Release Date: October 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Park Hotels & Resorts Inc (PK, Financial) reported a 3.3% RevPAR growth in the third quarter, despite disruptions in certain markets.
- The company experienced strong group and business transient demand, offsetting moderating leisure trends.
- Recent redevelopment projects in Orlando and Key West have shown positive results, with the Waldorf Astoria, Orlando receiving high accolades.
- Park Hotels & Resorts Inc (PK) is actively exploring additional development opportunities in key markets like Hawaii and Miami, aiming for attractive returns.
- The company has successfully disposed of non-core assets, improving its balance sheet and focusing on core portfolio investments.
Negative Points
- RevPAR in Hawaii declined by 8% due to labor strikes, tough year-over-year comparisons, and weather disruptions.
- Inbound travel from Japan was negatively impacted by severe weather, leading to a 17% decline in August.
- The company is unable to update full-year 2024 RevPAR and EBITDA guidance due to ongoing labor negotiations.
- October RevPAR growth was disrupted by Hurricane Milton, with expectations of flat growth for the month.
- The Hilton Oakland Airport Hotel closure resulted in a $3 million loss over the trailing 12 months.
Q & A Highlights
Q: Can you elaborate on the RevPAR decline in Hawaii and your outlook for leisure demand there?
A: Thomas Baltimore, CEO, explained that the RevPAR decline was primarily due to weather events and disruptions in Japanese travel. Despite these challenges, the company remains bullish on Hawaii's long-term prospects, citing historical RevPAR growth outpacing the U.S. by 300 basis points over 20 years.
Q: Is the Hilton Hawaiian Village taking bookings during the labor negotiations, and how quickly can operations normalize post-settlement?
A: The hotel has remained open and continues to provide services. Due to ongoing negotiations, the company cannot update guidance but will provide an update once agreements are ratified.
Q: How is group pace shaping up for 2025, and which markets are expected to outperform?
A: Group pace is up mid to high single digits, with strong performance expected in markets like Orlando, Denver, and San Francisco. The Hilton Waikoloa is projected to see a significant increase in group pace, up 77% next year.
Q: What are your expectations for inbound Japanese travel to Hawaii in Q4 and beyond?
A: Japanese travel is expected to be about 720,000 for the year, up 22% from last year but still below pre-pandemic levels. The company anticipates a return to pre-pandemic levels by 2026-2027.
Q: How do you factor weather-related disruptions into your underwriting and capital spending decisions?
A: The company proactively manages weather risks through measures like setting up tiger dams and improving building resiliency. These efforts have resulted in reduced insurance costs, distinguishing Park Hotels from peers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
