Good day, and thank you for standing by. Welcome to the DiamondRock Hospitality Company's fourth quarter 2022 earnings conference call. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star one one on your phone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Ms. Briony Quinn, Senior Vice President and Treasurer. Ms. Quinn, please go ahead. Thank you, Chris. Good morning, everyone. Welcome to DiamondRock's fourth quarter 2022 earnings call and webcast. Before we get started, let me remind everyone that many of our comments today are not historical facts and are considered to be forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ materially from those expressed in or implied by our comments today. In addition, on today's call, we will discuss certain non-GAAP financial information. A reconciliation of this information to the most directly comparable GAAP financial measure can be found in our earnings press release. With that, I'm pleased to turn the call over to Mark Brugger, our President and Chief Executive Officer. Good morning, thank you for joining us today. I'm here with our entire executive team, and we'll be happy to take your questions after the prepared remarks. The fourth quarter capped off the best year in the history of DiamondRock, with record revenues, record margins, and record profits. For the full year, comparable hotel adjusted EBITDA was $319.8 million. This was an increase of 121.9% or $175.7 million over 2021. Results even surpassed pre-pandemic 2019, with comparable RevPAR better by 5.5% and comparable hotel adjusted EBITDA better by $38.4 million. Importantly, comparable profit margins were 31.36%, surpassing our pre-pandemic peak by 184 basis points. These tremendous operating results were made possible by the consistent execution of our strategy to curate a portfolio that is uniquely focused on the leading secular travel trends. The portfolio we have assembled is comprised of irreplaceable experiential resorts and urban destination hotels that are tailored to be the hotel of choice in their particular markets. Our focus is paying off as our portfolio performance has been among the best in the lodging REIT sector. While this superior operating performance led to strong relative total shareholder returns during the past few years, our stock today nevertheless trades at more than a 30% discount to consensus net asset value. We are proud of what we have built at DiamondRock, and we will continue to work diligently to close that discount. For example, during the fourth quarter, we repurchased 1.6 million shares at an average price of only $7.81 per share. Going forward, we will use the power of our low leverage balance sheet and ample liquidity to capitalize on these types of opportunities. Let's look a little closer at the company's accomplishments in 2022. First, we completed numerous ROI projects, including the Clio Luxury Collection conversion, the Bethesda Suites brand conversion, and executing on our business plans for the repositionings completed in late 2021 of the Luxury Collection in Vail, the Margaritaville Resort in Key West, and the Lodge Resort in Sonoma. Second, we acquired three incredibly high-quality lifestyle hotels in 2022 with an average RevPAR of over $450 and a stabilized NOI yield averaging over 9%. Third, we completed our largest ever financing by favorably recasting $1.2 billion in bank debt. DiamondRock is also well-positioned for the future. We enter 2023 with a number of advantages, including, one, an optimally balanced portfolio to the leisure group and business demand segments. Note that earnings mix in 2023 is projected to be about 60% from our urban markets and just over 40% from our resort markets. Two, a high number of ROI projects completed and pending that should deliver double-digit returns. 3, a portfolio that is the least encumbered of all the full-service public lodging REITs, which gives us enhanced liquidity, control, and exit value. Fourth and finally, a balance sheet advantage with nearly $600 million in liquidity to opportunistically drive incremental shareholder value. On the topic of external growth, we expect to have an advantage on acquisitions this year as the debt markets are likely to remain very challenging for PE firms and other private buyers in 2023. With our significant dry powder, we are ready to pounce on opportunities that emerge. While there is a low volume of deals currently on the market, a core skill of our team remains in finding off-market deals and unique opportunities. Our most recent acquisition, just a few months ago, illustrates that point. The deal for the Lake Austin Spa Resort came about through a relationship that we had cultivated over a number of years with a well-known private equity firm. This firm had originally uncovered the opportunity and was very excited about it. They'd actually placed the property under contract, completed due diligence, and were about to go hard on their deposit when their lender walked from its loan commitment as the debt markets froze up last summer. We were then their first call, and this created an opportunity for us to quietly come in and negotiate for the resort with a multi-million dollar discount as the seller did not wanna have a second failed deal. Lake Austin is a spectacular acquisition for us. We bought a high-end resort at a trailing NOI cap rate of nearly 9%, an almost unheard of yield for a luxury property, one which will generate our highest total RevPAR and EBITDA per key. As good as that is, since closing on the deal, we have confirmed that there are considerable expansion possibilities on the site, which will really make this one a home run. As we go forward, these are the kind of deals that