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 ...

This supplement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements related to the effects of Park's decision to cease payments on its $725 million non-recourse CMBS loan ("SF Mortgage Loan") secured by two of Park's San Francisco hotels – the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc ...

Financial Performance - Total revenues for 2023 reached $2,698 million, an increase of 7.9% compared to $2,501 million in 2022 [294]. - Net income attributable to stockholders for 2023 was $97 million, down from $162 million in 2022, reflecting a decrease of 40.1% [294]. - Earnings per share (basic and diluted) for 2023 were $0.44, compared to $0.71 in 2022, representing a decline of 38.0% [294]. - Operating income for 2023 was $343 million, an increase from $296 million in 2022, reflecting a growth of 15.9% [294]. - Net income for the year ended December 31, 2023, was $106 million, a decrease of 38.7% compared to $173 million in 2022 [297]. - Hotel Adjusted EBITDA increased to $686 million in 2023, up from $630 million in 2022, representing an 8.9% growth [404]. Assets and Liabilities - Total assets decreased to $9,419 million in 2023 from $9,731 million in 2022, a reduction of 3.2% [293]. - Total liabilities increased to $5,651 million in 2023, up from $5,440 million in 2022, marking a rise of 3.9% [293]. - Cash and cash equivalents decreased to $717 million in 2023 from $906 million in 2022, a decline of 20.9% [293]. - Total cash and cash equivalents and restricted cash at the end of the period was $750 million, down from $939 million at the end of 2022 [297]. - The company had a net deferred tax liability of $23 million as of December 31, 2023, compared to $9 million in 2022 [386]. Impairment and Losses - The company reported an impairment and casualty loss of $204 million in 2023, significantly higher than $6 million in 2022 [294]. - The company recognized an impairment loss of approximately $202 million for the year ended December 31, 2023, related to a hotel securing a $725 million mortgage loan [352]. - The company experienced a loss of $221 million on the derecognition of assets in 2023, compared to no such loss in 2022 [297]. - The company reported an impairment loss of $202 million related to one of its hotels, with a fair value of $234 million as of December 31, 2023 [378]. Debt and Financing - The company had no variable rate debt outstanding as of December 31, 2023, with borrowings under its Revolver bearing interest based on the secured overnight financing rate (SOFR) [259]. - The company’s fixed-rate debt has a total carrying value of $3,786 million, with an average interest rate of 4.88% [260]. - Total debt as of December 31, 2023, was $3.765 billion, a decrease from $3.892 billion in 2022 [358]. - The company had approximately $946 million of available capacity under its Revolver as of December 31, 2023 [363]. - The company issued an aggregate of $725 million of 2028 Senior Notes with an interest rate of 5.875% per annum, and net proceeds were used to repay $80 million of the outstanding balance under the Revolver [366]. Capital Expenditures - Capital expenditures for property and equipment were $285 million in 2023, up from $168 million in 2022, representing a 69.6% increase [297]. - Capital expenditures for the year 2023 amounted to $307 million, an increase from $188 million in 2022 [418]. - Outstanding commitments for capital expenditures as of December 31, 2023, were approximately $90 million, including $16 million for the Bonnet Creek complex [405]. Revenue Recognition and Operations - The company recognizes revenue from room rentals, food and beverage sales, and ancillary services, with room revenue recognized over time when rooms are occupied [333]. - The company’s average daily rate (ADR) is calculated as rooms revenue divided by the total number of room nights sold in a given period [15]. - The company’s occupancy rate is defined as the total number of room nights sold divided by the total number of room nights available [15]. - The company’s RevPAR (revenue per available room) is calculated as rooms revenue divided by the total number of room nights available to guests [15]. Shareholder Returns - The company repurchased $180 million of common stock in 2023, compared to $227 million in 2022, indicating a decrease of 20.7% [300]. - Dividends declared per common share were $2.15 for the year ended December 31, 2023, which includes a special cash dividend of $0.77 [300]. - The company declared $355 million in unpaid dividends as of December 31, 2023, compared to $56 million in 2022 [411]. Internal Controls and Compliance - The company maintains effective internal control over financial reporting as of December 31, 2023, according to management's assessment [268]. - The company maintained effective internal control over financial reporting as of December 31, 2023, according to the auditor's opinion [284]. - The company operates as a REIT and has not included provisions for U.S. federal income taxes in its financial statements for the years ended December 31, 2023, 2022, and 2021, except for taxes related to built-in gain property sales [337]. Future Outlook and Strategy - Future guidance indicates a projected revenue growth of 5% for the upcoming fiscal year [415]. - The company is actively pursuing new acquisitions to enhance its market position and diversify its asset base [415]. - Park Hotels & Resorts Inc. is investing in technology upgrades to improve operational efficiency across its properties [415]. - The company aims to increase its customer loyalty program participation by 20% over the next year [415]. - A new marketing strategy is being implemented to target millennial travelers, expected to boost occupancy rates by 10% [415]. - The company plans to open three new hotels in high-demand areas by the end of 2024 [415]. - The company is focusing on sustainability initiatives, aiming for a 30% reduction in energy consumption by 2025 [415].

