Park Hotels & Resorts(PK) - 2021 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a consolidated RevPAR that was 25% higher than expected, driven by growth in both occupancy and ADR in select markets [18] - Adjusted EBITDA for the second quarter was $33 million, exceeding forecasts by over $60 million, marking the first positive adjusted EBITDA since Q1 2020 [50] - The company achieved breakeven results at the corporate level in June, significantly improving from a $23 million burn rate in April [50] Business Line Data and Key Metrics Changes - Leisure-focused properties outperformed expectations, with five hotels meeting or exceeding 2019 occupancy levels and ten hotels surpassing 2019 ADRs by an average of 25% [19] - Ancillary out-of-room spending increased by 65% to $26 per occupied room compared to Q2 2019, indicating strong demand for additional services [21] - The company has reopened 90% of its total portfolio rooms and plans to reopen the remaining three hotels in the coming months [23] Market Data and Key Metrics Changes - Leisure demand accounted for approximately 70% of total demand, doubling from Q1, with strong performance particularly in Hawaii [24] - Group business for Q2 saw a significant increase, with confirmed bookings pacing at roughly 50% of 2019 revenues [25] - In Hawaii, occupancy at Hilton Hawaiian Village jumped from 44% in April to 84% in June, driven by domestic leisure travel [31] Company Strategy and Development Direction - The company is focused on reopening suspended properties, maximizing RevPAR, implementing operational efficiencies, and pursuing selective acquisitions [16] - Future acquisitions will target upper upscale and luxury hotels in top 25 markets and premium resort destinations [17] - The company aims to leverage its diversified portfolio to benefit from all demand segments throughout the lodging recovery [47] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of business travel and corporate group events as restrictions ease [13] - The company anticipates continued strong demand in Hawaii, especially during the winter holidays, with rates already exceeding $1,000 per night [35] - Management remains cautious about the potential impact of the Delta variant on future demand but expects a return to normalcy [46] Other Important Information - The company raised $750 million in senior secured notes and announced nearly $480 million in asset sales to strengthen its balance sheet [9] - The company has identified $85 million in cost savings, translating to nearly 300 basis points of margin improvement [26] - The company has over $1.8 billion in liquidity, positioning it for growth through targeted ROI initiatives and strategic acquisitions [48] Q&A Session Summary Question: Can you elaborate on the appetite for buying and selling assets? - Management highlighted their active approach to reshaping the portfolio, having sold 30 assets for about $1.7 billion and expressing a focus on reopening hotels and identifying cost savings [58] Question: What is the current NAV and how has it changed? - Management indicated that the consensus NAV is around $27 per share, recovering from pre-pandemic levels of approximately $30, with significant improvements in the balance sheet [71] Question: What are the long-term expectations for the San Francisco market? - Management expressed confidence in the San Francisco market's recovery due to supply constraints and multiple sources of demand, despite recent asset sales [78] Question: How are the recent housekeeping changes by Hilton received? - Management applauded Hilton's opt-in housekeeping policy as a necessary adjustment and noted minimal complaints from customers regarding changes in service [100]