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.