Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK)
today announced results for the first quarter ended March 31,
2021 and an operational update on COVID-19.
First quarter financial highlights include:
- Pro-forma RevPAR was $40.79, a
decrease of 70.0% from the same period in 2020;
- Pro-forma Occupancy for Park’s 42 consolidated hotels open
during the entirety of the first quarter was 37.4%;
- Net loss and net loss attributable to stockholders were $(191)
million and $(190) million, respectively;
- Adjusted EBITDA was $(49) million;
- Pro-forma Hotel Adjusted EBITDA improved 34.7% compared to the
fourth quarter of 2020 due to a sequential quarterly improvement in
Pro-forma RevPAR of 48.8%;
- Adjusted FFO attributable to stockholders was $(113)
million;
- Diluted loss per share was $(0.81); and
- Diluted Adjusted FFO per share was $(0.48).
Additional highlights include:
- Completed the sale of the W New Orleans – French Quarter in
April 2021 for total gross proceeds of $24.1 million;
- Increased the total number of open hotels to 52 of 59 hotels
(88%), or 78% of total room count;
- Reduced burn rate to $26 million for the month of March and
generated positive Hotel Adjusted EBITDA for the month; and
- Currently expects to reach break-even at the corporate level
during the second half of 2021.
Thomas J. Baltimore, Jr., Chairman and Chief
Executive Officer, stated, “I am very encouraged by the momentum of
improvement in our portfolio during the first quarter. Our hotels
in drive-to markets continue to outperform and now our fly-to
leisure hotels in Hawaii and Puerto Rico are exceeding our
expectations, helping to drive consecutive monthly increases in
occupancy through the first quarter and positive Hotel Adjusted
EBITDA in March. Looking forward, we are confident that the
continued distribution of the COVID-19 vaccines, forecasts for
robust economic growth and fiscal stimulus, and significant pent-up
traveler demand will translate into a strong recovery for our
portfolio over the back half of the year and into 2022 and beyond.
Additionally, as evidenced by the recent sale of the W New Orleans
– French Quarter in April 2021, our team continues to execute on
our near-term priorities to return to profitability in 2021 and to
de-leverage our balance sheet, push out maturities and improve
financial flexibility to position Park for long-term success. We
are excited about our outlook for the balance of the year, and we
look forward to welcoming more of our guests back to our hotels and
resorts.”
Selected Statistical and Financial
Information
(unaudited, amounts in millions, except RevPAR, ADR and per
share data)
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
Change(1) |
|
Pro-forma RevPAR |
$ |
40.79 |
|
|
$ |
136.16 |
|
|
(70.0 |
)% |
Pro-forma Occupancy |
|
26.4 |
% |
|
|
61.7 |
% |
|
(35.3 |
)% pts |
Pro-forma ADR |
$ |
154.63 |
|
|
$ |
220.73 |
|
|
(29.9 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Pro-forma Total RevPAR |
$ |
59.99 |
|
|
$ |
218.05 |
|
|
(72.5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Net loss |
$ |
(191 |
) |
|
$ |
(689 |
) |
|
NM(2) |
|
Net loss attributable to
stockholders |
$ |
(190 |
) |
|
$ |
(688 |
) |
|
NM(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
(49 |
) |
|
$ |
82 |
|
|
NM(2) |
|
Pro-forma Hotel Adjusted
EBITDA |
$ |
(35 |
) |
|
$ |
90 |
|
|
NM(2) |
|
Pro-forma Hotel Adjusted EBITDA
margin |
|
(22.6 |
)% |
|
|
15.6 |
% |
|
NM(2) |
|
Adjusted FFO attributable to
stockholders |
$ |
(113 |
) |
|
$ |
57 |
|
|
NM(2) |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share -
Diluted(1) |
$ |
(0.81 |
) |
|
$ |
(2.89 |
) |
|
NM(2) |
|
Adjusted FFO per share -
Diluted(1) |
$ |
(0.48 |
) |
|
$ |
0.24 |
|
|
NM(2) |
|
Weighted average shares
outstanding - Diluted |
|
236 |
|
|
|
238 |
|
|
(2 |
) |
_____________________________________(1) Amounts
are calculated based on unrounded
numbers.(2) Percentage change is not
meaningful.
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2019 |
|
|
Change(1) |
|
Pro-forma RevPAR |
$ |
40.79 |
|
|
$ |
175.84 |
|
|
(76.8 |
)% |
Pro-forma Occupancy |
|
26.4 |
% |
|
|
77.7 |
% |
|
(51.3 |
)% pts |
Pro-forma ADR |
$ |
154.63 |
|
|
$ |
226.36 |
|
|
(31.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Pro-forma Total RevPAR |
$ |
59.99 |
|
|
$ |
273.13 |
|
|
(78.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(191 |
) |
|
$ |
97 |
|
|
NM(2) |
|
Net (loss) income attributable to
stockholders |
$ |
(190 |
) |
|
$ |
96 |
|
|
NM(2) |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
(49 |
) |
|
$ |
176 |
|
|
NM(2) |
|
Pro-forma Hotel Adjusted
EBITDA |
$ |
(35 |
) |
|
$ |
205 |
|
|
NM(2) |
|
Pro-forma Hotel Adjusted EBITDA
margin |
|
(22.6 |
)% |
|
|
28.5 |
% |
|
NM(2) |
|
Adjusted FFO attributable to
stockholders |
$ |
(113 |
) |
|
$ |
136 |
|
|
NM(2) |
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share -
Diluted(1) |
$ |
(0.81 |
) |
|
$ |
0.48 |
|
|
NM(2) |
|
Adjusted FFO per share -
Diluted(1) |
$ |
(0.48 |
) |
|
$ |
0.67 |
|
|
NM(2) |
|
Weighted average shares
outstanding - Diluted |
|
236 |
|
|
|
202 |
|
|
34 |
|
_____________________________________(1) Amounts
are calculated based on unrounded
numbers.(2) Percentage change is not
meaningful.
COVID-19 Action Plan Update
The following is an update on the actions Park and its hotel
managers have taken during the first quarter and expect to take to
mitigate the effects of COVID-19 on its business:
- Reduced budgeted capital
expenditures for 2021 to approximately $40 million for maintenance
projects;
- Reopened three hotels thus far in
2021, increasing total rooms by 1,381 rooms; currently expects to
reopen the remaining seven suspended hotels over the next couple of
quarters as travel restrictions ease and demand recovers; and
- Continued to refine the hotel
operating model by identifying an additional $10 to $15 million of
savings from permanent property-level full-time staff reductions,
increasing total expected future annual savings to up to $85
million throughout the portfolio compared to 2019 operations.
