Company: DRH-PA
Filing Date: 2025-08-08
Form Type: 10-Q
Source: 0001298946-25-000077
Chunk: 52

Company: DiamondRock Hospitality Co
Filing Date: 2025-08-08
Form: 10-Q
Item: Part I, Item 1
Chunk 52
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 costs of labor, employee-related benefits, food, commodities and other materials, taxes, property and casualty insurance and utilities.

During the first half of 2025, inflation remained above the Federal Reserve’s long-term target, though it has moderated from the peak levels observed in recent years. The Federal Reserve maintained its benchmark interest rate during the first half of the year, signaling a cautious approach to future rate cuts as it monitors ongoing inflation trends. Any increases in interest rates, especially if coupled with reduced government spending and volatility in financial markets, may have the effect of further increasing economic uncertainty, and increasing the cost of new indebtedness and servicing our outstanding variable rate debt.

Seasonality

The periods during which our hotels experience higher revenues vary from property to property, depending principally upon location and the customer base served. Accordingly, we expect some seasonality in our business. Volatility in our financial performance from the seasonality of the lodging industry could adversely affect our financial condition and results of operations. 

Supplemental U.S. Federal Income Tax Considerations

The following discussion supplements and updates the disclosures under the heading “Material U.S. Federal Income Tax Considerations” in the prospectus dated August 5, 2024, contained in our Registration Statement on Form S-3 (File No. 333-281236) filed with the SEC on August 5, 2024 (the “S-3 Tax Disclosure”) and as supplemented by the disclosures under the headings “Supplemental Material U.S. Federal Income Tax Considerations” and “Risk Factors” on the Form 10-K filed with the SEC on February 28, 2025 (together with the S-3 Tax Disclosure, the “Existing Tax Disclosure”). Capitalized terms herein that are not otherwise defined shall have the same meaning as when used in the Existing Tax Disclosure.

On July 4, 2025, H.R. 1, informally known as the One Big Beautiful Bill Act (the “OBBB”), was enacted.  The OBBB makes significant changes to the Code, including some provisions of the Code that affect the taxation of REITs and their investors.  In particular,

•For taxable years beginning on or after January 1, 2026, the OBBB increased the allowable percentage of a REIT’s assets that can consist of  securities of taxable REIT subsidiaries, providing that not more than 25% (increased from 20%) of the gross value of a REIT’s assets may be represented by