Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK)
today announced results for the second quarter ended June 30,
2021 and provided an operational update on COVID-19.
Second quarter financial highlights include:
- Pro-forma RevPAR was $78.46, an increase of 909.7% from the
same period in 2020 and a decrease of 59.2% from the same period in
2019;
- Pro-forma occupancy for Park’s 42 consolidated hotels open
during the entirety of the second quarter was 55.6%;
- Net loss and net loss attributable to stockholders were $(114)
million and $(116) million, respectively;
- Adjusted EBITDA was $33 million, an increase from Adjusted
EBITDA of $(49) million compared to the first quarter of 2021;
- Pro-forma Hotel Adjusted EBITDA was $42 million, an improvement
of 222.3% compared to the first quarter of 2021;
- Adjusted FFO attributable to stockholders was $(38) million, an
improvement of 66.3% compared to the first quarter of 2021;
- Diluted loss per share was $(0.49); and
- Diluted Adjusted FFO per share was $(0.16).
Additional highlights include:
- Reopened four additional hotels during the quarter, with 90% of
total room count currently open while only three hotels in the
portfolio remain closed – New York Hilton Midtown, Parc 55 San
Francisco - a Hilton Hotel and Hilton Short Hills;
- In June 2021, broke even at the corporate level and anticipates
positive cash flow for the third quarter, based on current
trends;
- In May 2021, issued an aggregate of $750 million of senior
secured notes ("2029 Senior Secured Notes") and utilized the net
proceeds to repay approximately $564 million of the Company's
revolving credit facility ("Revolver") and approximately $173
million of the term loan entered into in August 2019 ("2019 Term
Facility");
- Completed the sale of the W New Orleans – French Quarter in
April 2021 for total gross proceeds of approximately $24 million,
the net proceeds of which were used to repay a portion of the
Revolver;
- Completed the sale of the Hotel Indigo San Diego Gaslamp
Quarter in San Diego, California and the Courtyard Washington
Capitol Hill Navy Yard in Washington, D.C. in the same transaction
in June 2021 for total gross proceeds of $149 million, the net
proceeds of which were used in July 2021 to repay the then
remaining outstanding balance of the Revolver of $13 million and
$133 million of the 2019 Term Facility;
- In July 2021, completed the sale of the Hotel Adagio, Autograph
Collection, for gross proceeds of $82 million, for which the net
proceeds were used to repay $77 million of the 2019 Term Facility;
and
- In June 2021, entered into an agreement to sell the Le Meridien
San Francisco, which is expected to close during the third quarter,
for a gross sales price of approximately $222 million; the net
proceeds of which are expected to be used to repay a portion of the
2019 Term Facility.
Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer,
stated, “I am extremely pleased by the accelerated improvement of
our portfolio, with our hotels generating positive Hotel Adjusted
EBITDA for the second quarter. Our hotels in drive-to and fly-to
resort markets continue to outperform, producing solid increases in
both rate and occupancy as exceptionally strong leisure demand
drove many of our resort assets to pre-pandemic performance. During
the second half of 2021, we look forward to a sequential increase
in leisure demand through the summer followed by the expected
recovery of group and business transient demand. Also, with the
sale of an additional four hotels and one pending sale, totaling
$477 million in gross proceeds, our team will have exceeded our
stated goal of selling $300 million to $400 million of hotels in
2021 to further de-leverage our balance sheet. We look forward to
continuing this path of recovery throughout the remainder of this
year and anticipate the return of group business, for which forward
bookings continue to strengthen in 2022 with three consecutive
quarters of increases, including a 10% increase in the second
quarter.”