The current status of Park’s hotels as of May 6, 2021 is as
follows (for a list of status by hotel please see Park’s financial
supplement):
Status |
|
Number of Hotels |
|
|
Total Rooms |
|
Consolidated Open |
|
45 |
|
|
21,622 |
|
Consolidated Suspended |
|
7 |
|
|
7,212 |
|
Total Consolidated |
|
52 |
|
|
28,834 |
|
Unconsolidated Open |
|
7 |
|
|
4,297 |
|
Total Hotels |
|
59 |
|
|
33,131 |
|
|
|
|
|
|
|
|
Operational Update
Beginning in March 2020, Park experienced a
significant decline in ADR, occupancy, and RevPAR associated with
COVID-19 throughout its portfolio, which has resulted in a decline
in Park’s operating cash flow. As distribution of the COVID-19
vaccine has accelerated, Park has seen improvement in leisure
traveler sentiment, and as a result, an improvement in occupancy,
ADR and RevPAR in recent months. Changes in Pro-forma ADR,
Occupancy and RevPAR compared to the same periods in the prior
years and Pro-forma Occupancy for Park’s 52 consolidated hotels
were as follows:
|
Change inPro-forma ADR |
|
|
Change
inPro-formaOccupancy |
|
|
Change
inPro-formaRevPAR |
|
|
|
Pro-formaOccupancy |
|
Q1 2020 |
|
(2.5 |
)% |
|
|
(16.0 |
)pts |
|
|
(22.6 |
)% |
|
|
|
61.7 |
% |
Q2 2020 |
|
(43.2 |
) |
|
|
(79.7 |
) |
|
|
(95.9 |
) |
|
|
|
6.2 |
|
Q3 2020 |
|
(38.3 |
) |
|
|
(65.5 |
) |
|
|
(86.1 |
) |
|
|
|
19.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2020 |
|
(43.5 |
) |
|
|
(61.6 |
) |
|
|
(84.5 |
) |
|
|
|
23.3 |
|
November 2020 |
|
(41.6 |
) |
|
|
(61.8 |
) |
|
|
(86.0 |
) |
|
|
|
19.5 |
|
December 2020 |
|
(30.1 |
) |
|
|
(57.8 |
) |
|
|
(83.2 |
) |
|
|
|
18.3 |
|
Q4 2020 |
|
(38.9 |
) |
|
|
(60.4 |
) |
|
|
(84.6 |
) |
|
|
|
20.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 2021 |
|
(40.8 |
) |
|
|
(52.4 |
) |
|
|
(82.8 |
) |
|
|
|
21.4 |
|
February 2021 |
|
(30.6 |
) |
|
|
(54.1 |
) |
|
|
(78.0 |
) |
|
|
|
25.1 |
|
March 2021 |
|
(17.1 |
) |
|
|
(0.7 |
) |
|
|
(18.8 |
) |
|
|
|
32.5 |
|
Q1 2021 |
|
(29.9 |
) |
|
|
(35.3 |
) |
|
|
(70.0 |
) |
|
|
|
26.4 |
|
Changes in Pro-forma ADR, Occupancy and RevPAR for each month in
2021 compared to the same period in 2020 and Pro-forma Occupancy
for 2021 for only the consolidated hotels open during the entirety
of each month were as follows:
|
Number of Consolidated Hotels Open |
|
Change inPro-forma ADR |
|
|
Change inPro-Forma Occupancy |
|
|
Change inPro-Forma RevPAR |
|
|
|
Pro-forma Occupancy |
|
January 2021 |
|
42 |
|
|
(37.6 |
)% |
|
|
(45.6 |
)%pts |
|
|
(75.0 |
)% |
|
|
|
30.5 |
% |
February 2021 |
|
42 |
|
|
(30.9 |
) |
|
|
(45.8 |
) |
|
|
(69.7 |
) |
|
|
|
35.7 |
|
March 2021 |
|
42 |
|
|
(17.5 |
) |
|
|
9.1 |
|
|
|
2.9 |
|
|
|
|
45.9 |
|
As expected, strong demand trends continued in
April 2021. Changes in Pro-Forma ADR, Occupancy and RevPAR for
April 2021 compared to April 2020 for the 45 consolidated hotels
open during the entirety of the month are preliminarily estimated
to be 51.7%, 44.5% pts and 1,405.0%, respectively. Total Pro-forma
occupancy for April 2021 for the 45 consolidated hotels open during
the entirety of the month is preliminarily estimated to be
49.5%.
For March 2021, Park’s portfolio generated
positive Hotel Adjusted EBITDA with nearly half of Park’s open
consolidated hotels achieving break-even levels. Park currently
expects its portfolio to generate positive Hotel Adjusted EBITDA
during the second quarter of 2021 and expects to reach break-even
at the corporate level during the second half of 2021.
The Pro-forma Rooms Revenue mix for each of the quarters ended
March 31, 2021, 2020 and 2019 for the 42 consolidated hotels
open during the entirety of the first quarter of 2021 were as
follows:
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Group |
|
7.2 |
% |
|
|
31.2 |
% |
|
|
31.9 |
% |
Transient |
|
81.3 |
|
|
|
61.5 |
|
|
|
62.8 |
|
Contract |
|
9.9 |
|
|
|
5.0 |
|
|
|
3.3 |
|
Other |
|
1.6 |
|
|
|
2.3 |
|
|
|
2.0 |
|
Park is seeing group demand recovering with lead
volume continuing to increase, up from 50% of 2019 levels in
January to 80% of 2019 levels in April. In the quarter for the
quarter bookings through March were better than expected, driven by
smaller groups (up to 300 peak room nights) holding events in
locations with fewer restrictions. Given the reopening momentum
across the U.S., Park expects to see a return of larger groups late
in the third quarter in select markets. Looking further out, group
bookings for 2022 have increased each of the past two quarters,
growing by over 110,000 room nights, or nearly 13%, since September
30, 2020 with acceleration following the approval of COVID-19
vaccines for emergency use in November 2020.
