Park Hotels & Resorts Inc. · NYSE:PK
Park Hotels & Resorts — Q3 2023 Earnings Presentation
34 slides from Park Hotels & Resorts's earnings presentation, Nov 2, 2023
Slide 1: Investor Presentation
Investor Presentation NOVEMBER 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 Portfolio Excluding SF Hiltons 43 26K $6.1B 9.3x Hilton Waikoloa Village Hotels Rooms Enterprise Value(1) EBITDA Waldorf Astoria Orlando Multiple(2) Top 10 Markets 2019(3) Trailing 12 Months(4) Signia Hilton Bonnet Creek 1. Hawaii 26% 1. Hawaii 36% Hilton Denver City Center 2. San F
Slide 4: Park: A Compelling Investment Story
Park: A Compelling Investment Story Undervalued Growth in 2024 Robust ROI pipeline Financial flexibility Iconic portfolio trading at Significant upside potential Robust ROI pipeline to Ample liquidity following wide discount(1) unlock embedded value return of capital EBITDA for Comp Urban portfolio
Slide 5: 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 6: 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 7: 2023 Capital Allocation Initiatives Create Long Term Value
2023 Capital Allocation Initiatives Create Long Term Value Balance sheet strength and value-enhancing capital allocation $118M $300M - $325M Capital Allocation Asset Sales 2023E Capex Sold $118M year to date $110M - $120M dedicated to at 11.1x(1) value-enhancing ROI projects $180M $445M Hilton Waiko
Slide 8: 2023 Operational Update: Sector Leading Performance
2023 Operational Update: Sector Leading Performance Q3 2023 Results: On the road to recovery and positioned for growth $182 28.4% $163M $0.51 2.8% 70 3.2% 21.4% bps vs Q3 2022 vs Q3 2022 vs Q3 2022 vs Q3 2022 Comparable Comparable Adjusted Adj. FFO per RevPAR Hotel Adj. EBITDA Margin EBITDA Share Q3
Slide 9: The Improved Park: Impact of Partial San Francisco Exit
The Improved Park: Impact of Partial San Francisco Exit New York Hilton Midtown 9|
Slide 10: Park Materially Improves Balance Sheet with Effective Exit from Hilton San Francisco Hotels
Park Materially Improves Balance Sheet and Operating Metrics with Effective Exit from Hilton San Francisco Hotels Key Provisions of Court Order On October 26, 2023, it was announced that the $725M non-recourse CMBS loan which is secured by the Hilton San Francisco Hotels was placed into receivership
Slide 11: The Improved Park: Key Metrics Before and After
The Improved Park: Key Metrics Before and After Impact from SF Hilton Exit: RevPAR; Margin; EBITDA and Leverage: ALL Improve Park Hotels & Resorts Key Changes Following Partial SF Exit Current Comparable Change Enhances the overall quality of the portfolio, Consol. Room Count 26,373 23,428 (2,945)
Slide 12: Multiple Expansion Warranted: Significant Upside Potential
Multiple Expansion Warranted: Significant Upside Potential 14.0x 13.3x Removing Hilton San Francisco Hotels: 1) 13.0x improves the balance sheet; 2) improves 12.0x portfolio operating metrics; and 3) draws 12.0x '24E EBITDA Multiple 11.5x 10.8x attention to ’24 growth drivers (ROI 11.0x projects;
Slide 13: Building Blocks for Growth
Building Blocks for Growth Hilton Waikoloa Village 13 |
Slide 14: Building Blocks for Growth in 2024
Building Blocks for Growth in 2024 Improving Group Trends + ROI Benefit Provide Tailwind to Growth in 2024 and Beyond ’24 Group trends remain healthy with Comparable Group Revenue Pace tracking 94% versus ‘19, a nearly 100-basis point improvement from the previous quarter Improving Group / Strong
Slide 15: Recovery Still Taking Shape: Enhanced Growth Profile in 2024
Recovery Still Taking Shape: Enhanced Growth Profile in 2024 There is still over a $50M earnings gap Q3 TTM vs. 2019 Comparable Hotel Adj. EBITDA between TTM and 2019 Comparable Hotel Adjusted EBITDA when accounting for the $81M Below 2019 Comparable Hotel Adjusted EBITDA Ex-SF Hiltons removal of Pa
Slide 16: Group: Positive Trends to Continue into 2024
Group: Positive Trends to Continue into 2024 Group Trends Expected to Accelerate Well into 2024 Group trends expected to accelerate well into 2024 2024 Comparable Group Revenue Pace 2024 Market Highlights 25.0% Chicago: Room nights pacing ahead of 2023 by 16%; 21.0% 20.5% 19.2% citywide room nights
Slide 17: Hawaii: Outsized Growth to Continue
