Park Hotels (PK) Q2 FFO Beats by 237%

Core Insights - Park Hotels & Resorts reported Q2 2025 earnings with adjusted funds from operations (FFO) per share at $0.64, significantly exceeding analyst estimates of $0.19, while revenue reached $672 million, reflecting a 2.0% year-over-year decline [1][2] - The company operates 39 hotel properties with approximately 25,000 rooms, focusing on upper-upscale and luxury segments, and aims to enhance cash flow through renovations and asset sales [3][4] - The current strategy emphasizes capital recycling, cost control, and maintaining a conservative balance sheet to support dividends and growth opportunities [4][10] Financial Performance - Adjusted FFO per share was $0.64, outperforming consensus by $0.45 but down 1.5% from the previous year [2][5] - Revenue for Q2 2025 was $672 million, slightly above estimates but down 2.0% from Q2 2024 [2][5] - Comparable RevPAR decreased by 1.6% year-over-year to $195.68, with urban hotels showing a 3% increase in RevPAR [6][10] Operational Highlights - The company completed the sale of Hyatt Centric Fisherman's Wharf for $80 million and announced the closure of Embassy Suites Kansas City Plaza [7][9] - Major renovations are ongoing, including a $103 million project at Royal Palm South Beach Miami, expected to yield a 15% to 20% return on investment post-reopening in May 2026 [8][9] - Capital expenditures for Q2 totaled nearly $45 million, with plans for up to $330 million for the full year [9] Balance Sheet and Liquidity - As of June 30, liquidity was approximately $1.3 billion, supported by a $950 million undrawn revolving credit facility [11] - Net debt stood at $3.7 billion with an average maturity of 2.7 years, highlighting a focus on managing high leverage [11] - A significant upcoming item is the $1.3 billion mortgage maturing on the Hilton Hawaiian Village in November 2026 [11] Future Outlook - Management revised full-year guidance for comparable RevPAR to $184–$187, reflecting a potential decline compared to 2024 [12] - Adjusted EBITDA is forecasted at $595–$645 million, with adjusted FFO per share projected at $1.82–$2.08 [12] - Ongoing caution is advised regarding macroeconomic factors and the impact of renovations on demand [13]