PK - Earnings call transcript Q2 2020 | Park Hotels & Resorts Inc.

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Operator

Greetings, and welcome to Park Hotels & Resorts Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, the offer is being recorded. I would now like to turn the conference over to your host, Ian Weissman, SVP, Corporate Strategy. head. go Please

Ian Weissman

and Resorts operator, to Park the Thank Quarter welcome, XXXX & Second Earnings Hotels you, everyone, Call.

statements today Before we many considered made that remind to securities forward-looking are begin, I of would the like under laws. federal everyone comments

the those filings to and are publicly obligated expressed could and in that statements results future update risks these these to with we described are SEC, or forward-looking As to uncertainties cause our subject numerous differ statements. revise from not

certain discuss may financial we call, today's on addition, as such EBITDA. non-GAAP adjusted In information,

Executive can with Baltimore, our SEC You operations the current as financial review industry our the to an on on at website Chairman the in earnings a will balance find will our in the on our release well as morning, and update provide a provide on with in filed and addition Chief GAAP pkhotelsandresorts.com. whole. This comparable Chief an a reconciliations the our this update liquidity. quarter information X-K results well as supplemental thoughts Dell'Orto, together our most financial Tom second measure and Sean Officer, as morning's his Park's available as directly Officer, information Financial of sheet to brief

remarks, Following to that, I turn call will would we our for prepared like Tom. to the the open questions. With call over

Thomas Baltimore

mandated faced to and grinding remain X saying that industry the a by last restrictive the ever with you families been challenging policies I I start doubt, your orders and standstill, safe, to across healthy the Thank most world. want travel you, well. everyone. travel lodging have virtual and Ian, all and Without has stay-at-home months welcome, period the hope a

drew being XX team demand virtual liquidity. June, development, depressed. and many executing our have at remains our that our including social the April, gradual rise amending hotels, our dramatically learning in by which Despite We implement in U.S. are major underway businesses cases vaccines norm, the pace much plans districts to impediments capital mitigate XX billion remote vaccines several until suspended widespread largely issuance. business corporate challenges, are practice solutions, expect uncertainty, at encouraged XX% reduced are While our balance obtain And place. students, reopening to to substantially school and by are liquidity or spend in over quickly encouraged early bond a covenant for remain including home employees to our both increased travel distancing We III in the Phase relief $XXX of With moved and and committed and and our March is million the medical very remains facility don't our race operations demand into to still with our global as of of these continue and sheet travel. increase action the solidified in will and by losses from with we down COVID-XX trials. meaningful bolster revolver. credit our further $X to We a we therapeutics

X assuming actions, our the from and we with end quarter of our the from rate combination million, well of have $XXX the first positioned pandemic. ended the these runway a quarter keeps to all This of circumstances, liquidity which suspended under million from the cash hotels original available, or to With years $X.X disruption most of reduced a over estimate. operations increase equates over $XX to Park navigate severe burn XX% reduction the billion the monthly

XX in and remaining consider to hotels. the fluctuate, ease ultimately, airlift closed. and as the travel determining there recovery cost at of Park operations speaking, we restrictions open, fluid, consolidate room our hotels the we started versus the our we of which demand month, capacity, remains continue shifted restrictions extremely situation by has hotels phase process our While are have booking begin in of to as for count. opening another capacity, benefit Accordingly, reopening neighboring we recognize in XX focus reopen audiences, reopened with minimal and accounting state-at-home done followed of with July, hotels, to state X potential when during the as our Currently, the all of June, a relatively total cost. XX% local and XX hotel what were trends, we quickly and and start-up to of approximately hotels number to including a factors Generally

Over the balance count of bringing open of September XX% our almost count, to XX hotels, the and total for most XX accounting by hotels additional an the hotels our open to third quarter, with year-end. XX, we suspended of room opened expect by remaining total

trends. broader Turning operating to

mandatory of visitors safe X.X accounted list We relative basis. across step performing included accounting In forward, for is XX% leisure challenged as the state million one in of on across Hawaii more least recently note, proof markets tourism. date XX-day have our partners. to pressure On this Japan XX provide demand Hawaii inbound Japan have X seen given beyond they travel of an countries just a designated on regions, our drive-to better With hotels. however, Japan quarantine than a more exclusive Hawaiian from important for total XXXX, how an its meaningful travelers all Japan is for remains at Hawaii nearly Hawaii to markets travel and X, extending inbound XXXX, to negative also a while and through travelers that transient positive requiring locations segments restriction of test. with with September and COVID-XX

the largest which challenged scaled electing business in back city's associates the for first the the workers. half among citywides the the to foreseeable the The remains with players most hotel outlook or responders country. future. all all Mayor housing transient hotels essential Francisco, of with markets San over of XXXX The keep ordering and canceled to major and exception is challenged either Turning those with home at of back majority closed

to group we council the rebook On side, are events. working

Demand half ADR second early this of the XXXX key been June. Palm year-over-year. the or was of trends a in in and key at range targeting of relatively for beyond June. are the West West healthy have Hotel XX% for spot in for our leisure in drive-to Miami occupancy remained the trending north opening with bright of key most in Hotels in [ph] both flat month Miami Notably what However, West, a impressively the relative with portfolio and properties, from point XX%

property season. resort tremendous and restart tied out teams of the they accounting NBA early was second demand entire am on across other local doors our Orlando, July resilience, opened as market, incremental creativity ways Effectively successfully with the a buying quarter, of report Finally, perseverance I that the media Waldorf find contract of try but to the in for Group October, demonstrates and closed capture Complex, X. our Bone its through identify to demand. million large This and the virtually negotiated which nonexistent the sales is for $X demand ancillary Orlando Orlando team our Hotel revenue. pleased to Creek the for to

as for filling another XX% on student successfully a to alternative to traditionally which spring box housing revenue a for of block and example, auxiliary, University accounting of outside its of XX% XX%, group an approximately of in serve hotel, while semesters, $X incremental fall million mix relies for revenue. The for Orleans sources we Xavier XXX the and of a of As Riverside, Louisiana Hilton rooms negotiated looked New roughly

to to rightsize also We each the to continue reduce look future, operating department we the for model and improve more specifically. as aggressively efficiency seek at costs

