Mark Brugger - Chief Executive Officer Sean Mahoney - Chief Financial Officer Troy Furbay - Chief Investment Officer Robert Tanenbaum - Chief Operating Officer Brett Stewart – Director of Finance.

Austin Wurschmidt – KeyBanc Capital Markets Thomas Allen – Morgan Stanley Weston Bloomer – FBR Capital Markets Ryan Meliker - MLV & Company Anto Savarirajan – Goldman Sachs Steve Kent - Goldman Sachs.

Good day, ladies and gentlemen, and welcome to the Third Quarter 2014 DiamondRock Hospitality Company Earnings Conference Call. My name is Denise, and I will be the operator for today. At this time all participants are in listen-only mode. Later, we will conduct a question-and-answer session.

(Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I will now turn the conference over to Mr. Brett Stewart, Director of Finance. Please proceed, sir.

Thank you, Denise. Good morning, everyone, and welcome to DiamondRock's Third Quarter 2014 Earnings Call and Webcast. Before we begin, I would like to remind participants that many of our comments today are considered forward-looking statements under federal securities law and may not be historical fact. They also may not be updated in the future.

These statements are subject to risks and uncertainties as described in the company's SEC filings. Moreover, as management discusses certain non-GAAP financial measures, it may be helpful to review the reconciliation to GAAP set forth in our earnings press release.

At this time, I will turn the call over to Mark Brugger, our President and Chief Executive Officer. He is joined by Sean Mahoney, our Chief Financial Officer; Rob Tanenbaum, our Chief Operating Officer; and Troy Furbay, our Chief Investment Officer.

Mark?.

Thanks, Brett. Let me start with the obvious today. This is a great time to be in the hotel business. The third quarter was nothing short of robust for the lodge industry. Occupancy grew 3.8% while ADR was up 5.2%, leading to over 9% RevPAR growth. Importantly, this was an even better quarter for DiamondRock.

I’m proud to say that this was the best growth quarter for the company in our 10-year history. Our portfolio delivered 18.6% RevPAR growth, more than double the industry average and 531 basis points of profit margin growth.

These industry leading results are evidence that our portfolio transformation and intense asset management initiatives are starting to pay off. Importantly, the out performance in the portfolio was broad based and we made great strides in stealing market share from our competitors.

The portfolio gained over 7 points of market share in the quarter, while six hotels had stellar RevPAR growth of north of 20%. 17 of 27 hotels outperformed the industry average with double digit RevPAR growth.

One catalyst for this quarter’s performance is the actualization of the benefits from the $140 million capital investment program we started in 2013. This was most clearly demonstrated by the outsized growth at the Lexington, the Courtyard Midtown, the Westin DC, the Westin San Diego and our Boston Hilton.

In fact, the four pack that we purchased from Blackstone in 2012 is beginning to hit its stride and the four hotel portfolio delivered RevPAR growth of nearly 27% in the quarter, with margin expansion of 434 basis points. More importantly, we think that the benefits of these repositionings will continue well into 2015 and beyond.

This was also a great quarter for the company on the asset management front. Rob’s team continued implementing their many asset management initiatives. The benefits were both top and bottom line. With new sales strategies; the majority of our hotels gained market share and beat their local markets.

On cost containment, the nickels are really adding up with a proactive approach to every avenue of expense reduction. For the quarter, profit margin expansion was 531 basis points or 353 basis points, excluding the Lexington which was under renovation last year.

14 of our hotels grew profit margins by more than 250 basis points, with 10 of our hotels achieving profit margin growth of more than 350 basis points. In short, we’re on track to deliver above market margin growth this year and we expect that our efforts will lead to strong growth next year as well.

While internal growth was definitely strongest quarter, the company was also active creating value through external growth efforts. We closed on two great acquisitions in the quarter, the Hilton Garden Inn Times Square and the Inn at Key West. These hotels are located in the top two RevPAR markets in the United States.

