Diamondrock Hospitality Company Acquires Chico Hot Springs Resort in Paradise Valley, Montana
DiamondRock Hospitality Company (the "Company") (NYSE: DRH) announced that it has acquired the fee-simple interest in the Chico Hot Springs Resort (the "Resort"), a lifestyle resort in Paradise Valley, Montana and near Yellowstone National Park. The purchase price for the Resort and adjacent ranch (collectively, "Chico") is $33 million. Chico was acquired from an individual owner-operator and is an independent resort, completely unencumbered by brand and management agreements.
The $27 million purchase price for the 117-room, 153-acre Resort represents an 8.1% capitalization rate on 2022 net operating income ("NOI"). Year-to-date comparable RevPAR growth through the second quarter 2023 was 8.7%. The adjacent ranch, a 595-acre parcel purchased for approximately $6 million, provides extensive on-site trails for hiking and horseback riding as well as potential for future expansion of the Resort or residential lot sales. We expect Chico will generate a 10.5% NOI yield on the total $33 million purchase price upon stabilization. The acquisition was funded from corporate cash on hand.
"Chico Hot Springs Resort is another example of DiamondRock's leadership in identifying attractive investment opportunities that align with our focus on unique, leisure-oriented experiential hotels and resorts," said Mark W. Brugger, President and Chief Executive Officer of DiamondRock Hospitality Company. "Acquiring owner-operated properties in unique markets often allows DiamondRock to achieve superior returns on high quality real estate. Moreover, Chico has numerous of the attractive attributes we target, such as durable cash flow, significant ROI opportunities, irreplaceable location, fee-simple and fully unencumbered by brand and management."
About Chico Hot Springs Resort
Chico Hot Springs Resort is an authentic western-style resort situated in the heart of Montana's stunning Paradise Valley and convenient to the only year-round vehicle entrance to Yellowstone National Park. Situated at the base of Emigrant Peak, this four-season, full-service resort offers miles of trails for hiking, mountain biking, horseback riding as well as expeditions for world-class fly fishing, dog sledding, rock climbing and cross-country skiing. Two open-air natural mineral hot springs provide guests an opportunity to soak, swim and play all year long, and the same springs provide environmentally friendly geothermal energy to the property. The resort offers a variety of accommodation options -ranging from the authentic historic lodge to luxurious cabins and chalets to glamping opportunities overlooking Paradise Valley. The Resort has three dining outlets, including the authentic Chico Saloon and fine dining in the Historic Dining Room led by a James Beard Award semi-finalist. The restaurant is considered one of the region's best restaurants and is consistently awarded Wine Spectator's Best of Award of Excellence.
The Resort and adjacent ranch, in total, comprise 748 acres of land that provide numerous recreation options as well as exceptional vistas from the property. We believe there is a significant opportunity to enhance revenues, implement yield management, and broaden distribution channels. The Company has installed a professional management company to execute its operating plan as well as to pursue many high return-on-investment opportunities including additional rooms and glamping, affordable workforce housing, and renewable power.