PK - Earnings call transcript Q1 2022 | Park Hotels & Resorts Inc.

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Operator

Greetings, and welcome to Park Hotels & Resorts' First Quarter 2022 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, this conference is being recorded. It is now my pleasure to introduce your host, Ian Weissman, Senior Vice President, Corporate Strategy. you. Thank

begin. may You

Ian Weissman

and quarter to XXXX Operator, & Park Resorts first earnings welcome you, the everyone Hotels Thank call.

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

differ Actual with our to these that subject materially and refer and uncertainties SEC, these cause from forward-looking we the outcomes, those most publicly expressed, by SEC, future statements. revise actual important results those from recent performance, expressed in statements. to are As to that which the filings XX-Q, statements statements. may to risks obligated numerous update Park those forward-looking results described Please or factors contained differ specifically XX-K forward-looking files the the cause in from not risk documents in and Forms identify reports could are on and could to with differ results

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

You morning, with as measure additional our performance. our can reconciliations results, well as provide review quarter as information Officer, our Chairman quarter comparable at as Dell'Orto, in as the second this will information balance Chief additional of release, SEC, Sean with find on Chief financial and sheet of on quarter performance first our This first in Financial and Park's more Web balance directly liquidity, will a as most year. well Officer, the outlook over provide on detail and earnings this the color well this provide on pkhotelsandresorts.com. supplemental GAAP X-K to Tom filed morning's the Baltimore, available information our and site together Executive

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

Tom Baltimore

to and I results of see first Thank encouraged a report More am welcome the recovery. specifically, than we pleased to as all across very phase everyone. segments. quarter stronger incredibly Ian, I'm demand enter accelerate you, expected new

of expect markets and of demand transient While start gaining of recovery XXX% is seeing both group strong urban portfolio, the negatively year. some up the demand we leisure the business since impacted with continuation of a the most across our momentum,

our COVID down the addition, our has first U.S. quarter witnessed urban forecasted York, where and especially occupancy returning In sharp are XX% within in the in in of and toward XX% the very with is Japan over of upside double of Hawaii we back-half counts both in expected meaningful our companies to of significantly the case nearly travelers with about in acceleration more shape markets. And San New Japan nearly the a taking office, a portfolio. Further with representing rebound, quarter Hawaii, which specifically second to earnings, should from in recovery in help the support nearly year, Francisco excited XXXX. potential, portfolio broad-based demand in to the this Honolulu, support return

that value we of repurchases the including improving in backdrop, our by diversified plan at sheet, our the continue realizing big by incredibly our Supported advantage healthy is to initiatives. targeted and allocation the and strong for market quarters the in Looking strong largest driven years corporate create opportunity we and business XXXX believe ahead. balance COVID the efficient have a is of on pace full-year commodity were a at XX% as of urban The estate to We evident sits overall portfolio, XXXX. our take to U.S. group grow, XXXX, for continues as concerns our prices, what committed through and the through global and over XXXX uncertainty should well-positioned improvement and quality our spread a low of model, of benefits healthy mid-February, to sequential sales. a operational the markets markets over higher in XX% of within January at with a the executing despite widespread Chicago, improvement see cases, portfolio accelerated priorities, demand from group, Park on our materially as among just we economy priorities, group our Park's XXXX in U.S., to and we upgrading more of material In ROI have profits, remain real restrictions private the asset consumer stock hotel achieving loosening large by noticeable for to shift both portfolio, for and XXXX despite and group added month. from Francisco, initiatives the not business sooner. of lodging declining record to cancellations overall. with in increase to macro both improved XX% to on our capital Touching increases the briefly witnessed and the demand XXX,XXX increase pre-Omicron March unemployment, seen industry XXXX, Currently, The the coupled and fuel March, if of macro York, quarter first with spending, with COVID the by the March, demand January. travel full not February bookings backdrop, during million help geopolitical saw end companies QX, recovery Starting return-to-work in impact D.C., group by March environment pent-up group with polices bookings pays group rapidly in the in room significant three-fold volume for the New bookings. March, $XX declining group XXXX QX past hotels. quarter pace, and two in urban in in in versus group fourth tips in cases actual months XXX%, one have prior, like San lead the particularly XXXX, XX% seeing In some QX XXXX. by XXXX And group we because group approximately trends translated Boston, pace, generation bookings our increased resumed month of nights a demand

resulted including We markets strong ancillary Orlando, pricing York, New very San power that spending West. similar group we like in Francisco, leisure seeing and with exceeding have our in levels that travelers, Key contribution are March XXXX groups among seen

We hotels by group are in levels our outsized over group-oriented will will encouraged realize demand pre-COVID that and the confident feel to growth trends recent near-term, and return XXXX.

XX% with transient levels. XX% during March were in beginning resulting Additionally, a expect XX% March January, accelerate a a sequential promising growth travel we XX% growth in saw decline business XXXX. to healthy below improvements in XXXX February, growth demand business portfolio-wide overcoming the way second-half paving sequential March, revenues February, second for that just the Business the and in of in sequential transient quarter,

to occupancies In January, XX% more March, for just that XX% business in travelers in to cater addition, increased midweek improved up wave highlighting mobility as from our the receded. hotels COVID

Park's continue leisure indicator encouraging is the have while [sum] to overall expect trends we return quarter year, and XXXX, same XXXX, and XXXX accelerating time remains demand down and demand into improvement second pace pace transient the X% of by business seen levels, [Ph], as the pickup just in ahead, build growth increase overall In transient profile. demand XX% throughout continues of weeks, the accelerate. four to transient we to over broader to to Looking office In healthy. a last unfolds,

time surpassed in of quarter first of the the first QX came our Looking ADR briefly and for portfolio-wide at ahead expectations the XXXX levels start since pandemic. results, portfolio

mentioned earlier, demand Southern in Florida, and results driven, trends again, were robust Puerto As once Hawaii, by Rico. California,

including in during we uptick also more business transient markets Chicago the X,XXX January we seeing these demand markets basis in witnessed Francisco, a urban San lows group Boston, are points urban by more on strong on current urban of York, nearly the as pace hotels quarter, Importantly, hotels, March, by our forecast. D.C., to on and near have specifically, middle an our our hotel of than be across increased New several second inflexion the or occupancy, based core for to core quarter, and are and XX% across five XX% our the

