##### 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 June 19, 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 o
 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 10.1 to this Amendment, the Sales Agreement, dated
July 27, 2009 by and among DiamondRock Hospitality Company,
DiamondRock Hospitality Limited Partnership and Cantor Fitzgerald &
Co. (originally filed as an exhibit to the Companys Current Report on
Form 8-K filed with the SEC on July 27, 2009), in its entirety,
including all schedules and exhibits thereto.
 Form 10-Q
 INDEX
 
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited):Condensed Consolidated Balance Sheets as of June 19, 2009 and December 31, 2008
    
    
    1Condensed Consolidated Statements of Operations
For the Fiscal Quarters ended June 19, 2009 and June 13, 2008 and the Periods
from January 1, 2009 to June 19, 2009 and January 1, 2008 to June 13, 2008
    
    
    2Condensed Consolidated Statements of Cash Flows 
For the Fiscal Quarters ended June 19, 2009 and June 13, 2008 and the Periods
from January 1, 2009 to June 19, 2009 and January 1, 2008 to June 13, 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
    
    
    25Item 4. Controls and Procedures
    
    
    26PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    27Item 1A. Risk Factors
    
    
    27Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    27Item 3. Defaults Upon Senior Securities
    
    
    27Item 4. Submission of Matters to a Vote of Security Holders
    
    
    27Item 5. Other Information
    
    
    27Item 6. Exhibits
    
    
    28Exhibit 10.1Exhibit 31.1Exhibit 31.2Exhibit 32.1




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Item I. Financial Statements
 DIAMONDROCK HOSPITALITY COMPANY
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 As of June 19, 2009 and December 31, 2008
(in thousands, except share amounts)
 June 19, 2009
    
    
    December 31, 2008(Unaudited)ASSETSProperty and equipment, at cost
    
    $
    2,158,448
    
    
    $
    2,146,616Less: accumulated depreciation
    
    
    (264,946
    )
    
    
    (226,400
    )1,893,502
    
    
    
    1,920,216Deferred financing costs, net
    
    
    2,949
    
    
    
    3,335Restricted cash
    
    
    30,176
    
    
    
    30,060Due from hotel managers
    
    
    53,297
    
    
    
    61,062Favorable lease assets, net
    
    
    38,983
    
    
    
    40,619Prepaid and other assets
    
    
    38,219
    
    
    
    33,414Cash and cash equivalents
    
    
    51,557
    
    
    
    13,830Total assets
    
    $
    2,108,683
    
    
    $
    2,102,536LIABILITIES AND STOCKHOLDERS EQUITYLiabilities:Mortgage debt
    
    $
    819,385
    
    
    $
    821,353Senior unsecured credit facility
    
    
    
    
    
    
    57,000Total debt
    
    
    819,385
    
    
    
    878,353Deferred income related to key money, net
    
    
    20,067
    
    
    
    20,328Unfavorable contract liabilities, net
    
    
    83,610
    
    
    
    84,403Due to hotel managers
    
    
    32,185
    
    
    
    35,196Accounts payable and accrued expenses
    
    
    54,189
    
    
    
    66,624Total other liabilities
    
    
    190,051
    
    
    
    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; 107,972,100 and 90,050,264
shares issued and outstanding at June 19, 2009
and December 31, 2008, respectively
    
    
    1,080
    
    
    
    901Additional paid-in capital
    
    
    1,184,893
    
    
    
    1,100,541Accumulated deficit
    
    
    (86,726
    )
    
    
    (83,810
    )Total stockholders equity
    
    
    1,099,247
    
    
    
    1,017,632Total liabilities and stockholders equity
    
    $
    2,108,683
    
    
    $
    2,102,536
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DIAMONDROCK HOSPITALITY COMPANY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Fiscal Quarters Ended June 19, 2009 and June 13, 2008 and
the Periods from January 1, 2009 to June 19, 2009 and January 1, 2008 to June 13, 2008
(in thousands, except per share amounts)
 Fiscal Quarter
    
    
    Fiscal Quarter
    
    
    Period from
    
    
    Period fromEnded
    
    
    Ended
    
    
    January 1, 2009 to
    
    
    January 1, 2008 toJune 19, 2009
    
    
    June 13, 2008
    
    
    June 19, 2009
    
    
    June 13, 2008(Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)
    
    
    (Unaudited)Revenues:Rooms
    
    $
    90,228
    
    
    $
    116,011
    
    
    $
    165,343
    
    
    $
    201,938Food and beverage
    
    
    44,697
    
    
    
    55,532
    
    
    
    81,587
    
    
    
    95,614Other
    
    
    8,682
    
    
    
    9,473
    
    
    
    15,221
    
    
    
    16,327Total revenues
    
    
    143,607
    
    
    
    181,016
    
    
    
    262,151
    
    
    
    313,879Operating Expenses:Rooms
    
    
    22,974
    
    
    
    26,249
    
    
    
    42,956
    
    
    
    47,408Food and beverage
    
    
    30,320
    
    
    
    36,377
    
    
    
    56,901
    
    
    
    65,305Management fees
    
    
    5,008
    
    
    
    8,048
    
    
    
    8,336
    
    
    
    13,013Other hotel expenses
    
    
    50,516
    
    
    
    55,189
    
    
    
    96,540
    
    
    
    101,641Impairment of favorable lease asset
    
    
    1,286
    
    
    
