Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK)
today announced results for the third quarter ended
September 30, 2023, a special dividend and provided an
operational update.
Selected Statistical and Financial
Information
References to Park's "Current" hotels and "Current" financial
metrics include all 41 consolidated hotels owned as of
September 30, 2023, including the 1,921-room Hilton San
Francisco Union Square and 1,024-room Parc 55 San Francisco – a
Hilton Hotel (collectively, the "Hilton San Francisco Hotels").
References to Park's "Comparable" hotels and "Comparable" financial
metrics exclude the Hilton San Francisco Hotels.
(unaudited, amounts in millions, except RevPAR, ADR, Total
RevPAR and per share data)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change(1) |
|
|
2023 |
|
|
|
2022 |
|
|
Change(1) |
Current
Hotels: |
|
|
|
|
|
|
|
|
|
|
|
Current RevPAR |
$ |
178.13 |
|
|
$ |
172.91 |
|
|
3.0 |
% |
|
$ |
173.62 |
|
|
$ |
154.77 |
|
|
12.2 |
% |
Current Occupancy |
|
73.9 |
% |
|
|
71.4 |
% |
|
2.5 |
% pts |
|
|
71.1 |
% |
|
|
64.3 |
% |
|
6.8 |
% pts |
Current ADR |
$ |
241.06 |
|
|
$ |
242.21 |
|
|
(0.5 |
)% |
|
$ |
244.23 |
|
|
$ |
240.80 |
|
|
1.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Current Total RevPAR |
$ |
270.85 |
|
|
$ |
260.57 |
|
|
3.9 |
% |
|
$ |
273.22 |
|
|
$ |
240.52 |
|
|
13.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Comparable
Hotels: |
|
|
|
|
|
|
|
|
|
|
|
Comparable RevPAR |
$ |
182.08 |
|
|
$ |
177.12 |
|
|
2.8 |
% |
|
$ |
178.74 |
|
|
$ |
162.01 |
|
|
10.3 |
% |
Comparable Occupancy |
|
75.3 |
% |
|
|
72.6 |
% |
|
2.7 |
% pts |
|
|
73.2 |
% |
|
|
67.1 |
% |
|
6.1 |
% pts |
Comparable ADR |
$ |
241.74 |
|
|
$ |
243.91 |
|
|
(0.9 |
)% |
|
$ |
244.12 |
|
|
$ |
241.30 |
|
|
1.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Total RevPAR |
$ |
281.21 |
|
|
$ |
270.89 |
|
|
3.8 |
% |
|
$ |
284.92 |
|
|
$ |
254.23 |
|
|
12.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
$ |
31 |
|
|
$ |
40 |
|
|
(22.5 |
)% |
|
$ |
(82 |
) |
|
$ |
138 |
|
|
(159.4 |
)% |
Net income (loss) attributable
to stockholders |
$ |
27 |
|
|
$ |
35 |
|
|
(22.9 |
)% |
|
$ |
(90 |
) |
|
$ |
128 |
|
|
(170.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
$ |
85 |
|
|
$ |
92 |
|
|
(8.5 |
)% |
|
$ |
67 |
|
|
$ |
212 |
|
|
(68.3 |
)% |
Operating income margin |
|
12.5 |
% |
|
|
13.9 |
% |
|
(140 |
) bps |
|
|
3.3 |
% |
|
|
11.5 |
% |
|
(820 |
) bps |
|
|
|
|
|
|
|
|
|
|
|
|
Current Hotel Adjusted
EBITDA |
$ |
173 |
|
|
$ |
165 |
|
|
5.0 |
% |
|
$ |
514 |
|
|
$ |
450 |
|
|
14.2 |
% |
Current Hotel Adjusted EBITDA
margin |
|
26.3 |
% |
|
|
26.0 |
% |
|
30 |
bps |
|
|
26.1 |
% |
|
|
26.0 |
% |
|
10 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Hotel Adjusted
EBITDA |
$ |
172 |
|
|
$ |
162 |
|
|
6.4 |
% |
|
$ |
509 |
|
|
$ |
456 |
|
|
11.7 |
% |
Comparable Hotel Adjusted
EBITDA margin |
|
28.4 |
% |
|
|
27.7 |
% |
|
70 |
bps |
|
|
28.0 |
% |
|
|
28.1 |
% |
|
(10 |
) bps |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
163 |
|
|
$ |
158 |
|
|
3.2 |
% |
|
$ |
496 |
|
|
$ |
447 |
|
|
11.0 |
% |
Adjusted FFO attributable to
stockholders |
$ |
108 |
|
|
$ |
94 |
|
|
14.9 |
% |
|
$ |
329 |
|
|
$ |
251 |
|
|
31.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share –
Diluted(1) |
$ |
0.13 |
|
|
$ |
0.15 |
|
|
(13.3 |
)% |
|
$ |
(0.42 |
) |
|
$ |
0.55 |
|
|
(176.4 |
)% |
Adjusted FFO per share –
Diluted(1) |
$ |
0.51 |
|
|
$ |
0.42 |
|
|
21.4 |
% |
|
$ |
1.52 |
|
|
$ |
1.09 |
|
|
39.4 |
% |
Weighted average shares
outstanding – Diluted |
|
212 |
|
|
|
224 |
|
|
(12 |
) |
|
|
216 |
|
|
|
229 |
|
|
(13 |
) |
______________________________________________
(1) Amounts are calculated based on unrounded
numbers.Thomas J. Baltimore, Jr., Chairman and Chief Executive
Officer, stated, "I am very encouraged by our third quarter
results, which were driven by continued RevPAR growth in our key
urban markets as well as the continued acceleration of group
business. Comparable RevPAR for the third quarter of 2023 increased
approximately 3% compared to the third quarter of 2022, or nearly
5% excluding the Casa Marina Key West, Curio Collection, where
operations were suspended throughout the third quarter for a
comprehensive renovation. Highlights during the quarter include a
7% increase in Comparable RevPAR across our urban portfolio that
was driven by the New York Hilton Midtown where RevPAR increased
nearly 30% coupled with continued strength at our Hawaii hotels.
Group performance also continues to accelerate, with Comparable
group revenues for the third quarter of 2023 up 12% year-over-year
and 2024 Comparable Group Revenue Pace up nearly 18% compared to
the same time last year.
"In addition to our operating achievements, we executed
important strategic capital allocation initiatives, including the
repurchase of 5.8 million shares of our common stock under our
existing repurchase program at a significant discount to our
estimated net asset value, and reinvested over $70 million back
into our current portfolio, nearly half of which was for the Casa
Marina Key West, Curio Collection, where we began to welcome guests
back in October. With approximately $1.7 billion of liquidity, we
believe we are well-positioned to continue executing on our
strategic initiatives, including reshaping our portfolio, investing
in strategic ROI projects and opportunistically repurchasing stock
and/or acquiring assets, to create long-term value for our
shareholders.
"Finally, we have reached a significant milestone in exiting our
two Hilton San Francisco Hotels. The hotels have been placed into a
court-ordered receivership giving the receiver full authority and
control over the hotels’ operations. Consequently, Park no longer
has an economic interest in and will not financially support the
hotels' operations. With San Francisco still facing an elongated
recovery, we firmly believe our difficult but necessary decision to
exit these assets and greatly reduce our market exposure is in the
best interest of our shareholders.”
Additional Highlights
- In August 2023, repurchased a total of
5.8 million shares under the existing repurchase program at an
average price of $13.00 per share, for approximately $75
million;
- In October 2023, the trustee for the
$725 million non-recourse CMBS Loan ("SF Mortgage Loan") filed a
lawsuit against the borrowers under the SF Mortgage Loan. In
connection with the lawsuit, the court appointed a receiver to take
control of the Hilton San Francisco Hotels, which serve as security
for the SF Mortgage Loan, and their operations, and thus, Park has
no further economic interest in the operations of the hotels. The
receiver will operate and has authority over the hotels and, until
no later than November 1, 2024, has the ability to sell the hotels.
The lawsuit contemplates the receivership will end with a
non-judicial foreclosure by December 2, 2024, if the hotels are not
sold within the predetermined sale period;
- On October 27, 2023, Park's Board of
Directors declared a special cash dividend of $0.77 per share in
connection with the effective exit from the Hilton San Francisco
Hotels, which results in a required additional distribution. The
special dividend will be paid on January 16, 2024 to stockholders
of record as of December 29, 2023; and
- Park participated in the 2023 Global
Real Estate Sustainability Benchmark ("GRESB") assessment, ranking
in the top third of all publicly listed GRESB participant companies
in the Americas and registering a three-point increase over 2022,
continuing the Company's trend of enhancing its overall
Environmental, Social and Governance program and making meaningful
improvements toward decarbonization.
