Welcome to the DiamondRock Hospitality Fourth Quarter 2007 Conference Call. The Company is hosting a live webcast of today’s call which can be assessed on the Company’s website at www.drhc.com in the Investor Relation section. Many of the comments made today are considered to be forward-looking statements under federal security laws. As described in the SEC filings, these statements are subject to numerous risks and uncertainties which could cause future results to differ from the expressed or implied by our comments. The Company’s not obligated to publicly update or revise the forward-looking statements. In this call, the Company will discuss non-GAAP financial information such as adjusted FFO and adjusted EBITDA, which it believes is useful to investors. You can find the reconciliation of this information to GAAP in today’s earnings press release which is available on the Company’s website and in the Company’s Form 8-K filed with the SEC. I would now like to welcome management. With us today is Bill McCarten, Chief Executive Officer; John Williams, Chief Operating Officer; and Mark Brugger, Chief Financial Officer. At this time, I would like to turn the call over to Bill McCarten for opening remarks.

Thanks, Francis. Good morning, everyone, and welcome to DiamondRock Hospitality’s 2007 Earnings Conference Call. Our fourth quarter and full year 2007 results reflect outstanding year-over-year and are among the best in the industry. In addition to turning in strong operating results, we were able to improve the quality of our portfolio with the acquisition of the Westin Boston Waterfront Hotel in January of 2007 and the sale of our lowest RevPAR hotel at an excellent price in December. For the year, same-store RevPAR increased 9.8%. Same-store hotel level EBITDA was up 15% with margins expanding 162 basis points. Adjusted EBIDTA was $202.2 million and adjusted FFO per share was up 12% to a $1.55. Our strongest performers were the Manhattan Courtyards, no surprise there; the Conrad Chicago, the Austin Renaissance and the Westin Boston Waterfront, which helped to offset soft performance in Atlanta, our weakest market, as well flow through issues at Frenchman’s Reef. The fourth quarter was similarly outstanding with same-store RevPAR increasing 9.5% and hotel adjusted EBITDA margins up 136 basis points. Generally, the fourth quarter results were quite consistent with the full year. In view of the economic environment, our 2008 outlook is best summarized with two thoughts: Cautious optimism and high uncertainty. On the one-hand, several specific indicators provide some measure of optimism. Overall supply growth remains a macro positive, although, it’s important to focus on specific markets. Our group pace is positive with revenue up nearly 6%, and we have not yet seen any indication of an emerging cancellation trend. Nearly 70% of our budgeted group revenue is already on the books, and special corporate rates are up a solid 4%. Finally, our primary managers, Marriott and Starwood remain positive in their outlook. On the other hand, the economy has continued to soften and the…

Thanks, Bill. I’ll spend just a minute wrapping up our discussion of the 2007 property results and provide some additional perspective on our expected to 2008 hotel performance. As Bill mentioned, our strongest 2007 performers were the Conrad Chicago, the Manhattan Courtyards, the Austin Renaissance and the Westin Boston Waterfront. Generally, our fourth quarter results were consistent with the full year; although, Atlanta Waverly rebounded with strong group performance and Torrance was strong with an easy comp because of the fourth quarter 2006 renovation. Frenchman’s Reef had good RevPAR growth but continued to struggle with flow through issues, particularly in the fourth quarter. For 2008, we again expect our strongest performers to be the Westin Boston, the Manhattan Courtyards and the Chicago Conrad. Our Atlanta hotels are expected to remain soft along with the Chicago Marriott downtown and the Salt Lake City Marriott, both of which will be impacted by disruption. The Westin Boston Waterfront enjoyed over 14% RevPAR growth in 2007, it’s first full year of operation; and it will continue to ramp-up in 2008, especially with the 37,000 square feet of new meeting space we’re adding. Although the Westin is ramping more slowly than we anticipated, it remains on of our strongest growth hotels over the long-term. Citywide conventions in Boston are weighted towards the first half in the year of 2008, so we have work to do booking second half group room nights; and we’ve just signed a large piece of business for July. On the transient side, we expect the recently opened Boston Renaissance Hotel to have some impact in the market. However, the transient business in the market is growing ad with the new meeting space, we will not need as much as transient business in 2008. The Manhattan Courtyards enjoyed premium midtown locations in…

