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

Financial Data and Key Metrics Changes - In Q4 2025, RevPAR was approximately $182, reflecting a nearly 1% year-over-year increase, or nearly 3% when excluding the Royal Palm [20] - For the full year, RevPAR declined 2% versus 2024, while hotel adjusted EBITDA margin was 26.5%, a reduction of 130 basis points from the prior year [21] - Core hotel adjusted EBITDA margin improved by 230 basis points to 30%, contrasting with a 280 basis point contraction to 10% in the non-core portfolio [20][21] Business Line Data and Key Metrics Changes - The core portfolio delivered a RevPAR increase of 6% to nearly $216, significantly outperforming the non-core portfolio by nearly 1,500 basis points [20] - Q4 group revenue for the core portfolio increased 13% year-over-year, with double-digit growth in banquet and catering revenues across key markets [11] - The Royal Palm renovation is expected to generate a 15%-20% return on invested capital, with projected EBITDA doubling from $14 million to nearly $28 million once stabilized [16] Market Data and Key Metrics Changes - Hawaii's RevPAR growth is expected to be on the higher end of the 2% range, with mid-single-digit EBITDA growth anticipated for the Hawaiian properties [37] - Orlando's Bonnet Creek complex achieved record Q4 RevPAR, up nearly 9% year-over-year, driven by a 15% increase in group revenues [13] - New York delivered its highest Q4 group revenue in hotel history, up over 8% year-over-year [14] Company Strategy and Development Direction - The company is focused on reshaping its portfolio by concentrating ownership in 21 core hotels with superior growth prospects and aggressively exiting non-core assets [6][7] - In 2025, the company executed over $120 million in non-core sales at a blended multiple of 21x, with a goal to materially reduce exposure to non-core properties by year-end [9] - The company plans to complete a comprehensive redevelopment of the Royal Palm and launch a full-scale renovation of the Ali'i Tower at Hilton Hawaiian Village [24] Management's Comments on Operating Environment and Future Outlook - The management remains optimistic about the U.S. economy's firm footing, with expectations of modest growth and easing inflation supporting consumer demand [16] - The company anticipates a multi-year recovery in Hawaii, with demand trends forecasted to improve as renovations are completed [12] - Guidance for 2026 includes a RevPAR growth range of flat to +2%, with cautious expectations due to potential geopolitical or macroeconomic volatility [28] Other Important Information - The company returned a total of $245 million of capital in 2025, including $200 million in dividends and $45 million in share repurchases [32] - As of year-end 2025, the company's liquidity was approximately $2 billion, including $200 million in cash [25] Q&A Session Summary Question: Earnings trajectory for Hawaii properties - Management indicated that Hawaii properties should see mid-single-digit EBITDA growth, with RevPAR growth expected to be around 2% [37] Question: Sequential change in Hilton Hawaiian Village performance - Management noted a 37% decrease in group pace for Q1, impacting expected performance [45] Question: Timeline for Miami's Royal Palm reopening and World Cup demand - Management expressed confidence in meeting the June reopening target and capturing World Cup demand, although they remain conservative in their estimates [50] Question: Non-core asset sales and potential for core hotel sales - Management emphasized the focus on non-core asset sales, noting that core hotels account for 90% of EBITDA and value, making them less likely to be sold [70] Question: Impact of New York labor contract negotiations - Management is optimistic about reaching an agreement without disruptions, especially with the upcoming World Cup [92]