Welcome to DiamondRock Hospitality’s first 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.

Welcome to DiamondRock Hospitality’s first quarter 2008 earnings conference call. Our first quarter results are generally consistent with our prior guidance, with FFO per share of $0.24 and reflecting moderating demand environment as well as significant disruption from the renovation of the Chicago Marriott Downtown. The company’s out-performance from the midpoint of our guidance is the result of stronger hotel operations and some below the line items such as lower taxes and interest expense. For all 20 of our owned hotels, the company reported same-store RevPAR growth that was essentially flat. If you excluded the Chicago Marriott, the portfolio delivered solid RevPAR growth at 4.3%. Our strongest performer was the Westin Boston Waterfront with RevPAR up 24% and as expected, the Chicago Marriott Downtown was our worst performer with RevPAR down 27%. In the first quarter, we made good progress with our capital improvement plan, substantially completing $55 million in capital projects at our two largest hotels, the Chicago Marriott Downtown and the Westin Boston Waterfront. At these two hotels we have added an incremental 54,000 square feet of revenue generating meeting space and increased our food and beverage offerings. The outlook for the balance of the year remains clouded by the uncertain economic environment. The general economy continues to suffer from slumping housing prices, the continued credit crisis and lower consumer confidence, while overall supply growth remains a macro positive, short-term demand is increasingly difficult to predict. Because it generally takes up to six months for economic changes to ripple through to hotel operating fundamentals and frankly the GDP slowdown really started late in the fourth quarter of 2007. We expect demand to continue to moderate in 2008, with higher risk in the second half. We think that business transient will begin showing more signs of rate resistance as…

Let me start with some more details on the first quarter results. In the first quarter the company’s portfolio of 20 hotels delivered RevPAR growth of 0.3% reflecting a 2-percentage point loss in occupancy and a 3.3% gain in average rate. Hotel EBITDA profit margins were 24.6%, 186 basis point contraction from the comparable period. Significantly, the Chicago Marriott Downtown negatively impacted RevPAR growth by 4 percentage points and hotel EBITDA margins by 113 basis points. The company also reported adjusted EBITDA of $30.2 million and adjusted FFO per share of $0.24. Again, the Chicago Marriott Downtown had a significant impact, generating $3.4 million less EBITDA than in the comparable quarter in 2007. Turning to our capital structure, we continued to have one of the best balance sheets in the industry and we see it as a significant advantage over some of our peers. We have low leverage with debt-to-EBITDA of 4x. Our debt is almost entirely fixed at an average interest rate of 5.6% with generally long-term maturities. We have excellent liquidity with a $200 million credit facility as well as eight un-leveraged hotels that can be financed at any time. With one of the lowest debt levels in the industry, we have the ability to opportunistically deploy our investment capacity in various ways to create shareholder value. At this time, we are updating company guidance, because the full depth of the economic slowdown is uncertain. The ability to precisely forecast future results is particularly challenging. As Bill mentioned, group bookings looked solid, but there are a number of potential headwinds related to business transient and leisure strength. Based on our extensive analysis of each of our individual hotels’ forecast as well as increasingly negative macro-economic trends. We currently expect full-year RevPAR growth to be near 2%, the low end of our prior guidance for RevPAR growth, which was 2% to 5%. I would note that excluding the Chicago Marriott Downtown, which underwent a $35 million renovation this year, we are forecasting that our portfolio of hotels will have RevPAR growth of approximately 3.3% in 2008. So based on our present expectations for RevPAR growth for the full year, we project that the company would generate adjusted EBITDA of approximately $196 million, adjusted FFO of $153 million, and adjusted FFO per share of $1.60. The depth of the economic downturn and its eventual reacceleration will obviously impact ultimate results. For the second quarter, we have better visibility as we already have March results for our hotels that report on a monthly basis and there is greater visibility on near-term bookings. So for the second fiscal quarter of 2008, we expect same-store RevPAR to increase to 2% to 4%, adjusted EBITDA of $52 to $55 million, adjusted FFO of $41 to $43 million, and adjusted FFO per share of $0.43 to $0.45. Now, let me turn it over to John for details on our individual property performance, as well as our capital improvement initiatives.