Selected Statistical and Financial
Information
(unaudited, amounts in millions, except RevPAR, ADR and per
share data)
| |
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
|
|
2021 |
|
|
2020 |
|
|
Change(1) |
|
|
2021 |
|
|
2020 |
|
|
Change(1) |
|
|
| Pro-forma
RevPAR |
$ |
78.46 |
|
|
$ |
7.77 |
|
|
909.7 |
% |
|
$ |
59.74 |
|
|
$ |
71.84 |
|
|
(16.8 |
)% |
|
| Pro-forma
Occupancy |
|
42.3 |
% |
|
|
6.1 |
% |
|
36.2 |
% |
pts |
|
34.3 |
% |
|
|
33.8 |
% |
|
0.5 |
% |
pts |
| Pro-forma ADR |
$ |
185.63 |
|
|
$ |
128.34 |
|
|
44.6 |
% |
|
$ |
174.21 |
|
|
$ |
212.40 |
|
|
(18.0 |
)% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Pro-forma Total
RevPAR |
$ |
118.53 |
|
|
$ |
14.53 |
|
|
715.6 |
% |
|
$ |
89.57 |
|
|
$ |
116.76 |
|
|
(23.3 |
)% |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net loss |
$ |
(114 |
) |
|
$ |
(261 |
) |
|
NM(2) |
|
|
$ |
(305 |
) |
|
$ |
(950 |
) |
|
NM(2) |
|
|
| Net loss attributable
to stockholders |
$ |
(116 |
) |
|
$ |
(259 |
) |
|
NM(2) |
|
|
$ |
(306 |
) |
|
$ |
(947 |
) |
|
NM(2) |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Adjusted EBITDA |
$ |
33 |
|
|
$ |
(122 |
) |
|
NM(2) |
|
|
$ |
(16 |
) |
|
$ |
(40 |
) |
|
NM(2) |
|
|
| Pro-forma Hotel
Adjusted EBITDA |
$ |
42 |
|
|
$ |
(106 |
) |
|
NM(2) |
|
|
$ |
8 |
|
|
$ |
(19 |
) |
|
NM(2) |
|
|
| Pro-forma Hotel
Adjusted EBITDA margin |
|
13.7 |
% |
|
|
(282.7 |
)% |
|
NM(2) |
|
|
|
1.7 |
% |
|
|
(3.2 |
)% |
|
NM(2) |
|
|
| Adjusted FFO
attributable to stockholders |
$ |
(38 |
) |
|
$ |
(174 |
) |
|
NM(2) |
|
|
$ |
(151 |
) |
|
$ |
(117 |
) |
|
NM(2) |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss per share -
Diluted(1) |
$ |
(0.49 |
) |
|
$ |
(1.10 |
) |
|
NM(2) |
|
|
$ |
(1.30 |
) |
|
$ |
(4.01 |
) |
|
NM(2) |
|
|
| Adjusted FFO per
share - Diluted(1) |
$ |
(0.16 |
) |
|
$ |
(0.74 |
) |
|
NM(2) |
|
|
$ |
(0.64 |
) |
|
$ |
(0.50 |
) |
|
NM(2) |
|
|
| Weighted average
shares outstanding - Diluted |
|
236 |
|
|
|
235 |
|
|
1 |
|
|
|
236 |
|
|
|
236 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
Amounts are
calculated based on unrounded numbers. |
| (2) |
Percentage change is
not meaningful. |
Operational Update
Park reopened four hotels during the second quarter, increasing
total rooms by 3,996 rooms. The timing of reopening our remaining
three suspended hotels will depend primarily on demand recovery in
their respective markets.
The current status of Park’s hotels as of August 5, 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 |
|
46 |
|
25,033 |
| Consolidated Suspended |
|
3 |
|
3,216 |
|
Total Consolidated |
|
49 |
|
28,249 |
| Unconsolidated Open |
|
7 |
|
4,297 |
|
Total Hotels |
|
56 |
|
32,546 |
Changes in Pro-forma ADR, Occupancy and RevPAR compared to the
same periods in 2020 and 2019 and Pro-forma Occupancy for Park’s 49
consolidated hotels were as follows:
| |
|
Change in Pro-forma ADR |
|
|
Change in Pro-forma Occupancy |
|
|
Change in Pro-forma RevPAR |
|
|
|
|
|
|
|
|
2021 vs. 2020 |
|
|
2021 vs. 2019 |
|
|
2021 vs. 2020 |
|
|
2021 vs. 2019 |
|
|
2021 vs. 2020 |
|
|
2021 vs. 2019 |
|
|
|
2021 Pro-forma Occupancy |
|
|
Q1 2021 |
|
(29.5 |
)% |
|
(31.2 |
)% |
|
(35.4 |
)% |
pts |
(51.2 |
)% |
pts |
(70.0 |
)% |
|
(76.7 |
)% |
|
|
26.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 2021 |
|
47.0 |
|
|
(21.3 |
) |
|
33.0 |
|
|
(47.8 |
) |
|
1,326.8 |
|
|
(65.8 |
) |
|
|
36.7 |
|
|
May 2021 |
|
75.3 |
|
|
(19.5 |
) |
|
35.5 |
|
|
(44.3 |
) |
|
1,351.1 |
|
|
(61.6 |
) |
|
|
40.4 |
|
|
June 2021 |
|
36.3 |
|
|
(12.8 |
) |
|
40.2 |
|
|
(38.3 |
) |
|
610.5 |
|
|
(50.7 |
) |
|
|
49.7 |
|
|
Q2 2021 |
|
44.6 |
|
|
(17.2 |
) |
|
36.2 |
|
|
(43.5 |
) |
|
909.7 |
|
|
(59.2 |
) |
|
|
42.3 |
|
Changes in Pro-forma ADR, Occupancy and RevPAR for each month in
2021 compared to the same periods in 2020 and 2019 and Pro-forma
Occupancy for 2021 for only the consolidated hotels open during the
