Good day, ladies and gentlemen. Thank you for standing by. Welcome to DiamondRock Hospitality third quarter 2023 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 the session, you will need to press star one one on your telephone. You will then hear an automatic message advising your hand is raised. Please note that today's conference is being recorded. I will now hand the conference over to your speaker host, Briony Quinn, Senior Vice President and Treasurer. You may begin. Thank you. Good morning, everyone. Welcome to DiamondRock's third quarter 2023 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 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. Mark? Thank you for joining us. Global travel demand remains strong. Annual hotel stays in the United States are expected to surpass the pre-pandemic record of 1.3 billion room nights. 2023 is also setting a new normal in hotel patterns as the changes to the way global citizens travel settles in post-pandemic. During this recovery, DiamondRock has been a leader, and we believe we are well positioned to outperform going forward. Our confidence stems from our high-quality portfolio. We have spent more than a decade renovating, repositioning, and recycling our portfolio to curate a collection of hotels and resorts specifically designed to attract today's travelers. By full-year revenue, our portfolio remains approximately 60% urban and 40% resort. An important aspect of our strategy, which distinguishes DiamondRock from its peers, is that nearly 95% of our properties are unencumbered by long-term management contracts. This gives us greater control over operations at the properties and higher values upon sale. These portfolio advantages are a key element that enable DiamondRock to deliver solid results. Total revenue for our portfolio in the third quarter is up 12% as compared to 2019, and just over flat to last year. We were pleased with these results, which were modestly ahead of our expectations. RevPAR in the third quarter contracted 1.1% as compared to the same period in 2022. Compared to 2019, RevPAR in the quarter was up 7.6%, which is more than 100 basis points ahead of the midpoint of our expectation. While urban total RevPAR was up 2.9% in the quarter over last year, it was the sequential improvement in resorts that exceeded our expectations. As measured by total RevPAR, we saw strength at The Landing Lake Tahoe Resort, up 15.2% to last year, Tranquility Bay Resort in the Florida Keys, up 10.4% to last year, and our luxury resort in Vail, up 9.3% to last year. Of course, some resorts continued to adjust and were down to the prior year, but we are encouraged that the year-over-year decline in our resort revenue improved 340 basis points sequentially from last quarter and are still nearly 26% higher than 2019. Moreover, we expect additional sequential year-over-year improvement in resort revenues for the fourth quarter. Overall, total revenues for DiamondRock's entire portfolio in the third quarter were $277.1 million. While up only modestly from 2022, it was still a new record for DiamondRock as it marked the highest third quarter revenue in the history of the company. This led to Hotel Adjusted EBITDA in the third quarter of $81.1 million, which was $6.6 million or 8.9% ahead of 2019. It is worth noting that we achieved these third quarter 2023 revenue and Adjusted EBITDA results, despite about $2 million of disruption impact, stemming from renovations at the Salt Lake City Marriott and Hilton Boston repositioning to the Dagny. Okay, in reviewing the quarter, let's look a little closer at the trends that we saw at our urban hotels, year-over-year RevPAR increased 2.2% and exceeded 2019 by 2.1%. The group segment at the urban hotels was up modestly across the portfolio. However, we did have several stars on the group side in the quarter. On a year-over-year basis, group business in the third quarter was terrific at the D.C. Westin, up 33%, the Westin Boston, up 10.4%, the Westin San Diego, up 15.6%, the Worthington Fort Worth, Texas, up 15%, and the Phoenix Palomar, up high single digits. This strong group performance from our stars was somewhat offset by lower group business from the softer convention calendar in Chicago this quarter, as we discussed last earnings call, along with the anticipated renovation impact from the Salt Lake City Marriott. Business transient in the third quarter, saw demand increase 5.6% as compared to Q3 2022. Over the summer, the business demand landscape evolved quickly. We worked closely with our operators to aggressively adjust, and we were successful in executing on our revenue maximization strategies. This BT strategy involved channel shifts and carefully calculated occupancy for rate trade-offs. As we move beyond Labor Day and into the fall, we are seeing gradual gains in business transient demand, but at levels that remain well below prior peak. For our resort portfolio, third quarter resort RevPAR increased nearly 24% over 2019, despite contracting 8.2% compared to last year. Encouragingly, the year-over-year quarterly decline in resort RevPAR improved a full 500 basis points from the prior quarter. Importantly, we expect that year-over-year quarterly comparable RevPAR will improve yet again in the fourth quarter as we settle in to the new normal secular travel patterns for resorts. Clearly, resorts have been a big winner for DiamondRock. In the third quarter alone, our resorts had Adjusted EBITDA that was 23% higher than in 2019. Going forward, despite some near-term adjustments, it looks like resorts are likely to outperform the industry over the next decade from the acceleration and adoption of hybrid work in the U.S. Remember that there has been 2.7 billion more days of locational flexibility created post-pandemic from the average worker being in the office 3.35 days per week from the prior 4.4 days per week in 2019. To put this into context, the number of nights of locational flexibility is two times the annual demand for all hotel rooms of all types in the United States, and resort hotels specifically comprise just 10% of the existing supply. Resort supply in many of the resort markets is likely to remain near zero from legal restrictions, like in Key West, or the unavailability of developable land, like Huntington Beach and coastal California. As you can tell, we remain constructive on the long-term outlook for resorts. Okay, let's turn to internal