The Hilton Garden Inn was acquired on September first for $450,000 per key. The hotel hit the ground running. We sold out 21 of the last 26 days and our average rate is around $300. More importantly, this deal has already created value. In fact, we are booking a $24 million gain in connection with the acquisition.

But to most accurately o reflect our recurring earnings, it will be added back to our adjusted numbers. The future looks bright for this hotel and we still expect it to achieve at least a 9% EBITDA yield on our investment. The Inn at Key West was also a great addition to the portfolio.

We acquired the hotel in an off market transaction and the purchase price represented at 7.6% cap rate on 2014 forecasted NOI. Actually the hotel is tracking ahead of underwriting, gained market share in the quarter and had 70% flow through during our period of ownership in the quarter.

This hotel provides a footprint in Key West, a target resort market with highly favorable supply/demand dynamics and with the highest RevPAR in the country. As discussed previously, DiamondRock will remain disciplined in evaluating capital allocation opportunities.

We continue to maintain a highly defined acquisition strategy and are confident that our team will be able to identify acquisitions and meet all of our strict investment criteria. We continue to target opportunities in urban and resort locations, with an emphasis on prime markets on the west coast and in South Florida.

Further, despite our conviction that there are several more years of industry growth ahead, we believe that it’s prudent to avoid opportunities that require significant capital investment or deep and lengthy turnarounds. We are also primarily targeting acquisitions in the$50 million to $150 million range.

Finally, we are very sensitive to our cost of capital. We’ll only pursue acquisitions that create value in the near term. On the disposition front, we see robust demand for non-prime assets in today’s marketplace.

We are reviewing our portfolio for opportunities to take advantage of that market and to potentially upgrade the portfolio by selling some of our lowest RevPAR hotels. Of course it’s our policy not to announce those deals until they are closed. Now let me turn outlook for the remainder of the year.

We raised and narrowed our full year guidance, which reflects our conviction in the strength of lodging demand within our markets, as well as our third quarter out performance. Our updated 2014 guidance is for RevPAR growth of 11.5% to 12.5%, an increase of 150 basis points at the mid-point.

Based on that growth, we project adjusted EBITDA of $232 million to $236 million, an increase of $6.5 million at the bottom end of the range. Consequently, we expect adjusted FFO per share to be in the range of $0.87 to $0.89.

For full year, we expect our portfolio’s hotel adjusted EBITDA margins to expand by more than 265 basis points, which is consistent with prior expectations. For the fourth quarter, we expect our portfolio to continue to generate above market RevPAR and margin growth, despite tougher comparisons and less dynamics city wide calendars.

With that I’ll now turn the call over to Sean Mahoney, who’ll provide more detail on our third quarter operating results, asset management initiatives and balance sheet management..

Thanks Mark. Before discussing our third quarter results, please note that our reported RevPAR and margin data is pro forma.

While the pro forma adjustments include the Inn at Key West as if we owned it for all periods presented, it excludes both the recently opened Hilton Garden Inn Times Square Central, as well as the Oak Brook Hills Resort, which was sold earlier in the year.

Let me start by reiterating Mark’s comments that we had an outstanding quarter that exceeded expectations. Our portfolio RevPAR growth was over twice the industry average.

For the balance of 2014 and 2015, our portfolio is expected to benefit from several unique catalysts, including outsized growth from our $140 million capital renovation program, ramp up from the Lexington Hotel repositioning and re-branding the Marriott's Autograph Collection, the recent opening of the Hilton Garden Inn Times Square Central, positive momentum from successful asset management initiatives and strong group performance led by our hotels in Boston.

Now, let’s jump into the third quarter numbers. Overall, it was an outstanding quarter for both the industry and DiamondRock’s portfolio. The third quarter out performance was led by our hotels in Boston, New York, Washington D.C and Chicago. The company reported adjusted EBITDA of $66.8 million and adjusted FFO per share of $0.25.