Domestic leisure transient demand grew
significantly during the first quarter of 2021 as the distribution
of the COVID-19 vaccines accelerated and restrictions on
international travel continued. The transient mix between business
and leisure travelers for each of the quarters ended March 31,
2021, 2020 and 2019 for the 42 consolidated hotels open during the
entirety of the first quarter of 2021 were as follows:
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Business transient |
|
27.6 |
% |
|
|
44.4 |
% |
|
|
44.5 |
% |
Leisure transient |
|
72.4 |
|
|
|
55.6 |
|
|
|
55.5 |
|
The current operating status for each of the Company’s key
markets, segmented between leisure and other markets, is as
follows:
Leisure Markets
-
Hawaii: Both Hawaii hotels are open, and although
the market continues to be subject to global travel restrictions,
both hotels generated positive Hotel Adjusted EBITDA during March
2021 as demand trends accelerated. Hilton Waikoloa Village and
Hilton Hawaiian Village achieved occupancy of 41% and 21%,
respectively, for the first quarter, benefiting from an increase in
domestic leisure demand, with the Hilton Waikoloa Village and
Hilton Hawaiian Village achieving occupancy of 60% and 33% in March
2021, respectively. In April 2021, occupancy at the Hilton Waikoloa
Village and Hilton Hawaiian Village are estimated to be 72% and
44%, respectively. As vaccine rollouts accelerate and travel
restrictions ease, Park anticipates Hawaii will continue to benefit
from significant pent-up leisure demand;
- Orlando: All of
Park’s Orlando hotels are open, with all hotels in the market
benefiting from strong leisure demand in March during the
spring-break holiday, resulting in combined occupancy of 40% in
March 2021 and 26% for the quarter;
- New Orleans: The
Hilton New Orleans Riverside continued to benefit from its contract
to house college students, and with an increase in leisure demand
associated with loosening of state and local restrictions prior to
the spring-break holiday, the hotel achieved occupancy of over 50%
for the quarter;
- Southern
California: All of Park’s hotels in Southern California
are open. The market was significantly affected in the first part
of the quarter from the re-implementation of stay-at-home orders,
although, as those orders lifted, hotels benefited from the return
of leisure demand resulting in occupancy of 40% for the
quarter;
- Key West: Casa
Marina, A Waldorf Astoria Resort, and The Reach Key West, Curio
Collection, are both open and continued to benefit from leisure
transient demand, resulting in occupancy of 96% in March 2021 and
84% for the quarter. Compared to the fourth quarter of 2020,
occupancy increased by 14 percentage points and rate increased by
approximately 50%. Compared to the first quarter of 2019, rate
increased by 13% and Hotel Adjusted EBITDA increased by 10%. Key
West continued to benefit from strong leisure transient demand in
April 2021 with estimated occupancy of 93%; and
- Miami: Both of
Park’s Miami hotels are open and benefited from strong leisure
transient demand, achieving occupancy of 73% in March 2021 and 66%
for the quarter. Compared to the fourth quarter of 2020, occupancy
increased by 19 percentage points and rate increased by
approximately 46%. Occupancy continued to increase in April 2021 to
an estimated 75%.
Other Markets
- San Francisco: The
Le Meridien San Francisco and the Hotel Adagio, Autograph
Collection reopened at the end of March 2021 as local restrictions
loosened and market demand improved. The JW Marriott San Francisco
Union Square and Hyatt Centric Fisherman's Wharf, both of which
remained open throughout the pandemic, increased to 35% and 45%
occupancy in March 2021, respectively, from approximately 16% in
January 2021 as local weekend leisure demand increased;
- Boston: All of
Park’s Boston hotels are open and recorded combined occupancy of
26% for the quarter with demand primarily from leisure transient
and airline crew contract business;
- New York: The
Hilton New York Midtown’s operations remain suspended, as
substantial restrictions on travel and limits on gatherings
remained in place for the quarter;
- Chicago: The W
Chicago – Lakeshore and Hilton Chicago/Oak Brook Suites have
remained open throughout the pandemic, primarily due to demand from
airline crews. Both the state of Illinois and the city of Chicago
have maintained travel and event restrictions, including
restrictions on large gatherings, which have delayed the reopening
of Park’s remaining three hotels in the market;
- Denver: The Hilton
Denver is open, although the hotel was impacted during the quarter
from continued COVID-19 restrictions and severe weather, which
limited occupancy to 24% for the quarter;
- Washington, D.C.:
All of Park’s hotels are open and demand benefitted from the
increased National Guard presence in Washington D.C during January.
As a result, occupancy was 44% for the quarter, an increase of 21
percentage points from the fourth quarter of 2020; and
- Seattle: All of
Park’s Seattle hotels have now reopened, as the DoubleTree Hotel
Seattle Airport reopened in March 2021. Park’s hotels have
benefited from demand from airline crews and weekend leisure travel
with occupancy increasing at the two hotels open during the entire
quarter from 51% in January 2021 to 70% in March 2021.
Balance Sheet and Liquidity
Park’s Net Debt as of March 31, 2021 was
$4.5 billion. With total cash and cash equivalents as of
March 31, 2021 of $868 million and $32 million of restricted
cash, Park is maintaining higher than historical cash levels due to
the continued uncertainty surrounding COVID-19. As a result of the
proactive measures taken by Park’s team and its hotel managers to
dramatically reduce costs, coupled with recent capital raises and
proceeds from the sale of the W New Orleans – French Quarter in
April 2021, Park believes it has sufficient liquidity to satisfy
its short-term liquidity obligations even though the Company’s
opened hotels are operating at limited capacity and certain hotels
continue to suspend operations.
Park’s total liquidity was $1.3 billion as of
March 31, 2021, including $474 million of available capacity
remaining on Park’s revolving credit facility (the “Revolver”).
Based on Park’s monthly burn rate in March 2021 of $26 million,
which takes into account current operations from both open and
suspended hotels and uses an accrual-based methodology, Park
estimates it currently has over 50 months of liquidity available to
meet its financial obligations. The estimated burn rate amount does
not take into account capital expenditures, any possible
alternative sources of revenue that may arise, any additional hotel
property dispositions or any payment of future cash dividends, if
any, or continued improvement in operations. Additionally, the
estimated burn rate amount does not take into account any amount
available to Park under existing or future debt facilities, or
proceeds from issuance of any additional debt, equity or
equity-linked securities.
Park continues to take proactive measures to
reduce the burn rate from $42 million average per month in the
fourth quarter of 2020 to $26 million in March of 2021. As a result
of these measures, coupled with expected continued leisure demand
and the continued distribution of COVID-19 vaccines, Park expects
to break-even at the corporate level during the second half of
2021, with its portfolio expected to generate positive Hotel
Adjusted EBITDA during the second quarter of 2021.