growth. While DiamondRock has always invested in its assets to keep them highly competitive, spending more than $500 million over the last five years, one of our biggest competitive advantages is derived from the large number of high-impact ROI opportunities within the portfolio. These ROI projects drive cash flow and lead to outsized NAV increases. In the last 24 months, we have delivered on a number of projects, including the conversion and upbranding of The Hythe Vail to the Luxury Collection, the Clio Denver to the Luxury Collection, the Key West House to a Margaritaville, and the Lodge at Sonoma to an Autograph. Those four hotels alone generated a collective RevPAR increase of 27.4% over 2019 in the third quarter, with the Hotel Adjusted EBITDA up 42.8%. We will continue to benefit from the completion of these and a number of other recently completed ROI projects. In the last 36 months, we have executed a total of $58 million in ROI projects that touched more than a third of our hotels. The benefits of these projects often play out for several years, and we should continue to reap market share gains and increase profits that will bolster overall portfolio results. And we're not done. DiamondRock has a strong culture of excellence that has driven our quest to identify and execute additional value-add ROI opportunities.... For example, on August first, we announced the successful conversion of The Dagny Boston, which marks our fifteenth independent hotel. The Dagny is projected to increase its EBITDA by $4 million next year and ultimately stabilize in excess of $15 million of annual EBITDA. Additionally, we are actively underway with other ROI repositionings. The Hilton Burlington is in the process of being converted to a lifestyle hotel to be named Hotel Champlain, a member of the Curio Collection. It is on track to be completed during the summer of 2024. The Bourbon Orleans is also underway, with its repositioning to be the premier urban resort in the French Quarter of New Orleans. This ROI project is expected to be completed late next year. Behind these, DiamondRock has a large pipeline of future opportunities. I'll list just a few. At Orchards in Sedona, we are in the permitting process to move that hotel to a luxury level and make it part of the adjacent L'Auberge de Sedona Resort. The repositioning is projected to increase ADR there by $300. At the Landing Lake Tahoe, we have the opportunity to add almost 20% more keys. At the Chico Hot Springs Resort, we are evaluating adding more cabins on our 748-acre property. At Tranquility Bay, we are seeking permits to build DiamondRock's first marina with about 30 slips. These are just some examples, and there are many more, so stay tuned. That's a good transition to give you an update on the acquisition market. While Jeff will discuss our capital allocation options in a few moments, we have been disciplined in working to find more of the transactions that have worked so well for us. Owner-operated, experiential hotels, often in unique destinations. We have a deep well of understanding about unlocking value at these types of properties, which puts us in a great position to create value when we can pry them loose. However, as we said last call, any deal we would do this year will have to be something we really love. Our one deal this year, the Chico Hot Springs Resort in Paradise Valley, Montana, certainly fits that bill. This independent, owner-operated hotel has lots of upside opportunities. We bought it at an 8.1% NOI cap rate, and in the third quarter, 2023, comparable RevPAR grew a robust 10.8% for our period of ownership. We project our investment in the Chico Resort will ultimately stabilize north of a 10% NOI yield, just from the implementation of our best practices and a modern revenue management system. While the Chico Resort was a special opportunity, we continue to vigorously work our proprietary database of opportunities with similar characteristics. I should also mention that we are testing the market with a few potential dispositions, but we will remain disciplined with release prices. Now, let me turn it over to Jeff for more details on the quarter. Thanks, Mark. Starting at the top, DiamondRock's RevPAR contracted 1.1% in the quarter from the prior period, exceeding our guidance of a 1.5%-2% decline. This better-than-expected performance was largely due to the improving performance of our resorts. Food and beverage and other revenues saw mid-single-digit growth, pushing same-store portfolio revenue up slightly versus last year. The growth in comparable total revenue breaks down between a 2.9% increase for our urban hotels and a 4.6% decrease in our resort portfolio. It is important to highlight the steady improvement we are seeing in our resorts. Comparable total revenues at the resorts declined 8% in the second quarter, just 4.6% in the third quarter, and in September, they declined only 2.8%. We expect this trend to continue in October. Compared to 2019, comparable total revenue at our urban hotels was 5.8% higher, with steady mid-single-digit gains each month over the quarter. Comparable total revenue at our resort portfolio finished the third quarter nearly 26% above 2019, and September was the strongest month, with nearly 32% growth. Before I move on to profits, I want to spend a moment on the group segment. We expected group revenue gains in the third quarter to be softer than the strong results seen in the first half of the year. We discussed on our last conference call, this was mainly due to the shifts in the citywide calendar in Chicago. Third quarter group revenues were in line with our original expectation, but group room rates were slightly stronger than forecast. We expect comparable group revenue will exceed 2019 levels this year, but we forecast group room nights will still be 10% or 79,000 room nights below 2019. Next year is shaping up to be very strong, with group revenue pacing up over 23% compared to the same time last year. Our footprint continues to serve us well. In our largest group markets, the Westin Boston's group revenue is pacing up nearly 18%, and the Chicago Marriott is up over 40%. Several other stars on the group side are emerging. Group revenues at the Worthington, Westin D.C., Westin Fort Lauderdale, and Westin San Diego are collectively up over 60% compared to the same time last year. We believe the strength and breadth of our group setup for 2024 is a unique