Welcome to DiamondRock Hospitality’s second quarter 2008 conference call. (Operator Instructions) Many of the comments made today are considered to be forward-looking statements under Federal Security law. As described in the company’s SEC filings, these statements are subject to numerous risks and uncertainties, which could cause future results to differ from those expressed or implied by our comments. The company is not obligated to publicly update or revise these 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 a 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 like to now welcome management. With us today are 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 his opening remarks.

Good morning everyone and welcome to DiamondRock Hospitality’s second quarter 2008 earnings conference call. I will begin the call by providing some context to our second quarter results and outlook. I have been in the hospitality industry since the late ‘70s. It is a new unescapable fact that the industry is cyclical and the demand closely tracks trends in the overall economy. To state the obvious, we have entered the most difficult part of the cycle often called the decline phase which is marked by anemic GDP growth, the decline in corporate profits, and low consumer sentiment . As a result, the lodging industry will likely generate negative revPAR growth for the balance of 2008. On the positive side, the growth phase always returns. Moreover, in my opinion, we are approaching a point in the cycle where good value creation opportunities will arise for those who had already stood, perhaps, a bit lucky and have the capacity to act. Since ’08 spring DiamondRock has been cautionary with respect to its 2008 outlook. At the end of the first quarter, we reduced our guidance well below our property managers’ forecast in our attempt to reflect a clearly softening economy. Not surprising, we have our current forecast now approximate that guidance. Our second quarter results were generally in line with our guidance. However, the economic outlook has deteriorated more than we anticipated. Demand trends in all segments have weakened significantly more than expected, primarily over the past six weeks. And we have becoming increasingly skeptical about transiting it in the year for the year group groom night forecast for the second half of the year. As I am sure you noted in our press release, current trends lead us to further reduce our guidance for the remainder of 2008 and Mark Brugger will update our outlook in a few minutes. Despite these headwinds, DiamondRock is well-positioned. We have purposely maintained low leverage which remained among the most conservative in the industry with fixed charge coverage in excess of three times. With the high quality portfolio of hotels and a stellar balance sheet, DiamondRock is poised to weather the downturns and opportunistically deploy its capital to create shareholder value going forward. As you already know, I am retiring from my role of CEO but will remain Chairman. Well, it is unfortunate that we now find ourselves on the downside of this cyclical business. I take much comfort that we will continue to have strong leadership with a very talented and experienced team with complementary skill sets. I am highly confident that my successor Mark Brugger will do a great job for our shareholders. Let me just conclude it by thanking you for your support and interest since DiamondRock’s conception in 2004. We have built a solid company and I look forward to the future. This is perhaps our last public event this summer. I will take this opportunity to pass the baton to Mark and turn the call over to him.

Against the challenging macroeconomic backdrop that Bill discussed Diamond Rock generally results from the second quarter that were within our prior guidance although it will be at the low end of the range. The Company’s portfolio delivered revPAR growth in the quarter of 1.5% driven by a 2.2% increase in average daily rate which more than offset a half of percentage point decrease in occupancy. The implementation of contingency plans resulted the hotel to adjust EBITDA margins declining only 60 basis points over the same period in the prior year. As a result, the Company was able to generate adjusted EBITDA of $53.5 million and the adjusted FFO per share of $0.43 despite lower than anticipated revenue. The bright spots for demand in the quarter include the Chicago Conrad as well as our hotels located in Los Angeles and New York City. These positives help to compensate for general softness in the number of markets with particular challenges in the Helena and suburban Chicago markets. The response to the difficult operating environment we continued to work aggressively with our operators to implement cost containment measures and maximize revenue management. John will speak of these efforts in more detail in a moment but let me say that the team did a good job with margins from the second quarter given the modest revenue growth. This second quarter we implemented our share repurchase program. Through last Monday, July 21, we have repurchased $2.8 million shares an average price of less than $10.75. The board has authorized this Company repurchase up to a total of 4.8 million shares but we intend to continue to be measured and opportunistic with our program. With our stock trading in the greater than a 10% MOI cap rate. Our current stock rates appears compelling. Turning to the…

