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Park Hotels & Resorts Inc PK

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Raising FVEs for Park Hotels and Pebblebrook on Higher Revenue, Higher Margin Expectations

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

We are updating our fair value estimates for Park Hotels & Resorts, to $24 from $19, and Pebblebrook Hotel Trust, to $26 from $20, after updating our models for each company with their fourth-quarter results and after considering recent trends in the hotel industry. While revenue per available room declines are decelerating roughly at the pace we forecast for the upper upscale hotel segment, both companies were able to reduce operating expenses far more than we had expected during the hotel downturn. With the rollout of vaccinations fully underway across the U.S., we now anticipate that most hotels will be able to return to profitability at some point this summer. We have also pushed forward our assumption that the hotel industry returns to 2019 levels by 2024 from our prior expectation of 2026. Finally, we assume that some of the reductions in operating expenses made during the current downturn will become permanent, leading to hotel EBITDA margins that are slightly higher than the 2019 peak.

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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 Dec 31, 2020
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 182