we're looking for: high quality, great returns, and value-add opportunities. I'll now turn the call over to Jeff to discuss the numbers in greater detail. Jeff? Thanks. As Mark said, it was a record quarter and record year for DiamondRock. Total comparable revenues for the company were $257 million in the quarter, an increase of $47 million or nearly 23% over the comparable period in 2021. Comparable RevPAR for the portfolio in the fourth quarter was $196 or 6.7% higher than 2019. This growth was driven by room rates over 19% above 2019. Occupancy is down 780 basis points to 2019. Closing this gap remains one of several sources of future growth. Other revenue, which speaks directly to our asset management team's creativity in identifying and expanding new income streams, was up 31% or $5.1 million over 2019. F&B revenue was over $5.2 million above 2019, driven by the repositioning of several F&B outlets during the pandemic. We will share with you soon several new or upgraded outlets we are working on for 2023 and beyond that will continue to drive profits to new levels. Comparable hotel adjusted EBITDA was $77 million which beat fourth quarter 2019 by $11.2 million or 17%. Comparable hotel adjusted EBITDA margins were 30%, up 724 basis points over 2021, and 192 basis points to 2019. Adjusted EBITDA was $67.4 million, nearly $5 million over fourth quarter 2019. Finally, FFO per share was $0.23 or 85% of the fourth quarter of 2019. Demand across the portfolio remained robust in the fourth quarter. It was specifically the demand at our urban hotels that surpassed our expectation in the fourth quarter, as it has throughout 2022. Recall it at the end of the third quarter, we expected our RevPAR at our urban hotels to finish at 80%-85% of 2019 levels. Short-term group and business transient demand, however, drove urban RevPAR to 97.5% of 2019, outperforming our forecast. Short-term group and business transient continue to improve. We still have significant room for further gains as the citywide calendar across our footprint is stronger in 2023 and 2024 than it was in 2022. Resort portfolio performance remains strong with total RevPAR up nearly 29% over the same period in 2019, driven by a greater than 40% increase in room rates. It is important to note that Q4 occupancy was still 8 percentage points behind 2019, which means we have room to run in 2023 and 2024 at our resorts. Our fourth quarter resort profit margins are 341 basis points above 2019. We are confident resorts will hold on to premium performance going forward because of the strong secular demand for experiential travel and high barriers to new competitive supply. Let's talk about the demand segments. Leisure revenues were great, up 26% in the quarter compared to 2019 on a 29% increase in average daily rates. The resort markets had some variations. We expect healthy growth this season in markets like Vail and Huntington Beach. Group-oriented resorts like our Fort Lauderdale Beach Resort can mix shift, group up, and lock in performance. Key West continues to show strong growth in peak demand weeks, but it's giving back a little occupancy relative to 2021 in the lower demand shoulder periods. Key West remains at dramatically higher performance levels than in 2019, with great flow through and incredible profit margins. BT is probably the most interesting story. Business transient revenues were $47 million in the quarter. That's up 22% over the fourth quarter of 2021, driven by a nearly 32% increase in average daily rate. Fourth quarter BT revenues were nearly 90% of the same period in 2019, but on 21% higher room rates. We believe BT will continue to be a significant source of growth for DiamondRock. BT was over 25% of rooms sold in Q4 2022 versus 34% of rooms sold in Q4 2019. In full year 2021, BT revenues were roughly 50% of 2019 levels, and in 2022, BT revenues were 77% of 2019. No matter how you look at the data, there was significant room for continued growth from the burgeoning return of corporate travel. Group demand was strong in the quarter. Fourth quarter group revenues were nearly 103% of the same period in 2019, an acceleration from 91% of 2019 for full year 2022. The group room rate was up nearly 13% in the quarter, improvement from 10% growth in full year 2022. Banquet revenue was at nearly 99% of 2019 levels. The quality of our group is improving, and we expect total group spend to accelerate as we move through 2023 and 2024. When groups come, and they are coming, they are spending significantly outside the room. We have a terrific setup for 2023 and beyond. Citywide calendars in our core markets are already in line or ahead of total room production in 2022, pointing to a stronger base of business in the market. Boston, Phoenix, Washington, D.C., Chicago, and San Diego are all well positioned. Specific to our hotels, there are over 450,000 group room nights on the books at the start of this year, with an expected total production of nearly 740,000 room nights budgeted for 2023. This compares to approximately 540,000 room nights on the books at the start of 2019 and final total production of 782,000 room nights in 2019. Given the increased availability in our calendar and a strong citywide calendar, we expect to see outsized growth in short term, in the year for the year group sales, just as we saw throughout 2022. Switching gears, we continue to be excited by the growth of our ROI projects. We up branded four hotels in the past two years, including the Hythe Vail, The Lodge at Sonoma, Margaritaville in Key West, and the Clio in Cherry Creek. Collectively, these four hotels are producing $15.5 million more profit than they did in 2019. This is a 56% increase in hotel adjusted