Park had the following debt outstanding as of
March 31, 2021:
(unaudited,
dollars in millions) |
|
|
|
|
|
|
|
Debt |
|
Collateral |
|
Interest Rate |
|
|
Maturity Date |
|
As ofMarch 31, 2021 |
|
Fixed Rate Debt |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage loan |
|
DoubleTree Hotel Spokane City Center |
|
3.55 |
% |
|
|
October 2021(1) |
|
$ |
12 |
|
Mortgage loan |
|
Hilton Denver City Center |
|
4.90 |
% |
|
|
August 2022(2) |
|
|
60 |
|
Mortgage loan |
|
Hilton Checkers Los Angeles |
|
4.11 |
% |
|
|
March 2023 |
|
|
27 |
|
Mortgage loan |
|
W Chicago - City Center |
|
4.25 |
% |
|
|
August 2023(3) |
|
|
75 |
|
Commercial mortgage-backedsecurities loan |
|
Hilton San Francisco Union Square, Parc 55 San Francisco - a Hilton
Hotel |
|
4.11 |
% |
|
|
November 2023 |
|
|
725 |
|
Mortgage loan |
|
Hyatt Regency Boston |
|
4.25 |
% |
|
|
July 2026 |
|
|
139 |
|
Commercial mortgage-backedsecurities loan |
|
Hilton Hawaiian Village Beach Resort |
|
4.20 |
% |
|
|
November 2026 |
|
|
1,275 |
|
Mortgage loan |
|
Hilton Santa Barbara Beachfront Resort |
|
4.17 |
% |
|
|
December 2026 |
|
|
165 |
|
2025 Senior Secured Notes |
|
|
|
7.50 |
% |
|
|
June 2025 |
|
|
650 |
|
2028 Senior Secured Notes |
|
|
|
5.88 |
% |
|
|
October 2028 |
|
|
725 |
|
Finance lease obligations |
|
|
|
3.07 |
% |
|
|
2021 to 2022 |
|
|
1 |
|
Total Fixed Rate Debt |
|
|
|
5.07 |
%(4) |
|
|
|
|
|
3,854 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable Rate
Debt |
|
|
|
|
|
|
|
|
|
|
|
|
Revolving credit facility(5)(6) |
|
Unsecured |
|
L + 3.00% |
|
|
2021 to 2023(6) |
|
|
601 |
|
Mortgage loan |
|
DoubleTree Hotel Ontario Airport |
|
L + 2.25% |
|
|
May 2022(7) |
|
|
30 |
|
2019 Term Facility(5)(8) |
|
Unsecured |
|
L + 2.65% |
|
|
August 2024 |
|
|
670 |
|
Total Variable Rate Debt |
|
|
|
3.08 |
%(4) |
|
|
|
|
|
1,301 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: unamortized premium |
|
|
|
|
|
|
|
|
|
|
3 |
|
Less:
unamortized deferred financing costs and discount |
|
|
|
|
|
|
|
|
(37 |
) |
Total Debt(9) |
|
|
|
4.63 |
%(4) |
|
|
|
|
$ |
5,121 |
|
_____________________________________
(1) |
|
In December 2020, Park’s joint
venture executed a forbearance agreement for the $12 million loan
secured by the Doubletree Spokane in which the lender agreed to
forbear exercising its rights and remedies arising from Park’s
joint venture non-payment of the loan at maturity due to market
conditions until October 6, 2021. Beginning April 2021, the
interest rate on the loan will be accrued at the default rate of
6.55%. |
(2) |
|
The loan matures in August
2042 but is callable by the lender beginning August 2022. |
(3) |
|
In January 2021, Park ceased
making debt service payments for the $75 million mortgage loan
secured by the W Chicago City Center. Failure to make debt service
payments constitutes an event of default. While Park hopes to
negotiate an amendment with the lender, there can be no assurances
that an agreement will be reached. |
(4) |
|
Calculated on a weighted
average basis. |
(5) |
|
In May 2020, Park amended its
credit and term loan facilities to add a LIBOR floor of 25 basis
points. |
(6) |
|
In September 2020, Park
increased its aggregate commitments under the Revolver by $75
million to $1.075 billion and extended the maturity date with
respect to $901 million of the aggregate commitments for two years
to December 2023, including all $75 million of the increased
Revolver commitments. The maturity date for the remaining $174
million of commitments under the Revolver is December 2021. |
(7) |
|
In May 2021, Park’s joint
venture modified the loan agreement for the $30 million loan
secured by the DoubleTree Hotel Ontario to extend the maturity date
by one year to May 2022. |
(8) |
|
In August 2019, the Company,
Park Intermediate Holdings LLC and PK Domestic Property LLC entered
into a term loan facility (the ”2019 Term Facility”). |
(9) |
|
Excludes $225 million of
Park’s share of debt of its unconsolidated joint ventures. |
Dividends
As a precautionary measure in light of COVID-19,
Park has suspended dividend payments following the payment of its
first quarter 2020 dividend.
Full-Year 2021 Outlook
Given the continued economic uncertainty, travel
restrictions and rapidly changing circumstances related to the
COVID-19 pandemic, Park is not providing an outlook for full-year
2021 at this time.
The Company’s ability to predict future
operating results is significantly impacted by the current COVID-19
pandemic. Park expects that the trends affecting the economy will
continue to depress hotel operating results across the portfolio.
The economic environment lacks sufficient clarity at this time to
provide accurate guidance.
Supplemental Disclosures
In conjunction with this release, Park has
furnished a financial supplement with additional disclosures on its
website. Visit www.pkhotelsandresorts.com for more information.
Park has no obligation to update any of the information provided to
conform to actual results or changes in Park’s portfolio, capital
structure or future expectations.
Environmental, Social and Governance
(“ESG”)
In January 2021, Park published its third annual
corporate responsibility report, reinforcing the Company’s ESG
commitment. The report, which included information on environmental
performance data, strategic ESG initiatives and climate risk
mitigation strategies, among others, also included an expanded
Global Reporting Initiative Index as well as the addition of a
Sustainable Accounting Standards Board framework. The report also
aligns certain Company ESG priorities with select United Nations
Sustainable Development Goals, or UN SDGs. Additionally, four of
Park’s hotels recently earned the prestigious ENERGY STAR
certification in 2020 for superior energy performance, a
certification that only 26 hotels in the United States earned in
2020. Park was also recognized by Newsweek as one of America’s Most
Responsible Companies in 2021, marking the second consecutive year
that the Company has been recognized for its ESG initiatives.