Our industry leading third quarter RevPAR growth and margin expansion gives us confidence to increase our 2014 guidance. It is also a nice testament to the value creation form last year’s $140 million capital program and the success of our asset management initiatives. The numbers speak for themselves. Our RevPAR growth was 18.6%.

This growth was driven by our ability to push rate, which increased 10.7% and sizeable gains in occupancy. Our topline out performance combined with good cost controls, allowed our hotels to achieve profit margin expansion of 531 basis points.

Our portfolio benefited from pricing power across all demand segments led by group, which increased revenue 26% during the third quarter. The business transient segment was also incredibly strong, up 19%.

Our group business contributed to a 6% increase in quarterly banquet and catering revenues, which contributed to 156 basis points of food and beverage margin expansion.

Our pro forma results, excluding the Lexington were also exceptional and significantly outperformed the industry, with RevPAR growth of 13.5% and hotel adjusted EBITDA margin expansion of 353 basis points. Year to date results have also been very strong.

For the year to date period ended September 30, the company reported pro forma RevPAR growth of 13.2% and hotel adjusted EBITDA margin expansion of 301 basis points. We expect our portfolio to continue to generate above market RevPAR growth and margin expansion during the fourth quarter.

Shifting gears to group, as expected our group businesses outperformed during the quarter. The group segment was led by the Boston Westin and Boston Hilton, with combined group revenue growth of 59% during the quarter.

Other top performing group hotels during the third quarter included the Washington DC Westin up 56%; The Frenchman’s Reef Marriott up 66%; the Worthington Renaissance, up 27%’ and the San Diego Westin, up 43%. Looking ahead, our group segment remains well positioned to outperform.

Our short term group booking activity during the quarter was outstanding with a 24% increase in fourth quarter bookings compared to prior year. The fourth quarter booking pace has improved to up approximate 4% compared to flat as of the end of the second quarter.

We currently have almost 100% of the forecast of 2014 group business already under contract. Overall, our 2014 group booking pace improved at 9.6%, an acceleration from the 8% group pace at the end of last quarter. Our 2014 booking pace is being driven by a 5.6% increase in rooms sold and a 3.8% increase in average rates.

Third quarter performance reflects exceptionally strong results at almost all of our hotels, with 17 hotels reporting double digit RevPAR growth. Let me spend a few minutes highlighting some truly outstanding individual hotel achievements.

As expected, the Lexington Hotel's third quarter continued to ramp up from last year's renovation and rebranding to Marriott's Autograph Collection. In the quarter, Marriott channels delivered approximately 50% of the room revenue for the hotel.

We have high expectations as the hotel gains greater awareness, with both transient and special corporate customers. We continue to be happy with direction of the hotel, which we now expect to perform slightly ahead of our 2014 underwriting projections.

We expect the ramp up to continue for several years and achieve approximately 50% growth in hotel adjusted EBITDA during this period. The repositioned Washington DC Westin gained traction in all segments during the quarter. The hotel benefited from our capital investment with 34.5% RevPAR growth and 786 basis points of margin expansion.

The Boston Hilton extended its five quarter run of double digit RevPAR growth, delivering over 24% growth by taking advantage of both city wide compression and strong special corporate demand. The hotel continues to outperform the market, gaining 12 percentage points of market share during 2014.

The Boston Westin also achieved over 24% RevPAR growth during the quarter. The hotel also took advantage of strong city wide activity, which contributed to a 53% increase in group room revenues and strong corporate demand in Boston, resulting in over 33% growth in business transient revenue at a 14% higher average rate.

Our hotels in Chicago also outperformed during the quarter. The Chicago Conrad benefitted from new leadership at the hotel and achieved RevPAR growth of 11% and hotel adjusted EBITDA margin expansion of 702 basis points.

The Chicago Marriott had strong group performance and achieved RevPAR growth of 8.1% and hotel adjusted EBITDA margin expansion of 157 basis points. In total, the two hotels exceeded our hotel adjusted EBITDA expectations by approximately $1 million.