entirety of each month were as follows:
|
|
|
|
Change in Pro-forma ADR |
|
|
Change in Pro-Forma Occupancy |
|
|
Change in Pro-Forma RevPAR |
|
|
|
|
|
|
|
Number of Consolidated Hotels Open |
|
2021 vs. 2020 |
|
|
2021 vs. 2019 |
|
|
2021 vs. 2020 |
|
|
2021 vs. 2019 |
|
|
2021 vs. 2020 |
|
|
2021 vs. 2019 |
|
|
|
2021 Pro-forma Occupancy |
|
| January 2021 |
40 |
|
(37.6 |
)% |
|
(37.0 |
)% |
|
(45.9 |
)% |
pts |
(42.6 |
)% |
pts |
(75.3 |
)% |
|
(73.9 |
)% |
|
|
30.1 |
% |
| February 2021 |
40 |
|
(30.6 |
) |
|
(29.5 |
) |
|
(45.9 |
) |
|
(44.2 |
) |
|
(69.7 |
) |
|
(68.6 |
) |
|
|
35.6 |
|
| March 2021 |
40 |
|
(17.1 |
) |
|
(23.1 |
) |
|
9.1 |
|
|
(36.7 |
) |
|
3.4 |
|
|
(57.3 |
) |
|
|
45.9 |
|
| April 2021 |
42 |
|
52.6 |
|
|
(18.1 |
) |
|
44.4 |
|
|
(34.4 |
) |
|
1,437.0 |
|
|
(51.7 |
) |
|
|
49.3 |
|
| May 2021 |
42 |
|
75.0 |
|
|
(13.7 |
) |
|
47.3 |
|
|
(28.7 |
) |
|
1,336.8 |
|
|
(43.7 |
) |
|
|
53.8 |
|
| June 2021 |
45 |
|
36.3 |
|
|
(9.2 |
) |
|
47.8 |
|
|
(27.7 |
) |
|
604.3 |
|
|
(38.1 |
) |
|
|
59.2 |
|
As expected, strong demand trends continued in July 2021.
Changes in Pro-Forma ADR, Occupancy and RevPAR for July 2021
compared to July 2020 for the 46 consolidated hotels open during
the entirety of the month are preliminarily estimated to be 45.0%,
48.0% pts and 470.6%, respectively. Total Pro-forma occupancy for
July 2021 for the 46 consolidated hotels open during the entirety
of the month is preliminarily estimated to be 64.4%.
For the second quarter of 2021, Park’s portfolio generated
positive Hotel Adjusted EBITDA with over half of Park’s open
consolidated hotels achieving break-even levels. In June 2021, Park
broke even at the corporate level and anticipates positive cash
flow for the third quarter, based on current trends.
Domestic leisure transient demand continued to grow
significantly during the second quarter of 2021 as COVID-19
vaccinations rates increased, domestic restrictions eased and
restrictions on international travel continued. The Pro-forma Rooms
Revenue mix for each of three and six months ended
June 30, 2021, 2020 and 2019 for the 42 consolidated
hotels open during the entirety the second quarter of 2021 or 40
consolidated hotels open during the entirety of the first half of
2021 were as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
| Group |
7.9 |
% |
|
9.1 |
% |
|
28.3 |
% |
|
7.5 |
% |
|
29.8 |
% |
|
30.7 |
% |
| Transient |
84.7 |
|
|
66.1 |
|
|
64.9 |
|
|
84.0 |
|
|
61.4 |
|
|
63.6 |
|
| Contract |
5.8 |
|
|
23.3 |
|
|
4.8 |
|
|
6.9 |
|
|
6.5 |
|
|
3.7 |
|
| Other |
1.6 |
|
|
1.5 |
|
|
2.0 |
|
|
1.6 |
|
|
2.3 |
|
|
2.0 |
|
The change in Pro-forma Rooms Revenue for the three and six
months ended June 30, 2021 compared to the same periods
in 2019 for the 42 consolidated hotels open during the entirety the
second quarter of 2021 or 40 consolidated hotels open during the
entirety of the first half of 2021 were as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2021 vs. 2019 |
|
|
2021 vs. 2019 |
|
| Group |
(84.2 |
)% |
|
(88.7 |
)% |
| Transient |
(25.8 |
) |
|
(38.7 |
) |
| Contract |
(32.0 |
) |
|
(12.7 |
) |
| Other |
(51.8 |
) |
|
(61.8 |
) |
Group demand is showing signs of recovery with lead volume
continuing to increase, up from 50% of 2019 levels in January to
96% of 2019 levels in July. In the quarter for the quarter
bookings through June were better than expected, driven by smaller
groups (up to 300 peak room nights) holding events in locations
with fewer restrictions. Assuming the reopening momentum across the
U.S. continues, 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 three quarters,
growing by over 200,000 room nights, or nearly 25%, since September
30, 2020 with acceleration following the approval of COVID-19
vaccines for emergency use in November 2020. As of June 30, 2021,
2022 group bookings are approximately 72% of what 2019 group
bookings were as of June 30, 2018.
