PK

Portfolio Performance

• Q2 2026 results meaningfully exceeded internal expectations, with REVPAR growth accelerating from 4% in April to over 11% in June, driven by strong group demand and high-rated leisure travel across the portfolio.
• Strongest performance continues to come from assets that received recent targeted capital reinvestment, which generate outsized returns and value creation.
• Hawaii was a top performer, with REVPAR up ~9% YoY accelerating from Q1 2026, overcoming the partial closure of the Honolulu Convention Center (closed through 2027) via higher leisure and in-house group demand; airlift to Hawaii is increasing for H2 2026, and visitor arrival forecasts have been raised to 2% for 2026.

Capital Recycling and Non-Core Asset Disposition

• Management continues to execute a strategy of selling underperforming non-core assets to simplify the company, reduce future capital needs, and concentrate the portfolio on higher-quality, higher-growth core assets.
• Since the May 2026 earnings call, three additional non-core dispositions were completed for total gross proceeds of $47 million.
• Since announcing the non-core exit plan in early 2025, 10 of 19 identified non-core hotels have been sold, generating nearly $200 million in proceeds at an average 12.5x EBITDA multiple. Since the corporate spin, 55 total assets have been sold for over $3 billion in proceeds.
• Remaining non-core assets account for less than 5% of total portfolio value; management remains committed to materially reducing non-core exposure by the end of 2026, with active marketing underway for most remaining assets.

Capital Investment and Renovation Projects

• The $100+ million transformative redevelopment of Royal Palm South Beach was completed on schedule in 15 months, reopening on July 22, 2026. The project renovated all 393 existing rooms, added 11 new keys, reimagined public spaces, added four new F&B concepts, and upgraded meeting facilities. Upon expected stabilization in two years, management projects the investment will double the hotel's EBITDA to ~$28 million.
• The $100 million comprehensive renovation of the 348-room Ali'i Tower at Hilton Hawaiian Village will commence in August 2026, expected to complete in early 2027. Upon completion, nearly 80% of all guest rooms at the 3,000-room Hilton Hawaiian Village complex will be fully renovated, closing the remaining ~$60 million EBITDA gap relative to 2023 peak levels.
• The third and final phase of the main tower guest room renovation at the New Orleans convention hotel commenced in May 2026, expected to complete by mid-October 2026, resulting in all 1,600+ guest rooms being fully renovated.

Balance Sheet and Capital Structure

• Net debt as of Q2 end was ~$3.7 billion, for a net debt-to-EBITDA ratio of 6.1x, a 0.2x reduction from the prior quarter.
• The company has $260 million in cash, $1 billion in available revolver capacity, $600 million under a delayed draw term loan, and $700 million in Bonnet Creek delayed draw financing.
• Management plans to fully repay the $1.27 billion Hilton Hawaiian Village mortgage in September 2026 and refinance the Hilton Santa Barbara mortgage later in 2026, which will extend debt maturities and improve financial flexibility.
• The Q3 2026 cash dividend of $0.25 per share was approved, equal to an annualized 6.5% yield based on recent trading levels.

• Management raised full-year 2026 guidance across all metrics, reflecting stronger-than-expected Q2 performance and a strong start to Q3 2026 (July REVPAR up 8.5% YoY).
• Full-year 2026 REVPAR growth guidance was raised 225 bps at the midpoint to a new range of 3% to 4.5% YoY. The increase reflects 370 bps of Q2 outperformance and stronger early Q3 results, with Q3 2026 REVPAR growth expected to trend toward the upper end of the revised range.
• Full-year 2026 adjusted EBITDA guidance was raised $25 million at the midpoint to a new range of $617 million to $637 million.
• Full-year 2026 adjusted FFO per share guidance was raised 13 cents at the midpoint to a new range of $1.90 to $2.00 per share.
• The updated guidance assumes 3% to 4% higher operating expenses, driven by higher variable labor and utility costs from stronger occupancy and demand, partially offset by $11 million in fixed cost savings from successful Q2 2026 property tax appeals and a 20% reduction in property insurance premiums from the June 1 renewal.
• Guidance assumes only a modest earnings contribution from Royal Palm South Beach in H2 2026, with more meaningful growth coming in 2027 and 2028 as the property ramps to stabilization. Early booking trends for Royal Palm are ahead of expectations, with 2026 H2 group ADR up 21% and transient ADR up 53% compared to pre-renovation levels.
• Full-year 2026 CapEx is expected to range between $230 million and $260 million, with $64 million invested in Q2 2026. After the current round of major renovation projects is complete, run-rate maintenance CapEx is expected to fall below $200 million annually.

Park Hotels & Resorts reports results across two core portfolio categories: Resort and Urban.