Finally, The Hotel Rex in San Francisco had a great third quarter, with RevPAR growth over 20% and hotel adjusted EBITDA margin expansion of 774 basis points. Next, I would like to provide a brief update on our asset management initiatives. The asset management team is firing on all cylinders.

The success of recent asset management initiatives, including revenue enhancement strategies, cost containment measures and ROI projects are beginning to show up in the numbers.

Our portfolio achieved hotel adjusted EBITDA margin expansion of 531 basis points during the third quarter and 301 basis points for the year-to-date period ended September 30. These growth rates are the highest among our peers. We also expect our asset management initiatives to contribute to outsize margin expansion in 2015.

Let me now spend a couple of minutes providing an update on a few of our significant initiatives. We expect to commence a project to add 41 rooms to the Boston Hilton during the fourth quarter, which is projected to cost approximately $9.5 million.

This project will take place during the seasonally slow period this winter and will be completed by the end of the first quarter. We expect this project to generate an IIR of approximately 20% and add over $15 million to the hotel’s net asset value. We don’t expect any disruption from this project.

At the Boston Westin, we just completed the project to convert unfinished space into new meeting and pre-function space. This project is expected to achieve an IIR close to 30% and did not cause material disruption. At the Lexington Hotel, we are currently completing the re-concepting of vacant restaurant space.

This flexible space will be an elite lounge serving breakfast in the morning, be sold for group meetings during the day, and provide addition capacity for the high demand lobby bars in the evening. This project is underway and is expected to be completed next month with an investment of approximately $1.4 million and a projected IIR north of 30%.

Finally, we are focused on creating value by uncovering opportunities to add new guest rooms at existing hotels, including the JW Marriott at Cherry Creek, Westin Washington D.C, our two New York City courtyards and the Sonoma Renaissance. Lastly, I would like to touch on our balance sheet, which we think is among the best in the industry.

Being prudent stewards of our investors capital, has been a cornerstone of DiamondRock we founded the company. We have a nearly decade long track record of consistently maintaining a straightforward and low risk balance sheet that has essentially no corporate debt.

This discipline has allowed us to return over $0.5 billion in cash dividends to our shareholders since our IPO. Today, we continue to maintain ample liquidity and expect to end the year with approximately $140 million of unrestricted cash and an undrawn corporate revolver. We are really well positioned to create value.

I will now return the call back over to Mark..

Thanks Sean. To sum it up, lodge history fundamentals are terrific. DiamondRock had a phenomenal third quarter and we are well positioned to deliver solid full year results. Looking out over the next several quarter, we expect fundamentals to be strong, with lodging demand outstripping the low levels of supply grow projected for the industry.

Also, we are encouraged by the current trends in GDP growth, employment growth, corporate profits and international travel. As I said at the start of my prepared remarks, this is a great time to be in the hotel business.

It is also a great time to be part of DiamondRock and there are several catalysts that can drive above average growth for the company over the next several years. First, the Hilton Garden in Times Square will add over $6 million incrementally to the company’s ETHIBA once it reaches stabilization.

Second, the Lexington is on track to grow hotel adjusted EBITDA by over 50% to approximately $30 million over the next few years. The repositioned Westin D.C is also a great catalyst for the company. Ultimately achieving our underwritten target of 105% RevPAR penetration will add approximately $2.5 million to the hotel’s bottom line.

As Sean mentioned, we are also working on several ROI projects across the portfolio and we expect the three largest of those to contribute an incremental $3 million of EBITDA next year. Lastly, we remained focused on cost containment and on implementing new asset management initiatives that will continue to drive profit margin growth for the company.

With that, we would now like to open up the call for your questions. .

(Operator instructions). Our first question comes from Jordan Sadler with KeyBanc Capital. Please proceed. .

Hi guys, it’s Austin Wurschmidt here with Jordan. Just wanted to touch a little bit on acquisitions. If I heard you correctly, it sounded like you guys increased the high end by $50 million to $50 million or $150 million is sort of where your comfort level is today. I’m just curious what led you to increase the high end of that..