Highlights for Park's consolidated hotels owned as of August 5,
2021 in each of the Company’s key markets, segmented between
leisure and other markets, are as follows:
Leisure Markets
-
Hawaii: Both Hawaii hotels are open, and certain
restrictions between the Hawaiian Islands have been lifted.
Although the market continues to be subject to global travel
restrictions, including COVID-19 testing requirements, both hotels
benefited from occupancy growth from domestic leisure demand,
generating positive Hotel Adjusted EBITDA during the second quarter
of 2021 as demand trends continued to rapidly accelerate. Hilton
Waikoloa Village and Hilton Hawaiian Village achieved occupancy of
78% and 62%, respectively, for the second quarter and occupancy of
89% and 84% in June 2021, respectively, with rate increasing across
both hotels by 2% from June 2019;
-
Orlando: All of Park’s Orlando hotels are open and
benefited from leisure demand as well as the return of some group
demand during the quarter, resulting in combined occupancy of 56%
in June 2021 and 48% for the quarter;
- New
Orleans: The Hilton New Orleans Riverside continued to
benefit from an increase in leisure demand associated with
loosening of state and local restrictions, and the hotel achieved
occupancy of 43% in June 2021 and 53% for the quarter;
- Southern
California: All of Park’s hotels in Southern
California are open, and as statewide restrictions were further
lifted during the second quarter, the hotels benefited from an
increase in leisure demand, resulting in occupancy in June 2021 of
75%. Occupancy for the quarter was 67% , an increase of 27
percentage points from the first quarter of 2021. Compared to the
second quarter of 2019, rate increased by 7%;
- 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 92% in
June 2021 and for the quarter. Compared to the second quarter of
2019, occupancy increased by 8 percentage points and rate increased
by 36%; and
-
Miami: Both of Park’s Miami hotels are open and
benefited from strong leisure transient demand, achieving occupancy
of 64% in June 2021 and 72% for the quarter. During the second
quarter, occupancy increased 6 percentage points and rate increased
by approximately 9% compared to the first quarter of 2021. Rate
increased by 23% compared to the second quarter of 2019.
Other Markets
- San Francisco: Hilton San Francisco Union
Square reopened in May 2021 as local restrictions loosened and
market demand improved, with four of Park's five hotels now open in
the market. The JW Marriott San Francisco Union Square and Hyatt
Centric Fisherman's Wharf, both of which remained open throughout
the pandemic, achieved occupancy of 46% and 60% for the quarter,
respectively, and 57% and 69% in June 2021, respectively, an
increase from approximately 26% and 30% in the first quarter of
2021 as local weekend leisure demand increased;
-
Boston: All of Park’s Boston hotels are open and
achieved combined occupancy of 56% in June 2021. Occupancy for the
quarter was 45%, an increase of 19 percentage points from the first
quarter of 2021;
- New
York: The Hilton New York Midtown's operations remain
suspended; however, Park is monitoring demand in the market and
currently expects to reopen this hotel in the third quarter;
-
Chicago: The W Chicago - City Center, Hilton
Garden Inn Chicago/Oak Brook Terrace and Hilton Chicago reopened
during the second quarter of 2021 as state and local restrictions
were lifted. The W Chicago – Lakeshore and Hilton Chicago/Oak Brook
Suites have remained open throughout the pandemic, primarily due to
demand from airline crews and weekend leisure travel demand, with
occupancy of 44% and 63% in June 2021, respectively, and 36% and
62% for the quarter, respectively;
-
Denver: The Hilton Denver is open and benefited
from the loosening of local restrictions, which resulted in
occupancy of 59% in June 2021. Occupancy for the quarter was 50%,
an increase of 26 percentage points from the first quarter of
2021;
- Washington,
D.C.: All of Park’s hotels are open and benefited from
increased leisure demand, with occupancy increasing to 36% in June
2021 and 30% for the quarter, from 23% in March 2021, and a 15%
increase in rate in June 2021 compared to March 2021;
-
Seattle: All of Park’s Seattle hotels are open and
benefited from demand from airline crews and weekend leisure travel
with combined occupancy increasing to 65% in June 2021. Occupancy
for the quarter was 51%, an increase of 24 percentage points from
the first quarter of 2021.
Balance Sheet and Liquidity
Park and its hotel managers have taken several proactive steps
to reduce its burn rate, increase liquidity and mitigate the
effects of COVID-19 on its business, including reducing labor and
other operating expenses and cutting budgeted expenditures for 2021
to approximately $40 million for maintenance projects. As a result
of these measures, coupled with expected continued leisure demand
and the continued distribution of COVID-19 vaccines, Park's
portfolio generated positive Hotel Adjusted EBITDA during the
second quarter. In June 2021, Park broke even at the corporate
level and anticipates positive cash flow for the third quarter,
based on current trends.
Park’s Net Debt as of June 30, 2021 was $4.4 billion.