I will spend a minute on our first-quarter property results and provide some additional perspective on our expected full-year 2008, hotel performance, as well as our capital improvement initiatives. As Bill mentioned, in the first quarter our strongest performer was the Westin Boston Waterfront Hotel, with RevPAR up 23.7%. The Boston market benefited from a strong convention calendar that is heavily weighted towards the first half of the year. Other strong performers included the Torrance South Bay Marriott, the Manhattan Courtyard and the Vail Marriott. Torrance had a good transient demand growth in the market and enjoyed an easy comp, New York City remains a strong market with International and other corporate demand, deep enough to overcome financial sector retrenchment and Vail enjoyed another good snow year. Weaker performers were our Atlanta hotels, as Atlanta remains soft, the Salt Lake City Marriott, which is being impacted by the development of the adjacent City Creek Center project Which is great for the hotel in the long run, but challenging during it’s multi-year construction, and the Oak Brook Hills Marriott that is suffering along with the rest of the southwest quarter of suburban Chicago. LAX revenue growth was solid, but flow through was negatively impacted by the implementation of LA’s Living Wage law. As expected the Chicago Marriott Downtown was our worst performer with negative 26.6% RevPAR, which is a result of our major public space repositioning and also a weak downtown market caused by the lack of citywide rooms generated by McCormick Place in Q1. About $2 million of the $3.4 million reduction in EBITDA in the quarter was from disruption. For the full year, we expect New York City and Torrance South Bay markets to continue their first quarter trend. The Westin Boston Waterfront performance was significantly moderate in the…

To wrap up our formal comments, we believe that DiamondRock is well positioned going forward at this stage of the lodging cycle with the stellar balance sheet and a renovated portfolio of 20 high quality hotels concentrated in gateway cities and destination resort locations. We will open it up for questions.

(Operator Instructions) Your first question comes from William Truelove - UBS.

Can you talk about your CapEx plans for this year and to what extent you are thinking next year and how that is going to relate relative to possible share repurchases?

Well the capital program that we have in place this year for the most part has begun or is in the design phase, but in general it bears no relationship to the share repurchase program. The capital plan going forward in ‘09 and beyond is really pretty limited in relation to what we’ve spent in the last three years. So, that will clearly have no impact.

I was under the impression maybe you didn’t repurchase any shares because of all the CapEx going into Chicago, is that?

No, that really wasn’t it the Board gave us authorization really at their meeting at the end of February. We really didn’t get our program in place and were also closed down during that period of time, just right before the earnings release for the year. We didn’t get the program really in place until roughly the second week in March if I remember correctly and when you look at our where our shares probably have traded there was an uptick, and we traded pretty high from let’s say, the 12th of March during that timeframe. So, it really had nothing to do with capital programs.

So, all the systems is in place and you can start doing it as soon as the timing of the window restrictions open up, right?

Yes, then as we explained in the past, we have a bias against the repurchase programs because we don’t think it’s very consistent with the REIT business model. So, we are looking for price that we feel is compelling.

Your next question comes from Chris Woronka - Deutsche Bank.

Can you talk a little bit about New York City, the Courtyard, you had nice RevPAR growth there, but it looks like the margins were down. And then just how should we think about as you continue to implement more contingencies, it looks like in the first quarter you would’ve needed about 5% RevPAR growth, to get flat and that’s excluding Chicago, how should we look about that for the back half of the year if more contingencies go into place.

There are a couple of things working here. First of all in the two Courtyards the flow through is actually pretty good, the house profit margins were up about 82 basis points in Midtown and I think about 150 basis points at Fifth Avenue. So, the operating flow through was good. What you are seeing happen there is below that line on a weighted EBITDA you’ve got incentive management fees, you’ve got property taxes and you’ve got some common area charges in the case of Midtown. And so the deterioration to the extent that there was any, happened below the house profit line. Going forward and speaking about flow-through for the first quarter, keep in mind the first quarter is the lowest volume quarter of our year, by a lot. It’s about 18% of our annual volume. So, the impact of fixed cost in the first quarter is the most dramatic in the year, so as you clear the volume hurdle if you will, when your incremental profits become greater, which is in the second quarter, particularly in the fourth quarter. For the year we expect margins to be as we’ve directed our goal is to remain flat at the house profit line at 3.5% RevPAR growth and we are confident we can do that. With respect to EBITDA as we’ve told you we have a few unusual things working against us in this year regarding particularly incentive management fees and yield support. So, that has to be factored in the EBITDA margins, but in terms of general flow through we are very comfortable that the contingency plan is in place that will allow us to meet our objectives.

Chris can I just step back on a couple of macro points on the margins. When we gave guidance at the beginning of the year, what our targets were, roughly 3.5% RevPAR growth, which is around the midpoint of the original guidance, we thought we could keep house profit margins flat and our guidance had of range of 2% to 5%. And we thought at 2% that probably be down 50 BPS and up 50 BPS at 5% growth. And within that we assumed after a lot of discussions with our property managers that we would achieve that in part with implementation of contingency plans. And then our EBITDA margins with that guidance were ranging from down 100 BPS to flat at 5% RevPAR growth and we had a couple of non-comp issues from ‘07 that are affecting the EBITDA margins below house profit, by about 25 BPS and it was principally the yield support last year. And the IMF holiday but that’s suites primarily. So, that was about 25 basis points. And then we got the disruption this year in Chicago, and that was around 20-25 basis points also. So, that is those two items really explain the principle difference between house profit margin growth and EBITDA margin growth.