Operational Update
Changes in Park's 2023 Current ADR, Occupancy and RevPAR
compared to the same periods in 2022, and 2023 Current Occupancy
were as follows:
|
Current ADR |
|
Current Occupancy |
|
|
Current RevPAR |
|
|
Current Occupancy |
|
2023 vs 2022 |
|
2023 vs 2022 |
|
|
2023 vs 2022 |
|
|
2023 |
Q1 2023 |
6.7 |
% |
|
14.1 |
% pts |
|
36.5 |
% |
|
|
64.8 |
% |
|
|
|
|
|
|
|
|
|
|
Q2 2023 |
(0.2 |
) |
|
3.9 |
|
|
5.3 |
|
|
|
74.4 |
|
|
|
|
|
|
|
|
|
|
|
Jul 2023 |
(3.4 |
) |
|
3.3 |
|
|
1.0 |
|
|
|
75.9 |
|
Aug 2023 |
1.5 |
|
|
2.6 |
|
|
5.4 |
|
|
|
72.2 |
|
Sep 2023 |
0.8 |
|
|
1.6 |
|
|
3.0 |
|
|
|
73.6 |
|
Q3 2023 |
(0.5 |
) |
|
2.5 |
|
|
3.0 |
|
|
|
73.9 |
|
|
|
|
|
|
|
|
|
|
|
Preliminary Oct 2023 |
3.5 |
|
|
1.9 |
|
|
6.2 |
|
|
|
75.0 |
|
Changes in Park's 2023 Current ADR, Occupancy and RevPAR for the
three and nine months ended September 30, 2023 compared to the
same periods in 2022, and 2023 Current Occupancy for the three and
nine months ended September 30, 2023 by hotel type were as
follows:
|
Three Months Ended September 30, |
|
Current ADR |
|
Current Occupancy |
|
|
Current RevPAR |
|
|
Current Occupancy |
|
2023 vs 2022 |
|
2023 vs 2022 |
|
|
2023 vs 2022 |
|
|
2023 |
Resort |
(1.5 |
)% |
|
(0.8 |
)% pts |
|
(2.5 |
)% |
|
75.1 |
% |
Urban |
0.6 |
|
|
3.9 |
|
|
6.4 |
|
|
71.9 |
|
Airport |
3.2 |
|
|
5.8 |
|
|
11.3 |
|
|
80.0 |
|
Suburban |
(1.4 |
) |
|
1.2 |
|
|
0.3 |
|
|
69.4 |
|
All Types |
(0.5 |
) |
|
2.5 |
|
|
3.0 |
|
|
73.9 |
|
|
Nine Months Ended September 30, |
|
Current ADR |
|
|
Current Occupancy |
|
|
Current RevPAR |
|
|
Current Occupancy |
|
2023 vs 2022 |
|
|
2023 vs 2022 |
|
|
2023 vs 2022 |
|
|
2023 |
Resort |
(1.6 |
)% |
|
3.3 |
% pts |
|
2.8 |
% |
|
|
78.4 |
% |
Urban |
3.9 |
|
|
10.0 |
|
|
22.4 |
|
|
|
66.0 |
|
Airport |
7.3 |
|
|
4.1 |
|
|
13.6 |
|
|
|
74.6 |
|
Suburban |
4.0 |
|
|
6.9 |
|
|
16.3 |
|
|
|
65.2 |
|
All Types |
1.4 |
|
|
6.8 |
|
|
12.2 |
|
|
|
71.1 |
|
The Current Rooms Revenue mix for the three and nine months
ended September 30, 2023 and 2022 were as follows:
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
2023 |
|
|
2022 |
|
|
Change |
|
2023 |
|
|
2022 |
|
|
Change |
Group |
26.0 |
% |
|
23.0 |
% |
|
3.0 |
% |
|
29.4 |
% |
|
25.9 |
% |
|
3.5 |
% |
Transient |
65.6 |
|
|
70.4 |
|
|
(4.8 |
) |
|
62.8 |
|
|
67.5 |
|
|
(4.7 |
) |
Contract |
6.2 |
|
|
4.5 |
|
|
1.7 |
|
|
5.6 |
|
|
4.4 |
|
|
1.2 |
|
Other |
2.2 |
|
|
2.1 |
|
|
0.1 |
|
|
2.2 |
|
|
2.2 |
|
|
— |
|
Park continued to see improvements in demand as business travel
accelerated and group demand continued to return to its urban
hotels. During the third quarter of 2023, Comparable group bookings
for 2023 increased by over $25 million, or over 110,000 room
nights, as compared to the end of June 2023, of which approximately
$10 million was recognized during the third quarter. As of the end
of September 2023, Comparable Group Revenue Pace and room night
bookings for 2023 were nearly 93% and over 86% of what 2019 group
bookings were as of the end of September 2019, respectively, with
average Comparable group rates exceeding 2019 average group rates
by nearly 8% for the same time period. In addition, 2024 Comparable
Group Revenue Pace increased nearly 18% compared to the same time
last year.
Results for Park's Current hotels in each of the Company’s key
markets are as follows:
(unaudited) |
|
|
|
|
Current ADR |
|
Current Occupancy |
|
Current RevPAR |
|
Hotels |
|
Rooms |
|
3Q23 |
|
3Q22 |
|
Change(1) |
|
3Q23 |
|
3Q22 |
|
Change |
|
3Q23 |
|
3Q22 |
|
Change(1) |
Hawaii |
2 |
|
3,507 |
|
$ |
322.09 |
|
$ |
319.46 |
|
0.8 |
% |
|
92.0 |
% |
|
89.7 |
% |
|
2.3% pts |
|
$ |
296.29 |
|
$ |
286.37 |
|
3.5 |
% |
San Francisco |
4 |
|
3,605 |
|
|
239.14 |
|
|
237.30 |
|
0.8 |
|
|
65.5 |
|
|
64.7 |
|
|
0.8 |
|
|
|
156.61 |
|
|
153.46 |
|
2.1 |
|
Orlando |
3 |
|
2,325 |
|
|
188.44 |
|
|
188.84 |
|
(0.2 |
) |
|
60.3 |
|
|
59.3 |
|
|
1.0 |
|
|
|
113.54 |
|
|
111.82 |
|
1.5 |
|
New Orleans |
1 |
|
1,622 |
|
|
157.49 |
|
|
175.06 |
|
(10.0 |
) |
|
56.4 |
|
|
55.6 |
|
|
0.8 |
|
|
|
88.82 |
|
|
97.37 |
|
(8.8 |
) |
Boston |
3 |
|
1,536 |
|
|
267.12 |
|
|
252.53 |
|
5.8 |
|
|
86.1 |
|
|
85.1 |
|
|
1.0 |
|
|
|
230.03 |
|
|
214.94 |
|
7.0 |
|
New York |
1 |
|
1,878 |
|
|
302.44 |
|
|
290.39 |
|
4.1 |
|
|
92.2 |
|
|
74.4 |
|
|
17.8 |
|
|
|
278.78 |
|
|
215.92 |
|
29.1 |
|
Southern California |
5 |
|
1,773 |
|
|
263.09 |
|
|
278.65 |
|
(5.6 |
) |
|
79.7 |
|
|
79.3 |
|
|
0.4 |
|
|
|
209.58 |
|
|
220.86 |
|
(5.1 |
) |
Chicago |
3 |
|
2,467 |
|
|
227.83 |
|
|
236.69 |
|
(3.7 |
) |
|
69.4 |
|
|
68.4 |
|
|
1.0 |
|
|
|
158.20 |
|
|
161.94 |
|
(2.3 |
) |
Key West(2) |
2 |
|
461 |
|
|
409.71 |
|
|
396.50 |
|
3.3 |
|
|
25.2 |
|
|
66.5 |
|
|
(41.3 |
) |
|
|
103.07 |
|
|
263.46 |
|
(60.9 |
) |
Denver |
1 |
|
613 |
|
|
202.05 |
|
|
201.32 |
|
0.4 |
|
|
81.8 |
|
|
73.3 |
|
|
8.5 |
|
|
|
165.19 |
|
|
147.47 |
|
12.0 |
|
Miami |
1 |
|
393 |
|
|
177.55 |
|
|
205.55 |
|
(13.6 |
) |
|
71.3 |
|
|
75.0 |
|
|
(3.7 |
) |
|
|
126.59 |
|
|
154.22 |
|
(17.9 |
) |
Washington, D.C. |
2 |
|
1,085 |
|
|
173.20 |
|
|
160.78 |
|
7.7 |
|
|
77.2 |
|
|
66.5 |
|
|
10.7 |
|
|
|
133.77 |
|
|
107.03 |
|
25.0 |
|
Seattle |
2 |
|
1,246 |
|
|
187.14 |
|
|
187.53 |
|
(0.2 |
) |
|
82.5 |
|
|
68.3 |
|
|
14.2 |
|
|
|
154.39 |
|
|
128.04 |
|
20.6 |
|
Other |
11 |
|
3,862 |
|
|
193.45 |
|
|
192.14 |
|
0.7 |
|
|
68.4 |
|
|
68.7 |
|
|
(0.3 |
) |
|
|
132.40 |
|
|
132.02 |
|
0.3 |
|
All
Markets |
41 |
|
26,373 |
|
$ |
241.06 |
|
$ |
242.21 |
|
(0.5 |
%) |
|
73.9 |
% |
|
71.4 |
% |
|
2.5% pts |
|
$ |
178.13 |
|
$ |
172.91 |
|
3.0 |
% |
______________________________________________(1) Calculated
based on unrounded
numbers.(2) In mid-May 2023,
operations at the Casa Marina Key West, Curio Collection, were
suspended for a full-scale renovation.
