Park Hotels & Resorts(PK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the fourth quarter, RevPAR was approximately $182, representing a nearly 1% year-over-year increase, or nearly 3% when excluding Royal Palm [19] - Core hotel Adjusted EBITDA margin improved materially, expanding 230 basis points to 30%, while the non-core portfolio recorded a 280 basis point contraction to 10% [19] - For the full year, RevPAR declined 2% versus 2024, while hotel adjusted EBITDA margin was 26.5%, reflecting a 130 basis points reduction from the prior year [20] Business Line Data and Key Metrics Changes - The core portfolio delivered a solid 3.2% increase in RevPAR during the fourth quarter, or 5.7% excluding the Royal Palm, outperforming the non-core portfolio by nearly 1,500 basis points [9] - Fourth quarter group revenue for the core portfolio increased 13% year-over-year, with double-digit growth in banquet and catering revenues across several key markets [10] - Core hotel adjusted EBITDA increased 13%, or nearly $18 million over the prior year period, despite an over $4 million headwind from Royal Palm being closed [20] Market Data and Key Metrics Changes - Hawaii showed signs of recovery, with expectations for multiyear recovery towards prior peak levels, driven by improving leisure transient demand following extensive room renovations [11] - Orlando's Bonnet Creek complex generated a record fourth quarter RevPAR, up nearly 9% year-over-year, driven by a 15% increase in group revenues [12] - New York delivered its highest fourth quarter group revenue in hotel history, up over 8% year-over-year [13] Company Strategy and Development Direction - The company is focused on reshaping and upgrading its portfolio, concentrating ownership in 21 core hotels with superior growth prospects and aggressively exiting non-core assets [5] - The company executed more than $120 million in non-core sales at a blended multiple of 21x, with a strong track record of successfully recycling capital [6] - The company plans to complete its transition to a streamlined portfolio of high-quality hotels located in premium gateway cities and resort markets [17] Management's Comments on Operating Environment and Future Outlook - The U.S. economy remains on relatively firm footing, with modestly higher growth expectations and easing inflation, which should support the U.S. consumer [14] - The company expects a blended RevPAR growth range of flat to +2% for 2026, with expense growth expected to be low single digits [27] - Management remains cautious about potential geopolitical or macroeconomic volatility impacting short-term group pickup trends and international inbound demand [16] Other Important Information - The company invested nearly $300 million across the portfolio in 2025, with plans for a lower level of capital investment for 2026, estimated at $230 million-$260 million [21] - As of year-end 2025, the company's liquidity was approximately $2 billion, including $200 million of cash and $1 billion of available capacity under its revolver [24] - The company returned a total of $245 million of capital in 2025, including $200 million of dividends and $45 million of share repurchases [30] Q&A Session Summary Question: Earnings trajectory for Hawaii properties - Management indicated that Hawaii properties should see mid-single-digit growth in EBITDA, with RevPAR growth expected in the 2% range [36] Question: Sequential change in Hilton Hawaiian Village performance - Management noted a 37% decrease in group pace for Q1, impacting expectations for performance [44] Question: Non-core asset sales and buyer interest - Management confirmed strong interest from various buyer types, including family offices and owner-operators, and emphasized the goal of completing non-core asset sales within 2026 [70] Question: Impact of labor negotiations in New York - Management expressed confidence in reaching a favorable outcome in labor negotiations, with expectations for continued strong performance in New York [92]