DRH 10-K & 10-Q changes, risk factors and insider trading

We solely own hotels, which may be a verymore differentvolatile asset class fromthan manythose owned by other REITs. A typical healthcare REIT, for example, has long-term leases with third-party tenants, which provide a relatively stable long-term stream of revenue. Our TRS lessees, on the other hand, doengage not enter into leases with hotel managers. Instead, the TRS lessee engages thea hotel manager pursuant to a management agreement and payspay the manager a fee for managing the hotel. The TRS lessee receives all of the operating profit or losses at the hotel.hotel Moreover,rather virtuallythan allpredictable rent. Most hotel guests stay at the hotel for only a few nights, so the rate and occupancy at each of our hotels changes every day. As a result, our earnings may be highly volatile.

•dependence on business and commercial travelers and tourism, both of which vary with consumer and business confidence in the strength of the economy;

•increases in energy and transportation costs and other expenses affecting travel, which may affect travel patterns and reduce the number of business and commercial travelers and tourists;

•changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance.

Our entire business is related to the lodging industry. The performance of the lodging industry is highly cyclical and has historically been linked to key macroeconomic indicators, such as U.S. GDP growth, employment, personal discretionary spending levels, corporate earnings and investment, foreign exchange rates and travel demand. Given that our hotels are concentrated in major urban markets and destination resort locations in the U.S., our business may be particularly sensitive to changes in foreign exchange rates, elevated interest rates or a negative international perception of the U.S. arising from its political or other positions. Furthermore, otherOther macroeconomic factors, such as consumer confidence and conditions which negatively shape public perception of travel, including travel-related disruptions or incidents and their impact on travel, may have a negative effect on the lodging industry and may adversely impact our revenues and profitability.

Currently,The thelodging marketsindustry whereis ourhighly competitive. Our principal competitors are other owners and investors in upper upscale, full-service hotels, including other lodging REITs, as well as major hospitality chains with well-established and recognized brands. Our hotels areface locatedcompetition arefor veryindividual competitive.guests, However,group areservations and conference business. We also compete against smaller hotel chains and independent and local hotel owners and operators. Additionally, we face competition from peer-to-peer inventory sources that allow travelers to stay at homes and apartments booked directly from owners. New hotels may be constructed, and these additions create new competitors, in some cases without corresponding increases in demand for hotel rooms. A material increase in the supply of new hotel rooms to a market can quickly destabilize that market and existing hotels can experience rapidly decreasing RevPAR and profitability. If such over-building occurs in one or more of the markets where our majorhotels markets,are located, our business, financial condition, results of operations and our ability to make distributions to our stockholders may be materially adversely affected.

Many of our managers and franchisors contract with third-party internet travel intermediaries, including, but not limited toto, Expedia.com and Priceline.comPriceline.com, to sell rooms to leisure travelers, as well as for corporate and theirgroup subsidiaries.travel. These internet intermediaries are generally paid commissions and transaction fees by our managers and franchisors for sales of our rooms throughbefore such agencies. These intermediaries initially focused on leisure travel, but have grown to focus on corporate travel and group meetings as well.sales. If bookings through these intermediaries increase, these internet intermediaries may be able to negotiate higher commissions, reduced room rates or other contract concessions from us, our managers or our franchisors. In addition, internet intermediaries use extensive marketing, which could result in hotel consumers developing brand loyalties to the offered brands and such internet intermediary instead of our management or franchise brands.concessions. Further, internet intermediaries emphasize pricing and quality indicators, such as a star rating system, at the expense of brand identification. In response to these intermediaries, the brand operators and franchisors have launched initiatives to offer discounted rates for booking on their sites, which could put downward pressure on rates and revenue. In addition, an increasing number of companies have entered various aspects of the online travel market. An increase in hotel reservations made through these companies, including those that deploy artificial intelligence or automated recommendation tools, such as Google, Apple, Amazon or Facebook,Meta, may reduce the value of our franchise brands, which may negatively affect our average rates and revenues. Search engines (including generative AI search) and peer-to-peer inventory sources also provide online travel services that compete with our hotels. If bookings shift to higher cost distribution channels, including these internet travel intermediaries, it could materially impact our profitability.

In addition to competing with traditional hotels and lodging facilities, we compete with alternative lodging, including third-party providers of short-term rental properties and serviced apartments, such as Airbnb, as well as alternative meeting and event space platforms, such as Convene. We compete based on a number of factors, including room rates, quality of accommodations, service levels, convenience of location, reputation, reservation systems, brand recognition and supply and availability of alternative lodging and event space. Increasing use of these alternative facilities and Internet travel intermediaries could materially and adversely affect the occupancy at our hotels and could put downward pressure on average rates and revenues.

