Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK)
today provided an operational and liquidity update.
Highlights:
- Increased the number of open hotels to 55 of 59 hotels (93%),
or 86% of total room count;
- 40.7% occupancy in May 2021 for Park’s 52 consolidated hotels
(an increase of 3.7 percentage points from April 2021), with a
decrease in rate of 20.1% compared to May 2019;
- 53.8% occupancy for Park’s 45 consolidated hotels open during
the entirety of May (an increase of 4.4 percentage points from
April 2021) with a decrease in rate of 14.6% compared to May
2019;
- Generated Pro-forma Hotel Revenues of $82.8 million and
positive Pro-forma Hotel Adjusted EBITDA of $3.5 million in April
2021, with 24 of its 45 consolidated hotels that were open during
April 2021 generating positive Pro-forma Hotel Adjusted EBITDA;
and
- Decreased Park’s monthly burn rate to $23 million in April 2021
and expected to remain on track to break-even at the corporate
level in the third quarter of 2021.
Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer,
stated, “I continue to be extremely encouraged by our portfolio’s
performance over the past several months. Leisure demand trends
continue to accelerate at a faster pace than we had initially
anticipated, with impressive pricing power seen in most of our
resort assets, while early indications of group booking activity
and business transient travel should translate to a broader based
recovery across all demand segments over the back half of 2021 and
well into 2022. We remain laser-focused on executing on our
near-term strategic priorities, including continuing to reopen our
hotels, reducing our burn rate and further de-levering our balance
sheet through asset sales, as we enter what we expect to be a
promising period of demand recovery over the coming
months.”
Hotel Reopening Update
Park has reopened three additional hotels since early May due to
improving demand trends in the respective markets, and the Company
expects to open one additional hotel this week. Details are as
follows:
- The 403-room W Chicago - City Center and the 1,921-room Hilton
San Francisco Union Square both reopened in May;
- The 128-room Hilton Garden Inn Chicago/Oakbrook Terrace
reopened in early June;
- The 1,544-room Hilton Chicago is expected to reopen later this
week, which will increase the total open hotels to 56 out of 59
hotels accounting for nearly 90% of the Company’s total room count;
and
- The remaining three suspended hotels in Park’s portfolio are
currently expected to reopen over the next several months as travel
restrictions ease and demand recovers.
The current status of Park’s hotels as of June 8, 2021 is as
follows:
Status |
|
Number of Hotels |
|
Total Rooms |
Consolidated Open |
|
48 |
|
24,074 |
Consolidated Suspended |
|
4 |
|
4,760 |
Total Consolidated |
|
52 |
|
28,834 |
Unconsolidated Open |
|
7 |
|
4,297 |
Total Hotels |
|
59 |
|
33,131 |
|
|
|
|
|
Operational Update
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 Park’s 52 consolidated hotels were as follows:
|
Change in Pro-forma ADR |
|
Change in Pro-forma Occupancy |
|
Change in Pro-forma RevPAR |
|
|
2021Pro-formaOccupancy |
|
|
2021 vs. 2020 |
|
2021 vs. 2019 |
|
2021 vs. 2020 |
|
2021 vs. 2019 |
|
2021 vs. 2020 |
|
2021 vs. 2019 |
|
|
|
January |
(40.8 |
) |
% |
(41.4 |
) |
% |
(52.4 |
) |
%
pts |
(50.8 |
) |
%
pts |
(82.8 |
) |
% |
(82.6 |
) |
% |
|
21.4 |
% |
February |
(30.6 |
) |
|
(31.1 |
) |
|
(54.1 |
) |
|
(53.2 |
) |
|
(78.0 |
) |
|
(77.9 |
) |
|
|
25.1 |
|
March |
(17.1 |
) |
|
(25.4 |
) |
|
(0.7 |
) |
|
(50.1 |
) |
|
(18.8 |
) |
|
(70.6 |
) |
|
|
32.5 |
|
April |
47.3 |
|
|
(21.8 |
) |
|
33.1 |
|
|
(47.7 |
) |
|
1,305.3 |
|
|
(65.9 |
) |
|
|
37.0 |
|
May(1) |
74.1 |
|
|
(20.1 |
) |
|
35.7 |
|
|
(44.2 |
) |
|
1,325.3 |
|
|
(61.7 |
) |
|
|
40.7 |
|
______________________(1) Pro-forma ADR, Occupancy and RevPAR
for May 2021 are preliminary estimates.