Austin, this is Mark. No, the 50 to 150 is the same as the last earnings call. That’s been our target. We are less focused on big deals. We are not targeting big box hotels right now. We have three in our portfolio. We think that’s adequate.

We think it’s -- frankly at this part of the cycle it’s too much of a big bet generally to do these big hotels given that we are mid cycle. So we are much more focused on these $50 million to $150 million opportunities that we see in the marketplace..

How soon do you guys think you could get the dry powder that you have available today put to work? I think you said it’s around $250 million available of dry powder. Just curious on the timing on some of that..

We are very active in the process. I can tell you Troy is doing a tremendous job of uncovering opportunities, but we don’t announce deals until generally we are close to closing them..

Are you finding that there’s more opportunities today or have things slowed a bit as we get toward the end of the year?.

I would say over the last three to six months, we’ve been pleased with the volume of deals and the quality of deals that we’ve seen in the market place. Troy has an excellent track record of finding off market deals. The last five deals that he’s done have all been off market.

I think he’s -- we are seeing some things that may not be in the flow that other people are seeing. But there’s always a myriad of reasons why people are selling. We are starting to see more of those percolate through the system now. So I’d say overall we are pleased with what we are seeing in the marketplace..

Thanks. And then just one last one, it sounded like the Inn at Key West is outperforming you guys’ initial underwriting expectations. I’m just curious what’s driving the better performance there..

There’s two things, it’s both top and bottom line. There were some transition costs before our period of ownership in the quarter, but since our ownership the last 45 days of the quarter, flow is better than we anticipated. It was about 70%.

Then the RevPAR growth in the market and -- we gained probably 2 points of market share that were not in the underwriting during the quarter.

It’s gaining a little bit more share than we anticipated, which is great and the flow is a little better than we anticipated with some of the management stuff we were able to put in place on day one of ownership..

Our next question comes from Thomas Allen with Morgan Stanley. Please proceed..

Hey, good morning guys and congrats on the strong quarter. Can you just remind us why your F&B and other revenues are revenues are running flat to down year over year? I know pro forma they are actually running in the 6% to 7% range, but still a lot slower than room revenues. I think it’s partially a mix shift issue.

But can you help us to think about -- how think about it going forward. Thank you..

Thomas, this is Sean. The F&B revenues what we projected for the beginning of the year were up mid-single digits. And so we are tracking where we thought we are going to track for the year. For the quarter and for last quarter, our F&B was actually down and that was a function of the group activity for the quarter during the second quarter.

For the third quarter, our group revenues were up 26%, but our total F&B revenues were only up 7.4%. A lot of that was the type of groups that were on the books. Some of those were legacy groups from before, but it was consistent with our expectations.

I think the key takeaway though on F&B with the 7.4% increase in revenues is that we were able to drive margins up 156 basis points on that growth and that was led by a combination of both banquet and catering as well as on our outlet revenues for the quarter..

Hey Thomas, this is Rob. We were also pleased with our controllable spending in our labor management and food and beverages as well..

Thanks guys. Then one of the OTAs suggested that the strengthening dollar is having a negative impact on 4Q RevPAR rends in the U.S. Obviously international visitation has an outsized impact on gateway cities versus other places, but given your exposure, are you seeing any of that? Thanks. .

Hey Thomas, this is Mark. We don’t have specific data on that, but the trends we’re seeing in transient, particularly in New York in the fourth quarter continue to be slightly ahead of our expectations. We’re not seeing a slowdown related to international travel particularly.

And that could be because there’s enough transient demand domestically to make up for it, but we’re not seeing anything now that would lead us to believe that there’s a slowdown in that demand..

Our next question comes from Nikhil Bhalla with FBR Capital Markets. Please proceed..

