##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q/A
 (Amendment No. 1)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended March 27, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 Commission file number 001-32514
 DIAMONDROCK HOSPITALITY COMPANY
 (Exact Name of Registrant as Specified in Its Charter)
 Maryland
    
    20-1180098(State of Incorporation)
    
    (I.R.S. Employer Identification No.)6903 Rockledge Drive, Suite 800, Bethesda, Maryland
    
    20817(Address of Principal Executive Offices)
    
    (Zip Code)
 (240) 744-1150
(Registrants telephone number, including area code)
 þ Yes o No
 o Yes o No
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o Yes þ No




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##### 



EXPLANATORY NOTE
  
    
    to amend the certifications of the Chief Executive Officer and Chief
Financial Officer filed as Exhibits 31.1 and 31.2 to the Original
10-Q, which inadvertently omitted certain introductory language of
paragraph 4 of Item 601(b)(31) of Regulation S-K, and
    
    to file as exhibit 10.3 to this Amendment, the Agreement of Limited
Partnership of DiamondRock Hospitality Limited Partnership, dated as
of June 4, 2004 (originally filed as an exhibit to the Companys
Registration Statement on Form S-11 (File no. 333-123065)) and as
exhibit 10.4 to this Amendment, the Companys Amended and Restated
Credit Agreement, dated as of February 28, 2007 (originally filed as
an exhibit to the Companys Current Report on Form 8-K filed with the
SEC on March 9, 2007), each in its entirety, including all schedules
and exhibits thereto.
 Form 10-Q
  
 INDEX
 PART I. FINANCIAL INFORMATION
 Page No.Item 1. Financial Statements (unaudited):Condensed Consolidated Balance Sheets as of March 27, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations
For the Fiscal Quarters ended March 27, 2009 and March 21, 2008
    
    
    2Condensed Consolidated Statements of Cash Flows
For the Fiscal Quarters ended March 27, 2009 and March 21, 2008
    
    
    3Notes to Condensed Consolidated Financial Statements
    
    
    4Item 2. Managements Discussion and Analysis of Results of Operations and
Financial Condition
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    24PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
    
    
    25Item 3. Defaults Upon Senior
Securities
    
    
    25Item 4. Submission of Matters to a Vote of Security Holders
    
    
    25Item 5. Other Information
    
    
    25Item 6. Exhibits
    
    
    25Exhibit 10.3Exhibit 10.4Exhibit 31.1Exhibit 31.2Exhibit 32.1




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##### Table of Contents



Item I. Financial Statements
 DIAMONDROCK HOSPITALITY COMPANY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 As of March 27, 2009 and December 31, 2008
 (in thousands, except share amounts)
 March 27, 2009
    
    
    December 31, 2008(Unaudited)ASSETSProperty and equipment, at cost
    
    $
    2,151,416
    
    
    $
    2,146,616Less: accumulated depreciation
    
    
    (245,145
    )
    
    
    (226,400
    )1,906,271
    
    
    
    1,920,216Deferred financing costs, net
    
    
    3,142
    
    
    
    3,335Restricted cash
    
    
    28,534
    
    
    
    30,060Due from hotel managers
    
    
    56,562
    
    
    
    61,062Favorable lease assets, net
    
    
    40,444
    
    
    
    40,619Prepaid and other assets
    
    
    31,756
    
    
    
    33,414Cash and cash equivalents
    
    
    14,283
    
    
    
    13,830Total assets
    
    $
    2,080,992
    
    
    $
    2,102,536LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Mortgage debt
    
    $
    820,352
    
    
    $
    821,353Senior unsecured credit facility
    
    
    52,000
    
    
    
    57,000Total debt
    
    
    872,352
    
    
    
    878,353Deferred income related to key money, net
    
    
    20,197
    
    
    
    20,328Unfavorable contract liabilities, net
    
    
    84,007
    
    
    
    84,403Due to hotel managers
    
    
    34,410
    
    
    
    35,196Accounts payable and accrued expenses
    
    
    56,720
    
    
    
    66,624Total other liabilities
    
    
    195,334
    
    
    
    206,551Stockholders Equity:Preferred stock, $.01 par value; 10,000,000
shares authorized; no shares issued and
outstanding
    
    
    
    
    
    
    Common stock, $.01 par value; 200,000,000 shares
authorized; 90,147,100 and 90,050,264 shares
issued and outstanding at March 27, 2009 and
December 31, 2008, respectively
    
    
    901
    
    
    
    901Additional paid-in capital
    
    
    1,101,588
    
    
    
    1,100,541Accumulated deficit
    
    
    (89,183
    )
    
    
    (83,810
    )Total stockholders equity
    
    
    1,013,306
    
    
    
    1,017,632Total liabilities and
stockholders equity
    
    $
    2,080,992
    
    
    $
    2,102,536
   - 1 -




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##### Table of Contents



DIAMONDROCK HOSPITALITY COMPANY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Fiscal Quarters Ended March 27, 2009 and March 21, 2008
 (in thousands, except per share amounts)
 Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    
    March 21, 2008(Unaudited)
    
