Core Portfolio & Strategy - Park Hotels & Resorts focuses on upper-upscale and luxury full-service hotels in premier urban and resort destinations, affiliated with dominant global brands[4] - The company's core portfolio includes 20 consolidated hotels and 1 unconsolidated hotel, totaling 16,000 rooms[13] - Park plans to dispose of non-core hotels to enhance growth and quality, with estimated proceeds of $560 million to $600 million expected from non-core hotel sales[55, 61] - The strategic plan involves disposing of remaining non-core hotels over the next 12+ months to materially enhance growth and quality[46] Financial Performance & Valuation - Park Hotels & Resorts is trading at a 47% discount to the consensus estimate of NAV (Net Asset Value)[14] - The implied market value of the portfolio is $270,000 per key, while the replacement cost for the core portfolio is approximately $1 million per key[14] - The company offers an attractive dividend yield of 9%[14] - The company has over $2 billion of liquidity, including $1 billion available under the revolving credit facility and an unsecured $800 million delayed-draw term loan[15] ROI & Growth Potential - Park Hotels & Resorts has a robust ROI pipeline with $1 billion of potential opportunities, with past projects generating 20%+ average IRR (Internal Rate of Return)[15] - Since 2018, $1.4 billion of capital will have been invested in the core portfolio through 2025, or $87,000 per key[14] - The company anticipates $100 million+ Adjusted EBITDA growth potential as core markets recover and ROI projects stabilize[14]

Core Insights - The UK hotel investment market saw a significant increase in activity in Q3 2025, with transaction volumes reaching £1.04 billion, a 28% rise compared to Q3 2024 [1] - Despite the growth, overall investment volumes remain 5% below long-term trends [2] London Market Performance - London led the UK hotel investment sector with £697 million in transactions during Q3 2025, representing a 42% year-on-year increase [3] - The tightening of prime yields in London, which decreased by 25 basis points for franchise assets compared to the first half of 2024, indicates positive investor sentiment [4] Regional Market Growth - Regional UK markets showed strong performance, with Scotland's year-to-date transactions reaching £316 million, an 85% increase from the previous year [5] - The South West recorded £180 million, up 360%, while the West Midlands achieved £256 million, marking a 310% increase [5] - Collectively, regional markets accounted for £1.3 billion in transactions, more than double the total from the same period in 2024 [6] Investor Activity - Domestic owner-operators were particularly active, comprising 45% of the total transaction volume in 2025, amounting to £1.2 billion, a 77% increase compared to the 10-year average [7] - International asset managers re-entered the UK hotel sector, acquiring £734 million worth of hotels in the first nine months of 2025, with international players accounting for 60% of this total, marking a year-on-year increase of over 1,000% [8] - UK pension funds became more active, with year-to-date volumes at £299 million, up 31% year-on-year, driven by diversification strategies and confidence in long-term sector fundamentals [8] Market Sentiment - The first half of 2025 was characterized by operational and investor uncertainty, but sentiment stabilized through Q3, with over £1 billion in deals closed, a marked increase from 2024 [9]

Investment Rating - The report indicates a challenging start for the UK hotel market in Q1-2025, with a marginal increase in occupancy and declining average daily rates (ADR) and revenue per available room (RevPAR) [5][7][34]. Core Insights - The London hotel market's occupancy averaged 73.1%, showing a slight increase of 0.7% compared to Q1-2024, while luxury hotels experienced a more significant rise of 1.4 percentage points [5][6]. - ADR in London decreased by 2.3% to €198, with RevPAR declining by 1.3% to €145, indicating a softening demand across various hotel segments [6][7]. - Payroll costs rose by 4.6% year-on-year, accounting for 34.6% of total revenue, which is a 1.9 percentage point increase, reflecting the impact of rising costs and declining revenues [8][37]. - Operational efficiencies have been implemented to manage costs, with total departmental costs increasing by only 1.4% despite falling revenues [10][11]. Summary by Sections London Hotel Market - Occupancy rates reached 73.1%, with luxury hotels at 65%, still below pre-pandemic levels [5][6]. - ADR decreased to €198, while RevPAR fell to €145, with upper-midscale and select service hotels facing the most significant declines [6][7]. - Payroll costs increased by 4.6% year-on-year, significantly impacting profitability [8][13]. Regional UK Hotel Market - The regional UK hotel market saw occupancy levels at 67.4%, with marginal revenue growth and a decline in ADR for certain segments [34][35]. - TRevPAR growth outpaced RevPAR growth, driven by increased leisure spending, particularly in golf and spa hotels [36]. - Payroll costs rose by 4.9% year-on-year, with total departmental costs increasing by 3.5%, leading to a decline in operating margins [37][38]. Investment Volumes - In Q1-2025, hotel investment volumes reached £800 million, with over 50 transactions, primarily in the luxury and upper-upscale segments [68][69]. - The geographical capital flows indicate a strong market share for London, accounting for 60% of transactions [68][70].