Park Hotels & Resorts Inc. Q3 FY2025 earnings call

• Balance Sheet: Fortified balance sheet by extending and upsizing corporate credit facility to $2.1 billion to address 2026 debt maturities.
• Capital Allocation: Deployed over $325 million in strategic renovations with high ROI, e.g., $103 million renovation of Royal Palm in Miami (expected 15%-20% IRR), Hawaii hotel renovations, and New Orleans guestroom renovations. Targets divesting 15 non-core hotels to focus on 20 high-quality assets.
• Operations: Q3 RevPAR impacted by group demand decline, Hawaii renovations, softer leisure and government demand. Q4 expected recovery with mid-single-digit RevPAR growth, supported by leisure transient strength and group demand.

In Orlando, the Bonnet Creek complex delivered nearly 3% RevPAR growth with both the Signia and Waldorf Astoria hotels achieving their highest third quarter RevPAR and GOP in the complex's history. In Key West, RevPAR growth outperformed the broader portfolio, increasing 1% for the quarter, while Casa Marina's RevPAR index reached 110, up nearly 800 basis points year-over-year. In New York, RevPAR rose nearly 4% with meaningful share gains across all segments. The JW Marriott Union Square in San Francisco delivered RevPAR growth of nearly 14%. The Caribe Hilton in Puerto Rico saw Q3 RevPAR increase nearly 12%. Hawaii was impacted by renovations and a government shutdown but expected to rebound in Q4.

• Full year RevPAR growth midpoint down ~2% (range -2.5% to -1.75%) excluding Royal Palm South Beach, down 1% midpoint excluding Royal Palm.
• Adjusted EBITDA midpoint lowered by $12.5 million to $608 million, within range $595M-$620M.
• Adjusted FFO per share midpoint $1.91, range $1.85-$1.97.

• Government Shutdown: Impacted group and transient demand, reducing room revenue by ~$2.5 million and causing ~180-basis-point drag on October RevPAR.
• International Travel: Slower ramp-up of Japanese and Canadian travel affecting Hawaii and other markets.
• Asset Sales: Challenges in selling non-core assets due to market uncertainty and episodic transaction market.

Q: Duane Pfennigwerth of Evercore ISI asked about expense performance.

A: Sean Dell'Orto discussed cost discipline, deep dives in properties, insurance reductions, and tax appeals.

Q: Smedes Rose of Citi inquired about the dividend.

A: Thomas Baltimore explained capital allocation, dividend yield, and liquidity.

Q: Chris Woronka of Deutsche Bank questioned asset sales.

A: Thomas Baltimore spoke about focus on selling non-core assets, progress, and challenges.

Q: David Katz of Jefferies asked about Hawaii.

A: Thomas Baltimore provided insights on Hawaii's market, impact of travel trends, and investments.

Q: Cooper Clark of Wells Fargo asked about bidder pools and buyers.

A: Thomas Baltimore talked about buyer pool mix and market liquidity.

Q: Robin Farley of UBS clarified government shutdown impact.

A: Thomas Baltimore shared thoughts on reduced impact of shutdown in future months.

Q: Aryeh Klein of BMO Capital Markets asked about AI impact on forecasting.

A: Thomas Baltimore discussed GDP and non-residential investment correlation.

Q: Kenneth Billingsley of Compass Point asked about group business and 2026 expectations.

A: Sean Dell'Orto spoke about strong out-of-room spend and event impacts on RevPAR.