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Park Hotels & Resorts Update on Recent Operating Trends and Capital Allocation Highlights

TYSONS, Va., Dec. 20, 2023 (GLOBE NEWSWIRE) — Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE:PK) today provided an update on fourth quarter operating trends.

“I am incredibly pleased with the strength of our portfolio as operating trends remained very solid in both October and November. Results were once again driven by improvements across our urban portfolio which delivered year-over-year 10% Comparable RevPAR growth during the first two months of the quarter. Business travel accelerated in Boston, Chicago, New York and Denver, in addition to continued upside from group and leisure business at our Hawaii hotels with year-over-year RevPAR gains exceeding 9% in October and 14% in November. Additionally, we are near completion on our transformative renovation projects including at our Bonnet Creek and Casa Marina Key West, Curio Collection, properties which we expect to drive solid performance in 2024. And finally, we remain laser focused on creating long-term value for shareholders as evidenced by the over $630 million of capital we are returning to shareholders in 2023, including over $350 million, or $1.70 per share, of dividends declared during the fourth quarter. As we look ahead to 2024, we are excited about our growth prospects. Our reduced market exposure to San Francisco helps to change the narrative for the company and we remain well positioned to execute on our strategic growth priorities with $1.3 billion of liquidity expected to be available following the payment of our fourth quarter and special cash dividend,” said Thomas J. Baltimore, Jr., Chairman and CEO of Park.

Operational Highlights:

  Q3 2023 vs. Q3 2022   October
2023
vs. October
2022
  November
2023
vs. November
2022
Comparable Occupancy   75.3 % 2.7 % pts     77.3 % 1.9 % pts     71.4 % 2.7 % pts
Comparable ADR $ 241.74   (0.9 %)   $ 254.47   2.3 %   $ 241.60   2.0 %
Comparable RevPAR $ 182.08   2.8 %   $ 196.67   4.9 %   $ 172.54   5.9 %


Capital Expenditure Highlights:

Capital Return Highlights:

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements include, but are not limited to, statements related to the anticipated effects of the Company’s decision to cease payments on its $725 million non-recourse CMBS loan secured by the Hilton San Francisco Hotels and the effects of the lender’s exercise of its remedies, including placing such hotels into receivership, as well as our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including anticipated repayment of certain of the Company’s indebtedness, the completion of capital allocation priorities, the expected repurchase of the Company’s stock, the impact from macroeconomic factors (including inflation, increases in interest rates, potential economic slowdown or a recession and geopolitical conflicts), the effects of competition, the effects of future legislation or regulations, the expected completion of anticipated dispositions, the declaration and payment of future dividends and other non-historical statements. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”, “hopes” or the negative version of these words or other comparable words. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect our results of operations, financial condition, cash flows, performance or future achievements or events.

All such forward-looking statements are based on current expectations of management and therefore involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements and we urge investors to carefully review the disclosures Park make concerning risks and uncertainties in Item 1A: “Risk Factors” in Park’s Annual Report on Form 10-K for the year ended December 31, 2022, as such factors may be updated from time to time in Park’s filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Except as required by law, Park undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures

Park presents certain non-GAAP financial measures in this press release, including Hotel EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of its operating performance. Please see the schedules included in this press release including the “Definitions” section for additional information and reconciliations of such non-GAAP financial measures.

About Park Hotels & Resorts

Park is one of the largest publicly traded lodging REIT with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio currently consists of 43 premium-branded hotels and resorts with over 26,000 rooms primarily located in prime city center and resort locations. Visit www.pkhotelsandresorts.com for more information. 

PARK HOTELS & RESORTS INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATIONS

HOTEL EBITDA, HOTEL ADJUSTED EBITDA AND

HOTEL ADJUSTED EBITDA MARGIN

(unaudited, in millions)      
  Month Ended   Month Ended
  October 31, 2023   November 30, 2023
Hotel net income $ 39   $ 17
Depreciation and amortization expense   21     20
Interest expense   10     10
Hotel EBITDA   70     47
Other   5     2
Hotel Adjusted EBITDA   75     49
Less: Adjusted EBITDA from the Hilton San Francisco Hotels   1    
Comparable Hotel Adjusted EBITDA $ 76   $ 49
       
  Month Ended   Month Ended
  October 31, 2023   November 30, 2023
Total Revenues $ 256     $ 202  
Less: Other revenue   (7 )     (8 )
Less: Revenue from the Hilton San Francisco Hotels   (16 )      
Comparable Hotel Revenues $ 233     $ 194  
  Month Ended   Month Ended
  October 31, 2023   November 30, 2023
Comparable Hotel Revenues $ 233     $ 194  
Comparable Hotel Adjusted EBITDA $ 76     $ 49  
Comparable Hotel Adjusted EBITDA margin   32.6 %     25.0 %


PARK HOTELS & RESORTS INC.

