than $7.0 million on capital improvements by the end of 2026 (the “Capital Improvement Plan”). Assuming that we satisfy the Capital Improvement Plan contingency and exercise all renewal options, the ground lease would expire in October 2121.
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations
This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions. These forward-looking statements are generally identifiable by use of the words “will,” “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project” or similar expressions, whether in the negative or affirmative. Forward-looking statements are based on management’s current expectations and assumptions and are not guarantees of future performance. Factors that may cause actual results to differ materially from current expectations include, but are not limited to, the risks discussed herein and the risk factors discussed from time to time in our periodic filings with the Securities and Exchange Commission, including in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024 as updated by our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Accordingly, there is no assurance that the Company’s expectations will be realized. Except as otherwise required by the federal securities laws, the Company disclaims any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained in this report to reflect events, circumstances or changes in expectations after the date of this report.
Some of the risks and uncertainties that may cause our actual results, performance or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the following:
•negative developments or volatility in the economy, including, but not limited to elevated inflation and interest rates, job loss or growth trends, the imposition of trade sanctions or tariffs and any potential retaliatory responses thereto, an increase in unemployment or a decrease in corporate earnings and investment;
•increased competition in the lodging industry and from alternative lodging channels or third party internet intermediaries in the markets in which we own properties;
•failure to effectively execute our long-term business strategy and successfully identify and complete acquisitions and dispositions;
•risks and uncertainties affecting hotel management, operations and renovations (including, without limitation, elevated inflation, construction delays, increased construction costs, disruption in hotel operations, and the risks associated with our management and franchise agreements and our reliance on third-party managers);
•risks associated with the availability and terms of financing and the use of debt to fund acquisitions and renovations or refinance existing indebtedness, including the impact of higher interest rates on the cost and/or availability of financing;
•risks associated with our level of indebtedness and our ability to satisfy our obligations under our debt agreements;
•risks associated with the lodging industry overall, including, without limitation, decreases in the frequency of travel, decreases in the demand for, or frequency of, international travel as a result of evolving global trade dynamics or otherwise, and increases in operating costs;
•risks and uncertainties associated with our obligations under our management agreements;
•risks associated with natural disasters and other unforeseen catastrophic events;
•the adverse impact of any future pandemic, epidemic or outbreak of any highly infectious disease on the U.S., regional and global economies, travel, the hospitality industry, and on our financial condition and results of operations and our hotels;
•costs of compliance with government regulations, including, without limitation, the Americans with Disabilities Act;
•potential liability for uninsured losses and environmental contamination;
•risks associated with security breaches through cyber-attacks or otherwise, as well as other significant disruptions of our and our hotel managers’ information technologies and systems, which support our operations and those of our hotel managers;
•risks associated with our potential failure to maintain our qualification as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”);
•possible adverse changes in tax and environmental laws; and
•risks associated with our dependence on key personnel whose continued service is not guaranteed.
Overview
DiamondRock Hospitality Company is a lodging-focused Maryland corporation operating as a REIT for U.S. federal income tax purposes. As of March 31, 2025, we owned a portfolio of 36 premium hotels and resorts that contain 9,595 guest rooms located in 26 different markets in the United States. The markets that we target are those that we believe align with our strategic objectives, which include investing in assets in destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those markets that are considered to have high growth potential.
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As an owner, rather than an operator, of lodging properties, we receive all of the operating profits or losses generated by our hotels after the payment of fees due to hotel managers and hotel brands, which are calculated based on the revenues and profitability of each hotel.
Our strategy is to apply aggressive asset management, prudent financial strategy, and disciplined capital allocation to high quality lodging properties in North American urban and resort markets with superior growth prospects and high barriers-to-entry. Our goal is to deliver long-term stockholder returns that exceed those generated by our peers through a combination of dividends and enduring capital appreciation.
Our primary business is to acquire, own, renovate and asset manage premium hotel properties in the United States. Our portfolio is concentrated in major urban markets and destination resort locations. All of our hotels are managed by a third party—either an independent operator or a brand operator, such as Marriott.
We critically evaluate each of our hotels to ensure that we own a portfolio of hotels that conforms to our vision, supports our mission and corresponds with our strategy. On a regular basis, we analyze our portfolio to identify opportunities to invest capital in certain projects or market non-core assets for sale to increase our portfolio quality. We are committed to a conservative capital structure with prudent leverage. We regularly assess the availability and affordability of capital in order to maximize stockholder value and minimize enterprise risk. In addition, we are committed to following sound corporate governance practices and to being open and transparent in our communications with our stockholders.
Our Revenues and Expenses
Our revenue is primarily derived from hotel operations, including but not limited to, rooms revenue, food and beverage revenue and other operating revenue, which consists of parking, spa, resort fees, other guest services, and tenant leases.
Our operating costs and expenses consist of the costs to provide hotel services, including rooms expense, food and beverage expense, other departmental and support expenses, management and franchise fees, and other property-level expenses. Rooms expense includes housekeeping and front office wages and payroll taxes, room supplies, laundry services and other costs. Food and beverage expense includes the cost of food, beverages, and associated labor costs. Other departmental and support expenses include labor and other costs associated with the other operating department revenue, as well as labor and other costs associated with administrative departments, sales and marketing, information technology systems, repairs and maintenance and utility costs. Our hotels that are subject to franchise agreements are charged a royalty fee, plus additional fees for marketing, central reservation systems and other franchisor costs, in order for the hotel properties to operate under the respective brands. Franchise fees are based on a percentage of room revenue, and for certain hotels, additional franchise fees are charged for food and beverage revenue. We enter into management agreements with independent third-party management companies to operate our hotels. The management companies typically earn base and incentive management fees based on the levels of revenues and profitability of each individual hotel. Other property-level expenses include property taxes, insurance, ground lease expense, and other fixed costs.
