Park Hotels & Resorts(PK) - 2025 Q2 - Quarterly Results

Financial Statements Condensed Consolidated Balance Sheets As of June 30, 2025, Park Hotels & Resorts reported total assets of $8.87 billion, a decrease from $9.16 billion at year-end 2024, with total liabilities also decreasing to $5.48 billion from $5.57 billion, and stockholders' equity declining from $3.65 billion to $3.44 billion Balance Sheet Summary (in millions) | Balance Sheet Items | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Property and equipment, net | $7,176 | $7,398 | | Total Assets | $8,870 | $9,161 | | Total Liabilities | $5,482 | $5,567 | | Total Stockholders' Equity | $3,444 | $3,645 | - The company holds $725 million in debt associated with hotels in receivership, with accrued interest increasing from $95 million to $127 million since year-end 2024[13] Condensed Consolidated Statements of Operations For the second quarter of 2025, total revenues were $672 million, a 2.0% decrease year-over-year, leading to a net loss attributable to stockholders of $5 million, compared to a $64 million net income in Q2 2024, while for the six months ended June 30, 2025, the company recorded a net loss of $62 million, a significant shift from the $92 million net income in the same period of 2024, primarily impacted by a $70 million impairment loss Q2 and H1 2025 vs 2024 Performance (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $672 | $686 | $1,302 | $1,325 | | Operating Income | $65 | $121 | $72 | $213 | | Net (loss) income attributable to stockholders | $(5) | $64 | $(62) | $92 | | (Loss) earnings per share – Diluted | $(0.02) | $0.30 | $(0.31) | $0.44 | - A significant impairment loss of $70 million was recognized in the first six months of 2025, compared to $13 million in the prior year period, heavily impacting operating income and net results[14] Supplementary Financial Information EBITDA and Adjusted EBITDA Adjusted EBITDA for Q2 2025 was $183 million, down from $193 million in Q2 2024, and for the first six months of 2025, Adjusted EBITDA was $327 million, compared to $355 million in the prior year period, reflecting lower net income and adjustments for items like impairment losses Adjusted EBITDA Reconciliation Summary (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(2) | $67 | $(59) | $96 | | EBITDA | $190 | $185 | $270 | $345 | | Adjusted EBITDA | $183 | $193 | $327 | $355 | Comparable Hotel Adjusted EBITDA and Margin Comparable Hotel Adjusted EBITDA decreased by 3.2% to $191 million in Q2 2025, with the margin contracting by 80 basis points to 29.6%, while year-to-date, Comparable Hotel Adjusted EBITDA fell 6.5% to $342 million, and the margin decreased by 170 basis points to 27.4%, indicating pressure on profitability for the comparable hotel portfolio Comparable Hotel Performance vs. Prior Year | Metric | Q2 2025 | Q2 2024 | Change | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Comparable Hotel Revenues | $645M | $650M | (0.7)% | $1,248M | $1,256M | (0.7)% | | Comparable Hotel Adjusted EBITDA | $191M | $197M | (3.2)% | $342M | $366M | (6.5)% | | Comparable Hotel Adjusted EBITDA Margin | 29.6% | 30.4% | (80) bps | 27.4% | 29.1% | (170) bps | NAREIT FFO and Adjusted FFO Adjusted FFO attributable to stockholders was $129 million, or $0.64 per diluted share, in Q2 2025, slightly down from $137 million, or $0.65 per share, in Q2 2024, and for the first half of 2025, Adjusted FFO was $221 million ($1.10 per share), a decrease from $248 million ($1.18 per share) in the prior year period FFO Performance (in millions, except per share data) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Nareit FFO attributable to stockholders | $101 | $122 | $167 | $206 | | Adjusted FFO attributable to stockholders | $129 | $137 | $221 | $248 | | Nareit FFO per share – Diluted | $0.51 | $0.58 | $0.83 | $0.98 | | Adjusted FFO per share – Diluted | $0.64 | $0.65 | $1.10 | $1.18 | Net Debt and Net Debt to Comparable Adjusted EBITDA Ratio As of June 30, 2025, Net Debt increased to $3.67 billion from $3.58 billion at the end of 2024, with the Net Debt to TTM Comparable Adjusted EBITDA ratio rising to 5.88x from 5.53x, indicating increased leverage Net Debt and Leverage Ratio | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Net Debt | $3,671M | $3,582M | | TTM Comparable Adjusted EBITDA | $624M | $648M | | Net Debt to TTM Comparable Adjusted EBITDA ratio | 5.88x | 5.53x | Outlook and Assumptions Full-Year 2025 Outlook Park has revised its full-year 2025 outlook, lowering expectations for RevPAR and net income, but slightly raising the range for Adjusted EBITDA and Adjusted FFO per share, with the midpoint for Comparable RevPAR change now -1.0%, down from +0.5% previously, and the outlook for net loss attributable to stockholders widening to between -$60 million and -$10 million, while the Adjusted FFO per share guidance midpoint has