Following the sales of the Hotel Indigo San Diego Gaslamp Quarter,
Courtyard Washington Capitol Hill Navy Yard and Hotel Adagio,
Autograph Collection, Park reduced its outstanding debt by $223
million. Park's current liquidity is over $1.8 billion, including
approximately $1.1 billion of available capacity under the
Company's Revolver. As a result of the expected sale of the Le
Meridien San Francisco, Park expects to further reduce its
outstanding debt by approximately $208 million.
Park had the following debt outstanding as of June 30,
2021:
| (unaudited,
dollars in millions) |
|
|
|
|
|
|
Debt |
|
Collateral |
|
Interest Rate |
|
Maturity Date |
|
As of June 30, 2021 |
|
| Fixed Rate
Debt |
|
|
|
|
|
|
|
|
|
|
Mortgage loan |
|
DoubleTree Hotel Spokane City Center |
|
3.62% |
|
July 2026(1) |
|
$ |
14 |
|
|
Mortgage loan |
|
Hilton Denver City Center |
|
4.90% |
|
August 2022(2) |
|
|
59 |
|
|
Mortgage loan |
|
Hilton Checkers Los Angeles |
|
4.11% |
|
March 2023 |
|
|
27 |
|
|
Mortgage loan |
|
W Chicago - City Center |
|
8.25% |
|
August 2023(3) |
|
|
75 |
|
|
Commercial mortgage-backed securities 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 |
|
|
138 |
|
|
Commercial mortgage-backed securities 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 |
|
|
2029 Senior Secured Notes |
|
|
|
4.88% |
|
May 2029 |
|
|
750 |
|
|
Finance lease obligations |
|
|
|
3.07% |
|
2021 to 2022 |
|
|
1 |
|
| Total Fixed Rate
Debt |
|
|
|
5.10%(4) |
|
|
|
|
4,604 |
|
|
|
|
|
|
|
|
|
|
|
|
| Variable Rate
Debt |
|
|
|
|
|
|
|
|
|
|
Revolving credit facility(5)(6) |
|
Unsecured |
|
L + 3.00% |
|
2021 to 2023 |
|
|
13 |
|
|
Mortgage loan(7) |
|
DoubleTree Hotel Ontario Airport |
|
L + 3.00% |
|
May 2022 |
|
|
30 |
|
|
2019 Term Facility(5)(8) |
|
Unsecured |
|
L + 2.65% |
|
August 2024 |
|
|
497 |
|
| Total Variable Rate
Debt |
|
|
|
2.95%(4) |
|
|
|
|
540 |
|
|
|
|
|
|
|
|
|
|
|
|
| Add: unamortized premium |
|
|
|
|
|
|
|
|
3 |
|
| Less:
unamortized deferred financing costs and discount |
|
|
|
|
|
|
(47 |
) |
| Total
Debt(9) |
|
|
|
4.94%(4) |
|
|
|
$ |
5,100 |
|
|
|
|
| (1) |
In June 2021, Park’s joint
venture repaid the $12 million loan secured by the Doubletree
Spokane with proceeds from a $14 million loan with a maturity date
of July 1, 2026. |
| (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 toward the $75 million mortgage loan
secured by the W Chicago City Center and has received a notice of
an event of default. The default interest rate on the loan is
8.25%, and the stated interest rate is 4.25%. 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. In July 2021, Park
fully repaid the outstanding balance of the Revolver with net
proceeds from the sale of the Hotel Indigo San Diego Gaslamp
Quarter and Courtyard Washington Capitol Hill Navy Yard. |
| (7) |
In April 2021, the joint venture
that owns the property amended its $30 million mortgage loan
secured by the Doubletree Hotel Ontario Airport to extend its
maturity to May 28, 2022 and modified the interest rate to
one-month LIBOR plus 3.00%, with a LIBOR floor of 25 basis
points. |
| (8) |
Following the sale of the Hotel
Adagio, Autograph Collection in July 2021, Park repaid $77 million
of the 2019 Term Facility, and as a result of the expected sale of
the Le Meridien San Francisco, Park expects to further reduce the
outstanding balance of the 2019 Term Facility by approximately $208
million. |
| (9) |
Excludes $225 million of Park’s
share of debt of its unconsolidated joint ventures. |
Dividends
In light of the COVID-19 pandemic, Park 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
remains 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. While recent
trends have shown signs of improvement, the economic environment
continues to lack 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.