Good morning. This is Weston asking on behalf of Nikhil. I was just curious to how your group pace is trending in 2015 at this point versus where it stood last year. And then to dive a little deeper, if you can provide some color on how your group focused hotels are doing in terms of group pace for 2015, namely the Boston Westin and the Frenchman.

Thanks..

Okay, I’ll start on this one. This is Mark, Weston. On 2015 booking pace, the velocity of the booking pace has actually been very strong. If I looked in the quarter for third quarter, we actually increased 15 piece, revenue piece by 400 basis points, which is pretty remarkable.

But we’re being very tactical about what kind of group and how much group we’re putting at particular hotels. I know Rob can talk about the Westin D.C and Frenchman’s in particular. I know you asked about the Boston Westin. Boston is going to have another great group year in 2015.

But what we’re looking at is looking at total revenues spend by the groups and making sure that it’s not more profitable to tune back some of the lower rated or lower total revenue group and put in place higher rated transients. So we’re employing different strategies to different hotels. I would say overall we’re pleased with group piece.

Boston looks like it’s going to have another good year. But I’d let Rob -- we were having this conversation earlier, talk about Frenchman’s and Westin DC is good examples of the tactical mix shift we’re making around group in our hotels for 2015..

Thanks Mark. Hi Weston. How are you this morning? With regards to the Frenchman’s Reef, we’ve really been very strategic in our approach. Last year during Q1, we took in an abundance of group business, which was positive in one side in terms of driving occupancy, but it left some opportunity with rates.

We focus with -- on the high rated transient business for Q1.

In Washington D.C at our Westin, we’re also focused on -- we’ve lowered our group ceilings in order to take advantage of the repositioning of the asset and the renovations and we’ve received incredible support from the corporate market, both from a business transient and also from corporate group as well with regards to that..

Our next question comes from Ryan Meliker with MLV & Company. Please proceed..

Hey guys, nice quarter. I just had a quick question. I just want to make sure I’m not missing anything below the line here. It looks like you raised your full year RevPAR guidance to now above what was the – your low end of your current RevPAR guidance is now above or at the high end prior.

You assume that property margins are going to be relatively consistent to where you assumed before, but you didn’t raise your EBITDA and FFO guidance to above the – with the low end being about at to above the high end of the prior guidance similar to what you did with RevPAR.

Is there something going on below the line that we should think about heading into 4Q?.

No Ryan, this is Mark. Thanks for the question. I appreciate you raising that. So as you know we raised the bottom and top end of our guidance. But the bottom end was raised $6.5 million on the EBITDA. We think the full year 2014 guidance is pretty strong. We’re expecting the fourth quarter to still be very strong.

Obviously citywides and renovation comps are less beneficial for us in the fourth quarter. But we’re seeing really good strength at a number of our hotels. Like the Westin DC is going to continue to benefit from the renovation, the Lexington from the re-branding. Chicago looks great, both at our Marriott Chicago and the Conrad Hilton there.

Boston Hilton, which has had such a great run, we expect to have another great quarter in the fourth quarter. Charleston Renaissance looks good. And obviously we have the new Hilton project in Times Square. So there’s a lot of good things happening there.

But I would say looking at the bottom end raise is probably the difference versus just looking at the midpoint change in the math that you’re doing..

Okay. So it doesn’t sound like there’s anything material below the property level line that’s driving that disconnect between RevPAR, EBITDA (inaudible) so that’s helpful.

And then I guess the second question is, looking out to 2015 are there an any particular markets that you are a little bit more concerned about or a little bit more bullish about with regards to whether it be citywides or overall booking pace or just general dynamics that are occurring in the marketplace?.

I’d say for the big markets, so New York we expect, obviously there’s supply coming in, but we expect demand to be good in New York. I think relatively constructive on that market. Obviously the west coast, San Francisco looks very strong. San Diego looks like it’s going to have a good year.