    
    (Unaudited)Revenues:Rooms
    
    $
    75,116
    
    
    $
    85,927Food and beverage
    
    
    36,890
    
    
    
    40,081Other
    
    
    6,538
    
    
    
    6,855Total revenues
    
    
    118,544
    
    
    
    132,863Operating Expenses:Rooms
    
    
    19,982
    
    
    
    21,160Food and beverage
    
    
    26,581
    
    
    
    28,928Management fees
    
    
    3,327
    
    
    
    4,965Other hotel expenses
    
    
    46,024
    
    
    
    46,453Depreciation and amortization
    
    
    18,717
    
    
    
    16,687Corporate expenses
    
    
    3,769
    
    
    
    2,959Total operating expenses
    
    
    118,400
    
    
    
    121,152Operating profit
    
    
    144
    
    
    
    11,711Other Expenses (Income):Interest income
    
    
    (83
    )
    
    
    (438
    )Interest expense
    
    
    11,498
    
    
    
    10,695Total other expenses
    
    
    11,415
    
    
    
    10,257(Loss) Income before income taxes
    
    
    (11,271
    )
    
    
    1,454Income tax benefit
    
    
    5,978
    
    
    
    3,723Net (loss) income
    
    $
    (5,293
    )
    
    $
    5,177(Loss) Earnings per share:Basic and diluted (loss) earnings per share
    
    $
    (0.06
    )
    
    $
    0.05
   - 2 -




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##### Table of Contents



DIAMONDROCK HOSPITALITY COMPANY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Fiscal Quarters Ended March 27, 2009 and March 21, 2008
 (in thousands)
 Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    
    March 21, 2008(Unaudited)
    
    
    (Unaudited)Cash flows from operating activities:Net (loss) income
    
    $
    (5,293
    )
    
    $
    5,177Adjustments to reconcile net (loss) income to net cash provided by
operating activities:Real estate depreciation
    
    
    18,717
    
    
    
    16,687Corporate asset depreciation as corporate expenses
    
    
    34
    
    
    
    32Non-cash ground rent
    
    
    1,787
    
    
    
    1,777Non-cash financing costs as interest
    
    
    193
    
    
    
    186Amortization of debt premium and unfavorable contract liabilities
    
    
    (397
    )
    
    
    (397
    )Amortization of deferred income
    
    
    (130
    )
    
    
    (122
    )Stock-based compensation
    
    
    1,207
    
    
    
    671Changes in assets and liabilities:Prepaid expenses and other assets
    
    
    1,658
    
    
    
    (234
    )Restricted cash
    
    
    1,383
    
    
    
    1,175Due to/from hotel managers
    
    
    3,570
    
    
    
    2,735Accounts payable and accrued expenses
    
    
    (8,886
    )
    
    
    (8,071
    )Net cash provided by operating activities
    
    
    13,843
    
    
    
    19,616Cash flows from investing activities:Hotel capital expenditures
    
    
    (7,293
    )
    
    
    (21,542
    )Receipt of deferred key money
    
    
    
    
    
    
    5,000Change in restricted cash
    
    
    143
    
    
    
    (3,930
    )Net cash used in investing activities
    
    
    (7,150
    )
    
    
    (20,472
    )Cash flows from financing activities:Repayments of credit facility
    
    
    (5,000
    )
    
    
    Draws on credit facility
    
    
    
    
    
    
    14,000Scheduled mortgage debt principal payments
    
    
    (1,002
    )
    
    
    (680
    )Repurchase of shares
    
    
    (158
    )
    
    
    (344
    )Payment of dividends
    
    
    (80
    )
    
    
    (22,819
    )Net cash used in financing activities
    
    
    (6,240
    )
    
    
    (9,843
    )Net increase (decrease) in cash and cash equivalents
    
    
    453
    
    
    
    (10,699
    )Cash and cash equivalents, beginning of period
    
    
    13,830
    
    
    
    29,773Cash and cash equivalents, end of period
    
    $
    14,283
    
    
    $
    19,074Supplemental Disclosure of Cash Flow Information:Cash paid for interest
    
    $
    11,987
    
    
    $
    11,820Cash paid for income taxes
    
    $
    35
    
    
    $
    93Capitalized interest
    
    $
    19
    
    
    $
    183Non-Cash Financing Activities:Unpaid dividends
    
    $
    
    
    
    $
    23,921
   - 3 -




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##### Table of Contents



DIAMONDROCK HOSPITALITY COMPANY
 
 Notes to the Condensed Consolidated Financial Statements
 (Unaudited)
 1. Organization
     2. Summary of Significant Accounting Policies
 Basis of Presentation
    Reporting Periods
   - 4 -




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##### Table of Contents



Revenue Recognition
  Earnings (Loss) Per Share
  Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating Securities
 Stock-based Compensation
 Share-Based Payment
 Intangible Assets and Liabilities
  Straight-Line Rent
  Concentration of Credit Risk
   - 5 -




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##### Table of Contents



Use of Estimates
  Risks and Uncertainties
  3. Property and Equipment
  March 27, 2009
    