San Francisco Market Update
In October 2023, the trustee for the SF Mortgage Loan filed a
lawsuit against the borrowers under the loan. In connection with
the lawsuit, the court appointed a receiver to take control of the
Hilton San Francisco Hotels, which serve as security for the SF
Mortgage Loan, and their operations, and thus, Park has no further
economic interest in the operations of the hotels. Therefore, Park
is providing the below Comparable results, which exclude these
hotels.
Results for Park's Comparable hotels compared to its Current
hotels for the three and nine months ended September 30, 2023
are as follows:
|
Three Months Ended September 30, 2023 |
|
Nine Months Ended September 30, 2023 |
|
Comparable Hotels |
|
CurrentHotels |
|
Difference(1) |
|
Comparable Hotels |
|
CurrentHotels |
|
Difference(1) |
RevPAR |
$ |
182.08 |
|
|
$ |
178.13 |
|
|
2.2 |
% |
|
$ |
178.74 |
|
|
$ |
173.62 |
|
|
3.0 |
% |
Occupancy |
|
75.3 |
% |
|
|
73.9 |
% |
|
1.4 |
% pts |
|
|
73.2 |
% |
|
|
71.1 |
% |
|
2.1 |
% pts |
ADR |
$ |
241.74 |
|
|
$ |
241.06 |
|
|
0.3 |
% |
|
$ |
244.12 |
|
|
$ |
244.23 |
|
|
— |
% |
Hotel Adjusted EBITDA
margin |
|
28.4 |
% |
|
|
26.3 |
% |
|
210 |
bps |
|
|
28.0 |
% |
|
|
26.1 |
% |
|
190 |
bps |
______________________________________________(1) Calculated
based on unrounded numbers.
Results for Park's Comparable urban hotels compared to its
Current urban hotels for the three and nine months ended
September 30, 2023 are as follows:
|
Three Months Ended September 30, 2023 |
|
Nine Months Ended September 30, 2023 |
|
Comparable Urban Hotels |
|
Current Urban Hotels |
|
Difference(1) |
|
Comparable Urban Hotels |
|
Current Urban Hotels |
|
Difference(1) |
RevPAR |
$ |
172.90 |
|
|
$ |
166.62 |
|
|
3.8 |
% |
|
$ |
161.77 |
|
|
$ |
154.84 |
|
|
4.5 |
% |
Occupancy |
|
74.9 |
% |
|
|
71.9 |
% |
|
3.0 |
% pts |
|
|
69.8 |
% |
|
|
66.0 |
% |
|
3.8 |
% pts |
ADR |
$ |
230.98 |
|
|
$ |
231.72 |
|
|
(0.3) |
% |
|
$ |
231.83 |
|
|
$ |
234.50 |
|
|
(1.1) |
% |
Hotel Adjusted EBITDA
margin |
|
25.6 |
% |
|
|
21.0 |
% |
|
460 |
bps |
|
|
21.2 |
% |
|
|
17.8 |
% |
|
340 |
bps |
______________________________________________(1) Calculated
based on unrounded numbers.
Monthly RevPAR results for Park's Comparable hotels compared to
its Current hotels are as follows:
|
2023 Comparable Hotels |
|
2022 Comparable Hotels |
|
2023 vs 2022(1) |
|
2023 Current Hotels |
|
2022 Current Hotels |
|
2023 vs 2022(1) |
|
2023 Comparable vs
Current(1) |
July |
$ |
192.95 |
|
$ |
191.56 |
|
0.7 |
% |
|
$ |
185.65 |
|
$ |
183.83 |
|
1.0 |
% |
|
3.9 |
% |
August |
|
170.95 |
|
|
162.85 |
|
5.0 |
|
|
|
167.49 |
|
|
158.97 |
|
5.4 |
|
|
2.1 |
|
September |
|
182.35 |
|
|
176.95 |
|
3.1 |
|
|
|
181.35 |
|
|
176.02 |
|
3.0 |
|
|
0.6 |
|
Q3 |
|
182.08 |
|
|
177.12 |
|
2.8 |
|
|
|
178.13 |
|
|
172.91 |
|
3.0 |
|
|
2.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October(2) |
|
198.34 |
|
|
187.51 |
|
5.8 |
|
|
|
191.14 |
|
|
180.02 |
|
6.2 |
|
|
3.8 |
|
______________________________________________(1) Calculated
based on unrounded
numbers.(2) October 2023
Comparable and Current RevPAR are preliminary.
Balance Sheet and Liquidity
As of September 30, 2023, Park's Net Debt was $3.9 billion.
Excluding the SF Mortgage Loan, $26 million of restricted cash
associated with the Hilton San Francisco Hotels and the $162
million special dividend resulting from Park's effective exit from
the Hilton San Francisco Hotels, Net Debt as of September 30, 2023
was $3.4 billion.
As of September 30, 2023, the weighted average maturity of
Park's consolidated debt, excluding the SF Mortgage Loan, is 3.7
years. Park's current liquidity is approximately $1.7 billion,
including approximately $950 million of available capacity under
the Company's revolving credit facility ("Revolver").
Park had the following debt outstanding as of September 30,
2023:
(unaudited,
dollars in millions) |
|
|
|
|
Debt |
|
Collateral |
|
Interest Rate |
|
Maturity Date |
|
As of September 30,
2023 |
Fixed Rate Debt |
|
|
|
|
|
|
|
|
Mortgage loan |
|
Hilton Denver City Center |
|
4.90% |
|
|
March 2024(1) |
|
$ |
54 |
|
Mortgage loan |
|
Hyatt Regency Boston |
|
4.25% |
|
|
July 2026 |
|
|
129 |
|
Mortgage loan |
|
DoubleTree Hotel Spokane City Center |
|
3.62% |
|
|
July 2026 |
|
|
14 |
|
Mortgage loan |
|
Hilton Hawaiian Village Beach Resort |
|
4.20% |
|
|
November 2026 |
|
|
1,275 |
|
Mortgage loan |
|
Hilton Santa Barbara Beachfront Resort |
|
4.17% |
|
|
December 2026 |
|
|
160 |
|
Mortgage loan |
|
DoubleTree Hotel Ontario Airport |
|
5.37% |
|
|
May 2027 |
|
|
30 |
|
2025 Senior Notes |
|
|
|
7.50% |
|
|
June 2025 |
|
|
650 |
|
2028 Senior Notes |
|
|
|
5.88% |
|
|
October 2028 |
|
|
725 |
|
2029 Senior Notes |
|
|
|
4.88% |
|
|
May 2029 |
|
|
750 |
|
Comparable Fixed Rate Debt |
|
|
|
5.24%(2) |
|
|
|
|
3,787 |
|
|
|
|
|
|
|
|
|
|
Mortgage loan |
|
Hilton San Francisco Union Square, Parc 55 San Francisco – a Hilton
Hotel |
|
7.11%(3) |
|
November 2023 |
|
|
725 |
|
Total Fixed Rate Debt |
|
|
|
5.54%(2) |
|
|
|
|
4,512 |
|
|
|
|
|
|
|
|
|
|
Variable Rate
Debt |
|
|
|
|
|
|
|
|
Revolver(4) |
|
Unsecured |
|
SOFR + 2.10% |
|
December 2026 |
|
|
— |
|
Total Variable Rate Debt |
|
|
|
7.43% |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
Add: unamortized premium |
|
|
|
|
|
|
|
|
1 |
|
Less: unamortized
deferred financing costs and discount |
|
|
|
|
|
|
(23 |
) |
Total Debt(5) |
|
|
|
5.54%(2) |
|
|
|
$ |
4,490 |
|
______________________________________________(1) The loan
matures in August 2042 but is callable by the lender with six
months of notice. As of September 30, 2023, Park had not
received notice from the lender.(2) Calculated on a weighted
average basis. (3) In June 2023, Park ceased making debt
service payments toward the non-recourse SF Mortgage Loan, and Park
has received a notice of default. The stated rate on the loan is
4.11%, however, beginning June 1, 2023, the default interest rate
on the loan is 7.11%. Additionally, beginning June 1, 2023, the
loan accrues a monthly late payment administrative fee of 3% of the
monthly amount due. In October 2023, the trustee filed a lawsuit
against the borrowers. In connection with the lawsuit, the court
appointed a receiver to take control of the Hilton San Francisco
Hotels and their operations, and thus, Park has no further economic
interest in the operations of the hotels.(4) Park has
approximately $950 million of available capacity under the
Revolver.(5) Excludes $169 million of Park’s share of debt of
its unconsolidated joint ventures.
