Core Viewpoint - Park Hotels & Resorts Inc. is positioned as a strong investment opportunity in the U.S. hotel industry, particularly for dividend-focused investors, given its solid financials and favorable market outlook for 2024 [1][5]. Financial Performance - Revenue has recovered since 2021, surpassing pre-pandemic levels, with FFO per share showing significant growth [4][18]. - In Q3 2023, RevPAR was $178.25, a 4.11% increase year-over-year, while ADR rose by 1.85% to $250.93 [18]. - For 2023, FFO per share increased by 32.5% to $2.04, indicating strong revenue recovery [18]. Dividend and Valuation - The company pays a quarterly dividend of $0.25 per share, yielding 6.55%, with a payout ratio of 47.43% based on the last quarterly AFFO [6][12]. - The stock is trading at a slight discount to tangible book value of $16.36, which is considered unjustified given the company's prospects [13]. Leverage and Liquidity - Following a strategic default on a $725 million loan, the company's leverage improved, leading to an upgrade in credit rating from S&P Global from B to BB- [5]. - Approximately 50% of assets are funded by debt, with a debt/EBITDA ratio of 5.45x and interest coverage of 2.8x [5][11]. - The company has $378 million in liquid assets, representing 4.16% of total assets, and access to a $950 million revolver [5]. Market Position and Outlook - The portfolio consists of 43 hotels with 26,000 rooms, primarily concentrated in Hawaii and Orlando, which contribute nearly half of EBITDA [9][10]. - Room demand in Hawaii increased by 3.7% year-over-year, while Orlando is experiencing a recovery in RevPAR [10]. - The overall outlook for the U.S. hotel industry remains positive despite potential economic headwinds [10]. Management and Governance - Management compensation appears shareholder-friendly, with the CEO's package representing only 1.44% of cash NOI generated in 2023 [20]. - The company has a history of capital gains from property dispositions and has initiated a stock repurchase program of $300 million [20].

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Core Points - Park Hotels & Resorts Inc. announced the expiration and final results of its cash Tender Offer for its outstanding 7.500% Senior Notes due 2025, which expired on May 13, 2024 [1] - The Issuers purchased $311,473,000 in principal amount of the Notes that were validly tendered [2] - Following the settlement of the Tender Offer, the Issuers issued a notice of redemption for all outstanding Notes at a redemption price of 100.000% of the principal amount plus accrued interest, with the redemption date expected to be June 1, 2024 [3] Company Overview - Park Hotels & Resorts is one of the largest publicly traded lodging REITs, with a portfolio of 43 premium-branded hotels and resorts totaling over 26,000 rooms located in prime city center and resort locations [6]

Core Points - Park Hotels & Resorts Inc. announced the expiration and final results of its cash Tender Offer for its outstanding 7.500% Senior Notes due 2025 [1][2] - The Issuers purchased a total of $311,473,000 in principal amount of the Notes that were validly tendered [2] - Following the settlement of the Tender Offer, a notice of redemption was issued for all outstanding Notes at a redemption price of 100% of the principal amount plus accrued interest, with the redemption date expected on June 1, 2024 [3] Summary by Sections Tender Offer Details - The Tender Offer expired on May 13, 2024, at 5:00 p.m. New York City time [1] - The total principal amount of the Notes outstanding was $650,000,000, with $311,473,000 tendered and accepted for purchase [3] Redemption Information - A notice of redemption was issued for all remaining outstanding Notes at a price of 100% of the principal amount plus accrued interest [3] - The redemption date is anticipated to be June 1, 2024, after which no Notes will be outstanding [3] Company Overview - Park Hotels & Resorts is one of the largest publicly traded lodging REITs, with a portfolio of 43 premium-branded hotels and resorts totaling over 26,000 rooms [6]

Core Viewpoint - Park Hotels & Resorts Inc. successfully completed an offering of $550 million in senior notes, enhancing its liquidity and extending debt maturities [1][3]. Group 1: Offering Details - The offering consisted of $550 million aggregate principal amount of 7.000% senior notes due 2030, which will pay interest semi-annually and mature on February 1, 2030 [1]. - The notes are guaranteed by Park and certain subsidiaries, ensuring the company's credit agreement and existing senior notes due in 2025, 2028, and 2029 are backed [1]. Group 2: Use of Proceeds - The net proceeds from the offering, along with a new $200 million unsecured term loan, will be used to purchase all $650 million of the 7.500% Senior Notes due 2025 that were tendered in a cash tender offer and to redeem any remaining notes [2]. - Remaining proceeds will be allocated for general corporate purposes and to cover related fees and expenses [2]. Group 3: Management Commentary - The CEO expressed satisfaction with the execution of the offering, noting that it increases the company's liquidity position to $1.4 billion and provides flexibility for the balance sheet [3]. - Upon repayment of the 2025 Notes, the company will not face significant maturities until 2026, improving its financial stability [3].