EBITDA and 50% ahead of initial underwriting. This year, we will convert the Hilton Burlington to the lifestyle Curio Collection. This will involve completely reimagining the arrival and lobby experiences, as well as adding a new restaurant overseen by a local James Beard award-winning chef. In Boston, a major repositioning of the Hilton is underway. Later this year, we will unveil what will be the most exciting lifestyle hotel in downtown, serving both Faneuil Hall Leisure and Financial District business travelers. There is more to come down the road. Franchise agreements at our Courtyard Denver Downtown and Westin Boston Seaport expire in the next few years and will present value creation opportunities. An exciting transformation involves the opportunity to reinvent The Orchards Inn in Sedona. Last year, The Orchards ran at a $700 a night discount to our adjacent L'Auberge de Sedona. The Orchards has unparalleled panoramic views of Sedona's red rock formations. Our plan is to reposition that hotel to capture much of that rate differential. We will have more to share as our master plan develops. We have been active acquirers in the past 18 months, and performance of our new hotels have been strong. Our two resorts in Destin collectively generated NOI of over $10 million in full year 2022, exceeding initial underwriting by 15%. In Marathon, EBITDA at the Tranquility Bay Resort was ahead of initial underwriting by 51% or $2.7 million. In fact, Tranquility yielded 12.5% on its purchase price in its first year. The Bourbon in New Orleans is right in line with pro forma expectations, and just like the Shore Break in Fort Lauderdale, we are executing on our three-year business plan to enhance positioning to achieve new levels of profitability. Lake Austin, which Mark spoke about, was acquired in late November and still managed to surpass initial underwriting in the final weeks of 2022. Switching briefly to ESG matters, we are proud to be named the hotel sector leader in the Americas by GRESB for the third consecutive year. We introduced new environmental and social targets for 2030, as well as our goal to become a net zero company by 2050. This and much more can be found in our 2022 corporate responsibility report we published to our website in December. As Mark mentioned earlier, we recast and expanded our credit facility in 2022. We have nearly $600 million of total liquidity between our cash on hand and our undrawn revolver, which is fully available to us. During the first quarter, we placed $150 million of incremental interest rate swaps. As of this moment, 68% of our total debt and preferred capital is either fixed or swapped. The most effective way to manage interest rate exposure is, of course, to maintain low leverage from the start. On this point, we concluded 2022 with net debt to EBITDA 4 times and a weighted average debt maturity of 3.7 years. We have no material near term debt maturities and 31 of our 35 assets are unencumbered by debt. Moreover, we have no significant deferred maintenance, which can be a hidden pressure on the true investment capacity and leverage of a company. These qualities put DiamondRock in a unique position, particularly for a company our size, to be opportunistic on capital allocation, whether that is taking advantage of pricing dislocation of our common or preferred securities, pursuing value-added ROI projects, or capitalizing upon opportunities in real estate markets. We continue to review accretive recycling opportunities within our portfolio, but we are being prudent to maximize shareholder value. On that note, I will turn the floor back to Mark. Thanks, Jeff. Our outlook remains constructive. Importantly, we are starting from a position of strength. Our portfolio recovered quickly as our portfolio's favorable composition led to all-time record performance. We also ended 2022 with great profit margins, 184 basis points above prior peak. For 2023, the significant variability of the overall U.S. economy, in our view, makes providing guidance of little value at this time. Like the rest of the industry, we do expect some challenges this year to profit growth margins from rising property taxes and insurance costs, as well as from increases in hotel staffing and wages that occurred progressively throughout 2022. By the end of 2023, we expect expense comparisons to normalize. For this year, we are projecting corporate G&A to be approximately $32.5 million and interest expense to be roughly $61 million. Despite these headwinds, travel demand continues to be very strong, and our operator prepared budgets show growth in every segment of the business in 2023. We will strive to set new records for comparable total revenues and hotel adjusted EBITDA again this year. As we look out even further, we remain optimistic on travel generally, and we expect the industry to climb to new heights this cycle. We remain bullish on the future of leisure travel in particular. Experiences are one of the most highly valued and sought after assets in the world, and travel is unique for its ability to satisfy that consumer need. Leisure was on a long-term outperformance trend line well before the onset of the pandemic, and we believe that this positive trend will only continue in the years to come. This gives us high conviction that our resort properties will maintain a significant premium to 2019 performance and build upon that base going forward. Our urban hotels, which still constitute the majority of our portfolio, have an attractive footprint that will drive a second tailwind for DiamondRock. That, combined with the already achieved success at our resorts, has the power to take us to new highs in revenues and profits. The group