Thank you, John. As Bill mentioned, we are in an uncertain economic environment and accordingly have spent considerably more time than usual in studying macroeconomic indicators and demand factors in determining our RevPAR guidance. We focus very carefully on each of our segments to forecast demand. Our portfolio segmentation is 36% group, 26% leisure and 38% business transient and other. As John talked about, the group segment continues to show strength as we already have contracts covering 70% of the 2008 budgeted group revenue. Leisure demand is going to be heavily influenced by the softer general economy and we expect reduced demand in resort markets like the Caribbean, but we do see strength from the high-end leisure traveler at Vail and the foreign leisure traveler in New York that is benefited by the weak dollar. The last piece of the puzzle is the business traveler who is often the hardest to forecast. As you know, the slowing economy is putting pressure on corporate profits in a number of industries and inevitably this will moderate the robust business transient demand we have enjoyed for the last several years. We anticipate that the business traveler will get increasingly rate sensitive as the year progresses and companies potentially reduce their travel budgets. Demand in all segments will be impacted by renovation disruption. In 2008, we expect total renovation disruption in our portfolio to be approximately $2.5 million or $1.5 million more than last year. Putting all these pieces together, we are forecasting RevPAR growth of 2% to 5% and are expecting same-store hotel adjusted EBITDA margins to be flat to last year to down 100 basis points. Margin growth is negatively impacted by several non-recurring items in 2007 that I will discuss in a minute. Adjusted EBITDA is expected in the range of…

Thanks, Mark. To wrap up, we believe that DiamondRock is well positioned going forward at this stage of the lodging cycle with a great balance sheet and a portfolio of 20 high quality hotels that are concentrated in gateway cities and destination resort locations. With that, Francis, I think we’re ready to open the line up for questions.

Thank you. (Operator Instructions) Your first question comes from the line of Jeff Donnelly with Wachovia. Please proceed. Jeff Donnelly – Wachovia : Good morning, guys. John, actually if I could start with you, I know you touched on this in your comments, but I guess talk a little bit about hotel pricing. Rather than transactions that you’re seeing, can you talk about I guess what private owners are thinking right now about valuation? I know you’re pretty well connected in the industry and I’m sure you’ve had the benefit of some conversations with folks like that. I’m just curious where their heads are at right now and how they think about values.

Jeff, as I mentioned, I think owners are not yet, have not yet come around to the view that there’s going to be significant move in cap rates. I think they recognize in secondary and tertiary markets that cap rates have moved, but I don’t think there’s been enough evidence yet of actual transactions to prove that urban and resort locations will move as well. I think the other key thing in this market as opposed to maybe the last couple of downturns, if this is a downturn, is that there’s a complete lack of distressed real estate on the market. In other words, the sellers out there are really opportunistic sellers. There’s nobody who’s under a great deal of pressure, some in varying degrees obviously, but no one who’s under a great deal of pressure to sell, so there haven’t been the distress sales which generally lead to a major move in valuation. Jeff Donnelly – Wachovia : I’m curious, though, does that tell you that if they’re I guess not expecting to see any impact on their property values. Nevertheless, I’m sure there are a lot of folks out there that have maturities on their balance sheets in the next 6, 12, 18 months. Do you personally think that we are going to see the stress situation emerge in the next 12 to 18 months? I guess as a follow-on, do you think that could provide attractive investment opportunities for you guys, either in hotel assets or perhaps even hotel debt to the extend you’d consider that?

Well, we’re trying to keep our options open, Jeff, in the event that there do become some distressed situations. I think that the level of debt on some of the private equity transactions in the past couple of years would indicate that if there is a turnover required or if there’s a sever downturn, there may be some pressure there. But they generally tend to have the strength in the equity to be able to withstand those, just like the last kind of downturn in the industry, there wasn’t a kind of distressed situation that you saw in the early ‘90s with the S&L crisis. So no, I don’t see a tremendous amount of distressed sales, but there could be some level of that; and we’d like to keep our options open to take advantage of them. Jeff Donnelly – Wachovia : Just two last questions: One is on group meetings and even transient bookings that you guys are seeing, what observable trend has there been, or has there been one, on I guess I’ll call it “out of room” spend or FEB revenues beyond just the room rate? Has anything emerged there where you’re seeing guests become a little more frugal?

