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Park Hotels & Resorts Inc PK

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Slow Return of Leisure Travel Led to Incremental Improvement in Park Hotels' First-Quarter Results

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

First-quarter operations for no-moat Park Hotels & Resorts improved modestly over the fourth quarter and were slightly ahead of our estimates, though the improvement isn't large enough to materially impact our $24 fair value estimate. Occupancy improved sequentially to 26.4% in the first quarter compared with 20.4% in the fourth quarter of 2020, though that is still way down from the 61.7% level seen in the first quarter of 2020 that was itself partially impacted by the pandemic. Average daily rate fell 29.9% year over year, though that is a slight improvement over the declines seen the prior three quarters. As a result, revenue per available room fell 70.0% year over year, which is slightly better than our estimate of a 74.0% decline for the first quarter. Hotel EBITDA improved slightly in the first quarter to a $35 million loss compared with a $54 million loss in the fourth quarter of 2020. So, while Park reported an adjusted funds from operations loss of $0.48 in the first quarter, that is slightly better than the fourth quarter of 2020 result and our first-quarter estimate of a $0.53 loss.

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Company Profile

Business Description

Park Hotels & Resorts owns upper-upscale and luxury hotels with 28,931 rooms across 53 hotels in the United States. Park also has interests through joint ventures in another 4,297 rooms in seven U.S. hotels. Park was spun out of narrow-moat Hilton Worldwide Holdings at the start of 2017, so all of the company's hotels are still under Hilton brands. The company has sold all its international hotels and 11 lower-quality U.S. hotels to focus on high-quality assets in domestic, gateway markets. Park has used some of the proceeds to buy back shares and has $951 million available to acquire assets, pay down debt, or buy back more shares.

1775 Tysons Boulevard, 7th Floor
Tysons, VA, 22102
T +1 571 302-5757
Sector Real Estate
Industry REIT - Hotel & Motel
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 182

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