Diamondrock Announces it has Purchased the Westin Boston Waterfront Hotel

BETHESDA, Md., Feb. 1 /PRNewswire-FirstCall/ -- DiamondRock Hospitality Company ("DiamondRock") (NYSE: DRH) today announced that it has completed the acquisition of the leasehold interest in the recently built 793-room Westin Boston Waterfront Hotel, which is attached to the recently built convention center in downtown Boston, Massachusetts and an option to acquire a leasehold interest in an adjacent site with development rights to build a new hotel with approximately 325 rooms. Further, DiamondRock expects the acquisition of a leasehold interest in 100,000 square feet of retail space to close prior to the end of DiamondRock's first quarter, subject to the satisfaction of certain closing conditions.

The contractual purchase price for all three of the assets is $330.3 million. The Company projects that the existing hotel and retail space will generate $24.6 million of earnings before interest, taxes, depreciation and amortization (or "EBITDA") for the full year 2007 and $31.8 million in 2008. The retail space is not expected to begin generating cash flow until 2008. Including the cost of expected tenant improvements in the retail space, the estimated total investment of $350 million by 2008 represents an 11 times multiple of forecasted 2008 EBITDA (not including any income from the option on the development site).

This press release contains forward-looking statements within the meaning of federal securities laws and regulations. These forward-looking statements are identified by their use of terms and phrases such as "believe," "expect," "intend," "project," and other similar terms and phrases, including references to assumptions and forecasts of future results. Forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results to differ materially from those anticipated at the time the forward-looking statements are made. These risks include, but are not limited to: national and local economic and business conditions including an economic downturn in Boston, including the potential for additional terrorist attacks, that will affect occupancy rates at our hotels and the demand for hotel products and services; operating risks associated with the hotel business; risks associated with the level of our indebtedness; relationships with property managers; our ability to compete effectively in areas such as access, location, quality of accommodations and room rate structures; changes in travel patterns, taxes and government regulations which influence or determine wages, prices, construction procedures and costs; our ability to complete the retail space acquisition; and our ability to achieve the returns that we expect from the Westin Boston Waterfront Hotel. Although DiamondRock believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. All information in this release is as of the date of this release, and DiamondRock undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in DiamondRock's expectations.

            Reconciliation of Net Income to 2007B and 2008F EBITDA
                                                   2007B             2008F
    Estimated Net Income                       $6,600,000        $13,700,000
    Income Taxes                                  500,000            600,000
    Depreciation Expense                       12,100,000         12,100,000
    Interest Expense                            5,400,000          5,400,000

    Estimated EBITDA                          $24,600,000        $31,800,000

EBITDA is defined as net income (loss) before interest, taxes, depreciation and amortization. We believe it is a useful financial performance measure for us and for our stockholders and is a complement to net income and other financial performance measures provided in accordance with GAAP. We use EBITDA to measure the financial performance of our operating hotels because it excludes expenses such as depreciation and amortization, taxes and interest expense, which are not indicative of operating performance. By excluding interest expense, EBITDA measures our financial performance irrespective of our capital structure or how we finance our properties and operations. By excluding depreciation and amortization expense, which can vary from hotel to hotel based on a variety of factors unrelated to the hotels' financial performance, we can more accurately assess the financial performance of our hotels. Under GAAP, hotels are recorded at historical cost at the time of acquisition and are depreciated on a straight-line basis. By excluding depreciation and amortization, we believe EBITDA provides a basis for measuring the financial performance of hotels unrelated to historical cost. However, because EBITDA excludes depreciation and amortization, it does not measure the capital we require to maintain or preserve our fixed assets. In addition, because EBITDA does not reflect interest expense, it does not take into account the total amount of interest we pay on outstanding debt nor does it show trends in interest costs due to changes in our borrowings or changes in interest rates. EBITDA, as calculated by us, may not be comparable to EBITDA reported by other companies that do not define EBITDA exactly as we define the term. Because we use EBITDA to evaluate our financial performance, we reconcile it to net income (loss) which is the most comparable financial measure calculated and presented in accordance with GAAP. EBITDA does not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income or net income determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as an indicator of liquidity.

DiamondRock Hospitality Company is a self-advised real estate investment trust (REIT) that is an owner and acquirer of premium hotel properties. DiamondRock owns 21 hotels with almost 10,000 rooms. The Company has a strategic acquisition sourcing relationship with Marriott International. For further information, please visit DiamondRock's website at http://www.drhc.com.

SOURCE DiamondRock Hospitality Company

CONTACT: Mark Brugger of DiamondRock Hospitality Company, +1-240-744-1150, info@drhc.com