Park Hotels & Resorts - Q4 2025

Transcript

Operator (participant)

Greetings, and welcome to the Park Hotels & Resorts Q4 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ian Weissman, Senior Vice President, Corporate Strategy. Please go ahead.

Ian Weissman (SVP, Corporate Strategy)

Thank you, operator, and welcome everyone to the Park Hotels & Resorts Q4 and full year 2025 Earnings Call. Before we begin, I would like to remind everyone that many of the comments made today are considered forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. Actual future performance, outcomes, and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Park with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in forward-looking statements.

In addition, on today's call, we will discuss certain non-GAAP financial information, such as adjusted FFO and adjusted EBITDA. You can find this information together with reconciliations to the most directly comparable GAAP financial measure in yesterday's earnings release, as well as in our 8-K file with the SEC and the supplemental financial information available on our website at pkhotelsandresorts.com. Additionally, unless otherwise stated, all operating results will be presented on a comparable hotel basis. This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will update on our strategic initiatives, review Park's Q4 and full-year performance, and provide an outlook for 2026. While Sean Dell'Orto, our Chief Operating Officer and Chief Financial Officer, will provide additional color on Q4 and full-year results, our plan to address our upcoming debt maturities later this year, and further details on guidance.

Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom.

Tom Baltimore (Chairman and CEO)

Thanks, Ian, and welcome everyone. 2025 was another very productive year for Park, one marked by meaningful progress against our strategic priorities and continued execution across the core portfolio. Throughout the year, we remained laser-focused on reshaping and upgrading the portfolio and reinvesting in our highest quality hotels, all with the goal of positioning the company for sustained long-term success. Our strategy has been both consistent and deliberate, concentrating our ownership in 21 core hotels with superior growth prospects, aggressively exiting non-core assets, and allocating capital toward high-impact redevelopment projects with the potential to unlock meaningful embedded value across the core portfolio, with ROI opportunities exceeding $1 billion. In 2025, we executed more than $120 million in non-core sales at a blended multiple of 21x.

These transactions included the sale of the Hyatt Centric Fisherman's Wharf and our 25% joint venture interest in the Capital Hilton, as well as exiting three hotels sitting on expiring ground leases that produced no earnings on a combined basis. As we enter 2026, we continue to make steady progress toward completing our remaining non-core asset dispositions. In January, we closed on the sale of the 193-room Hilton Checkers in downtown Los Angeles for approximately $13 million, representing over a 17x 2025 EBITDA. We have established a strong track record of successfully recycling capital, having sold or disposed of 51 hotels for over $3 billion over the past 9 years.

Despite a challenging transaction environment, we have sold or disposed of 13 hotels since 2023, increasing portfolio-wide nominal RevPAR by nearly 8% and hotel-adjusted EBITDA margins by over 275 basis points. While the timing of non-core dispositions may be uneven, we remain firmly committed to materially reducing our exposure to our non-core portfolio by year-end. Active work streams are currently underway across all remaining non-core properties as we continue to advance this objective. Additionally, building on the success of our development team, we launched our sixth major redevelopment in 7 years, the $108 million transformation of the Royal Palm South Beach, while making significant progress on enhancing the overall quality of our Hawaii and New Orleans properties through extensive guest room renovations.

Together, these projects reinforce our conviction that reinvesting in the core portfolio remains the highest use of capital, which will best position Park to deliver outsized earnings growth and enhanced shareholder value over time. Turning to operations. I remain encouraged by the relative outperformance of our core portfolio, which delivered a solid 3.2% increase in RevPAR during the Q4, or 5.7%, excluding the Royal Palm, representing nearly 1,500 basis points of outperformance versus our non-core portfolio. That trend was consistent throughout much of the year, with RevPAR growth from our core portfolio outperforming the non-core hotels by an average of 480 basis points in 2025, further reinforcing our stated strategy. During the Q4, group performance stood out, supported by convention demand in Hawaii and New York, and solid corporate group activity in Orlando.

Q4 group revenue for our core portfolio increased 13% year-over-year, complemented by double-digit growth in banquet and catering revenues across several key markets, including Hawaii, Chicago, Orlando, and Denver, reflecting broad-based strength across key markets. Among our core hotels, Hilton Hawaiian Village was one of our strongest performers during the Q4, generating 22% RevPAR growth, benefiting from easier year-over-year comparisons following last year's labor disruption. We are increasingly encouraged by the outlook for both properties following the completion of the Rainbow Tower renovation at Hilton Hawaiian Village and the Palace Tower at Waikoloa Village.

Following the renovation, both resorts will be operating with significantly upgraded product and should be well positioned for a step-up in performance as demand trends are forecasted to improve, and we lap an otherwise challenged 2025, which our resorts were meaningfully impacted by the disruption from Labor Day and the government shutdown, the continued softness in Canadian demand, and renovation displacement. As we look ahead, we expect a multiyear recovery towards prior peak levels in Hawaii. We are beginning to see that recovery take shape, with momentum building into the Q2. As Hawaii continues to normalize, we expect it to be one of the most meaningful contributors to earnings growth across the portfolio.

Additional standouts in the portfolio include Orlando, which delivered exceptional results, with our Bonnet Creek complex generating a record Q4 RevPAR, up nearly 9% year-over-year, driven by a 15% increase in group revenues as the complex continues to benefit from its expanded meeting platform and renovated room product. I'm also pleased to share that the Waldorf Astoria Bonnet Creek has been named the number one hotel in Orlando by U.S. News & World Report. The property was also ranked number eight in Florida and within the top 100 of all hotels nationally, reflecting meaningful improvements over last year's ranking. I want to acknowledge the entire Bonnet Creek team for this achievement, which further highlights the quality and benefits of unlocking embedded value within our core portfolio.

New York remained another top performer, delivering its highest Q4 group revenue in hotel history, up over 8% year-over-year, while the Hilton Chicago hotel posted a nearly 4% increase in group revenue, despite a challenging citywide calendar supported by improved short-term pickup strategies and in-house group. Turning to our Royal Palm renovation. We continue to make meaningful progress on this transformational project, with more than half of the guest rooms complete and key public areas such as the lobby lounge, event terrace, and pool deck taking shape. Our best-in-class design and construction team is working hard to deliver the hotel by June, and we are laser focused on achieving that goal. Overall, Miami remains one of the strongest hotel markets in the country, and I am incredibly excited about the long-term outlook for this asset.