Your next question comes from David Loeb - Robert W. Baird.

John, on the CapEx budget, it looks like your two biggest projects for the year, in terms of what you are spending this year were the ones that you have completed and it didn’t look like in the first quarter you’ve spent that the bulk of the annual CapEx. Is that really just timing, is it just some of that is going to get paid in the second quarter or did get paid in the second quarter or am I missing some larger projects in the last three quarters?

Yes that is right David. That work is complete, we are into the punch list and we are closing out the invoices as we speak and so they are being paid in the second quarter.

In general when you look at Boston versus your underwriting how is it tracking is it meeting your expectations or is it meeting or lagging?

It’s behind our underwriting expectations this year particularly. Part of that is the way the convention calendar fell, part of that is a more meaningful discount that we have to take to the Back Bay to get the transient business at the hotel. And part of it is probably a little more impact from the Renaissance Hotel that just opened. We had hoped that they would have more group room nights on the books when they opened and that has not been the case so far. But I think they are making great progress at this point. They were a little late opening so they had some trouble on the group bookings side. Going forward we see Weston as being a great growth performer as to whether or not it eventually gets up to the pro forma underwriting, we stabilize that I think in three years and had a pretty conservative growth rate beginning in the fourth year. So, we would still hope that we will get to our underwriting pro forma.

On the guidance provision is this the more macro, is it more market specific that is causing your somewhat greater degree of pessimism or conservatism?

I think it would be both because I think they are interrelated in a sense, We all read the same papers. We see which direction the economy is going. So, certainly there is a macro trend that gives us cause for concern knowing how lodging fundamentals tend to react with economic softness. But on top of that, we look very carefully at the specific property forecasts going forward for the rest of the year, really focusing on the demand assumptions focusing in the year for the year group rooms that need to be booked and looking at the transient demand and make judgments very frankly, as to what we think is more likely. So they worked together.

Your next question comes from Analyst for Dennis Forst - KeyBanc. Analyst for Dennis Forst – KeyBanc: Right now with the market not been conducive to any deals being done and with DiamondRock having a strong balance sheet. What terms would you have to have in a deal to seriously consider an acquisition?

I think we were still looking for accretive acquisitions. I think the big change now versus maybe a year ago is the underwriting, you can’t build in the growth that you could build in ‘05 in ‘06 if you are underwriting these assets. Because generally we are seeing, in the assets are looking at, that the budget and forecast in ‘08 is actually pretty flat with ’07. Good news is you don’t argue about which year to apply the multiple to, but the bad news is the multiple hasn’t reflected that reduced growth. So, in order for us to be acquirers it would need to be an accretive transaction, it would need to fit the portfolio strategy that we’ve clearly articulated, and we haven’t seen that combination yet.

Your next question comes from Michael Salinsky - RBC Capital Markets.

You talked about your group booking pace for 2008. Can you talk about the preliminary group booking pace for 2009 at this point, specifically with regards to Boston and Chicago?

Yes, as I mentioned in our remarks, the Boston Westin is dramatically up year-over-year. It’s up about well 77% as of the fourth period in its pace for next year, that’s versus same time last year. Chicago is up about 18% representing almost $4 million of incremental revenue, $25 total put on the books for the year. Now that’s great news because that’s very meaningful in the big hotels. However that represents the total group revenue on the books as of period three, represents about just over 40% of what we budgeted for total group revenue for 2008. So presuming there was a growth between ‘08 and ‘09, which there will be, it’s less than 40% of what we anticipate we’ll be trying to put on the books. So it’s indicative and its very, very positive statistic, we are 26% up versus same time last year in total group revenue on the books for the portfolio, but you can’t take it to the bank yet.

Secondly in terms of the Westin Boston, how much retail space remains to be leased in that and can you provide any updates on couple of quarters ago you talked about possibly looking at a second tower there on some of your by land. That’s still something you are still looking at?

Well, in the first question we have about 18,000 left to lease. Frankly, our greatest concern was getting the meeting space done, which we have, and getting that first restaurant tenant committed because it’s both a nice amenity for the hotel but it is also an opportunity to probably save some money on the existing food and beverage outlet in the hotel. Now, that there is an option for lunch and dinner on slow nights, we are hoping we are going to be able to save some money on the hotel outlets. With respect to the second question, the incremental tower, we did it a pro forma. We underwrote it, on late last year I believe it was. It was about third quarter last year, and the numbers just didn’t support the construction cost, even though we have got basically free land, we don’t think the timing is right yet. We still think the timing will be right at some point and it’s a good addition to the hotel. Because not only do you get the additional rooms, which obviously are more efficient to build, if you have already got the infrastructure in place but we could also very efficiently double the size of the grand ballroom there, which would be a great benefit to the hotel. So, it’s still on our radar screen but the timing is not right.