increased slightly to $1.95 Full-Year 2025 Outlook Change (Midpoint) | Metric | New Outlook (July 31, 2025) | Prior Outlook (June 2, 2025) | Change at Midpoint | | :--- | :--- | :--- | :--- | | Comparable RevPAR change vs. 2024 | -1.0% | 0.5% | (150) bps | | Net (loss) income attributable to stockholders | ($35M) | $12M | ($47M) | | Adjusted EBITDA | $620M | $618M | $2M | | Adjusted FFO per share – Diluted | $1.95 | $1.94 | $0.01 | - Key assumptions for the outlook include a fully diluted weighted average share count of 200 million and no inclusion of potential future acquisitions, dispositions, or financing transactions[37] - The outlook excludes $54 million of default interest and fees related to the SF Mortgage Loan, which is expected to be resolved by October 29, 2025[37] Reconciliation of Outlook Metrics The full-year 2025 outlook projects a net loss between $53 million and $3 million, which after adjustments for depreciation, interest, taxes, and other items, reconciles to an Adjusted EBITDA range of $595 million to $645 million and a Comparable Hotel Adjusted EBITDA of $634 million to $685 million, while net loss attributable to stockholders of -$60 million to -$10 million reconciles to an Adjusted FFO of $363 million to $415 million FY 2025 Outlook Reconciliation (Low to High Case, in millions) | Metric | Low Case | High Case | | :--- | :--- | :--- | | Net (loss) income | $(53) | $(3) | | Adjusted EBITDA | $595 | $645 | | Comparable Hotel Adjusted EBITDA | $634 | $685 | | Net (loss) income attributable to stockholders | $(60) | $(10) | | Adjusted FFO attributable to stockholders | $363 | $415 | Portfolio and Operating Metrics Hotel Portfolio as of July 31, 2025 As of July 31, 2025, Park's portfolio consists of 39 premium-branded hotels with approximately 25,000 rooms, divided into a 36-hotel comparable portfolio and a 3-hotel unconsolidated joint venture portfolio, with notable events including the conversion of two W Chicago hotels in early 2025 and the planned permanent closure of the Embassy Suites Kansas City Plaza in Q3 2025 - The total portfolio comprises 39 hotels and 24,666 rooms, with the majority (36 hotels, 22,395 rooms) in the comparable portfolio[4][47] - In July 2025, the company decided to permanently close the Embassy Suites Kansas City Plaza and terminate its ground lease, with the closure expected in Q3 2025[48] - Two Chicago hotels were converted and rebranded in early 2025: W Chicago – Lakeshore became The Wade, and W Chicago – City Center became The Midland Hotel[45][46] Comparable Hotels by Market: Q2 2025 vs Q2 2024 In Q2 2025, the comparable hotel portfolio experienced a 1.6% decline in RevPAR to $195.68, driven by a 0.9 percentage point drop in occupancy, while ADR remained nearly flat, and Total RevPAR also decreased by 0.8%, with performance varying significantly by market, as Puerto Rico and Orlando showed strong growth, while Miami (due to renovation) and Hawaii saw significant declines, and overall Comparable Hotel Adjusted EBITDA fell 3.2% to $191 million Q2 2025 All Markets Performance vs. Q2 2024 | Metric | 2Q25 | 2Q24 | Change | | :--- | :--- | :--- | :--- | | Comparable ADR | $255.76 | $256.88 | (0.4)% | | Comparable Occupancy | 76.5% | 77.4% | (0.9) ppts | | Comparable RevPAR | $195.68 | $198.93 | (1.6)% | | Comparable Total RevPAR | $316.50 | $319.11 | (0.8)% | | Comparable Hotel Adjusted EBITDA | $191M | $197M | (3.2)% | - Operations at the Royal Palm in Miami were suspended in mid-May 2025 for a comprehensive renovation, causing a 56.9% drop in RevPAR for that market[51][53] Comparable Hotels by Market: YTD Q2 2025 vs YTD Q2 2024 For the first half of 2025, the comparable portfolio's RevPAR decreased by 1.2% to $187.01, with occupancy falling 1.6 percentage points, partially offset by a 1.0% rise in ADR, and Total RevPAR was nearly flat with a 0.2% decline, while year-to-date Comparable Hotel Adjusted EBITDA decreased by 6.5% to $342 million, with margins contracting by 170 basis points YTD Q2 2025 All Markets Performance vs. YTD Q2 2024 | Metric | YTD 2025 | YTD 2024 | Change | | :--- | :--- | :--- | :--- | | Comparable ADR | $256.75 | $254.33 | 1.0% | | Comparable Occupancy | 72.8% | 74.4% | (1.6) ppts | | Comparable RevPAR | $187.01 | $189.36 | (1.2)% | | Comparable Total RevPAR | $307.77 | $308.36 | (0.2)% | | Comparable Hotel Adjusted EBITDA | $342M | $366M | (6.5)% | - YTD 2024 results benefited from one-time items, including a $4 million state unemployment tax refund for Hawaii hotels and a $5 million grant for Boston hotels, making year-over-year comparisons less direct for those markets[59] Core Hotels Performance The 20 designated 'Core Hotels' slightly underperformed the total comparable portfolio in Q2 2025, with RevPAR down 1.3% and Hotel Adjusted EBITDA down 2.4%, however, year-to-date, Core Hotels showed more resilience with RevPAR down only 0.9% and Total