Park Hotels & Resorts Inc. Reports Second Quarter 2018 Results
TYSONS, Va.--(BUSINESS WIRE)--Aug 1, 2018--Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK) today announced results for the second quarter ended June 30, 2018. Highlights include:
Second Quarter 2018 HighlightsComparable RevPAR was $185.58, an increase of 4.3% from the same period in 2017; Net income was $218 million and net income attributable to stockholders was $216 million; Adjusted EBITDA was $228 million, an increase of 5.1% over the same period in 2017; Adjusted FFO attributable to stockholders was $187 million, an increase of 8.1% over the same period in 2017; Diluted earnings per share was $1.07; Diluted Adjusted FFO per share was $0.93, an increase of 14.8% over the same period in 2017; Comparable Hotel Adjusted EBITDA margin was 31.9%, an increase of 150 bps from the same period in 2017; Completed the sale of a joint venture ownership interest in the Hilton Berlin at an EBITDA multiple of 20x, for which Park’s pro rata share of the sales price was $140 million.
Thomas J. Baltimore, Jr., Chairman, President and Chief Executive Officer, stated, “I am extremely pleased to announce a very strong quarter, which highlights the benefits of a robust group base for our portfolio. We continue to execute against our internal growth strategies of grouping up, improving margins and recycling capital. Group pace continues to accelerate, up almost 5% for the year and improving to over 9% for 2019, while margins increased 150 bps during the quarter. We continue to take advantage of strong demand for hotel real estate by selling our JV interest in the Hilton Berlin at a significant EBITDA multiple of 20x, while initiating the second phase of our non-core hotel sales. Overall, we are encouraged by our results and while we expect our second quarter to be our strongest this year, our outlook remains positive for the second half with fundamentals continuing to improve and the transaction market accelerating.”
Selected Statistical and Financial Information (unaudited, amounts in millions, except per share data, Comparable RevPAR and Comparable ADR)
Top 10 Hotels
RevPAR at Park’s Top 10 Hotels, which account for approximately 70% of Hotel Adjusted EBITDA, increased 6% during the quarter and 3.8% year-to-date, primarily due to increases in occupancy and rate, as compared to the same period in 2017. Highlights within the Top 10 Hotels include:Hilton Hawaiian Village Waikiki Beach Resort: RevPAR growth was 3.3% for the quarter and 2.1% year-to-date from an increase in both group business, which was up over 9% from the second quarter last year, and transient business; New York Hilton Midtown: RevPAR increased 5.0% for the quarter and 2.5% year-to-date, from an increase in group business of more than 33% versus the second quarter last year; Hilton San Francisco Union Square / Parc 55 San Francisco – a Hilton Hotel: Combined RevPAR increased 13.7% for the quarter and 6.3% year-to-date from increases in group business of over 60% combined for the quarter, following the partial completion of renovations at the Moscone Center and increased transient rate; Hilton Waikoloa Village: Despite some disruption caused by the eruption of the Kilauea volcano, RevPAR growth was 6.9% for the quarter and 8.4% year-to-date from increases in both group and transient rates over the same periods in the prior year; Hilton New Orleans Riverside: RevPAR growth was 2.2% for the quarter and 2.7% year-to-date from an increase in occupancy from transient business; Hilton Chicago: RevPAR increased 10.5% during the quarter and 4.7% year-to-date benefiting from a more than 20% increase in group business from the second quarter of last year; Hilton Orlando Bonnet Creek / Waldorf Astoria Orlando: Combined RevPAR decreased 3.1% for the quarter and increased 2.5% year-to-date. The decrease in the second quarter resulted from a decrease in occupancy at both hotels, offset by an increase in group rate during the quarter and overall group business year-to-date; Casa Marina, A Waldorf Astoria Resort: RevPAR declined 2.4% during the quarter and 1.3% year-to-date from disruptions following the start of the next phase of renovations during the second quarter related to Hurricane Irma and from Tropical Storm Alberto over Memorial Day weekend resulting in declines in transient business, which was partially offset by an increase in group business.
Total Consolidated Comparable Hotels
Comparable RevPAR increased 4.3% for the quarter and 2.8% year-to-date primarily due to a 3.1% and 2.1% increase in rate, respectively, and 1.0% pts and 0.5% pts increase in occupancy, respectively, as compared to the same periods in 2017. Group rooms revenue increased 4.2% for the quarter and 2.6% year-to-date, offset by a 4.7% and 1.8% decline in transient rooms revenue, respectively, as compared to the same periods in 2017. The overall increase in RevPAR was a result of both increases in occupancy and ADR at Park’s Northern California, Hawaii, Chicago, and New York hotels during those periods, primarily attributable to increases in group business at urban and resort hotels in these markets. The overall increase in RevPAR for Park’s comparable hotels during both periods was partially offset by a decline in RevPAR for its Southern California hotels primarily from renovation displacement at the Hilton Santa Barbara Beachfront Resort; these renovations were completed in April 2018.
Hurricanes Irma and Maria
In September 2017, Hurricanes Irma and Maria caused damage and disruption at the Caribe Hilton in San Juan, Puerto Rico and Park’s two hotels in Key West, Florida. Park expects the Caribe Hilton to remain closed for almost all of 2018 and the results of operations of that property are presented as non-comparable. Full year 2017 EBITDA at the Caribe Hilton, prior to the hurricanes, was projected to be $8 million.
Park expects that insurance proceeds, excluding any applicable insurance deductibles, will be sufficient to cover a significant portion of the property damage to the hotels and loss of business. To date, Park has received $65 million of insurance proceeds for both Key West hotels and the Caribe Hilton, including $25 million received in the second quarter. These insurance proceeds included $7 million received for business interruption at the Caribe Hilton in the second quarter, which, when netted against fees and expenses, equates to approximately $5 million of Adjusted EBITDA for the second quarter. An additional advance of $25 million for the Caribe Hilton has been submitted, and Park expects to receive cash proceeds during the third quarter.
During the six months ended June 30, 2018, Park completed the sale of the following 12 consolidated hotels in four separate transactions (the results of these hotels are presented as non-comparable), and its interests in one unconsolidated joint venture:
Balance Sheet and Liquidity
Park had the following debt outstanding as of June 30, 2018:
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