TYSONS, Va., June 08, 2021 (GLOBE NEWSWIRE) — Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK) today provided an operational and liquidity update.
Highlights:
- Increased the number of open hotels to 55 of 59 hotels (93%), or 86% of total room count;
- 40.7% occupancy in May 2021 for Park’s 52 consolidated hotels (an increase of 3.7 percentage points from April 2021), with a decrease in rate of 20.1% compared to May 2019;
- 53.8% occupancy for Park’s 45 consolidated hotels open during the entirety of May (an increase of 4.4 percentage points from April 2021) with a decrease in rate of 14.6% compared to May 2019;
- Generated Pro-forma Hotel Revenues of $82.8 million and positive Pro-forma Hotel Adjusted EBITDA of $3.5 million in April 2021, with 24 of its 45 consolidated hotels that were open during April 2021 generating positive Pro-forma Hotel Adjusted EBITDA; and
- Decreased Park’s monthly burn rate to $23 million in April 2021 and expected to remain on track to break-even at the corporate level in the third quarter of 2021.
Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer, stated, “I continue to be extremely encouraged by our portfolio’s performance over the past several months. Leisure demand trends continue to accelerate at a faster pace than we had initially anticipated, with impressive pricing power seen in most of our resort assets, while early indications of group booking activity and business transient travel should translate to a broader based recovery across all demand segments over the back half of 2021 and well into 2022. We remain laser-focused on executing on our near-term strategic priorities, including continuing to reopen our hotels, reducing our burn rate and further de-levering our balance sheet through asset sales, as we enter what we expect to be a promising period of demand recovery over the coming months.”
Hotel Reopening Update
Park has reopened three additional hotels since early May due to improving demand trends in the respective markets, and the Company expects to open one additional hotel this week. Details are as follows:
- The 403-room W Chicago – City Center and the 1,921-room Hilton San Francisco Union Square both reopened in May;
- The 128-room Hilton Garden Inn Chicago/Oakbrook Terrace reopened in early June;
- The 1,544-room Hilton Chicago is expected to reopen later this week, which will increase the total open hotels to 56 out of 59 hotels accounting for nearly 90% of the Company’s total room count; and
- The remaining three suspended hotels in Park’s portfolio are currently expected to reopen over the next several months as travel restrictions ease and demand recovers.
The current status of Park’s hotels as of June 8, 2021 is as follows:
| Status | Number of Hotels | Total Rooms | ||
| Consolidated Open | 48 | 24,074 | ||
| Consolidated Suspended | 4 | 4,760 | ||
| Total Consolidated | 52 | 28,834 | ||
| Unconsolidated Open | 7 | 4,297 | ||
| Total Hotels | 59 | 33,131 | ||
Operational Update
Changes in Pro-forma ADR, Occupancy and RevPAR for each month in 2021 compared to the same periods in 2020 and 2019 and Pro-forma Occupancy for Park’s 52 consolidated hotels were as follows:
| Change in Pro-forma ADR | Change in Pro-forma Occupancy | Change in Pro-forma RevPAR |
2021 Pro-forma Occupancy |
||||||||||||||||||
| 2021 vs. 2020 | 2021 vs. 2019 | 2021 vs. 2020 | 2021 vs. 2019 | 2021 vs. 2020 | 2021 vs. 2019 | ||||||||||||||||
| January | (40.8 | ) | % | (41.4 | ) | % | (52.4 | ) | % pts | (50.8 | ) | % pts | (82.8 | ) | % | (82.6 | ) | % | 21.4 | % | |
| February | (30.6 | ) | (31.1 | ) | (54.1 | ) | (53.2 | ) | (78.0 | ) | (77.9 | ) | 25.1 | ||||||||
| March | (17.1 | ) | (25.4 | ) | (0.7 | ) | (50.1 | ) | (18.8 | ) | (70.6 | ) | 32.5 | ||||||||
| April | 47.3 | (21.8 | ) | 33.1 | (47.7 | ) | 1,305.3 | (65.9 | ) | 37.0 | |||||||||||
| May(1) | 74.1 | (20.1 | ) | 35.7 | (44.2 | ) | 1,325.3 | (61.7 | ) | 40.7 | |||||||||||
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(1) Pro-forma ADR, Occupancy and RevPAR for May 2021 are preliminary estimates.