We continue to expect to realize a 15%-20% return on our invested capital, with the hotel forecasted to more than double its EBITDA from $14 million to nearly $28 million once stabilized. We look forward to hosting many of you at the property during next month's Citi conference to showcase this world-class asset and the remarkable transformation underway. Looking ahead to 2026, we see several factors that could support an improving lodging environment. From a macro perspective, the U.S. economy remains on relatively firm footing, with modestly higher growth expectations, easing inflation, and ongoing fiscal stimulus, all of which should provide incremental support to the U.S. consumer.

In addition, easier year-over-year comparisons as we lap last year's government demand disruptions, together with the anticipated lift from major events such as the World Cup and the America250 celebrations in New York, Boston, and Washington, D.C., are expected to benefit demand across several of our core markets. Furthermore, new hotel construction remains muted, keeping supply growth at historical lows and supporting healthy operating fundamentals for the next several years. While we remain optimistic about the setup for the year, with easier year-over-year comparisons and major event-driven demand. Our guidance remains cautious, with the potential for geopolitical or macroeconomic volatility continuing to drive uncertainty around booking decisions and impacting short-term group pickup trends and international inbound demand, particularly from Canada. Sean will provide additional detail on earnings guidance later in the call.

In summary, 2025 was another year of meaningful progress for Park, one in which we advanced our strategic priorities, continued to reshape the portfolio, and strengthen the foundation for long-term growth. Our disciplined approach to capital allocation by accelerating non-core dispositions while reinvesting in our highest quality assets, continues to unlock embedded value across the core portfolio. The transformation underway at Royal Palm, the substantial renovation work at our two iconic Hawaiian resorts in New Orleans, and a broader base momentum across several of our core markets, further reinforce our conviction in the earnings power of our core portfolio. As we move into 2026, we remain laser focused on completing our transition to a streamlined portfolio of 21 high quality hotels located in premium gateway cities and resort markets, and we are confident in the long-term growth opportunities for Park.

With that, I'll turn the call over to Sean.

Sean Dell'Orto (COO and CFO)

Thanks, Tom. For the Q4, RevPAR was approximately $182, representing a nearly 1% year-over-year increase, or nearly 3% when excluding Royal Palm. The core portfolio, excluding Royal Palm, continued to demonstrate meaningful operational strength, delivering a RevPAR increase of 6% to nearly $216, or nearly 1,500 basis points higher than our non-core portfolio, underscoring the resilience of our highest quality assets. Core hotel Adjusted EBITDA margin also improved materially, expanding 230 basis points to 30%, in sharp contrast to the non-core portfolio, which recorded a 280 basis point contraction to 10%.

Overall, 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, while the non-core portfolio declined 28%, creating an approximately $4 million drag on quarterly earnings. These results underscore the strength and durability of our core portfolio and highlight the value-accretive nature of our portfolio reshaping initiative. For the full year, RevPAR came in slightly ahead of expectations, declining 2% versus 2024, while hotel adjusted EBITDA margin was 26.5%, reflecting a 130 basis points reduction from the prior year. As expected, the Royal Palm renovation remained the primary headwind, contributing a 110 basis points drag to full-year RevPAR growth and approximately 15 basis points of margin pressure.

From a CapEx standpoint, in 2025, we invested nearly $300 million across the portfolio, including roughly $110 million during the Q4. Earlier in the year, we completed nearly $75 million of guest room renovations that began in 2024 at our two Hawaiian properties, the Rainbow Tower at Hilton Hawaiian Village and the Palace Tower at Hilton Waikoloa Village. The second and final phase of guest room renovations for the Rainbow Tower, which commenced in Q3 of last year, is expected to be completed in a few weeks, while the final phase for the Palace Tower, which also commenced in Q3 of last year, was delivered last month, bringing the total investment for the second phase across both Hawaii properties to approximately $85 million.

In addition, we completed the second of three renovation phases, totaling more than $30 million at the Hilton New Orleans Riverside last month, with the third and final phase scheduled for completion in December of this year. Looking ahead, we expect a lower level of capital investment for 2026, with $230 million-$260 million of spend planned, which includes completing the $108 million comprehensive redevelopment of the Royal Palm. In addition, we are excited to launch a full-scale renovation of the Ali'i Tower at Hilton Hawaiian Village, expected to encompass all 348 guest rooms, the tower lobby, its private pool, and the addition of three new keys. Total investment for the project is expected to be approximately $96 million.

To expedite the construction schedule, we plan to suspend operations in the self-contained tower beginning in the Q3 of this year, with a reopening plan for the middle of next year. Overall, we expect renovation-related disruption at Hilton Hawaiian Village to be $1 million-$2 million in 2026, representing a 10 basis points impact to portfolio RevPAR. Once completed, nearly 80% of the resort's nearly 2,900 rooms will have been newly renovated, materially enhancing the long-term competitiveness of our iconic resort. Turning to the balance sheet, as of year-end 2025, our liquidity was approximately $2 billion, including $200 million of cash, $1 billion of available capacity under our revolver, and $800 million of an undrawn delayed draw term loan.

As we noted last quarter, we continue to make meaningful progress towards strengthening our balance sheet, while our long-term focus remains on further reducing leverage. As we execute non-core asset...... proceeds are expected to be used to pay down debt, while organic growth from our core portfolio is expected to further reduce leverage toward our targeted goal of below 5x over the next couple of years.

With respect to our 2026 maturities, we intend to draw on the delayed draw term loan to fully repay the $121 million mortgage loan secured by the Hyatt Regency Boston in June, and then draw the remaining capacity in September, in combination with proceeds from a planned mortgage financing for our Bonnet Creek complex, in order to fully repay the $1.275 billion CMBS financing on Hilton Hawaiian Village, which matures in early November. We are currently in active discussions to originate a $650 million floating rate delayed draw mortgage for our Bonnet Creek complex, including both the Signia and Waldorf Astoria properties, and expect closing to occur later this quarter.