I will talk about our second quarter property results and provide some additional perspective on our expected full year 2008 hotel performance as well as our capital improvements and initiatives. In the second quarter our strongest revPAR performance were the Chicago Conrad, LAX Marriott , and the Courtyard 5th Avenue in New York up 12.5%, 9.3%, and 7.4% respectively over 2007 second quarter. Chicago had a good city wide convention calendar in the quarter while LAX and the 5th Avenue Courtyard enjoyed good transient business. Other strong performers included the Torrance South Bay Marriott , the Renaissance Worthington and Fort Worth and the Salt Lake City Marriott, all up approximately 6% for the quarter. Foreign and good transient demand growth while Worthington and Salt Lake City had strong group business in the quarter. New York City remains a relatively strong market; with international and corporate demand deep enough to overcome financial sector retrenchment. They all enjoyed another good slow season, although the early Easter holiday compressed business in the margin resulted in the soft April. Weaker performers were Atlanta hotels as Atlanta remains soft. Orlando was the soft market and a newly renovated competitor restrained results. In Austin where the legislature meets only in odd years is creating soft first halves in even years. Increase supply in downtown Austin also impacted the Renaissance. New York Hotels Marriott is suffering along with the rest of the Southwest corner of suburban Chicago. LAX revenue growth was solid but flow through was negatively impacted by the implementation of LA’s leading wage law and lower catering revenue. For the full year, we expect New York City market to moderate somewhat in the face of tough comps. We expect California transient trends to soften and airlines cut-backs to begin impacting the contract segments. As expected,…

At this time we would like to open up the call for your questions.

(Operator Instructions) Your first question comes from the line of David Loeb from Robert W. Baird. David Loeb - Robert W. Baird & Co., Inc.: Hi. Bill, you described that this is the most difficult part of the cycle. Does that mean you think it is going to stop getting worst any time soon?

David Loeb - Robert W. Baird & Co., Inc.: And if ’09 starts out worse than expected and you find yourself nearing 100% dividend payout from half of the or more than 100% payout. What do you think the board’s reaction to that would be?

Well, first of all extending our dividend is important to us. Liquidity is important to us. We are certainly well-established with our balance sheet. I think what we would have to do is really assess what ’09 look like, what kind of duration we thought the problem might be, and how significant the problem might be. And secondly, I think we would always and we continually do this. So, look at the value of alternative uses with capital. David Loeb - Robert W. Baird & Co., Inc.: Does that mean that if you saw, given the priority of sustaining the dividend, if you saw a short term period in a quarter or two where you might have to fund a portion of the dividend. Would you probably continue to do that?

Yes, the first quarter of this year which is not our strong quarter for the way our portfolio lays out, we borrowed to pay the dividends. So that is by itself not the defining position. David Loeb - Robert W. Baird & Co., Inc.: Right, and then clearly seasonality always affects that since you pay the same dividend and your earnings are seasonal. I guess the question really is if it looks like it is more of a fundamental problem rather than a seasonal problem. And I certainly hear your answer on that. I have time for one more?

Sure. David Loeb - Robert W. Baird & Co., Inc.: This is more of a John question. Can you just talk a little bit about where the opportunities might lie, that Bill referred to, and how those acquisition opportunities might come up important to the Marriot relationship and cap rates?

Starting at the top, I am not sure where the opportunities are going to come because at this point there is no distress selling out there. We do not have financings coming due in any kind of order of magnitude. So we have not seen distress in the market yet and I think that is what is going to create opportunities. I cannot predict when that is going to happen. As you know, most of the re-financings probably do not come due for a couple of more years. Secondly, from the cap rates stand point the recent evaluation of the lodging rates had pretty much taken the public companies out of the market because the spread is just now wider from public to here, from private to public. So, it is pretty difficult to see how we could climb the value greater than some to our international and private buyers. Leverage is obviously is going to be an issue but if people alone will put 60% to 65% as opposed to 85% leverage on it. It is less than a $100 million transaction. I think there is money out there still.