Changes in Pro-forma ADR, Occupancy and RevPAR for each month in 2021 compared to the same periods in 2020 and 2019 and Pro-forma Occupancy for 2021 for only the consolidated hotels open during the entirety of each month were as follows:
| Number of Consolidated Hotels Open | Change in Pro-forma ADR | Change in Pro-forma Occupancy | Change in Pro-forma RevPAR |
2021 Pro-forma Occupancy |
|||||||||||||||||||
| 2021 vs. 2020 | 2021 vs. 2019 | 2021 vs. 2020 | 2021 vs. 2019 | 2021 vs. 2020 | 2021 vs. 2019 | ||||||||||||||||||
| January | 42 | (37.6 | ) | % | (37.0 | ) | % | (45.6 | ) | % pts | (42.3 | ) | % pts | (75.0 | ) | % | (73.6 | ) | % | 30.5 | % | ||
| February | 42 | (30.9 | ) | (29.3 | ) | (45.8 | ) | (37.0 | ) | (69.7 | ) | (65.3 | ) | 35.7 | |||||||||
| March | 42 | (17.5 | ) | (21.8 | ) | 9.1 | (26.8 | ) | 2.9 | (50.6 | ) | 45.9 | |||||||||||
| April | 45 | 52.7 | (18.8 | ) | 44.4 | (34.7 | ) | 1,409.6 | (52.3 | ) | 49.4 | ||||||||||||
| May(1) | 45 | 73.8 | (14.6 | ) | 47.2 | (28.9 | ) | 1,311.7 | (44.5 | ) | 53.8 | ||||||||||||
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(1) Pro-forma ADR, Occupancy and RevPAR for May 2021 are preliminary estimates.
Park’s leisure markets continue to benefit from increased transient demand and results for April 2021 and preliminary operating statistics for May 2021 are as follows:
- Hawaii: Demand trends continue to rapidly improve across both Hawaii hotels, with combined occupancy improving to an estimated 62% in May 2021, up from 49% in April 2021 and 38% in March 2021, with rate declines as compared to 2019 improving from (11%) in April 2021 to (7%) in May 2021. Both the Hilton Waikoloa Village and the Hilton Hawaiian Village generated positive Hotel Adjusted EBITDA in April 2021;
- Orlando: Combined occupancy increased to an estimated 45% in both May and April 2021 from 40% in March 2021, as demand trends continue to improve, with all of Park’s Orlando hotels generating positive Hotel Adjusted EBITDA in April 2021;
- New Orleans: Although occupancy at the Hilton New Orleans Riverside decreased in May 2021 to an estimated 49% from 65% in April 2021 and 64% in March 2021, with the expiration of the contract to provide housing to college students, rate increased by approximately 55% from March 2021 to May 2021 and the hotel generated positive Hotel Adjusted EBITDA in April 2021;
- Southern California: Occupancy increased to an estimated 65% in May 2021 from 62% in April 2021 and 54% in March 2021 due to a continued increase in leisure demand, with occupancy at the Hilton Santa Barbara Beachfront Resort, Hotel Indigo San Diego Gaslamp Quarter and the DoubleTree Hotel Ontario Airport increasing to an estimated 73%, 76% and 84%, respectively, in May 2021. Six of the seven hotels in Southern California generated positive Hotel Adjusted EBITDA in April 2021;
- Key West: Demand for both Key West hotels remains strong, with combined occupancy holding at an estimated 93% for May 2021 and a rate increase of 42% as compared to May 2019. Both hotels generated positive Hotel Adjusted EBITDA in April 2021; and
- Miami: Combined occupancy increased to an estimated 78% in May 2021 from 75% in April 2021 and 73% in March 2021 as the market continues to benefit from strong demand with the Royal Palm South Beach Miami achieving occupancy of 87% in May 2021 and a rate increase of 25% as compared to May 2019. Both the Royal Palm South Beach Miami and the Hilton Miami Airport generated positive Hotel Adjusted EBITDA in April 2021.
