DiamondRock's Profits Soar on Strong Demand

DiamondRock Hospitality (NYSE:DRH) announced impressive second-quarter 2026 financial outcomes, characterized by a notable increase in revenue per available room and expanded hotel margins. The company also revised its full-year outlook upwards, buoyed by sustained demand from group, transient, and leisure travelers.

Comparable RevPAR saw a 7% increase from the previous year, with growth accelerating from 5.5% in April and May to an impressive 10.1% in June. This growth was supported by an increase of over 6% in both group and transient revenue, contributing to a 5.6% rise in Total RevPAR.

The company reported corporate Adjusted EBITDA of $107.9 million and Adjusted FFO per share of $0.44. A $6.9 million benefit from settling property-tax appeals for its Chicago hotels, amounting to $0.03 per share, was included in these results. Excluding this benefit, FFO margin expanded by 303 basis points.

Further underscoring its financial health, DiamondRock's trailing-12-month free cash flow per diluted share, calculated as Adjusted FFO minus capital expenditures, surged by 27% year-over-year to $0.80. CEO Jeff Donnelly attributed this substantial increase, approximately 30% over the past 12 months, to the ongoing 'DiamondRock 2.0' strategic initiatives.

Operating expenses increased by 1.8% excluding tax benefits, while total revenue grew by 5.5%, leading to a 240 basis points expansion in Hotel Adjusted EBITDA margin. Despite higher occupancy rates, labor hours decreased, with wages and benefits rising by 2.2%.