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Park Hotels & Resorts(PK) - 2025 Q1 - Earnings Call Transcript
PKPark Hotels & Resorts(PK)2025-05-05 14:00
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Financial Data and Key Metrics Changes - The company reported Q1 RevPAR of 178,reflectingamodest70basispointdeclineyear−over−year,primarilyduetodifficultcomparisonsfollowinglastyear′snearly8178, reflecting a modest 70 basis point decline year-over-year, primarily due to difficult comparisons following last year's nearly 8% growth [18] - Total hotel revenues for the quarter were 608 million, with hotel adjusted EBITDA at 151million,resultinginanearly25151 million, resulting in a nearly 25% hotel adjusted EBITDA margin [18] - Adjusted EBITDA for the quarter was 144 million, and adjusted FFO per share was 0.46[19]BusinessLineDataandKeyMetricsChanges−TheBonnetCreekcomplexinOrlandosawa320.46 [19] Business Line Data and Key Metrics Changes - The Bonnet Creek complex in Orlando saw a 32% RevPAR increase, driven by a surge in transient revenues of nearly 65% [10] - Casa Marina in Key West delivered a 12% RevPAR increase, with occupancy up 680 basis points [11] - RevPAR across the two Hawaii properties declined by 15%, with Hilton Hawaiian Village significantly impacted by a labor strike [12] Market Data and Key Metrics Changes - Miami, New Orleans, Puerto Rico, Washington DC, and San Francisco reported above industry average RevPAR gains [5] - Preliminary April results showed mixed performance, with RevPAR growth of 1.6%, driven by strong gains in New York, Orlando, and San Francisco [15] - International demand represents just 10% of total room nights, with government-related business accounting for only 3% [16] Company Strategy and Development Direction - The company plans to invest 310 million to 330millionincapitalimprovementsin2025,focusingonunlockingembeddedvalueinitsportfolio[8]−AtransformativerenovationoftheRoyalPalmSouthBeach,Miami,issettobeginsoon,withexpectedreturnsexceeding15330 million in capital improvements in 2025, focusing on unlocking embedded value in its portfolio [8] - A transformative renovation of the Royal Palm South Beach, Miami, is set to begin soon, with expected returns exceeding 15% to 20% [6] - The company aims to sell 300 million to 400millionofnon−corehotelsthisyear,withseveralassetsinvariousstagesofmarketing[9]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedcautiousoptimismregardingtheongoinggeopoliticaluncertaintiesandtheirimpactondecision−makinginthemarket[26]−TheoutlookforHawaiiremainsfavorable,supportedbylimitednewsupplyexpectedthroughatleast2029[14]−Despitemacrouncertainties,thecompanyremainsfocusedonfactorswithinitscontrolandisworkingcloselywithoperatorstomanageoperatingexpenses[16]OtherImportantInformation−Thecompanyrepurchasedapproximately3.5millionsharesforatotalof400 million of non-core hotels this year, with several assets in various stages of marketing [9] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the ongoing geopolitical uncertainties and their impact on decision-making in the market [26] - The outlook for Hawaii remains favorable, supported by limited new supply expected through at least 2029 [14] - Despite macro uncertainties, the company remains focused on factors within its control and is working closely with operators to manage operating expenses [16] Other Important Information - The company repurchased approximately 3.5 million shares for a total of 45 million during the quarter [9] - A $70 million impairment was recognized in the quarter, related to an asset whose true value was reassessed [75] Q&A Session Summary Question: Comments on planned asset sales and current market environment - Management acknowledged tremendous uncertainty in the market due to geopolitical issues and trade wars, but expressed confidence in their ability to transact even under challenging conditions [26][27] Question: Update on Hawaii's performance and ramp-up post-strike - Management noted that the ramp-up is taking longer than expected, with sequential improvement anticipated, and expressed confidence in Hawaii's long-term growth potential [30][31] Question: Changes in core hotels and capital allocation - The company has focused on trimming its portfolio to core assets that account for 85-90% of its value, with plans to recycle capital from non-core asset sales [35][36] Question: Group pace and market performance expectations - Management indicated that group pace is slightly down for Q2 and Q3 but remains strong for Q4, with confidence in the overall bookings for the year [60][61] Question: Performance of Hilton Hawaiian Village and EBITDA expectations - Management stated that while it is challenging to predict if EBITDA will exceed last year's performance, they remain bullish on Hawaii's long-term outlook [73][74]