David, if I could just clarify my comment in my prepared remarks, my view is that the times of greatest opportunity in this business are around the peak and around the lows. If I look back at last spring, I think we could all benefit with volume size. Notice there were some tremendous value opportunities then perhaps in a different way. And my experience looking back, let us say 2003 which turned out to be in 12, I am not sure we all recognize it. That was the time when last cycle there are a lot of buying opportunities. David Loeb - Robert W. Baird & Co., Inc.: Yes. And how will the Marriott relationship figure in?

Generally, in times of distress the Marriot relationship is going to be more valuable because we need partners more than they do in times of when capital is plentiful. We are talking to them about the couple of different areas of opportunities. Nothing specific currently but we are trying to sort of position the relationship for the opportunity phase.

Your next question comes from the line of Chris Woronka from Deutsche Bank.

Could you just remind us what percentage of your group roommates for ’08 were booked in ’07 or earlier?

I am sort of confident that I have the answer for you, Chris. I will tell about this year because I cannot look back at this point. But at this year we have got about for the balance of ’08, we have got about 94% for what we needed for the back half of the year on the books. Grow nine that number is about 51%. I think that is probably consistent with last year. I remember, about mid-year having about 50% of this year’s roommates on the books for last year.

I know you have not really started the corporate negotiations yet but how are you guys going to approach it, just in terms of everyone else in the industry is raising prices for various reasons and you guys have the expense that everyone else has. At the same time the fundamentals are weak, there is a little bit more supply. I mean, how are you – not even looking for a number -- but how are you just going to approach those discussions and what is the goal, if you could define what the goal is in terms of the rate increases that would be helpful?

We will work with our three branches starting with Hilton and Marriot. And the strategy at this point is to try to maintain inflation price increases. I think if we are able to do that, it is probably, again come at the cost of some other things that are less tangible but expenses such as last room availability and things like that which we were able to get away from in the last couple of years. So, we are approaching it with some degree of optimism. We will see how the company has received it because there are a lot of cut backs out there. Chris, I want to clarify a couple of numbers I gave you. I said 94% of what we need for the balance of the year. We have 94% of total ’08 group revenue on the books. For the second half of the year, we have 90% of what we need. It includes Q’s 1 and 2. We have 94%.

And your next question comes from the line of Dennis Forst from KeyBanc.

. I wanted to get a clarification on your level of confidence for next year. I think Bill said that as of now there is 180,000/108,000(?) group rooms already booked for next year. Is that right?

That is in our Boston hotel.

That is just the Boston Hotel? Okay. And that was about how many group nights there were going to be for the whole year at that Boston hotel?

For this year?

Yes. For this year. Okay. On the group pays so is up 26% in the first quarter up 21% the second quarter vis-à-vis last year. Are you confident that those rooms are going to get filled. What is your level of certainty or uncertainty of those rooms being filled next year?

Well, those are contractual rooms for the most part. There are some in Chicago that are not contractual, they are citywide. But our expectation would be that most of those would be achieved and realized. Where you have risks and this comes as you detail the groups not at this point but as they are closer to fruition. When you detail the groups you then plan for attrition, food and beverage spend, things like that. We are seeing attrition rates a little bit higher although, as I have said, not materially. They are running about 15% attrition including food and beverages pending towards the contractual level which is fairly predictable at this stage of the cycle. So, as the hotels detail the groups that is sort of what they are planning going forward and I am sure that will be the case in’09 although it is early to do that.

And why is group pays up so much for next year given the state of the economy?

In Boston, it is a couple of things – I think it is a favorable citywide calendar. A little bit towards the Busy Easy as opposed to the hinds which is this year. Secondly, we have 3700 sq. ft. of new space which meeting planners have been very anxious to book. So, we have got a lot of smaller corporate groups that we are able to put in there that we have not had the space to do before this year. And then in Chicago, there is a favorable trend in the citywide and we also have new space there which is proving to be very helpful both this year and the fourth quarter and next year annually. So, if you look at the 21% increase, probably 2/3 of that is between Boston and Chicago and a couple of the other smaller hotels, LAX for example.

What percentage of your overall business is group?

It ranges by quarter anywhere from 35% to 38%.