    
    
    
    
    1,286
    
    
    
    Depreciation and amortization
    
    
    19,729
    
    
    
    18,069
    
    
    
    38,446
    
    
    
    34,756Corporate expenses
    
    
    3,651
    
    
    
    3,345
    
    
    
    7,419
    
    
    
    6,305Total operating expenses
    
    
    133,484
    
    
    
    147,277
    
    
    
    251,884
    
    
    
    268,428Operating profit
    
    
    10,123
    
    
    
    33,739
    
    
    
    10,267
    
    
    
    45,451Other Expenses (Income):Interest income
    
    
    (101
    )
    
    
    (332
    )
    
    
    (183
    )
    
    
    (770
    )Interest expense
    
    
    11,086
    
    
    
    11,430
    
    
    
    22,584
    
    
    
    22,125Total other expenses
    
    
    10,985
    
    
    
    11,098
    
    
    
    22,401
    
    
    
    21,355(Loss) income before income taxes
    
    
    (862
    )
    
    
    22,641
    
    
    
    (12,134
    )
    
    
    24,096Income tax benefit (expense)
    
    
    3,319
    
    
    
    (886
    )
    
    
    9,297
    
    
    
    2,836Net income (loss)
    
    $
    2,457
    
    
    $
    21,755
    
    
    $
    (2,837
    )
    
    $
    26,932Earnings (loss) per share:Basic and diluted earnings (loss) per share
    
    $
    0.02
    
    
    $
    0.23
    
    
    $
    (0.03
    )
    
    $
    0.28
   - 2 -




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DIAMONDROCK HOSPITALITY COMPANY
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Periods from January 1, 2009 to June 18, 2009 and January 1, 2008 to June 13, 2008
(in thousands)
 Period from
    
    
    Period fromJanuary 1, 2009 to
    
    
    January 1, 2008 toJune 19, 2009
    
    
    June 13, 2008(Unaudited)
    
    
    (Unaudited)Cash flows from operating activities:Net (loss) income
    
    $
    (2,837
    )
    
    $
    26,932Adjustments to reconcile net (loss) income to net cash provided by operating activities:Real estate depreciation
    
    
    38,446
    
    
    
    34,756Corporate asset depreciation as corporate expenses
    
    
    67
    
    
    
    75Non-cash ground rent
    
    
    3,570
    
    
    
    3,550Non-cash financing costs as interest
    
    
    386
    
    
    
    372Impairment of favorable lease asset
    
    
    1,286
    
    
    
    Amortization of unfavorable contract liabilities
    
    
    (794
    )
    
    
    (794
    )Amortization of deferred income
    
    
    (260
    )
    
    
    (253
    )Stock-based compensation
    
    
    2,532
    
    
    
    1,567Yield support received
    
    
    
    
    
    
    797Changes in assets and liabilities:Prepaid expenses and other assets
    
    
    (3,565
    )
    
    
    (4,022
    )Restricted cash
    
    
    123
    
    
    
    (582
    )Due to/from hotel managers
    
    
    4,754
    
    
    
    (5,966
    )Accounts payable and accrued expenses
    
    
    (13,457
    )
    
    
    (8,455
    )Net cash provided by operating activities
    
    
    30,251
    
    
    
    47,977Cash flows from investing activities:Hotel capital expenditures
    
    
    (13,265
    )
    
    
    (36,766
    )Receipt of deferred key money
    
    
    
    
    
    
    5,000Change in restricted cash
    
    
    (970
    )
    
    
    (1,820
    )Net cash used in investing activities
    
    
    (14,235
    )
    
    
    (33,586
    )Cash flows from financing activities:Repayments of credit facility
    
    
    (57,000
    )
    
    
    (15,000
    )Draws on credit facility
    
    
    
    
    
    
    47,000Scheduled mortgage debt principal payments
    
    
    (1,968
    )
    
    
    (1,413
    )Repurchase of shares
    
    
    (159
    )
    
    
    (3,184
    )Proceeds from sale of common stock
    
    
    82,562
    
    
    
    Payment of costs related to sale of common stock
    
    
    (404
    )
    
    
    Payment of financing deposits
    
    
    (1,240
    )
    
    
    Payment of dividends
    
    
    (80
    )
    
    
    (46,630
    )Net cash provided by (used in) financing activities
    
    
    21,711
    
    
    
    (19,227
    )Net increase (decrease) in cash and cash equivalents
    
    
    37,727
    
    
    
    (4,836
    )Cash and cash equivalents, beginning of period
    
    
    13,830
    
    
    
    29,773Cash and cash equivalents, end of period
    
    $
    51,557
    
    
    $
    24,937Supplemental Disclosure of Cash Flow Information:Cash paid for interest
    
    $
    23,819
    
    
    $
    24,176Cash paid for income taxes
    
    $
    868
    
    
    $
    861Capitalized interest
    
    $
    19
    
    
    $
    183Non-Cash Financing Activities:Unpaid dividends
    
    $
    
    
    
    $
    23,923
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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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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
    - 5 -




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Straight-Line Rent
  Concentration of Credit Risk
  Use of Estimates
  Risks and Uncertainties
  3. Property and Equipment
  June 19, 2009
    
    
    December 31, 2008Land
    
    $
    219,590
    
    
    $
    219,590Land improvements
    
    
    7,994
    
    
    