We management the are We positions with similar hotels hope where markets, of consolidate provide the months updates in coming our several partner operators neighboring progress to it makes operations looking complexing to process further with key in on across to sense. ahead.

the steps profound capital our of industry, while took adequately outside on working this to Park more cut the that recovery. our factors liquidity company portfolio eventual you control for necessary successfully enough raising position difficult assure impact on strategically a many cover but drastically crisis, interim. the to in laser-focused are hard an through there costs team to the are We needs across can our that the than is I navigating having While

side other find believe an operating the that the permanently brands as model this owners health system benefit to and hotel take of you will should from less leisure significantly of supply and crisis, profitable pent-up and collectively demand hotel from both business travelers. work On industry we more out strong cost and

members first balance waters. to all our as core time thanks and of all sincere Park men our truly who team we some through operating have has over uncharted my of and throughout that, these will this offer stepped the turn partners to women, principles crisis. tirelessly like with of our Sean, up displayed and this sheet not who team and have to I'd weighed experienced call color like all more I'd and And a on our to provide is liquidity. seasoned, Finally,

Sean Dell'Orto

Thanks, Tom.

briefly during decline, the quarter. RevPAR with hotels the results. with our XX% our Turning the majority to quarter We a second quarter ended closed of

of For May in costa occupancy; Top Doubletree witnessed in slightly to the XX% gradual those at occupancy occupancy. in July at hotels highlighting averaged XX% Airport results and include Hilton XX% north hotels, Marina demand. better averaging that remained occupancy increasing Key Resort Boba while additional to XX%; open, our XX each Santa we improved also XX%; June. our performers West in further in opening July, XX% in Hotel after ramp-up Durango Seattle In April, Hilton exceeded XX%, XX% month, with

remain in in year's revenues continue continued both quarter, concern pipeline. to canceled. our with business a balance the decline than currently XX% years travel. of into XX% hotels, already similar continue have group and for to for is and Looking events which anticipated leisure we future more the the said, be quarter we approximately room of year, expect another to fourth to will are overhang suburban out cancellations operating over as be account an we performance Group performance over third drive-to XX% challenging this down as leisure and be Overall, the expect XX% of by COVID-XX count. the rebooked driven That assuming for are creating

Turning to the balance sheet.

currently unclear. the the that maturing As million positive of to of million sheet actions, of allow the on differentiator our still to balance effectively us proceeds which $X.X inaugural his of Tom remains term balance with repay offering cash Due per million of $XX bond by our recognizing burn upsized then ultimate proceeds $XX to one month, capital, and With availability size also key while on another operating corporate year, rest quarter, was over next fortify our this on levels. uncertain used X-year issued due are over loan million current and duration as allowed $XX crisis, $XXX our billion been of of runway which the of of a has XX We times offering the par bond a the further will the not of but balance modeling May, of the be key to $X operating increased X now address extremely $X.X after $XXX to to available execution December remaining were market X million, by market our above only with during demonstrated has liquidity through our $XXX extends demand. to a with the million a manage our of billion in $XXX and of which maturities. shape ability on Park of excellent tack total $XXX hotels of of our billion well us portion we liquidity X for bolster targeting and to had alternative as opened, continue cash is priorities million noted of offering A consisting liquidity $XX $XXX our in revolver. comments, current priced into successfully its In bonds, in our of of a very we near-term on were the Originally pleased taking our end navigate with approximately months, X.X% access second to to million, us coupon. environment million sources revolver sheet the callable to with million sheet. based subsequent XXXX Park a years in

repayment, a of second $X.X As debt the quarter subsequent net and of billion. debt the result totaled as offering

debt months, maturities monthly carrying XX of coming and under maintaining sheet. Park's December look remarks. markets, we on loan, near-term reopening reducing $XXX and months, Park's finally, our the the of operate next As out severe progress and state hotels on include: beginning over significant which includes in $XXX to costs; addressing the a goals cash further through combination our most conditions; our minimizing XXXX; revolver financial concludes the due burn recovery million process That efficiently the of term of depending liquidity and deleveraging balance outstanding both the million the prepared our capital

We one address questions, To have first will question, follow-up. line each now we and open of Q&A. yourself the that please. the you we for ask question to may one limit Operator, your

Operator

question [Operator Instructions] comes BMO Markets. Our first Aryeh with from Klein Capital

Aryeh Klein

Can occupancy the you've heavy about post expect you so and leisure you the that seen seasonality intact talk demand the given how summer far? maybe

Thomas Baltimore

up and the hear repeat to Aryeh? you Can little you're breaking you, question, It's difficult a bit.