Core Viewpoint - Park Hotels & Resorts Inc. successfully completed an offering of $550 million in senior notes, enhancing its liquidity and extending debt maturities [1][3]. Group 1: Offering Details - The company issued $550 million of 7.000% senior notes due February 1, 2030, with interest paid semi-annually [1]. - The proceeds from the offering will be used to purchase $650 million of 7.500% Senior Notes due 2025 and to cover related fees and expenses [2]. Group 2: Financial Position - The combined liquidity position of the company, after the offering and a new $200 million unsecured term loan, is now $1.4 billion [3]. - Upon repayment of the 2025 Notes, the company will not face significant maturities until 2026 [3]. Group 3: Regulatory Information - The notes and guarantees were not registered under the Securities Act and were offered only to qualified institutional buyers and certain non-U.S. persons [3].

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Financial Data and Key Metrics Changes - Q1 adjusted EBITDA was $162 million, with adjusted FFO per share at $0.52, reflecting strong performance across key markets [123][149] - RevPAR in Q1 increased by 7.8% year-over-year, exceeding the high end of guidance and outperforming the sector by nearly 500 basis points [142] - The company is increasing its adjusted EBITDA forecast by $10 million at the midpoint to a new range of $655 million to $695 million, representing year-over-year growth of 2.5% [151] Business Line Data and Key Metrics Changes - Group room revenues increased by 15% year-over-year to $123 million, driven by a 5% increase in rates and an 11% increase in banquet and catering revenue [4] - Food and beverage revenues rose nearly 32% compared to the prior year, aided by the highest banquet revenue quarter on record [6][11] - RevPAR for the Bonnet Creek resort complex increased by nearly 9% versus 2023, with group revenues at Signia up 43% [109] Market Data and Key Metrics Changes - Inbound airlift in Japan increased by 65% year-over-year, contributing to an 85% increase in monthly passenger arrivals to Oahu and the Big Island [5] - Occupancy improved by 570 basis points year-over-year, reaching nearly 92% during Q1, with group bookings up 41% [108] - Urban RevPAR grew by 8%, with New York showing an 11% increase, while Chicago saw an 11% increase in RevPAR due to a 70% rise in citywide production [116][110] Company Strategy and Development Direction - The company is targeting an additional $260 to $280 million in strategic investments this year to unlock embedded value within its portfolio [3] - A comprehensive renovation of the Royal Palm, Oceanfront Hotel in South Beach is planned for 2025, alongside a ground-up development project at Hilton Hawaiian Village [9] - The company remains focused on maximizing returns on invested capital and is assessing potential acquisitions while prioritizing internal growth strategies [8][148] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ongoing recovery of group demand, with full-year revenue pace up nearly 11% compared to the same time last year [107] - Despite challenges from the Japanese market, management remains optimistic about Hawaii's recovery, expecting Japanese traveler revenue to increase from 3.5% to 4-5% this year [35][129] - The company anticipates RevPAR growth of 4% to 5.5% for 2024, with expectations for performance acceleration in May and June [12][41] Other Important Information - The company paid a cash dividend of $0.25 per share for Q1 and approved a second quarter dividend of $0.25 per share [124] - The balance sheet remains strong with current liquidity of approximately $1.3 billion and net debt to adjusted EBITDA ratio improved to 5.2x [150] Q&A Session Summary Question: What is the outlook for group bookings and pricing? - Management noted that group revenue is pacing up over 36% for 2024, with the ability to push through above-inflationary price increases on ancillary services [29][54] Question: How is the company addressing the challenges in the Japanese market? - Management acknowledged the impact of the weakened yen but remains optimistic about the recovery of Japanese travelers, who previously accounted for 18-20% of revenue [60][129] Question: What are the expectations for the Miami renovation plans? - Management indicated that while there are predevelopment costs, significant spending in Miami is not expected