    7,994Buildings
    
    
    1,664,897
    
    
    
    1,658,227Furniture, fixtures and equipment
    
    
    264,933
    
    
    
    259,154CIP and corporate office equipment
    
    
    1,034
    
    
    
    1,6512,158,448
    
    
    
    2,146,616Less: accumulated depreciation
    
    
    (264,946
    )
    
    
    (226,400
    )$
    1,893,502
    
    
    $
    1,920,216
  4. Capital Stock
 Common Shares
    - 6 -




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Preferred Shares
  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 June 19, 2009
    
    
    1,978,595
    
    
    $
    5.04
  Deferred Stock Awards
   - 7 -




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##### Table of Contents



Stock Appreciation Rights and Dividend Equivalent Rights
  Weighted-AverageNumber of
    
    
    Grant DateSARs/DERs
    
    
    Fair ValueBalance at January 1, 2009
    
    
    300,225
    
    
    $
    6.62Granted
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    Balance at June 19, 2009
    
    
    300,225
    
    
    $
    6.62
  6. Earnings (Loss) Per Share
   Fiscal Quarter
    
    
    Fiscal Quarter
    
    
    Period from
    
    
    Period fromEnded
    
    
    Ended
    
    
    January 1, 2009 to
    
    
    January 1, 2008 toJune 19, 2009
    
    
    June 13, 2008
    
    
    June 19, 2009
    
    
    June 13, 2008(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)Basic Earnings (Loss) per Share
Calculation:Numerator:Net income (loss)
    
    $
    2,457
    
    
    $
    21,755
    
    
    $
    (2,837
    )
    
    $
    26,932Less: dividends on
unvested restricted
common stock
    
    
    
    
    
    
    (119
    )
    
    
    
    
    
    
    (237
    )Net income (loss) after
dividends on unvested
restricted common stock
    
    $
    2,457
    
    
    $
    21,636
    
    
    $
    (2,837
    )
    
    $
    26,695Weighted-average number of
common shares outstandingbasic
    
    
    104,194,871
    
    
    
    95,212,142
    
    
    
    97,292,933
    
    
    
    95,195,961Basic earnings (loss) per share
    
    $
    0.02
    
    
    $
    0.23
    
    
    $
    (0.03
    )
    
    $
    0.28Diluted Earnings (Loss) per
Share Calculation:Numerator:Net income (loss)
    
    $
    2,457
    
    
    $
    21,755
    
    
    $
    (2,837
    )
    
    $
    26,932Less: dividends on
unvested restricted
common stock
    
    
    
    
    
    
    (119
    )
    
    
    
    
    
    
    (237
    )Net income (loss) after
dividends on unvested
restricted common stock
    
    $
    2,457
    
    
    $
    21,636
    
    
    $
    (2,837
    )
    
    $
    26,695Weighted-average number of
common shares outstandingbasic
    
    
    104,194,871
    
    
    
    95,212,142
    
    
    
    97,292,933
    
    
    
    95,195,961Unvested restricted common stock
    
    
    666,921
    
    
    
    
    
    
    
    
    
    
    
    Unvested SARs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted-average number of
common shares
outstandingdiluted
    
    
    104,861,792
    
    
    
    95,212,142
    
    
    
    97,292,933
    
    
    
    95,195,961Diluted earnings (loss) per share
    
    $
    0.02
    
    
    $
    0.23
    
    
    $
    (0.03
    )
    
    $
    0.28
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7. Debt
   PrincipalProperty
    
    Balance
    
    
    Interest RateCourtyard Manhattan / Midtown East
    
    $
    40,706
    
    
    5.195%Marriott Salt Lake City Downtown
    
    
    33,781
    
    
    5.50%Courtyard Manhattan / Fifth Avenue
    
    
    51,000
    
    
    6.48%Marriott Griffin Gate Resort
    
    
    28,066
    
    
    5.11%Renaissance Worthington
    
    
    57,400
    
    
    5.40%Frenchmans Reef & Morning Star Marriott
Beach Resort
    
    
    61,832
    
    
    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
    
    
    5,000
    
    
    LIBOR + 0.95 (1.27% as of June 19, 2009)Senior unsecured credit facility
    
    
    
    
    
    LIBOR + 0.95Total debt
    
    $
    819,385Weighted-Average Interest Rate
    
    
    
    
    
    5.62%
    - 9 -




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##### Table of Contents



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
    
    June 19, 2009Maximum leverage ratio(1)
    
    65%
    
    44.7%Minimum fixed charge coverage ratio(2)
    
    1.6x
    
    2.4xMinimum tangible net worth(3)
    
    $738.4 million
    
    $1.4 billionUnhedged floating rate debt as a percentage of total indebtedness
    
    35%
    
    0.6%
 
 (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.  Actual atCovenant
    
    June 19, 2009Minimum implied debt service ratio
    
    1.5x
    
    N/AMaximum unencumbered leverage ratio
    
    65%
    
    0%Minimum number of unencumbered borrowing base properties
    
    4
    
    8Minimum unencumbered borrowing base value
    
    $150 million
    
    $579.5 millionPercentage of total asset value owned by borrowers or guarantors
    
    90%
    
    100%
  8. Fair Value of Financial Instruments
  As of June 19,
    
    
    As of December 31,2009
    
    
    2008Carrying
    
    
    
    
    
    
    CarryingAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair ValueDebt
    
    $
    819,385
    
    
    $
    721,411
    
    
    $
    878,353
    
    
    $
    750,899
 9. Commitments and Contingencies
 Litigation
  Income Taxes
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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
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##### Table of Contents



Capital Structure
     
    
    We completed a follow-on public offering of our common stock on during the second
quarter. 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. In
addition, our Board of Directors recently authorized us to sell up to $75 million of common
stock.
 
