Park Hotels & Resorts Inc. · NYSE:PK
Park Hotels & Resorts — Citi 2017 Global Property CEO Conference
50 slides from Park Hotels & Resorts's conference presentation, March 2017
Slide 1: Citi 2017 Global Property CEO Conference
Citi 2017 Global Property CEO Conference MARCH 6-8, 2017 Waldorf Astoria Orlando Hilton Chicago Hilton Hawaiian Village Waikiki Beach Resort
Slide 2: Mission
Mission To be the preeminent Lodging REIT, focused on consistently delivering superior, risk-adjusted returns for shareholders through active asset management and a thoughtful external growth strategy, while maintaining a strong and flexible balance sheet 2|
Slide 3: Park Hotels & Resorts Overview
Park Hotels & Resorts Overview Casa Marina, a Waldorf Astoria Resort 3|
Slide 4: Pillars of our Corporate Strategy
Pillars of our Corporate Strategy Operational Excellence: Active Asset Management Continually improve property level operating performance Consistently implement revenue management initiatives to optimize market pricing / segment mix Prudent Capital Allocation Allocate capital effectively by l
Slide 5: Company Highlights
Company Highlights Park is a leading lodging real estate company with a diverse portfolio of Premium 2016 iconic and market-leading hotels and resorts with significant underlying real Brands Performance(2) estate value in top U.S. and international markets Leading Properties $2.7 billion Total GAAP
Slide 6: Seasoned and Experienced Management Team
Seasoned and Experienced Management Team Chairman, President & CEO Tom Baltimore EVP, CFO & EVP, Asset SVP, D&C EVP, CIO SVP, GC SVP, HR Treasurer Management Guy Lindsey Matt Sparks Tom Morey Jill Olander Sean Dell’Orto Rob Tanenbaum SVP, Asset SVP, SVP, CAO Darren Robb Management Investments John B
Slide 7: Portfolio Overview
Portfolio Overview Hilton San Francisco Union Square 7|
Slide 8: Diversified Exposure to Attractive Markets
Diversified Exposure to Attractive Markets High Barrier to Entry Urban Select Suburban and and Convention Hotels Landmark Resorts Strategic Airport Hotels Hilton San Francisco New York Hilton Midtown Hilton Hawaiian Village Hilton Waikoloa Village Hilton Short Hills Hilton Boston Logan Union Square
Slide 9: Diversified Exposure to Attractive Markets
Diversified Exposure to Attractive Markets 74% of Hotel EBITDA from coastal markets (1) 91% of Hotel EBITDA from Top 25 Markets & resort destinations (2) Washington Colorado Kansas/Missouri Illinois 3 Hotels | 1,621 Rooms 1 Hotel | 159 Rooms 2 Hotels | 465 Rooms 4 Hotels | 2,743 Rooms 2% Hotel EBITD
Slide 10: Portfolio Overview
Portfolio Overview Geographic Diversity Diverse Revenue Stream (% of Total Rooms) (% of 2016 Total Revenue) Top Cities Revenue Segmentation(1) Orlando Other 11% 8% Other San Francisco 28% 8% Food and 8% Honolulu Beverage 26% 8% 12% Chicago 66% International 6% Rooms (includes Puerto 2% 4% 4% 4% 5% N
Slide 11: Park Portfolio: Well Insulated from Supply
Park Portfolio: Well Insulated from Supply ~2% Supply Growth for Park Favorable Supply Picture for Park’s Hotels Against a backdrop of increased U.S. supply growth, Park is well positioned relative to its peers With outsized exposure to Orlando, Oahu, San Francisco and New Orleans, Park anticipa
Slide 12: Group Portfolio Positioned to Outperform
Group Portfolio Positioned to Outperform Park’s Leading Group Platform Park portfolio’s strong group positioning increases visibility into forward bookings and reduces operating volatility by enhancing the stability and predictability of revenue throughout the lodging cycle Top 25 Hotels: Group/
Slide 13: Investment Highlights
Investment Highlights Hilton New York Midtown 13 |
Slide 14: Investment Highlights