by Waikoloa quarter hotel and to $X.X EBITDA quarter our X.X% to Hawaii XX% Turning highlights XXXX. first expectations, exceeded compared markets. from million, exceed first many XXXX as half some XXXX to core surpassed on RevPAR rooms continues or by

with Hawaiian compared XXXX two basis points Village, first push quarter our operating RevPAR revenues just during the expectations buyouts XXXX. the model margins EBITDA further quarter, quarter below expect near hotel the of during X% growth International basis ahead At our March to testament demand, margin XXXX consistently half XX%. while levels, surpass the effective Hilton despite changes. XXXX, throughout combined outperformed quarter, a of year, XXXX helped around hotel XXX which the XXX traveler a return budgeted Our the up banquet International to hosted expected was March exceeded nearly occur by to with Hotel EBITDA XX% current points. which RevPAR hotels Overall, accelerating has our the second of to during been and of basis our on profile. we historically Hawaii second forecast, lack Based a on levels

exceeding remains during the our hotels Key South with XX% West quarter. occupancy Florida strong first incredibly

average while during reaching Miami rates period higher XX% topped XXX% of as modest year. ADRs of start achieved to XXXX. in during rates summer, same a XX% Our during expect more We Palm QX our hotels last than $XXX achieved the to XXXX. nearly the first growth XX%, were continue Hotel RevPAR growth our climb, and than higher occupancy to levels quarter, at on the Royal do than deceleration lap XXX%

Florida remain leisure strength. for in fundamentals However, strong continued South

average rebounded The XX to in second transient production more is of half and preliminary hotels, led the But with XX occupancy the Based material some production, companies open at In the encouraging the improvements accelerate the move to we are as are and quickly open occupancy than Performance is in Travel expect group and XX% the resumed mandates which nearly XXXX points the be been January, with improving to percentage May quickly XX% Francisco, both March hotel for of San the we Based market from year XX% XX removal around of of ramp occupancy XX% made based with than April as Square, in up on leisure outlook below pace at of over mask just back with reservations. second very occupancy or the in New Union in excluding bulk expected XX%. March signs year, reopening on of just has Park thus still and decision to business strong for results, March to San in end Francisco above report over in particularly there hotel on points but pays San scheduled increase improvement forecasted now throughout XXXX. XX%. sequentially quarter the results, XX. up hit on of expected assets, and better occupancy as balance through Hotels accelerate expected of and Tech to preliminary the Domestic Omicron Francisco Performance the the strong. Hilton outlook quarter far. promising. expected XXXX with given to April, February our demand to Park group with hotels XXXX. travelers. approximately rate XX% XX% room levels. expected the Leisure our hard to daily international over the group our April exceed looks has improving Looking XX we should And vaccine is forecasted the the XX% closed market. occupancy a over of group in XX% Overall, made results, for particularly continue up to accelerates. percentage to improvement urban the preliminary York, at up occupancy to our in March sharp returns be early on a to pace from

operating our XXX expansion onset our margin improved, since expected pandemic models basis improved the margin efforts As to of cost our gains with the into of demand and trends points yield and to translated strong flow through peak-to-peak. initiatives reimagine saving

XX% of to nearing hotels, which of reduction $XX level nearly pre-pandemic benefits management the staff maintain, reminder, we expenses even a continue have to two salaries managerial despite are levels. first levels our our successfully example, occupancy portfolio, By across in during we demand at a of eliminated XX% and way mid Hawaii operational As that to we return quarter. have expect maintained majority million as

based openings In rethinking continue food preferences. properties our to on outlet profitability beverage to their products evaluate and with and addition, alignment ensure flexing changing concepts and demand guest's offerings, and

As forward. demand continue minimize returns, creep our employ to staffing going cost properties would unnecessary to help thoughtful strategies

pursuing briefly million Hawaii NAV XXXX robust pent-up non-core setup summer, fully platform, we're estimates for on to executing Park strategies debt, to from remain materialize transient the to expected Turning anticipate conversion enhancing should expectations, from Meeting the and priorities, Waldorf, of the which in create capital next laser taking already XX% Japanese to recover accelerating expected repurchase advantage bid recap, assets in to the the among it's of Proceeds overall long-term to stated our generate XXXX. returns renovation push of million year, committed private to all group of goal our Accordingly, this for partners, of the To our on to of into internal excited San of continue market dispositions real our estate of Doubletree we while of the that value. projects, should extent reallocated urban West our invest and Creek remain strong allocation and the with to help we of million and year. focused iconic and Jose the Key particularly shareholder stock $XXX with balance about will to $XXX over to assets the growth process and by very Curio quality $XXX these in and business XX% ROI portfolio. be demand to travel is excess our in outperform expected the Bonnet Hilton, pipeline to demand Casa contract. deep persist rebranding under repay Marina including discount and to

pipeline translate recovers. a headwind remains near-term have demand valuation our markets, maturing in more initiatives certain priorities operations confident debt With value, execute peers. the as focused the on potential market of liquidity shareholder just creating our growth we our our optionality in focused of estate, growth. embedded our for operational our ROI liquidity and of gap enhanced $X.X in will quality plans. our narrowing XXXX by hotels and recycling excellence, and portfolio unlocking private embedded the upside our provide we remain to to through sheet balance that X% cost in capital strong significant flexibility, reinvesting to remain squarely savings on and over basis for into laser taking bid XXXX, realizing financial robust labor long-term Overall, continuing of efficient advantage ample drive points in While With allocation billion margins, capital XXX operating we real our improve to to on priorities value on the and and with the execute help

and the I'd Now, an to operations for on with balance along to over capital sheet on provide allocation like Sean, our who will color turn update guidance QX. priorities, additional call some

