Park Hotels & Resorts Inc. · NYSE:PK
Park Hotels & Resorts — Q1 2023 Earnings Presentation
41 slides from Park Hotels & Resorts's earnings presentation, May 1, 2023
Slide 1: Investor Presentation
Investor Presentation JUNE 2023
Slide 2: Park Hotels & Resorts: Mission, Strategy, Guiding Principles
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 returns for stockholders Premier Urban and Resort Prudent through active
Slide 3: Park at a Glance
Park at a Glance 46 29K $6.8B 10.2x Hilton Waikoloa Village Hotels Rooms Enterprise Value(1) EBITDA Multiple(2) Waldorf Astoria Orlando Top 10 Markets 2019(3) Trailing 12 Months(3) Signia Hilton Bonnet Creek Hilton Denver City Center 1. Hawaii 26% 1. Hawaii 36% 2. San Fran 16% 2. Orlando 13% 3. Orla
Slide 4: Iconic Portfolio: Urban and Resort Destinations
Iconic Portfolio: Urban and Resort Destinations Swap?? Hilton Hawaiian Village Waikiki Beach Resort Hyatt Regency Boston Royal Palm South Beach Miami Hilton Denver City Center Hilton Waikoloa Village Waldorf Astoria Orlando Signia Orlando Bonnet Creek Hilton New Orleans Riverside Hilton Chicago W Ch
Slide 5: Park: A Compelling Investment Story
Park: A Compelling Investment Story Undervalued Sector leading growth Robust ROI pipeline Financial flexibility Iconic portfolio trading Significant upside Robust capex pipeline Financial flexibility with at wide discount(1): potential to unlock embedded focus on reducing Highest AFFO/share growth v
Slide 6: Sector Leading Growth at a Discount to NAV
Sector Leading Growth at a Discount Earnings growth(1) vs. AFFO multiple(1) Despite being 32% 14.0x 28% forecasted to deliver the 27% 12.0x highest Y/Y earnings 2023 / 2022 AFFO Growth 22% growth (AFFO) in 2023 2023 AFFO Multiple 10.0x (28%)(1), Park trades at 17% the lowest earnings 12% 12% 8.0x mu
Slide 7: The Improved Park: Impact of Partial San Francisco Exit
The Improved Park: Impact of Partial San Francisco Exit New York Hilton Midtown 7|
Slide 8: San Francisco CMBS Loan: Exit Strategy
San Francisco CMBS Loan: Elongated Recovery Warrants Exit Strategy As of June 1, 2023, Park ceased making debt service payments toward its $725M non-recourse CMBS loan which is secured by the Hilton San Francisco Union Square and Parc 55 hotels. The decision is expected to result in the ultimate rem
Slide 9: The Improved Park: How the Story Changes
The Improved Park: How the Story Changes Reshaping the Park story: Growth, value and lower risk Lower San Fran / Higher Hawaii(1) RevPAR within 1% of 2019(2) Stronger balance sheet 29% PK PK xSF ▪ Net Debt to TTM Comparable Adjusted PK PK xSF RevPAR Recovery % as of 2019 EBITDA improves by 0.9x to 5
Slide 10: The Improved Park: Key Metrics vs. Peers
The Improved Park: Key Metrics vs. Peers PK xSF assumes disposition of the two San Francisco Hiltons for the periods presented below Exposure to San Fran lowest amongst peers(1) Margin gap to 2019 improves by 230bps(2) 14% 13% 400 bps 344 bps 12% 2022 vs. 2019 Hotel Adj. EBITDA Margin 12% 220 bps Ex
Slide 11: Still Significant Growth Ex-SF Hilton Hotels
The Improved Park: Still Significant Growth Ex-SF Hilton Hotels There is still over a $100M earnings gap 2022 vs. 2019 Comparable Hotel Adj. EBITDA(1) between 2022 and 2019(1) Comparable Hotel Adjusted EBITDA when accounting $141M Below 2019 Comparable +34M/+9% for the removal of Park’s two San Fran
Slide 12: 2023 Priorities: Execute on Growth Plans
2023 Priorities: Execute on Growth Plans Park remains laser-focused on the following priorities which are expected to help drive outsized growth in 2023 and beyond Operations: Deliver sector leading RevPAR / earnings growth as business recovery accelerates Capital Recycling: Sell $200M - $300M of no
Slide 13: Capital Allocation
2023 Capital Allocation Initiatives Create Long Term Value Balance sheet strength and value-enhancing capital allocation $200M - $300M $350M - $375M Capital Allocation Asset Sales 2023E Capex Sold $118M year to date $109M - $116M dedicated to at 11.1x(1) value-enhancing ROI projects $105M $0.15 Hilt
Slide 14: Operational Update
Operational Update New York Hilton Midtown 14 |
Slide 15: 2023 Operational Update: Sector Leading Performance