The increased use of Zoom video conferencing, Microsoft Teams and other teleconferencing and video-conferenceconferencing technology by businesses has resulted in decreased business travel as companies have leveraged the use of technologies that allow multiple parties from different locations to participate in virtual meetings without traveling to a centralized meeting location, such as our hotels. To the extent that such technologies, or new technologies, continue to play a role in day-to-day business interactions and the necessity for business-related travel decreases, demand for hotel rooms may decreasedecrease, which may have a material adverse effect on our hotels, our results of operations and our hotelsfinancial could be materially and adversely affected.condition.

These factsfactors and any others that would impede our ability to respond to adverse changes in the performance of our hotel properties could have a material adverse effect on our operating results and financial condition, as well as our ability to make distributions to our stockholders.

Due to restrictions in our hotel management agreements, franchise agreements, mortgage agreementsagreements, if any, and ground leases, we may not be able to sell our hotels at the highest possible price, or at all.

AllThe but threemajority of our hotel management agreements are terminable at our option. TheOnly remainingtwo threeof hotelour hotels have long-term management agreements havewith remaining terms rangingin fromexcess approximatelyof three years to 34five years, inclusivewith the longest remaining term of renewal33 periodsyears, that are exercisable at the option of the property manager. We are subject to franchise agreements atand certain of our properties,properties have franchise agreements with remaining terms of up to 2625 years, inclusive of renewal periods that are exercisable at the option of the franchisor. See Item 2, Properties, for hotel management and franchise agreement details. Because some of our hotels would have to be sold subject to the applicable agreement, thethese term length of an agreementlengths may deter some potential purchasers and could adversely impact the price realized from any such sale.sale, or our ability to sell such hotels at all. To the extent that we receive lower sale proceeds, or are unable to sell the hotels, our business, financial condition, results of operations and our ability to make distributions to stockholders could be materially adversely affected.

Our ground lease agreements with respect to the Embassy Suites by Hilton Bethesda, the Salt Lake City Marriott Downtown at City Creek, the Westin Boston Seaport District, the Hotel Palomar Phoenix, the Courtyard New York Manhattan/Fifth Avenue and Cavallo Point, as well as the ground lease underlying our annex sublease at the OrchardsL'Auberge Innde Sedona, require the consent of the lessor for assignment or transfer. These provisions of our ground leases may limit our ability to sell our hotels which, in turn, could adversely impact the price realized from any such sale. In addition, at any given time, investors may be disinterested in buying properties subject to a ground lease and may pay a lower price for such properties than for a comparable property owned in fee simple or they may not purchase such properties at any price. Accordingly, we may find it difficult to sell a property subject to a ground lease or may receive lower proceeds from any such sale. To the extent that we receive lower sale proceeds or are unable to sell the hotel at an opportune time or at all, our business, financial condition, results of operations and our ability to make distributions to stockholders could be materially adversely affected.

In order to remain competitive, our hotels have an ongoing need for renovations and other capital improvements, including replacements, from time to time,replacements of furniture, fixtures and equipment. These capital improvements may give rise to the following risks:

•disruptions in the operations of the hotel as well asor in demand for the hotel while capital improvements are underway; and

In addition, we may not be able to fund capital improvements or acquisitions solely from cash provided from our operating activities because we generally must distribute at least 90% of our REIT taxable income, determined without regard to the dividends paid deduction and excluding net capital gains,income each year to maintain our REIT tax status. As a result, our ability to fund capital expenditures or investments through retained earnings is very limited.limited Consequently,and we rely upon the availability of debt or equity capital to fund our investments and capital improvements.improvements, These sources of fundswhich may not be available on reasonable terms or conditions.

The fullCOVID-19 extentpandemic tohad whicha anymaterial adverse effect on our hotels and our business, including our results of operations and financial condition. Any future pandemic, epidemic or outbreak of any highly infectious diseasedisease, impactscould ourcause operationswidespread willdisruptions dependto onthe future developments, which are highly uncertainU.S. and cannotglobal be predicted with confidence, including the scope, severityeconomy and duration of such pandemic, the emergencevolatility and characteristicsnegative ofpressure variants,in thefinancial actions taken to contain the pandemic or mitigate its impact, including the adoption, administrationmarkets and effectiveness of available vaccines, and the direct and indirect economic effects of the pandemic and containment measures, among others. Any future pandemic, epidemic or outbreak of any other highly infectious disease may materially and adversely affect, our business, financial condition and results of operations, and our ability to pay dividends, and may also have the effect of heightening many of the risks described below and within this “Risk Factors” section, including:

•the postponement or cancellation of conferences, conventions, festivals, sporting events, public events and other group business that would have otherwise brought individuals to the cities in which our hotels are located, which could cause a decrease in occupancy rates over a prolonged period of time and exacerbate the seasonal volatility at our hotels;

•a decrease in individuals’ willingness to travel as a result of the public health risks and social impacts of such outbreak or a decrease in consumer spending, which could affect the ability of our hotels to generate sufficient revenues to meet operating and other expenses in the short- and long-term.revenues.