advantage for DiamondRock. Moving on to profits. Comparable gross operating profit, or GOP, was $111 million, or a 40.2% margin on $277 million of comparable total revenue. To put this in context, this means our asset managers were able to keep same-store hotel operating expenses to just 1.4% growth, despite the disruption of the Dagny and flat revenue. Hotel Adjusted EBITDA was $81 million and a 29.3% margin, and Corporate Adjusted EBITDA was $73 million. Hotel Adjusted EBITDA margins were 210 basis points lower than third quarter 2022. The Adjusted EBITDA comparisons were made more challenging, mainly by two events that discussed on the last earnings call. First, disruption and displacement, mainly at the Dagny, and second, the property tax relief in Chicago last year. Were it not for these two factors, we estimate our Hotel Adjusted EBITDA margin would have been 170 basis points higher than reported results. Let me reconcile the variances to the third quarter Hotel Adjusted EBITDA compared to 2022. The disruption and displacement shaved better than $2 million from the quarter. We had a successful tax appeal in Chicago in 2022. That resulted in $2.8 million dollar increase in our property taxes in the third quarter this year. Remember, we will face a $6.2 million dollar increase in property taxes compared to last year in the fourth quarter. Our insurance policy is renewed on April 1, so our third quarter results reflect a full quarter impact of higher costs, which was up $1.9 million over 2022. Finally, wages and benefits were up 2.8% year-over-year. Labor cost growth is slowing because we are fully staffed and wage inflation is moderated. You can see this trend in the sequential comparisons, where second quarter labor costs rose 6.5% over the prior year versus just 2.8% in the third quarter. These costs were offset by aggressive asset management initiatives that increased other income by 8.5%, as the team aggressively pursued opportunities to rebid parking agreements, adjust resort fees, and promote our spots. I'd like to point out a few stars in the quarter. The Dagny in Boston officially opened on August first, and the on-site team has done a superlative job keeping the project on schedule and on budget, and the hotel looks fantastic. Importantly, third quarter EBITDA was 5% ahead of our internal expectation after conversion. Collectively, our our luxury resorts held EBITDA margins nearly flat, despite the competitive pressures this season from Europe and cruise alternatives. For example, The Hythe in Vail posted a nearly 400 basis point EBITDA margin increase on a nearly 5% increase in RevPAR. Returning to Boston, RevPAR at our Westin Seaport was up 7.6%, which is 4.8% higher than 2019. Moreover, the Westin had a very strong quarter for advanced bookings, helping us set up for a successful 2024. Tranquility Bay posted a 4.8% increase in RevPAR and a 10.4% increase in revenue, in in what is otherwise a slow seasonal period for the Keys. As Florida returns towards historical seasonal patterns, our occupancy-focused revenue strategy allowed us to drive year-over-year EBITDA growth and an EBITDA margin change that surpassed the portfolio average. The same strategy was successfully deployed at The Landing in Lake Tahoe, resulting in a 19% year-over-year increase in EBITDA and over a 150 basis point margin increase. Finally, I want to point out that comparable F&B profit margins were excellent in the third quarter at 30.7%. That's 50 basis points better than in 2022, despite food inflation. By making smarter choices on the menu, along with rigorous changes in competitive sourcing, we improved food costs year over year. We also had success growing beverage profits, too, with margins up 140 basis points. This was achieved through an increased focus on selling more profitable cocktails and utilizing lower-cost providers. Okay, let's talk about capital allocation. We prioritize capital towards the highest IRR opportunities on a leverage-neutral basis. We constantly evaluate internal ROI projects, common and preferred share repurchases, and finally, external growth opportunities. Beyond the ROI projects Mark has already spoken about, in the past 12 months, we have repurchased over 1.8 million shares for approximately $14.7 million, or $777 per share. We are exploring dispositions, the proceeds of which can be used to fund additional repurchases, ROI projects, or external growth. Regardless of the ultimate capital allocation, our focus is on maximizing shareholder value. We remain committed to having a flexible balance sheet. We are conservatively leveraged, as demonstrated by the low net debt to EBITDA ratio of 3.8x trailing four-quarter results. Our liquidity is very strong and over $500 million, comprised of $102 million in cash and an undrawn $400 million revolver. Importantly, our current liquidity is nearly 140% of our debt maturities through 2025 and nearly seven times our 2024 maturities. Let me provide a few building blocks on our 2023 numbers. Our corporate overhead remains on track to be around $32.5 million. Debt service costs are expected to be about $63 million. Preferred equity dividends are $9.8 million. I also want to note that Westin is rolling out its Heavenly Bed 2.0 program, and by committing to the new bedding package in the fourth quarter, we can secure a 30% price reduction. This will result in an expense of $1 million in the fourth quarter to better position our Westins in 2024. Looking ahead to 2024, we expect several expense comparisons to get easier as we put inflation-fueled wage growth, rising staffing levels, a hard insurance market, and property tax surges in the rearview mirror. So with that, let me turn the call back to Mark. Thanks, Jeff. Overall, travel trends remain solid, but the current environment continues to adjust as the market establishes its new normal in 2023. We expect fourth quarter comparable RevPAR to be approximately flat year-over-year. This represents a 100 basis point sequential improvement from the third quarter, largely due to improving performance at our resorts. We are also pleased that our current full year forecast is generally consistent with Wall Street analyst estimates. For 2024, while the U.S. economy will certainly impact actual industry results, we believe that the industry has the potential to perform relatively well. This belief is based on a few factors. ADR is likely to increase at or above