Capital Investments
Through the third quarter of 2023, Park has spent $195 million
on capital improvements at its hotels, with $71 million spent
during the third quarter of 2023. Park expects to incur
approximately $300 million to $325 million in capital improvements
during 2023, consisting of $110 million to $120 million on return
on investment projects and $190 million to $205 million on
maintenance projects. Key current and upcoming projects are
summarized below:
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
Project & Scope of Work |
|
Start Date |
|
EstimatedCompletion Date |
|
Budget |
|
Current QuarterIncurred |
|
Total Incurred |
Waldorf
Astoria Orlando and Signia by Hilton Orlando Bonnet Creek
Complex |
|
Meeting
space expansion: To add more than 100,000 sq. ft. of meeting and
event space |
|
Q4 2019(Paused in 2020) |
|
Waldorf Astoria(Completed Q4 2022)Signia (Q1 2024) |
|
$ |
118 |
|
$ |
7 |
|
$ |
92 |
|
Guestroom, existing
meeting space & lobby renovations |
|
|
|
|
|
|
|
|
|
|
|
Waldorf Astoria Orlando |
|
|
|
|
|
|
|
|
|
|
|
|
- Guestroom,
existing meeting space, lobby and other public space
renovations
|
|
Q3 2022 |
|
Q2 2024 |
|
|
51 |
|
|
10 |
|
|
39 |
|
Signia by Hilton Orlando Bonnet Creek: |
|
|
|
|
|
|
|
|
|
|
|
|
- Existing meeting
space and lobby renovations
|
|
Q4 2019 |
|
Q4 2022(Substantially complete) |
|
|
21 |
|
|
2 |
|
|
19 |
|
|
|
|
Q2 2019 |
|
Q4 2019 |
|
|
25 |
|
|
— |
|
|
25 |
|
Golf
course renovations: Two phases of golf course renovations |
|
Phase 1 (Q2 2022)Phase 2 (Q2 2023) |
|
Phase 1 (Completed Q4 2022)Phase 2 (Q4 2023) |
|
|
9 |
|
|
— |
|
|
4 |
|
Recreational
amenities: Adding additional amenities, primarily at the pool |
|
Q3 2022 |
|
Q1 2024 |
|
|
5 |
|
|
— |
|
|
1 |
|
|
|
|
|
|
Total |
|
$ |
229 |
|
$ |
19 |
|
$ |
180 |
Hilton
Hawaiian Village Waikiki Beach Resort |
|
|
|
|
|
Guestroom
renovations: Three phases of guestroom renovations in the
1,020-room Tapa Tower |
|
Phase 1 (Q3 2019)Phase 2 (Q3 2022)Phase 3 (Q3 2023) |
|
Phase 1 (Completed Q4 2021)Phase 2 (Completed Q4 2022)Phase 3 (Q4
2023) |
|
$ |
84 |
|
$ |
11 |
|
$ |
72 |
Casa Marina Key West, Curio Collection |
|
|
|
|
|
|
|
|
|
|
|
Complete
renovation: Complete renovation of all 311 guestrooms, public
spaces and certain hotel infrastructure |
|
Q1 2023 |
|
Q4 2023 (Guestrooms)Q1 2024 (Restaurants) |
|
$ |
79 |
|
$ |
33 |
|
$ |
60 |
Hilton New Orleans Riverside |
|
|
|
|
|
|
|
|
|
|
|
Guestroom
renovations: Two phases of guestroom renovations in the 455-room
Riverside building |
|
Q3 2019(Paused in 2020) |
|
Q3 2023(Substantially complete) |
|
$ |
11 |
|
$ |
3 |
|
$ |
9 |
New York Hilton Midtown |
|
|
|
|
|
|
|
|
|
|
|
Ballroom
renovations: Renovation of the Grand Ballroom |
|
Q2 2023 |
|
Q3 2023(Substantially complete) |
|
$ |
5 |
|
$ |
1 |
|
$ |
4 |
Dividends
Park declared a third quarter 2023 cash dividend of $0.15 per
share to stockholders of record as of September 29, 2023. The
third quarter 2023 cash dividend was paid on October 16,
2023.
The effective exit from the Hilton San Francisco Hotels in
October 2023 results in a required additional distribution. Thus,
Park's Board of Directors declared a special cash dividend of $0.77
per share on October 27, 2023, which will be paid on January 16,
2024 to stockholders of record as of December 29, 2023.
In addition to the $0.77 special cash dividend, Park plans to
declare its fourth quarter dividend before the end of 2023 and
currently expects such dividend to be in the range of $0.85 and
$0.95 per share, subject to approval by its Board of Directors,
consisting of a top-off component of between $0.70 and $0.80 per
share and Park's recurring cash dividend of $0.15 per share.
Full-Year 2023 Outlook
Park is not providing a full year 2023 outlook for net income,
net income attributable to stockholders, earnings per share,
operating income and operating income margin and the accompanying
reconciliations as all the information necessary for the
calculation of the gain (loss) on derecognition of assets and
income tax expense resulting from the Hilton San Francisco Hotels
being placed into receivership is not yet available, and Park is
unable to reasonably estimate such amounts without unreasonable
burden or efforts. These amounts are expected to be material;
however, they are not expected to materially affect Park’s outlook
for Adjusted EBITDA, Hotel Adjusted EBITDA, Hotel Adjusted EBITDA
margin, Adjusted FFO or Adjusted FFO per share. Park expects
full-year 2023 operating results to be as follows:
(unaudited,
dollars in millions, except per share amounts and RevPAR) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-Year 2023
Outlookas of
November 1, 2023 |
|
Full-Year 2023
Outlookas of
August 2, 2023(1) |
|
Change at Midpoint |
Metric |
|
Low |
|
High |
|
Low |
|
High |
|
|
|
|
|
|
|
|
|
|
|
|
Comparable RevPAR |
|
$ |
177 |
|
|
$ |
179 |
|
|
N/A |
|
N/A |
|
N/A |
Comparable RevPAR change vs.
2022 |
|
|
7.5 |
% |
|
|
9.0 |
% |
|
N/A |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
644 |
|
|
$ |
668 |
|
|
$ |
619 |
|
$ |
679 |
|
$ |
7 |
Comparable Hotel Adjusted
EBITDA margin(2) |
|
|
27.7 |
% |
|
|
28.2 |
% |
|
N/A |
|
N/A |
|
N/A |
Comparable Hotel Adjusted
EBITDA margin change vs. 2022(2) |
|
|
(40 |
) bps |
|
|
10 |
bps |
|
N/A |
|
N/A |
|
N/A |
Adjusted FFO per share –
Diluted(2) |
|
$ |
1.92 |
|
|
$ |
2.03 |
|
|
$ |
1.76 |
|
$ |
2.02 |
|
$ |
0.08 |
______________________________________________
(1) Park did not provide
Comparable metrics in its full year 2023 outlook as of August 2,
2023.(2) Amounts are calculated
based on unrounded numbers.