Sean Dell'Orto

occupancy a expanded very we travel. pleased in sequentially as with our decline quarter leisure RevPAR to XX.X%. forma Pro beyond Thanks, are first has $XXX, recovery improved to despite Tom. performance basis Overall, point XX

in period in QX line sequential XXXX and an rate the While the over to XXXX. average quarter, $XXX X% a impressive during improvement same

in results by were impacted the counts negatively case January. quarter in spike First

over during of the with the month, demand toward first end the improving waned in by January was February $XXX of for from $XXX. by quarter, portfolio a over quarter. concerns we operating million in the in witnessed sharp the XX% Omicron RevPAR as and rebound first tail balance XX% However, revenue March Total the

moved adjusted adjusted hotel that EBITDA EBITDA margin of million from margins EBITDA January as in in first hotel the quickly was sequential for in low Note our resulting increasing QX $XX $X.XX just Overall, was FFO at property million XXXX While a March in XX.X% the March. nearly through adjusted with quarter million. QX X.X% $XX to XX.X%, ramped and up was in to increase $XX coming FFO, share we quarter, adjusted a was EBITDA to per of million quarter, taxes. down due margin slightly $X

Turning hand. of over cash $XXX currently on liquidity billion, million balance a including over on our to million stands $X.X the approximately sheet, $XXX at and revolver available

With of continue monitor debt of costs the its both couple maturing just borrowing resulting months. XX we next past with markets Our months. net In $XX remains to have respect debt increase fixed debt and opportunities, $X.X of shape within the the in potential parts, balance as credit treasuries meaningful sits a XX% of very good spreads in sheet and over at spite billion. this to refinancing widened, million

to monitor continue will you over markets the closely We debt and capital update the this refinancing efforts course on of our year.

share, the an a $XX quarter of were or dividends On total in the XX.X of and nearly per a quarters, to front, just entity Also, outlined discount the dividend adjusted return fourth capital our quarterly XXXX at million buybacks quarter of first per pro credit potential limitations to the our With paying nearly to average back quarter with the dividend. capacity the reported, of price we Overall expect we continue estimate top couple bought as stock times, previously a $X.XX announced, share million at over previously year $XX. $X.XX during ending reinitiated our forma next first off just executed internal XX% EBITDA. under $XXX available, still subject a at of in facilities. as

of hotels simply the we've recent and EBITDA. earnings to recent when better comparing the capital, than our to We use believe times XXXX fact, in at remains buybacks In buying with of months. north create transactions There's stock more twice evaluated no undervalued. XX

second on you update during quarter buybacks call. earnings will our future We

urban our over adjusted With pro Accordingly, will earnings years, XX%, This noted has and XXXX or based to been guidance quarter broad-based to XX% $XXX are or for of remarks. portfolio for EBITDA prepared below shape Finally, RevPAR below our reinstate EBITDA QX EBITDA at $XXX of taking and while recovery midpoint. from $X.XX And concludes upon the across the adjusted for XXXX FFO adjusted earlier especially that as second levels between our and million establishing the range quarter forma unprecedented to midpoint. of thrilled comments, decided $XXX improvement led million at between an the announce we $X.XX per markets, $XXX the XX% we've second XX% quarter. the in COVID within Hotel guidance hotels. Tom second the X uncertainty margins will I'm range share his remarkable. the while pace last guidance

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

Operator

Instructions] Thank question. of comes with question your Please line from with you. first the Our Rose Citi. [Operator Smedes proceed

Smedes Rose

Hi, good two morning, you quick it's just ask Smedes. I wanted to questions.

fees relative our had customer quite during we the there if there? just forecast, that a you was sort bit or other of which you're to spend were Just been well? as kind I out-of-pocket spend what some quarter, the higher maybe what cancellation revenue of talk And number booked anticipating. -- than about into line is maybe And wondering could seeing

Sean Dell'Orto

Smedes, Sean. is Yes, this

that And would reporting relative given we're quarter. through kind of And with or probably point any the $X if to so this you in cancellation quarter. were a seeing group is side, way, gap for say I to trying You're normalized probably biggest model million the you're cancellations with elevated talking around and the that's $XX we fees say around I'd at certainly you're million QX here. recall, were of lot obviously prior been tracking have [Ph] cancellations of if -- Omicron-related levels -- [pandemic]

I probably the think it's biggest gap.

certainly which down. meaningfully down and as to levels. resort we're that and But whatnot X% at fee you probably at standpoint, pre-pandemic in line, occupancy levels look being from is think a I

be two off. little you probably probably -- might So, where I those think combined the bit a are

Smedes Rose

recently given seller some market, of of for just more seeing going seen way wanted on ask, the a asset done? CMBS doing of what a just costs on private deal wondering, Okay, rising thanks. maybe and sort from just buyers? to and you the would as in the potential we're have And kind guys of getting And consider you financing debt things touched was then sales, I bid I

Tom Baltimore

funds. private I slowing million, Yes, tremendous cap hindrance little capital whether five year, something out, that and whether know, as we speak choppy, transacting But deals a supply you considering multiples. little no We it's clearly, great out pretty attractive and in of debt no as types really high-net-worth, say, rates at last really a is have are financing see -- we equity, Smedes, and real needed look deal there's down would done. And it's with the as for we're The whether we we're limited widened to we assets $XXX you not well, time, still that. certainly don't at it's Seller for obviously, we sold bit. it's growth, sovereign getting it's it's think at on. a of demonstrated and that; really looking and that markets

Smedes Rose

Great. you much. thank Well, very

Tom Baltimore

day. Thank you. Have a great

Operator

of Our next Van Please with line your Compass Point. comes question the with Dijkum from question. Floris proceed

Floris Van Dijkum

Hey, thanks, guys.

Tom Baltimore

Hey, Floris.

Sean Dell'Orto

Good morning.

Floris Van Dijkum

you about; some Good you morning. have talk obviously, Tom, of flexibility. allocation, capital bit -- little a

costs. money when You there that's did tower another lot those your potentially, capital? is. where to Village, think -- I Hawaii you -- weigh But higher you're doors Hawaii, for much double stock, competing investments, the capital demands mouth so How building weigh were appreciate I values than about buy replacement example, that, do talk are do that because put that think your of open your a you how you new potential your in the on maybe some when essentially, investors at willing back

Tom Baltimore

Yes, Floris, it's a great question.