    
    December 31, 2008Land
    
    $
    219,590
    
    
    $
    219,590Land improvements
    
    
    7,994
    
    
    
    7,994Buildings
    
    
    1,661,710
    
    
    
    1,658,227Furniture, fixtures and equipment
    
    
    260,360
    
    
    
    259,154CIP and corporate office equipment
    
    
    1,762
    
    
    
    1,6512,151,416
    
    
    
    2,146,616Less: accumulated depreciation
    
    
    (245,145
    )
    
    
    (226,400
    )$
    1,906,271
    
    
    $
    1,920,216
  4. Capital Stock   Common Shares
   Preferred Shares
   - 6 -




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##### Table of Contents



Operating Partnership Units
  5. Stock Incentive Plans
  Restricted Stock Awards
   Weighted-AverageNumber of
    
    
    Grant DateShares
    
    
    Fair ValueUnvested balance at January 1, 2009
    
    
    605,809
    
    
    $
    13.02Granted
    
    
    1,515,955
    
    
    
    2.82Vested
    
    
    (135,985
    )
    
    
    15.29Forfeited
    
    
    (7,184
    )
    
    
    14.61Unvested balance at March 27, 2009
    
    
    1,978,595
    
    
    $
    5.04
  Deferred Stock Awards
  Stock Appreciation Rights and Dividend Equivalent Rights
   - 7 -




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##### Table of Contents



Weighted-AverageNumber of
    
    
    Grant DateSARs/DERs
    
    
    Fair ValueBalance at January 1, 2009
    
    
    300,225
    
    
    $
    6.62Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Balance at March 27, 2009
    
    
    300,225
    
    
    $
    6.62
  6. Earnings (Loss) Per Share
   Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    

March 21, 2008(unaudited)
    
    
    (unaudited)Basic Earnings (Loss) per Share Calculation:Numerator:Net (loss) income
    
    $
    (5,293
    )
    
    $
    5,177Less: dividends on unvested restricted common stock
    
    
    
    
    
    
    (119
    )Net (loss) income after dividends on unvested
restricted common stock
    
    $
    (5,293
    )
    
    $
    5,058Weighted-average number of common shares outstandingbasic
    
    
    90,551,505
    
    
    
    95,173,458Basic (loss) earnings per share
    
    $
    (0.06
    )
    
    $
    0.05Diluted Earnings (Loss) per Share Calculation:Numerator:Net (loss) income
    
    $
    (5,293
    )
    
    $
    5,177Less: dividends on unvested restricted common stock
    
    
    
    
    
    
    (90
    )Net (loss) income after dividends on unvested
restricted common stock
    
    $
    (5,293
    )
    
    $
    5,087Weighted-average number of common shares outstandingbasic
    
    
    90,551,505
    
    
    
    95,173,458Unvested restricted common stock
    
    
    
    
    
    
    114,795Unvested SARs
    
    
    
    
    
    
    Weighted-average number of common shares outstandingdiluted
    
    
    90,551,505
    
    
    
    95,288,253Diluted (loss) earnings per share
    
    $
    (0.06
    )
    
    $
    0.05
  - 8 -




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##### Table of Contents



7. Debt
   PrincipalProperty
    
    Balance
    
    
    Interest RateCourtyard Manhattan / Midtown East
    
    $
    40,968
    
    
    
    5.195
    %Marriott Salt Lake City Downtown
    
    
    34,108
    
    
    
    5.50
    %Courtyard Manhattan / Fifth Avenue
    
    
    51,000
    
    
    
    6.48
    %Marriott Griffin Gate Resort
    
    
    28,247
    
    
    
    5.11
    %Renaissance Worthington
    
    
    57,400
    
    
    
    5.40
    %Frenchmans Reef & Morning Star MarriottBeach Resort
    
    
    62,029
    
    
    
    5.44
    %Marriott Los Angeles Airport
    
    
    82,600
    
    
    
    5.30
    %Orlando Airport Marriott
    
    
    59,000
    
    
    
    5.68
    %Chicago Marriott Downtown Magnificent Mile
    
    
    220,000
    
    
    
    5.975
    %Renaissance Austin
    
    
    83,000
    
    
    
    5.507
    %Renaissance Waverly
    
    
    97,000
    
    
    
    5.503
    %Bethesda Marriott Suites
    
    
    
    
    
    LIBOR + 0.95 (1.45% as of5,000
    
    
    March 27, 2009)Total mortgage debt
    
    
    820,352Senior unsecured credit facility
    
    
    
    
    
    LIBOR + 0.95 (1.46% as of52,000
    
    
    March 27, 2009)Total debt
    
    $
    872,352Weighted-Average Interest Rate
    
    
    
    
    
    
    5.4
    %
   Leverage Ratio60% or Greater
    
    
    55% to 60%
    
    
    50% to 55%
    
    
    Less Than 50%Alternate base rate margin
    
    
    0.65
    %
    
    
    0.45
    %
    
    
    0.25
    %
    
    
    0.00
    %LIBOR margin
    
    
    1.55
    %
    
    
    1.45
    %
    
    
    1.25
    %
    
    
    0.95
    %
  Actual atCovenant
    
    
    March 27, 2009Maximum leverage ratio(1)
    