inflation. Corporate transient should continue to improve, albeit gradually, but with special corporate rates up mid- to high-single digits. Group demand should continue to stay strong as forward bookings nationally are solid. Finally, limited hotel supply in most markets provides a good backdrop for fundamentals. Now, for DiamondRock, we like our particular setup. Let me give you a few specifics. First, we have room to run for our hotels to get back to prior peak occupancy. We expect to end 2023 about 5.5 percentage points of occupancy behind prior peak. Closing that gap is worth $57 million in incremental room revenue. Second, there is an opportunity on group. Our geographic setup is good for 2024, with terrific convention calendars in important markets for us, like Chicago, D.C., and San Diego. If group room nights just get back to 2019 levels, that is worth over $34 million in incremental room revenue and concomitant outside the room spend. As Jeff noted, DiamondRock has a strong group pace for 2024, up over 23%. Lastly, ROI projects will continue to fuel results. For example, the Dagny Boston, repositioned in 2023, is expected to experience 50% profit growth in 2024, with EBITDA projected to increase $4 million. As you can tell, we remain constructive on the future of the travel industry. Travel is one of the most highly valued assets in our society and around the world, and we believe that DiamondRock is well positioned for this cycle with a model portfolio, focused strategy, and ample liquidity to move opportunistically. At this time, we would like to open it up for any of your questions. Thank you. Ladies and gentlemen, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your questions, you may press star one one again. Please stand by while we compile the Q&A roster. Our first question coming from the line of Austin Wurschmidt with KeyBanc Capital Markets. Your line is open. Thanks, and good morning, everybody. Just starting off, wanted to clarify a couple items around the recent trends in resorts you referenced. Is the sequential improvement in resort performance a re-acceleration in year-over-year growth that you're alluding to? And does that include the Fort Lauderdale Kimpton Beach? And then separately, I'm just curious, is it fair to say that you think the normalization period in resorts is kind of starting to improve and that you expect it to re-accelerate again in 2024? Yeah, Austin, this is Mark. Great question on the resorts. I think it's a mix. So at some resorts, like the Florida Keys, we're seeing stabilization. We're also seeing easier year-over-year comps. In some of the markets that started, I would say, correcting to the new normal patterns earlier, we're getting into the comparable periods for those now. But there are other resorts that are, I would say we saw a good footing year over year, the ones we called out, and we are adjusting some of the strategies given the shift in some of the demands. So I would call out Lake Tahoe, our asset, The Landing there, where we did some carefully calculated rate for occupancy trade, which led to substantial outperformance on revenues, but also, more importantly, on profits. So I think it's a combination of all three. So it's easier comps in some markets. It is some markets that are, I would say, stabilizing or re-accelerating, but really some of that is, I would say, more focused asset management revenue strategies being executed successfully. ... So if you were to stack up, I guess, the three segments of your business without, you know, pinpointing 2024 guidance, between group, leisure, you mentioned kind of a gradual continued recovery in BT. I guess, how would you rank those three segments as it stands today? For 2024, we're still just rolling up the budgets right now, so I think it's a little early to give you a kind of. We'll know a lot more in 30 days after we've been through the budgets. I wouldn't want to jump in before I've been through each of those. Fair. All right. Thanks for the time. Thank you. Now our next question coming from the line of Smedes Rose with Citi. Your line is open. Hi, thanks. It sounds like you just have some improved visibility, I guess, into 2024 as the world kind of continues to normalize and, you know, some of the asset management tools that you've talked about. Would you consider at some point, sort of reintroducing a more kind of formal guidance for the full year? Or are you thinking more in terms of just kind of giving some color around the next, you know, the next quarters as far as you've been doing? Hey, good morning, Smead. I think as the world settles down, we'll see where we are when we get to February. We'll certainly have the discussion at the board meeting. We'd like. You know, right now you have two wars going on, you have the uncertainty of the Fed going on and a number of other factors. Hopefully, by the time we get to February, things will be a little bit clearer, and we'll be able to kind of give more forward outlook. But I think we'll have to take it kind of one quarter at a time right now. Okay. And then, can I just ask you, I know it's a relatively small piece of the overall portfolio, but the Lake Austin was a big per key investment. Mm-hmm. And I think when you bought it, you had expected this year's contribution to be around $7 million. It looks like it's running significantly below that. And I was just wondering, you know, what kind of went wrong relative to your initial forecast, and do you think it can reach the $7 million contribution at some point, maybe next year? Sure. Yeah, I think we've had a little bit of struggle at Austin, sort of going from an owner-operated, you know, owner-operated resort to, you know, more of an institutional set of revenue management tools, you know, while we saw some falloff in high-end leisure demand. So we've come back from a pricing strategy that's a little bit more occupancy forward. We've seen a lot of success there. And I think a lot of the things that we saw as opportunities, you know, going from an owner-operated resort in terms of increased group contribution and really group as a significant part of the segmentation, which has never really been there. We've seen a lot of inroads on. So I think we're still confident about our overall underwriting, especially on the group and through connection to GDS, which didn't previously exist. Just taking a little bit longer to implement, I think, some of those