Aryeh Klein

perhaps bit? leisure seasonality how about slows you Sorry to just post a when the trend down that expect about Can little summer demand that. and you talk

Thomas Baltimore

Yes.

in you type you're vaccines the our really remarks, have in is, if my our second clearly, half to think, that's continue and obviously, said will medical as year whether is about meaningful -- therapeutics a We're then candidly I for distribution, until reality of Park. and/or challenge not And think demand confidence prepared for our reality the portfolio industry and obviously, really increase restored. think solutions be a our going the we of see, for in I place, product the portfolio, the I encouraged. to

of there's I different global trials. I As Phase think there X lot race I or -- said, that X with are are the in think III solutions underway, a of the

the that XX% of continue third to what's about sort XXXX about of again, to be answer up our third case picking of fact, the RevPAR challenge probably for of strong down And in quarter question that. make your a we're in could, better get portfolio, If or it's slightly where into leisure will happening, directly, quarter, think But anything, quarter. you north that, to we certainly and second looking drive, fourth of as too. the demand clearly be year could probably half so XX% XX,XXX given rooms extended a a about There's us. than

expect we fever year is from and certainly restored. out, will to the the solutions have that. do challenged and half be doubt, But to as continue So get until will benefit no that people confidence want are second those continue medical to place of in

Aryeh Klein

well. on like about sounds from for seen it. the here, see more opportunity you're remainder And the Got How do doing you you've more And much contract year it of rates, the you business then you're seeing which can others those? as there? talk just rates

Sean Dell'Orto

we is This I seeing definitely the Sean. more contract in mean, are mix.

I looking revenue June, and about for the X%, XX% June. time last this year, mix around we're contracts think at this clearly, for

to crews certainly and managed through hotel picked of more the the markets. like base we've through clearly certain clearly, been in maintained maintain with open relied crews started -- airline So business that a that the for contract we've the and upon that remained up -- that's since and great and relationships even pandemic have

that's for a the going during us in We some we in. of focus only our of even mean that layered forward. I like be I hotels. sites layered it times good So think for

we'll So be looking will continue, that aggressive at. and certainly in

think, I okay you year-over-year for XX%, look generally you but the for kind look at that, held June. rate XX%, considering, as still as of it down up

Operator

Bank with Asad comes Dany question of next Our from America.

Unidentified Analyst

it drive there's a portfolio? you helpful? the in but between any be across So a I of would end walk But and mean, portfolio, just provide of through touched color be you held kind little rest your my us resorts the the there to kind can Sean there. of I'm question was, could help at on bit how may the dispersion rates assuming

Sean Dell'Orto

Yes.

the the last see obviously, that in in on I at XX%, -- think anywhere with typically portfolio talked across you is contract I challenging transient. about group have because obviously, looking ADR leisure's of we what shift extra below and I mean, from contract, overall mix think is XX% business emphasis contract

contributing was But like Reach okay, and month in the I shift so. or XX% it. West Marina slightly slightly of some held down think, there X%. Key as for up mean Santa look mix to around the has the Barbara drive-to was you Costa down year-over-year up, So resorts, at I

we've occupancy with So resurgence strong better markets, certainly generally, the those and performance side and I as -- until performance in that into exceptionally And well seen July, building think, on saw rate happen. better-than-expected well. the in June

kind occupied assets XX% of really down probably at think I being QS XX%. we're fell to and the looking of north

So that's at there's element you're as down it's there, within But components, seeing XX% even rate but components, a a anywhere element. But from of look probably had an rate, I too, those XX%. again, you mix impact. certain more mix think to

Unidentified Analyst

then And it. follow-up. my Got just

peers some periods. kind kind your have of business like of being business into much us us Some Can that's on give that? group of have the indication future group the and rebooked on how kind of you book that Anything of terms of how an pipeline, that's may of in given behaving? just you is been canceled the be maybe color getting just

Sean Dell'Orto

Sure.

I actually nights later consistent XX% years. canceled in it's room 'XX been that rebooked others I'd rebooked into has XXXX XXXX. about a -- lot so that think say of probably XX with Thankfully, into of and half received about 'XX. were in far we've not

that And Ultimately, wait that So right a we cancellations don't think ultimately to approach. are come XXXX pipeline, taking pipeline certainly just sitting that expect now. to see of the to XX% canceled fruition. in I

decisions making of when think, rebook come think be kind future these for of kind have vaccines into kind years. So of to I through, certainly, kind everybody I the at a we I that good, point tailwind think that's to people going of

Operator

with Roth James from Citi. comes question Next

Unidentified Analyst

about the in in Tom, meaningful making specifically, of How terms to come one of that's something revenue terms been remarks there environment? a And in you would way difference I thing big I'm a your ask guess, are significant stay, change even up on this changes better And kind bit moves a of lower even brands, model, are environment. which a I lot operating make opening put have the on pretty the little operating your guest operating changing the can during kind wanted margin? of owners talked work? of pandemic. potentially is that that you, I is model in housekeeping in focused eliminating a guess, up the to table, post to margin other does And ability wondering,

Thomas Baltimore

It's of a really and one great employees. situation this I coming X protects us it that touched benefits buckets. rightsize of out overs. or And for obviously all on business. is stay them kind sort and for a in that others question. the And crisis, better that say, collaboration probably to put I really would of guests tell is there's no an incredibly you among the brands Obviously, housekeeping. hardball reality communication The no I'd of the modify limited of the housekeeping you one. what's and

standpoint, post is the But continue mindset depending We'll the going some probably that or no a think probably is prefer scenario. pandemic. on I sort up of the to opt and from and will doubt speaking, out there. are end there's evidence customer market customers with opt-in

with you to which going contactless the of with knock, that So we Marriott little room more I probably the or mobile for then you're drop again, and and of of believe going really I see Hilton a service, in and the again, to a result and and Digital and see with at you're delivery guests, you having front many. of Key if desk when continue there savings an equivalent, to other expansion a think probably is, preference menu also obviously, contact But that. continuing Hyatt and also that, check sort be significant. sort to if as pretty combine will, there, going a pickup, only clearly, are reimagining certainly think