We expect a blended spread over SOFR between the Bonnet Creek mortgage loan and the term loan to be approximately 220-225 basis points. Turning to guidance, as Tom noted, we are establishing a full year 2026 RevPAR growth range of flat to +2%, with expense growth expected to be low single digits for the full year. With respect to earnings, adjusted EBITDA is forecast to be $580 million-$610 million, and adjusted FFO per share is expected to be in the range of $1.73-$1.89. We expect Q1 to be the most challenging quarter of the year due to difficult year-over-year comparisons.

New Orleans, due to lapping the Super Bowl last year, and Miami, together, represent an expected 450 basis points drag on RevPAR during the quarter, translating to an approximate $12 million headwind to earnings relative to last year. Partially offsetting this pressure, we expect double-digit RevPAR growth at Bonnet Creek, Puerto Rico, and San Francisco, supported by strong group pace for each, along with the Super Bowl in the Bay Area, as well as low single-digit growth at both of our Hawaii hotels, driven by improving leisure transient demand following their extensive room renovations. There are also a few key assumptions embedded in our guidance that are worth highlighting. First, with respect to the Royal Palm reopening and its impact on 2026 results. As Tom mentioned earlier, we are working diligently toward a targeted grand opening in early June.

However, given the challenges associated with securing advanced bookings without absolute certainty to opening ahead of the World Cup matches beginning in mid-June, our guidance does not assume any material benefit from World Cup-related demand at the hotel. Overall, we expect Royal Palm to generate approximately $3-$4 million of hotel Adjusted EBITDA this year, compared to the nearly $28 million expected at stabilization and approximately $5 million reported in 2025 when the hotel was opened during high season prior to its closure in May. Second, with respect to asset sales, our guidance excludes any impact from potential non-core dispositions in 2026 outside of what we have already closed. While we remain fully committed to selling the majority of our non-core hotels during the year, the timing of the transactions remains uncertain, making the earnings impact difficult to estimate.

For context, the remaining 13 non-core hotels generated approximately $60 million of hotel Adjusted EBITDA in 2025, or just 9% of total hotel Adjusted EBITDA. Finally, our Adjusted FFO guidance reflects the successful refinancing of approximately $1.4 billion of debt during the back half of the year at a blended interest rate of approximately 5.5%. On an annualized basis, this refinancing is expected to increase interest expense by roughly $20 million, of which $9 million is included in our guidance, given the anticipated timing of the refinancing. Finally, in 2025, we returned a total of $245 million of capital between $200 million of dividends and $45 million of share repurchases.

Over the past three years, we have returned $1.3 billion of capital, including stock repurchases of over 12% of total outstanding shares. With respect to this year's Q1 dividend, on February thirteenth, we declared a cash dividend of $0.25 per share, to be paid on April fifteenth to stockholders of record as of March thirty-first. At current trading levels, this quarterly fixed dividend translates to an annual yield of over 8.5%. This concludes our prepared remarks. We will now open the line for Q&A. To address each of your questions, we will ask that you limit yourself to one question and one follow-up. Operator, may we have the first question, please?

Operator (participant)

Ladies and gentlemen, if you would like to ask a question, please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from the line, from the line of Smedes Rose with Citi. Please proceed.

Smedes Rose (Managing Director)

Hi, good morning, or good afternoon, rather. I wanted to ask you just a little bit more about how you think earnings could roll out over the course of the year at your Hawaii properties. You know, I know you obviously the Q4 was pretty easy comp, but just in terms of are you looking at group pace, given I think the convention center is closed in Honolulu, it's just kind of, you know, what are you seeing kind of on the trajectory? I guess, and I mean, I guess the real question is: What do you think those properties can contribute this year in terms of EBITDA?

Sean Dell'Orto (COO and CFO)

Yes, Smedes, so this is Sean. You know, yeah, certainly had a good comp in Q4 for Hawaii. You know, we—with the convention center closed, that's about 50,000 room nights typically, that the property gets from citywide convention-related business. It's probably done a good job, though, of replacing that as best possible, with about 60% of that lost, or at least ultimately converted into in-house group, as well as about 20,000 room nights booked through a crew business, contract business. So they've done a good job to kind of replace that, for this year.

You know, in the end, I think Hawaii, both Hawaiian Village and Waikoloa combined, they should be kind of on the higher end of our guide of RevPAR growth in the 2% range. You know, again, with the convention center being out and kind of some early disruption from the ending of phase two at Hawaiian Village, I think you'll see, you know, some rate growth, but not tremendous. Again, just given the mix change there. I think you'll see certainly some decent growth overall on the EBITDA level kind of in the mid-single digits or so growth combined for the properties.

Waikoloa certainly has an easier comp, certainly, had challenges last year, and we certainly expect to see that materialize into a better, you know, probably low double-digit growth on the EBITDA level for Waikoloa overall. So blended together, again, kind of a top line, top of the end of the range, 2% growth ± on the RevPAR, translating into kind of mid-single-digit growth for the combined for the properties.

Tom Baltimore (Chairman and CEO)

It's me, Tom Baltimore. I agree with everything that Sean just outlined. If I could just add a comment about Japanese visitation. Obviously, relatively flat last year, but we are seeing some green shoots and certainly believe that we'll be in kind of mid-single-digit growth in terms of visitation, you know, perhaps somewhere in the 750,000 visitors to Hawaii, which is certainly a continued progress. Obviously, we'd like for that to accelerate as much as possible, but we are seeing green shoots there. And as we sort of look out and get the data on various forecasts, it looks like that continues at 5%-6% into 2027 as well. So we see both of those as certainly encouraging tailwinds as well.

Smedes Rose (Managing Director)

Great. And then, Tom, could you maybe just comment, portfolio-wide, just kind of like the, what you're seeing on the, pace of group revenues for this year?

Tom Baltimore (Chairman and CEO)

for Hawaii and?

