Park Hotels & Resorts Inc. · NYSE:PK
Park Hotels & Resorts — Nareit REITweek 2021
32 slides from Park Hotels & Resorts's conference presentation, June 2021
Slide 1: Nareit Presentation
Nareit Presentation JUNE 2021
Slide 2: Park Hotels & Resorts
Park Hotels & Resorts Mission Investment Strategy Guiding Principles To be the preeminent Upper-Upscale & Luxury Aggressive lodging REIT, focused on Full-Service Asset Management consistently delivering superior, risk -adjusted Premiere Urban and Resort Prudent returns for stockholders through activ
Slide 3: Park at a Glance
Park at a Glance Company Overview Currently the second largest publicly traded lodging REIT, Park owns a portfolio of 59 premium-branded hotels and resorts with over 33,000 rooms primarily located in prime city center and resort locations. Top Hyatt Regency Boston markets include Hawaii, San Francis
Slide 4: Iconic Portfolio: Urban and Resort Destinations
Iconic Portfolio: Urban and Resort Destinations Hilton Hawaiian Village Waikiki Beach Resort Hilton San Francisco Union Square Royal Palm South Beach Miami Hilton Denver City Center Hilton Waikoloa Village Waldorf Astoria Orlando JW Marriott SF Union Square Hilton New Orleans Riverside Hilton Chicag
Slide 5: Latest Update on Hotel Operations
Latest Update on Hotel Operations Fundamentals continue to improve: Leisure driving performance with improvements seen across all segments • A modest start to the year saw rapid acceleration by the end of Q1, and throughout Q2 as loosening restrictions, continued vaccine distribution, and pent-up le
Slide 6: Group Momentum Building Rapidly
Group Momentum Building Rapidly Significant interest in group events as restrictions ease and more of population is vaccinated Group Leads Have Increased 178% Since Encouraging Trends in Key Group Markets December 2020(1) 4,000 2,500,000 2021 Trends: Associated Group Room Nights 3,500 2,000,000 • Be
Slide 7: Focus for Balance of 2021
Focus for Balance of 2021 Park remains laser-focused on the following priorities as it navigates through the pandemic and the expected eventual lodging industry recovery • 56 of 59 hotels open(1); remaining hotels expected to open over the next several months as travel restrictions ease and demand r
Slide 8: Operational Update
Operational Update Park had 54 of 59 hotels open as of May 31st, with average occupancy of 54% 54% (4) 49% 46% 50.0% 42% 42% 39% 34% 36% 40.0% 32% 30% 30% 29% 30.0% # of Hotels Open(2) Number of Hotels 20% 18 14% 18 18 20.0% 17 17 17 17 16 17 17 16 10.0% 13 13 13 0.0% 14 10 12 13 13 13 10 10 10 12 -
Slide 9: Investment Highlights
Investment Highlights Iconic Portfolio of Irreplaceable Assets Trading at a Significant Discount Outsized Exposure to Attractive Leisure Markets Opportunity to Right-Size Hotel Operating Model Embedded Opportunities to Enhance Value Strong and Flexible Balance Sheet with Ample Liquidity Seasoned & E
Slide 10: Iconic Portfolio: Core Portfolio is Best in Class
Iconic Portfolio: Core Portfolio is Best in Class 2019 Pro-forma Comp Hotel Adj. EBITDA Breakdown PK Owns One of the Highest Quality Portfolios (1) • Core (89% of Pro-forma Comparable Hotel Adj. EBITDA): All Other 11% ✓ RevPAR of $204 is $20 higher than peers(1) ✓ Margin of 30.7% is 20bps higher tha
Slide 11: Iconic Portfolio: Steep Discount to Replacement Cost
Iconic Portfolio: Steep Discount to Replacement Cost Park currently trades at a 52% discount to replacement cost(1,2) Meeting Space Replacement Rooms (sq. ft.) Cost ($/key) $16.5B Core 21,495 1.8M $19.7B ($769k/Key) $19.7B $3.2B Total Portfolio(3) 30,119 2.3M ($654k/Key) Core 52% Discount to Replace
Slide 12: Leisure Focus to Drive Performance
Leisure Focus to Drive Performance Leisure focused markets represent over 60% of Hotel Adjusted EBITDA(1) • Drive-to-leisure focused hotels continue to witness solid improvements in occupancy, increasing to 56% in May(2) from 30% for the month of January. Top performing markets include: Key West, Mi
Slide 13: Leisure Markets Witness Strong Rebound
Leisure Markets Witness Strong Rebound Leisure focused markets in Hawaii, Florida and Puerto Rico continue to exhibit a healthy recovery Hawaii Florida Puerto Rico • Occupancy continues to build in • Key West: Continue to seek ways to drive • May occupancy reached 80%, up from Hawaii, up from 14% in
Slide 14: Broader Based Recovery Taking Shape
Broader Based Recovery Taking Shape Solid improvements in Denver and across much of Southern California; New Orleans expects improving group trends in 2H21 Denver New Orleans Southern California • Hilton Denver hotel witnessed a • Transient revenue for 3Q ‘21 is • Santa Barbara: Strong summer demand
Slide 15: Re-Imagining the Operating Model
Re-Imagining the Operating Model Unique opportunity to enhance the hotel operating model which should lead to improved operating margins ✓ Permanent reduction of full-time, hotel-level staffing resulting in up to $85M annual savings, or ~300bps of margin upside ✓ Reductions in above-property cost al
Slide 16: Park's Active Capital Recycling
Park’s Active Capital Recycling 4-Year Track Record of Success # Assets Proceeds 2018 • Sold 24(1) non-core hotels, including international assets since spin • Fully exited Park’s international exposure (14 assets) by early 2020 Dispositions 13 +$519M(2) • Enhanced and diversified portfolio with acq