Yeah, that shows up in the group mostly and only anecdotally have we heard that there may be some of the event planners, for example, who are getting together with the meeting planners for the first half groups to categorize their spend have reported that some of the groups are leaning towards the minimum spend under their food and beverage contracts. So that would be an indication that there’s some weakening in the out of room spend. But there’s no consistent pattern that we’re seeing. It’s sort of anecdotal. Jeff Donnelly – Wachovia : Is that, though, where I guess you guys are dialing back your margin expectations most significantly is because of that or is more in the room rate side?

Well, that’s definitely a factor, but I would say we’re dialing it back kind of equally between RevPAR and food and beverage. Jeff Donnelly – Wachovia : Last question actually for Mark on Chicago. I just want to clarify your comments in your press release on the Downtown Chicago Marriott, so I guess bear with me if it requires answering me like I’m a six-year-old. The Chicago Downtown Marriott, you said you will generate $4 million less in EBITDA in Q1 and if I’m hearing you right, that’s split between $2 million in disruption for the renovation and I think another $2 million for I guess business that couldn’t be replaced or what have you. Just be clear, does that imply that means on a full year basis that asset will be down $4 million year-over-year?

No, these other quarters are actually up. I mean the group booking pace there for the quarters two through four is actually pretty good, so we’re expecting, it’s the way the citywide layout that we had a great Q1 in 2007. The way the citywides and some other groups layout is not repeating in 2008 for that quarter, but the second quarter looks extremely strong and we see strength in the second and fourth quarter in particular this year. Jeff Donnelly – Wachovia : So is it possible that asset could just finish flat to up to the year?

Yeah, we’re currently (inaudible) it’s going to finish modestly up. Jeff Donnelly – Wachovia : Thank you.

Your next question comes from the line of Will Marks with JMP Securities. Please proceed. William Marks – JMP Securities : Great. Thank you and good morning. I was wondering on, just on the guidance, you took the, I believe the RevPAR guidance down from 6-to-8 to 2-to-5, which is probably as big of drop as we’ve seen and I’m wondering if anything has changed since besides the environment? Were any of these projects not planned that you’re working on? What really, I can make some guesses, but can you just tell me what changed things in general over the last three months?

Let me just add a couple things to that. Yeah, we did come out with 6 to 8. I think brand managers were a bit higher back then in the fall too and that guidance was in September, early October, so it’s hard to separate some of the specific budgets on the properties today versus from the overall look in the economy. Clearly the economy has continued to soften and deteriorate during that period of time, so that’s been the lion share of that. Our sense back in the fall, Will, was that given the makeup of our portfolio that we would outperform by about 100 basis points of the broader brand portfolios and generally we still think that. I think Chicago, the disruption in Chicago is perhaps higher than we hoped for and the softness in Chicago in the first quarter is having a fairly significant impact in our total portfolio, clearly for the quarter but even for the year. Downtown Chicago Marriott will probably have close to a 70 basis point impact on the RevPAR growth. So it was a really combination of all those things. Chicago’s the one thing that comes to mind in terms of any specific changes. Frenchman’s was a big disappointment in the fourth quarter, which we talked about and is of concern from a flow through standpoint again also in ’08. William Marks – JMP Securities : Great. Thank you. In terms of the guidance for ’08 specifically, there’s some markets I think that you’re in that are still very strong, and you mentioned Boston and clearly New York has had good RevPAR to date. Are you expecting a slowdown in some of the stronger markets in your guidance?

I think we are generally expecting a slowdown in even the stronger markets, but we’ve got pretty good visibility on particularly Boston and Chicago, so I guess New York is one we’re cautious about. We haven’t seen it yet. We see some replacement for some of the… Well actually, we’ve only seen one major corporate account basically disintegrate which we were easily able to replace. But at some point that the debt, if you will, gives us concern.