Smedes Rose (Managing Director)

No, just for your portfolio-wide,

Tom Baltimore (Chairman and CEO)

Portfolio-wide, if you exclude, obviously, Miami and Hilton Hawaiian Village, and obviously tough comp in New Orleans, up about 3% for the year in 2026. And then if you look out to 2027, just our core portfolio alone, we're about 4-4.5%. So very encouraging from that standpoint.

Smedes Rose (Managing Director)

Okay, thank you. Appreciate it.

Operator (participant)

The next question comes from the line of Duane Pfennigwerth with Evercore ISI. Please proceed.

Duane Pfennigwerth (Managing Director)

Hey, thanks,

Operator (participant)

Good morning.

Duane Pfennigwerth (Managing Director)

Good morning. And sorry for if I'm making you repeat anything. But just on the sequential for Hilton Hawaiian Village, I think we're going from, like, a +20 to a low single. So can you just speak to what would be driving that, specifically for the March quarter?

Sean Dell'Orto (COO and CFO)

I'm sorry, for the Q1, Duane?

Duane Pfennigwerth (Managing Director)

Yeah. Aren't we pacing at a, you know, very high rate in 4Q to a low single-digit rate? So just why the change sequentially?

Sean Dell'Orto (COO and CFO)

You have a group pace down in Hawaiian Village. Again, speaking to, while they have replaced business here and there from the convention center, but pace down 37% in Hawaiian Village for Q1. Certainly, a big driver there for kind of how... Even though it's, it certainly is lapping Q1's performance, it's roughly kind of in that flattish range for the quarter.

Duane Pfennigwerth (Managing Director)

Okay, that's helpful. And then just on, on Miami, can you talk about any refinement to your estimate on, on when that will be up and running? And how do you think about, capturing some of the World Cup demand, just given you may, you may reopen, you know, kind of close to that timeframe? In other words, it's probably hard to commit to that now, but maybe, you know, as you gain confidence in, in the, in the reopening, just, just how you think about that from a positioning and, and revenue management perspective.

Tom Baltimore (Chairman and CEO)

Yeah. A couple things, Duane. I've been down to Miami quite a bit and toured the property, and I, obviously, I say this with, uh, humility, but also with great confidence. I think we've demonstrated a track record really second to none in our sector in terms of being able to handle these types of very complex projects. If you think about Bonnet Creek and the success and the complexity of that, this really mirrors that. Carl Mayfield, who heads our design and construction team, is personally on site at least two or three days a week. We've got somewhere between 275 and 325 construction workers working six days a week, one to two shifts, and they're very confident. We're doing everything humanly possible to get done in that June timeframe.

I will be down there this weekend and touring again Monday morning. As Sean said in his prepared remarks, as you think about us opening in early June, plus or minus, and then obviously the World Cup, you know, the ability to be able to sell and commit, that makes it a little more challenging. Just given the amount of demand expected and how well I think we all believe Miami will do with the World Cup, we think obviously getting open, we'll be able to capture and certainly be able to capture at very attractive rates. So very, very bullish, very excited about the project. And as Sean also noted, I mean, we're not being overly ambitious in terms of the impact that this hotel will have on the overall performance for the year.

So if anything, we, we've been conservative, that's intentional, and we're certainly hoping that we can exceed that. But again, remain enthusiastically excited about this transformation. We can't wait to host many of you next weekend, as you can see for yourself, the progress and the real-time work that's underway there. And we're, you know, 100 days, plus or minus, from completion and doing everything we can to make that happen.

Duane Pfennigwerth (Managing Director)

Okay, thank you.

Operator (participant)

The next question comes from the line of Rich Hightower with Barclays. Please proceed.

Rich Hightower (Managing Director)

Hey, good afternoon, guys.

Tom Baltimore (Chairman and CEO)

Afternoon, Rich.

Rich Hightower (Managing Director)

Good to be on the Park call again. So Sean, I know that you kind of laid out a little bit of the color on the Q1, specifically with respect to the cadence of growth in 2026, and then obviously, there was some color on Hawaii specifically. But if you guys wouldn't mind, maybe just help us understand how that works kind of, you know, broadly for the portfolio, over the course of all the different quarters of the year within the context of that flat to 2 RevPAR guide.

Sean Dell'Orto (COO and CFO)

Sure, Rich, and welcome back. Great to hear your voice on the call here. The, yeah, just with respect to the kind of the quarterly cadence as you think about, you know, Q1 is certainly one where we think it's the weaker quarter of the year, where it's probably performing a little bit better than expected, but certainly came into the year with a, kind of a belief that it'd be down slightly. Maybe ultimately gets to flat, we'll see, but it's certainly in the bottom end of the range as we think about, Q1. Q2 and Q3 certainly should pick up. You're lapping some of this disruption from last year's, you know, policy initiatives, whether it's tariff related, DOGE, obviously, the Canadians, and their kind of decline in travel into the States.

You know, you start to see those impacts of that in Q2 and Q3. And so while lapping that on top of a World Cup that we believe, you know, our exposure with in New York and Boston, particularly, it could probably drive about 30-35 basis points for the year. So certainly some positive impact we're thinking of in kind of Q2 into Q3 as well. So those should ultimately drive towards, you know, the higher end of the range, I should say, for the year. And then Q4 is one where we got pace, group pace down 8%. So as Tom mentioned, you know, if you exclude a couple of properties, you know, we're certainly up, but I'd say overall portfolio is down slightly. The big driver for that is Q4.

While there's work to be done, and there's certainly some potential upside, in terms of pickup, in the year, for the year pickup, I think that's kind of where our conservative comes in as well. We certainly think we've got about $20 million or so, million dollars of revenue, more to pick up than last year. And so when we've seen kind of the last couple of years how things have gone, so we certainly want to take a little bit of a more cautious tone to that, looking at the pace being down about 8% for group in Q4. So that ends up, you know, making Q4 a little bit more closer, we think, to the bottom of the range for sure.

Rich Hightower (Managing Director)

All right. That's great color. Thank you. And I guess my, my follow-up is, on the expense side of it. So you've got, you've got a 2%-3% kind of total OpEx guidance for the year. You know, I think we heard earlier in the week that, you know, labor, you know, could, could run around 4%-5%. And so just how, how do you feel about, you know, the, the potential flex on, on that guidance range? And also, I, I think within the context of the union, renegotiation in New York later this year. Thanks.

