Diamondrock Hospitality (DRH)

Risks

• The outbreak of the novel coronavirus (COVID-19) has caused, and could continue to cause, severe disruptions in the U.S., regional and global economies, travel and the hospitality industry and has impacted, and could continue to materially and adversely impact, our financial condition and results of operations.
• Economic conditions and other factors beyond our control may adversely affect the lodging industry.
• Our hotels are subject to significant competition.
• Our hotels are subject to seasonal volatility, which is expected to contribute to fluctuations in our financial condition and results of operations.
• The need for business-related travel, and, therefore, demand for rooms in some of our hotels may be materially and adversely affected by the increased use of business-related technology.
• We may be subject to unknown or contingent liabilities related to recently sold or acquired hotels, as well as hotels that we may sell or acquire in the future.
• We may be unable to maintain good relationships with third-party hotel managers and franchisors.
• A substantial number of our hotels operate under a brand owned by Marriott or Hilton; therefore, we are subject to risks associated with concentrating our portfolio in two brands.
• Contractual and other disagreements with third-party hotel managers and franchisors could make us liable to them or result in litigation costs or other expenses.
• If we were to lose a brand license at one or more of our hotels, the value of the affected hotels could decline significantly and we could incur significant costs to obtain new franchise licenses, which could materially and adversely affect our results of operations and profitability as well as limit or slow our future growth.
• Our business may be adversely affected by consolidation in the lodging industry.
• The failure of tenants to make rent payments under our retail and restaurant leases may adversely affect our results of operation.
• Actions by federal, state or local jurisdictions could have a material adverse effect on our business.
• Our credit facility and term loans contain financial covenants that may constrain our ability to sell assets and make distributions to our stockholders.
• There is refinancing risk associated with our debt.
• Increases in interest rates may increase our interest expense.
• Hedging against interest rate exposure may adversely affect us.
• The discontinuation of LIBOR and the replacement of LIBOR with an alternative reference rate may adversely affect our borrowing costs and could impact our business and results of operations.
• We cannot assure you that we will remain qualified as a REIT.
• Maintaining our REIT qualification contains certain restrictions and drawbacks.
• Even if we maintain our status as a REIT, in certain circumstances, we may be subject to U.S. federal and state income taxes, which would reduce our cash available for distribution to our stockholders.
• Our property taxes could increase due to property tax rate changes or reassessment, which could impact our cash flow.
• Dividends payable by REITs generally do not qualify for reduced tax rates.
• Legislative or regulatory action could adversely affect our stockholders.
• We may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at expected levels, and we cannot assure you of our ability to make distributions in the future.
• We cannot guarantee that we will repurchase our common stock pursuant to a share repurchase program or that a share repurchase program will enhance long-term stockholder value. Share repurchases could also increase the volatility of the price of our common stock and could diminish our cash reserves.
• Tax protection agreements may limit our ability to sell or otherwise dispose of certain properties and may require our operating partnership to maintain certain debt levels that otherwise would not be required to operate our business.
• We and our hotel managers rely on information technology in our operations and any material failures, inadequacies, interruptions, security failures, social engineering attacks or cyber-attacks could harm our business.
• We may be subject to litigation, which could have a material adverse effect on our financial condition, results of operations, cash flow and trading price of our common stock and Series A Preferred Stock.