Park Hotels & Resorts Inc. · NYSE:PK
Park Hotels & Resorts — Q4 2022 Earnings Presentation
42 slides from Park Hotels & Resorts's earnings presentation, Feb 23, 2023
Slide 1: Investor Presentation
Investor Presentation MARCH 2023
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 returns for stockholders Premier Urban and Resort Prudent through active
Slide 3: Park at a Glance: Operational Update
Park at a Glance: Operational Update Operational Update Q4 2022 Recap Full-Year 2023 Guidance (as of 2/22/23): Q4 2022 occupancy was 67.7%; ADR was 8.4% RevPAR Growth: 7% to 14% Hyatt Regency Boston above Q4 2019; RevPAR was 8.9% below Q4 2019 Hotel Adj. EBITDA Margin 26.7% to 27.3% (+113bps P
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: 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 redevelopment Financial flexibility with at wide discount(1): potential pipeline to unlock focus on reducing Highest AFFO/share growth em
Slide 6: Growth at a Discount
Growth at a Discount Earnings Growth(1) vs. AFFO Multiple(1) 25% 15.0x 20% Despite being 13.0x 20% forecasted to '23/'22 AFFO Growth 2023 AFFO Multiple 11.0x deliver the highest 15% Y/Y earnings 9.0x growth (AFFO) in 10% 10% 2023 (20%)(1), Park 8% 7% 7.0x trades at among 5% the lowest 5.0x earnings
Slide 7: Adjusted EBITDA: Still Significant Gas in the Tank
Adjusted EBITDA: Still Significant Gas in the Tank 2022A vs. 2019A In-Place Hotel Adj. EBITDA $251M Below 2019 In-Place +31M/+8% Hotel Adjusted EBITDA $801M Urban Suburban Airport Resort $581M ($20M)/ ($23M)/ 2019A In-Place Adjusted EBITDA -55% -35% 2022A In-Place Adjusted EBITDA ($208M)/ -59%* * Ne
Slide 8: 2023 Guidance: Significant Growth Potential
2023 Guidance: Significant Growth Potential Q1 2023 and FY 2023 Guidance 2023 Y/Y Chg. at Midpt. Q1 2023 Outlook FY 2023 Outlook as of Feb. 22, 2023 as of Feb. 22, 2023 Metrics Low High Low High +10% Comparable RevPAR $156 $162 $167 $179 RevPAR Growth Q2 Y/Y Growth 34% 40% 7% 14% ‘22F Adjusted EBITD
Slide 9: Park Portfolio: Well-Insulated from Supply
Park Portfolio: Well-Insulated from Supply Favorable Supply Picture for Park through 2024(1)(2) 25% 20% National Supply Growth Average: 1.2% 15% 10% 5% 2.9% 2.7% 1.8% 1.8% 1.7% 1.7% 1.4% 1.3% 1.2% 0.7% 0.6% 0.6% 0.5% 0.5% 0.4% 0.3% 0.3% 0.3% 0.2% 0% 2023 / 2024 Avg. Supply Growth Park In-Place 2019
Slide 10: 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 to drive outsized growth in 2023 and beyond Operations: Deliver sector leading RevPAR / earnings growth as business recovery accelerates Capital Recycling: Sell $200M - $300M of
Slide 11: Operational Update
Operational Update New York Hilton Midtown 11 |
Slide 12: Operational Update: 2022 Performance
Operational Update: 2022 Performance Operational Update: 2022(1) vs. 2021 Hotel Adj. Hotel Adj. Hotel Adj. Occupancy ADR RevPAR EBITDA Occ (%) ADR ($) RevPAR ($) EBITDA (M) EBITDA Margin Margin Q1 2022 50.8% $229 $116 $83 19% 25.2% pts. 43% 185% 4,100bps Q2 2022 70.6% $246 $174 $202 31% 29.5% pts. 2
Slide 13: Group: On-Going Improvements in 2023 and Beyond
Group: On-Going Improvements in 2023 and Beyond Group trends expected to accelerate well into 2024 • Momentum for 2023 group increased during Q4 2022: 2023 group pick up during Q4 2022 was $55.4M, an improvement of $4.1M (8.0%) from Q3 2022 with gains primarily concentrated in San Francisco, New Yor
Slide 14: International: Tailwind to Growth in 2023 and Beyond