Sean Dell'Orto (COO and CFO)

Yeah, you're right. You're, we're expecting about low single digit kind of growth, and certainly, with the CBAs, both that have been renewed or ultimately upcoming, we certainly see something in the mid-single digits type growth as you talked about, with labor. But all setting that, you've got, again, if you're kind of looking at top line and revenue-based type of fees and everything else, you're gonna see lower end of the range there. We talked about doing deep dives at our properties last year. A lot of that came through multiple, you know, kind of the back half of the year, and so we certainly get the benefit of the full year impact of that this year.

So that's a nice little offset, we think, as well, to the labor growth, as well as, I think fixed costs will continue to be one where we see certainly below inflationary type growth. Insurance, you know, another good year, and, you know, no big claims, certainly from us, but, you know, I think across the board there with events from hurricanes and the like, absent the fires in LA in the beginning of the year, but ultimately not to a point where I think the underwriters will need to kind of look to grow their premiums.

I think we'll certainly be a favorable market, so we certainly expect to see continued improvement there as well, along with, with, you know, with taxes, we think would ultimately, while it can be choppy at times, you know, ultimately being checked for the year. So those, I think, are some of the offsets to the labor that gets us down to what we're talking about.

Rich Hightower (Managing Director)

That's great. And congrats on the big promotion, by the way.

Sean Dell'Orto (COO and CFO)

Thank you. Appreciate that.

Rich Hightower (Managing Director)

You got it.

Operator (participant)

The next question comes from the line of Ari Klein with BMO Capital Markets. Please proceed.

Ari Klein (Managing Director)

Thanks, and good afternoon. Yeah, just on-

Tom Baltimore (Chairman and CEO)

Hello.

Ari Klein (Managing Director)

On the non-core asset... Hey. Just on the non-core asset sales, how, what's the level of interest, I guess, you're seeing in those assets, and how quickly do you think you can move there? And then, obviously, the focus is on selling those non-core hotels, but is there or could there be some consideration to selling any of the core hotels if an opportunity arose? Thanks.

Tom Baltimore (Chairman and CEO)

Hi, Ari. A lot, a lot to unpack there. Let me try to frame it a little bit for you. We have been laser-focused, as we said, I think a couple of times in the prepared remarks, and, you know, continuing to really reshape the portfolio. I think it's important to remind listeners, you know, the core hotels account for 90% of the EBITDA in the company and 90% of the value. If you take sort of RevPAR, the core RevPAR is around $215-$218. That's about 69%, plus or minus, higher than the non-core.

The core hotels generate about 40,000 in EBITDA per key, and 30% EBITDA margins, whereas non-core, a RevPAR of approximately $129, ±, and about 14% margins and about $10,000 in EBITDA per key. So, I mean, a really stark contrast, hence the reason that we're so aggressively working, and we have been working. I think it's also important to note, you know, we've sold or disposed of 51 assets, and I think people sometimes forget that includes 14 international joint ventures in Dublin, in Brazil, two in Germany, the Netherlands, South Africa, many complex assets here in the US. So the team is skilled, the team is experienced, we've done it in the worst of times. We were selling during the pandemic. We've been selling post-pandemic.

There are buyers. I think everybody knows that we're a net seller, and so in some situations, some of the assets have short-term ground leases or joint ventures or low tax bases. So, you know, every single one has a story, but we've got aggressive work streams underway. Our investments team and our legal team are working incredibly hard, and we're confident that we're gonna, we're gonna get it solved. We've made significant progress before. We can handle this, and the goal is to get as many of them, if not all of them, done this year. We do have a few that are involved in a dispute, obviously, so those will probably lag.

But the other 10 hotels, we are aggressively working every day late into the evenings, and multiple discussions are underway, and we look forward to keeping investors informed, and we look forward, most importantly, to closing them, using those proceeds to pay down debt and really reinvest back into the core portfolio, where we're confident we can generate outsized returns. We believe, obviously, that we can generate higher yields from development projects than we can from acquisition projects at this time.

Ari Klein (Managing Director)

Thanks for that color. And then maybe just a follow-up on Miami and the Royal Palm. How quickly or how much in front of the actual opening can you actually start to take bookings, especially in front of a massive event like the World Cup? And then just the pathway towards getting to those stabilized EBITDA levels. How long do you think it takes to get there? Is it 27, 28, or beyond, I suppose?

Tom Baltimore (Chairman and CEO)

Yeah, well, we're, I guess, first, we're confident, obviously, in being able to take what was $14 million in EBITDA from a tired and certainly an asset that needed really a transformational renovation to $28 million on a stabilized basis. We certainly would think a couple of years is not unreasonable, just given the extraordinary amount of development and activity occurring, and I don't need to tell anyone on this phone, not only from a business standpoint, but the number of people relocating to the region as well. And proximate to us is probably $4 billion of development activity, not all of that hotels, but other asset classes as well. So we remain very, very bullish on Miami as we look out.

Regarding your question, obviously, as to how quickly we can get open, you know, we're in frequent contact, obviously, with both planning both the approval process from the regulators, and as soon as we're ready, and as soon as we get the signal, we will be up and, up and, up and running. We've kept, obviously, our general manager, who's on site every day. We've kept, obviously, the key leadership team of the operating group, so we'll be able to pivot and move very quickly. And again, as Sean noted in his prepared remarks, you know, north of 50% of the guest rooms are already complete. So we are making great progress and are working around the clock, and gonna do everything we can to make that date.

Ari Klein (Managing Director)

Thank you.

Operator (participant)

The next question comes from the line of David Katz with Jefferies. Please proceed.

David Katz (Managing Director)

Morning, or afternoon.

Tom Baltimore (Chairman and CEO)

Morning.

