Park Hotels & Resorts Inc. · NYSE:PK
Park Hotels & Resorts — Investor Presentation (2017)
45 slides from Park Hotels & Resorts's investor presentation, Sep 18, 2017
Slide 1: Investor Presentation Summer 2017
Investor Presentation SUMMER 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 stockholders 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 Aggressive 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 leveraging scale, liq
Slide 5: Company Highlights
Company Highlights Park is a leading lodging real estate company with a diverse portfolio of Premium TTM iconic and market-leading hotels and resorts with significant underlying real Brands Performance(1)(2) estate value in top U.S. and international markets Leading Properties $2.7 billion Total GAA
Slide 6: 1Q17 Highlights: Solid Quarter; Guidance Increased
1Q17 Highlights: Solid Quarter; Guidance Increased Operating Results +1.7% Comparable increase in RevPAR for domestic portfolio +15bps Increase in comparable Pro forma Hotel Adjusted EBITDA margins for our domestic portfolio(1) +4.2% Y/Y increase in Pro forma Adjusted EBITDA(1) +7.1% Increase in Gro
Slide 7: Seasoned and Experienced Management Team
Seasoned and Experienced Management Team Chairman, President & CEO Tom Baltimore EVP, CFO & EVP, Asset SVP, Design EVP, CIO SVP, GC SVP, HR Treasurer Management Construction Sean Dell’Orto Matt Sparks Tom Morey Jill Olander Rob Tanenbaum Guy Lindsey SVP, CAO SVP, Asset SVP, Darren Robb Management In
Slide 8: Portfolio Overview
Portfolio Overview Hilton San Francisco Union Square 8|
Slide 9: 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 10: Diversified Exposure to Attractive Markets
Diversified Exposure to Attractive Markets 74% of Hotel Adjusted EBITDA from coastal markets(1) 91% of Hotel Adjusted EBITDA from Top 25 Mkts & 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
Slide 11: Portfolio Overview
Portfolio Overview Geographic Diversity(1) Diverse Revenue Stream(2) (% of Total Rooms) (% of TTM Total Revenue) Top Cities Revenue Segmentation Orlando Other 11% 7% Other San Francisco 29% 8% Food and 8% Honolulu Beverage 27% 8% 12% Chicago 66% International 5% Rooms 2% 4% 4% 4% 5% New York Atlanta
Slide 12: 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 US supply growth, Park is well positioned relative to its peers With outsized exposure to Orlando, Oahu, San Francisco and New Orleans, Park anticipate
Slide 13: Group Portfolio Positioned to Outperform
Group Portfolio Positioned to Outperform Park’s Leading Group Platform Park Hotels & Resorts 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 Grou
Slide 14: Investment Highlights
Investment Highlights Hilton New York Midtown 14 |
Slide 15: 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 15 |
Slide 16: Size and Scale: Park ~2.5x the Size of Most Lodging REITs
1 Size and Scale: Park ~2.5x the Size of Most Lodging REITs (1) Park is the second largest publicly traded Lodging REIT $20.0 Full Service Mixed & Limited Service $18.0 $18.0 $16.0 $14.0 Enterprise Value (bn) $12.0 $10.0 $8.8 $8.0 $6.0 $5.6 $4.6 $4.8 $4.4 $4.6 $3.7 $3.7 $4.0 $3.0 $3.1 $2.7 $2.7 $2.3
Slide 17: Size and Scale: Park Ranks Among the Top 25 Largest REITs
1 Size and Scale: Park Ranks Among the Top 25 Largest REITs Park TTM Pro-Forma Adjusted EBITDA vs. US REITs Universe(1) Top 25 Largest REITs(1) ($ in millions) ($ in millions) TTM Adj. Company Sector EBITDA 1. Simon Property Group, Inc. Malls $4,839 2. GGP, Inc. Malls $2,213 3. Welltower, Inc. Healt
Slide 18: 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 $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 Discount to Replacement
Slide 19: 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 20: 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 21: Brand Strategy Maximizes Revenue and Profitability
3 Brand Strategy Maximizes Revenue and Profitability Brands Matter: Park will focus on owning hotels and resorts in the luxury and upper upscale segments Benefits of Partnering with Brands Consistent quality through a branded product should allow Park to achieve higher RevPAR and margins as a result
Slide 22: Asset Management
Asset Management Waldorf Astoria Orlando 22 |
Slide 23: 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 24: 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 Pro forma Hotel Adjusted EBITDA Margin(1) Opportuni
Slide 25: Active Asset Management: The Margin Story
4 Active Asset Management: The Margin Story We estimate there is 150-200bps 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 400bps to 35% over the next two years, capital
Slide 26: CapEx: Over $1.3bn Has Been Reinvested in Park's Hotels