Conference Call
Park will host a conference call for investors and other
interested parties to discuss second quarter 2021 results on August
6, 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’ Second 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 impact to the Company's
business and financial condition and that of its hotel management
companies, measures (including through potential alternative
sources of revenue) being taken in response to COVID-19, 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 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 56 premium-branded hotels and resorts with
over 32,000 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)
|
|
June 30, 2021 |
|
|
December 31, 2020 |
|
|
|
(unaudited) |
|
|
|
|
| ASSETS |
|
|
|
|
|
|
Property and equipment, net |
$ |
8,820 |
|
|
|
9,193 |
|
|
Assets held for sale |
|
77 |
|
|
|
— |
|
|
Investments in affiliates |
|
13 |
|
|
|
14 |
|
|
Intangibles, net |
|
44 |
|
|
|
45 |
|
|
Cash and cash equivalents |
|
909 |
|
|
|
951 |
|
|
Restricted cash |
|
35 |
|
|
|
30 |
|
|
Accounts receivable, net of allowance for doubtful accounts of $2
and $3 |
|
63 |
|
|
|
26 |
|
|
Prepaid expenses |
|
35 |
|
|
|
39 |
|
|
Other assets |
|
50 |
|
|
|
60 |
|
|
Operating lease right-of-use assets |
|
220 |
|
|
|
229 |
|
| TOTAL ASSETS (variable
interest entities - $235 and $229) |
$ |
10,266 |
|
|
$ |
10,587 |
|
| LIABILITIES AND
EQUITY |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Debt |
$ |
5,100 |
|
|
|
5,121 |
|
|
Accounts payable and accrued expenses |
|
178 |
|
|
|
147 |
|
|
Due to hotel managers |
|
90 |
|
|
|
88 |
|
|
Deferred income tax liabilities |
|
10 |
|
|
|
10 |
|
|
Other liabilities |
|
107 |
|
|
|
134 |
|
|
Operating lease liabilities |
|
236 |
|
|
|
244 |
|
|
Total liabilities (variable interest entities - $217 and $213) |
|
5,721 |
|
|
|
5,744 |
|
|
Stockholders' Equity |
|
|
|
|
|
|
|
|
Common stock, par value $0.01 per share, 6,000,000,000
shares authorized, 236,891,740 shares issued and 236,493,847
shares outstanding as of June 30, 2021 and 236,217,344 shares
issued and 235,915,749 shares outstanding as of December 31,
2020 |
|
2 |
|
|
|
2 |
|
|
Additional paid-in capital |
|
4,525 |
|
|
|
4,519 |
|
|
Retained earnings |
|
70 |
|
|
|
376 |
|
|
Accumulated other comprehensive loss |
|
(3 |
) |
|
|
(4 |
) |
|
Total stockholders' equity |
|
4,594 |
|
|
|
4,893 |
|
|
Noncontrolling interests |
|
(49 |
) |
|
|
(50 |
) |
|
Total equity |
|
4,545 |
|
|
|
4,843 |
|
| TOTAL LIABILITIES AND
EQUITY |
$ |
10,266 |
|
|
$ |
10,587 |
|
PARK HOTELS & RESORTS
INC.CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(unaudited, in millions, except per
share data)
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
| Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
Rooms |
$ |
207 |
|
|
$ |
21 |
|
|
$ |
313 |
|
|
$ |
383 |
|
|
Food and beverage |
|
54 |
|
|
|
3 |
|
|
|
76 |
|
|
|
164 |
|
|
Ancillary hotel |
|
50 |
|
|
|
15 |
|
|
|
79 |
|
|
|
72 |
|
|
Other |
|
12 |
|
|
|
3 |
|
|
|
20 |
|
|
|
22 |
|
|
Total revenues |
|
323 |
|
|
|
42 |
|
|
|
488 |
|
|
|
641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Rooms |
|
59 |
|
|
|
20 |
|
|
|
94 |
|
|
|
132 |
|
|
Food and beverage |
|
42 |
|
|
|
14 |
|
|
|
63 |
|
|
|
137 |
|
|
Other departmental and support |
|
101 |
|
|
|
60 |
|
|
|
179 |
|
|
|
232 |
|
|
Other property-level |
|
52 |
|
|
|
56 |
|
|
|
100 |
|
|
|
116 |
|
|
Management fees |
|
14 |
|
|
|
— |
|
|
|
21 |
|
|
|
25 |
|
|
Impairment loss and casualty gain, net |
|
5 |
|
|
|
— |
|
|
|
5 |
|
|
|
694 |
|
|
Depreciation and amortization |
|
71 |
|
|
|
75 |
|
|
|
145 |
|
|
|
150 |
|
|
Corporate general and administrative |
|
16 |
|
|
|
14 |
|
|
|
34 |
|
|
|
30 |
|
|
Other |
|
13 |
|
|
|
4 |
|
|
|
20 |
|
|
|
25 |
|
|
Total expenses |
|
373 |
|
|
|
243 |
|
|
|
661 |
