Park Hotels & Resorts Reinstates 2024 Earnings Guidance

Labour Agreements Reached in Hawaii, Seattle, and Boston

Park Hotels & Resorts Inc. has announced its reinstated and updated full-year 2024 earnings guidance following the recent ratification of labour agreements between operators and labour unions at four of its hotels: the 2,860-room Hilton Hawaiian Village Waikiki Beach Resort in Honolulu, the 604-room Hilton Boston Logan Airport in Boston, the 850-room DoubleTree Hotel Seattle Airport in Seattle, and the 396-room Hilton Seattle Airport & Conference Center, also in Seattle.

"I am excited to announce that our operators have successfully negotiated long-term labour agreements with the local unions representing the affected hotel employees. As a result, hotel operations have returned to normal. We anticipate that demand trends will continue to accelerate through the holiday travel season, with minimal impact on our performance in 2025," said Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer.

Operations Update

The company's preliminary Comparable RevPAR for October 2024 is expected to be 1.3% lower than in October 2023. However, if we exclude the four hotels affected by labour activity, the preliminary Comparable RevPAR for October 2024 would have shown an improvement of approximately 480 basis points, reflecting a 3.5% increase compared to October 2023. 

The performance in October 2024 was bolstered by double-digit RevPAR gains at hotels in New Orleans and Miami, thanks to strong convention calendars. Additionally, Park's capital investments continued to enhance results at its hotels in Key West and Orlando. Moreover, Park's hotels in New York, Boston, and Washington, D.C., experienced substantial demand from groups and business travellers, contributing 6% to the overall Comparable RevPAR growth for the month compared to October 2023.

For the fourth quarter of 2024, the Company expects these four hotels to negatively impact the portfolio's year-over-year Comparable RevPAR growth by 600 to 700 basis points as the properties recover from the lingering business disruption in November and December.

Outlook Reinstatement and Update

The Company previously announced that it was not in a position to update its full-year 2024 outlook in its earnings release dated October 29, 2024, given the uncertainties surrounding then-ongoing negotiations between operators and labour unions at Park Hotels and the related impacts on operating results. Due to the ratification of labour agreements covering union employees at the four Park hotels in Hawaii, Seattle and Boston, the Company is reinstating and updating its full-year 2024 financial outlook.

As previously reported, the Company's operations were impacted by labour activity at these four Park hotels beginning in late September 2024, which led to the cancellation of certain group events and overall lower transient volumes at these properties. Accordingly, the Company anticipates its full-year 2024 operating results to be as follows:

 

Park's outlook is based in part on the following assumptions:

• Includes approximately $30 million of Hotel Adjusted EBITDA disruption related to Hurricanes Helene and Milton and labor activity across all four of Park's impacted hotels in the fourth quarter of 2024. The Company expects a significant portion of the group events that were cancelled related to labor activity will be rebooked for a future period. Excluding the impact of hurricanes and labor activity, full-year 2024 Comparable RevPAR growth was expected to be approximately 200 bps higher, or within the range of 3.5% to 4.5%, compared to 2023;
• The removal of the Hilton Oakland Airport from Park's Comparable portfolio, which was closed in August 2024 and incurred an EBITDA loss of nearly $4 million for the trailing twelve months, results in increases to full-year 2024 Comparable RevPAR of nearly $2 and full-year 2024 Comparable Hotel Adjusted EBITDA margin of 30 bps;
• Includes 50 bps of RevPAR and $9 million of Hotel Adjusted EBITDA disruption from renovations at certain of Park's hotels, of which $8 million is associated with renovations at Park's Hawaii hotels;
• Adjusted FFO excludes $60 million of default interest and late payment administrative fees associated with default of the $725 million non-recourse CMBS Loan (“SF Mortgage Loan”) secured by the 1,921-room Hilton San Francisco Union Square and 1,024-room Parc 55 San Francisco – a Hilton Hotel (collectively, the “Hilton San Francisco Hotels”) for full-year 2024, which began in June 2023 and is required to be recognized in interest expense until legal title to the Hilton San Francisco Hotels are transferred;
• Fully diluted weighted average shares for the full-year 2024 of 209 million; and
• Park's Comparable portfolio as of November 11, 2024, which excludes the Hilton Oakland Airport as noted above, and does not consider potential future acquisitions, dispositions or any financing transactions that could result in a material change to Park’s outlook.

Park's full-year 2024 outlook is based on several factors, many of which are outside the Company's control. These include uncertainty surrounding macroeconomic factors such as inflation, changes in interest rates, and the possibility of an economic recession or slowdown, as well as the assumptions set forth above, all of which are subject to change.

Dividend Update

Park plans to declare its fourth quarter dividend before the end of 2024 and currently expects such dividend to be within a range of $0.60 to $0.66 per share, subject to approval by its Board of Directors, which is expected to be comprised of a quarterly cash dividend of $0.25 per share, coupled with an annual top-off dividend of between $0.35 to $0.41 per share. The range of the anticipated top-off component of the dividend is by Park's typical practice of targeting a 65% to 70% payout ratio of its full-year Adjusted FFO per share. At the midpoint of Park's anticipated fourth-quarter dividend, the 2024 declared dividends translate to an annualized dividend yield of 9.6% based on recent trading levels.

Non-GAAP Financial Measures

Park presents certain non-GAAP financial measures in this press release, including Nareit FFO attributable to stockholders, Adjusted FFO attributable to stockholders, FFO per share, Adjusted FFO per share, EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income as a measure of its operating performance. Please see the schedules in this press release, including the “Definitions” section, for additional information and reconciliations of such non-GAAP financial measures.

About Park

Park is one of the largest publicly traded lodging real estate investment trusts (“REIT”), with a diverse portfolio of iconic and market-leading hotels and resorts with significant underlying real estate value. Park's portfolio currently consists of 41 premium-branded hotels and resorts with over 25,000 rooms, primarily located in prime city center and resort locations.