Investment Highlights 1 Size and Scale of Park Creates Competitive Advantage 2 Iconic Assets in Key US Cities and Geographic Diversity Significant Growth Profile: Acquisitions and ROI 3 Opportunities 4 Enhanced Profitability with Aggressive Asset Management 5 Strong and Flexible Balance Sheet 14 |
Slide 15: Size and Scale: Park ~2.5x the Size of Most REITs
1 Size and Scale: Park ~2.5x the Size of Most REITs (1) Park is the second largest publicly traded Lodging REIT ($ in billions) Full Service Mixed & Limited Service Source: Public company filings as of December 31, 2016, and S&P Global. Market data as of March 1, 2017 15 | (1) Assumption excludes HS
Slide 16: Size and Scale: Park Ranks Among the Top 25 Largest REITs
1 Size and Scale: Park Ranks Among the Top 25 Largest REITs Park Adjusted EBITDA vs. US REITs Universe(1) Top 25 Largest REITs(1) ($ in millions) ($ in millions) Park is among the Top 25 largest REITs out of 130 REITs based on Adjusted EBITDA (1) 16 | Source: Public company filings, NAREIT REITWatch
Slide 17: Iconic Assets Valued at Well Below Replacement Cost
2 Iconic Assets Valued at Well Below Replacement Cost Park’s assets are currently valued at a significant discount to replacement cost(1) $20 ($ in billions) $18.5 $18 $16 Park EV Range $8.0 bn $9.0 bn $10.0 bn Top 10 Assets $14 Portfolio Replacement $18.5 bn $18.5 bn $18.5 bn $11.0 Cost $12 Discoun
Slide 18: Growth through Disciplined Allocation
3 Growth through Disciplined Allocation Focus on building portfolio of Upper Upscale and Luxury branded assets in Top 25 markets and premium resort destinations Pursue larger scale deals (assets and portfolios) that offer significant value add opportunities Diversify brand and operator mix to includ
Slide 19: Capital Allocation: Target Larger Scale Acquisitions
3 Capital Allocation: Target Larger Scale Acquisitions Market Backdrop for Deals of Scale Less competition exists on larger transactions as only a limited number of investors have access to equity needed to pursue $250+ million single assets Consequently, the share of deals pre-empted and execut
Slide 20: Brand Strategy Maximizes Revenue and Profitability
3 Brand Strategy Maximizes Revenue and Profitability Brands Matter: Park intends to focus on owning hotels and resorts in the luxury and upper upscale segments Benefits of Partnering with Brands Consistent quality through a branded product allows Park to achieve higher RevPAR and margins as a result
Slide 21: Asset Management
Asset Management Waldorf Astoria Orlando 21 |
Slide 22: Active Asset Management: Hands on Approach
4 Active Asset Management: Hands on Approach Approach Implementation Every Dollar Counts Hope is Not a Strategy Develop strong relationships with hotel operators through proactive communication Weekly calls with Top 25 hotel teams: Continuous improvement of property level Understand 90-day p
Slide 23: Additional Internal Growth Opportunities Remain
4 Additional Internal Growth Opportunities Remain “Maximize each asset’s full potential through a focused approach on revenue management and cost containment initiatives, while purposefully addressing capital needs including ROI opportunities” 2016 Adjusted Hotel EBITDA Margin(2) Opportunity: Focus
Slide 24: Active Asset Management: The Margin Story
4 Active Asset Management: The Margin Story We estimate there is 150-200bp of embedded margin growth in the portfolio to be captured over time Revenue Management Opportunities • Remixing the Mix: Look to increase Group business across our Top 25 hotels 400bp to 35% over the next two years, capitaliz
Slide 25: CapEx: Over $1.3b Has Been Reinvested in Park's Hotels