Coverage under our comprehensive insurance policies may not always be available on reasonable terms or may include significant deductibles. Certain catastrophic losses, such as from terrorism or extreme weather, may not be insurable or may exceed policy limits. Various types of catastrophic losses, like earthquakes, floods, wildfires, losses from foreign terrorist activities, or losses from domestic terrorist activities may not be insurable or are generally not insured because of economic infeasibility, legal restrictions or the policies of insurers.insurers, which may also affect our ability to obtain financing if a lender requires such insurance. Future lenders may require such insurance, and our failure to obtain such insurance could constitute a default under the loan agreements. Depending on our access to capital, liquidity and the value of the properties securing the affected loan in relation to the balance of the loan, a default could have a material adverse effect on our results of operations and ability to obtain future financing. Past and future claims could also impact the availability and cost of insurance, which may adversely impact the availability or pricing of insurance available to us. In the event of an uninsured or underinsured loss, we could lose invested capital and future revenue from affected properties, and may remain liable for any related debt. Any of these events could have a material adverse effect on our business, financial condition, results of operations, and our ability to make distributions to stockholders.

We and our hotel managers rely on information technologies and systems, including the Internet, to access, store, transmit, deliver and manage information and processes. Some of these information technologies and systems are provided by third-party vendors. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of certain confidential customer information, such as individually identifiable information, including information relating to financial accounts. Recently, a number of hotelsaccounts and hotel management companies have been subject to cybersecurity incidents, including successful attacks seeking guest credit card information. Moreover, theThe risk of a cybersecurity incident hascontinues generallyto increasedincrease as the number, intensity and sophistication of attempted attacks and intrusions from around the world has increased.

For these reasons, we and our hotel managers are subject to risks associated with cybersecurity incidents, whether through cyber-attacks such as ransomware or online fraud schemes, spoofed e-mails and social engineering efforts by bad actors aimed at obtaining confidential information. Any compromise of the function, security and availability of our network and systems or the network and systems of our hotel managers or our third-party vendors could result in disruptions to operations, misappropriated or compromised confidential hotel or guest information, systems disruptions, the shutdown of our hotels, exploited security vulnerability of our respective networks, delayed sales or bookings, lost guest reservations and damage to our reputation or the reputations of our hotel managers and third-party vendors.vendors, or significant litigation or other legal expense. Although we and our hotel managers have taken steps to protect the security of these systems, there can be no assurance that such security measures will prevent failures, inadequacies or interruptions in system services, or that system security will not be breached through physical or electronic break-ins, computer viruses, or other cybersecurity incidents. The costs to us to eliminate or alleviate cybersecurity incidents could be significant and may increase as the number, intensity and sophistication of such incidents increases. Disruptions in service, system shutdowns and cybersecurity incidents affecting either the information technologies and systems of our hotel managers, our third-party vendors or our own information technologies and systems, including unauthorized disclosure of confidential information, could have a material adverse effect on our business operations and results, our financial and compliance reporting and our reputation.

Many of our hotel managers carrymaintain cyber insurance policies to protect and offsetmitigate a portion of the potential costs thatassociated may be incurred from awith cybersecurity incident.incidents, Additionally,and we currentlymaintain haveseparate cyber insurance policies to provide supplemental coverage above the coverage carried by our third-party managers. However, these insurance policies may not be adequate to cover all losses relating to cybersecurity incidents. Despite various precautionary steps to protect our hotels from losses resulting from cybersecurity incidents, any occurrence of a cybersecurity incident could still result in losses at our properties, which could affect our results of operations. We are not aware of any cybersecurity incidents that we believe to be material or that could have a material adverse effect on our business, financial condition and results of operations.

In order to qualify as a REIT, we cannot operate our hotel properties or control the daily operations of our hotel properties.properties Ourand therefore our TRS lessees may not operate these hotel properties and, therefore, they must enter into third-party hotel management agreements with one or more eligible independent contractors. Thus, third-party hotel management companies that enter into management contracts with our TRS lessees control the daily operations of our hotel properties.

Under the terms of the hotel management agreements that we have entered into, or that we will enter into in the future, our ability to participate in operating decisions regarding our hotel properties is limited to certain matters, including approval of the annual operating budget. We currently rely, and will continue to rely, on these hotel management companies to adequately operate our hotel properties under the terms of the hotel management agreements. While we and our TRS lessees closely monitor the performance of our hotel managers, we do not have the authority to require any hotel property to be operated in a particular manner or to govern any particular aspect of its operations (for instance, setting room rates and cost structures). Thus, even if we believe that our hotel properties are being operated inefficiently or in a manner that does not result in satisfactory occupancy rates, ADRs and operating profits, we may not have sufficient rights under our hotel management agreements to enable us to force the hotel management company to change its method of operation. We can only seek redressremedies available under the applicable hotel management agreement if a hotel management company violates the terms of the applicablesuch hotel management agreement with the TRS lessee,lessee. and then only to the extent of the remedies provided for under the terms of the hotel management agreement. ThreeFour of our current management agreements are non-terminable, subject to certain exceptions for cause or failure to achieve certain performance targets. In the event that we need to replace any of our hotel management companies pursuant to termination for cause or performance, we may experience significant disruptions at the affected properties and the new management companies may not meet our performance expectations, which may have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.