    
    65
    %
    
    
    42.8
    %Minimum fixed charge coverage ratio(2)
    
    
    1.6
    x
    
    
    2.7
    xMinimum tangible net worth(3)
    
    $738.4 million
    
    
    $1.3 billionUnhedged floating rate debt as a percentage of total indebtedness
    
    
    35
    %
    
    
    6.5
    %
 
 (1)
    
    Maximum leverage ratio is determined by dividing the total debt outstanding
by the net asset value of our corporate assets and hotels. Hotel level net
asset values are calculated based on the application of a contractual
capitalization rate (which range from 7.5% to 8.0%) to the trailing twelve
month hotel net operating income.(2)
    
    Minimum fixed charge ratio is calculated based on the trailing four quarters.(3)
    
    Tangible net worth is defined as the gross book value of our real estate
assets and other corporate assets less our total debt and all other corporate
liabilities.  - 9 -




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##### Table of Contents



Actual atMarch 27,Covenant
    
    
    2009Minimum implied debt service ratio
    
    
    1.5
    x
    
    
    13.01
    %Maximum unencumbered leverage ratio
    
    
    65
    %
    
    
    7.9
    %Minimum number of unencumbered borrowing base properties
    
    
    4
    
    
    
    8Minimum unencumbered borrowing base value
    
    $150 million
    
    
    $658.9 millionPercentage of total asset value owned by borrowers or guarantors
    
    
    90
    %
    
    
    100
    %
  8. Dividends
  9. Commitments and Contingencies
 Litigation
  Income Taxes
   - 10 -




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 This report contains certain forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The Company intends such forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Securities Litigation Reform Act
of 1995 and includes this statement for purposes of complying with these safe harbor provisions.
These forward-looking statements are generally identifiable by use of the words believe,
expect, intend, anticipate, estimate, project or similar expressions, whether in the
negative or affirmative. Forward-looking statements are based on managements current expectations
and assumptions and are not guarantees of future performance. Factors that may cause actual
results to differ materially from current expectations include, but are not limited to, the risk
factors discussed herein and other factors discussed from time to time in our periodic filings with
the Securities and Exchange Commission. Accordingly, there is no assurance that the Companys
expectations will be realized. Except as otherwise required by the federal securities laws, the
Company disclaims any obligations or undertaking to publicly release any updates or revisions to
any forward-looking statement contained in this report to reflect events, circumstances or changes
in expectations after the date of this report.
 Overview
     
    
    high-quality urban- and resort-focused branded real estate;
 
    
    conservative capital structure; and
 
    
    thoughtful asset management.
 High-Quality Urban- and Resort-Focused Branded Real Estate
     - 11 -




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##### Table of Contents



Capital Structure
     
    
    We completed a follow-on public offering of our common stock on April 17, 2009. We sold
17,825,000 shares of common stock, including the underwriters overallotment of 2,325,000
shares, at an offering price of $4.85 per share. The net proceeds to us, after deduction of
offering costs, were approximately $82.1 million. We continue to evaluate our liquidity
needs and financing alternatives, and may choose to sell additional shares of common stock
in the future.
 
    
    We repaid the $52 million outstanding on our senior unsecured credit facility on April
17, 2009 with a portion of the proceeds from our follow-on offering.
 
    
    We chose to not pay a 2008 fourth quarter dividend and we intend to pay our next dividend
to our stockholders of record as of December 31, 2009. We expect the 2009 dividend will be
in an amount equal to 100% of our 2009 taxable income.
 
    
    Depending on our 2009 liquidity needs, we may elect to pay a portion of our 2009 dividend
in shares of our common stock, as permitted by the Internal Revenue Services Revenue
Procedure 2009-15.
 
    
    We have significantly curtailed capital spending for 2009 and expect to fund
approximately $10 million in capital expenditures in 2009, compared to an average of
$35 million per year of owner-funded capital expenditures during 2006, 2007 and 2008.
 
    
    As previously announced, we continue to evaluate the process regarding the sale of one or
more of our hotels. To date we have not received any bids that we consider attractive
compared to our internal valuation.
   - 12 -




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##### Table of Contents



Thoughtful Asset Management
     Key Indicators of Financial Condition and Operating Performance
  
    
    Occupancy percentage;
    
    Average Daily Rate (or ADR);
    
    Revenue per Available Room (or RevPAR);
    
    Earnings Before Interest, Income Taxes, Depreciation and Amortization (or EBITDA); and
    
    Funds From Operations (or FFO).
    - 13 -




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##### Table of Contents



Outlook
   Our Hotels
  % ChangeNumber of
    
    
    Occupancy
    
    
    
    
    
    
    
    
    
    
    from 2008Property
    
    Location
    
    Rooms
    
    
    (%)
    
    
    ADR($)
    
    
    RevPAR($)
    
    
    RevPARChicago Marriott
    
    Chicago, Illinois
    
    
    1,198
    
    
    
    58.1
    %
    
    $
    152.01
    
    
    $
    88.29
    
    
    
    6.7
    %Los Angeles Airport Marriott
    
    Los Angeles, California
    
    
    1,004
    
    
    