assume huge are environment. points, lucky to you you're it of a And I when sort you and industry. basis in XXX we to XXX probably you points million get for looking $XX think take a million X those operational will, you basis buckets, at pre-COVID savings or if our a if $XX look if opportunity year portfolio, at the in

other are our property I Can I I complex also also discussions know groups operating in cost there working we are managers operators And to Hilton know combine there's So we common there. across where can of costs for both or as ownership a and manager think they're management are really staff, passionate, markets. whether huge it's certain the we are there's opportunity think opportunity out out this. that that committed a Marriott the I it. to well. combine in -- take and other costs take above there to with

we concept. these So one passion sense. makes of will to benefit all initiatives. be think industry. are this It's There is every the We the going it and complexities in motivation on to there. But really,

encouraged we move are forward. as we So

Unidentified Analyst

talking in going is Okay. your a you Were your Or forward. for of the about existing in-place hotel remarks, And less the significant that view a won't you there development? then reopen? piece opening inventory new too, said potential supply

Thomas Baltimore

think front, obviously, there on unable who to I given a are expanded, owners either the the service. ourselves find circumstances in that we dire debt will meet that it's just be statement fair all debt that

up delinquencies I the already -- XX% in our are at industry. think in

supply look markets, you a York XXX,XXX the as that's So XX% are plus minus, have or some has market as perhaps that an for you believe XX% New of in example, already to about or significant. across rooms, talking

will be Chicago, I back others probably throw pandemic not only in reduction looked about the keys, to how San other certainly you last, Francisco, to the have convert depending There to owners but perhaps even uses. on there in think believe that that a obviously, will think supply. long, be have you As

when that through tailwind think be will we get this. a So we

pricing think that of last power, part all really for you think, which cycle. certainly as somewhat is, the know, as also lacked latter we opportunity really this industry We that more is about providing an the of

going every markets to the of a that's are but net a out think be we're reduction about will supply. U.S. say be talking Again, outside think we'll a fair certainly post we I not market are to in it. see U.S. a little that that We're coming different, there talking about of And So number of the

Operator

Barclays. comes Powell with Anthony from Next question

Anthony Powell

in the largest A the question of regulatory markets. some environment on

Just you of been that that maybe terms governments to into looking as do think do these some some in markets you there's risk are local open, closed them the in next things think or of have stay some year get the a try opening? even very the fall winter, first of of to conservative of for much longer half

Thomas Baltimore

going Yes, a challenge is most be I Hawaii. it's would say great to question. the probably

they've about administration you -- in has fairness, If job. Hawaii, done the think, an there, excellent I think

Wednesday. cases, seen about deaths. XXX a on week, or Tuesday had I I slight and only think Unfortunately, they've there are only minus and they plus think uptick cases have this cases on XX X,XXX XXX Monday,

carefully. back. been It know I to planning the get a know, you anything has few to September And opening contrary. haven't surprise we stay pushed to back That, the continues as Governor us pushed we're X. were heard manage So if that Currently, one on not there, would that times.

phase it XX. relates Francisco, to as begins stated I of the X, think August I think, kind Mayor on San

We're that. opened X. to X hotels there. this expect sort month. not that We've X got There's We've begin we we will planning. of So open would

are acceleration be as October perhaps certainly more cash September, us we to you what We said and rate our and than million. we we down from down at I The prepared a thought bringing would growth $XX another hope demand Sean in carefully more million burn that said the rate. burn we million job, managing safely in it make manage million, we $XX and before frame. profitably to open runway. desire one, that less really cash my or currently really to $XX remarks, know, we of -- has cash is as expect least for time to as as wait are the But done can $XX in will it. again, really X actual sure team really to others would lose great in his hotels our giving X burn money the in do rate And that it remarks, The months

here, north So of of X.X scenario. under most Park's got we runway years extreme think, well the

Anthony Powell

right some And in maybe What half to of market bringing in next? now? back or And access transactions. would year to gears switching you it. Got this to consider market you the just sale are seeing the asset early

Thomas Baltimore

We really are finance. on focused

few noncore the As Sean for listeners burn you'll bond we out, sold narrowed lot we not given had done assets discount profitable we've -- really continuing It contract And the thoughtful, near-term our an to some, post Chesapeake, has sold preference see those in -- covenant X there remind I'll as in hotels, noncore priorities addressing with reopening continue using our secondly, asset that our success our Park to $XXX when last evaluate obviously as is buyers continuing for our minimizing our never stopped team: sales. great we in XX given We're reduce mentioned, would leverage. are way. clearly be rate; pointed We've you'll rate; just again, get continuing relief. have I -- then a to discussions. $X.X to offer, million reduce burn fourth cash assets objective, sales. have asset internationally. with with for And XX us would We continue. the billion, it pre-COVID. to years, can a us obviously, of optionality cash assets we those third, discussions and the our we see COVID scale; Park the And that about maturities, prospective over even including proceeds obviously is

really to were way sell assets. on we well of noncore So our continuing

Anthony Powell

discount Is still about Or that closed is the recently? COVID XX%? a

Thomas Baltimore

Yes.

I think it's closed.

depending the think I from down to XX probably but and XX, XX probably think market on but to Anthony, asset, XX continues I to the it narrow.

to As global that we yield that, the other and to is that this certainly going more we there we're know and provide side believe be there's to going and evidence get vaccines, will the rates we and of therapies get will the confidence believe closer that of people that underway pandemic.