Key Indicators of Financial Condition and Operating Performance
We use a variety of operating and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), as well as other financial information that is not prepared in accordance with U.S. GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the performance of individual hotels, groups of hotels and/or our business as a whole. We periodically compare historical information to our internal budgets as well as industry-wide information. These key indicators include:
•Occupancy percentage;
•Average Daily Rate (“ADR”);
•Rooms Revenue per Available Room (“RevPAR”);
•Earnings Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”), Earnings Before Interest, Income Taxes, Depreciation and Amortization for real estate (“EBITDA re”), Adjusted EBITDA, and Hotel Adjusted EBITDA; and
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•Funds From Operations (“FFO”) and Adjusted FFO.
Occupancy, ADR and RevPAR are commonly used measures within the hotel industry to evaluate operating performance. RevPAR, which is calculated as the product of ADR and occupancy percentage, is an important statistic for monitoring operating performance at the individual hotel level and across our business as a whole. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and regional basis. ADR and RevPAR include only room revenue. Room revenue comprised approximately 64% of our total revenues for the three months ended March 31, 2025 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.
Our ADR, occupancy percentage and RevPAR performance may be impacted by macroeconomic factors such as U.S. economic conditions generally, inflation, interest rates, tariffs, regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, airport and other business and leisure travel, increased use of lodging alternatives, new hotel construction and the pricing strategies of our competitors. In addition, our ADR, occupancy percentage and RevPAR performance is dependent on the continued success of our hotels' global brands.
We also use EBITDA, EBITDA re, Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO as measures of the financial performance of our business. See “Non-GAAP Financial Measures” for further discussion on these financial measures.
Outlook
Like other companies in our industry, we are subject to changes in the macroeconomic, political, and regulatory environments, the potential impacts of recently proposed tariffs, and reductions in international travel to the United States. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, future results of operations and cash flow, which are dependent on future developments, including as a result of those risk factors discussed elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2024.
Our Hotels
The following tables set forth certain operating information for the three months ended March 31, 2025 for each of our hotels owned during the period.
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Property |  | Location |  | Number of Rooms |  | Occupancy (%) |  | ADR ($) |  | RevPAR ($) |  | % Change from 2024 RevPAR (1)
Chicago Marriott Downtown Magnificent Mile |  | Chicago, Illinois |  | 1,200 |  |  | 42.9 | % |  | $ | 199.47 |  |  | $ | 85.67 |  |  | 6.8 | %
Westin Boston Seaport District |  | Boston, Massachusetts |  | 793 |  |  | 76.3 | % |  | 235.21 |  |  | 179.45 |  |  | 4.7 | %
Salt Lake City Marriott Downtown at City Creek |  | Salt Lake City, Utah |  | 510 |  |  | 69.3 | % |  | 204.34 |  |  | 141.58 |  |  | 8.6 | %
Worthington Renaissance Fort Worth Hotel |  | Fort Worth, Texas |  | 504 |  |  | 74.7 | % |  | 212.06 |  |  | 158.44 |  |  | 8.3 | %
Westin San Diego Bayview |  | San Diego, California |  | 436 |  |  | 76.5 | % |  | 223.85 |  |  | 171.14 |  |  | 27.9 | %
Westin Fort Lauderdale Beach Resort |  | Fort Lauderdale, Florida |  | 432 |  |  | 84.5 | % |  | 330.69 |  |  | 279.44 |  |  | (3.5) | %
Westin Washington, D.C. City Center (2) |  | Washington, D.C. |  | 410 |  |  | 45.4 | % |  | 254.66 |  |  | 115.57 |  |  | 1.2 | %
The Dagny Boston |  | Boston, Massachusetts |  | 403 |  |  | 77.9 | % |  | 200.37 |  |  | 156.16 |  |  | 4.6 | %
The Hythe Vail |  | Vail, Colorado |  | 344 |  |  | 75.8 | % |  | 678.66 |  |  | 514.47 |  |  | 7.0 | %
Courtyard New York Manhattan/Midtown East |  | New York, New York |  | 321 |  |  | 87.6 | % |  | 250.75 |  |  | 219.67 |  |  | (3.0) | %
Atlanta Marriott Alpharetta |  | Atlanta, Georgia |  | 318 |  |  | 64.9 | % |  | 171.86 |  |  | 111.57 |  |  | 13.9 | %
The Gwen Hotel |  | Chicago, Illinois |  | 311 |  |  | 67.0 | % |  | 223.52 |  |  | 149.75 |  |  | 6.4 | %
Hilton Garden Inn New York/Times Square Central |  | New York, New York |  | 282 |  |  | 68.2 | % |  | 200.21 |  |  | 136.49 |  |  | (16.4) | %
Embassy Suites by Hilton Bethesda |  | Bethesda, Maryland |  | 272 |  |  | 55.5 | % |  | 161.98 |  |  | 89.95 |  |  | (3.8) | %
Henderson Beach Resort |  | Destin, Florida |  | 270 |  |  | 40.5 | % |  | 286.91 |  |  | 116.32 |  |  | (11.3) | %
AC Hotel Minneapolis Downtown |  | Minneapolis, Minnesota |  | 245 |  |  | 41.1 | % |  | 128.32 |  |  | 52.76 |  |  | (11.2) | %
Hotel Champlain Burlington |  | Burlington, Vermont |  | 258 |  |  | 57.5 | % |  | 142.41 |  |  | 81.82 |  |  | (1.4) | %
Hotel Palomar Phoenix |  | Phoenix, Arizona |  | 242 |  |  | 76.8 | % |  | 286.75 |  |  | 220.31 |  |  | (2.0) | %
Bourbon Orleans Hotel |  | New Orleans, Louisiana |  | 220 |  |  | 68.6 | % |  | 302.03 |  |  | 207.24 |  |  | 3.4 | %
Hotel Clio |  | Denver, Colorado |  | 199 |  |  | 70.0 | % |  | 282.38 |  |  | 197.67 |  |  | 13.6 | %
Courtyard New York Manhattan/Fifth Avenue |  | New York, New York |  | 189 |  |  | 93.9 | % |  | 224.94 |  |  | 211.19 |  |  | 14.0 | %
Margaritaville Beach House Key West |  | Key West, Florida |  | 186 |  |  | 91.0 | % |  | 480.85 |  |  | 437.79 |  |  | (6.9) | %
The Lodge at Sonoma Resort |  | Sonoma, California |  | 182 |  |  | 60.8 | % |  | 335.90 |  |  | 204.16 |  |  | 44.7 | %
Courtyard Denver Downtown |  | Denver, Colorado |  | 177 |  |  | 70.9 | % |  | 165.03 |  |  | 117.08 |  |  | 10.0 | %
The Lindy Renaissance Charleston Hotel |  | Charleston, South Carolina |  | 167 |  |  | 85.5 | % |  | 331.14 |  |  | 283.02 |  |  | 2.2 | %
Kimpton Shorebreak Resort Huntington Beach Resort |  | Huntington Beach, California |  | 157 |  |  | 73.6 | % |  | 288.04 |  |  | 211.92 |  |  | (5.9) | %
Cavallo Point, The Lodge at the Golden Gate |  | Sausalito, California |  | 142 |  |  | 51.5 | % |  | 539.57 |  |  | 277.80 |  |  | (1.2) | %
Chico Hot Springs Resort & Day Spa |  | Pray, Montana |  | 117 |  |  | 59.9 | % |  | 205.92 |  |  | 123.36 |  |  | (4.5) | %
Havana Cabana Key West |  | Key West, Florida |  | 106 |  |  | 92.9 | % |  | 338.18 |  |  | 314.11 |  |  | (10.1) | %
Tranquility Bay Beachfront Resort |  | Marathon, Florida |  | 103 |  |  | 78.9 | % |  | 734.06 |  |  | 579.02 |  |  | (5.2) | %
Hotel Emblem San Francisco |  | San Francisco, California |  | 96 |  |  | 56.0 | % |  | 252.59 |  |  | 141.44 |  |  | (5.4) | %
Kimpton Shorebreak Fort Lauderdale Beach Resort |  | Fort Lauderdale, Florida |  | 96 |  |  | 86.5 | % |  | 272.11 |  |  | 235.30 |  |  | 1.8 | %
L'Auberge de Sedona |  | Sedona, Arizona |  | 88 |  |  | 73.2 | % |  | 788.96 |  |  | 577.28 |  |  | 3.3 | %
The Landing Lake Tahoe Resort & Spa |  | South Lake Tahoe, California |  | 82 |  |  | 47.7 | % |  | 324.87 |  |  | 155.00 |  |  | (0.2) | %
Orchards Inn Sedona (3) |  | Sedona, Arizona |  | 70 |  |  | — | % |  | — |  |  | — |  |  | (100.0) | %
Lake Austin Spa Resort |  | Austin, Texas |  | 40 |  |  | 50.9 | % |  | 1,014.82 |  |  | 516.15 |  |  | (10.4) | %
Henderson Park Inn |  | Destin, Florida |  | 37 |  |  | 51.9 | % |  | 422.11 |  |  | 219.17 |  |  | (6.6) | %
TOTAL/WEIGHTED AVERAGE |  |  |  | 10,005 |  |  | 66.6 | % |  | $ | 277.01 |  |  | $ | 184.60 |  |  | 2.0 | %

