Park Hotels Earnings: Hotel EBITDA Falls as Park Begins Renovations on Hawaiian Properties

Third-quarter results for Park Hotels and Resorts were below our expectations, though we don’t see anything in the quarter that would alter our long-term view or our $25 fair value estimate for the no-moat company. Occupancy increased 2.5% year over year to 78.1% in the third quarter, though a significant portion of that gain was driven by the Casa Marina Key West being fully open in 2024 after the hotel was closed for the entire third quarter of 2023 for significant renovations. Average daily rate remained flat in the quarter, so revenue per available room increased 3.3% year over year in the quarter, below our estimate of 5.6% growth. Meanwhile, operating expenses went up 6.1%, and while that is less than our estimate of expenses growing 7.1%, it did lead to hotel EBITDA falling 1.9% in the third quarter, which is worse than our estimate of hotel EBITDA growing 1.5%. As a result of falling hotel EBITDA, Park reported adjusted funds from operations of $0.49 per share that was 3.7% lower than the $0.51 figure reported in the third quarter of 2023 and five cents below our $0.54 estimate for the quarter.