Operator

Next Bill question Crow Raymond James. comes from with

William Crow

how Tom, perspective from guests they hotels? labor operationally changes the of your the reacting a go high-end and are as especially to some --

Thomas Baltimore

great it's Bill. Yes, question, a

by -- words on we chose said surprise of I continued limited think largely and my will me be will you'll think limited that case. that of see a think luxury, I to you really limited, kind think when sort Clearly, for case it I not I housekeeping be about I carefully housekeeping. no and It that as earlier would

guest I demand of in supplemental the to a think, about, certainly many longer. that's we're near service, think think will, these permanent, in talking and incremental that whether there's embedded the not for that is I term, to I be if them rate But or whether for going candidly prepared charge. preferences pay the

about, a sort at and really is But that momentum, product, going to drop contactless service. people the I think resistance that. want service, is continue we here exists then already what seeing find particular Room and not showing in housekeeping, As this get you'll And and have going knock to seeing again, desk luxury using speaking, are right front think We're room obviously, room. to as gain not only take advances delivery for clearly kind on to and of digital of asset. you which generally key, technology, model in the to any a people we're all in

William Crow

just you for housing? could about Quickly, using economics a Perfect. talk right. of student the All hotel

Thomas Baltimore

for case, be I so XX% example, housekeeping, you partners a will proactive Orleans, be food asset service, management room there And if University runs model and that providing the operating will at not which lot not not out. be and in them credit for group, operating what New demand, where is product, is team hotel our and an as a will of component. this students there what of think about one beverage there's there a clearly, and being reaching want. where XX% Hilton to the really that our and Well, is which not It with is

I But may about incremental think we actual I the really provide us balance. it component. really So recall business. revenue, cost million to not a sense. benefit that in made in that $X big found And incremental for second. is that don't Sean a rate the

are flow-through move forward. So the for other as for really markets we looking in good going be us. to similar here opportunities many we And is

Sean Dell'Orto

of right. add you're paying If kind acquisition is you're of to the that, see of rate of contract add gross the and direct. of that kind customer add-back of Tom to the maybe not up, fact you again. kind where -- I I kind you're you you flow-through that I to mean, you paying a housekeeping that think to like could get costs And kind doing back -- is not

XX% take think that XX% If you on near relies hotel right the an this asset I in your about of the the a rooms New as Orleans months make environment it's term. X out as certainly group, this next a trade over in for on to think

Operator

question next comes One with Our from Malkin Securities. Neil Capital

Neil Malkin

think to higher-level Just it. a question about maybe or a way

other or late in vaccine therapy, stage something all the fantastic. is pretty we talked which like that, You about agree trials, can being

However, that get commercialized, time or individual corporate in going And inoculation. takes about still public distributed, and to be then it's to get buy it also comfort. there's

tomorrow, groups a back, then have So you out all demand of take view terms as actually than, on as the vaccine? could back a we some have your just it's, obviously, thoughts do stance we going you longer play come a in that objectively. come corporate share more initial what going process seeing to you about be accounts maybe well for their is right? a or have and talk or to mentally think largest when It's Because what oh, if of vaccine, will how

would thoughts any be great? So

Thomas Baltimore

comments I a I'd make And it's a question. think here. couple of Look, great Yes.

some and of on I as going they are to I billions traveling, you of is the we've rate. this, head that going the really the pandemic the and And communicating they're have of advising we're nail human here that going going that coming will is to work, I can it, us investing got will these that, first the this adoption and What being prospective other really vaccines vaccines none dollars. and the going like that know, hit they'll resume to therapies you all American that can in and American the you a interaction by global capacity the also spirit, that lives and Webex believe they're particular some to hope the But government believe the take are movies, I devices. we for manner, predict, you've medical these restaurants, are out Americans got you, hit many replaced not the to and that with to be already And federal But that if our that underway. we're there. all are manufacturing with that in of think and is you've professionals safe think the this will. Zoom also listeners, the and race get got believe other of so to global of where have majority side vast normal passionately of

personal they'll will So high. And time. is take that you're belief rate right, some I my be -- the adoption

lives. liability as really and resume of and are other think their liability Congress they're the I companies to to schools that as addresses the of limiting side part and get about anxious think governments, once people that, the we afraid issue, you

transient resuming. quarter, is obviously of believe that assuming by travel planned you December business I So And leisure to and going see I we don't still is people will companies the believe to can start have approved everybody's and recommended, group. first quarter, the beginning if that as rate I by November, the adoption bringing certainly -- but be it's would them first certainly has it back, followed that ahead. back by normal, think is that old

long will really, rightsize the and our until are careful and feel creatively Companies continue be been safe about people to going be I to and have as continue business to that, think to confident. again, we're we'll probably group cautious doing. and with

using interim Orleans, do rate. New for of burn necessary in what's university. in We'll obviously, our taking certainly the revenue XX% and as and it doing the essentially we're business reduce As to continue cash gain to

Neil Malkin

I that. I understand appreciate question, I thoughts. Sean... but like tough to your just a Yes. hear it's

Thomas Baltimore

Good.

Neil Malkin

Why?

Thomas Baltimore

them. share To

Neil Malkin

Yes.

through wondering, do? points that can are period? like just that not What to the pretty strict, assets, to -- us to your talked or when allowed you -- just the So Sean, can but it seems what are the you I'm covenants restriction waivers are you I'm the walk maybe waivers have -- you you the also talked you do? for noncore adhere from -- maybe waiver during about sorry, the selling you salient have like Like

Sean Dell'Orto

that reduction from credit sell liquidity I is we the mix manage to to it debt think going operations, that kind expect to or our the have -- debt there assets, you're Ultimately, well. and so term do with revolver purposes. kind repayment down typical Sure. of of no drives current buybacks, of capital as kind Certainly and the restrictions do -- refinance pay a refinancing waterfall. the reduction for internally a ultimately can some looks side revolver that outside And for the see we like and there. no between There's debt. -- you loans, dividends between able facility a to mix on of still But permanent to additional

while us kind restrictions the cash So in a quick way to given way. to system kind relief, the in the grants they've behave is there of a in in of of terms keep are

credit it, And accomplish as was and mean, that, kind on out getting extending well ultimately were to approval too. so all getting that facility that's as what liquidity. And too, of able for we of us we adhere I a XXX% our year part to.