    
    We repaid the $52 million outstanding on our senior unsecured credit facility during the
second quarter with a portion of the proceeds from our follow-on offering.
 
    
    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.
We may elect to pay up to 90 percent of our 2009 dividend in shares of our common stock, as
permitted by the Internal Revenue Services Revenue Procedure 2009-15.
 
    
    We have focused on minimizing capital spending during 2009 and expect to fund
approximately $10 million of 2009 capital expenditures from corporate cash.
 
    
    We explored the potential sale of certain hotels earlier in the year, but currently do
not have any hotels listed for sale with a broker. We will evaluate any unsolicited offers
received for any of our hotels.
  
    
    We have signed a term sheet with Massachusetts Mutual Life Insurance Company
(MassMutual) to provide a new $43 million non-recourse mortgage loan on the Courtyard
Manhattan/Midtown East bearing an interest rate of 8.8% and a term of five years. The
closing of the loan is subject to numerous closing conditions, including a material adverse
change clause.
 
    
    We are currently assessing the best alternatives to address the Griffin Gate Marriott
mortgage debt maturity, including either refinancing the loan or
repaying the loan with
corporate cash.
  - 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
    
    
    
    67.9
    %
    
    $
    169.99
    
    
    $
    115.46
    
    
    
    (17.6
    )%Los Angeles Airport Marriott
    
    Los Angeles, California
    
    
    1,004
    
    
    
    75.1
    
    
    
    112.27
    
    
    
    84.27
    
    
    
    (16.2
    )Westin Boston Waterfront Hotel (1)
    
    Boston, Massachusetts
    
    
    793
    
    
    
    60.0
    
    
    
    190.13
    
    
    
    114.00
    
    
    
    (7.9
    )Renaissance Waverly Hotel
    
    Atlanta, Georgia
    
    
    521
    
    
    
    62.6
    
    
    
    137.52
    
    
    
    86.11
    
    
    
    (17.4
    )Salt Lake City Marriott Downtown
    
    Salt Lake City, Utah
    
    
    510
    
    
    
    54.3
    
    
    
    134.59
    
    
    
    73.15
    
    
    
    (24.0
    )Renaissance Worthington
    
    Fort Worth, Texas
    
    
    504
    
    
    
    68.1
    
    
    
    166.43
    
    
    
    113.36
    
    
    
    (20.7
    )Frenchmans Reef & Morning Star Marriott Beach Resort (1)
    
    St. Thomas, U.S. Virgin Islands
    
    
    502
    
    
    
    86.5
    
    
    
    252.70
    
    
    
    218.60
    
    
    
    (8.2
    )Renaissance Austin Hotel
    
    Austin, Texas
    
    
    492
    
    
    
    63.2
    
    
    
    153.74
    
    
    
    97.12
    
    
    
    (17.2
    )Torrance Marriott South Bay
    
    Los Angeles County, California
    
    
    487
    
    
    
    67.4
    
    
    
    115.41
    
    
    
    77.77
    
    
    
    (23.2
    )Orlando Airport Marriott
    
    Orlando, Florida
    
    
    486
    
    
    
    78.4
    
    
    
    87.07
    
    
    
    68.28
    
    
    
    (17.2
    )Marriott Griffin Gate Resort
    
    Lexington, Kentucky
    
    
    408
    
    
    
    57.4
    
    
    
    122.83
    
    
    
    70.52
    
    
    
    (18.3
    )Oak Brook Hills Marriott Resort
    
    Oak Brook, Illinois
    
    
    386
    
    
    
    35.3
    
    
    
    120.41
    
    
    
    42.52
    
    
    
    (34.4
    )Westin Atlanta North at Perimeter (1)
    
    Atlanta, Georgia
    
    
    369
    
    
    
    66.5
    
    
    
    103.88
    
    
    
    69.08
    
    
    
    (26.8
    )Vail Marriott Mountain Resort & Spa (1)
    
    Vail, Colorado
    
    
    346
    
    
    
    67.9
    
    
    
    241.82
    
    
    
    164.17
    
    
    
    (25.3
    )Marriott Atlanta Alpharetta
    
    Atlanta, Georgia
    
    
    318
    
    
    
    59.1
    
    
    
    128.38
    
    
    
    75.82
    
    
    
    (21.1
    )Courtyard Manhattan/Midtown East
    
    New York, New York
    
    
    312
    
    
    
    83.2
    
    
    
    204.01
    
    
    
    169.69
    
    
    
    (33.6
    )Conrad Chicago (1)
    
    Chicago, Illinois
    
    
    311
    
    
    
    67.2
    
    
    
    177.78
    
    
    
    119.53
    
    
    
    (23.8
    )Bethesda Marriott Suites
    
    Bethesda, Maryland
    
    
    272
    
    
    
    62.7
    
    
    
    179.41
    
    
    
    112.45
    
    
    
    (21.5
    )Courtyard Manhattan/Fifth Avenue
    
    New York, New York
    
    
    185
    
    
    