____________________
(1)The percentage change from 2024 RevPAR reflects the comparable period in 2024 to our 2025 ownership period for our 2024 acquisition and 2025 disposition.
(2)The hotel was sold on February 19, 2025.
(3)The hotel was closed for renovation during the three months ended March 31, 2025.
Results of Operations
At both March 31, 2025 and 2024, we owned 36 hotels. All properties owned during these periods have been included in our results of operations during the respective periods since their date of acquisition or through their date of disposition, as applicable. Based on when a property was acquired or disposed, operating results for certain properties are not comparable for the three months ended March 31, 2025 and 2024. The properties detailed in the table below are hereinafter referred to as “non-comparable properties” and all other properties are referred to as “comparable properties”:

Property |  | Location |  | Acquisition Date
AC Hotel Minneapolis Downtown |  | Minneapolis, Minnesota |  | November 12, 2024

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Property |  | Location |  | Disposition Date
Westin Washington, D.C. City Center |  | Washington, D.C. |  | February 19, 2025

Comparison of the Three Months Ended March 31, 2025 to the Three Months Ended March 31, 2024
Revenue. Revenue consists primarily of the room, food and beverage and other operating revenues from our hotels, as follows (dollars in thousands):

| Three Months Ended March 31, |  | Change
| 2025 |  | 2024 |  | $ |  | %
Rooms | $ | 163,118 |  |  | $ | 163,507 |  |  | $ | (389) |  |  | (0.2) | %
Food and beverage | 66,841 |  |  | 68,381 |  |  | (1,540) |  |  | (2.3) | %
Other | 24,894 |  |  | 24,535 |  |  | 359 |  |  | 1.5 | %
Total revenues | $ | 254,853 |  |  | $ | 256,423 |  |  | $ | (1,570) |  |  | (0.6) | %

Our total revenues decreased $1.6 million from the three months ended March 31, 2024 to the three months ended March 31, 2025.
Rooms revenues decreased by $0.4 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, $1.5 million of which was due to the acquisition and disposition of the non-comparable properties. The offsetting increase of $1.1 million was due to growth in the group and business transient segments, partially offset by lower leisure transient revenue.
The following are key hotel operating statistics for the three months ended March 31, 2025 and 2024. The 2024 operating statistics reflect the period in 2024 comparable to our ownership period in 2025 for the non-comparable properties.

| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  | % Change
Occupancy % | 66.6 | % |  | 67.5 | % |  | (0.9) | %
ADR | $ | 277.01 |  |  | $ | 268.31 |  |  | 3.2 | %
RevPAR | $ | 184.60 |  |  | $ | 180.98 |  |  | 2.0 | %

Food and beverage revenues decreased $1.5 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, $0.8 million of which was due to the acquisition and disposition of the non-comparable properties. The remaining decrease was primarily due to lower banquet and catering revenue at the Chicago Marriott Downtown Magnificent Mile.
Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased by $0.4 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, $0.1 million of which was due the acquisition and disposition of the non-comparable properties. The remaining increase was primarily due to our implementation of a resort fee at the Bourbon Orleans Hotel and Hotel Champlain Burlington, as well as an increase in parking revenue.
Hotel operating expenses. The operating expenses consisted of the following (dollars in thousands):
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| Three Months Ended March, |  | Change
| 2025 |  | 2024 |  | $ |  | %
Rooms | $ | 43,843 |  |  | $ | 43,968 |  |  | $ | (125) |  |  | (0.3) | %
Food and beverage | 46,417 |  |  | 47,239 |  |  | (822) |  |  | (1.7) | %
Other departmental and support expenses | 65,286 |  |  | 64,600 |  |  | 686 |  |  | 1.1 | %
Management fees | 5,018 |  |  | 5,310 |  |  | (292) |  |  | (5.5) | %
Franchise fees | 9,048 |  |  | 9,026 |  |  | 22 |  |  | 0.2 | %
Other property-level expenses | 24,899 |  |  | 26,618 |  |  | (1,719) |  |  | (6.5) | %
Total hotel operating expenses | $ | 194,511 |  |  | $ | 196,761 |  |  | $ | (2,250) |  |  | (1.1) | %

Our hotel operating expenses decreased $2.3 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, $0.8 million of which was due the acquisition and disposition of the non-comparable properties. The remaining decrease in hotel operating expenses was primarily due to lower insurance premiums.
Depreciation and amortization. Depreciation and amortization on our hotel buildings is generally recorded over a 40-year period subsequent to acquisition. Depreciable lives of hotel furniture, fixtures and equipment are estimated as the time period between the acquisition date and the date that the hotel furniture, fixtures and equipment will be replaced. Our depreciation and amortization expense remained approximately flat from the three months ended March 31, 2024 to the three months ended March 31, 2025.
Corporate expenses. Corporate expenses principally consist of employee-related costs, including payroll, bonus, restricted stock and benefits. Corporate expenses also include corporate operating costs, professional fees and directors' fees. Our corporate expenses decreased $1.2 million from the three months ended March 31, 2024 to the three months ended March 31, 2025, primarily due to the streamlined leadership structure we implemented in 2024 as well as the accelerated recognition of share based compensation related to the retirement of our former Executive Vice President, General Counsel and Corporate Secretary in 2024.
Interest expense. Our interest expense decreased $1.1 million from the three months ended March 31, 2024 to the three months ended March 31, 2025 and was comprised of the following (dollars in thousands):

| Three Months Ended March 31, |  | Change
| 2025 |  | 2024 |  | $ |  | %
Unsecured term loan interest | $ | 10,762 |  |  | $ | 11,387 |  |  | $ | (625) |  |  | (5.5) | %
Mortgage debt interest | 3,092 |  |  | 4,034 |  |  | (942) |  |  | (23.4) | %
Credit facility interest and unused fees | 308 |  |  | 312 |  |  | (4) |  |  | (1.3) | %
Amortization of debt issuance costs | 535 |  |  | 513 |  |  | 22 |  |  | 4.3 | %
Finance lease expense(1) | 461 |  |  | — |  |  | 461 |  |  | — | %
| $ | 15,158 |  |  | $ | 16,246 |  |  | $ | (1,088) |  |  | (6.7) | %