So we to room operate. I plenty -- and think have of

utilize. were asset XX $XXX equity, other can raise this we XX down sales to $XXX paying without ultimately purposes have We debt any million We we have a bucket. restriction in We for we to besides at do can -- million we use And can investment can there. -- point. if

we feel enough circumstances. like think and given flexibility had certainly I we optionality the So

Neil Malkin

interest is that. quick principal how of along your -- guys I burn I housekeeping, The much is the in guess month? No, B, A, appreciate cash your saving that rate? Yes. same you And every and you mortgages. then And said that some deferred then one lines. new on

Sean Dell'Orto

rate. is burn That cash we do with our not. What ultimately

assets are what assume we of not we're We're working into currently of which the get and kind mode base. open, -- the more capital. an of that You to we don't most with as seeing of want majority closed kind the accrual

far, burn. in million across of doesn't amount so deferral $X it done those a lot, million a a But of lot -- we're cash kind -- our that kind Chesapeake kind So things X-month counting period. ultimately, portfolio kind and to of it's of still $X in about interest it's thus to the on but the to carry we've a X- concessions

Operator

from comes Next Gregory question Securities. Miller with

Gregory Miller

for progressing to my groups. supported question, I from letter curious, corporate believe or businesses do is travel is this this get U.S. other understanding, see liability legislation passed? you pending first if may if demand My shield bill there by I'm that was amongst sick people COVID-XX. signed how

Thomas Baltimore

next leader, on it legislation, schools, sort pending think phase the that etcetera. the clear part was of limitation liability I Well, morning having businesses, Greg, across this this majority made was some abundantly not governments, without

an it's cornerstone. think I important So

important business, support Bill unemployment to to that's then of again the support passed, continue the get on more positive the work additional overall get the small what's needed think medical is insurance front. I and this happening for that's all

think the than I we're careful that combined accelerate no provide the doubt I There's doing. all being that pace. cautious, at will, are different this of no confidence and think, companies all to really what point

a at our working it are have essentially, making everybody remotely. skeleton work. office. We crew here is People And

paramount, resume and our to clearly a it will accelerate. going all all of as that's going all of think and/or other us the of bunker really to therapies think the side I begin we give confidence to those being the vaccine to again. can. But to I the that's really provide think anxious as takes we're out where With quickly components, to get the lives come I ability

Gregory Miller

that great I the question that the One you reopening with I other deck Great. the all appreciate disclosure supplemental provided. have. dates and

with the ordinance, the how curious today, labor the how the operational Francisco, dates editorial I'm Given costs cost cleaning to and San your Francisco modeling with combined read market? that was cleaning reopen factors and cross passed operational that ordnance your the and in within challenges into your plan San Examiner. in I

Thomas Baltimore

Yes. clean safety. stay operating a American the have with by legislation. I Francisco, and that really city involved. clean It's and and obviously actively got a Park, We've Association And was the out we're to Association. to clean brands, secured by owners Hilton, side bad know the We women committed pointing a stay on safe how other the peers great the equivalent at by and along question. of San across think and this great the all hotel We men Marriott to other

tactics, I end but I'm more global candidly a that reality it's we we safer, that -- protect desperate. not issue. nothing a we pandemic. I place a Bill. unions the jobs. at is than So They're like panicked, And people reopen. to most local including was in what's understand It's in Safety just the get are Bill. of Greg, the thought we're to These officials, they're the is that the important don't really trying prepared think confident, the Bill get where the protocols Jobs when vaccine, this we the when feel we day,

interim more they continues balance opt-in appropriate out to and to want end don't employees of or we'll a housekeeping, confident really keep the our that that They this the But it. and no cost desk. on safe. that There's great get what have I'm guests thinking clear prevail, hedge business. that, in assured at opt-out. the bypass destruction. flexibility taking speaking long-term want. We about front a that have clear we're place the are our And the it's uplift at matters that to guests we they time, of want about and mutually the whether doubt about protocols our and will to day, and the business Guests are same and positively that

be technology. in advances to stop to going these not You're able

with the has industry these markets the to personally. think I take balance. right work to across And and don't in things got the together industry certain we labor find

great right confident cities hotels to provide we San of travel service that Francisco, want and great are they've reopen the people the that cities the find other continue to are in and these our balance the our employees always and We among provided. visit we'll will and to, world and

Operator

Next Goldman comes with from question Sachs. Grambling Stephen

Stephen Grambling

happen peers we about reinvestment within capital -- hearing kind reprioritizing leverage how to you and may of that been a allocation have priority? financial hotels, normalize with base into need reopen? on and business as catch-up as thinking number your a things about So that longer-term any just the are of CapEx as think is re-ramp also base in And there properties

Thomas Baltimore

portfolio Yes. and on scale. certainly We've always CapEx the taken position our given a and size X%, about of

appropriate -- you are in the made we XX%. we pandemic, So the decision as by expect, really can CapEx given to where reduce we

do clearly we We'll XXX emergency be of As temporarily. at will X% XXX necessary, that so that's to ramp points or capital. highlife what's an begin ramp to a up, we we X% we up, safety, little but or incremental will probably We'll bit continue whether basis that catch-up. assume

monitor in We've to capable our got design we team and very construction assets order. a good We things and make to sure monitor continue carefully. are and to that continue

have at Hilton. front facility to to Bonnet of asset portfolio. and Obviously, the Creek, was intermediate expansion started continue for we've we'll and from there second obviously our at look meeting the Clearly, the number term, asset. ROI now Over believe you rebranding are door, We know, there embedded of City, the converting We've the the and that quarters. long that the of as opportunities Doubletree within deferred a Amazon Jose in Crystal that the there Doubletree at we space. our in a San obviously