    88.4
    
    
    
    208.59
    
    
    
    184.31
    
    
    
    (27.1
    )The Lodge at Sonoma, a Renaissance Resort & Spa
    
    Sonoma, California
    
    
    182
    
    
    
    51.4
    
    
    
    176.20
    
    
    
    90.59
    
    
    
    (33.4
    )TOTAL/WEIGHTED AVERAGE
    
    
    
    
    9,586
    
    
    
    66.4
    %
    
    $
    157.36
    
    
    $
    104.53
    
    
    
    (19.9
    )%
 
 (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 period from January 1,
2009 to June 19, 2009 includes the operations for the period from January 1, 2009 to May
31, 2009 for these five hotels.  - 14 -




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##### Table of Contents



Results of Operations
  Comparison of the Fiscal Quarter Ended June 19, 2009 to the Fiscal Quarter Ended June 13, 2008
  Revenue.
 Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedJune 19, 2009
    
    
    June 13, 2008
    
    
    % ChangeRooms
    
    $
    90,228
    
    
    $
    116,011
    
    
    
    (22.2
    )%Food and beverage
    
    
    44,697
    
    
    
    55,532
    
    
    
    (19.5
    )%Other
    
    
    8,682
    
    
    
    9,473
    
    
    
    (8.4
    )%Total revenues
    
    $
    143,607
    
    
    $
    181,016
    
    
    
    (20.7
    )%
  Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedJune 19, 2009
    
    
    June 13, 2008
    
    
    % ChangeChicago Marriott
    
    $
    21.7
    
    
    $
    28.3
    
    
    
    (23.3
    )%Westin Boston Waterfront Hotel (1)
    
    
    18.2
    
    
    
    19.0
    
    
    
    (4.2
    )%Frenchmans Reef & Morning Star Marriott Beach Resort (1)
    
    
    14.6
    
    
    
    16.5
    
    
    
    (11.5
    )%Los Angeles Airport Marriott
    
    
    10.6
    
    
    
    13.5
    
    
    
    (21.5
    )%Renaissance Worthington
    
    
    7.4
    
    
    
    10.0
    
    
    
    (26.0
    )%Renaissance Austin Hotel
    
    
    7.2
    
    
    
    8.5
    
    
    
    (15.3
    )%Renaissance Waverly Hotel
    
    
    7.1
    
    
    
    8.6
    
    
    
    (17.4
    )%Marriott Griffin Gate Resort
    
    
    6.1
    
    
    
    7.6
    
    
    
    (19.7
    )%Vail Marriott Mountain Resort & Spa (1)
    
    
    5.5
    
    
    
    7.3
    
    
    
    (24.7
    )%Conrad Chicago (1)
    
    
    5.4
    
    
    
    7.3
    
    
    
    (26.0
    )%Courtyard Manhattan/Midtown East
    
    
    5.0
    
    
    
    7.8
    
    
    
    (35.9
    )%Torrance Marriott South Bay
    
    
    4.9
    
    
    
    6.0
    
    
    
    (18.3
    )%Oak Brook Hills Marriott Resort
    
    
    4.9
    
    
    
    6.8
    
    
    
    (27.9
    )%Orlando Airport Marriott
    
    
    4.6
    
    
    
    5.8
    
    
    
    (20.7
    )%Salt Lake City Marriott Downtown
    
    
    4.2
    
    
    
    5.9
    
    
    
    (28.8
    )%Westin Atlanta North at Perimeter (1)
    
    
    3.7
    
    
    
    4.6
    
    
    
    (19.6
    )%Bethesda Marriott Suites
    
    
    3.4
    
    
    
    4.7
    
    
    
    (27.7
    )%The Lodge at Sonoma, a Renaissance Resort & Spa
    
    
    3.2
    
    
    
    4.7
    
    
    
    (31.9
    )%Courtyard Manhattan/Fifth Avenue
    
    
    3.0
    
    
    
    4.4
    
    
    
    (31.8
    )%Marriott Atlanta Alpharetta
    
    
    2.9
    
    
    
    3.7
    
    
    
    (21.6
    )%Total
    
    $
    143.6
    
    
    $
    181.0
    
    
    
    (20.7
    )%
 (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 June
19, 2009 and June 13, 2008 include the operations for the period from March 1, 2009 to May
31, 2009 and March 1, 2008 to May 31, 2008, respectively, for these five hotels.  - 15 -




---



##### Table of Contents



Fiscal Quarter
    
    
    Fiscal QuarterEnded
    
    
    EndedJune 19, 2009
    
    
    June 13, 2008
    
    
    % ChangeOccupancy %
    
    
    69.0
    %
    
    
    75.7
    %
    
    
    (6.7) percentage pointsADR
    
    $
    159.30
    
    
    $
    186.53
    
    
    
    (14.6)%RevPAR
    
    $
    109.85
    
    
    $
    141.28
    
    
    
    (22.2)%
  Fiscal Quarter Ended
    
    
    Fiscal Quarter EndedJune 19, 2009
    
    
    June 13, 2008$ in millions
    
    
    % of Total
    
    
    $ in millions
    
    
    % of Total
    
    
    % DecreaseBusiness Transient
    
    $
    22.2
    
    
    
    25
    %
    
    $
    35.4
    
    
    
    31
    %
    
    
    37.0
    %Group
    
    
    34.0
    
    
    
    38
    %
    
    
    44.2
    
    
    
    38
    %
    
    
    23.2
    %Leisure and Other
    
    
    34.0
    
    
    
    37
    %
    
    
    36.4
    
    
    
    31
    %
    
    
    6.7
    %Total
    
    $
    90.2
    
    
    
    100
    %
    
    $
    116.0
    
    
    
    100
    %
    
    
    22.2
    %
 
    
    Business Transient: Revenue from the business transient segment, traditionally
the most profitable segment for hotels, has declined more than any other customer segment.
Business transient revenue was partially replaced with lower-rated government, leisure and
contract business. We expect business transient demand trends to remain negative until
there is an improvement in the overall economic climate in the United States.
 
