TYSONS, Va., Dec. 22, 2022 (GLOBE NEWSWIRE) — Park Hotels & Resorts Inc. (NYSE:PK) today provided an update on fourth quarter operating trends and the Company’s capital allocation activity.
Recent Highlights:
- Hotel net income for October 2022 and November 2022 was $41 million and $15 million, respectively;
- RevPAR for October 2022 was $178.62, a 77.5% increase versus October 2021 on a Pro-forma basis and a 9.7% decrease versus 2019 on a Pro-forma basis, resulting in Hotel Adjusted EBITDA Margin of 30.8% for October 2022;
- Occupancy for October 2022 was 73.4%, a 23.7 percentage point increase versus October 2021 on a Pro-forma basis and an 11.2 percentage point decrease versus 2019 on a Pro-forma basis, while rate for October 2022 was $243.41, a 20.2% increase versus October 2021 on a Pro-forma basis and a 4.0% increase versus 2019 on a Pro-forma basis;
- RevPAR for November 2022 was $156.14, a 48.9% increase versus November 2021 on a Pro-forma basis and a 10.9% decrease versus 2019 on a Pro-forma basis, resulting in Hotel Adjusted EBITDA Margin of 22.1% for November 2022;
- Occupancy for November 2022 was 67.1%, a 15.5 percentage point increase versus November 2021 on a Pro-forma basis and a 14.0 percentage point decrease versus 2019 on a Pro-forma basis, while rate for November 2022 was $232.53, a 14.4% increase versus November 2021 on a Pro-forma basis and a 7.7% increase versus 2019 on a Pro-forma basis;
- Updated Q4 2022 outlook to reflect slightly lower than expected RevPAR performance but better than expected Hotel Adjusted EBITDA margin, Adjusted EBITDA and Adjusted FFO per share as a result of higher than expected group business yielding additional incremental food & beverage revenue, offset by weaker than expected leisure demand in certain resort markets;
- Declared a $0.25 per share cash dividend to common stockholders of record as of December 30, 2022, payable on January 17, 2023;
- Successfully amended and restated its $901 million revolving credit facility to increase total capacity to $950 million, extend the maturity by three years to December 2026 and release of all collateral securing the credit facility (and its senior notes) consisting of pledges of equity interests in Park-affiliated entities owning certain unencumbered assets;
- Repaid in full the $78 million outstanding under its sole remaining bank term loan maturing in 2024, using a combination of a $50 million draw against the newly amended revolver and cash on-hand;
- Plans to fully repay its $26 million CMBS loan due March 2023 and secured by the Hilton Checkers hotel by the end of 2022 using available cash on hand; and
- Opened the newly constructed 13,000 square foot ballroom at the Waldorf Astoria Bonnet Creek in Orlando on December 2, 2022.
Thomas J. Baltimore, Jr., Chairman and CEO of Park, stated, “As we approach the end of the year, I am incredibly pleased with the recovery of our business and the progress we have made against our 2022 priorities. Operationally, despite the macro headwinds, the fourth quarter is generally in line with our overall expectations thanks to our diversified portfolio, and while we are adjusting our fourth quarter outlook down slightly on the top-line, we are raising margin and earnings guidance given outperformance in out-of-room spend and cost savings. Strong recovery and pick up in group, combined with steady business transient demand, has helped to offset some moderation in the leisure segment as seasonal trends normalize, while markets such as Hawaii, New York and New Orleans have shown solid outperformance throughout the quarter with additional tailwinds anticipated next year from incremental international inbound and convention demand, which should help offset slower growth this quarter in markets like Key West and a still lagging recovery in San Francisco, which is now expected to drag the portfolio fourth quarter RevPAR growth relative to 2019 by over 900 basis points.
On the capital allocation front, I am proud of our team’s efforts to sell $317 million of non-core assets, reducing leverage by almost 0.4x based on 2019 Pro-forma Adjusted EBITDA, enhance our financial flexibility through our recent re-cast of our revolving credit facility and execute transformative ROI improvements within our portfolio. With $1.9 billion of liquidity available as of the end of November, including over $1 billion of cash, Park’s balance sheet remains very well positioned to execute our strategic goals in 2023 and beyond.
We will remain disciplined with our capital allocation priorities—reinvesting in our robust ROI pipeline, continuing to de-lever our balance sheet by selling non-core assets and taking advantage of the on-going dislocation between public and private market valuations by buying back stock through our existing stock repurchase program on a leverage neutral basis.”
Preliminary Fourth Quarter 2022 Operational Highlights:
- Group business has outperformed expectations during the fourth quarter to date, resulting in more than $7 million in room revenue and approximately $7 million in incremental food & beverage revenue relative to Park’s outlook published on November 2, 2022 (“Prior Forecast”);
- Group bookings as of the end of November 2022 for the fourth quarter of 2022 was approximately 83% of what fourth quarter 2019 group bookings were as of the end of November 2019, an increase of approximately 600 basis points from the end of September 2022, with average group rate at 2019 levels for the same time period;
- Business transient has held steady to forecast with corporate, local and government negotiated account room revenue to date slightly exceeding Prior Forecast by $1 million;
- Leisure transient performance has moderated with resort market performance down 2.3% to Prior Forecast, led mostly by the Florida markets (and most notably Key West), with RevPAR down approximately 6.5% to Prior Forecast; however, Hawaii continues to outperform with RevPAR up over 1% relative to Prior Forecast and now expected to be up 8% relative to fourth quarter 2019 despite some minor demand disruption to the Hilton Waikoloa stemming from the volcano activity on the Big Island; and
- RevPAR across Park’s urban markets is down 3% for the fourth quarter of 2022 relative to Prior Forecast, with San Francisco continuing to lag in its recovery relative to other urban and convention markets within the Park portfolio. Excluding San Francisco, combined RevPAR for the urban markets is expected to increase 3% for the fourth quarter 2022 relative to Prior Forecast and expected to be down only 2% to fourth quarter 2019, on a Pro-Forma basis, with fourth quarter RevPAR for New York and New Orleans each expected to exceed 2019 levels, on a Pro-forma basis.