Conference Call
Park will host a conference call for investors
and other interested parties to discuss first quarter 2021 results
on May 7, 2021 beginning at 11 a.m. Eastern Time. Participants may
listen to the live webcast by logging onto the Investors section of
the website at www.pkhotelsandresorts.com. Alternatively,
participants may listen to the live call by dialing (877) 451-6152
in the United States or (201) 389-0879 internationally and
requesting Park Hotels & Resorts’ First Quarter 2021 Earnings
Conference Call. Participants are encouraged to dial into the call
or link to the webcast at least ten minutes prior to the scheduled
start time.
A replay of the webcast will be available within
24 hours after the live event on the Investors section of Park’s
website.
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Forward-looking statements include, but are
not limited to, statements related to Park’s current expectations
regarding the performance of its business, financial results,
liquidity and capital resources, including the expected reopening
dates for the Company’s hotels and dates that its properties will
break even or achieve positive Hotel Adjusted EBITDA, the effects
of competition and the effects of future legislation or
regulations, the expected completion of anticipated dispositions,
the declaration and payment of future dividends, and other
non-historical statements. Forward-looking statements include all
statements that are not historical facts, and in some cases, can be
identified by the use of forward-looking terminology such as the
words “outlook,” “believes,” “expects,” “potential,” “continues,”
“may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,”
“intends,” “plans,” “estimates,” “anticipates,” “hopes” or the
negative version of these words or other comparable words. You
should not rely on forward-looking statements since they involve
known and unknown risks, uncertainties and other factors which are,
in some cases, beyond the Company’s control and which could
materially affect its results of operations, financial condition,
cash flows, performance or future achievements or events.
Currently, one of the most significant factors continues to be the
adverse effect of COVID-19, including possible resurgences, on the
Company’s financial condition, results of operations, cash flows
and performance, its hotel management companies and its hotels’
tenants, and the global economy and financial markets. COVID-19 has
significantly affected the Company’s business, and the extent to
which COVID-19 continues to affect the Company, its hotel managers,
tenants and guests at the Company’s hotels will depend on future
developments, which are highly uncertain and cannot be predicted
with confidence, including the scope, severity and duration of the
pandemic, the actions taken to contain the pandemic or mitigate its
effect, the emergence of virus variants, the efficacy, availability
and deployment of vaccinations and other treatments to combat
COVID-19, including public adoption rates of COVID-19 vaccines,
additional closures that may be mandated or advisable even after
the reopening of certain of the Company’s hotels on a limited
basis, whether due to an increased number of COVID-19 cases or
otherwise, and the direct and indirect economic effects of the
pandemic and containment measures, among others. Moreover,
investors are cautioned to interpret many of the risks identified
in the risk factors included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2020 as being heightened as a
result of the ongoing and numerous adverse impacts of COVID-19.
Forward-looking statements involve risks,
uncertainties and assumptions. Actual results may differ materially
from those expressed in these forward-looking statements. You
should not put undue reliance on any forward-looking statements and
Park urges investors to carefully review the disclosures Park makes
concerning risk and uncertainties in Item 1A: “Risk Factors” in
Park’s Annual Report on Form 10-K for the year ended December 31,
2020, as such factors may be updated from time to time in Park’s
filings with the SEC, which are accessible on the SEC’s website at
www.sec.gov. Except as required by law, Park undertakes no
obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Non-GAAP Financial Measures
Park presents certain non-GAAP financial
measures in this press release, including Nareit FFO attributable
to stockholders Adjusted FFO attributable to stockholders, EBITDA,
Adjusted EBITDA, Hotel Adjusted EBITDA, Hotel Adjusted EBITDA
margin and Net debt. These non-GAAP financial measures should be
considered along with, but not as alternatives to, net income
(loss) as a measure of its operating performance. Please see the
schedules included in this press release including the
“Definitions” section for additional information and
reconciliations of such non-GAAP financial measures.
About Park
Park is the second largest publicly traded
lodging REIT with a diverse portfolio of market-leading hotels and
resorts with significant underlying real estate value. Park’s
portfolio currently consists of 59 premium-branded hotels and
resorts with over 33,000 rooms primarily located in prime city
center and resort locations. Visit www.pkhotelsandresorts.com for
more
information.
PARK HOTELS & RESORTS
INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(unaudited, in millions, except share and
per share data)
|
March 31, 2021 |
|
|
December 31, 2020 |
|
|
(unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Property and equipment, net |
$ |
9,125 |
|
|
|
9,193 |
|
Investments in affiliates |
|
14 |
|
|
|
14 |
|
Intangibles, net |