funnel for future business at our urban hotels looks great as the need to get teams together is more necessary now than ever. As for business transient, there is still room for improvement and uncertainty on where demand will ultimately settle out, but there is clearly positive momentum. To wrap up, 2022 was a record year for DiamondRock, we believe that we are well positioned for this cycle with a model portfolio, a focused strategy, and ample liquidity to move quickly. It remains a great time to be in the travel industry. We would like to open it up for your questions. Thank you. As a reminder, to ask a question, please press star one one on your phone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment please for our first question. Again, one moment for our first question. Our first question will come from Suneet Kamath of Citi. Your line is open. Hi. Thanks. Good morning. I wanted to ask you, Mark and Jeff, you talked a little bit about the gap to occupancies in 2019, and it sounds like you believe that that gap can continue to close in 23. I'm just wondering kind of what gives you confidence there. Do you feel like it's more on the business side or just more on the leisure side? I guess if you could, maybe just couple that with your remarks around margin pressures in 23 and, I kind of lost you right there at the end. I mean, are you expecting margins to be flat or kind of decline in 23 versus 22? If you could just speak to that a little bit. Sure, Suneet. This is Mark. Good morning. To take the first question on occupancy, yes, we expect the majority of the gain this year to be in occupancy, particularly at the urban hotels. If you look at just January as a harbinger, the occupancy was up versus last year, 15.8%. We're seeing almost all of that come through the urban properties. There's room to run there. Group's gonna be a big part of that component. We saw the momentum building as Jeff talked about in the prepared remarks as we moved through 2022, concluding the fourth quarter at almost parity to where we were in 2019. I think the data and the momentum and the trend line are pretty clear that occupancy gains are gonna be significant as we move into 2023. Well, on margins, there are pressures I mentioned in my concluding remarks that we are seeing like the rest of the industry, wage pressures, property insurance, taxes, the kind of normal cadre of things that are gonna be affected by inflation. We are offsetting those by productivity gains. You know, we do have less managers at the properties. We are doing things differently. We have a number of energy initiatives. We have tight cost controls on food. We've changed menus to eliminate the more expensive food items and replace those with things that haven't had the same kind of inflationary pressures. We're doing a number of things to try to mitigate the inflation pressure on expenses. I think on total, if we looked at 2023, if we could hold GOP margins flat, we would consider that a success. Can you just say, just to follow up, what sort of percentage increases are you expecting, I guess, in wages and benefits kind of at the property level for 2023? We're not giving specific guidance, but we've seen it ranges from 4% to 18% in our properties. It's a little bit misleading on the percentages because some of the low-cost markets, the percentages has actually been higher. You might move from $14 - $17. In some of the higher wage markets, you might be at $28 already. The increase is smaller, but it's on a much larger base. We're seeing wide variability within the portfolio. We would expect the industry to be up high single digits certainly in expenses this year. Okay. All right. Thank you. Thank you. One moment please for our next question. One moment again. Our next question will come from Dany Asad of Bank of America. Your line is open. Hi. Good morning, everybody. Mark, just to clarifying, I think in your prepared remarks, you were talking about, operator prepared budgets are showing growth in every segment for 2023. Does this hold true for all 4 quarters of the year, or is this, you know, 1Q kind of driving a lot of that? The growth this year, given the comps for last year, are going to be weighted towards the first half of the year. Certainly, the 40% increase we had in RevPAR in January isn't going to be consistent for every month of this year. It looks good. I mean, every segment, whether it's group, business or resorts, we're showing growth from the operator prepared budgets. We're encouraged by that trend. Awesome. Great. My other question for you is, how are you underwriting leisure rates for this year as kind of in your budgets, kind of as we look into for all of 2023? Yeah, it's interesting. Leisure is very disparate this year. While, for instance, Jeff talked about in the prepared remarks, Key West and the shoulder seasons is getting a little softer, we're going to see new record performance and very strong performance in Q1 at Vail, Sonoma, Huntington Beach, all continue to accelerate in their ability to charge higher rates. I think as we look at underwriting to your specific question, it's really very market specific and what the individual leisure demand drivers are in that particular market. Got it. Thank you very much. Thank you. Again, one moment please for our next question. Our next question will come from Michael Bellisario of Baird. Your line is open. Thanks. Good morning, everyone. Mark, or maybe for Justin, just on group trends, I was hoping you could perhaps differentiate what you're seeing in terms of spend and booking behavior at your big box hotels versus what you're seeing on the group side at your resort properties? Justin, do you want to take that one? Sure. I