RevPAR up 0.1%, compared to steeper declines for the 'All Other Hotels' segment, and the Core Hotels maintain significantly higher EBITDA margins (31.6% in Q2) compared to other hotels (20.8%) Q2 2025 Performance: Core vs. All Other Hotels | Metric | Core Hotels (20) | All Other Hotels (16) | Total Comparable (36) | | :--- | :--- | :--- | :--- | | RevPAR Change | (1.3)% | (2.9)% | (1.6)% | | Hotel Adj. EBITDA Change | (2.4)% | (8.2)% | (3.2)% | | Hotel Adj. EBITDA Margin | 31.6% | 20.8% | 29.6% | YTD Q2 2025 Performance: Core vs. All Other Hotels | Metric | Core Hotels (20) | All Other Hotels (16) | Total Comparable (36) | | :--- | :--- | :--- | :--- | | RevPAR Change | (0.9)% | (2.6)% | (1.2)% | | Hotel Adj. EBITDA Change | (4.8)% | (20.2)% | (6.5)% | | Hotel Adj. EBITDA Margin | 30.2% | 14.6% | 27.4% | Properties Acquired and Sold Acquisition and Sales History Since 2018, Park has sold 39 hotels for total gross proceeds of nearly $2.3 billion, as part of its capital recycling strategy, with the most significant acquisition period being in 2019, when 18 hotels were acquired for $2.5 billion, and in 2025, the company sold one hotel Total Sales (2018-2025) | Period | Number of Hotels Sold | Gross Proceeds (in millions) | | :--- | :--- | :--- | | 2018-2025 | 39 | $2,291.9 | - In May 2025, Park sold the Hyatt Centric Fisherman's Wharf in San Francisco for gross proceeds of $80.0 million[74] - In addition to the 39 hotels sold, five properties were returned to landlords upon ground lease expiration/termination, and two San Francisco hotels were placed into receivership[76] Comparable Supplementary Financial Information Historical Comparable TTM Hotel Metrics For the trailing twelve months (TTM) ended June 30, 2025, Comparable Hotel Adjusted EBITDA was $657 million on $2.46 billion of revenues, resulting in a margin of 26.8%, which compares to the full-year 2024 results of $681 million in Comparable Hotel Adjusted EBITDA on $2.46 billion of revenues, with a margin of 27.6%, indicating a slight margin compression over the most recent period TTM vs. Full-Year Comparable Performance | Metric | TTM Ended June 30, 2025 | Full-Year 2024 | | :--- | :--- | :--- | | Comparable RevPAR | $186.28 | $187.45 | | Comparable Hotel Revenues | $2,456M | $2,464M | | Comparable Hotel Adjusted EBITDA | $657M | $681M | | Comparable Hotel Adjusted EBITDA margin | 26.8% | 27.6% | - The TTM Comparable Adjusted EBITDA as of June 30, 2025, is $624 million, which is used for the company's leverage ratio calculation[82] Capital Structure Fixed and Variable Rate Debt As of June 30, 2025, Park's total debt was approximately $3.84 billion, with a weighted average interest rate of 5.18%, with the majority of the debt, $3.66 billion, being fixed-rate with a weighted average rate of 5.11%, and the company having $200 million in variable-rate debt and $950 million of available capacity under its revolver Debt Summary as of June 30, 2025 (in millions) | Debt Type | Amount | Weighted Avg. Interest Rate | | :--- | :--- | :--- | | Total Fixed Rate Debt | $3,661 | 5.11% | | Total Variable Rate Debt | $200 | 6.37% | | Total Debt | $3,840 | 5.18% | - The reported debt excludes the $725 million SF Mortgage Loan associated with the two Hilton San Francisco hotels in receivership[92] - As of July 31, 2025, Park had $950 million of available capacity under its Revolver[93] Definitions Key Non-GAAP Financial Measures and Operating Metrics The report defines several key non-GAAP measures and operating metrics used for performance evaluation, including EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA, Nareit FFO, Adjusted FFO, and Net Debt, which are used to assess ongoing operating performance by excluding certain items, while key operating metrics such as Occupancy, ADR, RevPAR, and Total RevPAR are standard industry measures used to gauge hotel utilization, pricing, and overall performance - Comparable Hotels: Includes hotels active since Jan 1st of the previous year and excludes disposed properties and the two San Francisco hotels in receivership[97] - Adjusted EBITDA: Calculated by adjusting EBITDA to exclude items not reflective of ongoing operations, such as gains/losses on sales, impairment, and share-based compensation[99][102] - Adjusted FFO: Calculated by adjusting Nareit FFO for items like acquisition costs, severance, and other non-representative items to provide a clearer view of ongoing performance[107][112] Analyst Coverage List of Analysts The report provides a list of 16 investment banks and their respective analysts that provide research coverage for Park Hotels & Resorts, with contact information, including phone numbers and email addresses, included for each analyst - The company is covered by analysts from major firms including Bank of America, BMO Capital Markets, Citi Research, Deutsche Bank, JP Morgan, Morgan Stanley, and Wells Fargo[118]