    79.7
    
    
    
    115.90
    
    
    
    92.38
    
    
    
    (10.8
    )Westin Boston Waterfront Hotel (1)
    
    Boston, Massachusetts
    
    
    793
    
    
    
    48.3
    
    
    
    160.95
    
    
    
    77.70
    
    
    
    (17.7
    )Renaissance Waverly Hotel
    
    Atlanta, Georgia
    
    
    521
    
    
    
    60.6
    
    
    
    143.51
    
    
    
    86.90
    
    
    
    (18.3
    )Salt Lake City Marriott Downtown
    
    Salt Lake City, Utah
    
    
    510
    
    
    
    58.3
    
    
    
    138.98
    
    
    
    81.04
    
    
    
    (21.3
    )Renaissance Worthington
    
    Fort Worth, Texas
    
    
    504
    
    
    
    72.1
    
    
    
    164.57
    
    
    
    118.72
    
    
    
    (15.5
    )Frenchmans Reef & Morning Star
Marriott Beach Resort (1)
    
    St. Thomas, U.S. Virgin Islands
    
    
    502
    
    
    
    83.0
    
    
    
    282.01
    
    
    
    234.19
    
    
    
    (11.1
    )Renaissance Austin Hotel
    
    Austin, Texas
    
    
    492
    
    
    
    62.9
    
    
    
    156.69
    
    
    
    98.51
    
    
    
    (16.6
    )Torrance Marriott South Bay
    
    Los Angeles County, California
    
    
    487
    
    
    
    62.6
    
    
    
    119.59
    
    
    
    74.88
    
    
    
    (27.0
    )Orlando Airport Marriott
    
    Orlando, Florida
    
    
    486
    
    
    
    81.8
    
    
    
    120.58
    
    
    
    98.66
    
    
    
    (16.3
    )Marriott Griffin Gate Resort
    
    Lexington, Kentucky
    
    
    408
    
    
    
    49.0
    
    
    
    108.41
    
    
    
    53.12
    
    
    
    (11.1
    )Oak Brook Hills Marriott Resort
    
    Oak Brook, Illinois
    
    
    386
    
    
    
    31.4
    
    
    
    118.38
    
    
    
    37.17
    
    
    
    (18.3
    )Westin Atlanta North at Perimeter (1)
    
    Atlanta, Georgia
    
    
    369
    
    
    
    66.3
    
    
    
    109.94
    
    
    
    72.90
    
    
    
    (27.0
    )Vail Marriott Mountain Resort & Spa
(1)
    
    Vail, Colorado
    
    
    346
    
    
    
    79.8
    
    
    
    287.44
    
    
    
    229.51
    
    
    
    (26.1
    )Marriott Atlanta Alpharetta
    
    Atlanta, Georgia
    
    
    318
    
    
    
    57.3
    
    
    
    136.01
    
    
    
    77.88
    
    
    
    (18.5
    )Courtyard Manhattan/Midtown East
    
    New York, New York
    
    
    312
    
    
    
    79.1
    
    
    
    200.59
    
    
    
    158.76
    
    
    
    (28.9
    )Conrad Chicago (1)
    
    Chicago, Illinois
    
    
    311
    
    
    
    56.1
    
    
    
    156.42
    
    
    
    87.77
    
    
    
    (7.4
    )Bethesda Marriott Suites
    
    Bethesda, Maryland
    
    
    272
    
    
    
    56.5
    
    
    
    196.94
    
    
    
    111.24
    
    
    
    (13.8
    )Courtyard Manhattan/Fifth Avenue
    
    New York, New York
    
    
    185
    
    
    
    87.6
    
    
    
    202.23
    
    
    
    177.22
    
    
    
    (21.1
    )The Lodge at Sonoma, a Renaissance

Resort & Spa
    
    Sonoma, California
    
    
    182
    
    
    
    40.1
    
    
    
    159.39
    
    
    
    63.94
    
    
    
    (35.8
    )TOTAL/WEIGHTED AVERAGE
    
    
    
    
    9,586
    
    
    
    63.7
    %
    
    $
    155.00
    
    
    $
    98.80
    
    
    
    (16.5
    )%
 
 (1)
    
    The Frenchmans Reef & Morning Star Marriott Beach Resort, Vail Marriott Mountain
Resort & Spa, Westin Atlanta North at Perimeter, Conrad Chicago and the Westin Boston
Waterfront Hotel report operations on a calendar month and year basis. The fiscal quarter
ended March 27, 2009 includes the operations for the period from January 1, 2009 to
February 28, 2009 for these five hotels.  - 14 -




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##### Table of Contents



Results of Operations
  Comparison of the Fiscal Quarter Ended March 27, 2009 to the Fiscal Quarter Ended March 21, 2008
  Revenue.
 Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    
    March 21, 2008
    
    
    % ChangeRooms
    
    $
    75,116
    
    
    $
    85,927
    
    
    
    (12.6
    )%Food and beverage
    
    
    36,890
    
    
    
    40,081
    
    
    
    (8.0
    )%Other
    
    
    6,538
    
    
    
