Park Hotels & Resorts Q3 Earnings Call Highlights

Key Points

• Park Hotels & Resorts raised its full-year outlook after third-quarter RevPAR rose 8.4% to $201 and adjusted FFO per share climbed more than 11% to $0.39. The company now expects 5.5%–6% RevPAR growth, $635 million–$645 million in adjusted EBITDA, and $2–$2.05 in adjusted FFO per share.
• Group room revenue grew more than 18%, and preliminary October RevPAR was up nearly 11%. Renovated properties are contributing to momentum: Royal Palm South Beach reopened in July, while ongoing Hawaii resort renovations are expected to help close a roughly $60 million EBITDA gap to 2023 levels.
• Park repaid a $1.275 billion loan secured by Hilton Hawaiian Village and has no significant debt maturities until late 2028. It expects capital spending to decline from $270 million–$280 million this year to $175 million–$185 million in 2027.

Park Hotels & Resorts NYSE: PK raised its full-year earnings and revenue growth outlook after third-quarter hotel demand exceeded expectations, with executives pointing to strength in group bookings and a rebound at renovated properties.

Revenue per available room, or RevPAR, rose 8.4% year over year to $201 in the third quarter. Adjusted EBITDA was $135 million, while adjusted funds from operations (FFO) per share increased more than 11% to $0.39, Chief Financial Officer and Chief Operating Officer Sean Dell’Orto said.

Hotel adjusted EBITDA rose 8%, and the corresponding margin expanded by 50 basis points to 25.7%. Group room revenue grew more than 18%, while transient revenue rose over 5%. Occupancy increased 2.4 percentage points and average daily rate advanced 5%.

Higher Outlook and Early Fourth-Quarter Strength

Park raised its full-year RevPAR growth forecast to 5.5%–6%, an increase of 200 basis points at the midpoint. The outlook implies fourth-quarter growth of 5.5%–7.5%.

Adjusted EBITDA guidance rose to $635 million–$645 million, approximately $13 million higher at the midpoint. The company also raised its adjusted FFO outlook by about $0.08 at the midpoint, to $2–$2.05 per share.

Dell’Orto said preliminary October RevPAR rose nearly 11%, helped by the reopening of Royal Palm South Beach and double-digit gains at Bonnet Creek, Key West and Washington, D.C. He expects fourth-quarter total RevPAR growth to be closer to room RevPAR growth than it was in the third quarter, potentially toward the lower end of the company’s implied RevPAR range.

Expenses rose 5% in the third quarter. Excluding Royal Palm, cost per occupied room increased 3.7%, including pressure from utilities. Park expects full-year expenses to rise approximately 4.5% and fourth-quarter expenses to increase 5.5%–6.5%, partly because of Royal Palm’s reopening.

Renovations Drive Growth Plans

Chairman and Chief Executive Officer Tom Baltimore said Park’s two Hawaii resorts increased RevPAR by 7% in the quarter, despite three hurricanes that the company estimates reduced their combined growth by nearly 280 basis points. Group rooms revenue at the resorts more than doubled, while banquet and catering revenue rose 110%.

At Hilton Hawaiian Village, RevPAR grew 5% and occupancy reached nearly 90%. Park began a $100 million renovation of the resort’s Ali’i Tower in August and expects to complete it in early 2027. Once finished, approximately 80% of the resort’s rooms will have been renovated, Dell’Orto said.

Baltimore said the Hawaii properties have an approximately $60 million EBITDA gap to their 2023 peak. He expects the company to close that gap over the next few years as renovations are completed and market share recovers.

In Miami, Royal Palm South Beach reopened in late July following an approximately $110 million renovation. Its third-quarter average daily rate was about $244, more than 30% above the comparable period in 2024, Baltimore said. Park expects the property to generate approximately $4 million in hotel adjusted EBITDA in the fourth quarter and $3 million for the full year.

For 2027, Baltimore expects Royal Palm’s EBITDA to return at least to its roughly $14 million pre-renovation level. He said the property could contribute approximately 200 basis points to portfolio RevPAR growth next year as it works toward roughly $28 million of stabilized hotel adjusted EBITDA by 2028.

Asset Sales, Debt and 2027 Spending

Park sold The Wade, a Chicago hotel, for approximately $19 million in October. Baltimore said the property had been expected to post an operating loss of roughly $1.3 million in 2026. Of 19 hotels originally identified as non-core, Park has sold or otherwise disposed of 11, generating about $220 million in gross proceeds.

Of the eight remaining non-core hotels, three are part of a dispute with Safehold and are not being marketed, Baltimore said. Park is evaluating whether to retain and renovate its Lake Buena Vista property in Orlando, while pursuing work on the other four assets.

Dell’Orto said Park repaid a $1.275 billion loan secured by Hilton Hawaiian Village in September and now has no significant debt maturities until the fourth quarter of 2028. He also estimated that replacing roughly $1.5 billion of lower-rate debt with financing at around 6% to the low-6% range created an annual interest expense headwind of approximately $30 million, partly offset by potential savings as leverage declines.

After spending an expected $270 million–$280 million on capital improvements this year, Park anticipates reducing annual spending to a more normalized $175 million–$185 million in 2027, Dell’Orto said. Core group revenue pace for 2027 was up nearly 6%, according to Baltimore.

About Park Hotels & Resorts (NYSE:PK)

Park Hotels & Resorts Inc NYSE: PK is a real estate investment trust focused on owning and operating hotels and resorts. The company's portfolio includes full-service properties in major business and leisure destinations, with hotels operating under Hilton brands as well as other nationally recognized and independent brands.

Park's properties provide lodging, food and beverage, meeting and event facilities, and other hospitality services. Its hotels are located primarily in the United States, including gateway cities, convention markets, and resort destinations.

Park Hotels & Resorts was formed in 2017 through a spin-off from Hilton Worldwide Holdings.

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