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:
|
Number of Consolidated Hotels Open |
|
Change in Pro-forma ADR |
|
Change in Pro-forma Occupancy |
|
Change in Pro-forma RevPAR |
|
|
2021Pro-formaOccupancy |
|
|
|
2021 vs. 2020 |
|
2021 vs. 2019 |
|
2021 vs. 2020 |
|
2021 vs. 2019 |
|
2021 vs. 2020 |
|
2021 vs. 2019 |
|
|
|
January |
42 |
|
(37.6 |
) |
% |
(37.0 |
) |
% |
(45.6 |
) |
%
pts |
(42.3 |
) |
%
pts |
(75.0 |
) |
% |
(73.6 |
) |
% |
|
30.5 |
% |
February |
42 |
|
(30.9 |
) |
|
(29.3 |
) |
|
(45.8 |
) |
|
(37.0 |
) |
|
(69.7 |
) |
|
(65.3 |
) |
|
|
35.7 |
|
March |
42 |
|
(17.5 |
) |
|
(21.8 |
) |
|
9.1 |
|
|
(26.8 |
) |
|
2.9 |
|
|
(50.6 |
) |
|
|
45.9 |
|
April |
45 |
|
52.7 |
|
|
(18.8 |
) |
|
44.4 |
|
|
(34.7 |
) |
|
1,409.6 |
|
|
(52.3 |
) |
|
|
49.4 |
|
May(1) |
45 |
|
73.8 |
|
|
(14.6 |
) |
|
47.2 |
|
|
(28.9 |
) |
|
1,311.7 |
|
|
(44.5 |
) |
|
|
53.8 |
|
______________________(1) Pro-forma ADR, Occupancy and RevPAR
for May 2021 are preliminary estimates.
Park’s leisure markets continue to benefit from increased
transient demand and results for April 2021 and preliminary
operating statistics for May 2021 are as follows:
- Hawaii: Demand trends continue to rapidly
improve across both Hawaii hotels, with combined occupancy
improving to an estimated 62% in May 2021, up from 49% in April
2021 and 38% in March 2021, with rate declines as compared to 2019
improving from (11%) in April 2021 to (7%) in May 2021. Both the
Hilton Waikoloa Village and the Hilton Hawaiian Village generated
positive Hotel Adjusted EBITDA in April 2021;
- Orlando: Combined occupancy increased to an
estimated 45% in both May and April 2021 from 40% in March 2021, as
demand trends continue to improve, with all of Park’s Orlando
hotels generating positive Hotel Adjusted EBITDA in April
2021;
- New Orleans: Although occupancy at the Hilton
New Orleans Riverside decreased in May 2021 to an estimated 49%
from 65% in April 2021 and 64% in March 2021, with the expiration
of the contract to provide housing to college students, rate
increased by approximately 55% from March 2021 to May 2021 and the
hotel generated positive Hotel Adjusted EBITDA in April 2021;
- Southern California: Occupancy increased to an
estimated 65% in May 2021 from 62% in April 2021 and 54% in March
2021 due to a continued increase in leisure demand, with occupancy
at the Hilton Santa Barbara Beachfront Resort, Hotel Indigo San
Diego Gaslamp Quarter and the DoubleTree Hotel Ontario Airport
increasing to an estimated 73%, 76% and 84%, respectively, in May
2021. Six of the seven hotels in Southern California generated
positive Hotel Adjusted EBITDA in April 2021;
- Key West: Demand for both Key West hotels
remains strong, with combined occupancy holding at an estimated 93%
for May 2021 and a rate increase of 42% as compared to May 2019.
Both hotels generated positive Hotel Adjusted EBITDA in April 2021;
and
- Miami: Combined occupancy increased to an
estimated 78% in May 2021 from 75% in April 2021 and 73% in March
2021 as the market continues to benefit from strong demand with the
Royal Palm South Beach Miami achieving occupancy of 87% in May 2021
and a rate increase of 25% as compared to May 2019. Both the Royal
Palm South Beach Miami and the Hilton Miami Airport generated
positive Hotel Adjusted EBITDA in April 2021.