mean, we continue to see growth in group demand throughout the portfolio. I think as Mark mentioned on the resort side, maybe first, part of our success going forward is as we've seen a little bit of fall off in leisure transient, some of our resorts have the ability to group up. The group growth there is actually going to be just as significant as you see on the urban side, as we usually replace the leisure traveler and then those groups that we're filling incremental demand. We did about 7% incremental group bookings in the fourth quarter versus the same quarter in 2019 at rates that are over 10% higher. We continue to see the group booking trend accelerate throughout the portfolio. Just given that shorter booking window and given our larger space availability throughout the portfolio, we're pretty excited about group opportunity as the year progresses. Helpful. Then just to follow up on, the Lake Austin acquisition, Mark, you touched on it a little bit. Can you provide maybe some timing or maybe your initial thoughts on the timing of some of those longer-term, ROI projects and redevelopment potential there at the property? Sure. This is Mark. I can. We disclosed on the asset in November, but we've been working with the land use attorneys and others in evaluating the rights that we have with the property. We think we have significant. We've confirmed with the land use that we have significant expansion opportunities. It'll probably take us 2 years to actually get through that. There's an extension of the sewer lines or other things that would need to get done. We feel fairly confident that we have the ability to do it, and we are going to evaluate this year the kind of the master plan and get it locked in and then be able to execute on it. Mr. Bellisario? That's all for me. Thank you. Thanks, Michael. Thank you. One moment, please, for our next question. Our next question will come from Anthony Powell of Barclays. Your line is open. Hi. Good morning. I guess a question on revenues and margins. If you could maybe get into what you think you need RevPAR growth to be this year for your portfolio to get to those flat GOP margins and maybe talk about that more on an ongoing basis, given wage pressures, insurance costs and whatnot on a just ongoing basis? Sure. It's hard because we're not giving specific guidance. You know, the industry, if you look at STR, they're saying the industry is up about 3.7%. Upper upscale up about 8, a little over 8%. We think that kind of environment, generally for upper upscale, we'd be able to hold margins for the industry kind of GOP flat. That's the environment. You know, will depend how the economic outlook plays out. Right now I think that's kind of a fair assessment on margins. Jeff, do you have anything else to add on that? No, that's the comment I was gonna make as well, just 'cause earlier you mentioned that should be expecting sort of high single digit expense increases. Saying to get high single digits, to get flat margins, GOP margins, you would need effectively high single digit revenue growth. Got it. I guess more on the economic outlook, I mean, you've talked about the opportunity to have good short term bookings in, you know, later this year. I guess given the uncertain environment, how certain are you in your ability to drive some of those short term bookings in group throughout the year? Yeah, I would say a couple of comments on the group piece. We saw in the fourth quarter, as Justin mentioned, the acceleration of bookings in the quarter for the quarter and in the quarter for 2023. We crossed over the end of the year with good momentum. The window for booking group remains shorter than pre-pandemic, so people are booking even large groups on relatively short timelines. That seems to be the world order that we're in this year. I think we're really encouraged on not only the momentum that we experienced in the fourth quarter, but the fact that the availability that remains in 2023 is still on some very attractive dates. Sometimes when we have, we cross over, we have, may have sold the best date, all the best dates, if you will, but we still have very attractive dates like summertime in Boston, summertime in Chicago, that are still available, and that gives us more confidence in the ability to close the group booking gap and the fact that we're going to be able to put high quality groups into those open periods. Great. Thank you. Thank you. One moment, please, for our next question. Our next question will come from Duane Pfennigwerth of Evercore ISI. Your line is open. Hey, good morning. Thank you. Just with respect to the... I think you put out a January up 10.5% relative to 2019 in your investor deck. Sorry for the short-term question, but, could you put sort of January in context from a comps perspective relative to, you know, February, March, the balance of the March quarter? Yeah. Duane, good morning. This is Mark. I'll make a couple of comments on Q1. We did pre-announce January, so the results, as you mentioned, were up 10.5% over 2019, up 39.6% over 2022. We do anticipate that Q1 will be the biggest year from the easy comp to Q1 of 2022 with the Omicron impact. We're expecting the entire quarter to be fairly robust in all the urban markets. In fact, we expect total RevPAR to exceed 2019 levels at our hotels in markets like Salt Lake City, Dallas Fort Worth, New York and Phoenix. That's gonna help power our Q1 overall. Even the resorts, as I mentioned, while Florida Keys may be moderating from being up over 50% from 2019, we still expect robust growth in Q1 from resorts in Vail, Huntington Beach and Sonoma, among others. We expect to finish, I think, in total Q1 with total RevPAR that is up, you