You next question comes from the line of Will Marks from JMP Securities.

I have a question on the corporate negotiations. Just a follow up. Can you talk about what happened this year with bookings or corporate rates from last year? Did you have the numbers stuck? Do you tend to, in a situation like this as slower economy, do you tend to relax your standard or not force your clients to use as many room nights?

Well, we do not really have volume agreements with these guys. It is really rate agreements. We have stuck to the rate agreements. We have not come off the rates although we have been asked in some cases. What we have done is we have thrown in some goodies like maybe free breakfast or internet – or free internet access. But, that is not unusual. So, the rates have hilled up. In some cases the volume has dissipated a bit like in New York, we lost our Citibank account but we are able to back fill it with other corporate customers. So, it really depends by hotel. But you do not really have volume guarantees as a part of this corporate rate negotiation. You have sort of indicative volume.

And then just my second question unrelated on the group side. They are actually across the board. You mentioned a little bit on food and beverage spending or outside the room spend – can you expand a little bit on just what we are seeing in general across the hotel industry. Is that taking more of a hit than the actual room revenues?

I would not say it is taking more of a hit but we are anticipating and have realized some sort of trending towards the minimum, if you will, under the contracts. So, while the groups are reducing below the minimum they tend to be reducing to the minimum. As long as you can budget for that and forecast that. It is not difficult to deal with but we are seeing some catering reductions, for example in LAX, we have seen a fairly 11.5% catering reduction in the quarter which was a function of fewer groups that also groups scaling back on the food and beverage spend.

Then just a final question and back to the corporate negotiation. What happened – let us say back in 2002 in terms of – or maybe 2001 but because that was a tricky time. Did you have any leverage to raise rates to go to your customers and say, look we need to push them by to the level of inflation?

In 2002, no. hotels did not have much leverage but this is not 2002 or even 2003. I don’t think that is what we are facing in 2009. So, as I say we will see if it is sort of heck type of question at this point but the plan is to go in for an inflationary increase with recognition that we are going to have to give on some of the softer issues.

Your next question comes from the line of Michael Salinsky of RBC Capital. Michael Salinsky –RBC Capital Markets: Looking at the cost contingencies that you put in place throughout the year here, what revPAR is needed to break even on the margins line right now?

I think we have consistently said that we need about 3.5% revPAR on the full year basis to keep our house profit margins flat. As we kind of move below that 3 ½, two plans come into effect but the lower you get on the revPAR and certainly what is going negative, it is more and more difficult to make in the margins Michael Salinsky –RBC Capital Markets: Secondly, with the Los Angeles Airport Marriott and the Orlando we have seen cut backs in the airline industry right now particularly in Orlando, are you seeing any pressure on the negotiated business side there or do you expect those to moderate significantly on the second half of the year?

In that – well, we are seeing softness in transient in Los Angeles and in group in Orlando. So, I don’t think it is directly related to the airline activities. What is directly related to the airline activity is contract business which is fairly significant in LAX and Torrance and we are anticipating, we are seeing some, but we are anticipating in the fall effective I think in late October or early November, LAX is going to see some fairly dramatic, among big airports is going to see probably a high end of airline cut backs. So, I anticipated some contract impact there. Michael Salinsky –RBC Capital Markets: And finally, you have talked about the acquisition environment right now. Can you talk a little bit more about the asset pricing environment? How much your cap rates are off right now or how much your asset down from the peak and at what level would you – how much further pressure do you need to see before you actually jump in to start looking at, making bids or trying to acquire some of these properties?

I think right now based on recent transactions and there are a lot of them but the range is 7 to 8 with urban assets being at the lower end and suburban assets maybe in 8 ½. That is based on actual transactions not the asked. They would have to come down significantly if you think about re-trading at a 10 cap on trailing 12 NOI so it is a pretty wide spread that we are facing right now. So, the combination of the wide spread and/or heightened concern about the liquidity. I think it would have to be a compelling deal for us to buy and I do not want to see compelling deals on the rise and at this point.