With regard to your data guidance, can you provide us with what you are expecting in terms of S&V this year and maybe on a year-over-year basis?

Yes, let’s probably take a look at that, for the year margins were up over 1%.

Your next question comes from Wan Kim – JMP Securities Wan Kim – JMP Securities : What are you seeing for the RevPAR growth trends for the second part of the year? It sounds like Q2 sounds pretty good. Someone did mention that Q4 might look pretty good, so are we seeing that Q3 is probably the weakest quarter, similar to what we saw in Q1?

The third quarter, what’s on the books from a group’s standpoint is actually down about 3% versus same time last year, so we have got some back filling we need to do. Q2 and Q4 are both up 9% in group bookings. In terms of transient forecast and overall forecast, we think the second and fourth quarter will be at the 3% range and the third quarter we think will be about flat on a RevPAR basis, up about 1%.

Your next question comes from Smedes Rose - KBW.

I just wanted a clarification that your 2% RevPAR growth expectations for the year, what margin declines did that incorporate now on the house profit margin and also on the EBITDA margin side?

That 2% for the full-year, you would have EBITDA margins down about 80 basis points and it’s probably 40 basis points, that’s house profit down 40, full year down about 80, obviously depending on the mix that will change but that’s our best estimate at this time.

And then the tenant leasing the space at the Boston Westin is that a nationally known chain or is it a local independent operator? What restaurant space or restaurant operator will it be?

It’s a popular local operator, Irish pub concept with a fairly high-end section on one level and more of a traditional pub on another level. It will serve lunch and dinner and of course breakfast is our strongest anchorage, so it’s really going to be very helpful to have them in there. And it’s a good credit.

Your next question is a follow-up from Analyst for Dennis Forst - KeyBanc.

I wanted to focus in a bit on the Marriott Chicago. Clearly, it had a tough first quarter you said that RevPAR I think for the year would be up 3.3% excluding the Chicago Marriott. I am wondering what that implies for the Chicago Marriott the rest of the year. Will that expansion aid the Marriott RevPAR for the last three quarters?

The Chicago Marriott in the second quarter, we think RevPAR will be up about 2.5%, 3%, down in the third quarter and then up marginally in the fourth quarter. Now keep in mind we have asked the property to go back and re-forecast on a fairly conservative basis, we hope. So that’s what is currently built into our guidance.

So the expansion really won’t fully contribute until ‘09 or until the economy gets better.

We are not putting it in our forecast to contribute meaningfully until ‘09. I will add that the third quarter in Chicago is a very, very weak, city wide quarter and so the incremental meeting space was important to keep us whole if you will or reduce the decline because we have about 11,000 in-house room nights we have been able to book because of that meeting space. So having it was important to stem the decline in the third quarter.

Your next question comes from Amanda Bryant - Merrill Lynch.

I know you touched very briefly in your commentary on the labor issue impacting profitability at your Los Angeles hotel. Are there any other labor, wage issues or union issues brewing in any other hotels properties in your portfolio that we at least might want to be aware of?

I wouldn’t say we have any brewing. We have felt in the first quarter in Boston a fairly dramatic wage increase, almost 19% and about half of that is because of higher volume, but about half of that is probably accounting. But we didn’t begin reserving for the new union contract until the May of last year so; the year-over-year comp is unrealistically low in the year ‘07. But going forward, we think we have got it all in the forecast in the guidance in Chicago and I see the LAX will continue to have an impact I think it’s about $30,000 a period for living wage.

So it was in Chicago and LAX is that correct?

I am sorry. I said Chicago, I didn’t mean to it. It’s just LAX for the living wage. Chicago is fairly normal, but we do have some incremental cost associated with the new meeting space.

Your last question is a follow-up from Chris Woronka with Deutsche Bank.

I think last quarter you mentioned you were considering or at least looking at a few asset sales any update on that, just given the potential changes in fundamentals and expectations?

Yes. On the disposition front we sold our SpringHill Suites Buckhead for about a 5.5 cap in December. There are couple lower growth properties that are on our potential disposition list. It’s really doing an analysis and what we think the current market pricing would be in the private market transaction. We are still going through that evaluation process and haven’t made any current repositions at this point.

At this time you don’t have anymore question in queue.

Thank you very much for joining us today, and we will talk to you again. Good-bye.