Liquidity Update
As of May 31, 2021, Park’s liquidity was $1.9 billion, including estimated cash and cash equivalents of $789 million as of May 31, 2021 and approximately $1.1 billion of available capacity remaining under the Company’s revolving credit facility. Park also had $33 million of restricted cash as of May 31, 2021.
Park’s estimated burn rate decreased to $23 million in April 2021 from $26 million in March 2021. This estimate does not take into account capital expenditures or any possible alternative sources of revenue that may arise, any hotel property dispositions from the remainder of the year or payment of cash dividends or other distributions not already declared and paid in 2021, if any. The estimated burn rate has not been increased or decreased by any amount available to Park under existing or future debt facilities, or proceeds from issuance of any additional debt, equity or equity-linked securities.
Park continues to take proactive measures to reduce the near-term burn rate, including deferral of payments, hiring freezes and other cost reduction measures. As a result of these measures, coupled with expected continued leisure demand and the continued distribution of COVID-19 vaccines, Park expects to break-even at the corporate level during the second half of 2021, with its portfolio expected to generate positive Hotel Adjusted EBITDA during the second quarter of 2021.
Supplemental Information
Park’s management team is scheduled to meet with investors at the Nareit’s REITWeek: 2021 Investor Conference and an investor presentation will be provided to those investors during the meetings. This presentation has been posted to Park’s website at www.pkhotelsandresorts.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements related to Park’s current expectations regarding the performance of its business, financial results, liquidity and capital resources, including the expected reopening dates for the Company’s hotels and expected dates that its properties will break even or achieve positive Hotel Adjusted EBITDA, the effects of competition and the effects of future legislation or regulations, the expected completion of anticipated dispositions, the declaration and payment of future dividends, and other non-historical statements. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “hopes” or the negative version of these words or other comparable words. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and which could materially affect its results of operations, financial condition, cash flows, performance or future achievements or events. Currently, one of the most significant factors continues to be the adverse effect of COVID-19, including possible resurgences, on the Company’s financial condition, results of operations, cash flows and performance, its hotel management companies and its hotels’ tenants, and the global economy and financial markets. COVID-19 has significantly affected the Company’s business, and the extent to which COVID-19 continues to affect the Company, its hotel managers, tenants and guests at the Company’s hotels will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its effect, the emergence of virus variants, the efficacy, availability and deployment of vaccinations and other treatments to combat COVID-19, including public adoption rates of COVID-19 vaccines, additional closures that may be mandated or advisable even after the reopening of certain of the Company’s hotels on a limited basis, whether due to an increased number of COVID-19 cases or otherwise, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified in the risk factors included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements and Park urges investors to carefully review the disclosures Park makes concerning risk and uncertainties in Item 1A: “Risk Factors” in Park’s Annual Report on Form 10-K for the year ended December 31, 2020, as such factors may be updated from time to time in Park’s filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Except as required by law, Park undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Non-GAAP Financial Measures
Park presents Hotel Adjusted EBITDA, a non-GAAP financial measure, in this press release. Hotel Adjusted EBITDA should be considered along with, but not as an alternative to, net income (loss) as a measure of its operating performance.
About Park
Park is the second largest publicly traded lodging REIT with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio currently consists of 59 premium-branded hotels and resorts with over 33,000 rooms primarily located in prime city center and resort locations. Visit www.pkhotelsandresorts.com for more information.
PARK HOTELS & RESORTS INC.