• Overall Portfolio: Total Hotel Revenue increased 6% year-over-year (YoY) in Q2 2026; Hotel Adjusted EBITDA increased 9% YoY to $204 million, with a margin of 32% (up 80 bps YoY); Adjusted FFO per share was $0.70. Total portfolio REVPAR increased nearly 6% YoY to $217, and nearly 7% YoY excluding the closed-for-renovation Royal Palm South Beach. Group rooms revenue grew 9.5% YoY, with June 2026 group revenue up nearly 23% YoY; leisure transient revenue grew over 13% YoY.
• Resort Segment: REVPAR increased more than 9% YoY excluding Royal Palm South Beach, contributing approximately 60% of total portfolio EBITDA. Top performing resort assets:
  • Hilton Hawaiian Village (Hawaii): REVPAR up nearly 12% YoY, EBITDA up over 13% YoY, REVPAR index of 117 (up 4 points YoY);
  • Bonnet Creek Complex (Orlando, Florida): REVPAR up 13% YoY, achieved record Q2 rooms and F&B revenue for the 3rd consecutive year, with Waldorf Astoria Orlando REVPAR up nearly 15% and Signia by Hilton Orlando Bonnet Creek REVPAR up 12% YoY;
  • Key West (Florida) properties: REVPAR up 10% YoY, with Casa Marina REVPAR up over 14% YoY, reaching record rooms and F&B revenue (F&B up 36% YoY).
• Urban Segment: REVPAR increased nearly 4% YoY, contributing approximately 40% of total portfolio EBITDA. Top performing urban assets: Washington D.C. REVPAR up nearly 17% YoY; Chicago REVPAR up nearly 12% YoY; Hyatt Regency Boston REVPAR up nearly 9% YoY.

• Forward-looking results are subject to macroeconomic and geopolitical headwinds that could impact consumer travel demand, even though the U.S. economy has been resilient to date.
• Partial closure of the Honolulu Convention Center through 2027 creates ongoing loss of citywide group business for Hawaii assets, offset to date by higher leisure and in-house group demand.
• Major renovation projects carry execution risk related to cost, schedule, and disruption to ongoing resort operations, even though recent projects have been completed on time and on budget.
• The highly competitive luxury/leisure hotel acquisition market limits near-term offensive growth opportunities via acquisition at attractive return thresholds.

Q: An analyst asked for clarification on the timing of the ~$100 million in incremental EBITDA from Hawaii and Royal Palm South Beach that management has previously referenced, and whether the total upside could reach $200 million. / A: Management clarified that the realistic total upside is ~$100 million, comprised of $60-70 million from closing Hawaii's EBITDA gap to 2023 peak levels, and ~$28 million from stabilized Royal Palm EBITDA. Most of this upside is expected to be realized by 2028, as renovation projects complete and properties ramp up. Management also noted that after selling 55 assets for over $3 billion, remaining non-core assets make up less than 5% of portfolio value, with disposal expected to be substantially complete by end of 2026.

Q: An analyst asked what the long-term trajectory of capital spending will be after completing current major renovation projects, and whether 2026's elevated spending will come down. / A: Management confirmed that 2026 is an above-average capex year driven by large ROI renovation projects, and baseline run-rate capex will fall to below $200 million annually going forward, consisting primarily of maintenance spending. Capex would only increase from this baseline if new high-return ROI projects are approved, but no major projects are planned currently. The biggest positive surprise to Q2 performance was broad-based strength across the portfolio, with more resilient consumer leisure demand and 700 bps higher group revenue than expected, which management expects to continue into H2 2026.

Q: An analyst asked for additional detail on the 6% 2027 group revenue growth pace: whether this reflects booked revenue, current booking levels relative to expectations, and geographic drivers. / A: Management confirmed that the 6% increase refers to total booked group revenue for 2027 versus 2026 at the same point in time. Growth is broad-based, with double-digit booked growth in Hawaii, New York, Key West, Miami, and San Francisco. 2027 group growth is balanced between occupancy gains and average rate increases, compared to 2026 growth which was weighted more toward occupancy. Around 96% of 2026 full-year group business is already booked, reinforcing confidence in full-year results.

Q: An analyst asked whether management would consider using the recent run-up in the share price to go on offensive with acquisitions, rather than only selling non-core assets, or if reducing leverage is the higher priority. / A: Management stated that after years of reshaping the portfolio through non-core sales, the company is now well-positioned to pursue opportunistic acquisitions when attractive high-quality opportunities arise, once the share price re-rates further to lower the cost of capital. Proceeds from non-core sales are first used to fund high-return internal renovation projects, with excess proceeds used to pay down debt to reduce leverage. Growing EBITDA through internal improvements is also actively reducing the net debt-to-EBITDA ratio. Management remains focused on organic value creation from existing core assets in the near term, as this generates higher returns than acquisitions in the current competitive market.