As of the date of this report, 1918 of our 3635 hotels operate under Marriott, Hilton, or IHG franchise agreements. The maintenance of the franchise licenses for branded hotel properties is subject to the franchisors’ operating standards and other terms and conditions set forth in the applicable franchise agreement. Franchisors periodically inspect hotel properties to ensure that we, our TRS lessees and management companies follow their brand standards.

Consolidation among companies in the lodging industry may reduce our bargaining power in negotiating management agreements and franchise agreements due to decreased competition among major brand companies. We believe this could provide the major brand companies with leverage when negotiating for property improvement plans where the franchisor or hotel brand requires renovations to bring the physical condition of a hotel into compliance with the specifications and standards eachrequired franchisorby orthe hotel brand has developed.brand.

Industry consolidation could also result in the lack of differentiation among the brands, which could impact the ability to drive higher rates in those brands. In addition, to the extent that consolidation among hotel brand companies adversely affects the loyalty reward program offered by one or more of our hotels, customer loyalty to those hotels may suffer and demand for guestrooms may decrease. Furthermore, because each hotel brand company relies on its own network of reservation systems, hotel management systems and customer databases, the integration of two or more networks may result in a disruption to operations of these systems, such as disruptions in processing guest reservations, delayed bookings or sales, or lost guest reservations, which could adversely affect our financial condition and results of operations. Additionally, following the completion of a merger of companies, the costs to integrate the companies may be absorbed by our impacted hotel or hotels and adversely affect our financial condition and results of operations.

We hold a leasehold or subleasehold interest in all or a portion of the land underlying eight of our hotels owned as of December 31, 2024 (Embassy Suites by Hilton Bethesda, Courtyard New York Manhattan/Fifth Avenue, Salt Lake City Marriott Downtown at City Creek, Westin Boston Seaport District, Hotel Clio, Orchards Inn Sedona, Hotel Palomar Phoenix,2025 and Cavallo Point), and a parking area near the Bourbon Orleans Hotel. Wewe may acquire additional hotels in the future subject to ground leases. In the past, from time to time, secured lenders have been unwilling to lend, or otherwise charged higher interest rates, for loans secured by a leasehold mortgage compared to loans secured by a fee simple mortgage. For this reason, we may have a difficult time selling a property subject to a ground lease or may receive lower proceeds from a sale. Finally, as the lessee under our ground leases, we are exposed to the possibility of losing the hotel, or a portion of the hotel, upon maturity or termination, or an earlier breach by us, of the ground lease, which would mean we would no longer receive operating income from the hotel and could therefore result in a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.

DiamondRock Hospitality Company (the “Company” or, “we”, or "our") is a self-managed and self-administered lodging-focused real estate companyinvestment trust ("REIT") that owns a portfolio of premium hotels and resorts. As of December 31, 2024,2025, we owned 3735 hotels with 10,0049,595 rooms located in 26 different markets in the U.S.United States. The markets that we target for ownership are those that we believe align with our strategic objectives, which include investing in assetsthose in destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those marketswe that are consideredconsider to have high demand growth potential. Our hotels are concentrated in major urban markets and in destination resort locations and more than 60% of our hotels are operated under a brand owned by one of the leading global lodging brand companies (Marriott International, Inc., Hilton Worldwide, or IHG Hotels & Resorts). We are an owner, as opposed to an operator, of the hotels in our portfolio. As an owner, we receive all of the operating profits or losses generated by our hotels after we pay fees to the hotel managers and hotel brands,managers, which are based on the revenues and profitability of the hotels, and the hotel brands, in certain cases, which are based on the revenues of the hotels. Each hotel is positioned to maximize its cash flow and value; accordingly, we choose to operate nearly 40% of our portfolio as an independent hotel and the remainder are operated under a brand owned by one of the leading global lodging brand companies (Marriott International, Hilton Worldwide, or IHG Hotels & Resorts).

We are a real estate investment trust (“REIT”) for U.S. federal income tax purposes. We conduct our business through a traditional umbrella partnership REIT, or UPREIT, in which our hotel properties are owned by our operating partnership, DiamondRock Hospitality Limited Partnership, or subsidiaries of our operating partnership. The Company is the sole general partner of our operating partnership and owns 99.5% of the limited partnership units (“common OP units”) of our operating partnership as of December 31, 2024.2025. The remaining 0.5% of the common OP units are held by third parties and current and former executive officers of the Company. See Note 9 for additional disclosures related to common OP units.

We use a variety of operating and other information to evaluate the financial condition and operating performance of our business. These key indicators include financial information that is prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), as well as other financial information that is not prepared in accordance with U.S. GAAP. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the performance of individual hotels, groups of hotels and/or our business as a whole. We periodically compare historical information to our internal budgets as well as industry-wide information. These key indicators include:

Occupancy, ADRADR, RevPAR, and Total RevPAR are commonly used measures within the hotel industry to evaluate operating performance. RevPAR, which is calculated as the product of ADR and occupancy percentage, and Total RevPAR, which is ancalculated as total revenues divided by room nights available, are important statisticstatistics for monitoring operating performance at the individual hotel level and across our business as a whole.portfolio. We evaluate individual hotel RevPAR and Total RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and regional basis. ADR and RevPAR include only room revenue. Room revenue comprised approximately 66%65% of our total revenues for the year ended December 31, 20242025 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.