|
44 |
|
|
|
45 |
|
Cash and cash equivalents |
|
868 |
|
|
|
951 |
|
Restricted cash |
|
32 |
|
|
|
30 |
|
Accounts receivable, net of allowance for doubtful accounts of $2
and $3 |
|
38 |
|
|
|
26 |
|
Prepaid expenses |
|
35 |
|
|
|
39 |
|
Other assets |
|
53 |
|
|
|
60 |
|
Operating lease right-of-use assets |
|
225 |
|
|
|
229 |
|
TOTAL ASSETS (variable
interest entities - $228 and $229) |
$ |
10,434 |
|
|
$ |
10,587 |
|
LIABILITIES AND
EQUITY |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
Debt |
$ |
5,121 |
|
|
|
5,121 |
|
Accounts payable and accrued expenses |
|
196 |
|
|
|
147 |
|
Due to hotel managers |
|
80 |
|
|
|
88 |
|
Deferred income tax liabilities |
|
10 |
|
|
|
10 |
|
Other liabilities |
|
134 |
|
|
|
134 |
|
Operating lease liabilities |
|
240 |
|
|
|
244 |
|
Total liabilities (variable interest entities - $215 and $213) |
|
5,781 |
|
|
|
5,744 |
|
|
|
|
|
|
|
|
|
Stockholders' Equity |
|
|
|
|
|
|
|
Common stock, par value $0.01 per share, 6,000,000,000 shares
authorized, 236,832,708 shares issued and 236,435,153 shares
outstanding as of March 31, 2021 and 236,217,344 shares issued and
235,915,749 shares outstanding as of December 31, 2020 |
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
4,520 |
|
|
|
4,519 |
|
Retained earnings |
|
185 |
|
|
|
376 |
|
Accumulated other comprehensive loss |
|
(3 |
) |
|
|
(4 |
) |
Total stockholders' equity |
|
4,704 |
|
|
|
4,893 |
|
Noncontrolling interests |
|
(51 |
) |
|
|
(50 |
) |
Total equity |
|
4,653 |
|
|
|
4,843 |
|
TOTAL LIABILITIES AND
EQUITY |
$ |
10,434 |
|
|
$ |
10,587 |
|
PARK HOTELS & RESORTS
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, in millions, except per
share data)
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Revenues |
|
|
|
|
|
|
|
|
|
|
|
Rooms |
$ |
106 |
|
|
$ |
362 |
|
|
$ |
403 |
|
Food and beverage |
|
22 |
|
|
|
161 |
|
|
|
183 |
|
Ancillary hotel |
|
29 |
|
|
|
57 |
|
|
|
55 |
|
Other |
|
8 |
|
|
|
19 |
|
|
|
18 |
|
Total revenues |
|
165 |
|
|
|
599 |
|
|
|
659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
Rooms |
|
35 |
|
|
|
112 |
|
|
|
107 |
|
Food and beverage |
|
21 |
|
|
|
123 |
|
|
|
124 |
|
Other departmental and support |
|
78 |
|
|
|
172 |
|
|
|
149 |
|
Other property-level |
|
48 |
|
|
|
60 |
|
|
|
49 |
|
Management fees |
|
7 |
|
|
|
25 |
|
|
|
33 |
|
Impairment loss and casualty gain, net |
|
— |
|
|
|
694 |
|
|
|
— |
|
Depreciation and amortization |
|
74 |
|
|
|
75 |
|
|
|
62 |
|
Corporate general and administrative |
|
18 |
|
|
|
16 |
|
|
|
17 |
|
Other |
|
7 |
|
|
|
21 |
|
|
|
20 |
|
Total expenses |
|
288 |
|
|
|
1,298 |
|
|
|
561 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sales of assets, net |
|
— |
|
|
|
62 |
|
|
|
31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income |
|
(123 |
) |
|
|
(637 |
) |
|
|
129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
— |
|
|
|
1 |
|
|
|
1 |
|
Interest expense |
|
(63 |
) |
|
|
(40 |
) |
|
|
(32 |
) |
Equity in (losses) earnings from investments in affiliates |
|
(4 |
) |
|
|
(1 |
) |
|
|
5 |
|
Other (loss) gain, net |
|
— |
|
|
|
(2 |
) |
|
|
1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before
income taxes |
|
(190 |
) |
|
|
(679 |
) |
|
|
104 |
|
Income tax expense |
|
(1 |
) |
|
|
(10 |
) |
|
|
(7 |
) |
Net (loss)
income |
|
(191 |
) |
|
|
(689 |
) |
|
|
97 |
|
Net loss (income)
attributable to noncontrolling interests |
|
1 |
|
|
|
1 |
|
|
|
(1 |
) |
Net (loss) income
attributable to stockholders |
$ |
(190 |
) |
|
$ |
(688 |
) |
|
$ |
96 |
|
(Loss) Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings per share - Basic |
$ |
(0.81 |
) |
|
$ |
(2.89 |
) |
|
$ |
0.48 |
|
(Loss) earnings per share - Diluted |
$ |
(0.81 |
) |
|
$ |
(2.89 |
) |
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - Basic |
|
235 |
|
|
|
238 |
|
|
|
201 |
|
Weighted average shares outstanding - Diluted |
|
236 |
|
|
|
238 |
|
|
|
202 |
|
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSEBITDA AND ADJUSTED
EBITDA
(unaudited, in millions) |
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Net (loss) income |
$ |
(191 |
) |
|
$ |
(689 |
) |
|
$ |
97 |
|
Depreciation and amortization expense |
|
74 |
|
|
|
75 |
|
|
|
62 |
|
Interest income |
|
— |
|
|
|
(1 |
) |
|
|
(1 |
) |
Interest expense |
|
63 |
|
|
|
40 |
|
|
|
32 |
|
Income tax expense |
|
1 |
|
|
|
10 |
|
|
|
7 |
|
Interest expense, income tax and depreciation and amortization
included in equity in earnings from investments in affiliates |
|
1 |
|
|
|
5 |
|
|
|
5 |
|
EBITDA |
|
(52 |
) |
|
|
(560 |
) |
|
|
202 |
|
Gain on sales of assets, net |
|
— |
|
|
|
(62 |
) |
|
|
(31 |
) |
Severance expense |
|
— |
|
|
|
2 |
|
|
|
1 |
|
Share-based compensation expense |
|
6 |
|
|
|
2 |
|
|
|
4 |
|
Impairment loss and casualty gain, net |
|
— |
|
|
|
694 |
|
|
|
— |
|
Other items |
|
(3 |
) |
|
|
6 |
|
|
|
— |
|
Adjusted
EBITDA |
$ |
(49 |
) |
|
$ |
82 |
|
|
$ |
176 |
|
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSPRO-FORMA HOTEL ADJUSTED EBITDA
AND PRO-FORMA HOTEL ADJUSTED EBITDA
MARGIN(1)
(unaudited, dollars in
millions) |
|
|
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Adjusted
EBITDA |
$ |
(49 |
) |
|
82 |
|
|
$ |
176 |
|
Less: Adjusted EBITDA from investments in affiliates |
|
2 |
|
|
|
(4 |
) |
|
|
(10 |
) |
Add: All other(2) |
|
11 |
|
|
|
13 |
|
|
|
15 |
|
Hotel Adjusted
EBITDA |
|
(36 |
) |
|
|
91 |
|
|
|
181 |
|
Add: Adjusted EBITDA from hotels acquired(1) |
|
— |
|
|
|
— |
|
|
|
37 |
|
Less: Adjusted EBITDA from hotels disposed of |
|
1 |
|
|
|
(1 |
) |
|
|
(13 |
) |
Pro-forma Hotel Adjusted
EBITDA(1) |
$ |
(35 |
) |
|
$ |
90 |
|
|
$ |
205 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