So optionality of in of this move we we and upside in at lot really portfolio the look forward as that getting forward lot we've a great a got future. to

Stephen Grambling

the As might to deemed do that assets? core you these of the business some structural I given might earlier. what follow-up comments a cases, versus how some in your guess, be in noncore changes changes influence anticipate model,

Thomas Baltimore

overreact. is Yes. things say That's think I is one important question. would I of great not to that the a

upscale over and top that. side, and the on resort I our markets think, have in luxury strategy. and confident first XX foremost, our Again, we conviction premium destinations, are Park hotels we in

acres, that world. You the in X Hilton never in could towers, think today's X,XXX rooms, world-class replicate about Village, XX Hawaii, our fortress, assets you

you bull's that we think huge the If demand there estate. believe follow these Having about as Hilton, Clearly, the the shift well about that the have CBD York you the also markets real entry, located, that, other will think barriers in be come eye Francisco that assets in to having Chicago that San Hilton will and said we or and growth. New we demand to want are back. those in markets

will believe to our don't grow to to like look any expand. to more markets Austin, be accounts we'll brand probably for Hawaii other clearly, that of those. and expanding that to one is at want geographic You of have Nashville, the footprint XX Chesapeake continue able market But that we And XX% that, well. into XX% than more bolt-on in us a perfect We operator Clearly of the world. were part benefit and give assets that today. really diversification as

hotels. everybody this the independent hotels most that to do I the don't to so with The look And clearly in thought out as abandonment. today. would the people. for thing off pandemic. to now that buy you'll suburban side worked make of right looking seems We're strategy to think sense purely use suburban analogy other get is everybody about and retreating go years that to independent New several in more I So not ago when we York for many of do. think because But well rush the future no to there's us the

in opportunities. the current and look where out there then conviction areas growth our in continue we'll team are won't our of panic recycle pockets see other we'll -- those we'll pivot, with a to assets adjust, here. Park and You noncore at we we'll Believe strategy,

Operator

JPMorgan. question from Next Montour comes Brandt with

Brandt Montour

you XQ gave? of curious with bridge metrics, you to sort sharing if moving sort the just July, mind pieces XQ the the of RevPAR Just given want you all guidance

Sean Dell'Orto

high down flash standpoint been REVPAR, For what's a is July, at -- from the XX%. July here RevPAR

Thomas Baltimore

was X.X%. Yes. XX.X%, down July June to July occupancy sequentially, grew XX%. you about It's We but occupancy look down was if XX%. But up

Brandt Montour

Great.

looking the driving and just second don't is that I'm just would what split terms want in half, curious here, to better but RevPAR? then XQ be the out of I the to And than Okay. Q confidence

Thomas Baltimore

our obviously, think, open. end of hotels the would of we one, we Well, expect to September, XX% we said have by

of on getting whether having closer it's to open XX%, XX% gives through clearly to be through XXX% imply. it's side, by So more we're whether hotels doubt, and whether again, the confidence again, contract ancillary see us quarter. we where slight, fourth whether opportunity, half north -- begin beginning revenue, or medical Having to challenged. that's business, more don't certainly I to up. the a want second going is will pick No to

guess a as really fourth think, RevPAR would the probably hard be range, quarter. the that quarter. XX% XX%, point. know, north that's then in XX% down you whether I at expect be somewhere in second And this but third We of the that that certainly in to clearly, down only in quarter, moderate, we're to should here XX% would in again, down

Brandt Montour

Okay. any then seasonal that, aside, Great. third from And for in happen quarter, no lift -- necessarily solutions if quarter? the quarter aside the mean, us, doesn't I third but there's fourth quarter difference. wouldn't dictate over versus fourth seasonality that medical

Thomas Baltimore

a of gets spending the you get those look, prepared it some -- environment. people of I and you time, could no the and even but or there's so resisting medical sales beginning end I People difficult perhaps it's game travel, beginning No, the But are day, on whether solutions meetings see more to the seeing make margin. are a fever consultant, be as drive said the little think out, more. the that at you to certainly evidence. People the changer. they will a to leisure It's down to No. evidence case cap -- our extended remarks, little comes and really in more begin to bit, the

Operator

comes question with Woronka Deutsche from Bank. Chris Next

Chris Woronka

looks of you is negotiations? the or Question years rate for how But How different type you for piece a XX, it of a could things ball I Or some at do rate the on integrity couple We've rate you all crystal there direct forward shaking lot towards missing do understanding that group do be did that's at had a lot Tom. worry you ago. How how right? Also M&A. bookings. corporate if going much like situation had integrity? do positive We've you, for next question. years? -- of supply than the industry pushed look with I XX the about -- that's look mean more years, offsets know out see couple a there side, rate

