Tuesday, DiamondRock Hospitality Co. (DRH), a lodging focused real estate investment trust that owns premium hotel properties, reported a decline in earnings for the second quarter, hurt by lower occupancy and a decline in daily average rates due to the severe economic recession.
Adjusted Funds From Operations or FFO for the quarter slid to $24.9 million from $41.2 million in the same period last year. Adjusted funds from operations per share declined to $0.24 from $0.43 per share in the corresponding period last year, yet came in above the $0.21 per share projected by ten analysts polled by Thomson Reuters. Analysts' estimates typically exclude special items.
Net income for the quarter plunged to $2.5 million or $0.02 per share from $21.8 million or $0.23 per share in the same period last year.
Revenues declined to $143.6 million from $181 million in the same period last year. Seven Street analysts expected the company to report revenues of $144.97 million for the quarter.
Revenue Per Available Room or RevPAR decreased 22.2% to $109.85 from $141.28 in the comparable period in 2008, driven by a 6.7 percentage point decrease in occupancy. For the quarter, occupancy declined to 69% from 75.7% and average daily rate declined 14.6% to $159.30 from $186.53.
For the six month period, net loss was $2.8 million or $0.03 per share compared to net income of $26.9 million or $0.28 per share in the same period last year. Adjusted funds from operations declined to $39.7 million or $0.41 per share from $64.4 million or $0.68 per share in the corresponding period last year. Revenues declined to $262.2 million from $313.9 million in the year-ago period.
Year-to-date RevPAR decreased 19.9% from the comparable period in 2008, driven by a 12.8% percent decrease in the average daily rate and a 5.9 percentage point decrease in occupancy.
DiamondRock intends to pay its next dividend to stockholders of record as of December 31, 2009. The company expects the 2009 dividend will be in an amount equal to 100% of its 2009 taxable income, which is expected to be in the range of $35 million to $45 million and may elect to pay up to 90% of its 2009 dividend in shares of its common stock.
DiamondRock, which owns twenty premium hotels in North America, said that it explored the potential sale of certain hotels earlier in the year, but currently does not have any hotels listed for sale with a broker. The company said it will evaluate any unsolicited offers received for any of its hotels. The company expects lodging demand to follow its historical course and lag the general economic recovery by several quarters and thus, the company anticipates a challenging operating environment for the balance of 2009 and into 2010.
Looking ahead, the company expects its 2009 distributable taxable income to be in the range of $35 million to $45 million.
DRH closed Monday's regular trading session at $7.13.
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