Our ADR, occupancy percentagepercentage, RevPAR, and Total RevPAR performance may be impacted by macroeconomic factors such as U.S. economic conditions generally, inflation, interest rates, tariffs, regional and local employment growth, personal income and corporate earnings, office vacancy rates and business relocation decisions, airport and other business and leisure travel, increased use of lodging alternatives, new hotel construction and the pricing strategies of our competitors. In addition, our ADR, occupancy percentagepercentage, RevPAR, and Total RevPAR performance is dependent on the continued success of our hotels' global brands.brands and our hotel operators.

________________ (1)The percentage change from 20232024 RevPAR reflects the comparable period in 20232024 to our 20242025 ownership period.period from January 1, 2025 until the hotel was sold on February 19, 2025.

At December 31, 2024 and 2023, we owned 37 and 36 hotels, respectively. All properties owned during these periods have been included in our results of operations during the respective periods since their date of acquisition. Based on when a property was acquired, operating results for certain properties are not comparable for the year ended December 31, 2025 and 2024. The AC Hotel Minneapolis Downtown was acquired on November 12, 2024 and 2023. The properties detailed for the non-comparable periods highlighted in the table below arewill hereinafter be referred to as our “non-comparable2024 propertiesAcquisition.” The Westin Washington D.C. City Center was sold on February 19, 2025, and allwill otherhereinafter properties arebe referred to as our “comparable2025 propertiesDisposition.”:

Our short-term liquidity requirements consist primarily of funds necessary to pay our scheduled debt service, near term debt maturities, operating expenses, ground lease payments, capital expenditures directly associated with our hotels, any share repurchases, and distributions to our common and preferred stockholders, and the cost of acquiring additional hotels.stockholders.

Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotels, renovations and other capital expenditures that need to be made periodically to our hotels, scheduled debt payments, debt maturities, certain redemptions of limited operating partnership units (“common OP units”),units, ground lease payments, share repurchases, and making distributions to our common and preferred stockholders. We expect to meet our long-term liquidity requirements through various sources of capital, including cash provided by operations, borrowings, issuances of additional equity, including common OP units, and/or debt securities and proceeds from property dispositions. Our ability to incur additional debt is dependent upon a number of factors, including the state of the credit markets, our degree of leverage, the value of our unencumbered assets and borrowing restrictions imposed by existing lenders. Our ability to raise capital through the issuance of additional equity and/or debt securities is also dependent on a number of factors including the current state of the capital markets, investor sentiment and our intended use of proceeds. We may need to raise additional capital if we identify acquisition opportunities that meet our investment objectives and require liquidity in excess of existing cash balances. Our ability to raise funds through the issuance of equity securities depends on, among other things, general market conditions for hotel companies and REITs and market perceptions about us.

Since our formation in 2004, we have been committed to a conservative capital structure with prudent leverage. Our outstanding debt consists of fixed interest rate mortgage debt, unsecured term loans and periodic borrowings on our senior unsecured credit facility. We have a preference to maintain a significant portion of our portfolio as unencumbered in order to provide balance sheet flexibility. As of December 31, 2025, our portfolio is fully unencumbered by secured debt. We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle. We believe that it is prudent to reduce the inherent risk of highly cyclical lodging fundamentals through a low leverage capital structure.

We believe that we maintain a reasonable amount of debt. As of December 31, 2024,2025, we had $1.1 billion of debt outstanding with a weighted average interest rate of 5.21%4.98%, which includes the effect of interest rate swaps, and a weighted average maturity date of approximately 1.73.6 years, assuming all extension options available in our debt agreements are exercised. We have three mortgage loans that mature in the next twelve months. We are actively pursuing a financing transaction the proceeds of which will be used to repay the three mortgage loans that mature in 2025. In the case that we are unsuccessful with obtaining this new financing, we may repay such mortgage loans using cash on hand and our senior unsecured revolving credit facility. We expect that our weighted average interest rate will increase as we refinance our debt at less favorable rates. As of December 31, 2024, 34 of our 37 hotels are unencumbered by mortgage debt. We remain committed to our core strategy of prudent leverage.

The following table outlines the timing and extent of our debt principal maturities and estimated interest payments for our mortgage debt and unsecured term loans as of December 31, 2024 (in thousands),2025, assuming all extension options available in our debt agreements are exercised.exercised (in thousands):

(1)The interest expense for our variable rate unsecured term loans is calculated based on the weighted average rate as of December 31, 20242025 of 5.79%.4.98%, which includes the effect of interest rate swaps.