about And that I that buying in I we've important. been in case first example kind in stock finding best us investing you're think prepared noted portfolio, at that and and XX%, are, clear in remarks, trading XX% is that. projects, to as that; balance Bonnet think discount of his the available is use of right or great at ROI when the the of Creek for reinvesting Sean the the and of crystal into a is really that we highest our really is back either back cash thing,

exceed trading, assets of allocate, the in million, those $XXX and thereafter, will that $XXX a between the And which in give we set least to non-core is would also obviously, in then You that. us use flexibility, expect and here I if second that, covenant stock million what increased certainly of carefully, proceeds selling, quarter we'll we meet out will we've not we'll at And to the portfolio. that expect, target permitted not near-term, terms to be if will discount, but reinvesting we're restrictions of do. shortly back here buybacks expect of or in where the

at look decision in of decision fortunately, is you make just allocation extraordinary terms We're an to make doing the here. obviously asset, out need now. Hawaii, of which that. all we'll process something through entitlement we rooms, X,XXX where But we investing. As like We're really to in we're few that that working the years on design through a don't entitlement, near-term work still have the that and

Floris Van Dijkum

end urban XX like has that waivers Right. emerge follow-up, and at Where quarter. if year? over And -- covenant expect, of optimal upon the an you an of past the And touched of to going portfolio? in possible, you split the the My do so in your your this from resort second sort changed your you're between you be percentage fact -- potentially, months, view? that have the see to optimal you do

Tom Baltimore

other second. I But Hawaii where look said quarter, more as piece, are. you clarify he'll by Yes, -- -- clarity second in going possibly just in just a as it's the listen, we a give to point me obviously, is, so on Sean let covenant little that two come at the back XX%. to look, don't we things, he'll is that

as there. urban front, of Hawaii. the assets either at to We looking continue markets. sell we'll We're have looking two assets certainly necessarily We're add not not product those to in In point obviously evaluate this phenomenal well. to more

like expect we're in said, markets very East, South you're look Phoenix. of that's allocating markets, Obviously, want continue to certainly we thoughtful or be attractive Nashville, we as as as and certainly, we to we've in too capital. that move what's the going supply how we urban that happening, accelerate, or we at us As see whether and we others, find the a looking Austin an a be forward. we're certainly that are to to that's to so respect lot fully coming, that attractive, But there's that seeing, recovery to -- at going as we obviously, here

Sean Dell'Orto

Yes, to But when of the way waivers due QX. and out expect get that just then QX, not QX. did and and too expecting be to certainly we in since we we on functioning out of not give covenant waiver lot we're where you it us to I tested QX. we kind you QX. in won't period, covenants, towards during originally be covenant flexibility certainly test worried typically, it's truly very expected more and will it about until position ultimately, QX, we don't clarify, lot -- Obviously, of through analyze strong. Floris, a And our just But so think, we really have be of -- a work that us that as need to

Floris Van Dijkum

still guys. on? Thanks, [Technical difficulty] guys you Are

Tom Baltimore

the Yes, is Park team here.

Floris Van Dijkum

still to the if was I'm Sorry. me. it up live. open I for will That others, floor

Tom Baltimore

I Yes, -- have we Okay. think

Sean Dell'Orto

to ultimately queue, Operator, can question the the please? in we next get

Operator

Barclays. question of Our Anthony line of next question. Please comes with proceed from Powell the your

Anthony Powell

leisure some power be everyone. Hi, for comps A in which see question properties, I good morning, your leisure said expect. you all on in summer expect we to curious, I'm pricing, But the about think you some that and to this of these that away XXXX you taking worry markets summer? some of purchasing expect do push to maybe in you pricing or inflation properties levels do these over tougher able

Tom Baltimore

we gotten we a what in of from seeing we've and we're delay little bit hear really you, bit great that West. of there, but sorry, hopefully of had little the context saying one, Anthony, Key in were to a corrected. moderation a Look,

to numbers are which thresholds XX% XX% are reach going XX% obviously continue but going of XX% at noted, to as out, costs expecting to be little and that, certainly Having RevPAR healthy. strong. Sean XXX% over, that at the probably a they're here, previous moderation, of said QX, we're versus and obviously, above, were still we're sort range we we're As looking bit to here XXX% as to both that to in there's look XXXX, be we look

we As we in RevPAR great sort we said, that in incredible at probably what an look And we has are being are, But of second they run, performer continue we continue going properties had been as over hasn't Waikoloa in quarter, probably a going fully the clearly incredibly and X% of expect look Hawaii that combined, clearly, as XXXX. at Hawaii, both that's we're out really to had encouraged. just and to looking just to, and it's XX% over there. range so

see than real pockets is the extraordinarily and of retreat fact that other sky, the don't given just has we successful, not been there grow that probably trees moderation So, slight a to so no QS unreasonable. just

Anthony Powell

the Got you're it, low. travelers, mentioned okay. on the the you mean very the year And maybe on second XX Hawaii, like of given return positive half year, I of Yen Japanese was the

back how headwinds, view in based I rates the the half on interest year as Hawaii guess. currency of I'm So, those of into were curious your travels currency plays and

Tom Baltimore

I that Hawaii Hilton half I of run, But about consistently if it's Japanese a XX% travelers us, about about of for and I you a a over International point, been think Anthony. long mean, mean, as you into about they've that. XX% Yes, it's at million look Village fair think visitors, Hawaiian the

about Japan, their down that's they've XX% last and that and visitation total, years, significant over down the there's pent-up plus or minus. XX% demand, coming obviously from absent been two So, been in is

we discussions that stay recovery believe they the longer. and that and return going trends having, and robust we're more that we hear just be is on and coming So, based to spend the And pretty really and and significant. that they just

by really and return. expect has encouraged 'XX are been partner we group, fully that in it's second over last And important XX So, expect the we years, just consistent. really that. again it's to half And fully been that the and and that base of beyond 'XX going

Anthony Powell

you. Okay, thank

Tom Baltimore

Okay, thank you.

Operator

with comes of question. proceed Please Woronka question with next Bank. Chris Our the line Deutsche your from

Chris Woronka

hey, guys. Yes, good morning

Tom Baltimore

Good morning.