NON-GAAP FINANCIAL MEASURES RECONCILIATIONS
HOTEL EBITDA, PRO-FORMA HOTEL ADJUSTED EBITDA AND
PRO-FORMA HOTEL REVENUES
| (unaudited, in millions) | ||||
|
Month Ended April 30, 2021 |
||||
| Hotel net income | $ | (29.3 | ) | |
| Depreciation and amortization expense | 24.3 | |||
| Interest expense | 9.0 | |||
| Hotel EBITDA | 4.0 | |||
| Severance benefit | (1.2 | ) | ||
| Other items | 0.7 | |||
| Hotel Adjusted EBITDA | 3.5 | |||
| Less: Adjusted EBITDA from hotels disposed of | — | |||
| Pro-forma Hotel Adjusted EBITDA | $ | 3.5 | ||
| (unaudited, in millions) | ||||
|
Month Ended April 30, 2021 |
||||
| Total Revenues | $ | 86.7 | ||
| Less: Other revenue | (3.4 | ) | ||
| Less: Revenues from hotels disposed of | (0.5 | ) | ||
| Pro-forma Hotel Revenues | $ | 82.8 | ||
PARK HOTELS & RESORTS INC.
DEFINITIONS
Occupancy
Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels. Room nights available to guests have not been adjusted for suspended or reduced operations at certain of Park’s hotels as a result of COVID-19. Occupancy measures the utilization of the Company’s hotels’ available capacity. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help management determine achievable Average Daily Rate (“ADR”) levels as demand for rooms increases or decreases.
Average Daily Rate
ADR represents rooms revenue divided by total number of room nights sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the hotel industry, and management uses ADR to assess pricing levels that the Company is able to generate by type of customer, as changes in rates have a more pronounced effect on overall revenues and incremental profitability than changes in occupancy, as described above.
Revenue per Available Room
Revenue per Available Room (“RevPAR”) represents rooms revenue divided by the total number of room nights available to guests for a given period. Room nights available to guests have not been adjusted for suspended or reduced operations at certain of Park’s hotels as a result of COVID-19. Management considers RevPAR to be a meaningful indicator of the Company’s performance as it provides a metric correlated to two primary and key factors of operations at a hotel or group of hotels: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods.
Hotel EBITDA and Hotel Adjusted EBITDA
Hotel earnings (loss) before interest expense, taxes and depreciation and amortization (“Hotel EBITDA”), presented herein, reflects net income (loss) excluding depreciation and amortization, interest income, interest expense and income taxes of the Company’s consolidated hotels. Hotel Adjusted EBITDA is Hotel EBITDA further adjusted to exclude items that management believes are not representative of the Company’s consolidated hotels current or future operating performance, including severance expense (benefit), and is a key measure of the Company’s consolidated hotels profitability. The Company presents Hotel Adjusted EBITDA to help the Company and its investors evaluate the ongoing operating performance of the Company’s consolidated hotels.
Hotel EBITDA and Hotel Adjusted EBITDA are not recognized terms under United States (“U.S.”) GAAP and should not be considered as an alternative to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, the Company’s definition of Hotel EBITDA and Hotel Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
The Company believes that Hotel EBITDA and Hotel Adjusted EBITDA provides useful information to investors about the Company and its financial condition and results of operations for the following reasons: (i) Hotel EBITDA and Hotel Adjusted EBITDA are among the measures used by the Company’s management team to make day-to-day operating decisions and evaluate its operating performance between periods and between REITs by removing the effect of its capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from its operating results; and (ii) Hotel EBITDA and Hotel Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as common performance measures to compare results or estimate valuations across companies in the industry.
Hotel EBITDA and Hotel Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss) or other methods of analyzing the Company’s operating performance and results as reported under U.S. GAAP.
Pro-forma
The Company presents certain data for its consolidated hotels on a pro-forma hotel basis as supplemental information for investors: Pro-forma Hotel Revenues, Pro-forma RevPAR, Pro-forma Occupancy, Pro-forma ADR and Pro-forma Hotel Adjusted EBITDA. The Company presents pro-forma hotel results to help the Company and its investors evaluate the ongoing operating performance of its hotels. The Company’s pro-forma metrics exclude results from property dispositions that have occurred through June 8, 2021 and include results from property acquisitions as though such acquisitions occurred on the earliest period presented.
| Investor Contact |
| Ian Weissman |
| + 1 571 302 5591 |