International: Tailwind to Growth in 2023 and Beyond International Demand Still Off from 2019 Levels—Additional Driver of Growth Across Key Park Markets % of Park FY 2019 International EBITDA by Demand as Key Park Markets Market (1) % of Ttl Room Nights Hawaii 25% 30% Japanese Demand 20% San Francis
Slide 15: Leisure Remains Healthy with Upside Potential
Leisure Remains Healthy with Upside Potential Leisure Story Remains Intact with Upside Potential • Resorts continue to drive performance, with Q4 2022 RevPAR for Park’s resort hotels finishing 8% above 2019 levels driven by solid ADR gains (21% above Q4 2019 levels) while demand remains healthy (91%
Slide 16: Urban Performance Improving with Runway for Growth
Urban Performance Improving with Runway for Growth Relative to 2019,In-Place RevPAR across the portfolio continues to improve Performance at Park’s urban hotels continues to improve, driven by DC, New York, Boston, Chicago and San Francisco 20% 16% 9% 10% 8% 7% 6% 10% 3% 2% 0% -3% -1% -10% -20% -19%
Slide 17: Urban Spotlights: New York & New Orleans
Urban Spotlights: New York & New Orleans New Orleans New York • Q4 2022 marked the return to 2019 performance levels; • Q4 2022 occupancy 85% up 1,030bps from Q3 2022, Q4 occupancy 68%, RevPAR 16% ahead of Q4 2019, ADR 14% RevPAR finished nearly 2% ahead of 2019 levels above same period in 2019 • De
Slide 18: San Francisco: Improving Trends Expected in 2023
San Francisco: Improving Trends Expected in 2023 San Francisco: Material Uptick in Convention Room Nights in 2023 to Help Drive Performance • While Q4 2022 performance was softer than expected, positive momentum witnessed in Jan. 2023 with RevPAR trends improving—down just 35% vs. same period in 201
Slide 19: External Growth Initiatives
External Growth Initiatives Hilton Waikoloa Village 19 |
Slide 20: 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 (12.1x, on average) while selling or disposing of 39 hotels(7) for over $2.1B at very healthy multiples (1
Slide 21: Embedded Opportunities to Potentially Enhance Value
Embedded Opportunities to Potentially Enhance Value Over half of the hotels in Park’s Core Date Completed Rebrand/ Reposition Expansion Alt. Use/Land Development portfolio possess potential value enhancement opportunities ( ) which Waldorf Astoria Orlando December 2022 Completed further promote the
Slide 22: 2023 Major Capex Projects Underway
2023 Major Capex Projects Underway Park is investing $300M+ on ROI + capex projects expected to be completed over the next year(1) Est. Total Capex Spend Incurred as of Property Spend ($M) 12/31/2022 (%) Scope of Work Hilton Hawaiian Village $85 61% Guestrooms Waldorf Astoria Orlando and Signia $220
Slide 23: 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 24: ROI Case Studies: Signia + Waldorf Bonnet Creek
ROI Case Studies: Signia + Waldorf Bonnet Creek Development/Expansion: $220M investment Exterior Renderings Signia Expansion: Q1 2024 Waldorf Expansion: Completed Scope Scope • New build expansion featuring the • New build expansion featuring the addition of 90K sf of multi-functional addition of 13
Slide 25: ROI Case Studies: Casa Marina Curio
ROI Case Studies: Casa Marina Curio Rebrand/Redevelopment: $70M investment Scope: Rebrand/Rooms/Public Space Interior Renderings • Transformative public space and guestroom renovation • Create new ocean facing restaurant • Façade restoration Investment • Project budget: $70M (includes planned invest
Slide 26: 2023 Capex Project: Hilton Hawaiian Village (Tapa Tower)
2023 Capex Project: Hilton Hawaiian Village (Tapa Tower) Guestroom Renovation: Phase 3 Underway—All Rooms Renovated by YE23 Timing Interior Renderings Scope • Full Renovation of 1,020 Keys • Phase 1&2: ’21/’22 (680 keys) Guestroom - After • New finishes, FF&E , partial • Phase 3: 2023 (340 keys) bat
