MCLEAN, Va.–Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK) today announced results for the first quarter ended March 31, 2017. Highlights include:
First Quarter 2017 Results (as compared to First Quarter 2016)
- Comparable RevPAR for the domestic portfolio was $163.90, an increase of 1.7% on a Pro-forma basis
- Comparable RevPAR was $156.34, an increase of 1.4% on a Pro-forma basis
- Net income and net income attributable to stockholders were $2,350 million, including an income tax benefit of $2,288 million resulting from the REIT conversion
- Adjusted EBITDA was $177 million, an increase of 4.1% on a Pro-forma basis
- Adjusted FFO attributable to stockholders was $138 million, an increase of 7.8% on a Pro-forma basis
- Diluted earnings per share was $11.02
- Diluted Adjusted FFO per share was $0.64
- Comparable Hotel Adjusted EBITDA margin was 25.9%, a decrease of 10 bps on a Pro-forma basis
Thomas J. Baltimore, Jr., Chairman, President and Chief Executive Officer, stated, “We are very pleased with our first quarter results, which came in ahead of expectations both on top line and bottom line, clearly demonstrating the benefit of owning a geographically diverse portfolio of high quality assets with multiple levers of demand. I am thrilled with the progress our team has made after just four months operating as an independent public company with our attention keenly focused on creating value for our shareholders. On the asset management front, we continue to build out our team as we implement aggressive asset management strategies to help narrow the margin gap that exists between Park and our peers. Separately, we continue to make progress on our ROI projects and our team is formulating a strategic plan to determine the scope of our non-core asset sale program given our intention to recycle the bottom 10% to 15% of our portfolio over the next several years.”
Selected Statistical and Financial Information
(unaudited, dollars in millions, except per share data, Comparable RevPAR and Comparable ADR)
Three Months Ended March 31, 2017 2016 2017 vs. 2016 Comparable RevPAR(1)(2) $ 156.34 $ 154.23 1.4% Comparable Occupancy(1)(2) 77.6% 77.7%
(0.1)% pts
Comparable ADR(1)(2) $ 201.41 $ 198.55 1.4% Net income(3) $ 2,350 $ 23 NM(4) Net income attributable to stockholders(3) $ 2,350 $ 22 NM(4) Adjusted EBITDA(1) $ 177 $ 170 4.1% Comparable Hotel Adjusted EBITDA(1)(2) $ 165 $ 161 2.5% Comparable Hotel Adjusted EBITDA margin(1)(2) 25.9% 26.0% (10) bps Adjusted FFO attributable to stockholders(1) $ 138 $ 128 7.8% Earnings per share – Diluted(5) $ 11.02 $ 0.11 Adjusted FFO per share – Diluted(1)(5) $ 0.64 $ 0.65 Weighted average shares outstanding – Diluted 213 198
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(1) For 2016, amounts are calculated on a Pro-forma basis. (2) Excludes unconsolidated joint ventures. (3) Includes a $2,288 million income tax benefit in 2017 resulting from the derecognition of deferred tax liabilities upon Park’s declaration of intent to be taxed as a REIT. (4) Percentage change is not meaningful. (5) For 2016, per share amounts were calculated using the number of shares of common stock outstanding upon the completion of the spin-off. Per share amounts are calculated based on unrounded numbers.
2017 First Quarter Operating Results: Total Consolidated Comparable Hotels
Comparable RevPAR increased 1.4% on a Pro-forma basis, attributable to a 1.4% increase in rate, with occupancy remaining relatively flat. Across Park’s major markets:
- Washington, D.C. was the best performer with RevPAR growth of 10.0% attributable to increased demand during the inauguration and related political events;
- Chicago showed RevPAR growth of 8.1% with an increase in both rate and occupancy primarily from increased group business and renovation disruptions in 2016 at the Hilton Chicago; and
- Hawaii generated RevPAR growth of 4.1% due to an increase in rate driven by an increase in group business.
The solid performance was primarily attributable to increases in group business, which accounted for approximately one-third of revenues. Group rooms revenue for the quarter increased by 7.1%, led by the following properties:
- Hilton Hawaiian Village Waikiki Beach Resort increased 28.4%
- Parc 55 San Francisco – a Hilton Hotel increased 23.8%
- Hilton Chicago increased 22.2%; and
- Hilton Orlando Bonnet Creek increased 16.1%.
2017 First Quarter Operating Results: Top 10 Hotels
RevPAR for Park’s Top 10 Hotels, which accounts for approximately 66% of Hotel Adjusted EBITDA, grew 1.8% on a Pro-forma basis, driven by a 1.0 percentage point increase in occupancy and a 0.5% increase in rate. Within the Top 10 Hotels:
- Hilton Chicago was the best performing hotel with RevPAR growth of 17.5% from strong group demand and renovation disruptions in 2016;
- Hilton Orlando Bonnet Creek had RevPAR growth of 8.7%;
- Parc 55 San Francisco – a Hilton Hotel had RevPAR growth of 4.2%;
- Hilton Hawaiian Village Waikiki Beach Resort had RevPAR growth of 4.1%; and
- New York Hilton Midtown had RevPAR growth of 2.9%.
Hilton San Francisco Union Square was the weakest performer with a decrease in RevPAR of 8.0%, due to ongoing renovations and a tough comparable period in 2017 due to the Super Bowl in 2016.
Balance Sheet and Liquidity
Park had the following debt outstanding as of March 31, 2017:
(unaudited, dollars in millions)
As of Debt Collateral Interest Rate Maturity Date March 31, 2017 Fixed Rate Debt Unsecured notes Unsecured 7.50% December 2017 $ 55 Mortgage loan DoubleTree Hotel Spokane City Center 3.55% October 2020 12 Commercial mortgage-backed
securities loan
Hilton San Francisco Union Square, Parc 55 San Francisco – a Hilton Hotel 4.11% November 2023 725 Commercial mortgage-backed
securities loan
Hilton Hawaiian Village Waikiki Beach Resort 4.20% November 2026 1,275 Mortgage loan The Fess Parker Santa Barbara Hotel – a DoubleTree Resort 4.17% December 2026 165 Total Fixed Rate Debt(1) $ 2,232 Variable Rate Debt Revolving credit facility(2) Unsecured L + 1.50%
December 2021(3)
$ – Term loan Unsecured L + 1.45% December 2021 750 Mortgage loan DoubleTree Hotel Ontario Airport L + 2.25% May 2022(3) 30 Total Variable Rate Debt $ 780
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(1) Excludes $14 million of capital lease obligations. (2) $1 billion revolving credit facility, with $1 billion available as of March 31, 2017. (3) Assumes the exercise of all extensions that are exercisable solely at Park’s option.
Total cash and cash equivalents were $336 million as of March 31, 2017, including $18 million of restricted cash.
Capital Investments
Park invested $37 million in the first quarter on capital improvements, including $32 million on improvements made to guest rooms, lobbies and other guest-facing areas. Key projects include:
- Hilton San Francisco Union Square: $9.5 million primarily on rooms and suites renovations
- Hilton Sao Paulo Morumbi: $5.8 million primarily on rooms and corridors renovations
- Hilton New Orleans Riverside: $5.1 million primarily on ballroom and exhibit hall renovations
- Hilton Chicago: $2.7 million primarily on ballroom and meeting space renovations.
To view full financial release and corresponding tables please click the PDF icon or visit: http://www.pkhotelsandresorts.com/news-and-events/press-releases/2017/05-03-2017-211532945