(1)In October 2024, we extended the term on one of our ground leases, and, as a result, the lease classification changed from an operating lease to a finance lease.
The decrease in interest expense is primarily due to the maturity of the mortgage loan secured by the Courtyard New York Manhattan/Midtown East in the third quarter of 2024, as well as a decrease in SOFR.
Liquidity and Capital Resources
Our short-term liquidity requirements consist primarily of funds necessary to pay our scheduled debt service, near term debt maturities, operating expenses, ground lease payments, capital expenditures directly associated with our hotels, any share repurchases, distributions to our common and preferred stockholders, and the cost of acquiring additional hotels.
We have three mortgage loans that mature in the next 12 months. Our first mortgage loan maturity is on May 6, 2025, and we plan to repay that mortgage loan using cash on hand. We are actively pursuing a financing transaction, the proceeds of which we plan to use to repay the remaining mortgage loans that mature in 2025. If we are unsuccessful in obtaining this new financing, we may repay the mortgage loans using a combination of cash on hand and proceeds from our senior unsecured
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revolving credit facility. As of March 31, 2025, we had $400 million of borrowing capacity under our senior unsecured revolving credit facility.
Our mortgage debt agreements contain “cash trap” provisions that are triggered when the hotel’s operating results fall below a certain debt service coverage ratio. When these provisions are triggered, all of the excess cash flow generated by the hotel is deposited directly into cash management accounts for the benefit of our lenders until a specified debt service coverage ratio is reached and maintained for a certain period of time. Such provisions do not allow the lender the right to accelerate repayment of the underlying debt. We had no cash traps in effect as of March 31, 2025.
Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotels, renovations and other capital expenditures that need to be made periodically to our hotels, scheduled debt payments, debt maturities, certain redemptions of limited operating partnership units (“common OP units”), ground lease payments, share repurchases, and making distributions to our common and preferred stockholders. We expect to meet our long-term liquidity requirements through various sources of capital, including cash provided by operations, borrowings, issuances of additional equity, including common OP units, and/or debt securities and proceeds from property dispositions. Our ability to incur additional debt is dependent upon a number of factors, including the state of the credit markets, our degree of leverage, the value of our unencumbered assets and borrowing restrictions imposed by existing lenders. Our ability to raise capital through the issuance of additional equity and/or debt securities is also dependent on a number of factors including the current state of the capital markets, investor sentiment and our intended use of proceeds. We may need to raise additional capital if we identify acquisition opportunities that meet our investment objectives and require liquidity in excess of existing cash balances. Our ability to raise funds through the issuance of equity securities depends on, among other things, general market conditions for hotel companies and REITs and market perceptions about us.
Our Financing Strategy
Since our formation in 2004, we have been committed to a conservative capital structure with prudent leverage. Our outstanding debt consists of fixed interest rate mortgage debt, unsecured term loans and periodic borrowings on our senior unsecured credit facility. We have a preference to maintain a significant portion of our portfolio as unencumbered in order to provide balance sheet flexibility. We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle. We believe that it is prudent to reduce the inherent risk of highly cyclical lodging fundamentals through a low leverage capital structure.
We prefer a relatively simple, but efficient capital structure. We generally structure our hotel acquisitions to be straightforward and to fit within our capital structure; however, we will consider a more complex transaction, such as the issuance of common OP units in connection with the acquisition of Cavallo Point, The Lodge at the Golden Gate, if we believe that the projected returns to our stockholders will significantly exceed the returns that would otherwise be available.
We believe that we maintain a reasonable amount of debt. As of March 31, 2025, we had $1.1 billion of debt outstanding with a weighted average interest rate of 5.08% and a weighted average maturity date of approximately 1.3 years. We have three mortgage loans that mature in the next 12 months. Our first mortgage loan maturity is on May 6, 2025, and we plan to repay that mortgage loan using cash on hand. We are actively pursuing a financing transaction, the proceeds of which we plan to use to repay the remaining mortgage loans that mature in 2025. If we are unsuccessful in obtaining this new financing, we may repay the mortgage loans using a combination of cash on hand and proceeds from our senior unsecured revolving credit facility. As of March 31, 2025, 33 of our 36 hotels are unencumbered by mortgage debt. We remain committed to our core strategy of prudent leverage.
Information about our financing activities is available in Note 5 to the accompanying consolidated financial statements.
ATM Program
In August 2024, our board of directors approved an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. We did not sell any shares under the ATM Program during the three months ended March 31, 2025 and 2024.
Share Repurchase Program
On May 1, 2024, our board of directors authorized the repurchase of up to $200.0 million of our common stock under a share repurchase program. The timing and actual number of shares repurchased will depend on a variety of factors, including
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price and general business and market conditions. The share repurchase program does not obligate us to acquire any particular amount of shares, and may be suspended or discontinued at any time at our discretion. The share repurchase program will expire on May 1, 2026. During the three months ended March 31, 2025, we repurchased 1,413,643 shares of common stock at an average price of $7.85 per share for a total purchase price of $11.1 million under this program. During the year ended December 2024, we repurchased 3,114,876 shares of common stock at an average price of $8.33 per share for a total purchase price of $26.0 million under this program. Subsequent to March 31, 2025, we repurchased 661,689 shares of common stock at an average price of $7.26 per share for a total purchase price of $4.8 million under this program. As of May 1, 2025, we have $158.1 million of authorized capacity remaining under the share repurchase program.
Short-Term Borrowings
We currently do not utilize short-term borrowings to meet liquidity requirements.
Senior Unsecured Credit Facility and Unsecured Term Loans
We are party to a Sixth Amended and Restated Credit Agreement that provides us with a $400 million senior unsecured revolving credit facility and two term loan facilities in the aggregate amount of $800 million. The revolving credit facility matures on September 27, 2026, which we may extend for an additional year upon the payment of applicable fees and satisfaction of certain standard conditions. The term loan facilities consist of a $500 million term loan that matures on January 3, 2028 and a $300 million term loan that matures on January 3, 2026. We have the right to increase the aggregate amount of the facilities to $1.4 billion upon the satisfaction of certain standard conditions. As of March 31, 2025, we had $400 million of borrowing capacity under our senior unsecured revolving credit facility.
Additional information about the credit facilities, including a summary of significant covenants, can be found in Note 5 to the accompanying consolidated financial statements.
Sources and Uses of Cash
As of March 31, 2025, we had $100.6 million of unrestricted cash, $49.6 million of restricted cash and no outstanding borrowings on our senior unsecured credit facility.
Our net cash provided by operations was $27.6 million for the three months ended March 31, 2025. Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses, interest payments, and other working capital changes.
Our net cash provided by investing activities was $63.5 million for the three months ended March 31, 2025, which consisted of capital expenditures at our hotels offset by the proceeds from the sale of the Westin Washington, D.C. City Center.
Our net cash used in financing activities was $69.6 million for the three months ended March 31, 2025, which consisted of $48.6 million of distributions paid to holders of common stock and common OP units, $11.1 million of shares repurchased under our share repurchase program, $4.9 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholding obligations, $2.5 million of distributions paid to holders of preferred stock and $2.1 million of scheduled mortgage debt principal payments.
We currently anticipate our significant source of cash for the remainder of the year ending December 31, 2025 will be the net cash flow from hotel operations, potential dispositions, and proceeds from debt refinancing. We expect our estimated uses of cash for the remainder of the year ending December 31, 2025 will be loan maturities, potential acquisitions, scheduled debt service payments, capital expenditures, distributions to preferred and common stockholders, share repurchases and corporate expenses.
Dividend Policy
We intend to distribute to our stockholders dividends at least equal to our REIT taxable income to avoid paying corporate income tax and excise tax on our earnings (other than the earnings of our taxable REIT subsidiaries, which are all subject to tax at regular corporate rates) and to qualify for the tax benefits afforded to REITs under the Code. In order to qualify as a REIT under the Code, we generally must make distributions to our stockholders each year in an amount equal to at least:
•90% of our REIT taxable income determined without regard to the dividends paid deduction and excluding net capital gains, plus
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•90% of the excess of our net income from foreclosure property over the tax imposed on such income by the Code, minus
•any excess non-cash income.
The timing and frequency of distributions will be authorized by our board of directors and declared by us based upon a variety of factors, including our financial performance, restrictions under applicable law and our current and future loan agreements, our debt service requirements, our capital expenditure requirements, the requirements for qualification as a REIT under the Code and other factors that our board of directors may deem relevant from time to time.
We have paid the following dividends to holders of our common stock during 2025:

Payment Date |  | Record Date |  | Dividend per Share/Unit
January 14, 2025 |  | December 31, 2024 |  | $ | 0.23 |
April 11, 2025 |  | March 28, 2025 |  | $ | 0.08 |

We have paid the following dividends to holders of our Series A Preferred Stock during 2025:

Payment Date |  | Record Date |  | Dividend per Share
March 28, 2025 |  | March 20, 2025 |  | $ | 0.515625 |

Capital Expenditures
The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement reserves to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures. Contributions to the property improvement fund are calculated as a percentage of hotel revenues. In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement fund under the applicable management or franchise agreement. As of March 31, 2025, we have set aside $46.8 million for capital projects in property improvement reserves, which are included in restricted cash on our consolidated balance sheets.
We have invested approximately $25.6 million on capital improvements at our hotels during the three months ended March 31, 2025. In 2025, we expect to spend between $85 to $95 million on capital improvements at our hotels, however we are evaluating the timing and extent of certain projects that may be deferred or cancelled. Significant projects currently planned for 2025 include the following:
•Orchards Inn Sedona: We commenced the repositioning of Orchards Inn as the Cliffs at L'Auberge on November 1,
2024. The repositioning will integrate the hotel with the adjacent L'Auberge de Sedona and include construction of a
new pool connecting the two properties, renovation of the guestrooms and creation of a new arrival experience and
new outdoor event space. We expect to complete the project in the third quarter of 2025.
•Hilton Garden Inn New York/Times Square Central: We completed a renovation of the hotel's guestrooms during
the first quarter of 2025.
•Kimpton Hotel Palomar Phoenix: We expect to commence a renovation of the hotel's guestrooms during
the second quarter of 2025.
•Courtyard New York Manhattan/Midtown East: We expect to commence a renovation of the hotel's
guestrooms during the fourth quarter of 2025.
Non-GAAP Financial Measures
We use the following non-GAAP financial measures that we believe are useful to investors as key measures of our operating performance: EBITDA, EBITDA re, Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO. These measures should not be considered in isolation or as a substitute for measures of performance in accordance with U.S. GAAP. EBITDA, EBITDA re, Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO, as calculated by us, may not be comparable to other companies that do not define such terms exactly as the Company.
Use and Limitations of Non-GAAP Financial Measures
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Our management and Board of Directors use EBITDA, EBITDA re, Adjusted EBITDA, Hotel Adjusted EBITDA, FFO and Adjusted FFO to evaluate the performance of our hotels and to facilitate comparisons between us and other lodging REITs, hotel owners who are not REITs and other capital intensive companies. The use of these non-GAAP financial measures has certain limitations. These non-GAAP financial measures as presented by us, may not be comparable to non-GAAP financial measures as calculated by other real estate companies. These measures do not reflect certain expenses or expenditures that we incurred and will incur, such as depreciation, interest and capital expenditures. We compensate for these limitations by separately considering the impact of these excluded items to the extent they are material to operating decisions or assessments of our operating performance. Our reconciliations to the most comparable U.S. GAAP financial measures, and our consolidated statements of operations and comprehensive income and consolidated statements of cash flows, include interest expense, capital expenditures, and other excluded items, all of which should be considered when evaluating our performance, as well as the usefulness of our non-GAAP financial measures.
These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with U.S. GAAP. They should not be considered as alternatives to operating profit, cash flow from operations, or any other operating performance measure prescribed by U.S. GAAP. These non-GAAP financial measures reflect additional ways of viewing our operations that we believe, when viewed with our U.S. GAAP results and the reconciliations to the corresponding U.S. GAAP financial measures, provide a more complete understanding of factors and trends affecting our business than could be obtained absent this disclosure. We strongly encourage investors to review our financial information in its entirety and not to rely on a single financial measure.
EBITDA and EBITDA re
EBITDA represents net income (calculated in accordance with U.S. GAAP), excluding: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; and (3) depreciation and amortization. The Company computes EBITDA re in accordance with the National Association of Real Estate Investment Trusts (“Nareit”) guidelines, as defined in its September 2017 white paper “Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate.” EBITDA re represents net income (calculated in accordance with U.S. GAAP), adjusted for: (1) interest expense; (2) provision for income taxes, including income taxes applicable to sale of assets; (3) depreciation and amortization; (4) gains or losses on the disposition of depreciated property including gains or losses on change of control; (5) impairment write-downs of depreciated property and of investments in unconsolidated affiliates caused by a decrease in value of depreciated property in the affiliate; and (6) adjustments to reflect the entity's share of EBITDA re of unconsolidated affiliates.
We believe EBITDA and EBITDA re are useful to an investor in evaluating our operating performance because they help investors evaluate and compare the results of our operations from period to period by removing the impact of our capital structure (primarily interest expense) and our asset base (primarily depreciation and amortization, and in the case of EBITDA re, impairment and gains or losses on dispositions of depreciated property) from our operating results. In addition, covenants included in our debt agreements use EBITDA as a measure of financial compliance. We also use EBITDA and EBITDA re as measures in determining the value of hotel acquisitions and dispositions.
FFO