Slide 27: 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 Well-laddered debt maturity schedule 4Q20 4Q21 4Q22 % of Debt Maturing through 2023 (1) 30% 21% 18% In 2022,
Slide 28: 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 29: 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 30: Appendix
Appendix Hilton Waikoloa Hilton Chicago Village 30 |
Slide 31: NAV Analysis
NAV Analysis Park NAV: $26.50-$30.50 per share; midpoint of $28.50 equates to 6.3% cap rate (2) (3) (3,4) Cap Rates Est. Values (M) Mid Value Gross Asset Values # of Pro-Rata % of Hotel NOI Low High Low High Property Type Cap Rate Value (M) Value/Key(K) Hotels Keys Value 2019A(1) Value Value Value V
Slide 32: Geographic Diversification
Geographic Diversification Legend Circle Size Based on Hotel Adjusted EBITDA $200M+ $100M+ $50M+ $25M+ $10M+ $5–10M <$5M Puerto Rico 30% 25% Park’s Geographic Exposure (by % 2019 In-Place Hotel Adjusted EBITDA) 25% 20% 15% 15% 12% 12% 10% 6% 6% 5% 5% 5% 3% 3% 2% 2% 2% 2% < 1% 0% Hawaii San Fran Orla
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 hotel basis as supplemental information for investors: Comparable Hotel Revenues, Comparable RevPAR, Comparable Total RevPAR, Comparable Occupancy, Comparable ADR, Comparable Adjus
Slide 36: Net Asset Value Disclaimer and Methodology
Net Asset Value Disclaimer and Methodology Notes: Estimated Net Asset Value As described in more detail below, to calculate estimated net asset value (“NAV”) as of December 31, 2022, the Company used a 10-year discounted cash flow (“DCF”) model to determine estimated hotel property values to generat
Slide 37: Non-GAAP Financial Measures
Non-GAAP Financial Measures In-Place Adjusted EBITDA Full Year (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 expense, income tax and depreciation and amortization included
Slide 38: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Net Debt to In-Place Adjusted EBITDA (unaudited, in millions) December 31, 2022 December 31, 2021 December 31, 2020 Debt $ 4,617 $ 4,672 $ 5,121 Add: unamortized deferred financing costs and discount 30 38 38 Less: unamortized premium (3) (4) (3) Debt, excludi
Slide 39: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Quarterly In-Place Hotel Adjusted EBITDA, Hotel Revenues and Hotel Adjusted EBITDA Margin Three Months Ended Full Year (unaudited, in millions) March 31, June 30, September 30, December 31, December 31, 2022 2022 2022 2022 2022 Net (loss) income $ (56) $ 154 $
Slide 40: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Guidance Three Months Ending Year Ending (unaudited, in millions) March 31. 2023 December 31, 2023 Low Case High Case Low Case High Case Net income $ 12 $ 28 $ 92 $ 180 Depreciation and amortization expense 64 64 261 261 Interest income (6) (6) (16) (16) Inter
Slide 41: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) FFO Guidance Year Ending (unaudited, in millions except per share data) December 31, 2023 Low Case High Case Net income attributable to stockholders $ 78 $ 166 Depreciation and amortization expense 261 261 Depreciation and amortization expense attributable to
Slide 42: About Park and Safe Harbor Disclosure
About Park and Safe Harbor Disclosure About Park Hotels & Resorts Inc. Park (NYSE: PK) is the second largest publicly-traded 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 46 premiu
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