In August 2024, our board of directors approved an “at-the-market” equity offering program (the “Current ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. Prior to the implementation of the Current ATM Program, we had a $200.0 million ATM program (the “Prior ATM Program”), which is no longer active. We did not sell any shares under the Current ATM Program or the Prior ATM Program during the years ended December 31, 20242025 and 2023.2024.

InOn May 1, 2024, our board of directors authorized the repurchase of up to $200.0 million of our common stock under a new share repurchase program, which replaced our prior share repurchase program that was authorized in September 2022.program. The timing and actual number of shares repurchased will depend on a variety of factors, including price and general business and market conditions. The new share repurchase program does not obligate us to acquire any particular amount of shares, and may be suspended or discontinued at any time at our discretion. The new share repurchase program will expire on May 1, 2026. During the year ended December 31, 2024,2025, we repurchased 3,114,8764,798,642 shares of common stock at an average price of $8.33$7.72 per share for an aggregate purchase price of $26.0$37.1 million. InformationAs aboutof ourFebruary 27, 2026, we have $137.0 million of authorized capacity remaining under the share repurchase program is in Note 9 to the accompanying consolidated financial statements.program.

DiamondRock Hospitality Company is a self-managed and self-administered lodging-focused REIT that owns a portfolio of premium hotels and resorts. As of MarchJune 31,30, 2026, we owned a portfolio of 3534 premium hotels and resorts that contain 9,5959,400 guest rooms located in 26 different markets in the United States. The markets that we target for ownership are those that we believe align with our strategic objectives, which include those in destination markets with constrained supply trends, those that provide geographic diversity relative to our existing portfolio, and those we consider to have high demand growth potential.

Occupancy, ADR, RevPAR, and Total RevPAR are commonly used measures within the hotel industry to evaluate operating performance. RevPAR, which is calculated as the product of ADR and occupancy percentage, and Total RevPAR, which is calculated as total revenues divided by room nights available, are important statistics for monitoring operating performance at the individual hotel level and across our portfolio. We evaluate individual hotel RevPAR and Total RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a company-wide and regional basis. Room revenue comprised approximately 64% of our total revenues for the threesix months ended MarchJune 31,30, 2026 and is dictated by demand, as measured by occupancy percentage, pricing, as measured by ADR, and our available supply of hotel rooms.

The outlook for the remainder of 2026 hasremains becomesubject moreto uncertaineconomic, as the ongoing conflict with Irangeopolitical and broadermarket instabilityuncertainty, including evolving conditions in the Middle East have increased volatility in energy markets, contributed to renewedEast, inflationary pressurepressures, labor market conditions and added uncertainty aroundregarding the trajectorytiming and magnitude of future interest rates.rate changes. Travel demand isremained expectedstrong through the first half of 2026, contributing to remain relatively stable but unevengrowth in 2026,occupancy, although elevated costsADR and softerhotel travelrevenues demandacross many of our markets. While performance varied by property and customer segment, lodging fundamentals remained favorable and supported continued growth in certainoperating segments and markets may temper performance.results. We continue to monitor the potential favorable or unfavorable impacts of these and other factors on our business, operations, financial condition, future results of operations and cash flow, which areremain dependent on future developments,developments includingand assubject ato result of thosethe risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2025.2025 and this Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.

The following tables set forth certain operating information for the threesix months ended MarchJune 31,30, 2026 for each of our hotels owned during the period.

All properties owned during the periods presented have been included in our results of operations during the respective periods since their date of acquisition or through their date of disposition, as applicable. The operating results are not directly comparable for the three months ended MarchJune 31,30, 2026 and 2025 due to the sale of The Westin Washington, D.C. City Center on February 19, 2025,2025 hereinafter referred to as our(the “2025 Disposition.Disposition”) and the sale of Courtyard New York Manhattan/Fifth Avenue on May 1, 2026 (the “2026 Disposition”).

Comparison of the Three Months Ended MarchJune 31,30, 2026 to the Three Months Ended MarchJune 31,30, 2025

Rooms revenues increased by $1.0$9.4 million from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026. Excluding a decrease of $2.3$3.8 million due to our 20252026 Disposition, room revenues increased $3.3$13.2 million driven primarily by an increase in ADR, as well as higher occupancy at L'Auberge de Sedona following the repositioning of the hotel in the third quarter of 2025.

The following are key hotel operating statistics for the three months ended MarchJune 31,30, 2026 and 2025,2025. which excludeThe operating resultsstatistics fromfor the three months ended June 30, 2025 reflect the comparable period in 2025 to our 20252026 Disposition.ownership period.

Food and beverage revenues increased $0.3$2.0 million from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026, primarily due to growth in outlet revenues, offset by a decrease of $0.5 million due to our 2025 Disposition.revenues.

Other revenues, which primarily represent spa, parking, resort fees and attrition and cancellation fees, increased by $2.0$1.2 million from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026, primarily due to an increase in resort fees and attrition and cancellation fees, offset by a decrease of $0.2 million due to our 2025 Disposition.fees.