revenue growth strategies that we saw at acquisition. Okay, thank you. Thank you. Now our next question coming from the line of Peter Lasky with Evercore ISI. Your line is open. Hey, this is actually Duane for Peter. How are you guys? Good morning. Hi, Duane. As you think about trends into 2024, just to follow up on an earlier question, which markets do you think have the most headroom? Which ones would you expect to lag? You know, you mentioned, I think for a couple of quarters now, a good building convention calendar in a market like Chicago. You know, how would you see that market kind of trending in total? Yeah, I mean, I think the most visibility we have in 2024 is on the group side. So we can look at the forward bookings at our hotels and the citywide convention calendars. So if you look at Chicago, we're up, as we mentioned, significantly over 40% in our revenues for next year of forward bookings, and the citywide are actually going to be ahead of, and room nights ahead of 2019. So that one feels very good. Boston's having a good year this year, and next year is still supposed to remain significantly above 2019 levels in room nights. And our forward bookings there are low double digits. That feels good as well. D.C. looks like it's going to be outstanding, significantly ahead of where it was, last year in 2019. San Diego, kind of the same thing, another very good year, substantially ahead of prior peak. So all those markets look particularly attractive. Our, you know, our forward bookings at our hotels correspond with the strength in those markets. So that's really where the visibility is right now. We'll go through the budgeting process at the individual hotels that really kicks off this week. And, you know, 30 days from now, we'll have a much better sense, having spent more time with the properties and seeing those detailed budgets, on how 2024 will shape up. Thanks. And then just on the conversion to independent, like the Dagny, can you talk about how your mix changes, and any changes you see on distribution channels? You know, for example, how, how much of the prior demand was staying on points, and, and what do you backfill that demand with? And, and is it really, as you convert to independent, is it really OTAs that pick up share, when you, when you transition to an independent? Thanks for the thoughts. I think it's, you know, the, it's going to be a base building exercise over a couple of years of building market awareness. We have put some contract business, which I think got up on really sort of a rate parity basis, will supplant and probably slightly in excess of the amount that we were getting, you know, from redemption out of the Hilton system. And we got a significant amount of volume out of that system, but the rate wasn't actually that great on an annual basis. So we've really sort of traded like for like there with some contract business, which is a more consistent base throughout 12 months. And now we're just, you know, in the process of establishing a name for the hotel with a lot of our local partners on the BT side, which we've seen some encouraging results on. And I think we're up about 60% in group for the Dagny specifically. It's, you know, it's not a huge group hotel, unlike the Westin that we have in Boston, but, but we've seen some good inroads with the renovated product, from some of our local corporate customers. Appreciate the thoughts. Thank you. Our next question coming from the line of Dori Kesten with Wells Fargo Securities. Your line is open. Thanks. I believe you said that Q3 expenses were up 1.5% with flat revenues, and that looking into 2024, there are some expense tailwinds. Are you able to give just any more detail on what a potential run rate could be as we're looking into 2024? Yeah, well, hi, Dori, this is Mark. We're not really giving 2024 guidance, but we are seeing expenses, particularly on comparisons to fully staffed hotels, better food costs. I think a number of the labor initiatives we put in are also helping our productivity per room. So, you know, as you saw sequentially, the expenses have come down substantially on a year-over-year basis. That's a trend, you know, ex some uncontrollables, like property tax, that we expect to continue. Yeah. year. And hopefully, as we move into 2024, you know, the comparisons continue to get better. We do anticipate that we'll have higher banquet revenues in 2024 from the strength of our group book. So there'll be some associated expense as we, as we layer the banquet back into 2024 as well. Okay. And what's the quick math on Q4 margins, based on your comment that you're comfortable with the consensus EBITDA? Yeah, good. That's a good question, Dori. I guess I would explain it this way. Year to date, I think our margins for Hotel Adjusted EBITDA, you know, quarter by quarter, are down about 200 basis points year-over-year versus 2022. The fourth quarter will have a bit larger dip because, as you recall, we have the tax in Chicago or the tax relief in Chicago, that's not going to repeat. So that's about a 240 basis point benefit to last year, we're not going to have this year. And then beyond that, you have the insurance, property tax insurance renewal this year, which is about a 75 basis point drag. And then I mentioned the expenditure on something like the Westin linens and some other small items are about a 40 basis point drag. So if you think of it as sort of adding that on top of the 200 basis point change we've seen before, you're probably something, you know, close to almost a 500 basis point differential versus the margins that we did in the fourth quarter of 2022. Okay. And then you mentioned testing the market on dispositions. Should we assume that that's going to be primarily in urban markets? And then, I guess second, is it a good time yet to test pricing on larger boxes? So, we generally don't like to talk too much about pending dispositions because we always assume that the potential buyers are listening to these calls as well. But I will say with the assets that we are testing the market on are all urban assets, so that's a correct assumption. I think it's really deals below $100 million, where there seems to be more liquidity and volume. The bigger deal is just because of where the debt markets are and kind of the more difficult large loan market that exists today. It's just harder to get those deals done. Okay, thanks. Thank you. One moment for next question. Our