2023 Operational Update: Sector Leading Performance Q1 2023 Results: On the road to recovery and positioned for growth $159 24.2% $146M $0.42 37% 550 78% 425% bps vs Q1 2022 vs Q1 2022 vs Q1 2022 vs Q1 2022 Comparable Comparable Adjusted Adj. FFO per RevPAR Hotel Adj. EBITDA Margin EBITDA Share Q2 2
Slide 16: 2023 Earnings Guidance
2023 Earnings Guidance 2023 Full-Year Guidance(1) FY 2023 Outlook 2023 Y/Y chg. (at midpt.) as of May 1, 2023 Metrics Low High RevPAR $167 $179 +10% Y/Y Growth 7% 14% RevPAR growth Adjusted EBITDA Y/Y Growth $624 3% $704 16% +120 bps Hilton Santa Barbara Beachfront Resort Hotel Adj. EBITDA Hotel Adj
Slide 17: Spotlight: Hawaii
Spotlight: Hawaii Strong fundamentals for Park’s two hotels with Japanese demand still expected to come 114% 116% 22% $59M 310 bps Q1 2023 RevPAR Q1 2023 Hotel Adj. FY 2023 Group Q1 2023 Hotel Adj. as a % of Q1 2019 EBITDA as a % of Revenue Pace(1) Hotel Adj. EBITDA Margin Q1 2019 EBITDA Improvement
Slide 18: Group: On-Going Improvements in 2023 and Beyond
Group: On-Going Improvements in 2023 and Beyond Group trends expected to accelerate well into 2024 710 bps improvement to FY 2024 Group Current: xSF Hiltons: Revenue Pace YTD April 2023 12% 11.1% 83% 90% Group Revenue Pace (OTB vs. 2022) 10% 8.5% (as of April 2023) (as of April 2023) 8% 7.0% 5.8% 6%
Slide 19: Urban Performance Improving with Runway for Growth
Urban Performance Improving with Runway for Growth Q1 2023 Comparable RevPAR for Park’s Urban hotels up 81% versus Q1 2022(1); narrowing the gap to 2019 190% 183% 140% 113% 90% 80% 50% 42% 37% 40% 30% 1% -10% -5% -8% -5% -19% -17% -60% -50% SF Chicago Denver NoLA NYC Boston DC Q1 2023 RevPAR vs. Q1
Slide 20: Business Transient Narrowing the Gap to 2019
Business Transient Narrowing the Gap to 2019 Strong performance YTD 2023 sets pace for business transient recovery(1) YTD April 2023 Business Transient Revenues YTD April 2023 Local YTD April 2023 Negotiated Gov’t Negotiated 90% +22% Revenues(1) Revenues(2) of YTD April 2019 improvement vs Q1 2022 x
Slide 21: Park Portfolio: Well-Insulated from Supply
Park Portfolio: Well-Insulated from Supply Favorable supply picture for Park through 2024(1)(2) 25% National Supply Growth Average: 1.0% 20% 15% 10% 5% 3.1% 2.7% 2.4% 1.5% 1.6% 1.7% 1.3% 1.4% 0.5% 1.1% 0.7% 0.5% 0.5% 0.4% 0.3% 0.2% 0.1% 0.2% 0.2% 0% 2023 / 2024 Avg. Supply Growth Park Comparable 201
Slide 22: External Growth Initiatives
External Growth Initiatives Hilton Waikoloa Village 22 |
Slide 23: Park's Active Capital Recycling Creates Value
Park’s Active Capital Recycling Creates Value 5-year track record of success • Over the last 5+ years, Park has invested nearly $3.2B in acquisitions and stock buybacks at attractive valuations (12.0x, on average) while selling or disposing of 39 hotels(8) for over $2.1B at very healthy multiples (1
Slide 24: Embedded Opportunities to Potentially Enhance Value
Embedded Opportunities to Potentially Enhance Value Date Rebrand/ Alt. Use/Land Over half of the hotels in Park’s Core Completed Reposition Expansion Development portfolio possess potential value enhancement opportunities ( ) which Waldorf Astoria Orlando December 2022 Completed further promote the
Slide 25: 2023 Major Capex Projects Underway
2023 Major Capex Projects Underway Park is investing $350M+ on ROI + capex projects expected to be completed over the next year(1) Est. Total Capex Spend Incurred as of 4/30/2023 Property Spend ($M) (%) Scope of Work Hilton Hawaiian Village $85 73% Guestrooms Waldorf Astoria Orlando and Signia $220
Slide 26: Value Enhancing ROIs: Track Record of Success
Value Enhancing ROIs: Track Record of Success Rebrand / Reposition Hilton Santa Barbara Beachfront Resort The Reach Key West, Curio Collection by Hilton Re-branded from DoubleTree by Hilton Re-branded from Waldorf Astoria ▪ $14M renovation completed Q2 2018 ▪ $13M renovation completed Q4 2019 ▪ 2022
Slide 27: ROI Case Studies: Signia + Waldorf Bonnet Creek
ROI Case Studies: Signia + Waldorf Bonnet Creek $220M meeting space expansion and comprehensive renovation to enhance iconic complex Ballrooms expansion project ▪ Signia by Hilton: 90,000 sf of new construction multi-functional meeting space that cascades over an active waterway to a 30,000 sf event
Slide 28: ROI Case Studies: Casa Marina, Curio Collection