Will, even the stronger markets are going to, we do believe they’re going to be more moderate than last year. 10% RevPAR growth, which is roughly where we came in, is really great and very unusual. Even without some of the more recent happenings with the economy, we would have expected some moderation. Well, New York, for example, we believe will stay strong with some caution. We’re still not, wouldn’t be expecting mid-teen RevPAR growth in 2008 there, still well, well above historical averages but not in the mid teens. William Marks – JMP Securities : Great. Thank you very much.

Your next question comes from the line of Amanda Bryant with Merrill Lynch. Please proceed. Amanda Bryant – Merrill Lynch : Great. Thanks. Good morning. I just have two questions for you. First, what does the 2009 convention calendars look like in Boston and Chicago versus 2008? Then the second question would be: What would be the likelihood that you will sell any additional hotels this year. Thanks.

Amanda, this is John. In those two markets, Boston is more or less flat, but the trends are a little bit different. In ’09, the bookings at our hotel are dramatically up in 2009; there are a lot of reasons for that. They’ve been selling that hotel for a fairly limited period of time and I think there efforts are really kicking in in ’09 in a big way. But also the city is weighted in different quarters. This year it’s kind of heavily weighted in the first two quarters, which is great because that’s a normally a soft time. But it also impacts the rate because it’s traditionally a lower rated period than the third and fourth quarters. In Chicago, 2009 has been trumpeted to be a fabulous convention year since 2005, really, and we have no indication that that’s softening in anyway. The patterns are good. The citywide totals are good, and our in-house bookings are quite strong in Chicago for 2009. So that creates all kinds of pricing opportunities. Based on the compression of the citywides and the strong in-house groups, that creates all kinds of pricing opportunities on transient and where you position your rate for the balance of the segments. So in those two cities, it’s a good story. In Chicago, it’s a great story. Amanda Bryant – Merrill Lynch : Then with respect to your maybe willingness to sell any additional properties this year.

We are in the process of, as we do every year, prioritizing our portfolio. We sold Buckhead in December. There are a couple of hotels that we’re considering right now and one of the things we’re considering is how we redeploy those funds if we were to sell the hotels. So yeah, we’re constantly evaluating it. We’ve not identified any specific disposition at this point.

The cautionary note is sort of the disconnect in the marketplace right now in terms of valuation, so we’d have to be comfortable. The one we sold in December, the SpringHill Suites, we think we got a great price for it. Hopefully that won’t be unique, but we got a price and it will really depend on valuation. Amanda Bryant – Merrill Lynch : Then I guess you’re testing the market now in essence and if you feel like you get a decent price, you’d be more than willing to let something go.

Amanda, this is Mark. We’re evaluating and getting opinions of value on a few assets, but we haven’t gone to market with any other assets at this point. We’re not past the market currently. Amanda Bryant – Merrill Lynch : I understand. Thank you.

Your next question comes from the line of David Loeb from Baird. Please proceed. David Loeb – Robert W. Baird & Co. : Yeah, just a quick follow-up on Amanda’s question. John, given what you said about cap rates, does that make you think that asset sales are somewhat unlikely given where you see values fit in?

It depends, David, I would have to say. I don’t want to be equivocal, but it’s… So many factors go into whether or not you sell an asset. It’s impact on the portfolio; it’s impact on our growth, our ability to redeploy the funds all factor into it. If we could sell an asset, a slow growth asset and we could get an eight cap for the asset, we may very well choose to do that given the current capital environment and alternative uses of that capital. But we’re not going to sell anything that we think has growth in it that would warrant hanging on to it for the benefit of the portfolio.

David, this is Mark. The SpringHill Suites Buckhead we sold in December is really the perfect example. It was our lowest RevPAR hotel. It had zero growth in 2008 [sic]and we find a buyer that we would pay us what we considered extraordinary price. So that’s our ideal disposition. David Loeb – Robert W. Baird & Co. : I know you probably don’t know the answer, but what they were thinking?

They saw potential obviously. David Loeb – Robert W. Baird & Co. : That’s very political. John, on Chicago supply, there’s a lot of luxury coming into the market, does that affect your thinking about the Conrad or do you think you’ve moved that hotel in the right direction given where that’s coming, or do you see that supply being competitive?