next question coming from the line of Chris Woronka with Deutsche Bank. Your line is open. Hey, good morning, guys. Thanks for all the details so far. Mark, I guess, you know, one of your friends recently sold a hotel in Boston. I think they're gonna convert to a Hilton. Is there any, you know, as you look out a couple of years, is that a net positive? And that, you know, does it hurt you at all, given you have, you know, you recently converted your Hilton, slightly different neighborhood, and then you have the Westin, which I, you know, I don't know what the longer-term plans there are. So can you give us any color on any impact from that? Sure. One, you know, I thought a good cap rate, and that's a good. I think that's a good comp to have in the marketplace for assets in Boston, so I thought that was favorable read-through. On the Hilton branding, you know, one of the reasons we want independent is we have a seven-day-a-week kind of location that lends itself because of the kind of consistent demand in our location at the Dagny. And it avoided the, you know, what would have been a problem if Hilton had decided to put another Hilton brand on 1,000 rooms not too far away from our hotel. So I think in a lot of ways, it vindicates our decision to not be exposed to new Hilton supply within this market. So, we feel good about our decision. We feel good about the prospects of the Dagny. It had a, it had a very good August, which was ahead of our original anticipated pace. September looked good, and October came in, just on, just on underwriting. So, we feel really good about that. Okay. Appreciate that, Mark. And then, really just want to follow up on a couple quick ones from the prepared comments. One is on the corporate transient. I think a pretty good comment about pricing. Question there is, are there any volume guarantees associated with those, maybe relative to 2019? And then the second part of it is, I think you talked about some cost comps being easier, especially you mentioned insurance there. I guess that caught me a little bit by surprise, given what we're seeing. Is that because you have insurance for next year locked in, or you're just more optimistic in general? ... Well, taking this in reverse order then, property insurance, our renewal is April first, so we're locked in till April first. I think that's what we were trying to convey in the prepared remarks, is that we know what our costs will be through that, and, you know, we had a substantial increase last year. Hopefully, the market will be more accommodating when we get to April, but we'll see when we get there. On the BT, I think the surveys that I've seen come back from the largest special corporates is that they intend to travel more in 2024 than they did in 2023 at this time. That's helpful. Most of our BT special corporates don't have minimum guarantees, but, you know, we're taking some comfort from the fact that they are, the initial surveys indicate that they are intending to travel more than the restricted levels that they're at in 2023. But we don't expect a rapid reacceleration of BT as we move into 2024, and certainly not the way we're engineering the mixes at our hotels. Okay, super helpful. Thanks, guys. Yep. Thank you. Our next question coming from the line of Floris van Dijkum with Compass Point. Your line is open. Hey, good morning, guys. I had a question for you on the capital markets and how that's impacting your business. And obviously, you're testing the market with some asset sales. Should we presume that you're testing the market for sales below $100 million, or because of the difficulty in getting debt on some of these larger transactions? Or does the Sunstone news make you more positive on some of the bigger, you know, the bigger potential dispositions? And the follow-up, I guess, is on the fact that the debt markets are more accommodating for smaller transactions. Are you seeing more competition for the types of assets that you've been buying, like the Chico and, you know, the resort-type assets? Floris, it's... Let me try to parse through those several questions. So I would say in our portfolio, everything's for sale, and there certainly seems to be an arbitrage between private market values and public market, implied values. So we'd like to give into that arbitrage. With that said, it's a, you know, it's not a great seller's market right now. So we're trying to be prudent about, you know, making sure that we're doing what's in the best interest of our shareholders on release prices. So we're actively involved in testing the market. I think at below $100 million, we've seen greater volume, excuse me, in the number of lenders, and the number of potential bidders. So you're more likely to get a number of bidders on those, on those more small to mid-sized deals than you are on the, you know, the $200 million plus deals that are out in the marketplace. So we remain. We think the best arbitrage is still probably in those under $100 million dispositions. The flip side, as you point out, is that for acquisition opportunities, there is more competition for those kind of opportunities. That's why we continue to spend our efforts on off-market transactions. And as I mentioned, our proprietary database that we've spent, you know, over 10 years now on, focused on these kind of unique opportunities like Chico and Lake Austin, they continue to be where we are spending our time on the external growth front. Great. Maybe my follow-up question is, you have a mortgage on the Courtyard in New York, and that's coming due next year, $74 million, pretty low interest. Potentially, I mean, you could look to sell. That could be one of your dispositions as well, potentially, so you don't have to deal with that. But would you otherwise just simply pay down the mortgage and, you know, increase your unsecured, you know, borrowing base? Well, I don't think it makes it more likely that we sell the asset because there's debt. I mean, debt's fungible among the assets. If we sold another asset, you know, we could certainly use it. But I would say we ended the quarter with $102 million of cash, plus the undrawn revolver, so we could satisfy that mortgage just with cash on hand. So we have all the, kind of all the optionality that we need. That's one of the reasons we keep the fortress balance sheet and the financial flexibility to handle those kind of events when they come without putting any pressure