DiamondRock Lifts 2026 Outlook Again As Hotel-Level Profit Climbs 12.5% And Dividend Rises 22%
The hotel REIT raised its full-year Adjusted EBITDA forecast to $322.0 million to $327.0 million and bought a 79-room Delaware resort.
DiamondRock Hospitality, a real estate investment trust that owns 35 premium hotels and resorts in the U.S., raised its 2026 guidance for the second time this year after third-quarter profit at its hotels outgrew revenue, the company said in an 8-K filed Tuesday. Comparable hotel-level profit rose 12.5% to $91.7 million while comparable revenue grew 6.4%.
Profit outran revenue in the quarter
Net income attributable to common stockholders was $33.3 million, or $0.16 per diluted share, up 65.7% and 60.0% from the third quarter of 2025. Adjusted EBITDA, the company's adjusted earnings measure, rose 7.2% to $84.8 million.
Revenue per available room at comparable hotels climbed 6.6% to $226.01. The comparable hotel-level profit margin widened 166 basis points, or 1.66 percentage points, to 30.81%.
Adjusted FFO, a cash earnings measure for REITs, rose 10.3% to $0.32 per diluted share. CEO Jeffrey J. Donnelly said the quarter exceeded expectations, with "healthy demand and higher rates across both transient and group segments."
Raised forecast, higher payout
The company now expects 2026 Adjusted EBITDA of $322.0 million to $327.0 million, up from $310.0 million to $320.0 million. Adjusted FFO is forecast at $1.24 to $1.26 per share, from $1.18 to $1.23, and comparable RevPAR growth at 4.75% to 5.25%, from 2.5% to 4.0%. The outlook includes the new acquisition but assumes no further deals, sales or buybacks.
The quarterly dividend rose 22% to $0.11 per share and was paid on October 14. DiamondRock expects to declare a stub dividend in the fourth quarter, depending on its estimated 2026 taxable income, on top of the regular $0.11.
The company has $299.4 million left under its $300.0 million buyback program, announced April 30. It bought back about 0.2 million shares for $1.9 million in the first nine months, at an average of $9.79.
A Delaware resort for $31.0 million
On October 1, DiamondRock bought The Bellmoor Inn & Spa, a 79-room independent resort in Rehoboth Beach, Delaware, for $31.0 million. The price is an 8.6% capitalization rate on hotel net operating income, and the company expects a stabilized yield of about 9.5%. The resort is expected to add about $0.2 million to fourth-quarter Adjusted EBITDA.
The company owns hotels but third-party managers run them. As of September 30, it had $1.1 billion of debt, $400.0 million of undrawn revolver capacity and about $140.0 million of cash. It expects to spend $75.0 million to $80.0 million on hotel improvements in 2026.
The third-quarter earnings call is Wednesday at 10:00 a.m. Eastern.
Donnelly described the plan as a flywheel: grow earnings, generate more free cash flow and reinvest it at attractive returns.