Chris Woronka

little then easy I those you a gives And about numbers into of it could it's you be bit Again, I want pretty seems and go into that your I like it, conservative. basically, Good time back morning, going you. give the decision on said to to out But confidence. all gave acceleration the think what guidance. appreciate since April, us first March,

And where question of so, the quarter now? is month April I is, from the strongest the guess sit you

Tom Baltimore

group meeting couple we're based less and on a XX just the now, guidance. discussion Yes, reality it's people is, hope and exceeding of been team the we on And I Chris. of We're confidence understandably remember, And management things, the certainly lot about what that. have are a signs. and confident. trends, been in have I But there team than encouraging is gain the conservative confident having listeners that that we that here. think the certainly, should days transient urban. business very and a from think the concerned the seeing look this Look, And certainly on

are to we and segments continue. that those that, think accelerating, clear it's are that's going I certainly that confident that

Chris Woronka

quarters. that's And relief. dividend, Okay, sheet you or do of year you where beyond on think that, out to balance that fair, for of you to higher? the beyond Covenant you're where the come you the to now relative back I and yes, Tom. lot want, the think land the the mentioned you given XX might X%, 'XX is But yield competitive say that a that's have would with you to next understandably, couple penny still then getting -- the But land like

Tom Baltimore

the here Look, operations then more a environment will and the this do continuing set we the the to that we'll be in be quarter as important of thoughtful, as then we've would as we improve, that a and particularly thought to in and that decided we use lead with to continue and past, and put weeks modest of we've it's come. it strategy additional dividend, business sort to had We and question. capital to information. will get was we decided in we'll you near-term, in recycle months off out clarity on will top expect off great adjust more asset continue fourth to can sales of a $X.XX a the top course of sort team Yes, as a

Chris Woronka

Thanks, good. very Okay, Tom.

Tom Baltimore

you. Thank

Operator

your proceed line from with comes the Asad of Please with Dany question America. next question. Our Bank of

Dany Asad

Hi, good morning, everybody.

Tom Baltimore

Good morning, Asad.

Dany Asad

just RevPAR differently, outlook Sean, or your the Tom down I'm but of than is question going rate. to run little QX lower bit XX a April just ask

or can we're we're when so conservative help just the -- parts as kind just So, an de-sell and -- of markets into whether that kind thinking visibility that out June, it's well, -- of of May haven't there and specific it to way. like you lay about like, don't us in really, don't you're some we going is -- have we're specific unpack are and we there not segments much we it is recovery, just, implied be

Sean Dell'Orto

I'll give Dany, a shot. it

guys elements say tone, realistic were but were for tone, so kind underlying bit, slightly here under lines better a leisure, than little and but the strong is there underline first coming May April, the line leisure little coming bottom the of on that I than Chris time, went say of certainly June I a out -- April. it's couple least kind years take at as off that went one again, of easy certainly May but weaker just say conservativeness conservative that April, is the in we would in that Somebody would us,

May So, we've as pretty again, a guidance what is little bit but we it's about overall, you. given think feel soft, just good I the

Dany Asad

follow-up, reductions. tricky only There's recovery a been you permanent for look margin bit then map cost It's out you. just thank And my pattern pieces, so right? to little that Understood, bit. moving a many it's because, have

markets some kind some full that don't issues labor the seen markets, know, offsetting that returns in of you've ROI the haven't of from have projects. we some in those of some labor are picture we You

beyond these recoveries. so, And portfolios, would kind about are margin things core the all of how we normal think

we milestones can York will there there see that, balance an hit the thresholds about certain for oh, the like be any of for to something kind or year there and any, or Francisco of, do think New San we that look how significant is that? are So, inflection, for example,

Sean Dell'Orto

think. getting I to six stabilized, and the basis XXX more about Q'XX group a revenue. group I or on and I back on mix I -- think we're it points points one I in Yes, the we're when think getting down think mean, relative down banquet for significantly on

margin. So, more margin been you're only, or getting percent talking we're actually only item on XXish a you're outlets, in that which line than so has it's profitable XX% and margin but about the that great, on about reliance versus XX% outlets, XX% more we're

think So, margin it's think the demonstrate getting I I back, to that going help, mixed some strength here. of

XXXX, So, assets partnership, just look to pre-pandemic in these in But prior times. the when at need business we group the start mix you we so have and to of get had basis great margin. when XXX, of you we've the data relative of obviously XXX or down portfolio, look of you to the recession, we to even stabilized our your XXX our more comparing we at back and XX% to in kind at kind margins got XX% talked are points quarter drops for where on XXXX midpoint the down XXXX the basis down points XX% RevPAR only about

the but different think at business I of going I times. of these -- time the seeing take through, different little back the variability of some elements ways, think to So, different coming of of get kind to in a it's kind you're of

Tom Baltimore

pandemic evidence operating as working preferences And The about in stand operating thing by majority management and customer differently we and we of is coming beverage and us to customer marketing. labor all coming and model quarter with of only of the would jobs. the expenses of that partners as changing positions. vast that you I The million quarter, in we've in about It's is said our down lot to think just and business $XX think $XX to and laser-focused, to those X,XXX food about in say the the million labor, respond lot were first the are cost. are our the sales really the preferences obviously reimagine in in forced and one a and of the on here a

analysts confident show that it's understand demonstrate in Investors we it's us certainly back to see very credit a look, bit to but it, different going very me we operating comes that as accelerate, it are they credit a going to and as and profile are business that aren't you're and look out. So, giving of to a model better any us continue we're is that continues aren't giving for story. and the occupancies much we

Dany Asad

much. Thank Okay, very very you helpful.

Tom Baltimore

Okay.

Operator

question. line question with of the your comes proceed Our Klein from BMO Markets. next Pleased Capital with Ari

Ari Klein

of some for of near about Maybe an recent in some originally weight, if from on rate dig a which so get bookings? on compare and bit improving of more X.X% the wanted back quite bookings a the they've 'XX been evolved flat have side, and bookings to group bit made, 'XX obviously were uplift versus hoping since these booking, we're rate is color more to you XXXX, expect versus for quite The and up XXXX. the has

Sean Dell'Orto

I'm you through really ways to about adjustment more not bring and they're pricing group brands, power has are couldn't on he in and side. that elements the think of last inflationary ultimately years more I there as ultimately outer with over last in a At the bookings our but really through some saying also cycle. adjust, done Yes, have are think to to seeing of working lot factors which some even data, been ability in more the sorry, give the and -- operators years you and implementing several the has They're hard big A kind yes, talking of folks. to heart. the little

the contract of now into elements kinds brought are being discussion. So, those

more right side that So, you're of starting the to more push and on see the group.