on the company. Thanks. That's it for me. Thanks, Lawrence. Thank you. Our next question coming from the line of Anthony Powell with Barclays. Your line is open. Hi, good morning. Just a question on business trends again. I think you talked about some sluggishness there in the third quarter. Were there any particular markets or, I guess, categories that drove that decline, and what revenue management strategies did you implement to counteract that? Yeah, so just to good morning, Anthony, it's Mark. Just to clarify, we didn't see BT softness. We just said it remains substantially below 2019 levels. And really, what we're seeing, and you've seen these comments from the big brand companies as well, is the small business traveler still remains relatively robust, and they're at levels north of what they did pre-pandemic. But the biggest special corporates, the, you know, the Accentures, PWCs, they are traveling at much, much lower volumes than they did pre-pandemic. And that trend continued, you know, in the second quarter and the third quarter. The comps were obviously easier to last year, but they remain, you know, they remain at those lower levels, and we're seeing it gradually get better post-Labor Day, but it remains at, you know, kind of depressed levels overall. ... Got it. Thanks. And maybe one on cash flow for next year. I mean, you talked about some more developments, redevelopments in 2024. Do you expect the CapEx budget to remain kind of where it is? And also on the dividend, do you have any NOL and whatnot, and keep your dividend kind of at its current level, or maybe the dividend go up next year as income continues to increase? Hi, Anthony, it's Jeff. Right now, I mean, as Mark said earlier, we're still pulling together our budgets. I think our CapEx will generally remain as what it was originally contemplated to be this year, which I think is about $100 million. It's a pretty consistent number for us. It might flex a little bit, simply sometimes there's timing issues between when projects are started and completed or carry over from the prior year, but it'll be about $100 million. As for the dividend, right now, we pay $0.12 per share per year. I'll defer to Mark on that or where the board sets that, but I think that's the plan going forward in 2024. Sure. Yeah, we have sufficient net operating losses that we can continue to use to offset the need to pay a dividend, I believe, through much of 2024, if not all of 2024. So I think we have the ability to keep it at that level. Yeah, I'll just add on to the dividend policy. It's something we'll review with the board every quarter, but right now it looks like the highest and best use of our capital is in other places. While we value the dividend and know it's an important component of long-term returns for lodging REITs, right now, given where the stock price is trading, we just think that there are higher and better uses generally for that capital. But it'll be something that we talk about every board meeting, and we'll evaluate quarter to quarter. Okay. Thank you. Thank you. Our next question coming from the line of Dany Ismail from Bank of America. Your line is open. Hi, good morning, guys. You know, we've heard airlines commenting during this earnings season that there's been, you know, they're seeing strength on peak holidays, but outside of those windows, there's been a little bit of more weakness in between. Are you seeing any kind of that similar behavior in your booking patterns, and maybe why or why not we could be different than kind of what we're seeing on the airline side? Yeah, Danny, I think it's a little bit of we're starting to establish the new normal patterns this year, on that. So certainly, there's some Florida fatigue, I would say, and some of that stuff that we had exceptional shoulder seasons. They're remaining better than they were pre-pandemic, but they're kind of calming down into, I think, more sustainable levels that we can build on going forward. So I wouldn't say that's different. We are implementing strategies around that reality. So that may mean at some of our resorts, like I'll take a Henderson Beach Resort, which we have in Destin, has terrific meeting space. Last year, we basically locked it up and barely used it. As we move into 2024, we're gonna be much more aggressive in booking in high-end group during the midweek to make sure that we're maximizing profits at the hotels. So I think you need to understand what's happening in the in the demand channels. You have to be very proactive and anticipatory in the way you set your revenue strategies, particularly midweek group. And I think we've, we've done an excellent job on it so far, and I think we're trying to stay ahead of the curve as we move into 2024 on this shifting patterns as the new normal is established. Thank you very much. Thank you. Our next question coming from the line of Bill Crow with Raymond James. Your line is open. Hey, good, good morning. Jeff, let me, let me start with you, in recognizing you're still rolling up budgets, but also recognizing that you opened the subject of 2024 expenses and margins in your prepared remarks. So let me frame it this way: One of your peers recently suggested that in order to achieve flat EBITDA margins next year, they'd need about 4% RevPAR growth. Is there any reason to, to think that, that DiamondRock would be materially different than that, one way or the other? I think we have some sort of unique factors going on for us, like as I mentioned, like with the Dagny, that's gonna be coming on and adding some significant EBITDAs, that ramps back up. I think for a portfolio that's maybe a little more static, if you will, I think that's probably in the vicinity. It's gonna vary, of course, you know, portfolio to portfolio, but I think that's probably a sort of a good industry metric. Great. Thanks for answering that. Mark, maybe a subtle question here, but when we look at leisure, is it normalizing or is the consumer weakening? Well, it's hard to distinguish those two. I think it's, you know, we're seeing normalization. We're not seeing... maybe it's some consumer weakening, but we're not seeing that. We're seeing the share of wallet still be significant. We're seeing people spend on experiences versus things. It seems like they're cutting back their material purchases before they're cutting back their travel expenses. But it, you know, it's hard to always pull out exactly