4 CapEx: Over $1.3bn Has Been Reinvested in Park’s Hotels Well-capitalized portfolio with ~$1.3 bn 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 ens
Slide 27: 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 130,000 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 28: Future ROI Projects: Orlando
4 Future ROI Projects: Orlando Bonnet Creek: Development Rights Hilton Bonnet Creek and Waldorf Astoria Orlando The 1,009-room Hilton and the adjacent 502-room Waldorf Astoria Orlando feature a combined 174,000 sq. ft. of meeting space, a 3- acre Florida-style lazy river pool, a luxurious spa, a r
Slide 29: Balance Sheet
Balance Sheet Hilton New Orleans Riverside 29 |
Slide 30: Strong and Flexible Balance Sheet
5 Strong and Flexible Balance Sheet Debt Capital Structure Overview(1) Debt Maturity Schedule(2) Weighted Avg. Debt $ Amount % of Total Cost of Debt CMBS (secured) $2,000 66% 4.2% Term Loan A (unsecured)(3) 750 25% 2.4% Consolidated JV Debt (secured) 207 7% 4.0% Other (incl. capital lease obligation
Slide 31: In Focus: Hawaii
In Focus: Hawaii Casa Marina, The Waldorf Astoria Collection 31 |
Slide 32: 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 33: Hilton Waikoloa Village
Hilton Waikoloa Village Impact of Schedule of Room Transfer to Hilton Grand Vacations (HGV) • Hilton Waikoloa Village is a 1,244 room resort hotel located in Waikoloa, HI (Big Island) • As previously disclosed, Park has an agreement with HGV whereby Park has transferred 600 rooms to HGV to be used a
Slide 34: Appendix
Appendix Casa Marina, The Waldorf Astoria Collection 34 |
Slide 35: 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) • Former Executive – Hilton Hotels Corp., Host Marriott Services Corp., and Marriott Chairman, President & Chief Executive Officer Corp. (NYSE: MAR
Slide 36: Park Hotels & Resorts: Board of Directors (cont'd)
Park Hotels & Resorts: Board of Directors (cont’d) Name Principal Occupation Experience • Executive Vice President and Chief Financial Officer of Jones Lang LaSalle EVP and Chief Financial Officer (NYSE: JLL) since 2013 Jones Lang LaSalle Incorporated • Executive Vice President and Chief Financial O
Slide 37: 2017 Guidance
2017 Guidance 2017 Assumptions and Guidance Summary (unaudited, in millions, except per share data) Metric Low High (1)(2) Comparable RevPAR Growth 0.0% 2.0% Comparable Hotel Adjusted EBITDA margin change(1)(2) (80) bps 0 bps Net income(3) $ 250 $ 277 Net income attributable to stockholders (3) $ 24
Slide 38: 2017 Guidance (cont'd)
2017 Guidance (cont’d) EBITDA and FFO Year Ending (unaudited, in millions) Decem ber 31, 2017 Low Case High Case Net income (1) $ 250 $ 277 Interest income (2) (2) Interest expense 125 125 Income tax expense(1) 26 28 Depreciation and amortization expense 292 293 Interest expense, income tax and depr
Slide 39: Reconciliations: Non GAAP Financial Measures
Reconciliations: Non GAAP Financial Measures Pro-forma Hotel Adjusted EBITDA, Pro-forma Hotel Revenue EBITDA, Adjusted EBITDA and Pro-forma Adjusted EBITDA and Pro-forma Hotel Adjusted EBITDA Margin (unaudited, in millions) (unaudited, dollars in millions) Year Ended Decem ber 31, 2016 Year Ended Ne
Slide 40: Reconciliations: Non GAAP Financial Measures (cont'd)
Reconciliations: Non GAAP Financial Measures (cont’d) TTM Pro forma Adjusted EBITDA Three Months Ended Year Ended TTM (1) (unaudited, in millions) March 31, Decem ber 31, March 31, 2017 2016 2016 2017 Net income $ 2,350 $ 23 $ 139 $ 2,466 Interest income — — (2) (2) Interest expense 30 46 181 165 In
Slide 41: 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 42: Definitions (cont'd)
Definitions (cont’d) NAREIT FFO attributable to stockholders, Adjusted FFO attributable to stockholders, NAREIT FFO per share – Diluted and Adjusted FFO per share - Diluted NAREIT FFO attributable to stockholders, presented herein, is calculated as net income (loss) attributable to stockholders (cal
Slide 43: Definitions (cont'd)
Definitions (cont’d) NAREIT FFO per share – Diluted, presented herein, is calculated as the Company’s NAREIT FFO, as previously defined, divided by the number of fully diluted shares outstanding during a period. Adjusted FFO per share – Diluted, presented herein, is Adjusted FFO per share, as previo
Slide 44: 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. Occupancy measures the utilization of the Company’s hotels’ available capacity. Management uses occupancy to gauge demand at a
Slide 45: About Park Hotels & Resorts and Safe Harbor Disclosure
About Park Hotels & Resorts 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-brande