These fourth quarter operating statistics are preliminary. The Company expects to publicly report its results for the fourth quarter and full year 2022 in February 2023. Actual results may differ materially from the estimates above.
Updated Q4 2022 and Full-Year 2022 Outlook
Park’s outlook for Q4 2022 and full-year 2022 are updated as follows:
| (unaudited, dollars in millions, except per share amounts and RevPAR) | ||||||||||||||||||||
| Q4 2022 Outlook | Q4 2022 Outlook | Change at | ||||||||||||||||||
| as of November 2, 2022 | as of December 22, 2022 | Midpoint | ||||||||||||||||||
| Metric | Low | High | Low | High | ||||||||||||||||
| RevPAR | $ | 163 | $ | 166 | $ | 161 | $ | 164 | $ | (2 | ) | |||||||||
| RevPAR change vs. 2019 | (9 | )% | (7 | )% | (10 | )% | (8 | )% | (1 | )% | ||||||||||
| Net income | $ | 6 | $ | 20 | $ | 21 | $ | 35 | $ | 15 | ||||||||||
| Net income attributable to stockholders | $ | 4 | $ | 18 | $ | 19 | $ | 33 | $ | 15 | ||||||||||
| Earnings per share – Diluted(1) | $ | 0.02 | $ | 0.08 | $ | 0.08 | $ | 0.15 | $ | 0.07 | ||||||||||
| Adjusted EBITDA | $ | 140 | $ | 155 | $ | 145 | $ | 160 | $ | 5 | ||||||||||
| Hotel Adjusted EBITDA margin | 24.0 | % | 25.0 | % | 24.3 | % | 25.3 | % | 30 | bps | ||||||||||
| Hotel Adjusted EBITDA margin change vs. 2019(2) | (520 | ) bps | (420 | ) bps | (490 | ) bps | (390 | ) bps | 30 | bps | ||||||||||
| Adjusted FFO per share – Diluted(1) | $ | 0.35 | $ | 0.43 | $ | 0.38 | $ | 0.45 | $ | 0.02 | ||||||||||
| Full-Year 2022 Outlook | Full-Year 2022 Outlook | Change at | ||||||||||||||||||||||||||||||
| as of November 2, 2022 | as of December 22, 2022 | Midpoint | ||||||||||||||||||||||||||||||
| Metric | Low | High | Low | High | ||||||||||||||||||||||||||||
| RevPAR | $ | 156 | $ | 157 | $ | 156 | $ | 157 | $ | — | ||||||||||||||||||||||
| RevPAR change vs. 2019 | (15 | )% | (14 | )% | (15 | )% | (15 | )% | — | % | ||||||||||||||||||||||
| Net income | $ | 143 | $ | 157 | $ | 158 | $ | 173 | $ | 16 | ||||||||||||||||||||||
| Net income attributable to stockholders | $ | 132 | $ | 147 | $ | 147 | $ | 161 | $ | 15 | ||||||||||||||||||||||
| Earnings per share – Diluted(1) | $ | 0.58 | $ | 0.64 | $ | 0.64 | $ | 0.71 | $ | 0.06 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 587 | $ | 602 | $ | 591 | $ | 607 | $ | 5 | ||||||||||||||||||||||
| Hotel Adjusted EBITDA margin | 25.6 | % | 25.8 | % | 25.5 | % | 25.9 | % | — bps | |||||||||||||||||||||||
| Hotel Adjusted EBITDA margin change vs. 2019 | (370 | ) bps | (350 | ) bps | (380 | ) bps | (340 | ) bps | — bps | |||||||||||||||||||||||
| Adjusted FFO per share – Diluted(1) | $ | 1.45 | $ | 1.52 | $ | 1.47 | $ | 1.54 | $ | 0.02 | ||||||||||||||||||||||
| (1) | Per share amounts are calculated based on unrounded numbers. |
| (2) | The fourth quarter 2019 margin benefited from $21 million of business interruption proceeds, or a 200 basis point impact, related to the loss of income in prior periods for Park’s Puerto Rico and Key West hotels. |
Park’s outlook is based in part on the following assumptions:
- Fully diluted weighted average shares are expected to be 224 million and 228 million for Q4 2022 and full-year 2022, respectively; and
- Does not take into account potential future acquisitions and dispositions, which could result in a material change to Park’s outlook.
Park’s fourth quarter and full-year 2022 outlook are based on a number of factors, many of which are outside the Company’s control, including uncertainty surrounding any new disruptions from the COVID-19 pandemic and other macro-economic factors, including inflation, increases in interest rates, supply chain disruptions and the possibility of an economic recession or slowdown, all of which are subject to change.
About Park
Park is the second largest publicly traded lodging REIT with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio currently consists of 47 premium-branded hotels and resorts with approximately 30,000 rooms primarily located in prime city center and resort locations. Visit www.pkhotelsandresorts.com for more information.