ROI Case Studies: Casa Marina, Curio Collection Rebrand/Redevelopment: $70M investment Scope: Rebrand/Rooms/Public Space Model Rooms ▪ Transformative public space and guestroom renovation ▪ Create new ocean facing restaurant ▪ Façade restoration Investment ▪ Project budget: $70M (includes planned in
Slide 29: Fortified Balance Sheet with Ample Liquidity
Fortified Balance Sheet with Ample Liquidity Park’s balance sheet provides flexibility for growth while providing protection during economic uncertainty Debt Metrics Over Time Commentary 1Q21 1Q22 1Q23 ▪ Well-laddered debt maturity schedule % of Debt Maturing through 2023 (1) 29% 19% 19% ▪ Current l
Slide 30: Experienced Management Team with Track Record of Success
Experienced Management Team with Track Record of Success President, Chairman & CEO Thomas J. Baltimore, Jr. Executive Management EVP, CFO & EVP, Design & EVP & EVP & CIO EVP, HR Treasurer Construction General Counsel Tom Morey Jill Olander Sean M. Dell’Orto Carl Mayfield Nancy Vu Senior Management S
Slide 31: Strong Corporate Governance and ESG Focus
Strong Corporate Governance and ESG Focus 5 Hotels Earned US EPA’s ENERGY STAR Certification in 2022 3 Dedicated ESG Sub Committees Signatory of under Formal AHLA’s 5-Star ESG Committee: Promise ➢ Green Park Park’s 2022 Committee Signatory of Corporate CEO Action for Diversity Responsibility and Inc
Slide 32: Appendix
Appendix Hilton Waikoloa Hilton Chicago Village 32 |
Slide 33: Definitions
Definitions EBITDA, 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, interest income, interest exp
Slide 34: Definitions (Continued)
Definitions (Continued) 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 and Nareit FFO per diluted share (defined as set forth below) are presented herein a
Slide 35: Definitions (Continued)
Definitions (Continued) Comparable Hotels The Company presents certain data for its consolidated hotels on a Comparable basis as supplemental information for investors: Comparable Hotel Revenues, Comparable RevPAR, Comparable Total RevPAR, Comparable Occupancy, Comparable ADR, Comparable Adjusted EB
Slide 36: Non-GAAP Financial Measures: Comparable Adjusted EBITDA
Non-GAAP Financial Measures Comparable Adjusted EBITDA Three Months Ended Full Year TTM (unaudited, in millions) March 31, March 31, December 31, December 31, March 31, 2023 2022 2022 2019 2023 Net income (loss) $ 33 $ (56) $ 174 $ 316 $ 263 Depreciation and amortization expense 64 69 269 264 264 In
Slide 37: Non-GAAP Financial Measures: Net Debt to Comparable Adjusted EBITDA
Non-GAAP Financial Measures (continued) Net Debt to Comparable Adjusted EBITDA (unaudited, in millions) Current Portfolio Ex SF Hiltons March 31, 2023 March 31, 2023 March 31, 2022 March 31, 2021 Debt $ 4,566 $ 3,841 $ 4,671 $ 5,121 Add: unamortized deferred financing costs and discount 28 28 37 37
Slide 38: Non-GAAP Financial Measures: Guidance
Non-GAAP Financial Measures (continued) Guidance As of May 1, 2023 Year Ending (unaudited, in millions) December 31, 2023 Low Case High Case Net income $ 113 $ 191 Depreciation and amortization expense 263 263 Interest income (24) (24) Interest expense 240 240 Income tax expense 5 7 Interest expense
Slide 39: Non-GAAP Financial Measures: FFO Guidance
Non-GAAP Financial Measures (continued) FFO Guidance As of May 1, 2023 Year Ending (unaudited, in millions except per share data) December 31, 2023 Low Case High Case Net income attributable to stockholders $ 101 $ 178 Depreciation and amortization expense 263 263 Depreciation and amortization expen
Slide 40: Non-GAAP Financial Measures: AFFO
Non-GAAP Financial Measures (continued) AFFO Three Months Ended March 31, 2023 2022 Net income (loss) attributable to stockholders $ 33 $ (57) Depreciation and amortization expense 64 69 Depreciation and amortization expense attributable to noncontrolling interests (1) (1) Gain on sales of assets, n
Slide 41: About Park and Safe Harbor Disclosure
About Park and Safe Harbor Disclosure About Park Hotels & Resorts Inc. Park (NYSE: PK) is one of the largest publicly-traded lodging REITs with a diverse portfolio of iconic and market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio consists of 46 premium-b
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