Total
Revenues |
$ |
165 |
|
|
$ |
599 |
|
|
$ |
659 |
|
Less: Other revenue |
|
(8 |
) |
|
|
(19 |
) |
|
|
(18 |
) |
Add: Revenues from hotels acquired(1) |
|
— |
|
|
|
— |
|
|
|
130 |
|
Less: Revenues from hotels disposed of |
|
(1 |
) |
|
|
(10 |
) |
|
|
(51 |
) |
Pro-forma Hotel
Revenues(1) |
$ |
156 |
|
|
$ |
570 |
|
|
$ |
720 |
|
|
Three Months Ended March 31, |
|
|
2021 vs 2020 |
|
|
2021 vs 2019 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Change(3) |
|
|
Change(3) |
|
Pro-forma Hotel Revenues(1) |
$ |
156 |
|
|
$ |
570 |
|
|
$ |
720 |
|
|
|
(72.7 |
)% |
|
|
(78.3 |
)% |
Pro-forma Hotel Adjusted
EBITDA(1) |
$ |
(35 |
) |
|
$ |
90 |
|
|
$ |
205 |
|
|
NM(4) |
|
|
NM(4) |
|
Pro-forma Hotel Adjusted EBITDA
margin(1)(3) |
|
(22.6 |
)% |
|
|
15.6 |
% |
|
|
28.5 |
% |
|
NM(4) |
|
|
NM(4) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________________________
(1) |
|
Assumes hotels were acquired on January 1, 2019. |
(2) |
|
Includes other revenues and other expenses, non-income taxes on
TRS leases included in other property-level expenses
and corporate general and administrative expenses in the
condensed consolidated statements of operations. |
(3) |
|
Percentages are calculated based on unrounded
numbers. |
(4) |
|
Percentage change is not meaningful. |
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSNAREIT FFO AND ADJUSTED
FFO
(unaudited, in millions, except per share data)
|
Three Months Ended March 31, |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
|
|
Net (loss) income attributable to
stockholders |
$ |
(190 |
) |
|
$ |
(688 |
) |
|
$ |
96 |
|
Depreciation and amortization expense |
|
74 |
|
|
|
75 |
|
|
|
62 |
|
Depreciation and amortization expense attributable to
noncontrolling interests |
|
(1 |
) |
|
|
(1 |
) |
|
|
(1 |
) |
Gain on sales of assets, net |
|
— |
|
|
|
(62 |
) |
|
|
(31 |
) |
Impairment loss |
|
— |
|
|
|
695 |
|
|
|
— |
|
Equity investment adjustments: |
|
|
|
|
|
|
|
|
|
|
|
Equity in losses (earnings) from investments in affiliates |
|
4 |
|
|
|
1 |
|
|
|
(5 |
) |
Pro rata FFO of investments in affiliates |
|
(2 |
) |
|
|
1 |
|
|
|
9 |
|
Nareit FFO attributable
to stockholders |
|
(115 |
) |
|
|
21 |
|
|
|
130 |
|
Severance expense |
|
— |
|
|
|
2 |
|
|
|
1 |
|
Share-based compensation expense |
|
6 |
|
|
|
2 |
|
|
|
4 |
|
Other items(1) |
|
(4 |
) |
|
|
32 |
|
|
|
1 |
|
Adjusted FFO attributable
to stockholders |
$ |
(113 |
) |
|
$ |
57 |
|
|
$ |
136 |
|
Nareit FFO per share -
Diluted(2) |
$ |
(0.49 |
) |
|
$ |
0.09 |
|
|
$ |
0.65 |
|
Adjusted FFO per share
- Diluted(2) |
$ |
(0.48 |
) |
|
$ |
0.24 |
|
|
$ |
0.67 |
|
Weighted average shares
outstanding - Diluted |
|
236 |
|
|
|
238 |
|
|
|
202 |
|
|
|
|
|
|
|
|
|
|
|
|
|
_____________________________________
(1) |
|
The three
months ended March 31, 2020 includes $26 million of tax expense on
hotels sold during the period. |
(2) |
|
Per share amounts are calculated based on unrounded
numbers. |
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSNET DEBT
(unaudited, in millions) |
|
|
|
|
March 31, 2021 |
|
Debt |
$ |
5,121 |
|
Add: unamortized deferred
financing costs and discount |
|
37 |
|
Less: unamortized premium |
|
(3 |
) |
Long-term debt, including current maturities and excluding
unamortized deferred financing cost, premiums and discounts |
|
5,155 |
|
Add: Park's share of
unconsolidated affiliates debt, excluding unamortized deferred
financing costs |
|
225 |
|
Less: cash and cash
equivalents |
|
(868 |
) |
Less: restricted cash |
|
(32 |
) |
Net debt |
$ |
4,480 |
|
PARK HOTELS & RESORTS
INC.DEFINITIONS
Pro-forma
The Company presents certain data for its
consolidated hotels on a pro-forma hotel basis as supplemental
information for investors: Pro-forma Hotel Revenues, Pro-forma
RevPAR, Pro-forma Total RevPAR, Pro-forma Occupancy, Pro-forma ADR,
Pro-forma Hotel Adjusted EBITDA and Pro-forma Hotel Adjusted EBITDA
Margin. The Company presents pro-forma hotel results to help the
Company and its investors evaluate the ongoing operating
performance of its hotels. The Company’s pro-forma metrics exclude
results from property dispositions that have occurred through May
6, 2021 and include results from property acquisitions as though
such acquisitions occurred on the earliest period presented.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel
Adjusted EBITDA margin
Earnings (loss) before interest expense, taxes
and depreciation and amortization (“EBITDA”), presented herein,
reflects net income (loss) excluding depreciation and amortization,
interest income, interest expense, income taxes and interest
expense, income tax and depreciation and amortization included in
equity in earnings (losses) from investments in affiliates.
Adjusted EBITDA, presented herein, is calculated as EBITDA, as
previously defined, further adjusted to exclude:
- Gains or losses on sales of assets for
both consolidated and unconsolidated investments;
- Costs associated with hotel acquisitions or dispositions
expensed during the period;
- Severance expense;
- Share-based compensation expense;
- Impairment losses and casualty gains or losses; and
- Other items that management believes are not representative of
the Company’s current or future operating performance.
Hotel Adjusted EBITDA measures hotel-level
results before debt service, depreciation and corporate expenses of
the Company’s consolidated hotels, which excludes hotels owned by
unconsolidated affiliates, and is a key measure of the Company’s
profitability. The Company presents Hotel Adjusted EBITDA to help
the Company and its investors evaluate the ongoing operating
performance of the Company’s consolidated hotels.