Park's outlook is based in part on the following
assumptions:
- Comparable RevPAR for the fourth
quarter of 2023 is expected to be between $170 and $180;
- Comparable Hotel Adjusted EBITDA margin for the fourth quarter
of 2023 is expected to be between 26.9% and 28.9%;
- Adjusted EBITDA includes Hotel Adjusted EBITDA for the two
Hilton San Francisco Hotels of $3 million from January 2023 to
October 2023, the period prior to the hotels being placed into
receivership;
- Adjusted FFO excludes an incremental $20 million of default
interest and late payment administrative fees associated with
default of the SF Mortgage Loan beginning in June 2023, which is
required to be recognized in interest expense until legal title to
the Hilton San Francisco Hotels are transferred;
- Fully diluted weighted average shares for the full-year 2023
are expected to be 214 million, while fully diluted weighted
average shares for the fourth quarter of 2023 are expected to be
210 million;
- Includes $15 million of Hotel Adjusted EBITDA disruption from a
full-scale renovation at the Casa Marina Key West, Curio
Collection, which is expected to be completed in the fourth quarter
of 2023; and
- Comparable portfolio as of November 1, 2023 and does not take
into account potential future acquisitions and dispositions, which
could result in a material change to Park’s outlook.
Park's full-year 2023 outlook is based on a number of factors,
many of which are outside the Company's control, including
uncertainty surrounding macro-economic factors, such as inflation,
increases in interest rates, supply chain disruptions and the
possibility of an economic recession or slowdown, as well as the
assumptions set forth above, all of which are subject to
change.
Supplemental Disclosures
In conjunction with this release, Park has furnished a financial
supplement with additional disclosures on its website. Visit
www.pkhotelsandresorts.com for more information. Park has no
obligation to update any of the information provided to conform to
actual results or changes in Park’s portfolio, capital structure or
future expectations.
Conference Call
Park will host a conference call for investors and other
interested parties to discuss third quarter 2023 results on
November 2, 2023 beginning at 10 a.m. Eastern Time.
Participants may listen to the live webcast by logging onto the
Investors section of the website at www.pkhotelsandresorts.com.
Alternatively, participants may listen to the live call by dialing
(877) 451-6152 in the United States or (201) 389-0879
internationally and requesting Park Hotels & Resorts’ Third
Quarter 2023 Earnings Conference Call. Participants are encouraged
to dial into the call or link to the webcast at least ten minutes
prior to the scheduled start time.
A replay of the webcast will be available within 24 hours after
the live event on the Investors section of Park’s website.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Forward-looking statements include, but are not limited
to, statements related to the anticipated effects of Park's
decision to cease payments on its $725 million SF Mortgage Loan and
the effects of the lender's exercise of its remedies, including
placing such hotels into receivership, as well as Park’s current
expectations regarding the performance of its business, financial
results, liquidity and capital resources, including anticipated
repayment of certain of the Company's indebtedness, the completion
of capital allocation priorities, the expected repurchase of the
Company's stock, the impact from macroeconomic factors (including
inflation, increases in interest rates, potential economic slowdown
or a recession and geopolitical conflicts), the effects of
competition and the effects of future legislation or regulations,
the expected completion of anticipated dispositions, the
declaration and payment of future dividends and other
non-historical statements. Forward-looking statements include all
statements that are not historical facts, and in some cases, can be
identified by the use of forward-looking terminology such as the
words “outlook,” “believes,” “expects,” “potential,” “continues,”
“may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,”
“intends,” “plans,” “estimates,” “anticipates,” “hopes” or the
negative version of these words or other comparable words. You
should not rely on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are,
in some cases, beyond the Company’s control and which could
materially affect its results of operations, financial condition,
cash flows, performance or future achievements or events.
Forward-looking statements are based on current expectations of
management and therefore involve estimates and assumptions that are
subject to risks, uncertainties and other factors that could cause
actual results to differ materially from those expressed in these
forward-looking statements. You should not put undue reliance on
any forward-looking statements and Park urges investors to
carefully review the disclosures Park makes concerning risk and
uncertainties in Item 1A: “Risk Factors” in Park’s Annual Report on
Form 10-K for the year ended December 31, 2022, as such factors may
be updated from time to time in Park’s filings with the SEC, which
are accessible on the SEC’s website at www.sec.gov. Except as
required by law, Park undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
Non-GAAP Financial Measures
Park presents certain non-GAAP financial measures in this press
release, including Nareit FFO attributable to stockholders,
Adjusted FFO attributable to stockholders, EBITDA, Adjusted EBITDA,
Hotel Adjusted EBITDA, Hotel Adjusted EBITDA margin and Net debt.
These non-GAAP financial measures should be considered along with,
but not as alternatives to, net income (loss) as a measure of its
operating performance. Please see the schedules included in this
press release including the “Definitions” section for additional
information and reconciliations of such non-GAAP financial
measures.
About Park
Park is one of the largest publicly-traded lodging REITs with a
diverse portfolio of iconic and market-leading hotels and resorts
with significant underlying real estate value. Park's portfolio
currently consists of 43 premium-branded hotels and resorts
(excluding the Hilton San Francisco Hotels) with over 26,000 rooms
primarily located in prime city center and resort locations. Visit
www.pkhotelsandresorts.com for more information.
PARK HOTELS & RESORTS
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(in millions, except share and per share
data)
|
September 30, 2023 |
|
December 31, 2022 |
|
(unaudited) |
|
|
ASSETS |
|
|
|
Property and equipment, net |
$ |
8,028 |
|
|
$ |
8,301 |
|
Intangibles, net |
|
42 |
|
|
|
43 |
|
Cash and cash equivalents |
|
726 |
|
|
|
906 |
|
Restricted cash |
|
60 |
|
|
|
33 |
|
Accounts receivable, net of allowance for doubtful accounts of $1
and $2 |
|
149 |
|
|
|
129 |
|
Prepaid expenses |
|
63 |
|
|
|
58 |
|
Other assets |
|
36 |
|
|
|
47 |
|
Operating lease right-of-use assets |
|
201 |
|
|
|
214 |
|
TOTAL ASSETS (variable
interest entities – $241
and $237) |
$ |
9,305 |
|
|
$ |
9,731 |
|
LIABILITIES AND
EQUITY |
|
|
|
Liabilities |
|
|
|
Debt |
$ |
4,490 |
|
|
$ |
4,617 |
|
Accounts payable and accrued expenses |
|
293 |
|
|
|
220 |
|
Due to hotel managers |
|
136 |
|
|
|
141 |
|
Other liabilities |
|
221 |
|
|
|
228 |
|
Operating lease liabilities |
|
225 |
|
|
|
234 |
|
Total liabilities (variable interest entities – $218 and $219) |
|
5,365 |