know, double digits, low double digits 2019. I would say January is not out of line with what we expect for the quarter. We expect those overall results for the quarter versus 2019 will probably put us at the front of the pack among the peer set. That's helpful color. Thank you. Then just, you know, the comment on the Florida Keys, and maybe what we're seeing is just sort of normal seasonality coming back, you know, relative to a period of time where there was no seasonality. It was sort of peak forever. I'm just wondering, is your approach to revenue management different in these off-peak shoulder seasons? Is there something through the pandemic that you learned that changes your approach to off-peak versus the past? Thanks for taking the questions. Sure, Duane. On the Florida Keys, let's say we can't own enough Florida Keys in some ways. We're talking about rates that are 50% higher than they were in 2019, with incredible ability to flow that higher rate to the bottom line. It's an incredibly profitable place to be. What we're seeing is the, I think the impact last year of Omicron, where people could all of a sudden they got their another 60 days of work from home that they didn't anticipate and they were trying to figure somewhere where they could drive to, and take advantage of the last gasp of work from home before they had to go back to the office a couple days a week. The Floridas were, you know, they really participated in that surge, if you will, from the last minute pushback caused by the Omicron variant. What we're seeing now is, yeah, Christmas week, we can still push it, but that unusual surge that we saw is moderating a little bit. When I mean moderating, it's not like it's going back to anywhere close to 2019. We're talking small percentage declines. Our strategy is to maintain rate. You know, we've retrained the traveler to pay rates that are 50, sometimes 100% higher than they were 4 years ago. We're not gonna give back $1 of that very easily. That's our strategy. Thank you very much. Thank you. One moment please, for our next question. Again, one moment, please. Our next question will come from Patrick Scholes of Truist Securities. Your line is open. Hi, good morning. Most of my questions have been answered. Just when we think about comparable margins Versus 2019 and ability to, you know, have permanent margin increase. What are your latest thoughts on that? I know it may not been specifically you folks, you know if we go back 6 months, 1 year ago, sort of the industry was thinking plus 100, maybe 200 basis points. Would something like that still be on the table? Thank you. I'll let Jeff jump in some details, you know, we ended 2022, 184 basis points above 2019. I think DiamondRock's proven we can operate our hotels at higher margins. Now in 2023, there will be some expense pressures, there'll be some pressure against that margin increase, we're already substantially higher than we were in 2019. Jeff, do you wanna jump in in some details? Yeah. I was also gonna just chime in on that, Patrick, that I think on the resort side of the portfolio, as Mark mentioned earlier, that's where our rate growth has been highest and our flows have been strongest. I think that's gonna be the area too, where you continue to see our premium performance on margins holding out better. There's a lot of structural reasons for that as it relates to, you know, for everything from taxes and insurance to labor costs in those markets that drive that. But I think that's probably where you'll see those premium margins more apt to be held and relative to 2019. Okay. Thank you. I'm all set. Thank you. One moment please for our next question. Our next question will come from Chris Woronka of Deutsche Bank. Your line is open. Yeah. Hey, good morning, guys. Mark, I think you mentioned in the prepared comments, you still have a lot of room to go even at the resorts on occupancy. The question would be, you know, do you think? Can you get that at the rates that you want to get? Or is there gonna be a function of eventually rates come down, occ goes up, which obviously, you know, is a little tougher for margins. I mean, how do you get that full occupancy back in the resorts? Sure, Chris, it's a great question. The resorts are really. You have to think about them. They're their own micro-businesses, and it's gonna be different at different kinds of resorts. In Fort Lauderdale, for instance, Justin was saying we're grouping up to replace some of that leisure. The way we're gonna get back to the kind of max occ hotel like Fort Lauderdale, which has a great group meeting platform, is that we're gonna supplement in more and more group than we had last year, and that's gonna allow us to close that gap. Some other hotels, you know, if you have a 100-room hotel that has no group, it's gonna be harder to recover that, and we're gonna have to play with the rate strategy there a little bit to figure out where the maximum profit mix is on revenues. The overall goal is to continue to maximize profits. We'll close some of the occupancy gap through adding group throughout the portfolio, but it might not close entirely in 2023. Okay. Thanks, Mark. I was hoping we could go back to the comment about group and still having some, you know, some prime dates. I thought that's a little bit unusual, maybe different than what we've heard from others. I mean, are those? Again, are those open because the rates are, you know, at a level where, you know, there's more selective demand? I mean, do you worry at all that, you know, that you're gonna miss it, that something changes in the macro and it's too late to even get close in? That's a good question. I think it's more the fact that our