Our hotel operating expenses decreased $1.4$6.3 million from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026. A decrease of $2.7$2.6 million was attributable to our 20252026 Disposition. Excluding the impact of the 2026 Disposition, whichhotel operating expenses decreased primarily due to property tax appeal settlements recognized in the second quarter of 2026 at our Chicago properties. Including the increase in incentive management fees, the net benefit from these settlements was partially$6.9 offsetmillion. byIn addition, despite an increase of $1.3 million in theoccupancy, restrooms and food and beverage expenses remained generally flat as a result of ourfavorable portfoliolabor due to higher property tax assessments, as well as increases in generalproductivity and administrativecost costs and utilities.controls.

Depreciation and amortization. Depreciation and amortization on our hotel buildings is generally recorded over a 40-year period subsequent to acquisition. Depreciable lives of hotel furniture, fixtures and equipment are estimated as the time period between the acquisition date and the date that the hotel furniture, fixtures and equipment will be replaced. Our depreciation and amortization expense increased $0.6$0.7 million from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026, primarily due to the renovations and rebrandings that were completed in 2025 and in the first quarterhalf of 2026.

Corporate expenses. Corporate expenses principally consist of employee-related costs, including payroll, bonus, restricted stock and benefits. Corporate expenses also include corporate operating costs, professional fees and directors' fees. Our corporate expenses increased $0.2$1.0 million from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026, primarily due to an increase in share-basedemployee-related compensation.costs.

Interest expense. Our interest expense decreased $0.5$0.4 million from the three months ended MarchJune 31,30, 2025 to the three months ended MarchJune 31,30, 2026 and was comprised of the following (dollars in thousands):

(1)Represents the interest expense associated with the ground lease on the Courtyard New York Manhattan/Fifth Avenue.Avenue, which was sold on May 1, 2026.

The decrease in interest expense was due to our mortgage debt repayments in 2025, which was partially offset by the amendment to our Credit Facility in July 2025,2025 whichthat increased our unsecured term loans by $300 million. In addition, finance lease expense decreased due to the sale of Courtyard New York Manhattan/Fifth Avenue in May 2026.

Since our formation in 2004, we have been committed to a conservative capital structure with prudent leverage. Our outstanding debt consists of unsecured term loans and periodic borrowings on our senior unsecured credit facility. We have a preference to maintain a significant portion of our portfolio as unencumbered in order to provide balance sheet flexibility. As of MarchJune 31,30, 2026, our portfolio is fully unencumbered by secured debt. We expect that our strategy will enable us to maintain a balance sheet with an appropriate amount of debt throughout all phases of the lodging cycle. We believe that it is prudent to reduce the inherent risk of highly cyclical lodging fundamentals through a low leverage capital structure.

We believe that we maintain a reasonable amount of debt. As of MarchJune 31,30, 2026, we had $1.1 billion of debt outstanding with a weighted average interest rate of 4.96%,4.90%, which includes the effect of interest rate swaps, and a weighted average maturity date of approximately 3.43.2 years, assuming all extension options available in our debt agreements are exercised. We remain committed to our core strategy of prudent leverage.

In August 2024, our board of directors approved an “at-the-market” equity offering program (the “ATM Program”), pursuant to which we may issue and sell shares of our common stock from time to time, having an aggregate offering price of up to $200.0 million. No shares were sold under the ATM Program during the three and six months ended MarchJune 31,30, 2026.

OurIn April 2026, our board of directors has authorized the repurchase of up to $200.0$300 million of our common stock under a new share repurchase program.program effective May 1, 2026 (the “Share Repurchase Program”). This Share Repurchase Program replaced our prior $200 million share repurchase program that was authorized in May 2024. The timing and actual number of shares repurchased will depend on a variety of factors, including price and general business and market conditions. The shareShare repurchaseRepurchase programProgram does not obligate us to acquire any particular amount of shares, and may be suspended or discontinued at any time at our discretion. WeThe didShare notRepurchase repurchaseProgram anywill sharesexpire ofon commonMay stock1, during2028. During the threesix months ended MarchJune 31,30, 2026. During the three months ended March 31, 2025,2026, we repurchased 1,413,643189,265 shares of common stock at an average price of $7.85$9.79 per share for a total purchase price of $11.1$1.9 millionmillion. underDuring thisthe program.six Subsequentmonths toended MarchJune 31,30, 2026,2025, we repurchased 136,3643,097,942 shares of common stock at an average price of $9.38$7.64 per share for a total purchase price of $1.3$23.7 million under this program. OnAs Aprilof 28,July 30, 2026, ourwe boardhave of directors approved a new share repurchase program, which replaced the previously authorized program. The new share repurchase program is effective May 1, 2026 and authorizes us to repurchase up to $300.0$299.4 million of commonauthorized stock.capacity Theremaining newunder programthe willShare expireRepurchase on May 1, 2028.Program.