Financial Data and Key Metrics Changes - In Q4 2023, RevPAR growth was 4.1%, with full-year growth at 8.7%, exceeding guidance by 50 basis points [10][21] - Total RevPAR for Q4 increased nearly 5%, supported by an 8% rise in food and beverage spend, contributing an additional $3.5 million to EBITDA [10][11] - Adjusted EBITDA for Q4 was $163 million, with adjusted FFO per share at $0.52 [41][21] Business Line Data and Key Metrics Changes - Urban hotel portfolio saw RevPAR growth of nearly 16% versus 2022, with notable performance in New York, Boston, Denver, and Chicago [8][10] - Group revenues for Q4 were up nearly 9% year-over-year, with a sequential improvement of 12% over Q3 [34] - Hawaii's Hilton Hawaiian Village achieved a RevPAR increase of 5%, driven by group room nights and ADR improvements [12][15] Market Data and Key Metrics Changes - New York experienced a nearly 9% decrease in hotel supply since 2019, leading to increased compression room nights and a 30% RevPAR growth compared to 2022 [11] - Total air available seats into Oahu grew by 11% over 2022, with domestic seats up 5% and international seats increasing by nearly 30% [36] - Group revenue pace for 2024 is up 13% year-over-year, with expectations to exceed 2019 levels [34] Company Strategy and Development Direction - The company plans to sell non-core hotels with expected proceeds of $100 million to $250 million to reduce debt and reinvest in core properties [9][21] - Capital allocation remains focused on high-return investments, with nearly $300 million invested in 2023 [32] - The company aims to maintain a leverage ratio of 3x to 5x, targeting closer to 4x [116] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2024, citing a healthier U.S. economy and strong group demand in key markets [9][16] - The company anticipates continued strength in Hawaii, with inbound tourism from Japan expected to improve significantly [15][39] - Management noted that renovations in Hawaii will impact RevPAR but are expected to yield long-term benefits [45][20] Other Important Information - The company has over $1.3 billion in liquidity, including approximately $350 million in cash, and net debt has decreased by over $500 million year-over-year [17][41] - S&P Global upgraded the company's corporate credit rating from B to BB- [43] - The company plans to spend approximately $230 million to $250 million on capital expenditures in 2024, focusing on guest-facing areas [44] Q&A Session Summary Question: Insights on Hawaii's performance and future potential - Management is bullish on Hawaii's performance, noting strong leadership and ongoing demand, with plans for a sixth tower at Hilton Hawaiian Village [25][69] Question: Clarification on wage and benefits expectations for 2024 - Wage increases were in the 4% to 5% range last year, but specific forecasts for 2024 are uncertain due to ongoing negotiations [56] Question: Strength in group bookings and spending tendencies - Groups are getting larger, with a notable increase in convention bookings, and there is a strong propensity to spend outside of room rates [60][62] Question: Expectations for 2025 bookings - Group revenue pace for 2025 is currently at 97% of 2019 levels, with strong rate increases anticipated [83] Question: Market assessment and acquisition opportunities - The company is cautious about the current market, noting a bid-ask spread issue but remains open to opportunistic acquisitions [95][96]

Financial Performance & Outlook - Park Hotels & Resorts reported a net income attributable to stockholders of $97 million for the year ended December 31, 2023[13] - Adjusted FFO attributable to stockholders was $439 million, or $2.04 per diluted share for the year ended December 31, 2023[22] - The company anticipates a full-year 2024 net income between $146 million and $186 million[31] - Adjusted EBITDA for full-year 2024 is projected to be between $645 million and $685 million[31] - Adjusted FFO per share – Diluted for 2024 is expected to be between $2.02 and $2.22[31] Portfolio Performance - Comparable RevPAR increased by 49% for the year ended December 31, 2023[46] - Comparable Hotel Adjusted EBITDA reached $680 million for the year ended December 31, 2023[20] - Comparable Hotel Revenues totaled $2441 million for the year ended December 31, 2023[20] - Comparable Hotel Adjusted EBITDA margin was 278% for the year ended December 31, 2023[20] Capital Structure - As of December 31, 2023, the company's total debt stood at $3765 million[13] - The company has approximately $950 million of available capacity under the Revolver[101] - Net debt to full-year Comparable Adjusted EBITDA ratio is 515x[27]