    
    Group: Groups have postponed, cancelled or reduced their meetings in response to
the current economic recession. The deterioration in revenue is primarily due to a decline
in group room nights and, to a much lesser extent, rate. Moreover, as there were fewer
cancellations in the second quarter compared to the first quarter, the deterioration in
group room nights appears to have been caused by a decline in short-term group pick-up. As
of the end of the second quarter, our group booking pace was 19% lower than at the same time
last year, which represents the continued deterioration of group booking trends during the
year.
 
    
    Leisure and Other: The decline in revenue from the leisure and other segment was
almost entirely driven by lower average daily rates.
  Hotel operating expenses.
 Fiscal Quarter Ended
    
    
    Fiscal Quarter EndedJune 19, 2009
    
    
    June 13, 2008
    
    
    % ChangeRooms departmental expenses
    
    $
    23.0
    
    
    $
    26.2
    
    
    
    (12.2
    )%Food and beverage departmental expenses
    
    
    30.3
    
    
    
    36.4
    
    
    
    (16.8
    )%Other departmental expenses
    
    
    7.5
    
    
    
    8.1
    
    
    
    (7.4
    )%General and administrative
    
    
    12.2
    
    
    
    13.9
    
    
    
    (12.2
    )%Utilities
    
    
    5.4
    
    
    
    6.6
    
    
    
    (18.2
    )%Repairs and maintenance
    
    
    6.8
    
    
    
    7.1
    
    
    
    (4.2
    )%Sales and marketing
    
    
    10.2
    
    
    
    11.8
    
    
    
    (13.6
    )%Base management fees
    
    
    3.8
    
    
    
    5.0
    
    
    
    (24.0
    )%Incentive management fees
    
    
    1.2
    
    
    
    3.0
    
    
    
    (60.0
    )%Property taxes
    
    
    6.2
    
    
    
    5.5
    
    
    
    12.7
    %Ground rentContractual
    
    
    0.4
    
    
    
    0.5
    
    
    
    (20.0
    )%Ground rentNon-cash
    
    
    1.8
    
    
    
    1.8
    
    
    
    
    %Total hotel operating expenses
    
    $
    108.8
    
    
    $
    125.9
    
    
    
    (13.6
    )%
  - 16 -




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##### Table of Contents



Depreciation and amortization.
 Corporate expenses.
 Interest expense.
  Interest income
 Income taxes.
 Comparison of the Period from January 1, 2009 to June 19, 2009 to the Period from January 1, 2008
to June 13, 2008
   - 17 -




---



##### Table of Contents



Revenue.
 Period from
    
    
    Period fromJanuary 1, 2009
    
    
    January 1, 2008to June 19, 2009
    
    
    to June 13, 2008
    
    
    % ChangeRooms
    
    $
    165,343
    
    
    $
    201,938
    
    
    
    (18.1
    )%Food and beverage
    
    
    81,587
    
    
    
    95,614
    
    
    
    (14.7
    )%Other
    
    
    15,221
    
    
    
    16,327
    
    
    
    (6.8
    )%Total revenues
    
    $
    262,151
    
    
    $
    313,879
    
    
    
    (16.5
    )%
  Period from
    
    
    Period fromJanuary 1, 2009
    
    
    January 1, 2008to June 19, 2009
    
    
    to June 13, 2008
    
    
    % ChangeChicago Marriott
    
    $
    36.4
    
    
    $
    39.2
    
    
    
    (7.1
    )%Westin Boston Waterfront Hotel (1)
    
    
    25.2
    
    
    
    27.9
    
    
    
    (9.7
    )%Frenchmans Reef & Morning Star Marriott Beach Resort (1)
    
    
    24.6
    
    
    
    27.7
    
    
    
    (11.2
    )%Los Angeles Airport Marriott
    
    
    23.6
    
    
    
    27.9
    
    
    
    (15.4
    )%Renaissance Worthington
    
    
    16.0
    
    
    
    19.5
    
    
    
    (17.9
    )%Renaissance Austin Hotel
    
    
    14.8
    
    
    
    16.7
    
    
    
    (11.4
    )%Renaissance Waverly Hotel
    
    
    14.3
    
    
    
    17.3
    
    
    
    (17.3
    )%Vail Marriott Mountain Resort & Spa (1)
    
    
    11.6
    
    
    
    15.6
    
    
    
    (25.6
    )%Orlando Airport Marriott
    
    
    11.2
    
    
    
    13.4
    
    
    
    (16.4
    )%Marriott Griffin Gate Resort
    
    
    9.9
    
    
    
    11.6
    
    
    