Slide 17: Embedded Opportunities to Potentially Enhance Value
Embedded Opportunities to Potentially Enhance Value Nearly half of Park’s Core portfolio Rebrand/Reposition Expand Alt. Use possesses potential value enhancement Hilton Hawaiian Village opportunities which further promote the portfolio’s inherent real estate value Hilton New Orleans Riverside Hilton
Slide 18: Value Enhancement Case Studies
Value Enhancement Case Studies Rebrand / Reposition Hilton Santa Barbara: Re-branded to Hilton from DoubleTree ▪ Transient revenues increased 19% from 2017 to 2019 on strength of more upscale brand and transformational renovation ▪ Improved EBITDA from $16.6M in 2017 to $22.2M in 2019, a 15.4% CAGR
Slide 19: Strong and Flexible Balance Sheet
Strong and Flexible Balance Sheet Park has raised over $2.1B of corporate debt since May 2020 with proceeds used to pay-down near-term maturities, boost liquidity and enhance debt metrics Park Total Capitalization as of 6/1/21 Debt Metrics: 1Q20 vs. 1Q21 1Q20 1Q21 PF 1Q21 (1) % of Debt Maturing thro
Slide 20: Experienced Management Team with Track Record of Success
Experienced Management Team with Track Record of Success Chairman and CEO Thomas J. Baltimore, Jr. Executive Management EVP, Design & SVP, EVP, CFO EVP, CIO EVP, HR Construction General Counsel Sean M. Dell’Orto Tom Morey Jill Olander Carl Mayfield Nancy Vu Senior Management SVP, Investments SVP, FP
Slide 21: Strong Corporate Governance and ESG Focus
Strong Corporate Governance and ESG Focus 2020 ESG Highlights Named by Newsweek to Established Park’s America’s Most Responsible Companies Diversity and Inclusion list 2020 & 2021 Steering Committee Issued third annual Participated Ranked as Signatory of Corporate Responsibility in the GRESB A AHLA’
Slide 22: Appendix
Appendix The Reach Key West, Curio Collection by Hilton
Slide 23: Amendment Overview and Covenant Relief
Amendment Overview and Covenant Relief Park Successfully Amended its Credit and Term Loan Facilities Amendment Overview Covenant Metric Modification 8.50x for Q1/Q2 2022 Upsized and Extended Revolver Net Leverage Ratio < 7.25x 8.00x for Q3/Q4 2022 • $901 million of Revolver commitments extended two
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations Pro-forma Core and Pro-forma Comparable Hotel Revenues Year Ended (unaudited, in millions) December 31, 2019 Total Hotel Revenues $ 2,767 Add: Revenues from hotels acquired 406 Less: Revenues from hotels disposed of (154) Pro-forma Hotel Revenues (1) 3,019 Less: Revenues fro
Slide 25: Non-GAAP Reconciliations (Cont'd)
Non-GAAP Reconciliations (Cont’d) Net Income to Pro-forma Core and Pro-forma Comparable Hotel Adjusted EBITDA Year Ended (unaudited, in millions) December 31, 2019 Net income $ 316 Depreciation and amortization expense 264 Interest income (6) Interest expense 140 Income tax expense 35 Interest expen
Slide 26: Non-GAAP Reconciliations (Cont'd)
Non-GAAP Reconciliations (Cont’d) Monthly Pro-forma Hotel Adjusted EBITDA and Pro-forma Hotel Revenues – Total Consolidated and Open Consolidated Hotels (unaudited, in millions) Month Ended Month Ended Month Ended Month Ended January 31, 2021 February 28, 2021 March 31, 2021 April 30, 2021 Hotel net
Slide 27: Non-GAAP Reconciliations (Cont'd)
Non-GAAP Reconciliations (Cont’d) Net Debt and Net Debt to Pro-forma Adjusted EBITDA Ratio (unaudited, in millions) December 31, 2020 December 31, 2019 Debt $ 5,121 $ 3,871 Add: unamortized deferred financing costs and discount 38 18 Less: unamortized premium (3) (3) Long-term debt, including curren
Slide 28: Non-GAAP Reconciliations (Cont'd)
Non-GAAP Reconciliations (Cont’d) Hotel Adjusted EBITDA Margin Year Ended (unaudited, in millions) December 31, 2019 Pro-forma Hotel Revenues (1) $ 3,019 Pro-forma Hotel Adjusted EBITDA (1) $ 892 Pro-forma Hotel Adjusted EBITDA margin(1)(2) 29.5% Core Pro-forma Hotel Revenues (1) $ 2,536 Core Pro-fo
Slide 29: Definitions
Definitions EBITDA, Adjusted EBITDA, Pro-forma Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA Margin Earnings (loss) before interest expense, taxes and depreciation and amortization (“EBITDA”), presented herein, reflects net income (loss) excluding depreciation and amortization, in
Slide 30: Definitions (Cont'd)
Definitions (Cont’d) The Company believes Net debt provides useful information about its indebtedness to investors as it is frequently used by securities analysts, investors and other interested parties to compare the indebtedness of companies. Net debt should not be considered as a substitute to de
Slide 31: Definitions (Cont'd)
Definitions (Cont’d) Occupancy Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels. Rooms nights available to guests have not been adjusted for suspended or reduced operations at certain hotels as a result of CO
Slide 32: About Park and Safe Harbor Disclosure
About Park and Safe Harbor Disclosure About Park Hotels & Resorts Inc. Park Hotels & Resorts Inc. (NYSE: PK) is the second largest publicly traded lodging real estate investment trust with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s