|
|
|
1,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sales of assets, net |
|
6 |
|
|
|
1 |
|
|
|
6 |
|
|
|
63 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Operating
loss |
|
(44 |
) |
|
|
(200 |
) |
|
|
(167 |
) |
|
|
(837 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
2 |
|
|
Interest expense |
|
(66 |
) |
|
|
(50 |
) |
|
|
(129 |
) |
|
|
(90 |
) |
|
Equity in losses from investments in affiliates |
|
(2 |
) |
|
|
(8 |
) |
|
|
(6 |
) |
|
|
(9 |
) |
|
Other loss, net |
|
(2 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loss before income
taxes |
|
(114 |
) |
|
|
(258 |
) |
|
|
(304 |
) |
|
|
(937 |
) |
|
Income tax expense |
|
— |
|
|
|
(3 |
) |
|
|
(1 |
) |
|
|
(13 |
) |
| Net loss |
|
(114 |
) |
|
|
(261 |
) |
|
|
(305 |
) |
|
|
(950 |
) |
| Net (income) loss
attributable to noncontrolling interests |
|
(2 |
) |
|
|
2 |
|
|
|
(1 |
) |
|
|
3 |
|
| Net loss attributable to
stockholders |
$ |
(116 |
) |
|
$ |
(259 |
) |
|
$ |
(306 |
) |
|
$ |
(947 |
) |
| Loss per
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share - Basic |
$ |
(0.49 |
) |
|
$ |
(1.10 |
) |
|
$ |
(1.30 |
) |
|
$ |
(4.01 |
) |
|
Loss per share - Diluted |
$ |
(0.49 |
) |
|
$ |
(1.10 |
) |
|
$ |
(1.30 |
) |
|
$ |
(4.01 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding - Basic |
|
236 |
|
|
|
235 |
|
|
|
235 |
|
|
|
236 |
|
|
Weighted average shares outstanding - Diluted |
|
236 |
|
|
|
235 |
|
|
|
236 |
|
|
|
236 |
|
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSEBITDA AND ADJUSTED
EBITDA
| (unaudited, in millions) |
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
Net loss |
$ |
(114 |
) |
|
$ |
(261 |
) |
|
$ |
(305 |
) |
|
$ |
(950 |
) |
|
Depreciation and amortization expense |
|
71 |
|
|
|
75 |
|
|
|
145 |
|
|
|
150 |
|
|
Interest income |
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(2 |
) |
|
Interest expense |
|
66 |
|
|
|
50 |
|
|
|
129 |
|
|
|
90 |
|
|
Income tax expense |
|
— |
|
|
|
3 |
|
|
|
1 |
|
|
|
13 |
|
|
Interest expense, income tax and depreciation and amortization
included in equity in earnings from investments in
affiliates |
|
4 |
|
|
|
4 |
|
|
|
5 |
|
|
|
9 |
|
| EBITDA |
|
27 |
|
|
|
(130 |
) |
|
|
(25 |
) |
|
|
(690 |
) |
|
Gain on sales of assets, net |
|
(6 |
) |
|
|
(1 |
) |
|
|
(6 |
) |
|
|
(63 |
) |
|
Acquisition costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
Severance expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
Share-based compensation expense |
|
4 |
|
|
|
4 |
|
|
|
10 |
|
|
|
6 |
|
|
Impairment loss and casualty gain, net |
|
5 |
|
|
|
— |
|
|
|
5 |
|
|
|
694 |
|
|
Other items |
|
3 |
|
|
|
5 |
|
|
|
— |
|
|
|
10 |
|
| Adjusted
EBITDA |
$ |
33 |
|
|
$ |
(122 |
) |
|
$ |
(16 |
) |
|
$ |
(40 |
) |
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSPRO-FORMA HOTEL ADJUSTED EBITDA
AND PRO-FORMA HOTEL ADJUSTED EBITDA
MARGIN
| (unaudited, dollars in
millions) |
Three Months Ended |
|
|
Six Months Ended |
|
| |
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
|
Adjusted EBITDA |
$ |
33 |
|
|
$ |
(122 |
) |
|
$ |
(16 |
) |
|
$ |
(40 |
) |
|
Less: Adjusted EBITDA from investments in
affiliates |
|
(2 |
) |
|
|
4 |
|
|
|
— |
|
|
|
— |
|
|
Add: All other(1) |
|
11 |
|
|
|
10 |
|
|
|
22 |
|
|
|
23 |
|
| Hotel Adjusted
EBITDA |
|
42 |
|
|
|
(108 |
) |
|
|
6 |
|
|
|
(17 |
) |
|
Less: Adjusted EBITDA from hotels disposed of |
|
— |
|
|
|
2 |
|
|
|
2 |
|
|
|
(2 |
) |
| Pro-forma Hotel Adjusted
EBITDA |
$ |
42 |
|
|
$ |
(106 |
) |
|
$ |
8 |
|
|
$ |
(19 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
June 30, |
|
|
June 30, |
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
| Total
Revenues |
$ |
323 |
|
|
$ |
42 |
|
|
$ |
488 |
|
|
$ |
641 |
|
|
Less: Other revenue |
|
(12 |
) |
|
|
(3 |
) |
|
|
(20 |
) |
|
|
(22 |
) |
|
Less: Revenues from hotels disposed of |