The Company computes FFO in accordance with standards established by Nareit, which defines FFO as net income (calculated in accordance with U.S. GAAP) excluding gains or losses from sales of properties and impairment losses, plus real estate related depreciation and amortization. The Company believes that the presentation of FFO provides useful information to investors regarding its operating performance because it is a measure of the Company's operations without regard to specified non-cash items, such as real estate related depreciation and amortization and gains or losses on the sale of assets. The Company also uses FFO as one measure in assessing its operating results.
Adjustments to EBITDAre and FFO
We adjust EBITDA re and FFO when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance and that the presentation of Adjusted EBITDA and Adjusted FFO when combined with U.S. GAAP net income, EBITDA re and FFO, is beneficial to an investor's complete understanding of our consolidated and property-level operating performance. We adjust EBITDA re and FFO for the following items:
•Non-Cash Lease Expense and Other Amortization: We exclude the non-cash expense incurred from the straight line recognition of expense from our ground leases and other contractual obligations and the non-cash amortization of
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our favorable and unfavorable contracts, originally recorded in conjunction with certain hotel acquisitions. We exclude these non-cash items because they do not reflect the actual cash amounts due to the respective lessors in the current period and they are of lesser significance in evaluating our actual performance for that period.
•Cumulative Effect of a Change in Accounting Principle: The Financial Accounting Standards Board promulgates new accounting standards that require or permit the consolidated statement of operations and comprehensive income to reflect the cumulative effect of a change in accounting principle. We exclude the effect of these adjustments, which include the accounting impact from prior periods, because they do not reflect the Company’s actual underlying performance for the current period.
•Gains or Losses from Early Extinguishment of Debt: We exclude the effect of gains or losses recorded on the early extinguishment of debt because these gains or losses result from transaction activity related to the Company’s capital structure that we believe are not indicative of the ongoing operating performance of the Company or our hotels.
•Hotel Acquisition Costs: We exclude hotel acquisition costs expensed during the period because we believe these transaction costs are not reflective of the ongoing performance of the Company or our hotels.
•Severance Costs: We exclude corporate severance costs, or reversals thereof, incurred with the termination of corporate-level employees and severance costs incurred at our hotels related to lease terminations or structured severance programs because we believe these costs do not reflect the ongoing performance of the Company or our hotels.
•Hotel Manager Transition and Hotel Pre-Opening Costs: We exclude the transition costs associated with a change in hotel manager and the pre-opening costs associated with the redevelopment or rebranding of a hotel because we believe these items do not reflect the ongoing performance of the Company or our hotels.
•Share-Based Compensation Expense: We exclude share-based compensation expense as it is a non-cash item. This adjustment aligns with the calculation of Adjusted EBITDA for our financial covenant ratios under our credit facility, supporting consistency in our financial reporting and covenant compliance, as well as comparability with our peers.
•Other Items: From time to time we incur costs or realize gains that we consider outside the ordinary course of business and that we do not believe reflect the ongoing performance of the Company or our hotels. Such items may include, but are not limited to, the following: non-cash realized gains or losses on our deferred compensation plan assets; management or franchise contract termination fees; gains or losses from legal settlements; costs incurred related to natural disasters; and gains on property insurance claim settlements, other than income related to business interruption insurance.
In addition, to derive Adjusted FFO, we exclude any unrealized fair value adjustments to interest rate swaps and the portion of our non-cash ground lease expense recognized as interest expense. We exclude these non-cash amounts because they do not reflect the underlying performance of the Company.
Hotel Adjusted EBITDA
We believe that Hotel Adjusted EBITDA provides our investors a useful financial measure to evaluate our hotel operating performance, excluding the impact of our capital structure (primarily interest), our asset base (primarily depreciation and amortization), and our corporate-level expenses. With respect to Hotel Adjusted EBITDA, we believe that excluding the effect of corporate-level expenses provides a more complete understanding of the operating results over which individual hotels and third-party management companies have direct control. We believe property-level results provide investors with supplemental information on the ongoing operational performance of our hotels and effectiveness of the third-party management companies operating our business on a property-level basis. Hotel Adjusted EBITDA margins are calculated as Hotel Adjusted EBITDA divided by total hotel revenues.
The following table is a reconciliation of our U.S. GAAP net income to EBITDA, EBITDA re, Adjusted EBITDA and Hotel Adjusted EBITDA (in thousands):
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| Three Months Ended March 31, |  |  |  |
| 2025 |  | 2024 (As Adjusted)(1) |  |  |  |  |  |  |  |
Net income | $ | 11,915 |  |  | $ | 8,358 |  |  |  |  |  |  |  |  |
Interest expense | 15,158 |  |  | 16,246 |  |  |  |  |  |  |  |  |
Income tax benefit | (842) |  |  | (1,090) |  |  |  |  |  |  |  |  |
Real estate related depreciation and amortization | 27,892 |  |  | 28,313 |  |  |  |  |  |  |  |  |
EBITDA/EBITDA re | 54,123 |  |  | 51,827 |  |  |  |  |  |  |  |  |
Non-cash lease expense and other amortization | 1,299 |  |  | 1,518 |  |  |  |  |  |  |  |  |
Share-based compensation expense (2) | 665 |  |  | 2,635 |  |  |  |  |  |  |  |  |
Hotel pre-opening costs | 23 |  |  | 234 |  |  |  |  |  |  |  |  |
Adjusted EBITDA | 56,110 |  |  | 56,214 |  |  |  |  |  |  |  |  |
Corporate expenses | 6,348 |  |  | 6,248 |  |  |  |  |  |  |  |  |
Interest (income) and other (income) expense, net | (794) |  |  | (1,048) |  |  |  |  |  |  |  |  |
Hotel Adjusted EBITDA | $ | 61,664 |  |  | $ | 61,414 |  |  |  |  |  |  |  |  |