This is Mark. Just add on to that. I think the opportunity that would have to arise would not just be an adjustment of cap rate. There have to be some kind of real value add play for us to do an acquisition in the near future. That has to be kind of a re-branding, repositioning where there is an opportunity to increase the cash flow of 40% to 50% through some initiatives versus the whole markets cap rates of just 25 of 50 basis points. That is not going to be enough for us to jump into the market, an opportunity creating value for our shareholders. Michael Salinsky –RBC Capital Markets: Then, as a follow up to that. You look at your repurchase program right now for $48 million shares. I mean, that was like the most compelling adjustment at this point. Would you look to expand that I you exhaust the 4.8 million shares at this point?

We have talked to the board about our share re-purchase program and we intend to, assuming that our stock trades within this range complete our program this year, I think we need to get a little bit better visibility on 2009 before we could expand our program but it is something we regularly talk to our board about.

Your next question comes from the line of William Truelove from UBS.

When I am looking at your balance sheet, you have gone from 94.5 million shares to 94.7 so where is the 2.8 million shares being repurchased? I know that as of June 13. So is that as of June 13 to today or is it that you are issuing shares and then just repurchasing them back? What is going on?

Yes. I think what you have seen is that we started buying shares just in the beginning of June. Our quarter ended June 13 so we only bought 240,000 shares in the second quarter so the bulk of the 2.8 million, what is third quarter of that? So you see the share count change for the third quarter.

If there is no compelling acquisition activities, given where you are trading relative to the cap rates. What about the reverse of that – there should be a very compelling analogy to expel some assets. Is that right? Given what your stock is and use those proceeds to repurchase stock?

That is something that we are looking at right now. So, it might be a great opportunity to sell some of your less strategic assets or assets that you think have the slower growth prospects over the next three to five years and three to four of that capital. So that is something that we are evaluating currently.

And your next question is a follow up question from Dave Loeb from Baird. David Loeb - Robert W. Baird & Co., Inc.: John, to follow up on the cap rate question. If you looked at your blend of assets, what is the cap rate that you could actually liquidate the portfolio today in total?

I do not know the answer to that question, David. We have not look at it in those terms. We look at trailing 12 and what the cap rate relates to based on how the trading but is not so much in the individual assets that we do tend to price. Tend to be the ones that are non-strategic and the ones that fall at the lower end of the zone and ones that are candidates for disposition but we have not gone through the portfolio lately and tried to put the cap rate on New York for example David Loeb - Robert W. Baird & Co., Inc.: Right. Do you expect that New York would likely be below the 78 range that you have cited?

Materially. David Loeb - Robert W. Baird & Co., Inc.: And how about big bucks like Chicago or Boston? Boston, of course, presumably has a bit of a benefit from being really new and ramping.

Right. They would command different cap rates one is brand new and as you say ramping up. Although it has not ramped this year, next year, it looks like another kind of a rejuvenation year, if you will, then kind to getting back on the ramp patterns. In Chicago, it just would depend I guess on the buyer’s view of the kind of a trophy component of the hotel. It is such a great real estate location. Such a great decent real estate. We would look for evaluation based on the recognition of its kind of trophy status. David Loeb - Robert W. Baird & Co., Inc.: But that would put it sub seven right?

David, there has been virtually no transactions over a 100 million in the last 6 to 7 months. The only significant transaction was with Century Plaza which is at 5 ½ cap which we were surprised about. So, there is kind of only one marker on the space but I do not know if that defines what the current cap rates are. David Loeb - Robert W. Baird & Co., Inc.: And that one clearly is muddied by the potential for redevelopment land play?

Yes. David Loeb - Robert W. Baird & Co., Inc.: Yes. I think so. So, Okay, that helps. We are trying to figure out what the liquidation value would be today and it sounds like – well , seven to eight maybe what you are seeing out there for assets that are not necessarily assets that are much like yours or much like the number of yours.

Right. I think if you take the urban assets it would just be an individual transactions that would define the cap rates but our expectations would certainly be much higher than the 7 to 8 cap rate.

And you have no more questions at this time.

We would like to thank everyone for their time today and appreciate your continued attention to our company. Thank you.