    6,855
    
    
    
    (4.6
    )%Total revenues
    
    $
    118,544
    
    
    $
    132,863
    
    
    
    (10.8
    )%
  Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    
    March 21, 2008
    
    
    % ChangeChicago Marriott
    
    $
    14.7
    
    
    $
    10.9
    
    
    
    34.9
    %Los Angeles Airport Marriott
    
    
    13.0
    
    
    
    14.3
    
    
    
    (9.1
    )%Frenchmans Reef & Morning Star Marriott Beach Resort (1)
    
    
    10.0
    
    
    
    11.2
    
    
    
    (10.7
    )%Renaissance Worthington
    
    
    8.5
    
    
    
    9.5
    
    
    
    (10.5
    )%Renaissance Austin Hotel
    
    
    7.6
    
    
    
    8.2
    
    
    
    (7.3
    )%Renaissance Waverly Hotel
    
    
    7.2
    
    
    
    8.7
    
    
    
    (17.2
    )%Westin Boston Waterfront Hotel (1)
    
    
    7.0
    
    
    
    8.9
    
    
    
    (21.3
    )%Orlando Airport Marriott
    
    
    6.6
    
    
    
    7.5
    
    
    
    (12.0
    )%Vail Marriott Mountain Resort & Spa (1)
    
    
    6.1
    
    
    
    8.4
    
    
    
    (27.4
    )%Salt Lake City Marriott Downtown
    
    
    5.6
    
    
    
    6.3
    
    
    
    (11.1
    )%Torrance Marriott South Bay
    
    
    4.6
    
    
    
    5.8
    
    
    
    (20.7
    )%Courtyard Manhattan/Midtown East
    
    
    4.5
    
    
    
    6.0
    
    
    
    (25.0
    )%Marriott Griffin Gate Resort
    
    
    3.7
    
    
    
    4.0
    
    
    
    (7.5
    )%Bethesda Marriott Suites
    
    
    3.5
    
    
    
    3.6
    
    
    
    (2.8
    )%Marriott Atlanta Alpharetta
    
    
    3.1
    
    
    
    3.6
    
    
    
    (13.9
    )%Oak Brook Hills Marriott Resort
    
    
    3.0
    
    
    
    3.3
    
    
    
    (9.1
    )%Courtyard Manhattan/Fifth Avenue
    
    
    2.9
    
    
    
    3.4
    
    
    
    (14.7
    )%Westin Atlanta North at Perimeter (1)
    
    
    2.5
    
    
    
    3.7
    
    
    
    (32.4
    )%The Lodge at Sonoma, a Renaissance Resort & Spa
    
    
    2.2
    
    
    
    3.0
    
    
    
    (26.7
    )%Conrad Chicago (1)
    
    
    2.2
    
    
    
    2.6
    
    
    
    (15.4
    )%Total
    
    $
    118.5
    
    
    $
    132.9
    
    
    
    (10.8
    )%
 (1)
    
    The Frenchmans Reef & Morning Star Marriott Beach Resort, Vail Marriott Mountain
Resort & Spa, Westin Atlanta North at Perimeter, Conrad Chicago and the Westin Boston
Waterfront Hotel report operations on a calendar month and year basis. The fiscal quarters
ended March 27, 2009 and March 21, 2008 include the operations for the period from January
1, 2009 to February 28, 2009 and January 1, 2008 to February 29, 2008, respectively, for
these five hotels.  - 15 -




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##### Table of Contents



Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    
    March 21, 2008
    
    
    % ChangeOccupancy %
    
    
    63.7
    %
    
    
    68.5
    %
    
    (4.8) percentage pointsADR
    
    $
    155.00
    
    
    $
    172.91
    
    
    
    (10.4
    )%RevPAR
    
    $
    98.80
    
    
    $
    118.37
    
    
    
    (16.5
    )%
 Hotel operating expenses.
 Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    
    March 21, 2008
    
    
    % ChangeRooms departmental expenses
    
    $
    20.0
    
    
    $
    21.2
    
    
    
    (5.7
    )%Food and beverage departmental expenses
    
    
    26.6
    
    
    
    28.9
    
    
    
    (8.0
    )%Other hotel expenses
    
    
    37.8
    
    
    
    39.0
    
    
    
    (3.1
    )%Base management fees
    
    
    3.1
    
    
    
    3.6
    
    
    
    (13.9
    )%Incentive management fees
    
    
    0.2
    
    
    
    1.4
    
    
    
    (85.7
    )%Property taxes
    
    
    6.0
    
    
    
    5.1
    
    
    
    17.6
    %Ground rentContractual
    
    
    0.4
    
    
    
    0.5
    
    
    
    (20.0
    )%Ground rentNon-cash
    
    
    1.8
    
    
    
    1.8
    
    
    
    Total hotel operating expenses
    
    $
    95.9
    
    
    $
    101.5
    
    
    
    (5.5
    )%
   Depreciation and amortization.
  - 16 -




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##### Table of Contents



Corporate expenses.
 Interest expense.
  Interest income
 Income taxes.
 Liquidity and Capital Resources
     - 17 -




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##### Table of Contents



Our Financing Strategy
     
    
    We completed a follow-on public offering of our common stock in April 2009. We sold
17,825,000 shares of common stock, including the underwriters overallotment of 2,325,000
shares, at an offering price of $4.85 per share. The net proceeds to us, after deduction of
offering costs, were approximately $82.1 million. We continue to evaluate our liquidity
needs and financing alternatives, and may choose to sell additional shares of common stock
in the future.
    