|
(6 |
) |
|
|
(2 |
) |
|
|
(10 |
) |
|
|
(19 |
) |
| Pro-forma Hotel
Revenues |
$ |
305 |
|
|
$ |
37 |
|
|
$ |
458 |
|
|
$ |
600 |
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
|
|
|
|
|
June 30, |
|
|
June 30, |
|
|
|
|
|
2021 |
|
|
2020 |
|
|
Change(2) |
|
|
2021 |
|
|
2020 |
|
|
Change(2) |
|
|
Pro-forma Hotel Revenues |
$ |
305 |
|
|
$ |
37 |
|
|
|
715.6 |
% |
|
$ |
458 |
|
|
$ |
600 |
|
|
|
(23.7 |
)% |
| Pro-forma Hotel
Adjusted EBITDA |
$ |
42 |
|
|
$ |
(106 |
) |
|
NM(3) |
|
|
$ |
8 |
|
|
$ |
(19 |
) |
|
NM(3) |
|
| Pro-forma Hotel
Adjusted EBITDA margin(2) |
|
13.7 |
% |
|
|
(282.7 |
)% |
|
NM(3) |
|
|
|
1.7 |
% |
|
|
(3.2 |
)% |
|
NM(3) |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
(1) |
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. |
|
(2) |
Percentages are
calculated based on unrounded numbers. |
|
(3) |
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 June 30, |
|
|
Six Months Ended June 30, |
|
|
|
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
| Net loss
attributable to stockholders |
$ |
(116 |
) |
|
$ |
(259 |
) |
|
$ |
(306 |
) |
|
$ |
(947 |
) |
|
Depreciation and amortization expense |
|
71 |
|
|
|
75 |
|
|
|
145 |
|
|
|
150 |
|
|
Depreciation and amortization expense attributable to
noncontrolling interests |
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
|
Gain on sales of assets, net |
|
(6 |
) |
|
|
(1 |
) |
|
|
(6 |
) |
|
|
(63 |
) |
|
Gain on sale of investments in affiliates(1) |
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
|
Impairment loss |
|
5 |
|
|
|
— |
|
|
|
5 |
|
|
|
695 |
|
|
Equity investment adjustments: |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Equity in losses from investments in affiliates |
|
2 |
|
|
|
8 |
|
|
|
6 |
|
|
|
9 |
|
|
Pro rata FFO of investments in affiliates |
|
— |
|
|
|
(4 |
) |
|
|
(2 |
) |
|
|
(3 |
) |
| Nareit FFO
attributable to stockholders |
|
(45 |
) |
|
|
(183 |
) |
|
|
(160 |
) |
|
|
(162 |
) |
|
Severance expense |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
Acquisition costs |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
|
Share-based compensation expense |
|
4 |
|
|
|
4 |
|
|
|
10 |
|
|
|
6 |
|
|
Other items(2) |
|
3 |
|
|
|
5 |
|
|
|
(1 |
) |
|
|
36 |
|
| Adjusted FFO
attributable to stockholders |
$ |
(38 |
) |
|
$ |
(174 |
) |
|
$ |
(151 |
) |
|
$ |
(117 |
) |
| Nareit FFO
per share - Diluted(3) |
$ |
(0.19 |
) |
|
$ |
(0.78 |
) |
|
$ |
(0.68 |
) |
|
$ |
(0.69 |
) |
| Adjusted
FFO per share - Diluted(3) |
$ |
(0.16 |
) |
|
$ |
(0.74 |
) |
|
$ |
(0.64 |
) |
|
$ |
(0.50 |
) |
| Weighted
average shares outstanding - Diluted |
|
236 |
|
|
|
235 |
|
|
|
236 |
|
|
|
236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| (1) |
Included in other
loss, net in the condensed consolidated statements of
operations. |
| (2) |
The six months ended
June 30, 2020 includes $26 million of tax expense on hotels sold
during the period. |
| (3) |
Per share amounts
are calculated based on unrounded numbers. |
PARK HOTELS & RESORTS
INC.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSNET DEBT
| (unaudited, in millions) |
|
|
|
|
June 30, 2021 |
|
|
Debt |
$ |
5,100 |
|
| Add: unamortized deferred
financing costs and discount |
|
47 |
|
| Less: unamortized premium |
|
(3 |
) |
|
Long-term debt, including current maturities and
excluding unamortized deferred financing cost, premiums and
discounts |
|
5,144 |
|
| Add: Park's share of
unconsolidated affiliates debt, excluding unamortized deferred
financing costs |
|
225 |
|
| Less: cash and cash
equivalents |
|
(909 |
) |
| Less: restricted cash |
|
(35 |
) |
| Net debt |
$ |
4,425 |
|
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 August 5, 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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