Park Hotels & Resorts(PK) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a significant sequential improvement in occupancy, with consolidated portfolio occupancy increasing from 21% in January to 33% in March [15] - For open hotels, occupancy reached 46% in March, with 17 hotels surpassing 60% occupancy compared to just seven in February [16] - The company achieved breakeven EBITDA in March, with an occupancy of 32% and average rates down 25% compared to 2019 levels [16][12] Business Line Data and Key Metrics Changes - Leisure demand accounted for approximately two-thirds of total demand during the quarter, with leisure-related room revenues nearly doubling from Q4 2020 [18] - Ancillary revenues, excluding food and beverage, exceeded Q1 2019 levels by more than 30% during the quarter [19] - Business transient demand showed marginal improvement, while group demand began to recover with small group bookings [20] Market Data and Key Metrics Changes - The company's top-performing hotels were located in leisure destinations, with South Florida hotels averaging over 80% occupancy [21] - Key West hotels achieved an average occupancy of 96% and combined revenues of $25 million, surpassing budget by nearly $9 million [23] - Puerto Rico's Caribe Hilton reached 72% occupancy in March, benefiting from travel restrictions in other Caribbean destinations [25] Company Strategy and Development Direction - The company aims to return to profitability by safely reopening its portfolio and reducing its monthly burn rate, which was $26 million in March [12][13] - Focus on capital recycling through asset sales, with plans to sell $300 million to $400 million of non-core assets this year [32] - The company is also pursuing attractive acquisitions in target markets and relaunching the Bonnet Creek meeting space expansion project [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery, driven by vaccination rates and increased consumer confidence [9] - The GDP forecast for 2021 is averaging 6.4%, the highest since 1984, which bodes well for the hospitality industry [12] - Management expects to achieve breakeven in the second half of the year, with positive adjusted hotel EBITDA anticipated in Q2 [46] Other Important Information - The company reported a liquidity of $1.3 billion, with a net debt of $4.5 billion [45] - Recent ESG efforts include the publication of the corporate responsibility report and recognition for energy performance [49][50] - The company is focused on enhancing diversity and inclusion within its workforce [50] Q&A Session Summary Question: Concerns about larger hotels reopening - Management noted that larger hotels may ramp up more slowly but are seeing positive trends in occupancy and demand [52][53] Question: Feedback on group and corporate travel budgets - Management indicated uncertainty about the long-term impact on business travel but believes the need for in-person meetings will persist [68][70] Question: Update on cost-saving targets and labor constraints - Management confirmed an increase in cost-saving targets to $85 million and discussed the impact of labor challenges on operations [82][88] Question: Path to recovery for Hawaii compared to Key West - Management expects Hawaii to see a strong recovery, with occupancy projected to reach 75% for the balance of the year [29][90] Question: Current status of New York hotel openings - Management highlighted the complexity of reopening in New York, with plans to monitor the situation closely [118][120]