DEFINITIONS

Comparable

The Company presents certain data for its consolidated hotels on a Comparable basis as supplemental information for investors: Comparable Hotel Revenues, Comparable RevPAR, Comparable Occupancy, Comparable ADR, Comparable Hotel Adjusted EBITDA and Comparable Hotel Adjusted EBITDA Margin. The Company presents Comparable hotel results to help the Company and its investors evaluate the ongoing operating performance of its hotels. The Company’s Comparable metrics exclude results from property dispositions that have occurred through December 20, 2023 and include results from property acquisitions as though such acquisitions occurred on the earliest period presented. Park’s Comparable hotels also exclude the two Hilton San Francisco Hotels, the1,921-room Hilton San Francisco Union Square and 1,024-room Parc 55 San Francisco – a Hilton Hotel, which were placed into receivership at the end of October 2023.

EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA Margin

Hotel earnings before interest expense, taxes and depreciation and amortization (“Hotel EBITDA”), presented herein, reflects net income excluding depreciation and amortization, interest income, interest expense and income taxes of the Company’s consolidated hotels. Hotel Adjusted EBITDA is Hotel EBITDA further adjusted to exclude items that management believes are not reflective of the Company’s ongoing operating performance or incurred in the normal course of business, and thus, excluded from management’s analysis in making day-to-day operating decisions and evaluations of Park’s operating performance against other companies within the industry. Hotel Adjusted EBITDA is a key measure of the Company’s consolidated hotels profitability. The Company presents Hotel Adjusted EBITDA to help the Company and its investors evaluate the ongoing operating performance of the Company’s consolidated hotels.

Hotel Adjusted EBITDA margin is calculated as Hotel Adjusted EBITDA divided by total hotel revenue.

Hotel EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin are not recognized terms under United States (“U.S.”) GAAP. Hotel EBITDA and Hotel Adjusted EBITDA should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, the Company’s definition of Hotel EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies.

The Company believes that Hotel EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin provide useful information to investors about the Company and its financial condition and results of operations for the following reasons: (i) Hotel EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin are among the measures used by the Company’s management team to make day-to-day operating decisions and evaluate its operating performance between periods and between REITs by removing the effect of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results; and (ii) Hotel EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin are frequently used by securities analysts, investors and other interested parties as common performance measures to compare results or estimate valuations across companies in the industry.

Hotel EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss) or other methods of analyzing the Company’s operating performance and results as reported under U.S. GAAP.

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 specific hotel or group of hotels in a given period. Occupancy levels also help management determine achievable Average Daily Rate (“ADR”) levels as demand for rooms increases or decreases.

Average Daily Rate

ADR (or rate) represents rooms revenue divided by total number of room nights sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the hotel industry, and management uses ADR to assess pricing levels that the Company is able to generate by type of customer, as changes in rates have a more pronounced effect on overall revenues and incremental profitability than changes in occupancy, as described above.

Revenue per Available Room

Revenue per Available Room (“RevPAR”) represents rooms revenue divided by the total number of room nights available to guests for a given period. Management considers RevPAR to be a meaningful indicator of the Company’s performance as it provides a metric correlated to two primary and key factors of operations at a hotel or group of hotels: Occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods.

Group Revenue Pace

Group Revenue Pace represents bookings for future business and is calculated as group room nights multiplied by the contracted room rate expressed as a percentage of a prior period relative to a prior point in time.

For more information, contact:
Ian Weissman
Senior Vice President, Corporate Strategy
571-302-5591
iweissman@pkhotelsandresorts.com

For additional information or to receive press releases via e-mail, please visit our website at www.pkhotelsandresorts.com


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