Ari Klein

at continue And to narrow just on pay XXXX, December. it moving where that was to kind end expect gap of forward? group then it. that's you Got the flat of XX% Do

Tom Baltimore

we Yes, look obviously seeing in there's on that's expect that, D.C. one we so encouraging. I no million to Orlando about XXX,XXX really There window doubt continue York if the mean, City, going even out accelerate. to San very Francisco, month given look saw you and accelerate Hawaii, about just $XX as and New room that nights what in we is again, incremental that. of booking here in

Ari Klein

Thanks.

Operator

of Kornreich line question proceed next with Jay your with the Our question. SMBC. comes Please from

Jay Kornreich

morning. Good thanks. Hi,

Tom Baltimore

Good morning.

Jay Kornreich

you give a how As color seeing Francisco the and highlight this with and just in up the drive pick little group you're us maybe mentioned urban ground transient can back, markets, is seeing morning San as solid improving you demand? is more the what on in

Tom Baltimore

mayor's think personally Yes, the outreach mean, about months last and we've Police. through with been a out our no of been there, several I've I doubt operators times San lot I there there to leadership over continue talking the have obviously Francisco. Chief we several

the continue wise, an of other and look so The part think to city as south you we XX industry out. improve, And about important security that. about of room just and safety conditions issues XX,XXX nights, as leaders events,

and as confidence RSA, quarter, April Here, the look quarter Francisco, reopen Obviously, about at was hard range. city XX% got San attendees and out to in conference, to attendees, expect pretty be more XXXX you're XX% encouraged. part earlier, and here probably hence about XX% second we second we XX, looking good obviously March RIMS giving there so which providing wide very, us probably to rhythm, in in XX,XXX as Hilton you there, we very said increasing occupancy in at coverage

been XXs and So, flat days mid-XXs it's more the us more ago. we what obviously we're and RevPAR, of encouraging But having quarter, we than a JW as encouraging bit no a in second XXX that really other doubt a in April saw still mid expect markets. very than the is to little we XX, seeing XX, Fisherman's XX, look out, so far discount had Wharf outlook very, high on Marriott performance a the there what in we saw picture, in obviously for in Hilton. the strong occupancies and little

Sean Dell'Orto

Hawaii has for portfolio. each consistent. million driven think markets. that, lately. a I the the main of for add pickup, to think but urban And remain could certainly to the by year lot at and that a for about looking Orlando up about month four to $X together say been here across Performers I month putting if the about activity markets and It would you some $X pickup urban just

D.C. Francisco, Chicago I think they're York, challenged and really been San New

around You those in four is they markets end York, amongst cancels for and of had time of was year four million March, over just four up big $XX cancels assets it turn million to million we million the New February, for positive markets it about should get those the 'XX. say with $X of By I the at which was or dollars a jump across pickup big, pickup. $X.X a

So, urban I seeing think and markets by in clearly, you're the driven in on end point the turnaround you inflection that -- the that group side.

Jay Kornreich

countries as color. we Got international as the the in to of base a demand And And see I targeted customer curious Japanese great demand on returning months specifically I'm just cases from the then That's coming back other just spoke you've for so been updated you I York. that. it. New some the Thanks Hawaii about and follow-up, throughout like how curious year? strongly previously believe demand international know thoughts there's China, uptick your to abroad, I'm summer COVID more in and returned market

Tom Baltimore

a pretty has Mexico. getting obviously the been I largely small part when from from Yes, Canada think coming U.K., having about you're the see China coming you don't -- international obviously it, China you're from

We as XXXX. to you're a Europe, But probably were the million international levels don't will anchored. going we be clearly about where think on back travel Japanese be certainly mentioned. see back few three in I we're the the those back, of to that really of we very out to coming more about near think you years. If out come out Mexico markets confident we'll coming of out it coming Coming going of Canada that's of to XX and inbound in for terms get front expect but

Jay Kornreich

great. on that's Thanks and right, time All so congrats the the for quarter. much

Tom Baltimore

All right, thanks.

Operator

of line Bill proceed with James. your with Please Our Raymond next the question. question comes Crow from

Bill Crow

guys. morning, Good

Tom Baltimore

Good morning, Bill.

Bill Crow

XXXX. in a curious whether for whether are you're I'm curious Tom, building scenario I'm y'all recession tight.

about about XX% the about I think wondered allocation? but are how when that, now, there of capital economists think you of I kind you think

Tom Baltimore

horribles certainly the of some inflation. starting the inflation do that last say rising perhaps on handled minds. belief clearly war; the -- obviously now, a well the about as to DNA, things think parade our to panic. not Right anybody as certainly equity between balls, you've uncertainty. that environment so how obviously really dilutive I'm would it's this really model, I just evidence better is There's We to got one crisis. on part that out team anybody defense the be done obviously and We And given it's part obviously and a we've peak we than really front. Bill Bill, reimagined is and and I'm everybody's and it's We that didn't my didn't got of there some not has crystal challenging operating strength raise. We shut our is able toggle offence. down of of else hotels.

optionality. make seeing balance, balance whether and to that continue it's that As is to you doubt to but it's work the assets ROI non-core that sell we There side and guidance we're through so whether debt, as the sheet right look confidence the protected we there. projects, the on out, hard that's that find sure that we're we and continue down the obviously is continue going through providing portfolio, make really encouraged through what very whether reinvest to no you're demand and we've to to having back, here, articulated have we're we'll continue the sure will seeing obviously paying reshape will buyback,

Bill Crow

they that of And that the New hit of up the markets their over in the a in it's some really just group since XX increasing I'm on that quarter. a paced -- that follow-up there's good curious, seemed did and one then dramatically job year share, to for pick demand mean the so groups pace other to lot where days. markets gain a and was does on last York the that smaller group you're is of year

Sean Dell'Orto

improvement. Bill, the to I've think pace the mentioned I good side, XXX basis I say XXX on points side, On would saw the ones urban naturally

the it one continued has probably D.C. so pick say for has well. so, picked it's up New been been really into to it's strengthen. York XX%, really been showed little encouraged the has about actually up on the good really coming and has late, the XX% since in also that, I'd when up, actually strong a by that. the at it's Chicago range picking point, lower year, specifically new and year year bit scale pretty some that this Boston's talked

more, those cancellations point it's So, markets, has been and starting we'd like actually been kind the where of San the one reducing Francisco we're up. picking to get inflection

that right So, I think we're at now. juncture

urban that not the fairly it I just throughout. driving side the as has would areas because overall, So, just think say recent the I And resurgence it's consistent. solid been much have mostly been resort

Bill Crow

for the time. thanks Appreciate Great, it.

