DiamondRock Hospitality Co. (NYSE: DRH) is aiming for a 50% reduction in carbon emissions intensity by 2030. In pursuit of that goal, the REIT is not only improving its existing properties but looking for acquisition targets that may also align with its sustainability plans.
DiamondRock Hospitality, a REIT that owns 37 hotels and resorts with over 10,000 rooms, bought Chico Hot Springs Resort in Paradise Valley, Montana in 2023, along with an adjacent 595-acre ranch. The 117-room, 153-acre resort, near Yellowstone National Park, offers a prime attraction for tourists as well as several sustainability features. For example, the resort runs on power generated by onsite solar and geothermal energy sources.
Of course, DiamondRock Hospitality is also investing in sustainability upgrades at existing properties. Irene Chiao, vice president of investor relations at the company, says these investments include smart thermostats, onsite solar panels, upgraded building management systems, and energy-efficient boilers and hot water pumps.
Furthermore, the entire DiamondRock Hospitality portfolio is fully benchmarked in the ENERGY STAR Portfolio Manager, a tool for monitoring and improving energy performance of buildings, and is one of the few lodging REITs to disclose data about energy and water usage, Chiao points out.
In recognition of DiamondRock Hospitality’s commitment to responsible business operations, the REIT received Nareit’s 2024 Leader in the Light Award in the lodging/resorts category. Nareit recognizes REITs that demonstrate leadership in sustainable and socially responsible investment and operating practices, good governance, and transparency.
Positive impact for all stakeholders
In announcing his company’s Leader in the Light award, DiamondRock Hospitality’s CEO Jeffrey Donnelly said that incorporating sustainable practices, social responsibility, and transparent governance into its operations “not only benefits our stakeholders but also contributes to a healthier planet and stronger communities. We remain committed to driving meaningful progress and setting the standard for sustainable leadership in the hospitality industry.”
Chiao says environmental impact matters to DiamondRock in large part because of the amount of water and energy the hospitality industry consumes and the waste it generates.
“Adopting sustainable practices allows us to reduce our carbon footprint and operating costs while enhancing employee and guest satisfaction,” Chiao says. “Strong governance is equally critical in a sector characterized by large capital investments, enabling us to build trust and attract socially responsible investors.”
In 2023, DiamondRock invested nearly $9.7 million in energy-efficiency projects, and earmarked $310,000 for water-saving measures and $12,000 for water diversion efforts.
Sustainability remains a key focus for ensuring DiamondRock’s portfolio is resistant to climate risks while supporting the communities where the REIT operates and simply “doing what is right for the business,” Chiao says.
“Similarly, ESG principles are fundamental to our success,” she says, “as our people and communities are the driving forces behind our business. We are steadfast in our commitment to their well-being and to creating a positive impact for all stakeholders.”
As DiamondRock moves into 2025, it’s advancing a host of sustainability initiatives, including onsite generation of renewable energy and pursuit of green certifications, Chiao notes.
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Jeff Donnelly, CEO of DiamondRock, recorded a video interview during Nareit’s REITworld: 2024 Annual Conference in Las Vegas, where he shared his strategic outlook for 2025, emphasizing profitability and capital efficiency.