Park Hotels Earnings: Strong First Quarter, but Growth of Fundamentals Is Decelerating

First-quarter results for no-moat Park Hotels and Resorts were better than our expectations, giving us confidence in our $26 fair value estimate. Occupancy improved 350 basis points to 70.9%, though that is still below the 76.2% level reported in the first quarter of 2019. Average daily rate grew 2.5% year over year, leading to revenue per available room growth of 7.8% that was ahead of our 4.4% estimate for the quarter. Meanwhile, hotel operating expenses only grew 5.1%, leading to hotel EBITDA margins expanding 190 basis points and hotel EBITDA growing 16.0%. As a result, Park reported adjusted funds from operations, or FFO, of $0.52 per share in the first quarter, which was eight cents better than our $0.44 estimate and 10 cents better than the $0.42 figure reported in the first quarter of 2023.