(1)Effective January 1, 2025, we exclude share-based compensation expense from our calculation of Adjusted EBITDA. Amounts reported for 2024 have been adjusted to reflect the current year presentation.
(2)Amount includes $0.7 million of non-cash realized gains related to our deferred compensation plan for the three months ended March 31, 2025.
The following table is a reconciliation of our U.S. GAAP net income to FFO and Adjusted FFO (in thousands):

| Three Months Ended March 31, |  |  |  |
| 2025 |  | 2024 (As Adjusted)(1) |  |  |  |  |  |  |  |
Net income | $ | 11,915 |  |  | $ | 8,358 |  |  |  |  |  |  |  |  |
Real estate related depreciation and amortization | 27,892 |  |  | 28,313 |  |  |  |  |  |  |  |  |
FFO | 39,807 |  |  | 36,671 |  |  |  |  |  |  |  |  |
Distributions to preferred stockholders | (2,454) |  |  | (2,454) |  |  |  |  |  |  |  |  |
FFO available to common stock and unit holders | 37,353 |  |  | 34,217 |  |  |  |  |  |  |  |  |
Non-cash lease expense and other amortization | 1,475 |  |  | 1,518 |  |  |  |  |  |  |  |  |
Hotel pre-opening costs | 23 |  |  | 234 |  |  |  |  |  |  |  |  |
Share-based compensation expense (2) | 665 |  |  | 2,635 |  |  |  |  |  |  |  |  |
Adjusted FFO available to common stock and unit holders | $ | 39,516 |  |  | $ | 38,604 |  |  |  |  |  |  |  |  |

(1)Effective January 1, 2025, we exclude share-based compensation expense from our calculation of Adjusted FFO. Amounts reported for 2024 have been adjusted to reflect the current year presentation.
(2)Amount includes $0.7 million of non-cash realized gains related to our deferred compensation plan for the three months ended March 31, 2025.
Critical Accounting Estimates and Policies
Our unaudited consolidated financial statements include the accounts of DiamondRock Hospitality Company and all consolidated subsidiaries. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. We evaluate our estimates and judgments, including those related to the impairment of long-lived assets, on an ongoing basis. We base our estimates on experience and on various assumptions that are believed to be reasonable under the circumstances. All of our significant accounting policies, including certain critical accounting policies, are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024. There have been no significant changes to our critical accounting policies since the year ended December 31, 2024.
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Inflation
Operators of hotels, in general, possess the ability to adjust room rates daily to reflect the effects of inflation. Generally, our management companies may adjust room rates daily, excluding previous contractually committed reservations. However, competitive pressures or other factors may limit the ability of our management companies to raise room rates. Inflation may also affect our expenses and cost of capital improvements, including, without limitation, by increasing the costs of labor, employee-related benefits, food, commodities and other materials, taxes, property and casualty insurance and utilities.
During the first quarter of 2025, inflation remained above the Federal Reserve’s long-term target, though it has moderated from the peak levels observed in recent years. The Federal Reserve maintained its benchmark interest rate during the quarter, signaling a cautious approach to future rate cuts as it monitors ongoing inflation trends. Any increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty, and increasing the cost of new indebtedness and servicing our outstanding variable rate debt.
Seasonality
The periods during which our hotels experience higher revenues vary from property to property, depending principally upon location and the customer base served. Accordingly, we expect some seasonality in our business. Volatility in our financial performance from the seasonality of the lodging industry could adversely affect our financial condition and results of operations.
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Item 3.Quantitative and Qualitative Disclosures about Market Risk
Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. In pursuing our business strategies, the primary market risk to which we are currently exposed, and to which we expect to be exposed in the future, is interest rate risk. The face amount of our outstanding debt as of March 31, 2025 was $1.1 billion, of which $0.8 billion had a variable interest rate. Our primary sensitivity in 2025 is to changes in one-month Secured Overnight Financing Rate (“SOFR”), as the interest rates on our variable-rate indebtedness were based on this benchmark rate. We use interest rate swaps in order to maintain what we believe to be an appropriate level of exposure to interest rate variability. As of March 31, 2025, the interest rate on $325 million of our variable-rate indebtedness had been effectively fixed through the use of interest rate swaps. We receive one-month SOFR and pay a fixed rate for all of our interest rate swaps. If market interest rates on our unhedged variable rate debt fluctuate by 100 basis points, interest expense would increase or decrease, depending on rate movement, future earnings and cash flows, by $4.8 million annually.
Item 4.Controls and Procedures
The Company’s management has evaluated, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the effectiveness of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as required by paragraph (b) of Rules 13a-15 and 15d-15 under the Exchange Act, and has concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective to give reasonable assurances that information we disclose in reports filed with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
There was no change in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act during the Company’s most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1.Legal Proceedings
We are subject to various claims, lawsuits and legal proceedings, including routine litigation arising in the ordinary course of business regarding the operation of our hotels and other company matters. While it is not possible to ascertain the ultimate outcome of such matters, management believes that the aggregate amount of such liabilities, if any, in excess of amounts covered by insurance will not have a material adverse impact on our financial condition or results of operations. The outcome of claims, lawsuits and legal proceedings brought against the Company, however, is subject to significant uncertainties.
Item 1A.Risk Factors
Except as set forth in the risk factors below, which reflects updates to certain previously disclosed risk factors, there have been no material changes to the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024. These updates should be read in conjunction with the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024, which continue to apply.
Economic conditions and other factors beyond our control may adversely affect the lodging industry.
Our entire business is related to the lodging industry. The performance of the lodging industry is highly cyclical and has historically been linked to key macroeconomic indicators, such as U.S. GDP growth, employment, personal discretionary spending levels, corporate earnings and investment, foreign exchange rates and travel demand.
Given that our hotels are concentrated in major urban markets and destination resort locations in the U.S., our business has historically attracted some international travelers, who may be particularly sensitive to changes in foreign exchange rates or any increase in negative international perception of the U.S. arising from its political or other positions, which may cause a negative decline in inbound international travel. Furthermore, other macroeconomic factors, such as consumer confidence and conditions which negatively shape public perception of travel, including travel-related disruptions or incidents, heightened uncertainty surrounding tariffs and their impact on the economy, visa restrictions, or other federal policy changes, may have a negative effect on the lodging industry and may adversely impact our revenues and profitability.
Many of our expenses, such as operating expenses, interest expense and acquisition and renovation costs, could be adversely impacted by periods of heightened inflation or heightened tariffs and/or a tight labor market.
During 2024, inflation began to moderate, but remained elevated relative to the years preceding 2021. Inflationary increases in certain of our operating expenses, including, but not limited to, labor costs, employee-related benefits, food, beverage and utility costs, repairs and maintenance expenses, property taxes and insurance premiums, have and may continue to negatively impact our business and results of operations. Changes in U.S. policies that discourage immigration, restrict the number of immigrants permitted into the U.S., or negatively impact certain types of work visas, may put further inflationary pressures on labor costs if there is a material decrease in available and/or willing workers. While, in general, operators of hotels possess the ability to adjust room rates daily to reflect the effects of inflation, competitive pressures, customer resistance to higher booking costs or other factors may limit the ability of our management companies to raise room rates. Additionally, inflation may have a negative effect on our ability to renovate or make capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. Proposed or enacted tariffs on imported goods, including construction materials, furniture, and equipment, particularly those sourced from Asia, may further exacerbate inflationary pressures on renovation costs and limit the availability of certain supplies, thereby increasing the cost and timing uncertainty of planned capital projects. Additionally, see “Risk Factors—Risks Related to our Business and Operations—We are subject to risks associated with our ongoing need for renovations and capital improvements as well as financing for such expenditures.”
In March 2022, the Federal Reserve began to raise interest rates in an effort to curb inflation. While the Federal Reserve made several cuts to interest rates in the second half of 2024 in response to decreases in inflation levels, it continues to indicate that it will remain data-dependent in determining whether to hold its benchmark rate at current levels or continue to slowly ease interest rates throughout 2025. Our direct exposure to increases in interest rates in the short term is limited to our unhedged variable rate debt, which amounted to approximately $475.0 million as of March 31, 2025. However, the effect of inflation on interest rates could increase our financing costs over time, either through near-term borrowings under our Credit Agreement or refinancing of our existing borrowings that may incur higher interest expenses related to the issuance of new debt. For more information, see “Risk Factors—Risks Related to our Debt and Financing— Future debt service obligations may adversely affect our operating results, require us to liquidate our properties, jeopardize our ability to make cash distributions necessary to
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maintain our tax status as a REIT and limit our ability to make distributions to our stockholders.” in our Annual Report on Form 10-K for the year ended December 31, 2024.
In addition, historically, during periods of increasing interest rates, real estate valuations have generally decreased as a result of rising capitalization rates, which tend to be positively correlated with interest rates. Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our portfolio and result in the decline of the quoted trading price of our securities and market capitalization, as well as lower sales proceeds from future dispositions.
We are subject to risks associated with our ongoing need for renovations and capital improvements as well as financing for such expenditures.
In order to remain competitive, our hotels have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. These capital improvements may give rise to the following risks:
•construction cost overruns and delays, including those caused by supply chain disruptions, uncertainty around tariffs or inflationary price increases;
•increased costs resulting from proposed or enacted tariffs on imported goods such as construction materials, furniture, fixtures, and equipment;
•a possible shortage of available cash to fund capital improvements and the related possibility that financing for these capital improvements may not be available to us on affordable terms;
•the renovation investment failing to produce the returns on investment that we expect;
•disruptions in the operations of the hotel as well as in demand for the hotel while capital improvements are underway; and
•disputes with franchisors/hotel managers regarding compliance with relevant franchise/management agreements.
The costs of these capital improvements or profit displacements during the completion of these capital improvements could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.
In addition, we may not be able to fund capital improvements or acquisitions solely from cash provided from our operating activities because we generally must distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains, each year to maintain our REIT tax status. As a result, our ability to fund capital expenditures or investments through retained earnings is very limited. Consequently, we rely upon the availability of debt or equity capital to fund our investments and capital improvements. These sources of funds may not be available on reasonable terms or conditions.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
(a)None.
(b)Not applicable.
(c)Issuer Purchases of Equity Securities
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Period |  | (a) Total Number of Shares Purchased (2) |  | (b) Average Price Paid per Share |  | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | (d) Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (1)
January 1 - January 31, 2025 |  | — |  | $ | — |  |  | — |  | $ | 174,038 |
February 1 - February 28, 2025 |  | 218,418 |  | $ | 8.17 |  |  | — |  | $ | 174,038 |
March 1 - March 31, 2025 |  | 1,430,769 |  | $ | 7.86 |  |  | 1,413,643 |  | $ | 161,194 |