David Katz (Managing Director)

Thanks for taking my question. Look, if we're, you know, laying out a 2026 where, you know, I, I'll make the leap that you're likely to be successful getting divested of your non-core hotels, you know, my expectation of those is that, you know, their earnings level are such where they would be meaningfully de-levering, events for Park. You know, do you think, and we don't wanna get ahead of ourselves, but do you think, you know, 2027 could be a year of potentially playing offense and maybe getting ready to buy something?

Tom Baltimore (Chairman and CEO)

Nothing, David, would make me and this team more excited than to be able to make that pivot from playing defense to offense, and I think you really hit the nail on the head. We've been working our tails off and as you know, you've been along the journey with us, and you've watched the effort, and I think there are a few doubters out there. But I think you can remind people through the pen of just the hard work and the heavy lifting and the complexity of work that we've done in reshaping, not only the 51 hotels that we've sold, but also keep in mind, we were self-operating five hotels, and we also had three laundry facilities that have subsequently been closed. So the team is tested. It is experienced.

We share that belief, and that the sooner we can substantially reduce the non-core so that it's no longer a, not only an overhang, but even a discussion point, gives us the opportunity, I think, for consideration for a re-rating of the company, hopefully, our multiple, and allows us to go on offense. There are a lot of interesting opportunities that I think are out there today, and I think there'll be more in the future. And I think getting down to low twenties in terms of our core portfolio gives us a lot of optionality. The other thing to keep in mind, as you think about some of our core assets in Bonnet Creek and the, and the two iconic resorts in Hawaii and all the capital that we're putting, and you think about also what we're doing in Miami. We own all of that fee simple.

Very rare, and all of that we think is also gonna be advantageous for Park and gives us a lot of optionality as we can think about where it makes sense to continue to grow, and in some cases, to monetize, if that makes sense.

David Katz (Managing Director)

It does. And look, I know it's hard. It sounds like a couple of the assets are in some form of dispute. It's tough to tell. But, you know, is it reasonable to expect that, you know, most of the assets that are non-core are gonna get done, you know, within 2026?

Tom Baltimore (Chairman and CEO)

Yes. Yes, that is the goal, that is the mission. We know what's at stake, and we're working on as hard as we can. Obviously, there are things that happen beyond our control, David, but I think you've seen the effort. You and others have witnessed the amount of work that we've done in this, in this respect, and it has not been easy, but we're up to the task.

David Katz (Managing Director)

Got it. Thank you.

Operator (participant)

The next question comes from the line of Chris Woronka with Deutsche Bank. Please proceed.

Chris Woronka (Managing Director)

Hey, good afternoon, guys. Thanks for taking the question. So maybe just to kind of double-click back to the asset sales. I guess, Tom, is there a way? I think we're really talking about 10, 10 hotels if we exclude the three leases. Is there a way you could maybe bucket the type of buyer, buyers that you're maybe working with, or characterize them in any way? Because I think, you know, we see headlines in the market every day about, you know, isolated struggles on the private side, and I think investors are kind of wondering whether any of that potentially, you know, is a roadblock to moving any of those assets.

Tom Baltimore (Chairman and CEO)

Yeah, Chris, it's a great, it's a great question. I would say one thing globally, there's plenty of equity capital. That's the first comment. The second, there's plenty of debt capital and private credit. So there's no issue there. There are also interested buyers, whether they be small family offices, whether they be owner-operators, whether they're deep value entrepreneurs. And look, some of the buyers tend to have a little sharper elbows in this kind of situation because they realize in some cases, these are deeper turns and some reposition opportunities, but there's more than an adequate buyer pool out there. Some markets are a little tougher. I'd say obviously, Chicago and LA are a little tougher than a San Francisco right now for all the obvious reasons.

But there are buyers, not our first rodeo. It's up to us to figure it out and solve it. You don't wanna hear excuses, our investors don't wanna hear excuses, and we know what's required to do. At the same time, we've got to make sure that we're getting fair value and that we're executing as quickly and as efficiently as we can. But there are work streams underway on all of them. There are some that have whether they be short-term ground leases or so low tax bases. I mean, it's a little bit of all of that. But that's no different than what we experienced, candidly, within the 51 assets that we've sold, particularly some of those more complicated international assets that we sold a few years ago.

Chris Woronka (Managing Director)

Oh, okay. Fair, fair enough. Thanks, Tom. Then as a follow-up, obviously, you have the New York labor contract coming up. I think, Tom, you might have mentioned in the past that once you get through that and you kind of understand what the new math looks like, you might, you know, consider a longer-term plan there, that could include a lot of different things, maybe conversation with Hilton. So is there anything you could add to that at this point, as we move closer to the union reset?

Tom Baltimore (Chairman and CEO)

Yeah, it obviously, I'm going to be careful here, Chris, as you can imagine. I'd make a couple observations. We've got an excellent operating team on site. You saw the results that we delivered last year. New York was incredibly strong. Record Q4, up, you know, 5%-7% for the year. We're encouraged as we sort of look out here in 2026. I don't think it's in anybody's best interests across the city for, you know, protracted negotiations or any kind of strike or that type of activity. We're one seat at the table. There are a lot of other owners also involved in this.

You've also got, obviously, the World Cup, and we're going to be on the world stage, and I think—you know, I think as we think about tailwinds for us being the largest hotel in the city, and there's probably a little bit of upside opportunity there from a demand standpoint. So we're encouraged. We think it will get done. We have assumptions in our guidance as to what we think that impact will be, and obviously, we're not going to negotiate publicly, but we think we've got it covered from that standpoint. And as we think about the hotel, there's, we're doing some modernization work on the infrastructure. We'll then huddle with Hilton. We'll look internally as to what we think makes the most sense.

But no doubt, when you think about, you've only got really two big boxes in New York that can handle large groups. We think that gives us a unique positioning and a unique opportunity for us over the intermediate and long term. And again, we had an outstanding year in 2025, and we're very, very encouraged as we look out in 2026 at for the New York Midtown.

Chris Woronka (Managing Director)

Okay. Very good. Appreciate all that color. Thanks. Thanks, Tom.

Operator (participant)

The next question comes from the line of Dan Politzer with J.P. Morgan. Please proceed.

Dan Politzer (Managing Director)

Hey, good afternoon, everyone, and thanks for taking my questions.