    (14.7
    )%Salt Lake City Marriott Downtown
    
    
    9.8
    
    
    
    12.3
    
    
    
    (20.3
    )%Torrance Marriott South Bay
    
    
    9.5
    
    
    
    11.7
    
    
    
    (18.8
    )%Courtyard Manhattan/Midtown East
    
    
    9.4
    
    
    
    13.8
    
    
    
    (31.9
    )%Oak Brook Hills Marriott Resort
    
    
    7.9
    
    
    
    10.1
    
    
    
    (21.8
    )%Conrad Chicago (1)
    
    
    7.6
    
    
    
    9.8
    
    
    
    (22.4
    )%Bethesda Marriott Suites
    
    
    6.9
    
    
    
    8.3
    
    
    
    (16.9
    )%Westin Atlanta North at Perimeter (1)
    
    
    6.2
    
    
    
    8.3
    
    
    
    (25.3
    )%Marriott Atlanta Alpharetta
    
    
    6.0
    
    
    
    7.3
    
    
    
    (17.8
    )%Courtyard Manhattan/Fifth Avenue
    
    
    5.9
    
    
    
    7.8
    
    
    
    (24.4
    )%The Lodge at Sonoma, a Renaissance Resort & Spa
    
    
    5.4
    
    
    
    7.7
    
    
    
    (29.9
    )%Total
    
    $
    262.2
    
    
    $
    313.9
    
    
    
    (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 periods from January 1,
2009 to June 19, 2009 and January 1, 2008 to June 13, 2008 include the operations for the
period from January 1, 2009 to May 31, 2009 and January 1, 2008 to May 31, 2008,
respectively, for these five hotels.  Period from
    
    
    Period fromJanuary 1, 2009
    
    
    January 1, 2008to June 19, 2009
    
    
    to June 13, 2008
    
    
    % ChangeOccupancy %
    
    
    66.4
    %
    
    
    72.3
    %
    
    (5.9) percentage pointsADR
    
    $
    157.36
    
    
    $
    180.48
    
    
    (12.8)%RevPAR
    
    $
    104.53
    
    
    $
    130.53
    
    
    (19.9)%
   - 18 -




---



##### Table of Contents



Hotel operating expenses.
 Period from
    
    
    Period fromJanuary 1, 2009
    
    
    January 1, 2008to June 19, 2009
    
    
    to June 13, 2008
    
    
    % ChangeRooms departmental expenses
    
    $
    43.0
    
    
    $
    47.4
    
    
    
    (9.3
    )%Food and beverage departmental expenses
    
    
    56.9
    
    
    
    65.3
    
    
    
    (12.9
    )%Other hotel expenses
    
    
    14.0
    
    
    
    14.9
    
    
    
    (6.0
    )%General and administrative
    
    
    23.1
    
    
    
    25.5
    
    
    
    (9.4
    )%Utilities
    
    
    10.8
    
    
    
    11.4
    
    
    
    (5.3
    )%Repairs and maintenance
    
    
    13.0
    
    
    
    13.4
    
    
    
    (3.0
    )%Sales and marketing
    
    
    18.8
    
    
    
    21.4
    
    
    
    (12.2
    )%Base management fees
    
    
    6.9
    
    
    
    8.6
    
    
    
    (19.8
    )%Incentive management fees
    
    
    1.4
    
    
    
    4.4
    
    
    
    (68.2
    )%Property taxes
    
    
    12.3
    
    
    
    10.6
    
    
    
    16.0
    %Ground rentContractual
    
    
    0.9
    
    
    
    1.0
    
    
    
    (10.0
    )%Ground rentNon-cash
    
    
    3.6
    
    
    
    3.5
    
    
    
    2.9
    %Total hotel operating expenses
    
    $
    204.7
    
    
    $
    227.4
    
    
    
    (10.0
    )%
   Depreciation and amortization.
 Corporate expenses.
 Interest expense.
  - 19 -




---



##### Table of Contents



Interest income
 Income taxes.
 Liquidity and Capital Resources
    Our Financing Strategy
     - 20 -




---



##### Table of Contents




    
    We completed a follow-on public offering of our common stock during the second quarter.
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. In addition, our Board of
Directors recently authorized us to sell up to $75 million of common stock.
 
    
    We repaid the $52 million outstanding on our senior unsecured credit facility during the
second quarter with a portion of the proceeds from our follow-on offering.
 
    
    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.
We may elect to pay up to 90 percent of our 2009 dividend in shares of our common stock, as
permitted by the Internal Revenue Services Revenue Procedure 2009-15.
 
    
    We have focused on minimizing capital spending during 2009 and expect to fund
approximately $10 million of 2009 capital expenditures from corporate cash.
 
    
    We explored the potential sale of certain hotels earlier in the year, but currently do
not have any hotels listed for sale with a broker. We will evaluate any unsolicited offers
received for any of our hotels.
  
    
    We have signed a term sheet with MassMutual to provide a new $43 million non-recourse mortgage loan on the Courtyard
Manhattan/Midtown East bearing an interest rate of 8.8% and a term of five years. The
closing of the loan is subject to numerous closing conditions, including a material adverse
change clause.
 