|
|
|
5,440 |
|
Stockholders' Equity |
|
|
|
Common stock, par value $0.01 per share, 6,000,000,000 shares
authorized, 210,672,182 shares issued and 209,983,781 shares
outstanding as of September 30, 2023 and 224,573,858 shares issued
and 224,061,745 shares outstanding as of December 31, 2022 |
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
4,151 |
|
|
|
4,321 |
|
(Accumulated deficit) retained earnings |
|
(169 |
) |
|
|
16 |
|
Total stockholders' equity |
|
3,984 |
|
|
|
4,339 |
|
Noncontrolling interests |
|
(44 |
) |
|
|
(48 |
) |
Total equity |
|
3,940 |
|
|
|
4,291 |
|
TOTAL LIABILITIES AND
EQUITY |
$ |
9,305 |
|
|
$ |
9,731 |
|
PARK HOTELS & RESORTS
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, in millions, except per
share data)
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues |
|
|
|
|
|
|
|
Rooms |
$ |
432 |
|
|
$ |
428 |
|
|
$ |
1,256 |
|
|
$ |
1,153 |
|
Food and beverage |
|
159 |
|
|
|
148 |
|
|
|
518 |
|
|
|
431 |
|
Ancillary hotel |
|
66 |
|
|
|
67 |
|
|
|
203 |
|
|
|
198 |
|
Other |
|
22 |
|
|
|
19 |
|
|
|
64 |
|
|
|
54 |
|
Total revenues |
|
679 |
|
|
|
662 |
|
|
|
2,041 |
|
|
|
1,836 |
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
Rooms |
|
119 |
|
|
|
115 |
|
|
|
343 |
|
|
|
298 |
|
Food and beverage |
|
122 |
|
|
|
115 |
|
|
|
377 |
|
|
|
321 |
|
Other departmental and support |
|
161 |
|
|
|
162 |
|
|
|
484 |
|
|
|
453 |
|
Other property-level |
|
59 |
|
|
|
58 |
|
|
|
182 |
|
|
|
173 |
|
Management fees |
|
31 |
|
|
|
30 |
|
|
|
95 |
|
|
|
84 |
|
Casualty and impairment loss |
|
— |
|
|
|
3 |
|
|
|
204 |
|
|
|
4 |
|
Depreciation and amortization |
|
65 |
|
|
|
67 |
|
|
|
193 |
|
|
|
204 |
|
Corporate general and administrative |
|
18 |
|
|
|
16 |
|
|
|
50 |
|
|
|
48 |
|
Other |
|
19 |
|
|
|
18 |
|
|
|
61 |
|
|
|
52 |
|
Total expenses |
|
594 |
|
|
|
584 |
|
|
|
1,989 |
|
|
|
1,637 |
|
|
|
|
|
|
|
|
|
Gain on sales of assets, net |
|
— |
|
|
|
14 |
|
|
|
15 |
|
|
|
13 |
|
|
|
|
|
|
|
|
|
Operating
income |
|
85 |
|
|
|
92 |
|
|
|
67 |
|
|
|
212 |
|
|
|
|
|
|
|
|
|
Interest income |
|
9 |
|
|
|
4 |
|
|
|
29 |
|
|
|
5 |
|
Interest expense |
|
(65 |
) |
|
|
(61 |
) |
|
|
(186 |
) |
|
|
(185 |
) |
Equity in earnings from investments in affiliates |
|
2 |
|
|
|
1 |
|
|
|
9 |
|
|
|
6 |
|
Other gain, net |
|
— |
|
|
|
1 |
|
|
|
4 |
|
|
|
98 |
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes |
|
31 |
|
|
|
37 |
|
|
|
(77 |
) |
|
|
136 |
|
Income tax benefit (expense) |
|
— |
|
|
|
3 |
|
|
|
(5 |
) |
|
|
2 |
|
Net income
(loss) |
|
31 |
|
|
|
40 |
|
|
|
(82 |
) |
|
|
138 |
|
Net income attributable to
noncontrolling interests |
|
(4 |
) |
|
|
(5 |
) |
|
|
(8 |
) |
|
|
(10 |
) |
Net income (loss)
attributable to stockholders |
$ |
27 |
|
|
$ |
35 |
|
|
$ |
(90 |
) |
|
$ |
128 |
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share: |
|
|
|
|
|
|
|
Earnings (loss) per share – Basic |
$ |
0.13 |
|
|
$ |
0.15 |
|
|
$ |
(0.42 |
) |
|
$ |
0.55 |
|
Earnings (loss) per share – Diluted |
$ |
0.13 |
|
|
$ |
0.15 |
|
|
$ |
(0.42 |
) |
|
$ |
0.55 |
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding – Basic |
|
212 |
|
|
|
224 |
|
|
|
216 |
|
|
|
229 |
|
Weighted average shares outstanding – Diluted |
|
212 |
|
|
|
224 |
|
|
|
216 |
|
|
|
229 |
|
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSEBITDA AND ADJUSTED
EBITDA
(unaudited, in millions) |
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income
(loss) |
$ |
31 |
|
|
$ |
40 |
|
|
$ |
(82 |
) |
|
$ |
138 |
|
Depreciation and amortization expense |
|
65 |
|
|
|
67 |
|
|
|
193 |
|
|
|
204 |
|
Interest income |
|
(9 |
) |
|
|
(4 |
) |
|
|
(29 |
) |
|
|
(5 |
) |
Interest expense |
|
65 |
|
|
|
61 |
|
|
|
186 |
|
|
|
185 |
|
Income tax (benefit) expense |
|
— |
|
|
|
(3 |
) |
|
|
5 |
|
|
|
(2 |
) |
Interest expense, income tax and depreciation and amortization
included in equity in earnings from investments in affiliates |
|
2 |
|
|
|
2 |
|
|
|
7 |
|
|
|
7 |
|
EBITDA |
|
154 |
|
|
|
163 |
|
|
|
280 |
|
|
|
527 |
|
Gain on sales of assets, net |
|
— |
|
|
|
(14 |
) |
|
|
(15 |
) |
|
|
(13 |
) |
Gain on sale of investments in affiliates(1) |
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
(92 |
) |
Share-based compensation expense |
|
5 |
|
|
|
4 |
|
|
|
14 |
|
|
|
13 |
|
Casualty and impairment loss |
|
— |
|
|
|
3 |
|
|
|
204 |
|
|
|
4 |
|
Other items |
|
4 |
|
|
|
2 |
|
|
|
16 |
|
|
|
8 |
|
Adjusted
EBITDA |
$ |
163 |
|
|
$ |
158 |
|
|
$ |
496 |
|
|
$ |
447 |
|
______________________________________________
(1) Included in other gain, net.
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSCURRENT AND COMPARABLE HOTEL
ADJUSTED EBITDA ANDCURRENT AND COMPARABLE HOTEL
ADJUSTED EBITDA MARGIN
(unaudited, dollars in
millions) |
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Adjusted
EBITDA |
$ |
163 |
|
|
$ |
158 |
|
|
$ |
496 |
|
|
$ |
447 |
|
Less: Adjusted EBITDA from investments in affiliates |
|
(4 |
) |
|
|
(4 |
) |
|
|
(19 |
) |
|
|
(20 |
) |
Add: All other(1) |
|
14 |
|
|
|
13 |
|
|
|
40 |
|
|
|
37 |
|
Hotel Adjusted
EBITDA |
|
173 |
|
|
|
167 |
|
|
|
517 |
|
|
|
464 |
|
Less: Adjusted EBITDA from hotels disposed of |
|
— |
|
|
|
(2 |
) |
|
|
(3 |
) |
|
|
(14 |
) |
Current Hotel Adjusted
EBITDA |
|
173 |
|
|
|
165 |
|
|
|
514 |
|
|
|
450 |
|
Less: Adjusted EBITDA from the Hilton San Francisco Hotels |
|
(1 |
) |
|
|
(3 |
) |
|
|
(5 |
) |
|
|
6 |
|
Comparable Hotel
Adjusted EBITDA |
$ |
172 |
|
|
$ |
162 |
|
|
$ |
509 |
|
|
$ |
456 |
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Total
Revenues |
$ |
679 |
|
|
$ |
662 |
|
|
$ |
2,041 |
|
|
$ |
1,836 |
|
Less: Other revenue |
|
(22 |
) |
|
|
(19 |
) |
|
|
(64 |
) |
|
|
(54 |
) |
Less: Revenues from hotels disposed of |
|
— |
|
|
|
(11 |
) |
|
|
(10 |
) |
|
|
(51 |
) |
Current Hotel
Revenues |
|
657 |
|
|
|
632 |
|
|
|
1,967 |
|
|
|
1,731 |
|
Less: Revenues from the Hilton San Francisco Hotels |
|
(51 |
) |
|
|
(48 |
) |
|
|
(145 |
) |
|
|
(105 |
) |
Comparable Hotel
Revenues |
$ |
606 |
|
|
$ |
584 |
|
|
$ |
1,822 |
|
|
$ |
1,626 |
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Change(2) |
|
|
2023 |
|
|
|
2022 |
|
|
Change(2) |
Total Revenues |
$ |
679 |
|
|
$ |
662 |
|
|
2.4 |
% |
|
$ |
2,041 |
|
|
$ |
1,836 |
|
|
11.1 |
% |
Operating income |
$ |
85 |
|
|
$ |
92 |
|
|
(8.5 |
)% |
|
$ |
67 |
|
|
$ |
212 |
|
|
(68.3 |
)% |
Operating income
margin(2) |
|
12.5 |
% |
|
|
13.9 |
% |
|
(140 |
) bps |
|
|
3.3 |
% |
|
|
11.5 |
% |
|
(820 |
) bps |
|
|
|
|
|
|
|
|
|
|
|
|
Current Hotel Revenues |
$ |
657 |
|
|
$ |
632 |
|
|
3.9 |
% |
|
$ |
1,967 |
|
|
$ |
1,731 |
|
|
13.6 |
% |
Current Hotel Adjusted
EBITDA |
$ |
173 |
|
|
$ |
165 |
|
|
5.0 |
% |
|
$ |
514 |
|
|
$ |
450 |
|
|
14.2 |
% |
Current Hotel Adjusted EBITDA
margin(2) |
|
26.3 |
% |
|
|
26.0 |
% |
|
30 |
bps |
|
|
26.1 |
% |
|
|
26.0 |
% |
|
10 |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
Comparable Hotel Revenues |
$ |
606 |
|
|
$ |
584 |
|
|
3.8 |
% |
|
$ |
1,822 |
|
|
$ |
1,626 |
|
|
12.1 |
% |
Comparable Hotel Adjusted
EBITDA |
$ |
172 |
|
|
$ |
162 |
|
|
6.4 |
% |
|
$ |
509 |
|
|
$ |
456 |
|
|
11.7 |
% |
Comparable Hotel Adjusted
EBITDA margin(2) |
|
28.4 |
% |
|
|
27.7 |
% |
|
70 |
bps |
|
|
28.0 |
% |
|
|
28.1 |
% |
|
(10 |
) bps |
______________________________________________(1) Includes
other revenues and other expenses, non-income taxes on TRS leases
included in other property-level expenses and corporate general and
administrative expenses in the consolidated statements of
operations. (2) Percentages are calculated based on unrounded
numbers.