portfolio, a lot of the prime dates in markets like Chicago and Boston are still six months out, you know, five, six months out. The nature of group bookings these days is a little shorter window. I think it just happens to be the geography of our portfolio. We're actually super happy with the way it's laying out on a calendar basis this year, but I'll Justin add any details for the question. I think it also comes down to average group size. I mean, our portfolio skews maybe a little bit smaller than some of our competitors. Those average groups that are, you know, maybe in the 50 to 150 rooms are gonna book shorter out than maybe some of the larger hotels that are 500 and plus. It gives us the ability to sort of look towards a higher percentage of our business from that short-term booking window. Okay. Very helpful. Thanks, guys. Thank you. Thank you. 1 moment please for our next question. Our next question will come from Floris van Dijkum of Compass Point LLC. Your line is open. Thanks, guys, for taking my question. I know you're not providing guidance, you know, you're hoping to keep margins the same, and you're saying that some of your costs could go up, your operating costs could go up by, you know, 8%-ish or somewhere in that range, which would essentially mean that your EBITDA would have to go higher as well. I mean, put another way, under what scenario do you see EBITDA going down? Barring a hard landing recession, what scenario do you see DiamondRock posting negative EBITDA growth in 2023? That's my first question. Sure, Floris. Well, we're not giving guidance, but as we mentioned earlier, you know, STR's guidance of 3.7% for the industry and high single digits for upper upscale. You know, in that environment, that's the environment that we think we can hold GOP margins flat. If that's kind of the economic scenario that they're utilizing, that's how the industry plays out, we think we can do well in that environment. Hopefully, that's helpful. It is, Mark. It is. I just my second question is, I noticed you still had last year two hotels that actually posted negative EBITDA. Your Embassy Suites in Bethesda and your Kimpton in Fort Lauderdale. Maybe talk a little bit about that and maybe also touch upon actually your highest EBITDA producer, which, you know, doesn't really fit into, I think, where you wanna take the company, which is your Chicago Marriott, which, you know, represents over 10% of your EBITDA. You know, how should we think about that hotel going forward, and how would you replace the lost income if you were to trade out of that out of that asset? Okay. On the two that you mentioned, Bethesda Suites had a brand transition, which, you know, was disruptive. That's the reason it had negative EBITDA, and it's ramping back up this year. The Shorebreak in Fort Lauderdale, we acquired. We're repositioning that asset. As anticipated, we're redoing the roof net. Repositioning won't be done till probably the end of the second quarter of this year. And it's small. Both these are tiny assets for the overall portfolio. Both were in transition. That's the reason. Chicago Marriott, it had a great year. It exceeded our expectations, the market and ability for us to bring leisure in over the summer and then the group rebound as the year went in Chicago were ahead of our expectations. We're very pleased with the performance of that asset. As you mentioned, Chicago, we do think about monetizing some of our Chicago assets as we move forward, thinking about portfolio composition and clearly having the better results puts us in a better position to do that. Right now, the market's not very accommodating for large asset sales given the inability to secure large loans. That'll probably change as the year progresses on. We'll continue to monitor the debt markets and think about those things in capital recycling. If we did monetize, you know, a hard branded asset, it's gonna be continually putting that dollars back into the areas where we think there's gonna be outsized growth over the next decade, and that's in lifestyle experiential assets in very high varied entry markets. It's gonna be more of what we've been buying. It's gonna be more Lake Austins, it's gonna be more Henderson Beaches, it's gonna be unique assets like the Bourbon Orleans in the French Quarter. We continue to move the company in that direction, and you're seeing it. You know, our results were tremendous in 2022, in large part because we've been positioning the, you know, positioning the portfolio for those demand trends that have been really compelling over the last couple years. Thanks, Mark. Thank you. Thank you. One moment, please, for our next question. Next question will come from Chris Darling of Green Street. Your line is open. Thanks. Good morning, everyone. Related to staffing levels, are you more or less running at the right headcount today, or is there more work to be done in terms of hiring across the portfolio? Justin, you wanna take that one? Yeah. I think generally we're running at the required staffing levels to what we anticipate the business levels to be. As we progress through the year, you know, we will have some comparables that are not perfect on a year-over-year basis, just given where business levels were same time last year as Omicron sort of worked its way through the country in early 2022. I think by the end of last year, we're pretty much fully ramped from a staffing perspective in terms of where we see operating fundamentals going forward. Those levels are in a lot of cases, significantly below 2019. We've been able to really rethink and streamline the business as we've ramped these staffs back up from, you know, what was a pretty significantly reduced