    
    We are currently assessing the best alternatives to address the Griffin Gate Marriott
mortgage debt maturity, including either refinancing the loan or repaying loan with
corporate cash.
 Credit Facility
   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
    
    
    June 19, 2009Maximum leverage ratio(1)
    
    
    65%
    
    
    
    44.7%Minimum fixed charge coverage ratio(2)
    
    
    1.6x
    
    
    
    2.4xMinimum tangible net worth(3)
    
    
    $738.4 million
    
    
    
    $1.4 billionUnhedged floating rate debt as a percentage of total indebtedness
    
    
    35%
    
    
    
    0.6%
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##### Table of Contents



(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.  Actual atCovenant
    
    
    June 19, 2009Minimum implied debt service ratio
    
    
    1.5x
    
    
    
    N/AMaximum unencumbered leverage ratio
    
    
    65%
    
    
    
    0%Minimum number of unencumbered borrowing base properties
    
    
    4
    
    
    
    8Minimum unencumbered borrowing base value
    
    
    $150 million
    
    
    
    $579.5 millionPercentage of total asset value owned by borrowers or guarantors
    
    
    90%
    
    
    
    100%
  EBITDA Change from 2008Covenant
    
    
    -10%
    
    
    -20%
    
    
    -30%
    
    
    -40%
    
    
    -50%Maximum leverage ratio
    
    
    65
    %
    
    
    42
    %
    
    
    47
    %
    
    
    53
    %
    
    
    62
    %
    
    
    74
    %Minimum fixed charge coverage ratio
    
    
    1.6x
    
    
    
    2.6x
    
    
    
    2.3x
    
    
    
    2.0x
    
    
    
    1.7x
    
    
    
    1.4x
  Sources and Uses of Cash
  Cash Provided by Operating Activities.
  Cash Used In Investing Activities.
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##### Table of Contents



Cash Provided by Financing Activities.
  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
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##### Table of Contents



Non-GAAP Financial Measures
   Fiscal Quarter
    
    
    Fiscal Quarter
    
    
    Period from
    
    
    Period fromEnded
    
    
    Ended
    
    
    January 1, 2009
    
    
    January 1, 2008June 19, 2009
    
    
    June 13, 2008
    
    
    to June 19, 2009
    
    
    to June 13, 2008(in thousands)Net income (loss)
    
    $
    2,457
    
    
    $
    21,755
    
    
    $
    (2,837
    )
    
    $
    26,932Interest expense
    
    
    11,086
    
    
    
    11,430
    
    
    
    22,584
    
    
    
    22,125Income tax (benefit) expense
    
    
    (3,319
    )
    
    
    886
    
    
    
    (9,297
    )
    
    
    (2,836
    )Real estate related depreciation and amortization
    
    
    19,729
    
    
    
    18,069
    
    
    
    38,446
    
    
    
    34,756EBITDA
    
    $
    29,953
    
    
    $
    52,140
    
    
    $
    48,896
    
    
    $
    80,977
  Fiscal Quarter
    
    
    Fiscal Quarter
    
    
    Period from
    
    
    Period fromEnded
    
    
    Ended
    
    
    January 1, 2009
    
    
    January 1, 2008June 19, 2009
    
    
    June 13, 2008
    
    
    to June 19, 2009
    
    
    to June 13, 2008(in thousands)Net income (loss)
    
    $
    2,457
    
    
    $
    21,755
    
    
    $
    (2,837
    )
    
    $
    26,932Real estate related
depreciation and
amortization
    
    
    19,729
    
    
    
    18,069
    
    
    
    38,446
    
    
    
    34,756FFO
    
    $
    22,186
    
    
    $
    39,824
    
    
    $
    35,609
    
    
    $
    61,688
 Critical Accounting Policies
  Investment in Hotels Business Combinations
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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
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##### Table of Contents



Item 4.

    Controls and Procedures
    - 26 -




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##### 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
   VOTES FOR
    
    
    VOTES WITHHELDWilliam W. McCarten
    
    
    76,289,109
    
    
    
    9,860,766Mark W. Brugger
    
    
    78,551,055
    
    
    
    7,598,819John L. Williams
    
    
    77,511,444
    
    
    
    8,638,431Daniel Altobello
    
    
    79,461,516
    
    
    
    6,688,358W. Robert Grafton
    
    
    79,479,365
    
    
    
    6,670,510Maureen L. McAvey
    
    
    79,054,890
    
    
    
    7,094,984Gilbert T. Ray
    
    
    79,462,470
    
    
    
    6,687,405
  VOTES FOR
    
    VOTES AGAINST
    
    VOTES ABSTAINED85,000,059
    
    1,144,488
    
    5,327
 
 Item 5.

    Other Information
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##### Table of Contents



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))10.1
    
    

Sales
Agreement, dated July 27, 2009 by and among DiamondRock Hospitality
Company, DiamondRock Hospitality Limited Partnership and Cantor Fitzgerald & Co.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.
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##### Table of Contents



SIGNATURE
  DiamondRock Hospitality CompanyDecember 7, 2009/s/ Sean M. Mahoney
    
    /s/ Michael D. SchecterSean M. Mahoney
    
    Michael D. SchecterExecutive Vice President and
Chief Financial Officer
    
    Executive Vice President,
General Counsel and Corporate Secretary
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##### Table of Contents



EXHIBIT INDEX
 Exhibit10.1
    
    
    Sales Agreement, dated July 27, 2009 by and among DiamondRock Hospitality Company,
DiamondRock Hospitality Limited Partnership and Cantor Fitzgerald & Co.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.
  - 30 -