Hawaii: Outsized Growth to Continue Hawaii’s Outperformance Likely to Continue By the Numbers: PK’s Hawaii Hotels Domestic transient demand to Hawaii remains strong Improving international demand to sustain long-term growth: ’23 Japan arrivals still 86% off 2019 peak levels $240M Q3 TTM EBITDA
Slide 18: Casa Marina: Full Scale Renovation Incremental to '24
Casa Marina: Full Scale Renovation Incremental to ‘24 Rebrand/Redevelopment: $79M investment Scope: Rebrand/Rooms/Public Space Property Photos • Transform public space and guestrooms • Create new ocean facing restaurant Complete restoration of both pools and Façade Investment Cost: $79M Return
Slide 19: Bonnet Creek Expansion to Support Solid Group Trends
Signia + Waldorf Bonnet Creek Expansion to Support Solid Group Trends in 2024 and Beyond $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 ove
Slide 20: 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 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: Appendix
Appendix Hilton Waikoloa Hilton Chicago Village 22 |
Slide 23: 2023 Earnings Guidance
2023 Earnings Guidance 2023 Full-Year Guidance(1) Includes SF Hiltons Excludes SF Hiltons What’s Changed From Prior FY 2023 Outlook FY 2023 Outlook Guidance as of Aug 2, 2023 as of Nov 1, 2023 (2) Metrics Low High Low High RevPAR $168 $177 $177 $179 +$6 Y/Y Growth 7% 13% 8% 9% RevPAR Adjusted EBITDA
Slide 24: Fortified Balance Sheet with Ample Liquidity
Fortified Balance Sheet with Ample Liquidity Removal of the Hilton San Francisco Hotels significantly improves Park’s balance sheet, instantly generating greater flexibility for growth while providing protection during economic uncertainty Debt Metrics Over Time Commentary With SF No SF Well-ladde
Slide 25: Strong Corporate Governance and ESG Focus
Strong Corporate Governance and ESG Focus 4 Hotels Earned EPA’s ENERGY STAR Certification for 2023 3 Dedicated ESG Subcommittees 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 Inclus
Slide 26: 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 27: 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 28: Definitions (Continued)
Definitions (Continued) Hilton San Francisco Hotels Park's Hilton San Francisco Hotels represent the 1,921-room Hilton San Francisco Union Square and 1,024-room Parc 55 San Francisco – a Hilton Hotel. Current Hotels The Company presents certain data for its consolidated hotels on a Current basis as
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures Comparable Adjusted EBITDA Three Months Ended Nine Months Ended Full Year TTM Full Year (unaudited, in millions) September 30, September 30, September 30, September 30, December 31, September 30, December 31, 2023 2022 2023 2022 2022 2023 2019 Net income (loss) $ 31 $ 40
Slide 30: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Net Debt to Comparable Adjusted EBITDA (unaudited, in millions) Current SF Mortgage Loan Comparable September 30, 2023 Adjustments (1) September 30, 2023 Debt $ 4,490 $ (725) $ 3,765 Add: unamortized deferred financing costs and discount 23 — 23 Less: unamorti
Slide 31: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) Guidance As of August 2, 2023 Year Ending (unaudited, in millions) December 31, 2023 Low Case High Case Net loss $ (109) $ (51) Depreciation and amortization expense 263 263 Interest income (31) (31) Income tax expense 4 6 Interest expense, income tax and depr
Slide 32: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) FFO Guidance As of August 2, 2023 Year Ending (unaudited, in millions except per share data) December 31, 2023 Low Case High Case Net income attributable to stockholders $ (119) $ (61) Depreciation and amortization expense 263 263 Depreciation and amortization
Slide 33: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) AFFO (unaudited, in millions except per share data) Three Months Ended September 2023 2022 Net income (loss) attributable to stockholders $ 27 $ 35 Depreciation and amortization expense 65 67 Depreciation and amortization expense attributable to noncontrolling
Slide 34: About Park and Safe Harbor Disclosure
About Park and Safe Harbor Disclosure About Park Hotels & Resorts Inc. Park 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 currently consists of 43 premium-br
Park Hotels & Resorts — Q3 2023 Earnings Presentation on 6ix