We are feeling generally bullish in all the west coast markets. Living wage will be a whole bucket in some of those markets potentially on the EBITDA growth. Boston is going to have another great year we expect in 2015 moving down the coast. We talked about New York, D.C. We except D.C.

to have another mediocre year, but we except that our hotel will be able to gain a lot of market share. We’d expect good results from our D.C. hotel. Then we expect the resorts to have another piece of leisure demand. The resort buckets had a good year and we expect that trend at the resort market to continue to be good into 2015..

Thanks Mark. That’s good. That’s all for me and I look forward to seeing you guys this week in Atlanta..

(Operator instructions) Our next question comes from Anto Savarirajan with Goldman Sachs. Please process, sir..

Anto Savarirajan – Goldman Sachs:.

:.

This is Sean. Our historical fourth quarter when we reported under the Marriott calendar for Marriott hotels used to include four months of activity versus three months of activity today.

So when you look at the historical fourth quarters the waiting has shifted this year and last year relative to what DiamondRock has historically reported, which explain most of the distortion..

Got it.

On potentially selling some lower RevPAR hotels, can you clarify here? if we look at the operating start schedule that you provide, should we think of hotels with a lower dollar value of RevPAR being taken out of the system or are you looking at certain hotels that are maybe in your math punching below on the RevPAR index?.

This is Mark. Obviously every hotel has its own story and we are trying to -- right now what we are trying to do is look at the hotels that are probably the lowest quality hotels. The easiest things for investors or analysts to do, is look at the bottom 10% or 15% by average RevPAR in nominal dollars.

Those are the ones where we think there may be an arbitrage in the marketplace today because there’s a robust demand and there’s less distinction between high quality and low RevPAR hotels.

Frankly we’ve had a number of reverse inquiries from some unlikely buyers that make us a little bit more bullish on the ability to monetize that arbitrage opportunity at this moment in time. We are looking at them and trying to create value for our shareholders by taking advantage of that environment..

Got it. One last question for me. On the Lex, in your prepared remarks you said 50% of revenues came from Marriott channels.

Can you provide some context as to how this compares to similar hotels like the Lex and what share of bookings or revenues they get from brand pipe?.

Sure Anto, this is Rob. In terms of the Marriott production, this is a typical penetration. I think where the emphasis is coming from whereas before it was the Radisson and now it's now part of Marriott and then and independent now is part of the Marriott channel.

We’re seeing similar production levels coming from the Marriott channels as we see in other hotels, so very positive for us..

Rob, do you want to talk about the Lexington about where the upside is going to come from in segmentation just to make that clear?.

Sure. We are very much focused in on our special corporate demand now that the hotel has hit its one year anniversary as being part of the Marriott system. We’ve really been able to further penetrate within the special corporate segment and especially relevant along the east side.

In addition our group opportunities further grow especially as we gain traction with the various missions for like UNJ for example and further exposure with the federal government. We’ve been very, very successful in driving demand through those channels..

Our next question comes from Steven Kent with Goldman Sachs. Please proceed..

Mark, just to follow up a little bit on Anto’s question, you noted a couple of times that you were considering maybe selling some properties. I guess what I’m struggling with is I know that the environment is pretty strong out there, but you are trading at around 14 times or so.

Would you consider selling an asset that would be least dilutive on a multiple basis? Or would you not do that considering where we are in the cycle?.

Right, it's a great question. So we are trying to do what we’ve done the last several years is try to recycle capital.

The ideal situation for us would be to sell a lower RevPAR, lower quality hotel in our portfolio and to quickly redeploy that same amount of capital into something that has a similar EBITDA multiple on 2015 and create higher quality and better growth prospects. That’s really what we are trying to accomplish.

So it would be more of a capital recycling play of something that’s got similar EBITDA multiples on 2015 numbers. That’s what we direct the team to try to accomplish..

We have no further questions. I will now turn the call back over to management for any closing remarks. Please proceed..

Thank you, Denise. To everyone on the call, we appreciate your continued interest in DiamondRock and look forward to updating you with our fourth quarter results. Thank you..

This concludes today’s conference. You may now disconnect. Have a great day everyone..