what's driving the behavior. But, you know, people are traveling. I think we'll see a pretty robust holiday season as we come up here. So we're relatively optimistic, but, you know, clearly things have settled into new patterns in 2023. Great. Appreciate it. Thank you, guys. Thank you. Our next question coming from the line of Chris Darling with Green Street. Your line is open. Thanks. Good morning. Mark, can you touch on what's been pretty strong fundamental performance in New York City and how sustainable that might be going forward? And then is it fair to suggest that New York is one of those rare markets where values might actually be up in recent months, despite the movement in the 10-year? Yeah, so I guess I'll speak on, yeah, I guess, a couple kind of detailed questions there. So I say, think about values, the interest in New York City from investors is always high. I mean, it's a market that always gets international and everyone's attention. So I think New York continues, you know, you could see increase in value. People believe in the thesis in New York, and it's always been active on investor, you know, kind of on a global scale, investor appetite. Fundamentals there are good. You know, you have a lot of positive things happening there. Most notably, you've had a lot of supply get taken out and converted to other uses. You have the 1,000-room Roosevelt, getting converted to, migrant housing and other big properties getting taken out permanently for student housing and other uses. That's been very helpful. You have the M1 rezoning going forward, which will take out the ability to build non-union hotels generally after 2026. That's gonna be a nice catalyst. And of course, most recently, we've had the change in the laws around Airbnb, which has taken out a significant number of available units through that channel. So there's a lot of reasons to be bullish on New York. I'd say the other one is that the type of industry in New York, the financials, have probably been the single most aggressive industry in making sure people return to work four or five days a week. Yeah, juxtapose that with a tech-centric market like Seattle or San Francisco. Those industries have kind of lagged on the return to office stats, which has kind of suppressed the ability to get the, the transient coming into those markets. So I think there's a lot of reasons to be constructive on New York. We certainly are. I think we'll be constructive as we set our budgets for 2024 there as well. So that feels good. Any commentary you would have on the investment sales market in New York, or? There's been some recent trades, particularly smaller select service hotels, and at the high end, that have gone off. Again, I think the feedback from the brokers that we talked to that participate in this process is there was fairly, fairly robust demand for those offerings. I think people are interested in that market, as I mentioned, and New York is one of those markets you will always get the international and high net worth individuals interested in. So I think it's a constructive market for dispositions. Fair enough. Appreciate the thoughts. Thank you, Chris. Thank you. Now, our next question coming from the line of Mike Belisario with Baird. Your line is open. Thanks. Good morning, everyone. Hi, Mike. Just first on the monthly cadence, just was September really the main driver of 3Q upside versus your expectations? And then, can you provide any color on what you saw in October, particularly, relative to what you thought the month was gonna look like? Yeah, so September did come in a little better than we anticipated. We, you know, we gave our expectations about two months ago, so September was the, kind of the variable, and it came in a little better, particularly in the resorts than we had forecasted. October is a strong month. It'll be the strongest month of the fourth quarter for us. The way group laid out in our major markets was particularly focused on October. So we were at or ahead of our expectations for October. We don't expect November or December to have the same group strength, so they probably won't be as, on a comp basis, as strong as October was. But, you know, so far so good this quarter. Got it. Helpful. Thank you for that. And then just switching gears a little bit, the Hersha transaction was announced in late August after your last conference call. Maybe one, can you provide any updated view on what private equity groups are looking for, what you're hearing from them, and then how that transaction maybe shapes or changes your view on relative value and next steps for you looking ahead? Well, I would say the Hersha transaction had a positive read-through in that they had substantial interest from a number of high quality, very capable, private equity firms. So the depth of the bidding there, I think, was very encouraging, and the debt they were able to secure, I think was also very encouraging. It was, you know, it was significant. They had fairly good competition for the debt, and the pricing looks like it's gonna be on a relative basis, fairly attractive. So I think all that are positive read-throughs. Does that change our outlook? I don't know that it changes our outlook. I think private equity is still interested, but it doesn't feel like this is the moment in time when they're particularly leaning in to get super aggressive on pricing for the public REITs. You know, I think based on where we are with the Fed, and the concern of a slower economy, I would imagine that the middle of next year is probably going to be a more robust time for PE firms to lean in. You'll be hopefully past the peak of the Fed raising the rates. Hopefully, liquidity will get even more robust in the debt markets. You know, today, it's functioning, I would say, but it's not robust. And those things should come together in the middle of next year, and I would imagine that that'll be a more optimal time for people and private equity to make aggressive decisions. Perfect. Thanks for that. Thank you. I see no further questions in the queue at this time. I will now turn the call back over to Mr. Mark Brugger for any closing remarks. Thank you. For everyone on the call, we appreciate your interest in DiamondRock, and we look forward to updating you next quarter. Have a great day. Ladies and gentlemen, that does conclude our conference call today. Thank you for your participation. You may now disconnect.