    We repaid the $52 million outstanding on our senior unsecured credit facility on April
17, 2009 with a portion of the proceeds from our follow-on offering.
    
    We chose to not pay a 2008 fourth quarter dividend and we intend to pay our next dividend
to our stockholders of record as of December 31, 2009. We expect the 2009 dividend will be
in an amount equal to 100% of our 2009 taxable income.
    
    Depending on our 2009 liquidity needs, we may elect to pay a portion of our 2009 dividend
in shares of our common stock, as permitted by the Internal Revenue Services Revenue
Procedure 2009-15.
    
    We have significantly curtailed capital spending for 2009 and expect to fund
approximately $10 million in capital expenditures in 2009, compared to an average of
$35 million per year of owner-funded capital expenditures during 2006, 2007 and 2008.
    
    As previously announced, we continue to evaluate the process regarding the sale of one or
more of our hotels. To date we have not received any bids that we consider attractive
compared to our internal valuation.
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##### Table of Contents



Credit Facility
   Leverage Ratio60% or
    
    
    55% to
    
    
    50% to
    
    
    Less ThanGreater
    
    
    60%
    
    
    55%
    
    
    50%Alternate base rate margin
    
    
    0.65
    %
    
    
    0.45
    %
    
    
    0.25
    %
    
    
    0.00
    %LIBOR margin
    
    
    1.55
    %
    
    
    1.45
    %
    
    
    1.25
    %
    
    
    0.95
    %
  Actual atMarch 27,Covenant
    
    
    2009Maximum leverage ratio(1)
    
    
    65
    %
    
    
    42.8
    %Minimum fixed charge coverage ratio(2)
    
    
    1.6
    x
    
    
    2.7
    xMinimum tangible net worth(3)
    
    $738.4 million
    
    
    $1.3 billionUnhedged floating rate debt as a percentage of total indebtedness
    
    
    35
    %
    
    
    6.5
    %
 
 (1)
    
    Maximum leverage ratio is determined by dividing the total debt outstanding
by the net asset value of our corporate assets and hotels. Hotel level net
asset values are calculated based on the application of a contractual
capitalization rate (which range from 7.5% to 8.0%) to the trailing twelve
month hotel net operating income.(2)
    
    Minimum fixed charge ratio is calculated based on the trailing four quarters.(3)
    
    Tangible net worth is defined as the gross book value of our real estate
assets and other corporate assets less our total debt and all other corporate
liabilities.  - 19 -




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##### Table of Contents



Actual atMarch 27,Covenant
    
    
    2009Minimum implied debt service ratio
    
    
    1.5
    x
    
    
    13.01
    xMaximum unencumbered leverage ratio
    
    
    65
    %
    
    
    7.9
    %Minimum number of unencumbered borrowing base properties
    
    
    4
    
    
    
    8Minimum unencumbered borrowing base value
    
    $150 million
    
    
    $658.9 millionPercentage of total asset value owned by borrowers or guarantors
    
    
    90
    %
    
    
    100
    %
  EBITDA Change from 2008Covenant
    
    
    -10%
    
    
    -20%
    
    
    -30%
    
    
    -40%Maximum leverage ratio
    
    
    65
    %
    
    
    45
    %
    
    
    51
    %
    
    
    58
    %
    
    
    67
    %Minimum fixed charge coverage ratio
    
    
    1.6
    x
    
    
    2.6
    x
    
    
    2.3
    x
    
    
    2.0
    x
    
    
    1.7
    x
  Sources and Uses of Cash
  Cash Provided by Operating Activities.
  Cash Used In Investing Activities.
  Cash Provided by Financing Activities.
  - 20 -




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##### Table of Contents



Dividend Policy
  
    
    90% of our REIT taxable income determined without regard to the dividends paid deduction,
plus
    
    90% of the excess of our net income from foreclosure property over the tax imposed on
such income by the Code, minus
    
    any excess non-cash income.
  Capital Expenditures
   Off-Balance Sheet Arrangements
  Non-GAAP Financial Measures
    - 21 -




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##### Table of Contents



Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    
    March 21, 2008(in thousands)Net (loss) income
    
    $
    (5,293
    )
    
    $
    5,177Interest expense
    
    
    11,498
    
    
    
    10,695Income tax benefit
    
    
    (5,978
    )
    
    
    (3,723
    )Real estate related depreciation and amortization
    
    
    18,717
    
    
    
    16,687EBITDA
    
    $
    18,944
    
    
    $
    28,836
  Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedMarch 27, 2009
    
    
    March 21, 2008(in thousands)Net (loss) income
    
    $
    (5,293
    )
    
    $
    5,177Real estate related depreciation and amortization
    
    
    18,717
    
    
    