We see great potential in the Conrad. The location of the Conrad is so superior and the way it’s positioned right now as sort of the 4.5 star Hilton product in Chicago gives it a tremendous depth of both group and transient demand to pull from. So yeah, there is the Trump coming on and actually there are more limited service hotels coming on. But we are not concerned at this point about the new supply in Chicago with regard to the Conrad. We think there’s a tremendous growth opportunity at the Conrad, a tremendously deep pool of Hilton room nights to draw from. David Loeb – Robert W. Baird & Co. : Great. Kind of generally, what kinds of things do you think could go wrong that would make it challenging to hit the low end of your guidance or where do you think there are opportunities in the other extreme that you could beat in ’08?

I think it’s really a question of the economy more than anything. Clearly the low end of our guidance does not really assume a significant recession. It clearly assumes lower GDP growth and 2% but not that much lower, but it really doesn’t assume us going negative. So it’s really the economy and what’s going to happen there. David Loeb – Robert W. Baird & Co. : Thanks.

(Operator Instructions) Your next question is from the line of Chris Woronka with Deutsche Bank. Please proceed. Chris Woronka – Deutsche Bank : Good morning, guys. Just if I could drill down a little bit more on the, really on the margin issue, but you mentioned that you’re expecting a fairly big ramp in salary and benefits cost on staffing. I mean if the transient business is declining a little bit, I guess I’m just trying to understand a little bit better where you’d be staffing up or if the higher margin banquet business is increasing kind of understand a little bit better the staffing relationship with that. Thanks.

All right, I’ll take a crack at that, Chris. If you think about it, the meeting and banquet space that we’re adding, I was just trying to do it quickly in my head, it totals probably around 75 or 80,000 square feet across the portfolio and the banquet volume associated with that is going to be great. As you know, banquet profit margins are higher than other food and beverage profit margins, but they’re significantly lower than rooms, obviously. So the level… If you can consider a normal banquet operation has about a 40% payroll cost associated with, and these are very round numbers, you can imagine that the increased revenue is going to create significant increased man hours, disproportionately to normal growth year-over-year because of the 75 (inaudible) meeting space. Chris Woronka – Deutsche Bank : That’s helpful. Thanks.

Your next question is a follow-up from the line of David Loeb from Baird. Please proceed. David Loeb – Robert W. Baird & Co.: Just one more if you don’t mind. On Boston, John, can you just give us an idea about what kind of return you expect on the $19 million that you’re investing, and when do you see, starting to see incremental revenues in cash flow as a result of having that meeting space on line?

Well we underwrote that, David, we underwrote it pretty conservatively. It’s about a $19 million project. It gets us about 37,000 square feet of incremental space. Now a chunk of that is exhibition space, so that’s not high yielding space. But overall it was well north of the 20% internal rate of return, and I think it was in the first full year of operation. We’ll feel the first initial benefit obviously when it opens in March. But the full year impact in 2009 will be when the north of 20% ROI would (inaudible). David Loeb – Robert W. Baird & Co.: So you think, you’re talking about on the order of $3.5 to $4 million.

Yeah, I don’t remember the specific number, but it was a combination of about 11,000 room nights, incremental room nights, plus the associated catering and banquet revenue. David Loeb – Robert W. Baird & Co.: Some of that will start this year, but you think that ’09 is the better year for that.

Yeah, a big chunk of it will start this year because we’re bringing it on line just as prime season comes in, so we expect a nice return on it this year. Again, I’m going from memory, I remember this, it was well north of 20%, which is our hurdle rate. David Loeb – Robert W. Baird & Co.: Great. That’s all I had. Thanks.

There are no other questions in the queue at this time. I’d like to turn the call over to Mr. Bill McCarten for closing remarks.

One clarification we had to one of our answers was on Downtown Chicago. I think Jeff may have asked what the (inaudible) for the total year was and whether our profits were going to be up. I think after the disruption, the revenues are up some and the profits are about flat.

Jeff, this is Mark. Just clear, on the revenue line what the renovation and the market impact is up maybe slightly and then on the bottom line it’s up slightly if you take the $2 million adjustment for the renovation impact. So I just want to make sure we were talking apples-to-apples. So with that…

Well thanks a lot for your interest and we look forward to talking to you again. Bye.

Thank you all for your participation in today’s conference. This concludes the presentation. You may now disconnect and have a great day.