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSCURRENT AND COMPARABLE URBAN HOTEL
ADJUSTED EBITDA ANDCURRENT AND COMPARABLE URBAN
HOTEL ADJUSTED EBITDA MARGIN
(unaudited, dollars in
millions) |
Three Months EndedSeptember 30,
2023 |
|
Nine Months EndedSeptember 30,
2023 |
Current Hotel Adjusted EBITDA |
$ |
173 |
|
|
$ |
514 |
|
Less: Adjusted EBITDA from non-urban hotels |
|
(116 |
) |
|
|
(377 |
) |
Current Urban Hotel
Adjusted EBITDA |
|
57 |
|
|
|
137 |
|
Less: Adjusted EBITDA from the Hilton San Francisco Hotels |
|
(1 |
) |
|
|
(5 |
) |
Comparable Urban Hotel Adjusted EBITDA |
$ |
56 |
|
|
$ |
132 |
|
|
|
|
|
|
Three Months EndedSeptember 30,
2023 |
|
Nine Months EndedSeptember 30,
2023 |
Current Hotel
Revenues |
$ |
657 |
|
|
$ |
1,967 |
|
Less: Revenues from non-urban hotels |
|
(388 |
) |
|
|
(1,198 |
) |
Current Urban Hotel
Revenues |
|
269 |
|
|
|
769 |
|
Less: Revenues from the Hilton San Francisco Hotels |
|
(51 |
) |
|
|
(145 |
) |
Comparable Urban Hotel
Revenues |
$ |
218 |
|
|
$ |
624 |
|
|
Three Months EndedSeptember 30,
2023 |
|
Nine Months EndedSeptember 30,
2023 |
Current Urban Hotel Revenues |
$ |
269 |
|
|
$ |
769 |
|
Current Urban Hotel Adjusted
EBITDA |
$ |
57 |
|
|
$ |
137 |
|
Current Urban Hotel Adjusted
EBITDA margin(1) |
|
21.0 |
% |
|
|
17.8 |
% |
|
|
|
|
Comparable Urban Hotel
Revenues |
$ |
218 |
|
|
$ |
624 |
|
Comparable Urban Hotel
Adjusted EBITDA |
$ |
56 |
|
|
$ |
132 |
|
Comparable Urban Hotel
Adjusted EBITDA margin(1) |
|
25.6 |
% |
|
|
21.2 |
% |
______________________________________________(1) Percentages
are calculated based on unrounded numbers.
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSNAREIT FFO AND ADJUSTED
FFO
(unaudited, in millions, except per share data)
|
Three Months EndedSeptember
30, |
|
Nine Months EndedSeptember
30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income (loss)
attributable to stockholders |
$ |
27 |
|
|
$ |
35 |
|
|
$ |
(90 |
) |
|
$ |
128 |
|
Depreciation and amortization expense |
|
65 |
|
|
|
67 |
|
|
|
193 |
|
|
|
204 |
|
Depreciation and amortization expense attributable to
noncontrolling interests |
|
(1 |
) |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(3 |
) |
Gain on sales of assets, net |
|
— |
|
|
|
(14 |
) |
|
|
(15 |
) |
|
|
(13 |
) |
Gain on sale of investments in affiliates(1) |
|
— |
|
|
|
— |
|
|
|
(3 |
) |
|
|
(92 |
) |
Impairment loss |
|
— |
|
|
|
— |
|
|
|
202 |
|
|
|
— |
|
Equity investment adjustments: |
|
|
|
|
|
|
|
Equity in earnings from investments in affiliates |
|
(2 |
) |
|
|
(1 |
) |
|
|
(9 |
) |
|
|
(6 |
) |
Pro rata FFO of investments in affiliates |
|
2 |
|
|
|
1 |
|
|
|
12 |
|
|
|
11 |
|
Nareit FFO
attributable to stockholders |
|
91 |
|
|
|
87 |
|
|
|
287 |
|
|
|
229 |
|
Casualty loss |
|
— |
|
|
|
3 |
|
|
|
2 |
|
|
|
4 |
|
Share-based compensation expense |
|
5 |
|
|
|
4 |
|
|
|
14 |
|
|
|
13 |
|
Other items(2) |
|
12 |
|
|
|
— |
|
|
|
26 |
|
|
|
5 |
|
Adjusted FFO
attributable to stockholders |
$ |
108 |
|
|
$ |
94 |
|
|
$ |
329 |
|
|
$ |
251 |
|
Nareit FFO per share –
Diluted(3) |
$ |
0.43 |
|
|
$ |
0.39 |
|
|
$ |
1.33 |
|
|
$ |
1.00 |
|
Adjusted FFO per share
– Diluted(3) |
$ |
0.51 |
|
|
$ |
0.42 |
|
|
$ |
1.52 |
|
|
$ |
1.09 |
|
Weighted average
shares outstanding – Diluted |
|
212 |
|
|
|
224 |
|
|
|
216 |
|
|
|
229 |
|
______________________________________________
(1) Included in other gain, net.(2) For
the three and nine months ended September 30, 2023, includes
$6 million and $8 million, respectively, of incremental interest
expense associated with the default of the SF Mortgage
Loan.(3) Per share amounts are calculated based on
unrounded numbers.
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSNET DEBT
(unaudited, in millions) |
|
|
|
|
|
|
CurrentSeptember 30,
2023 |
|
SF Mortgage Loan
Adjustments(1) |
|
Comparable September 30,
2023(1) |
Debt |
$ |
4,490 |
|
|
$ |
(725 |
) |
|
$ |
3,765 |
|
Add: unamortized deferred
financing costs and discount |
|
23 |
|
|
|
— |
|
|
|
23 |
|
Less: unamortized premium |
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Debt, excluding unamortized deferred financing cost, premiums and
discounts |
|
4,512 |
|
|
|
(725 |
) |
|
|
3,787 |
|
Add: Park's share of
unconsolidated affiliates debt, excluding unamortized deferred
financing costs |
|
169 |
|
|
|
— |
|
|
|
169 |
|
Less: cash and cash
equivalents |
|
(726 |
) |
|
|
162 |
|
|
|
(564 |
) |
Less: restricted cash |
|
(60 |
) |
|
|
26 |
|
|
|
(34 |
) |
Net debt |
$ |
3,895 |
|
|
$ |
(537 |
) |
|
$ |
3,358 |
|
______________________________________________
(1) Comparable Net Debt as of September 30, 2023
excludes the $725 million SF Mortgage Loan and $26 million of cash
that is restricted due to the default of the SF Mortgage Loan, and
assumes the removal of the Hilton San Francisco Hotels from Park's
portfolio that were placed into receivership in October 2023, which
results in a required additional distribution of $162 million (or
approximately $0.77 per share). The cash dividend of $0.77 per
share was declared on October 27, 2023 and will be paid on January
16, 2024 to stockholders of record as of December 29, 2023.
PARK HOTELS & RESORTS
INC.DEFINITIONS
Hilton San Francisco Hotels
Park's Hilton San Francisco Hotels represent the 1,921-room
Hilton San Francisco Union Square and 1,024-room Parc 55 San
Francisco – a Hilton Hotel.
Current
The Company presents certain data for its consolidated hotels on
a Current basis as supplemental information for investors: Current
Hotel Revenues, Current RevPAR, Current Total RevPAR, Current
Occupancy, Current ADR, Current Hotel Adjusted EBITDA and Current
Hotel Adjusted EBITDA Margin. The Company presents Current hotel
results to help the Company and its investors evaluate the ongoing
operating performance of its hotels. The Company’s Current metrics
exclude results from property dispositions that have occurred
through September 30, 2023 and include results from property
acquisitions as though such acquisitions occurred on the earliest
period presented.
