Park Hotels & Resorts ((PK)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call for Park Hotels & Resorts painted a mixed picture, with strong performances in certain markets like Orlando and Key West, but also challenges such as a RevPAR decline at the Hilton Hawaiian Village. The company is actively working on capital allocation to enhance its portfolio, yet macroeconomic uncertainties have led to adjustments in overall guidance.
RevPAR Growth in Key Markets
The Bonnet Creek complex in Orlando and the Casa Marina resort in Key West reported impressive RevPAR increases of 14% and 12%, respectively, in the first quarter. These results underscore the strong market performance in these key locations, contributing positively to the company’s overall financial health.
Capital Allocation and Renovation Plans
Park Hotels & Resorts has executed over $80 million in capital improvements, with plans to invest between $310 million and $330 million in total capital improvements by 2025. Notably, a $100 million renovation of the Royal Palm South Beach in Miami is expected to double the hotel’s EBITDA, showcasing the company’s commitment to enhancing its property portfolio.
Share Repurchase Program
The company has been actively repurchasing shares, with approximately 3.5 million shares bought back for a total of $45 million during the quarter. Over the past year, Park Hotels & Resorts has repurchased about 11.5 million shares, reflecting a strategic move to enhance shareholder value.
Hilton Hawaiian Village Project Milestone
A significant milestone was achieved in the entitlements for a planned 515-room tower at the Hilton Hawaiian Village, with City Council approval secured and final administrative approval expected by year-end. This development marks a key step forward in the company’s expansion plans.
Strong Group Booking Trends
The company reported robust group booking trends, particularly in Orlando hotels, with group revenue pace up by 9%. An 18% increase in Q4 group revenue pace is expected for the portfolio, indicating strong future demand in this segment.
RevPAR Decline at Hilton Hawaiian Village
Despite successes elsewhere, RevPAR across Hawaii properties declined by 15%, attributed to recovery challenges from last year’s labor strike and softer inbound travel. This decline has been a notable drag on the company’s overall performance.
Overall RevPAR Guidance Adjustment
The company has lowered its full-year RevPAR growth forecast by 100 basis points to a range of negative 1% to positive 2%. This adjustment reflects the slower-than-expected recovery at the Hilton Hawaiian Village and ongoing macroeconomic uncertainties.
Transaction Market Challenges
Challenges in the transaction market are impacting the company’s strategic initiative to sell $300 million to $400 million of non-core hotels. This has been a hurdle in optimizing the company’s asset portfolio.
Occupancy Decline
Occupancy fell by 210 basis points during the quarter, contributing to a modest 70 basis point decline in RevPAR compared to the prior year. This decline highlights the challenges faced in maintaining occupancy levels.
Forward-Looking Guidance
During the earnings call, Park Hotels & Resorts provided guidance for the year, emphasizing several key financial metrics and strategic initiatives. Despite a challenging market, the company reported stable first-quarter RevPAR with an 8% growth compared to Q1 2023. The company plans significant capital improvements, including a $100 million renovation at the Royal Palm South Beach, Miami. Adjusted EBITDA guidance was revised to $590 to $650 million, and adjusted FFO per share was set at $1.79 to $2.09, reflecting a modest slowdown in demand.
In summary, the earnings call for Park Hotels & Resorts highlighted a blend of strong market performances and strategic investments, tempered by challenges such as RevPAR declines and macroeconomic uncertainties. The company’s proactive capital allocation and share repurchase strategies aim to bolster future growth, despite the hurdles faced in certain segments.