Park Hotels & Resorts Inc. (PK)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 revenue and REIT cash metrics outperformed consensus, but GAAP EPS missed on non‑cash items. Revenue was $630M vs S&P Global consensus $615.9M* and Adjusted FFO/share was $0.46 vs $0.41*, while GAAP diluted EPS was $(0.29) driven largely by a $70M impairment and non‑cash SF Mortgage Loan interest accounting .
• Management lowered FY25 guidance: Comparable RevPAR growth cut by 100 bps at midpoint to (-1%)–2%, Adjusted EBITDA reduced by $20M at midpoint to $590–$650M, and diluted EPS cut by $0.47 at midpoint to $(0.08)–$0.22 .
• Operations were mixed: Orlando (Bonnet Creek) and Key West remained standouts; Hawaii remained a drag but is improving sequentially; group pace solid in Q4 but softer in Q2–Q3 (down ~10% in Q3), with macro/trade uncertainty cited as a headwind .
• Potential stock catalysts: execution of $300–$400M non‑core asset sales, >15–20% ROI Miami Royal Palm renovation (target reopening May 2026), and Orlando outperformance; offsets include Hawaii normalization path and macro/geopolitical trade‑related uncertainty .

What Went Well and What Went Wrong

• What Went Well

  • Orlando’s Bonnet Creek complex (Waldorf + Signia) materially outperformed; Waldorf RevPAR up 32% YoY on ~65% transient growth and share gains; 2025 EBITDA forecast for the complex to exceed $90M (>$30M above 2023) .
  • Key West momentum continued: Casa Marina RevPAR +12% YoY on +680 bps occupancy and ~4% ADR growth, with RevPAR index >112; The Reach maintained outperformance with RevPAR index 119 .
  • Capital allocation: $95M returned in Q1 via dividends and buybacks; ~3.5M shares repurchased for $45M; liquidity ~ $1.2B provides flexibility .

• What Went Wrong

  • Hawaii remained a notable drag: Comparable RevPAR -15.2% YoY with occupancy down 1,180 bps, largely from the Q4 strike impact and softer inbound international; management expects sequential improvement through 2025 .
  • Macro/trade uncertainty shortened booking windows and pressured demand confidence; Q2 RevPAR expected roughly flat YoY, with Hawaii responsible for ~80% of the cut vs initial forecast .
  • A $70M impairment and continued recognition of SF Mortgage Loan default interest (offset by derecognition gains) weighed on GAAP results, resulting in $(0.29) diluted EPS .

Financial Results

Headline actuals vs S&P Global consensus (Q1 2025)

Values with asterisks (*) retrieved from S&P Global.

Quarterly trends

Core KPIs (Q1 YoY)

Selected market performance (Q1 YoY)

Balance sheet and liquidity

• Liquidity ~ $1.2B including $950M revolver availability; Net Debt ~$3.8B; weighted average debt maturity 2.9 years .
• Debt stack and fixed vs variable rates detailed in Q1 8‑K supplement .

Guidance Changes

Assumptions include ~$17M 2025 EBITDA disruption from Royal Palm Miami closure and continued exclusion of SF CMBS default interest from Adjusted FFO .

Earnings Call Themes & Trends

Management Commentary

• “We delivered better‑than‑expected performance in the first quarter… Bonnet Creek… and Casa Marina… continued to lead… RevPAR increasing by 14% and 12% respectively” .
• “We remain laser‑focused on allocating capital… including the $100 million transformative renovation of the Royal Palm South Beach… Forecasted returns are in excess of 15% to 20%… with the expectation of doubling the hotel's EBITDA once stabilized” .
• “The near‑term outlook… remains uncertain as the ongoing global trade war continues to delay decision‑making… causing booking windows… to narrow significantly” .
• “Q2 RevPAR growth is expected to be relatively flat… approximately 290 bps lower than initial forecast with Hilton Hawaiian Village representing roughly 80% of the reduction” .
• “We repurchased approximately 3.5 million shares… for $45 million… and declared a $0.25 dividend… liquidity of approximately $1.2 billion” .

Q&A Highlights

• Dispositions: One asset under contract at “very attractive pricing”; confident in achieving $300–$400M non‑core sales despite uncertainty; targeting sales at multiples above where PK trades .
• Hawaii cadence: HHV was down ~18% in Q1; April ~-7%; Q3 expected mid‑single‑digit positive; easier Q4 comps aid recovery .
• Group pace detail: Q2 ~flat; Q3 down ~10% (Hawaii, NO, Chicago comps inc. DNC in Chicago last year); Q4 up 18% with broad‑based support .
• Cost discipline: Ex‑one‑time credits last year, comparable OpEx up ~1% YoY despite labor resets; insurance renewal expected to be a tailwind .
• Orlando upside: Expect Bonnet Creek to exceed $90M EBITDA in 2025; Epic Universe viewed as demand catalyst .

Estimates Context

• Q1 2025: Revenue $630M vs S&P Global consensus $615.9M*; GAAP diluted EPS $(0.29) vs $0.037*; Adjusted FFO/share $0.46 vs $0.41*; EBITDA consensus $134.5M* (note: company reported Adjusted EBITDA $144M and EBITDA $80M) .
• The GAAP EPS miss reflects a $70M impairment and SF loan accounting; Street models for REITs often emphasize FFO/share, which PK beat .
  Values with asterisks (*) retrieved from S&P Global.

Key Takeaways for Investors

• Quality mix matters: Orlando and Key West momentum plus D.C./SF improvement support 2H setup; monitor Hawaii’s sequential recovery to gauge trajectory into Q3–Q4 .
• Guidance reset lowers the bar: FY25 RevPAR and EBITDA cut modestly; Q4 group pace +18% provides a visible 4Q catalyst if macro holds .
• Capital allocation optionality: $1.2B liquidity with active buybacks and targeted asset sales offers multiple levers to drive per‑share value if execution continues .
• ROI pipeline should compound: Royal Palm Miami (15–20% ROI; doubling EBITDA target) and Hawaii room renovations already commanding 25–30% rate premiums in renovated rooms .
• Cost control credible: OpEx growth ~1% ex one‑off credits and potential insurance tailwinds help defend margins despite occupancy softness .
• Dividend visibility: $0.25/share declared for Q2; cash returns remain a priority alongside leverage‑neutral buybacks .
• Watch macro/trade risks: Narrowing booking windows and cross‑border uncertainty can pressure near‑term transient; pacing details (Q3 softer, Q4 stronger) are key monitoring points .

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Appendix: Additional Detail

• Q1 2025 Non‑GAAP reconciliations and margins: Comparable Hotel Adjusted EBITDA $151M; margin 24.9% vs 27.7% in Q1 2024 (impacted by prior‑year grants/tax refunds) .
• Leverage: Net Debt ~$3.76B; Net Debt/TTM Comparable Adjusted EBITDA 5.95x as of March 31, 2025 .
• Dividends: Q1 paid $0.25 on April 15; Q2 declared $0.25 payable July 15 .