DRH
#<UNK>, this is <UNK>.
Let me take both of those, in turn.
On the dispositions, and thinking about the confidentiality agreements we have, it's probably difficult to disclose what the net proceeds are, but if you look back into what hotels they are by figuring out what that is.
On your broader question about share repurchases, it's a great question.
I would note a couple of things.
One is the two dispositions that we mentioned are still pending.
We don't have that cash yet to deploy.
The other thing I'd point out on valuation is that just two months ago, which was during a blackout period for share repurchases, the stock was 20% lower.
I think we're being patient in trying to be opportunistic about any share repurchase.
And although we do think the stock is trading at a big discount to NAV, as we mentioned, probably 25% to 30%, in our estimation, we're being cautious as we watch some of our peers hit that buyback button way too early over the last six months.
So, we'll continue to monitor the markets and try to make the right calls on when we deploy the capital.
Yes, <UNK>.
We have that option within our plan.
It's called a 10b5-1 plan where you can set a set price, if you think it's so compelling that you would buy back stock, and then that can be traded during all periods of the year.
<UNK>, this is <UNK>.
That's a great question.
Group looks like it's been lagging for this recovery.
So, it's been a late comer to the party.
I think there was a loft pent-up demand for groups that needed to meet, finally got the momentum, and now we're seeing those groups actualize.
And we're seeing a lot of new groups that haven't met in a while come into our hotels.
So, I think there's a little bit of a pent-up demand element to the group trends and what's going on there.
On the business transient, as I was mentioning earlier, I think a lot of that's just more realtime in how corporate America is doing.
And if you look at profitability of corporate America and if you look at the correlation to GDP, it's been a little anemic over the last couple of quarters.
So, if there's improve, we would expect the business transient more quickly to react to that improvement, [or change] either way.
<UNK>, from a mix perspective about 29% of our first-quarter rooms revenue was business transient, about 29% was group, and the balance was leisure contract and other.
From a sequencing perspective business transient was down relative to where it was first quarter last year about 1%, group was down about 2%, and leisure contract and other went up 3%.
That's a function of what we talked about in our prepared remarks, which is the leisure contract and other businesses performed strongest during the quarter at the expense of both group, which was down 7.9%, and business transient which was down 1.4%.
With respect to where the demand is coming from I'll turn it over to <UNK>.
Steve, this is <UNK>.
I would just add two comments to that.
One is, we have a portfolio of only 29 hotels.
We do have an allocation to business transient that seasonality plays a big role.
So, think about New York, Chicago, even Boston in the first quarter, it's not necessarily indicative of what's going on for the full year in business transient.
So, we don't want to read through too much to the general industry.
The other is, what we have witnessed is actually our special corporate accounts have increased, but at a number of the special corporates, just their production is down.
So, while [PIVC] may still be coming, or we may have added [MacKenzie], just the level of activity that they're producing has been shy of our expectations.
So, they're coming, sometimes they're paying the rate, but the production of some of our best customers is just down.
I think especially based on Q1, and based on the segmentation we get from our operators, it'd be hard to give you precise numbers on that kind of segmentation by type of special corporate account, if you will.
It's <UNK>.
I'll start on Key West and then turn it over on the specific hotels for <UNK> to comment.
Key West market, it's a great market because you have the moratorium there on new supply.
But what we've seen is there is some volatility because people have taken ---+ because it's such a good market people have taken a bunch of older products, taken them out, and then they re-introduce them, which creates some volatility and pseudo-supply, if you will.
Right now we're experiencing that.
There was a four-pack of hotels that Highgate had purchased that were taken offline, completely renovated, and now coming back online.
So, I think there's some absorption there.
We think that will happen over the next couple quarters and then we'll get back to the regular trend line.
We do own two hotels that had some particular things going on so I'll let <UNK> expand on that.
It's <UNK>.
I would add real quick, both those hotels, the fact that the new supply was coming back was all factored into our underwriting.
Both of those hotels are actually trending about 10% ahead of our underwriting on the bottom line.
So, it is just a matter of how we thought through the market.
This was factored into our underwriting.
Yes, I'll answer that.
Actually, it exceeded our expectations for the quarter.
If you look at the bottom line, the margin growth there, the property really did a terrific job.
There were some issues in the way we layered in the group last year that created some comp issues this year, but overall we're actually pleased with how the first quarter played out at Frenchman's Reef.
And actually at the second quarter I think it's starting off on a relatively strong foot.
As far as a core holding, will we own this hotel in five years.
I would say it's less likely than more likely given the volatility and the seasonality of the kind of asset of a fly-to-only market.
It just has some inherent issues when you're trying to get consistent earnings.
It could be up baked or it could be down baked depending on the weather, which isn't necessarily ideal for a public company.
The market, as we've seen in the Caribbean, it goes hot and cold very quickly.
One, we've been waiting to maximize profitability.
And you've seen revenues and EBITDA grow pretty substantially in the last three years at this hotel.
So, we've been waiting a little bit to get that EBITDA back up to where we think it should be.
And then we're going to come out of the markets.
We regularly talk to the brokers that are experts in the Caribbean market.
Based on those conversations as recently as two months ago, it doesn't feel like the ideal time to monetize that asset.
We certainly don't want to sell it below what we think it's worth.
So, we're going to continue to watch it.
If there's a good opportunity to monetize the asset in the Caribbean, and we think we can get decent pricing for it, we're going to do that.
I think the reason you haven't seen us be more proactive on that front the last couple years was really because we saw the upside in both the revenue and the EBITDA there, and we wanted to get there.
But we're now at that point and we'll just continue to watch the market.
Thank you, Crystal.
To everyone on this call, we appreciate your continued interest in DiamondRock and look forward to updating you with our next-quarter results.