Comparable
Park's Comparable hotels represent its Current hotels excluding
the two Hilton San Francisco Hotels as the Company expects these
hotels to ultimately be removed from its portfolio.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel
Adjusted EBITDA margin
Earnings before interest expense, taxes and depreciation and
amortization (“EBITDA”), presented herein, reflects net income
(loss) excluding depreciation and amortization, interest income,
interest expense, income taxes and interest expense, income tax and
depreciation and amortization included in equity in earnings from
investments in affiliates.
Adjusted EBITDA, presented herein, is calculated as EBITDA, as
previously defined, further adjusted to exclude the following items
that are not reflective of Park's ongoing operating performance or
incurred in the normal course of business, and thus, excluded from
management's analysis in making day-to-day operating decisions and
evaluations of Park's operating performance against other companies
within its industry:
- Gains or losses on sales of assets for
both consolidated and unconsolidated investments;
- Costs associated with hotel
acquisitions or dispositions expensed during the period;
- Severance expense;
- Share-based compensation expense;
- Impairment losses and casualty gains
or losses; and
- Other items that management believes
are not representative of the Company’s current or future operating
performance.
Hotel Adjusted EBITDA measures hotel-level results before debt
service, depreciation and corporate expenses of the Company’s
consolidated hotels, which excludes hotels owned by unconsolidated
affiliates, and is a key measure of the Company’s profitability.
The Company presents Hotel Adjusted EBITDA to help the Company and
its investors evaluate the ongoing operating performance of the
Company’s consolidated hotels.
Hotel Adjusted EBITDA margin is calculated as Hotel Adjusted
EBITDA divided by total hotel revenue.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel
Adjusted EBITDA margin are not recognized terms under United States
(“U.S.”) GAAP and should not be considered as alternatives to net
income (loss) or other measures of financial performance or
liquidity derived in accordance with U.S. GAAP. In addition, the
Company’s definitions of EBITDA, Adjusted EBITDA, Hotel Adjusted
EBITDA and Hotel Adjusted EBITDA margin may not be comparable to
similarly titled measures of other companies.
The Company believes that EBITDA, Adjusted EBITDA, Hotel
Adjusted EBITDA and Hotel Adjusted EBITDA margin provide useful
information to investors about the Company and its financial
condition and results of operations for the following reasons: (i)
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted
EBITDA margin are among the measures used by the Company’s
management team to make day-to-day operating decisions and evaluate
its operating performance between periods and between REITs by
removing the effect of its capital structure (primarily interest
expense) and asset base (primarily depreciation and amortization)
from its operating results; and (ii) EBITDA, Adjusted EBITDA, Hotel
Adjusted EBITDA and Hotel Adjusted EBITDA margin are frequently
used by securities analysts, investors and other interested parties
as a common performance measure to compare results or estimate
valuations across companies in the industry.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel
Adjusted EBITDA margin have limitations as analytical tools and
should not be considered either in isolation or as a substitute for
net income (loss) or other methods of analyzing the Company’s
operating performance and results as reported under U.S. GAAP.
Because of these limitations, EBITDA, Adjusted EBITDA and Hotel
Adjusted EBITDA should not be considered as discretionary cash
available to the Company to reinvest in the growth of its business
or as measures of cash that will be available to the Company to
meet its obligations.
Nareit FFO attributable to stockholders, Adjusted FFO
attributable to stockholders, Nareit FFO per share – diluted and
Adjusted FFO per share – diluted
Nareit FFO attributable to stockholders and Nareit FFO per
diluted share (defined as set forth below) are presented herein as
non-GAAP measures of the Company’s performance. The Company
calculates funds from (used in) operations (“FFO”) attributable to
stockholders for a given operating period in accordance with
standards established by the National Association of Real Estate
Investment Trusts (“Nareit”), as net income (loss) attributable to
stockholders (calculated in accordance with U.S. GAAP), excluding
depreciation and amortization, gains or losses on sales of assets,
impairment, and the cumulative effect of changes in accounting
principles, plus adjustments for unconsolidated joint ventures.
Adjustments for unconsolidated joint ventures are calculated to
reflect the Company’s pro rata share of the FFO of those entities
on the same basis. As noted by Nareit in its December 2018 “Nareit
Funds from Operations White Paper – 2018 Restatement,” since real
estate values historically have risen or fallen with market
conditions, many industry investors have considered presentation of
operating results for real estate companies that use historical
cost accounting to be insufficient by themselves. For these
reasons, Nareit adopted the FFO metric in order to promote an
industry-wide measure of REIT operating performance. The Company
believes Nareit FFO provides useful information to investors
regarding its operating performance and can facilitate comparisons
of operating performance between periods and between REITs. The
Company’s presentation may not be comparable to FFO reported by
other REITs that do not define the terms in accordance with the
current Nareit definition, or that interpret the current Nareit
definition differently. The Company calculates Nareit FFO per
diluted share as Nareit FFO divided by the number of fully diluted
shares outstanding during a given operating period.
The Company also presents Adjusted FFO attributable to
stockholders and Adjusted FFO per diluted share when evaluating its
performance because management believes that the exclusion of
certain additional items described below provides useful
supplemental information to investors regarding the Company’s
ongoing operating performance. Management historically has made the
adjustments detailed below in evaluating its performance and in its
annual budget process. Management believes that the presentation of
Adjusted FFO provides useful supplemental information that is
beneficial to an investor’s complete understanding of operating
performance. The Company adjusts Nareit FFO attributable to
stockholders for the following items, which may occur in any
period, and refers to this measure as Adjusted FFO attributable to
stockholders:
- Costs associated with hotel acquisitions or dispositions
expensed during the period;
- Severance expense;
- Share-based compensation expense;
- Casualty gains or losses; and
- Other items that management believes are not representative of
the Company’s current or future operating performance.
Net Debt
Net debt, presented herein, is a non-GAAP financial measure that
the Company uses to evaluate its financial leverage. Net debt is
calculated as (i) long-term debt, including current maturities and
excluding unamortized deferred financing costs; and (ii) the
Company’s share of investments in affiliate debt, excluding
unamortized deferred financing costs; reduced by (a) cash and cash
equivalents; and (b) restricted cash and cash equivalents.
The Company believes Net debt provides useful information about
its indebtedness to investors as it is frequently used by
securities analysts, investors and other interested parties to
compare the indebtedness of companies. Net debt should not be
considered as a substitute to debt presented in accordance with
U.S. GAAP. Net debt may not be comparable to a similarly titled
measure of other companies.
Occupancy
Occupancy represents the total number of room nights sold
divided by the total number of room nights available at a hotel or
group of hotels. Occupancy measures the utilization of the
Company’s hotels’ available capacity. Management uses Occupancy to
gauge demand at a specific hotel or group of hotels in a given
period. Occupancy levels also help management determine achievable
Average Daily Rate (“ADR”) levels as demand for rooms increases or
decreases.
Average Daily Rate
ADR (or rate) represents rooms revenue divided by total number
of room nights sold in a given period. ADR measures average room
price attained by a hotel and ADR trends provide useful information
concerning the pricing environment and the nature of the customer
base of a hotel or group of hotels. ADR is a commonly used
performance measure in the hotel industry, and management uses ADR
to assess pricing levels that the Company is able to generate by
type of customer, as changes in rates have a more pronounced effect
on overall revenues and incremental profitability than changes in
Occupancy, as described above.
Revenue per Available Room
Revenue per Available Room (“RevPAR”) represents rooms revenue
divided by the total number of room nights available to guests for
a given period. Management considers RevPAR to be a meaningful
indicator of the Company’s performance as it provides a metric
correlated to two primary and key factors of operations at a hotel
or group of hotels: Occupancy and ADR. RevPAR is also a useful
indicator in measuring performance over comparable periods.
Total RevPAR
Total RevPAR represents rooms, food and beverage and other hotel
revenues divided by the total number of room nights available to
guests for a given period. Management considers Total RevPAR to be
a meaningful indicator of the Company’s performance as
approximately one-third of revenues are earned from food and
beverage and other hotel revenues. Total RevPAR is also a useful
indicator in measuring performance over comparable periods.
Group Revenue Pace
Group Revenue Pace represents bookings for future business and
is calculated as group room nights multiplied by the contracted
room rate expressed as a percentage of a prior period relative to a
prior point in time.
Investor ContactIan Weissman+ 1 571 302
5591
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