Tom Baltimore (Chairman and CEO)

Hey.

Dan Politzer (Managing Director)

First, I just wanted to touch on the RevPAR range. It came in a little bit lower than we were expecting. It sounds like there's a fair degree of, you know, conservatism in there. You're baking in the possibility of macro and political uncertainty. But perhaps you could, you know, maybe bookend or paint a picture where, you know, where are the areas of conservatism in the guide, specifically as it relates to some of the properties or markets where you're most excited about?

Tom Baltimore (Chairman and CEO)

Certainly. Look, I think, again, I'll start with just from a macro standpoint in terms of, I talked about the quarterly cadence with Rich earlier and just kind of what that means. You know, when you think about Q4, and it being down 8%, you know, that's, you know, that's kind of where, you know, a good point of conservative would be. You think about where we see some of that, you know, some of that, softness, whatever you want to call it, in Q4. It is, you know, back to Hawaiian Village. It's, it's down about 50% on pace in Q4. Midtown, while it's got a good setup for, for the year overall, you know, down 6% for the year in pace, its weakest quarter is Q4.

So I think, again, going into that, I think that's where we kind of feel, they're obviously bigger impact hotels. We continue to find a way to just make sure that we, you know, use caution against some of the, you know, the near term in the year for the year pickup trends, as we get through the rest of the year. But, yeah, there's certainly a case to be made that things could be, you know, better. But ultimately, I think as we think through what we've seen in the past, I think, you know, so those are some of the... You know, that's the time period, and those are some of the markets we're a little bit more hesitant on right now.

I would also add just so to step back, you can paint a, I think, a rosier picture. You know, the tailwinds for 2026 are encouraging. Obviously, we all expect a more accommodative Fed and perhaps lower interest rates. I mean, we're lapping DOGE, Liberation Day, government shutdown. You've got the major events, obviously, World Cup, you've got America250 celebrations, deregulation, fiscal stimulus, that's all encouraging. We've got the massive AI investment cycle and what we all hope and expect will be, you know, productivity gains at some point. You know, easing inflation didn't show quite that way today in the PCE report, but, you know, the other side of that, you've also got some risk out there.

You've got geopolitical, and obviously, we look at what's happening in the Middle East and in Iran, in the U.S. right now, and inflationary pressures are still there. International travel really hasn't rebounded yet. We're seeing some green shoots, but we're certainly still down pre-pandemic. And... You know, the consumer is cautious, and we've got a K-shaped economy right now. So look, we are—we think it was prudent to be conservative and cautious for, you know, all the reasons that Sean outlined, particularly as he went quarter by quarter. And obviously, as I give you sort of macro, we should think about the tailwinds, but there are some headwinds out there. And if you think about what's happened in the last few years in the sector, the Q1 came out to be pretty good.

And then, you know, for many of us, if not all of us, we saw somewhat of a downward trend. We think right now it makes sense to just be a little more measured, a little more cautious coming out of the box. But we are crystal clear as to the business priorities for Park. What we're focused on, selling non-core, investing in our core portfolio, paying down debt, looking for all of the operational efficiencies we can, and really outperforming. We'd rather have a lower bar and outperform, and we're aligned as a management team there, and we're really focused on continuing to deliver for shareholders.

Dan Politzer (Managing Director)

Got it. Thank you. That's helpful. And then, just for my follow-up, Tom, Sean, whoever wants to take it, it's more on capital allocation and leverage. Sean, you mentioned the target of 5 turns in the next couple of years. How do you think about that? You know, given that's kind of where you're setting this expectation, like, how do you think about near term, the allocation of capital between, you know, some of the project and investment opportunities, share repurchases, given the price and valuation of stock, or even the dividend, which obviously, you know, I don't know how secure you view that or how kind of tied you are to that level, but just kind of broad strokes, how you think about those buckets?

Sean Dell'Orto (COO and CFO)

Well, I think as we sell—certainly as we sell the non-core, we've been focused on redeploying that capital towards deleveraging. So I think that's probably the main focus and certainly helps bring us to that target. You know, with that, but, you know, obviously, the investments we made already and then we continue to make with things like Royal Palm, some other projects we have lined up, we think, you know, again, those drive nice returns for us. And over the next couple of years, as those ramp up, along with, you know, longer, you know, kind of a recovery here in Hawaii, back to kind of where we were achieving EBITDA levels in 2023.

You know, those are the things that we think organically get the growth, to help kind of bring us towards that, 5x target.

Dan Politzer (Managing Director)

Got it. Thanks so much.

Operator (participant)

The next question comes from the line of Cooper Clark with Wells Fargo. Please proceed.

Cooper Clark (Managing Director)

Great. Thanks for taking the question.

Operator (participant)

Hey, Cooper.

Cooper Clark (Managing Director)

Hello, thank you very much. Curious if you could speak to the RevPAR uplift from the World Cup and America250 celebration that's currently embedded in guide, and if on the World Cup, that uplift is mainly just coming from the Hilton Midtown asset?

Sean Dell'Orto (COO and CFO)

Yeah, I think for the full year, for the portfolio, the impact, we estimate somewhere in that 30-35 basis points. Probably about 20 of that or so would come from New York, another kind of call it 10 from Boston and 5 from kind of other markets that, you know, aren't as big for us, but ultimately obviously have games going on or matches going on there.

Cooper Clark (Managing Director)

Great, thanks. And then appreciate some of the earlier color on individual projects and puts and takes. But curious if you could talk about the total RevPAR disruption and EBITDA disruption from renovations this year, how that compares to 2025, and then maybe how we should be thinking about potential tailwinds from renovation in 2027 as you look out.

Sean Dell'Orto (COO and CFO)

Yes, certainly. I mean, obviously, Royal Palm's the big one. It's certainly a big benefit, you know, certainly helps the portfolio in the back half of the year after it opens up. But in the first part of the year, you're talking about 300 basis points of RevPAR impact within the quarters. Altogether, though, if you kind of remove Miami just has about a 30 basis point impact to the full year, full year guide. So it's a little bit of first half, second half there. Other projects aren't really net disruptive to the portfolio, maybe to the tune of 20-30 basis points of impact. Certainly going forward, clearly, Miami will continue to have an outsized impact to the portfolio.