Operator

line proceed Our next Sachs. Goldman Grambling with the of question your comes Stephen questions. from Please with

Stephen Grambling

versus X% debt before as dynamic guess, three-ish over like probably about Smedes on up cap you question with are I follow-up, volatility changes do what following or in a in as properties? maybe markets, Thanks, some see transaction dynamic mortgages debt the hotel of you more these well What the you think investor seems that in and they're rates do now residential means following the base related there with other crossover generally words, properties do like likely cap the rates, any multifamily versus underwater look hotel this resi think correlation Thanks. for load.

Tom Baltimore

so just I maybe of right times, market to we're certainly But talking get fair of But where we're where rates resi rate again, look historically And done certainly on assets there seeing trade. given three that's low at and and Stephen. seeing cap XX hotels versus particular dollars, of if any of you for capital we're point the softening out and think Yes, amount markets. in where deals, and we're industrial only I going now. basis deals as we depending X% cap question, four a looking hundreds think kind billions deals are mean, have not many X% it's been, XX, looking to to

even class leasing So, more attractive. And just in this a business. daily respects, being it's asset certainly make going we many think to

financing. seeing not any seeing need for any not really issues, the or we're sale we're So,

the point. We have that a robust at process all we're this currently marketing assets and

Stephen Grambling

so me. for That's Awesome. Thanks it much.

Tom Baltimore

Thanks.

Operator

comes question Please next with Our line with the Neil of Capital One. your from Malkin question. proceed

Neil Malkin

Hey, everyone, thanks.

I child had values. been think has at REITs of the attempts some active trading potentially a one, over know public M&A failed do Blackstone acquiring that look acquisitions. Blackstone would Lodging privates that or discounts I'm think some I this sectors pretty First last be kind just Obviously, for lodging to recently likelihood couple market private Thanks. poster the good of of that. private at sector you wondering kind what Blackstone are could and equity think years, for year REITs at of do you a take several lodging? your of the

Tom Baltimore

industry great I for or private obviously, been Blackstone and for well and a question. that I've It's need the know anyone take listeners as And advocates in PE other the sector, stronger the firms. this one think of as consolidation

terms over way. and trade that's any that I more would of predict just you to time. expect So, or the in Other than going disconnect Park, that I hotel the happens, space over would for clearly given a would gap that be it the wide not time. sidelines, in meaningful decision would a say, they am when other the NAV, the to others of to amount certainly PE for given comment but firm how to enter on certainly is in try the When expect enticing makes again, the only that capital accelerate Blackstone not

Neil Malkin

of, compared just a lot people Okay, more of many of cautious and at is look had seem just people your just these reset mix going a room, to oriented stability we've it confident debt to et how caution to just people kind keep pay the have unemployment heard pretty if seems leisure sort I at it is that, great. nothing least what stimulus, of of for likely these from like high the to you money you're are of a everyone were properties, thanks. country about revenge, any pay that housing, me versus hotels, kind or non-sustainable rates. and for savings leisure out a we cycle Other mania next previously very sustainable, of that the seem are leader doing doesn't afford lot that quarter. and would paying people for of those XX% fiscal there, the ADRs that. the occupancy I interest, trends of that at student in in seeing I'm there on, sorts a like and seeing your sort never whole ADR, mean, report purchases peaks get $XXXX kind you're take can have and at of coastal more more to that more that on, sustainable of, one it demographic doesn't of are you lot last for going of potentially cetera I back to I sort long-term and $XXX, lack versus the just think And like on the me having a very ADR the give seeing these

Tom Baltimore

think right and optionality. that And both in and it important I sort operators it's mind more balance, to pricing. opportunity This working all leisure, toward your think leisure concept combining kind to and I model. provides I more business and in in of of Yes, owners hotel keep think an we provides of move as find hybrid for product to both building, continue a service,

trade no the that there's think I remains strong. doubt So, leisure

continue said to XXX% markets Key West even and were see XXX%. that a in where to we up we We like

look expect expect as trade be continue that here we to see out. slight that we to can a still moderation while believe there, we to you strong Now

peak to don't see grow any don't certainly But about we comment is trees, I point. sky, Your fair. at the this think

Neil Malkin

Okay, thanks.

Tom Baltimore

great. Okay,

Operator

line from Farley your Robin comes UBS. question. Please proceed question of next with Our with the

Robin Farley

given seeing, below. Thanks or group questions Great. that been know talked for that XXXX meet that something in demand even guess one by From so two two. up. a topic. still you've you're there the is group. was haven't much, guess you for what only And for that now it's there years, group, get pace 'XX years be be But acceleration every have will XXXX three last and back just groups not the do surprising but month just of the you'll three so lot 'XX, 'XX about be the my there I as on asked I above it's like now, would that for surprising so seems that circling in groups right I backlog or to where the levels, far think that of XX% XXXX XX% 'XX, of a 'XX 'XX of ended early met group

back what further groups are So, looks not met folks these thoughts behind three we're what haven't just on full assume whether ground terms years. and So, the like? of I in in are from if hearing coming your your that why 'XX

So, thanks.

Tom Baltimore

to point, we going to that Robin, certainly your continue accelerate. expect it's to

window. in the or and we increase again, about my XXXX. about And nights nights the million between room the in million year Obviously And three in February. room again day prepared plus in XXX,XXX XXXX that are noted fold, XX,XXX March $XX about a for just XX and As a then room and and was year. nights XXX% minus remarks, really XXX,XXX $XX of obviously, that we saw

language to our that the fully to operating and partners that's going we So, and continue is the feedback expect expect we we're body accelerate. from getting

get even you're to would all of we'd calendar so said as XXXX year we on. markets, sooner levels during even given are quarter how accelerating. think expect at XXXX the things concerned, I we've back here get just not So, spot and fourth and that may We're we in some back XXXX

incentive, together to we would grow. in to would be two over markets whether we there. that is are that it to of that to training, continue course and reclaiming, two Again, we group the there. continue need of expect those to the to an accelerate and will just we're X%. have like world bringing going second recapturing, resorts that be there, But example I expect the fact that think seeing QS class Hawaii whether And only it's continue expect quarter given resorts that what we it's group accelerate is

Robin Farley

Okay, you. thank

Tom Baltimore

you. thank Great,

Operator

question comes your next Patrick line Scholes Truist. proceed of Our questions. with the from Please with

Patrick Scholes

afternoon. good Hi,

Tom Baltimore

Hi, Patrick.