Liquidity Update
As of May 31, 2021, Park’s liquidity was $1.9 billion, including
estimated cash and cash equivalents of $789 million as of May 31,
2021 and approximately $1.1 billion of available capacity remaining
under the Company’s revolving credit facility. Park also had $33
million of restricted cash as of May 31, 2021.
Park’s estimated burn rate decreased to $23 million in April
2021 from $26 million in March 2021. This estimate does not take
into account capital expenditures or any possible alternative
sources of revenue that may arise, any hotel property dispositions
from the remainder of the year or payment of cash dividends or
other distributions not already declared and paid in 2021, if any.
The estimated burn rate has not been increased or decreased by 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
near-term burn rate, including deferral of payments, hiring freezes
and other cost reduction measures. 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.
Supplemental Information
Park’s management team is scheduled to meet with investors at
the Nareit’s REITWeek: 2021 Investor Conference and an investor
presentation will be provided to those investors during the
meetings. This presentation has been posted to Park’s website at
www.pkhotelsandresorts.com.
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 expected 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 Hotel Adjusted EBITDA, a non-GAAP financial
measure, in this press release. Hotel Adjusted EBITDA should be
considered along with, but not as an alternative to, net income
(loss) as a measure of its operating performance.
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.NON-GAAP FINANCIAL MEASURES
RECONCILIATIONSHOTEL EBITDA, PRO-FORMA HOTEL
ADJUSTED EBITDA ANDPRO-FORMA HOTEL
REVENUES
(unaudited, in millions) |
|
|
|
|
Month EndedApril 30, 2021 |
Hotel net income |
|
$ |
(29.3 |
) |
Depreciation and amortization expense |
|
|
24.3 |
|
Interest expense |
|
|
9.0 |
|
Hotel
EBITDA |
|
|
4.0 |
|
Severance benefit |
|
|
(1.2 |
) |
Other items |
|
|
0.7 |
|
Hotel Adjusted
EBITDA |
|
|
3.5 |
|
Less: Adjusted EBITDA from hotels disposed of |
|
|
— |
|
Pro-forma Hotel
Adjusted EBITDA |
|
$ |
3.5 |
|
|
|
|
|
|
|
(unaudited, in millions) |
|
|
|
|
Month EndedApril 30, 2021 |
Total
Revenues |
|
$ |
86.7 |
|
Less: Other revenue |
|
|
(3.4 |
) |
Less: Revenues from hotels disposed of |
|
|
(0.5 |
) |
Pro-forma Hotel
Revenues |
|
$ |
82.8 |
|
PARK HOTELS & RESORTS
INC.DEFINITIONS
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.
Hotel EBITDA and Hotel Adjusted EBITDA
Hotel earnings (loss) before interest expense, taxes and
depreciation and amortization (“Hotel EBITDA”), presented herein,
reflects net income (loss) excluding depreciation and amortization,
interest income, interest expense and income taxes of the Company’s
consolidated hotels. Hotel Adjusted EBITDA is Hotel EBITDA further
adjusted to exclude items that management believes are not
representative of the Company’s consolidated hotels current or
future operating performance, including severance expense
(benefit), and is a key measure of the Company’s consolidated
hotels 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 EBITDA and Hotel Adjusted EBITDA are not recognized terms
under United States (“U.S.”) GAAP and should not be considered as
an alternative to net income (loss) or other measures of financial
performance or liquidity derived in accordance with U.S. GAAP. In
addition, the Company’s definition of Hotel EBITDA and Hotel
Adjusted EBITDA may not be comparable to similarly titled measures
of other companies.
The Company believes that Hotel EBITDA and Hotel Adjusted EBITDA
provides useful information to investors about the Company and its
financial condition and results of operations for the following
reasons: (i) Hotel EBITDA and Hotel Adjusted EBITDA 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)
Hotel EBITDA and Hotel Adjusted EBITDA are frequently used by
securities analysts, investors and other interested parties as
common performance measures to compare results or estimate
valuations across companies in the industry.
Hotel EBITDA and Hotel Adjusted EBITDA 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.
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 Occupancy,
Pro-forma ADR and Pro-forma Hotel Adjusted EBITDA. 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 June 8, 2021 and include
results from property acquisitions as though such acquisitions
occurred on the earliest period presented.
Investor
Contact |
Ian Weissman |
+ 1 571 302 5591 |
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