4 CapEx: Over $1.3b Has Been Reinvested in Park’s Hotels Well-capitalized portfolio with ~$1.3 billion invested since 2011 to maintain competitive strength Historical Cumulative CapEx Spend (mn) (1) Capital Investment Overview $1,313 $1,088 $864 Invested heavily to drive market share $704 $549 and
Slide 26: Future ROI Projects: New Orleans
4 Future ROI Projects: New Orleans Hilton New Orleans Riverside: Development Rights/Land Sale Hilton New Orleans Riverside 1,622 room hotel with 143,000 sq. ft. of meeting space Adjacent to the 1.1 million sq. ft. New Orleans Ernest N. Morial Convention Center (NOCC) – 7th largest in the US Oppo
Slide 27: Future ROI Projects: Orlando
4 Future ROI Projects: Orlando Bonnet Creek: Development Rights Hilton Bonnet Creek and Waldorf Astoria Orlando The 1,001-room Hilton and the adjacent 498-room Waldorf Astoria Orlando feature a combined 147,000 sq. ft. of meeting space, a 3- acre Florida-style lazy river pool, a luxurious spa, a r
Slide 28: Balance Sheet
Balance Sheet Hilton New Orleans Riverside 28 |
Slide 29: Strong and Flexible Balance Sheet
5 Strong and Flexible Balance Sheet Debt Capital Structure Overview(1) Debt Maturity Schedule ($ in millions) Weighted % of Avg. Debt $ Amount Total Cost of Debt CMBS (secured) $ 2,000 66% 4.2% 2 Term Loan A (unsecured) 750 25% 2.2% Consolidated JV Debt (secured) 207 7% 4.0% Other (incl. capital lea
Slide 30: In Focus: Hawaii
In Focus: Hawaii Casa Marina, The Waldorf Astoria Collection 30 |
Slide 31: Park's Hawaiian Exposure
Park’s Hawaiian Exposure Hilton Hawaiian Village Situated on a 22-acre ocean front property in Waikiki, the Hilton Hawaiian Village has nearly 3,000 rooms spread across six towers. Occupancy runs a portfolio high of 94.6%, while margins run an impressive 37%. In 2016, the hotel won a Certificate of
Slide 32: Hawaii Has Witnessed Steady Growth Since '09
Hawaii Has Witnessed Steady Growth Since ‘09 Overall Hawaii Travel Statistics Total Inbound Travel to HI: Steady as She Goes 8.9mn inbound travelers to Hawaii in 2016, 3% Y/Y growth, and 1.3mn more than the prior peak (’07) 5.3mn (or 62%) arriving from the US 1.5mn (or 17%) arriving from Japan
Slide 33: Hilton Waikoloa Village
Hilton Waikoloa Village Impact of Schedule of Room Transfer to Hilton Grand Vacation • Hilton Waikoloa Village is a 1,243 room resort hotel located in Waikoloa, HI (Big Island) • As previously disclosed, Park has an agreement with Hilton Grand Vacations (NYSE: HGV) whereby Park has transferred 600 r
Slide 34: In Focus: San Francisco
In Focus: San Francisco Parc 55 San Francisco 34 |
Slide 35: San Francisco Overview: How Park Fares in '17
San Francisco Overview: How Park Fares in ‘17 • Park owns 2 hotels in the city of San Francisco, accounting for 8.3% of our total room count (vs. peer average of 11%), or 12.5% of 2016 Adjusted EBITDA • With ~3,000 hotel rooms and 167,000 sf of complexed meeting space (the largest offering in San Fr
Slide 36: Appendix
Appendix Casa Marina, The Waldorf Astoria Collection 36 |
Slide 37: Park Hotels & Resorts: Board of Directors
Park Hotels & Resorts: Board of Directors Name Principal Occupation Experience • Co-founder and former President and CEO – RLJ Lodging Trust (NYSE: RLJ) Chairman, President & Chief Executive • Former Executive – Hilton Hotels Corp., Host Marriott Thomas J. Baltimore, Jr. Officer Services, and Marrio
Slide 38: Park Hotels & Resorts: Board of Directors
Park Hotels & Resorts: Board of Directors Name Principal Occupation Experience • Head of U.S. Asset Management for The Blackstone Group (NYSE: BX) • Previously worked for Blackstone in Los Angeles and also Senior Managing Director and Head of U.S. London as head of Blackstone’s European Real Estate
Slide 39: Park Hotels & Resorts: Board of Directors