Patrick Scholes

think I the Transient XX% for ballpark how of to and outlook, the a you in Thank your are for what down to three your range for those XX% you. XQ would three versus what segments, in Leisure, about specific customer down gave Transient XX% versus down segments would to XXXX? expectations RevPAR you XX% XXXX, relation Business Group, think

Tom Baltimore

I think you're it haven't we continuation obviously, I the a really, and group business across haven't Yes, I still broken you're standpoint, but think mean, leisure of too of I just transient kind up that, out or I would to going 'XX. going on see to see, still regards in suddenly that that going relative say to a to you're much detail, add see basically improvement

in group of that levels, somewhere kind a pause running group be out April, May, of call leisure of down So, neighborhood the is strong so you've would of of kind have still say, you've the some call quarter. and a but on it kind in recovering, it business back, group we again, got while guidance, pacing 'XX kind slight close it with still get we're still normal coming below with with kind April there, pulling as you again, in I up to probably strong going of got you got. entered of at was obviously then that transient here the our of we're to on XX%, levels XX% you've still because some on stay pace

I think being still looking or down XX% you're at so, that XX.X%.

Patrick Scholes

it. That's you. thank Okay,

Operator

question Chris line next Street. with proceed the Darling with of comes from your question. with Our Green Please

Christopher Darling

good morning. Thanks,

Tom Baltimore

Hi, Chris.

Christopher Darling

curious, your more confidence plays I'm next years? kind supply of some the urban broadly, around a the can out few hey, Do hoping on am you I and portfolio. side negative across your on provide, I'm couple the you can of supply recovering market over we hoping or thoughts markets how outlook into doing, any positive provide Tom, backdrop are your how that for of stand

Tom Baltimore

on the to thank get markets you look think if we I market hope. near Orlando larger you question. supply, just is so we low given Francisco supply. there San and mean, as Chris, X% mean three no Yes, to where see certainly entry, in barriers another about in out, product at to added would Hawaii, looking new supply. clearly there, of another for our is just I impossible certainly we sub expect the virtually be

San a got York, kind Block New level. New the probably supply, our a average X% you've the you're X%. where being Orleans, about York, what think 'XX, New a Two behind, look Chicago, one it So, but a of think was in portfolio, in as as XXXX sub we X%, hotels it's little we even just lower we peers, certainly a probably probably 'XX to across it's range. very in we you're of long-term whether the taken And again, also more and industry, our Francisco, vis-à-vis when are below our and a And reset with out again, replicate at also bunch out City about difficult the be market than 'XX, urban and of look that exposure and would have clearly the in markets, out,

another we be Service, seeing years. hotels get or entitlement that done, a again the five full as you're select given and that So, see seeing four service And not urban while process real opportunity fact three, you're other can that benefit.

minus trade placement we fact and see another probably also a costs a at obviously this of being costs looking real that given So, at seeing inflationary know to not plus we replacement XX% that probably rising you're probably increased And the XX% course, discount more. in benefit. XX% or environment, huge if that's you're

Christopher Darling

all Got me. Appreciate it. the thought. from That's

Tom Baltimore

thank Great, you.

Operator

proceed question. line of Our with Jefferies. Please your David next Katz question comes from with the

David Katz

and Hi, on for afternoon question. taking my Congrats the everyone. thanks quarter

sales. bigger if or a You cause might that derived. there elaborate how be think out get up? asset is and to can that XXX what it potential you sort any, XXX have gating on out of of number if target go factors curious I I'm there would that And of

Tom Baltimore

a venture proceeds this other $XXX for self within us to through. portfolio optionality. only debt part it's hold there last going We've are joint the are there at you aggressively is that were balance were raising as we assets, we're are were is highest gives that. through given is back four a Yes, those were that operating this we the as target, to $XXX certainly early, I where we a question, it's assets $XXX other great think just how assets may really again, of exceed alternatively, time, period to million, buying would the constantly articulated hard And, whether sort we those reality into what invest that expect, reasonable smaller trading, million, obviously recycle there working I projects, a that set that as we're those assets, best working spin, And target or looking five million either set to as that year, but team given additional finding Look, we portfolio. ones David. we're kind And use working inside that is of like the reinvesting capital, or assets, are doing to of of paying right ROI and recall, back we of down portfolio, really the certainly were stock, required the we're and well.

we've continue $X.X of continuation success our is very portfolio. And this targeted really for reshape very we're over We've you'll about that and lot the assets confident been thoughtful billion. sold plus see where really us recycling, a last So, to a we've And the XX that. five over of had just years.

David Katz

the sort context finding right and taking if circumstance is XXX complexity what factor the that moment ultimately sounds it, baseline like Got the that I'm and execute is so it just sort is. of of gating is really XXX a to and or

Tom Baltimore

really Yes, XXXX to we it's may recall think San we pricing. urban year, last a so we you Francisco, I point. think be mean, we that about sold I difficult comparable in it were that really sold, fair told move being two what you to assets, would

sale, fire thoughtful, it's a targeted. it's not it's So,

and and leasing be power. of daily firms, estate do. for certainly for business plenty offices, We being more Park can a only going perception and no for and in certainly for PE you got there's lodging you've four real looking pricing through returns being worth, as higher capital where both many days family certainly are people of it's that industry, whether deals and net so better said, the to in confidently believe lodging I've high three capped industrial of capital As shortage are in ahead or

David Katz

concur, much. it. Appreciate very thanks I

Tom Baltimore

thank Yes, you.

Operator

our That session. back concludes hand Tom for Baltimore to remarks. closing question-and-answer it I'd to like

Tom Baltimore

well, look you visit to opportunity forward to today, NAREIT. with be the and safe, appreciate in of many you seeing forward you in Stay seeing soon. and and We upcoming I look we meetings to

Operator

you this your for conclude Thank Ladies gentlemen, and teleconference. does today's participation.

at You wonderful this may disconnect lines your have and time a day.

Park Hotels & Resorts (PK) 2 May 222022 Q1 Earnings call transcript