We certainly expect it to see that in kind of a 100+% , you know, basis point positive impact to the portfolio going forward as it ramps back up. And I think certainly we expect to see some, you know, certainly expect to see some nice, nice recovery in the Hawaiian assets from the investments we made in New Orleans, which already is getting good, you know, good reception from meeting planners, winning business based on the product we have there. We certainly expect that to kind of be a nice tailwind for us over the next year or two.

Cooper Clark (Managing Director)

Great. Thank you.

Operator (participant)

The next question comes from the line of Robin Farley with UBS. Please proceed.

Robin Farley (Managing Director)

Great, thanks. I just wanted to get a little more color around the new project in Hawaii, the renovation. You mentioned $1 million-$2 million of disruption in 2026. I think that starts mid-year. So is it, I guess, if we think about what that tower specifically generates in EBITDA, would that mean sort of $3 million-$4 million? And where do you think that goes after the renovation? And then just to tack on to that, if I remember, at Hilton Hawaiian Village, there's an underdeveloped parcel there, right? I don't know if there were stores or something on it that I think you talked about as being like a site for potential future development.

I know you're really focused on delivering right now, but does the, does the additional renovation here in Hawaii, is that a sign that you're thinking about, you know, kind of more, investment going forward in Hawaii? Thanks.

Tom Baltimore (Chairman and CEO)

Yeah, Robin, lots to unpack there. Listen, I think the big message is we are absolutely committed to Hawaii, particularly Hilton Hawaiian Village. Twenty-three acres, fee simple, iconic. We've obviously renovated the Tapa Tower, 1,100 keys. We've just finished Rainbow Tower, north of 800 keys, plus or minus. Ali'i Tower, as Sean mentioned, 351 keys. We think we can add another 3 keys there. It's self-contained, so it's sort of the higher-end product on the campus at the village there, and so we really think that this is the window to renovate that. Obviously, there's a gym, a self-contained restaurant.

So what we really believe that the window that we've identified, that the disruption will be minor, $2 million that we mentioned, and that this is the window to get it done. So excited about it, thrilled about it. It's really separate from the AMB Tower. The AMB Tower was more opportunistic. We wanted to grab that last site. We are still finishing up the final entitlements. We have no intention of proceeding with that project at any time soon, until obviously demand has fully recovered. We think that's a long-term, and I emphasize long-term play at a future date. We have no intention of proceeding with that at this point. But Ali'i Tower, we think, is prudent.

We think that's gonna continue to really give not only tailwind, but significant lift in a way to distinguish the property even further from its competitive set. So we're excited about getting that done, and as Sean noted in his prepared remarks, you know, north of 80% of the rooms at what's already a 2,900, room, campus and village would be completed and fully renovated, which we think really helps us as we look to 2027 and beyond. So hopefully, that gives you a good framework.

Robin Farley (Managing Director)

That very helpful. Thank you. Just one quick follow-up on the Ali'i Tower. If I remember, it has its own entrance and sort of, like, pool area, maybe even. Is there a thought that or potential for you to have for that to be a different brand or like a different price point after the renovation, that it could be like a hotel within a hotel or you know, anything along those lines?

Tom Baltimore (Chairman and CEO)

Yeah, it's certainly something that we've looked at from time to time. No doubt, it will have an elevated price point. Whether or not it's a hotel within a hotel is something that the, you know, the asset management team here at Park and the operators and our operating partners at Hilton will look at. We've studied that from time to time. It clearly is the most elevated product, and, and we're obviously gonna take it to the next level and are really, really excited about the work that's gonna commence there and, and get done, obviously, as we said, in, in, in certainly by the middle of 2027.

Robin Farley (Managing Director)

Great. Thank you.

Operator (participant)

The next question comes from the line of Jay Kornreich with Cantor Fitzgerald. Please proceed.

Jay Kornreich (Managing Director)

Hey, thanks so much. Obviously, a lot of ground already covered here but just curious on, you know, the out-of-room F&B spend has been quite strong as of late, so just wondering what you're seeing from customers and groups there on that front and how much revenue growth there could be from the out-of-room spend this year?

Sean Dell'Orto (COO and CFO)

Yeah, sure. I mean, you're right, it has, it has been very strong. I'd say, on total, it's probably about 40-50 basis points above kind of where our RevPAR is, translating to total RevPAR, and we think it's the same this year as we think about the guide as well. Big drivers, you know, in-house group, as well as even SMERF, will, I think, help to drive banquet and catering even, you know, to a decent amount this year. Outlet spend is, in the resorts, has been strong, headlined by our Dorada restaurant, for example, in Casa Marina, which we opened up last year and drove outlet spend up 40% in that property.

We expect that to actually spend it's now full, you know, open, obviously, for the high season this year, so we expect to see continued growth in those areas. You know, other things I think are just more, a little bit more in, you know, line, you know, kind of single digit, low single-digit type growth, whether it's parking and other, other fees generated in that respect. But for the most part, but banquet and catering, the groups continue to spend. We don't see much pressure from that as well. As, again, in the resorts, certainly the higher-end properties, you certainly see the benefits of the higher income guests who are spending in the outlets.

Jay Kornreich (Managing Director)

Okay, great. I appreciate the color. We'll leave it there.

Operator (participant)

Thank you. This concludes the question and answer session. I'd like to turn the call back over to Tom Baltimore for closing remarks.

Tom Baltimore (Chairman and CEO)

Well, I appreciate all of you taking time today, and look forward to seeing many of you at the Citi conference in another week or so. I also just wanna take a moment to congratulate my partner, Sean Dell'Orto, on his promotion, well-deserved. Sean has been a just an extraordinary CFO, a great business partner, great leader. I know that I speak for the board and myself, we are thrilled that Sean is taking on the CEO title, COO title, in addition to the CFO title, and I look forward to working with him for many years to come. So congratulations, Sean, and I look forward to seeing all of you in the near future.

Operator (participant)

This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.