(1)On May 1, 2024, our board of directors approved a $200.0 million share repurchase program. The share repurchase program expires on May 1, 2026. The share repurchase program does not obligate the Company to acquire any particular amount of shares, and the share repurchase program may be suspended or discontinued at any time at the Company’s discretion.
(2)Includes shares surrendered to the Company by employees for payment of tax withholding obligations in connection with the vesting of restricted stock. These shares are not part of the Company's share repurchase program.
Item 3.Defaults Upon Senior Securities
None.
Item 4.Mine Safety Disclosures
Not applicable.
Item 5.Other Information
During the three months ended March 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K).
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Item 6.Exhibits
(a)Exhibits
The following exhibits are filed, or furnished as indicated, as part of this Form 10-Q:

Exhibit |  |
10.1 |  | First Amendment to the Sixth Amended and Restated Credit Agreement, dated as of January 31, 2025, by and among DiamondRock Hospitality Limited Partnership, DiamondRock Hospitality Company, Wells Fargo Bank, National Association, as Administrative Agent, each of Wells Fargo Securities, LLC, BofA Securities, Inc., U.S. Bank National Association, KeyBanc Capital Markets Inc., Regions Capital Markets, a Division of Regions Bank, PNC Capital Markets LLC, TD Securities (USA) LLC, Capital One, National Association and BMO Harris Bank, N.A., as Joint Lead Arrangers, each of Wells Fargo Securities, LLC, BofA Securities, Inc., U.S. Bank National Association and TD Securities (USA ) LLC, as Joint Bookrunners, each of Bank of America, N.A., U.S. Bank National Association and TD Bank, N.A., as Syndication Agents, each of KeyBank National Association, Regions Bank, PNC Bank, National Association, BMO Harris Bank, N.A. and Capital One, National Association, as Documentation Agents, and each of Wells Fargo Bank, National Association and PNC Bank, National Association, as Sustainability Structuring Agents (incorporated by reference to the Registrant's Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2025)
10.2 |  | Second Amendment to the Sixth Amended and Restated Credit Agreement, dated as of March 27, 2025 (incorporated by reference to the Registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 31, 2025)
31.1* |  | Certification of Chief Executive Officer Required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act
31.2* |  | Certification of Chief Financial Officer Required by Rule 13a-14(a) and Rule 15d-14(a) of the Exchange Act
32.1** |  | Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.SCH* |  | Inline XBRL Taxonomy Extension Schema Document
101.CAL* |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* |  | Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* |  | Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document
104* |  | Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101.*)
* Filed herewith
** Furnished herewith

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

DiamondRock Hospitality Company
May 2, 2025
/s/ Briony R. Quinn
Briony R. Quinn
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ Stephen M. Spierto
Stephen M. Spierto
Chief Accounting Officer and Corporate Controller
(Principal Accounting Officer)

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