Thomas Baltimore

if Yes, pricing great you I it's power you last the think the think would never points a think that really all saw have, I frustration made, the us that it. the about right, One question, all for and supply cycle, to Chris. that contributed of we

fragmented. think, that played the and that business other of so clearly, a the OTAs I the clearly part is part is

rightsizing. I we think as think the opportunity here about

the I again, supply. think there's that opportunity,

to different as We the in the product, we that owners of We much supply in have a to It for be go like hotels their these can move this better on and contraction. better talking to of The model it, all know of reduction a viable also doing our about rightsize the well how hit in XX and is going is topics can use in think as should retrained customer of that about leaner business about distraction we're to with distress much items. There's think the us service And for but period years my a partners. airlines the I this able I've the cost. a it process know create value model, if north think forward. industry. gives operating side come operating some acquisition are These the believe crisis. other can we provide time. argue as for level us other collaboration to there's as painful the are brands it in same. I to operating communication opportunity of ways us a I some things today on and we're do that You that we to much, more can also a to types and to airlines clearly, seen to this well. going when is we out a And hopefully, continue

Chris Woronka

the but there unlikely, I which get sheet. to indicator be there that if Is number? a you Tom. of there equation, sales it Great. last -- is balanced follow-up Very would going on more opportunistic? a And done, to shore get equity a to Just or was is downturn up asset that trying of capital coming a it think is be -- out certain can't remember decisions. to ton just look Is helpful, is sense a then a issued the of key balance allocation we equity part for you -- as

for So industry. that up the good ended event being a very liquidity

Thomas Baltimore

few remember, public to, Yes. also fair It's on question, a I back alternatively, so because the number I would a capitulation is, whether balance happened think Chris. up a proceeds. to if use I a and I say of had in of trade time, did think be perhaps reality you other and that period of sheet which their made boards, they companies that showing company or setting they we're

Park the obviously think be we it made, Sean X.X point. offer where any a need continuing the manage at successful our us no as very kind this have do to of are, we enough we offering and great of equity I team the next laser-focused Based years. liquidity. There's team, into has to relates bond will for for to on liquidity lot the moves to being X, credit on our that

about as a think growth need we demand, get hopefully, we would because would for think more near acceleration the not offerings potential we the of kind beyond, last vehicle, a vaccine, much get get Equity there's be we equity any date a the we of see term. we As later in thing clarity, It to equity do do offering at for equity certainly NAV, offering we any kind trade us to dilutive to something significant are. sense this want so we a given trade. at cost. to candidly, to makes that and shareholders. We a where that replacement at And of would discount all discount significant point, our current we where no be in

would to we So opposed that. adamantly be

Operator

Farley Robin UBS. from Next with comes question

Robin Farley

call, but like to had little a this actually of one follow-up going I a touched My my a QX, question give -- just mix wonder usual previous the transient but I've it's and since bidding in QX in questions color that a of how leisure on more your start of question since sound the you versus if year? quarters it business just little transitions to because the typical is you on bit, could what

Sean Dell'Orto

X% so mix kind about been of was contract basis. on the always revenue always Look, has -- a or

standpoint. the held -- from standpoint from last revenue looking I'm QX, As of much revenue versus look, second It's -- think same we've give Pretty it's apologies, the here. you right But generally it's it I X about just kind on kind at been same. it me a a of at year. now. QX, generally QX I pretty looked spot QX, if much

group, kind about It was contract so, So or high. was X%. transient a almost of from XX%, about XX.X% it

Robin Farley

the you split leisure between meant go business QX? from sorry, as the I into transient QX But transient -- and

Sean Dell'Orto

of front me. in I have don't that

Robin Farley

it where on QX. that's to of more typically that maybe Just would thinking in should it obviously, side focused how going look where transient The things? of seems that, degree demand kind is become and the the just leisure, about, business QX into dependent as

Thomas Baltimore

Yes.

a Robin, historically, it's your think few But don't to look margin percentage will think have the that to I points. you I and we question. probably answered at team going make be Sean on get that to significant. We'll back sure it. it's

Operator

with Green question Street. comes Lukas Next from Hartwich

Lukas Hartwich

risk do curious, for increases the think experience this permanently you premium I'm

Thomas Baltimore

certainly advantage They You've transient, the wonderful group. leisure, take real group, given got multiple Wedding. embedded big events probably I what been business think really you do religious is through. you you in-house No, the way I all if having, of that et sources of have make obviously, have mean, of statement ability I would got occur, today those benefit, demand, we've you've look, family, citywides. the anchored, it's about say, cetera. group that to easy right? to the And generations, all hotels, think, of these

of hotels So portfolio would we to the diversity think entry revenue. I barriers many to It'd of they're the able the near of sources say big fact be how to impossible being U.S. that huge box cities would have also the replicate of the are the to getting I constructed. really say major in across that few replicate,

improves it take positioned given But growth. now, we we months, the our operating I with. the with get to months years So our months, X that and is side. opportunity going think, the X the distribution. or what faced I us will not for we of product happening think also are one, side X to I that's this now, , the to it given demand. we're It's get reality this, when model, say And right encouraged other have whether outsized clearly, on would pent-up confident tremendous incredibly of given right be to and Park chin of other type we well But that

Lukas Hartwich

other That's really for my just the then curious next late revolver question that helpful the Sean. I'm due is year? extending are for the And loan color. prospects term and about

Sean Dell'Orto

of kind and looking that our them with again, coming we quarter. May. already banks, to having off third we And the -- confident. mentioned I'm bond did explore do work utilize leads. have, We We we with with that further as look kind conversations and of we're that our certainly our on Yes. to that in amendment very that the the after with through to Tom optionality expect the and reports through of options have certainly reengage

Operator

for Baltimore to to like over floor the would comments. Tom I closing turn

Thomas Baltimore

of taking all safe, be be late together Stay days that in I our soon. quarter the to third until could well, look October. We in-person with you we And appreciate having you today. forward all to can wait time call forward look and meeting. talking

Operator

conference. Thank your for today's concludes participation. you This

Park Hotels & Resorts (PK) 6 Aug 202020 Q2 Earnings call transcript