Park Hotels & Resorts(PK) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q4 2024, RevPAR was $179, a decline of 1.4$256 [32] - Q4 hotel revenue was $600 million, with hotel adjusted EBITDA of$147 million, resulting in an adjusted EBITDA margin of 24.6% [32] - For the full year, adjusted EBITDA was $652 million, with adjusted FFO per share at$2.06 [33] Business Line Data and Key Metrics Changes - The Waldorf Astoria Bonnet Creek reported an 85% surge in transient revenues and a 40% increase in ancillary revenues [19] - Casa Marina in Key West saw a 77% increase in RevPAR during Q4, with a RevPAR index of 126, marking the highest quarterly performance since 2019 [20] - The Hilton Chicago experienced nearly 15% RevPAR growth, contributing to a 53 basis point improvement in EBITDA margin [22] Market Data and Key Metrics Changes - In Hawaii, the Hilton Hawaiian Village was negatively impacted by a 45-day labor strike, accounting for a nearly 540 basis point headwind to total portfolio RevPAR [22] - The company anticipates a solid rebound for the resort in 2025, driven by increased domestic travel and convention activity [23] - January 2025 RevPAR finished 2.7% lower than the prior year, but performance is expected to improve throughout the quarter [40] Company Strategy and Development Direction - The company plans to divest $300 to$400 million of non-core assets to improve portfolio quality and pay down debt [11][12] - A $100 million investment is planned for the Royal Palm Resort in South Beach, aimed at significantly elevating the property's quality [15][16] - The company is focused on capital allocation to maximize shareholder returns, including reinvestment into core portfolio hotels [12][29] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2025, expecting RevPAR growth of 0$0.25 per share, translating to a yield of 7.5% to 8% at current trading levels [41] - The company has a robust ROI pipeline exceeding $1 billion, with an estimated incremental value creation potential of over$300 million [17] Q&A Session Summary Question: Disposition target and capital deployment - Management confirmed the target of $300 million to$400 million for non-core asset sales and emphasized the focus on reinvesting in core projects and paying down debt [45][49] Question: CMBS debt refinancing strategy - Management discussed the $1.4 billion CMBS debt maturing in 2026 and indicated that they are exploring various strategies for refinancing [50][52] Question: Hawaii market expectations - Management expects a soft first quarter for Hawaii but anticipates significant growth in Q3 and Q4, with low to mid-single digit RevPAR growth by year-end [66][67] Question: Royal Palm positioning in Miami - Management highlighted the Royal Palm's potential to double EBITDA post-renovation and its strategic location among high-end competitors [78][84] Question: Bonnet Creek asset performance - Management expressed bullish sentiment regarding Bonnet Creek's performance, with expectations for continued growth driven by group bookings and market demand [90][92] Question: Chicago hotel brand changes - Management noted that the brand switch to Tribute is expected to enhance operational efficiency and provide more flexibility for future asset sales [95][102]