RevPAR: Flat compared to last year, with nearly 8% growth compared to Q1 2023. Bonnet Creek RevPAR: Increased by 32% at Waldorf Astoria, driven by a 65% surge in transient revenues. Casa Marina RevPAR: Increased by 12%, with a 680 basis point increase in occupancy. Hilton Hawaiian Village RevPAR: Declined by 15% due to recovery from a labor strike. Total Hotel Revenues: $608 million for the quarter. Hotel Adjusted EBITDA: $151 million, with a nearly 25% margin. Total Expenses: Increased by 3.3% during the quarter. Adjusted EBITDA: $144 million for the quarter. Adjusted FFO per Share: $0.46 for the quarter. Dividend: $0.25 per share, translating to an annualized yield of approximately 10%. Full Year RevPAR Growth Forecast: Revised to a range of -1% to +2%. Full Year Adjusted EBITDA Forecast: Revised to a range of $590 million to $650 million. Adjusted FFO per Share Forecast: Revised to a range of $1.79 to $2.09 per share.

Warning! GuruFocus has detected 5 Warning Sign with PK.

Release Date: May 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Park Hotels & Resorts Inc (NYSE:PK) reported better than expected performance in the first quarter with RevPAR essentially flat despite tough comparisons to the previous year. The Bonnet Creek complex in Orlando and Casa Marina resort in Key West led the portfolio with significant RevPAR increases of 14% and 12%, respectively. The company initiated over $80 million of capital improvements during the quarter and plans further renovations, including a $100 million transformative renovation of the Royal Palm South Beach, Miami. Park Hotels & Resorts Inc (NYSE:PK) achieved a major milestone in the entitlements process for the planned 515-room tower at Hilton Hawaiian Village, with expected final administrative approval by the end of the year. The company repurchased approximately 3.5 million shares during the quarter at a material discount to net asset value, reflecting active capital management.

Negative Points

The Hilton Hawaiian Village Hotel's recovery from a labor strike caused a 420 basis point drag on first quarter results, with RevPAR across Hawaii properties declining by 15%. The company revised its full-year outlook to reflect a modest slowdown in demand, lowering RevPAR growth forecast by 100 basis points at the midpoint. Park Hotels & Resorts Inc (NYSE:PK) faces ongoing macroeconomic uncertainty, including geopolitical tensions and a global trade war, impacting booking windows and cross-border leisure travel. The transaction market remains challenging, with uncertainty around the timing and pricing of planned asset sales. The company reported a $70 million impairment related to an undisclosed asset, reflecting adjustments in asset valuation.

Story Continues

Q & A Highlights

Q: Can you comment on the planned asset sales and your confidence in achieving decent prices in the current market environment? A: Thomas Baltimore, CEO: There's significant uncertainty due to geopolitical issues and trade wars, which affects decision-making. Despite this, our team has a strong track record of transacting under challenging conditions, having sold or disposed of 45 hotels for over $3 billion since the spin-off. We have one asset under contract at attractive pricing and are cautiously optimistic about achieving our sales objectives this year.

Q: How is the ramp-up at Hilton Hawaiian Village following the strike and renovations, and how dependent is it on international tourists? A: Thomas Baltimore, CEO: The ramp-up is taking longer post-strike, but we are seeing sequential improvement. We expect mid-single-digit positive RevPAR growth in Q3 and favorable comps in Q4. Long-term, we are confident in Hawaii's market due to limited supply growth and historical RevPAR outperformance.

Q: Can you discuss the CapEx planned for Miami and how much of the cost and timing is locked in? A: Thomas Baltimore, CEO: We are confident in delivering the Miami project by June next year for the World Cup. We have secured permits and contractors, and the renovation will transform guestrooms, public spaces, and more. We expect 15% to 20% unlevered returns and the potential to double EBITDA.

Q: What are your updated views on markets expected to lead or lag this year, and has the pecking order changed since last quarter? A: Thomas Baltimore, CEO: Hawaii, Orlando, Key West, and New York are expected to perform well, with strong group business and leisure demand. Denver is expected to improve with management changes. Overall, excluding Hilton Hawaiian Village, we would have seen a nearly 4% RevPAR increase in Q1.

Q: How do you view pursuing incremental share repurchases relative to bolstering liquidity, considering debt maturities next year? A: Thomas Baltimore, CEO: We aim to buy back stock on a leverage-neutral basis while investing in the core portfolio and managing the balance sheet. We have over $1.2 billion in liquidity and plans to address the CMBS loan maturity for Hilton Hawaiian Village. Buying back stock at current pricing is a strong investment decision.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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