in 2024, but they see considerable upside in the market [99][134] Question: How does the company view the leisure consumer trends? - Management believes that while leisure trends are important, the diversified group demand will help mitigate any potential weaknesses in the leisure segment [130][132]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201%2E%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited condensed consolidated financial statements for Park Hotels & Resorts Inc [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $9.085 billion, while total liabilities decreased to $5.343 billion as of March 31, 2024 Condensed Consolidated Balance Sheets (in millions) | | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$9,085** | **$9,419** | | Cash and cash equivalents | $378 | $717 | | Property and equipment, net | $7,441 | $7,459 | | **Total Liabilities** | **$5,343** | **$5,651** | | Debt | $3,764 | $3,765 | | Debt associated with hotels in receivership | $725 | $725 | | Dividends payable | $57 | $362 | | **Total Equity** | **$3,742** | **$3,768** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2024, total revenues were $639 million, with net income attributable to stockholders of $28 million Condensed Consolidated Statements of Operations (in millions, except per share data) | | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | **Total revenues** | **$639** | **$648** | | Rooms | $374 | $382 | | Operating income | $92 | $80 | | **Net income attributable to stockholders** | **$28** | **$33** | | **Earnings per share – Diluted** | **$0.13** | **$0.15** | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations was $92 million, with a net decrease in cash of $340 million for Q1 2024 Net Cash Flow Summary (in millions) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $92 | $104 | | Net cash (used in) provided by investing activities | $(70) | $49 | | Net cash used in financing activities | $(362) | $(217) | | **Net decrease in cash** | **$(340)** | **$(64)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail significant events including asset sales, impairment losses, and the San Francisco hotel receivership - In February 2023, the company sold the Hilton Miami Airport hotel for gross proceeds of $118.25 million, recognizing a **net gain of approximately $15 million**[28](index=28&type=chunk) - In June 2023, the company **ceased payments on the $725 million non-recourse CMBS loan** (SF Mortgage Loan) for two San Francisco hotels, leading to receivership and a **$14 million gain** in Q1 2024 from derecognized interest[38](index=38&type=chunk)[39](index=39&type=chunk) - During Q1 2024, the company recognized an **impairment loss of approximately $5 million** related to one of its hotels[30](index=30&type=chunk)[43](index=43&type=chunk) - As of March 31, 2024, the company had outstanding commitments of **approximately $91 million for capital expenditures** at its properties[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202%2E%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses performance, highlighting strong comparable hotel results despite impacts from the San Francisco hotels [Overview and Outlook](index=18&type=section&id=Overview%20and%20Outlook) The company operates 43 premium hotels and anticipates continued positive demand momentum through 2024 - The company has interests in **43 premium-branded hotels with over 26,000 rooms**, with over 86% being luxury and upper upscale, located in prime U.S. markets[60](index=60&type=chunk) - Management expects **positive momentum to continue for the remainder of 2024**, based on current demand trends, expected increases in city-wide events, and improving international travel[64](index=64&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Results were impacted by non-comparable hotels, but comparable properties showed strong revenue growth in key markets - The exclusion of the two Hilton San Francisco Hotels from consolidation resulted in a significant year-over-year variance, including a **$34 million decrease in rooms revenue** from these non-comparable properties[84](index=84&type=chunk)[85](index=85&type=chunk) - **Comparable hotel revenue increased**, driven by strong performance in Orlando (Signia by Hilton: **occupancy +5.4 pts, ADR +8.3%**), New York (Hilton Midtown: **occupancy +5.7 pts, ADR +2.8%**), and Key West (Casa Marina: **occupancy +6.1 pts, ADR +24.4%** post-renovation)[86](index=86&type=chunk)[89](index=89&type=chunk) - Interest expense on the defaulted SF Mortgage Loan **increased by $6 million** due to a higher default interest rate of 7.11% (up from 4.11%) and additional late fees[97](index=97&type=chunk) [Non-GAAP Financial Measures](index=19&type=section&id=Non-GAAP%20Financial%20Measures) Adjusted EBITDA and Adjusted FFO per share increased year-over-year, reflecting improved operational performance Non-GAAP Performance Summary (in millions, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Adjusted EBITDA | $162 | $146 | | Hotel Adjusted EBITDA | $169 | $152 | | Nareit FFO attributable to stockholders | $84 | $82 | | Adjusted FFO attributable to stockholders | $111 | $92 | | Adjusted FFO per share – Diluted | $0.52 | $0.42 | [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position with sufficient cash and revolver availability for future obligations - As of March 31, 2024, the company had **$378 million in cash and cash equivalents** and approximately **$950 million available under its Revolver**[98](index=98&type=chunk)[100](index=100&type=chunk) - Excluding the defaulted SF Mortgage Loan, the company has **no significant debt maturities until June 2025**[100](index=100&type=chunk) - A first-quarter **dividend of $0.25 per share** was paid in April 2024, and a second-quarter **dividend of $0.25 per share** was declared for payment in July 2024[101](index=101&type=chunk)[110](index=110&type=chunk) - The stock repurchase program, authorized in February 2023 for up to $300 million, had **$150 million remaining available** for repurchases as of March 31, 2024[104](index=104&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=32&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure stems from interest rate fluctuations affecting its financial instruments - The company's primary market risk exposure is from **changes in interest rates**[113](index=113&type=chunk) [Controls and Procedures](index=32&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that as of March 31, 2024, the company's **disclosure controls and procedures were effective**[114](index=114&type=chunk) - **No material changes were made to internal controls** over financial reporting during the most recent fiscal quarter[115](index=115&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=33&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings not expected to have a material adverse effect - The company is involved in various ordinary course legal proceedings and believes it has adequate reserves to cover potential losses, which are **not expected to be materially adverse**[118](index=118&type=chunk) [Risk Factors](index=33&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes to risk factors have occurred since the company's 2023 Annual Report on Form 10-K - **No material changes to risk factors** were reported since the last Annual Report on Form 10-K[119](index=119&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the public plan in Q1 2024, with $150 million remaining available - **No shares were repurchased** as part of the publicly announced plan in Q1 2024; **$150 million remains available** under the stock repurchase program[123](index=123&type=chunk) [Defaults Upon Senior Securities](index=34&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) The company defaulted on its SF Mortgage Loan, resulting in receivership and a total arrearage of $54 million - The company **defaulted on the SF Mortgage Loan** after ceasing payments in June 2023; a receiver was appointed in October 2023 to take control of the two Hilton San Francisco hotels[124](index=124&type=chunk) - As of May 1, 2024, the total **arrearage on the loan was $54 million**, which includes **$24 million in default interest**[124](index=124&type=chunk) - The receiver can sell the hotels until November 1, 2024; otherwise, a **non-judicial foreclosure is expected by December 2, 2024**[124](index=124&type=chunk) [Exhibits](index=35&type=section&id=Item%206%2E%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including required CEO and CFO certifications

About Park and Safe Harbor Disclosure About Park Hotels & Resorts Inc. Park (NYSE: PK) is one of the largest publicly-traded lodging real estate investment trusts ("REIT") 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-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. Forw ...