Hotel Adjusted EBITDA margin is calculated as
Hotel Adjusted EBITDA divided by total hotel revenue.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA
and Hotel Adjusted EBITDA margin are not recognized terms under
United States (“U.S.”) GAAP and should not be considered as
alternatives to net income (loss) or other measures of financial
performance or liquidity derived in accordance with U.S. GAAP. In
addition, the Company’s definitions of EBITDA, Adjusted EBITDA,
Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin may not be
comparable to similarly titled measures of other companies.
The Company believes that EBITDA, Adjusted
EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin
provide useful information to investors about the Company and its
financial condition and results of operations for the following
reasons: (i) EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and
Hotel Adjusted EBITDA margin are among the measures used by the
Company’s management team to make day-to-day operating decisions
and evaluate its operating performance between periods and between
REITs by removing the effect of its capital structure (primarily
interest expense) and asset base (primarily depreciation and
amortization) from its operating results; and (ii) EBITDA, Adjusted
EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin are
frequently used by securities analysts, investors and other
interested parties as a common performance measure to compare
results or estimate valuations across companies in the
industry.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA
and Hotel Adjusted EBITDA margin have limitations as analytical
tools and should not be considered either in isolation or as a
substitute for net income (loss) or other methods of analyzing the
Company’s operating performance and results as reported under U.S.
GAAP.
Nareit FFO attributable to stockholders, Adjusted FFO
attributable to stockholders Nareit FFO per share - diluted and
Adjusted FFO per share - diluted
Nareit FFO attributable to stockholders and
Nareit FFO per diluted share (defined as set forth below) are
presented herein as non-GAAP measures of the Company’s performance.
The Company calculates funds from (used in) operations (“FFO”)
attributable to stockholders for a given operating period in
accordance with standards established by the National Association
of Real Estate Investment Trusts (“Nareit”), as net income (loss)
attributable to stockholders (calculated in accordance with U.S.
GAAP), excluding depreciation and amortization, gains or losses on
sales of assets, impairment, and the cumulative effect of changes
in accounting principles, plus adjustments for unconsolidated joint
ventures. Adjustments for unconsolidated joint ventures are
calculated to reflect the Company’s pro rata share of the FFO of
those entities on the same basis. As noted by Nareit in its
December 2018 “Nareit Funds from Operations White Paper – 2018
Restatement,” since real estate values historically have risen or
fallen with market conditions, many industry investors have
considered presentation of operating results for real estate
companies that use historical cost accounting to be insufficient by
themselves. For these reasons, Nareit adopted the FFO metric in
order to promote an industry-wide measure of REIT operating
performance. The Company believes Nareit FFO provides useful
information to investors regarding its operating performance and
can facilitate comparisons of operating performance between periods
and between REITs. The Company’s presentation may not be comparable
to FFO reported by other REITs that do not define the terms in
accordance with the current Nareit definition, or that interpret
the current Nareit definition differently. The Company calculates
Nareit FFO per diluted share as Nareit FFO divided by the number of
fully diluted shares outstanding during a given operating
period.
The Company also presents Adjusted FFO
attributable to stockholders and Adjusted FFO per diluted share
when evaluating its performance because management believes that
the exclusion of certain additional items described below provides
useful supplemental information to investors regarding the
Company’s ongoing operating performance. Management historically
has made the adjustments detailed below in evaluating its
performance and in its annual budget process. Management believes
that the presentation of Adjusted FFO provides useful supplemental
information that is beneficial to an investor’s complete
understanding of operating performance. The Company adjusts Nareit
FFO attributable to stockholders for the following items, which may
occur in any period, and refers to this measure as Adjusted FFO
attributable to stockholders:
- Costs associated with hotel
acquisitions or dispositions expensed during the period;
- Severance expense;
- Share-based compensation expense;
- Other items that management believes are not representative of
the Company’s current or future operating performance.
Net Debt
Net debt, presented herein, is a non-GAAP
financial measure that the Company uses to evaluate its financial
leverage. Net debt is calculated as (i) long-term debt, including
current maturities and excluding unamortized deferred financing
costs; and (ii) the Company’s share of investments in affiliate
debt, excluding unamortized deferred financing costs; reduced by
(a) cash and cash equivalents; and (b) restricted cash and cash
equivalents.
The Company believes Net debt provides useful
information about its indebtedness to investors as it is frequently
used by securities analysts, investors and other interested parties
to compare the indebtedness of companies. Net debt should not be
considered as a substitute to debt presented in accordance with
U.S. GAAP. Net debt may not be comparable to a similarly titled
measure of other companies.
Occupancy
Occupancy represents the total number of room
nights sold divided by the total number of room nights available at
a hotel or group of hotels. Room nights available to guests have
not been adjusted for suspended or reduced operations at certain of
Park’s hotels as a result of COVID-19. Occupancy measures the
utilization of the Company’s hotels’ available capacity. Management
uses occupancy to gauge demand at a specific hotel or group of
hotels in a given period. Occupancy levels also help management
determine achievable Average Daily Rate (“ADR”) levels as demand
for rooms increases or decreases.
Average Daily Rate
ADR represents rooms revenue divided by total
number of room nights sold in a given period. ADR measures average
room price attained by a hotel and ADR trends provide useful
information concerning the pricing environment and the nature of
the customer base of a hotel or group of hotels. ADR is a commonly
used performance measure in the hotel industry, and management uses
ADR to assess pricing levels that the Company is able to generate
by type of customer, as changes in rates have a more pronounced
effect on overall revenues and incremental profitability than
changes in occupancy, as described above.
Revenue per Available Room
Revenue per Available Room (“RevPAR”) represents
rooms revenue divided by the total number of room nights
available to guests for a given period. Room nights available
to guests have not been adjusted for suspended or reduced
operations at certain of Park’s hotels as a result of COVID-19.
Management considers RevPAR to be a meaningful indicator of the
Company’s performance as it provides a metric correlated to two
primary and key factors of operations at a hotel or group of
hotels: occupancy and ADR. RevPAR is also a useful indicator in
measuring performance over comparable periods.
Total RevPAR
Total RevPAR represents rooms, food and beverage
and other hotel revenues divided by the total number of room
nights available to guests for a given period. Room nights
available to guests have not been adjusted for suspended or reduced
operations at certain of Park’s hotels as a result of COVID-19.
Management considers Total RevPAR to be a meaningful indicator of
the Company’s performance as approximately one-third of revenues
are earned from food and beverage and other hotel revenues. Total
RevPAR is also a useful indicator in measuring performance over
comparable periods.
Investor
Contact |
Ian Weissman |
+ 1 571 302
5591 |
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