    16,687FFO
    
    $
    13,424
    
    
    $
    21,864
 Critical Accounting Policies
  Investment in Hotels Business Combinations
  - 22 -




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##### Table of Contents



Revenue Recognition
 Stock-based Compensation Share-Based Payment
 Income Taxes.
  Inflation
  Seasonality
  New Accounting Pronouncements Not Yet Implemented
  
 Item 3. Qualitative Disclosure about Market Risk
   - 23 -




---



##### Table of Contents



Item 4. Controls and Procedures
 
   - 24 -




---



##### Table of Contents



PART II
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  
 Item 6. Exhibits
 Exhibits
  Exhibit3.1.1
    
    
    Articles of Amendment and Restatement of the Articles of
Incorporation of DiamondRock Hospitality Company (incorporated by
reference to the Registrants Registration Statement on Form S-11
filed with the Securities and Exchange Commission (File no.
333-123065)).3.1.2
    
    
    Amendment to the Articles of Amendment and Restatement of the
Articles of Incorporation of DiamondRock Hospitality Company
(incorporated by reference to the Registrants Current Report on
Form 8-K dated January 9, 2007).3.2.1
    
    
    Second Amended and Restated Bylaws of DiamondRock Hospitality
Company (incorporated by reference to the Registrants
Registration Statement on Form S-11 filed with the Securities and
Exchange Commission (File no. 333-123065)).3.2.2
    
    
    Amendment No. 1 to Second Amended and Restated Bylaws of
DiamondRock Hospitality Company (incorporated by reference to the
Registrants Current Report on Form 8-K filed with the Securities
and Exchange Commission on March 7, 2006).4.1
    
    
    Form of Certificate for Common Stock for DiamondRock Hospitality
Company (incorporated by reference to the Registrants
Registration Statement on Form S-11 filed with the Securities and
Exchange Commission (File no. 333-123065)).
  - 25 -




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##### Table of Contents



Exhibit10.1
    
    
    Form of Stock Appreciation Right (incorporated by reference to the
Registrants Current Report on Form 8-K filed with the Securities
and Exchange Commission on March 6, 2008).10.2
    
    
    Form of Dividend Equivalent Right (incorporated by reference to
the Registrants Current Report on Form 8-K filed with the
Securities and Exchange Commission on March 6, 2008).10.3
    
    

Agreement
of Limited Partnership of DiamondRock Hospitality Limited
Partnership, dated as of June 4, 2004.10.4
    
    
    Amended and Restated Credit Agreement, dated as of February 28, 2007 by and among DiamondRock
Hospitality Limited Partnership, DiamondRock Hospitality Company, Wachovia Bank, National
Association, as Agent, Wachovia Capital Markets, LLC, as Sole Lead Arranger and as Book
Manager, each of Bank of America, N.A., Calyon New York Branch and The Royal Bank Of Scotland
PLC, as a Syndication Agent, and Citicorp North America, Inc., as
Documentation Agent.31.1
    
    
    Certification of Chief Executive Officer Required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    
    Certification of Chief Financial Officer Required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.32.1
    
    
    Certification of Chief Executive Officer and Chief Financial
Officer Required by Rule 13a-14(b) of the Securities Exchange Act
of 1934, as amended.
  - 26 -




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##### Table of Contents



SIGNATURE
  December 7, 2009
    
    
    
    DiamondRock Hospitality Company/s/ Sean M. Mahoney
    
    
    
    /s/ Michael D. SchecterSean M. Mahoney
    
    
    
    Michael D. SchecterExecutive Vice President and
    
    
    
    Executive Vice President,Chief Financial Officer
    
    
    
    General Counsel and Corporate Secretary
  - 27 -




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##### Table of Contents



EXHIBIT INDEX
 Exhibit10.1
    
    
    Form of Stock Appreciation Right (incorporated by reference to the
Registrants Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 6, 2008).10.2
    
    
    Form of Dividend Equivalent Right (incorporated by reference to the
Registrants Current Report on Form 8-K filed with the Securities and
Exchange Commission on March 6, 2008).10.3
    
    
    Agreement of Limited Partnership of DiamondRock Hospitality Limited Partnership, dated as of
June 4, 2004.10.4
    
    
    Amended and Restated Credit Agreement, dated as of February 28, 2007 by and among DiamondRock
Hospitality Limited Partnership, DiamondRock Hospitality Company, Wachovia Bank, National
Association, as Agent, Wachovia Capital Markets, LLC, as Sole Lead Arranger and as Book
Manager, each of Bank of America, N.A., Calyon New York Branch and The Royal Bank Of Scotland
PLC, as a Syndication Agent, and Citicorp North America, Inc., as
Documentation Agent.31.1
    
    
    Certification of Chief Executive Officer Required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.31.2
    
    
    Certification of Chief Financial Officer Required by Rule
13a-14(a) of the Securities Exchange Act of 1934, as amended.32.1
    
    
    Certification of Chief Executive Officer and Chief Financial
Officer Required by Rule 13a-14(b) of the Securities Exchange Act
of 1934, as amended.
  - 28 -