Park Hotels & Resorts: Board of Directors Name Principal Occupation Experience • Senior counsel with Kasowitz, Benson, Torres & Friedman LLP • Served 24 years in the U.S. Senate (Connecticut), retiring in January 2013; served as Chairman of the Committee on Senator Joseph I. Senior Counsel Homeland
Slide 40: Guidance
Guidance 2017 Assumptions (unaudited, in millions, except per share amounts) Metric Low High (1)(2) Comparable RevPAR Growth 0.0% 2.0% Net income(3) $ 243 $ 277 (3) Net income attributable to stockholders $ 237 $ 271 (3) Diluted earnings per share $ 1.10 $ 1.26 Adjusted EBITDA $ 725 $ 765 (2) Compar
Slide 41: Guidance (cont'd)
Guidance (cont’d) EBITDA Year Ending (unaudited, in millions) Decem ber 31, 2017 Low Case High Case (1) Net income $ 243 $ 277 Interest income (1) (1) Interest expense 125 125 (1) Income tax expense 17 23 Depreciation and amortization expense 295 295 Interest expense, income tax and depreciation and
Slide 42: Guidance (cont'd)
Guidance (cont’d) FFO Year Ending (unaudited, in millions except per share amounts) Decem ber 31, 2017 Low Case High Case Net income attributable to stockholders(1) $ 237 $ 271 Depreciation and amortization expense 295 295 Equity investment adjustments: Equity in earnings from investments in affilia
Slide 43: Guidance (cont'd)
Guidance (cont’d) Selected 2016 Operating Metrics for 2017 Comparable Hotels Year Ended (unaudited, dollars in millions, except Comparable RevPAR) December 31. 2016 (1) Comparable RevPAR $ 161.33 Pro-forma Hotel Adjusted EBITDA $ 750 Less: Hilton Waikoloa Village (40) Embassy Suites Washington, D.C.
Slide 44: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA, Adjusted EBITDA and Pro-forma Adjusted EBITDA (unaudited, in millions) Three Months Ended Year Ended Decem ber 31, Decem ber 31, 2016 2015 2016 2015 Net income $ 17 $ 69 $ 139 $ 299 Interest income (1) — (2) (1) Interest expense 40 47 181 186 Income tax expense 3
Slide 45: Non-GAAP Financial Measures (cont'd)
Non-GAAP Financial Measures (cont’d) Pro-forma Hotel Adjusted EBITDA, Pro-forma Hotel Revenue and Pro-forma Hotel Adjusted EBITDA Margin Three Months Ended Year Ended December 31, December 31, 2016 2015 2016 2015 Pro-forma Adjusted EBITDA $ 184 $ 189 $ 756 $ 779 (1) All other 3 9 38 46 Adjusted EBIT
Slide 46: Definitions
Definitions EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA Margin Earnings before interest expense, taxes and depreciation and amortization (“EBITDA”), presented herein, reflects net income (loss), excluding interest expense, a provision for income taxes and depreciation an
Slide 47: Definitions (cont'd)
Definitions (cont’d) NAREIT FFO attributable to Parent, or stockholders, and Adjusted FFO attributable to Parent, or stockholders NAREIT FFO attributable to Parent, or stockholders, presented herein, is calculated as net income (loss) attributable to Parent, or stockholders, (calculated in accordanc
Slide 48: Definitions (cont'd)
Definitions (cont’d) Net Debt Net debt, presented herein, is a non-GAAP financial measure that the Company uses to evaluate its financial leverage. Net debt is calculated as (i) long-term debt, including current maturities and excluding unamortized deferred financing costs; and (ii) the Company’s sh
Slide 49: 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 property or group of properties. Occupancy measures the utilization of the Company’s properties available capacity. Management uses occupancy to gauge de
Slide 50: Disclosure
About Park Hotels & Resorts Inc. and Safe Harbor Disclosure About Park Hotels & Resorts Inc. Park (NYSE: PK) is a leading lodging real estate company with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio consists of 67 premium-b
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