level during the middle of the pandemic. I think, you know, our hotel, Westin in Boston, is probably a great example of that. You know, we're forecasting about 20 less managers in 2023 budget versus 2019 operating levels. We've really found ways to complex roles throughout the portfolio, especially in some of the larger assets, to find a more efficient and streamlined business model. Got it. That's helpful. Shifting gears. Mark, you mentioned there's not too much available in the transaction market today. Curious if you've considered putting capital to work maybe in the form of mez debt, preferred equity, just thinking about other ways to maybe get a foot in the door of assets you might like to own over the longer term. Chris, it's a great question. We do have kind of strategic conversations all the time about capital deployment. We love our balance sheet. We love the clean story that DiamondRock is today. Frankly, there's a lot of competition from private equity in doing mez debts and buying tranches of debt in other places. Actually, the competition there is fairly intense. We're most likely to keep it relatively simple. Not that we wouldn't do something creative on that front, but I think that it has to be a very high bar to overcome for us to move down that. Frankly, we find opportunities, and we found that six opportunities of great acquisitions in the last 24 months. You know, while the volume is low on the market, we're having active conversations about deals, primarily off market deals right now. It's not like it's zero. One of the advantages of having only 35 assets of being our size, if we can do a few deals this year, it can really move the needle for us. We don't need to do a $1 billion of acquisitions to be, you know, the top performing REIT in 2023. I think we'll continue to find smart deals. You know, one of the things we've been able to do is find off market deals. Looking at our pipeline, you know, we have a number of those that we're in active dialogue on today. Got it. Appreciate the thoughts. That's all for me. Thanks, Chris. Thanks, Chris. Thank you. One moment for our next question, please. Our next question will come from Stephen Grambling of Morgan Stanley. Your line is open. Hi. Thanks. The comments on the first quarter were helpful. Are there any additional thoughts you can provide on the quarterly cadence for the remainder of the year as we think about big citywide or other factors to consider for whether it's revenue or margins by quarter? As a related follow-up, were cancellation fees in 2022, you know, outsized? Is there any way to think about how cancellation fees may have contributed on a quarterly basis last year? Jeff, you wanna take that one? Yeah, I mean, I'll say, Stephen, we're not gonna give guidance on revenues and margins by quarter. You know, as Mark said, our first quarter is probably gonna be most significant in terms of revenue growth. I actually think that, you know, EBITDA growth year-over-year is probably gonna be more front of the year weighted, just given the comparisons to last year, you know, and how the business ramped over last year. I think from a, I'll call it a risk-adjusted standpoint, I think, you know, having our earnings more front-end weighted is, you know, an encouraging sign. I'm looking at Justin. I'm not sure if we have the cancellation fee revenue handy, or if we can always follow up offline. Yeah. I mean, we did have, like, I think most of our competitors, more cancellation versus 2019, but it was a little over $2 billion more than we had in 2019, so it's not that material to over $1 billion in revenue. I think it's less material to us than it is to probably some of our others with the larger group component, but... Makes sense. That's it for me. Thanks so much. Thank you. One moment, please, for our next question. Our next question will come from Bill Crow of Raymond James. Your line is open. Yeah, thanks. Good morning. Jeff, one for you. If we just think about revenues up in the mid to high single digit range, which I think you've established, or the industry is. Excuse me. We think about expenses up in a similar amount, and we kind of get to a flattish EBITDA number, maybe a slight positive bias. You have made transactions over the course of the year, and I'm just thinking about how the portfolio changes would then be additive to kind of the baseline number. I guess I would say, Bill, that we tend to think of all this on a comparable basis. I mean, I guess when we're giving guidance or talking about the portfolio in that way, it is, you know, I'll call it same store on that level. I wouldn't think of the acquisitions as sort of incremental or outside of that. You know, we're trying to be as transparent as possible and adjust for the transactions that we've already made in our past numbers and our, you know, how we think about the year going forward. I don't know, is that helpful to you? I guess. You know, in Austin, for example, only owned it for a short period of time, right? You're gonna get that benefit rolling through this year. Oh, certainly. It's a very profitable asset. You know, when we think about our year-over-year growth, you know, we obviously look to the historical contribution that that asset would've made to the extent we had owned it for all prior periods. Okay. All right. That's it. Thank you. Thanks. Thank you. Speakers, I see no further questions in the queue. I would now like to turn the conference back to Mark Brugger for closing remarks. Thank you. For everyone on the call, we appreciate your interest in DiamondRock, we look forward to updating you next quarter. Have a great day. This concludes today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.