We are party to a Seventh Amended and Restated Credit Agreement (the “Credit Facility”) that provides for a $400.0 million revolving credit facility (the “Revolving Credit Facility”) and three term loan facilities in the aggregate amount of $1.1 billion. The Revolving Credit Facility matures on January 22, 2030. The term loan facilities consist of a $500.0 million term loan that matures on January 3, 2028 (the “Term 1 Loan”), a $300.0 million term loan that matures January 22, 2030 (the “Term 2 Loan”) and a $300.0 million term loan that matures on January 22, 2029 (the “Term 3 Loan”). The maturity date of the Revolving Credit Facility, Term 1 Loan and Term 3 Loan may be extended for two additional six-month periods upon the payment of applicable fees and satisfaction of certain standard conditions. We have the right to increase the aggregate capacity of the Amended Credit Facility to $1.8 billion upon the satisfaction of certain standard conditions. As of MarchJune 31,30, 2026, we had $400.0 million of borrowing capacity under the Revolving Credit Facility.

Additional information about the creditCredit facilities,Facility, including a summary of significant covenants, can be found in Note 45 to the accompanying consolidated financial statements.

As of MarchJune 31,30, 2026, we had $39.3$106.0 million of unrestricted cash, $37.0$39.9 million of restricted cash and no outstanding borrowings on our revolving credit facility.

Our net cash provided by operations was $21.9$101.5 million for the threesix months ended MarchJune 31,30, 2026. Our cash from operations generally consists of the net cash flow from hotel operations, offset by cash paid for corporate expenses, interest payments, and other working capital changes.

Our net cash used in investing activities was $20.8$10.4 million for the threesix months ended MarchJune 31,30, 2026, which consisted of $40.3 million of capital expenditures.expenditures offset by $29.9 million of net proceeds from the sale of Courtyard New York Manhattan/Fifth Avenue on May 1, 2026.

Our net cash used in financing activities was $28.0$48.5 million for the threesix months ended MarchJune 31,30, 2026, which consisted of $25.2$43.7 million of distributions paid to holders of common stock and $2.8units, $2.9 million paid to repurchase shares upon the vesting of restricted stock for the payment of tax withholdings obligations.obligations and $1.9 million of share repurchases.

We currently anticipate our significant sources of cash for the year ending December 31, 2026 will be net cash flow from hotel operations and potential dispositions. We expect our estimated uses of cash for the year ending December 31, 2026 will be debt service payments, potential acquisitions of hotel properties, capital expenditures, distributions to common stockholders, share repurchases, and corporate expenses.

During 2026, we have paid the following dividends to holders of our common stock and common OP units:

The management and franchise agreements for each of our hotels provide for the establishment of separate property improvement reserves to cover, among other things, the cost of replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures. Contributions to the property improvement fund are calculated as a percentage of hotel revenues. In addition, we may be required to pay for the cost of certain additional improvements that are not permitted to be funded from the property improvement fund under the applicable management or franchise agreement. As of MarchJune 31,30, 2026, we have set aside $37.0$39.8 million for capital projects in property improvement reserves, which are included in restricted cash on our consolidated balance sheets.

We have invested approximately $20.8$40.3 million on capital expenditures during the threesix months ended MarchJune 31,30, 2026. In 2026, we expect to spend between $80.0$75.0 to $90.0$85.0 million on capital expenditures. Significant projects currently planned or completed in 2026 include the following:

•Westin San Diego Bayview: We expect to commence a renovation of the hotel's entrance and public spaces throughout the lobby, including the lobby barbar, induring mid-2026.the third quarter of 2026.

(1)For each of the three months ended MarchJune 31,30, 2026 and 2025, amounts include less than $0.1 million of non-cash income related to our deferred compensation plan. For the six months ended June 30, 2026 and 2025, amounts include less than $0.1 million and $0.7 million, respectively, of non-cash income related to our deferred compensation plan.

(1)For each of the three months ended MarchJune 31,30, 2026 and 2025, amounts include less than $0.1 million of non-cash income related to our deferred compensation plan. For the six months ended June 30, 2026 and 2025, amounts include less than $0.1 million and $0.7 million, respectively, of non-cash itemsincome related to our deferred compensation plan.

Operators of hotels generally possess the ability to adjust room rates frequently, including on a daily basis, to reflectrespond theto effectschanges ofin inflation,market conditions and inflationary pressures, subject to previously contractually committedcontracted reservations. However, competitive pressures, demand elasticity, consumer spending patterns and other market factors may limit the ability of our management companies to increase room rates sufficiently to offset inflationaryincreases costin increases.operating Inflation,costs. Inflation remains elevated relative to the Federal Reserve's long-term target, and operating costs continue to be influenced by market conditions, including recent increases driven in part by higher energylabor costs, may also affect our operating expenses and the cost of capital improvements, including, without limitation, labor, employee-related benefits, food, commodities and other materials, taxes,utilities, propertyreal estate taxes and casualtythe insurancecost andof utilities.capital improvements. Refer to “Outlook” above for additional information regarding recentcurrent macroeconomic conditions, including inflationary pressures.conditions.