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Park Hotels & Resorts Inc PK

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Park Hotels Beats Expectations as Leisure Travel Returns Hotel Operations to Profitability in Q2

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

No-moat Park Hotels & Resorts reported second-quarter results that were well ahead of our expectations, but we don't anticipate making any material changes to our $24 fair value estimate. Occupancy for the quarter improved to 42.3% compared with just 6.1% in the second quarter of 2020, though it is still far short of the 85.8% during the second quarter of 2019. Similarly, average daily rate improved 44.6% year over year but still 17.2% below 2019. As a result, Park reported revenue per available room growth of 909.7%, though that is slightly below our estimate of 970.1%. However, Park did a good job of controlling expenses as it brought operations back on line, leading to hotel EBITDA of $8 million compared with our estimate of a $41 million loss in the quarter. While Park's second-quarter cash flows were negative as a result of corporate administrative expenses and interest expenses, Park's reported adjusted funds from operations of a $0.16 loss was better than our estimate of a $0.57 loss for the second quarter.

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Company Profile

Business Description

Park Hotels & Resorts owns upper-upscale and luxury hotels with 28,249 rooms across 49 hotels in the United States. Park also has interests through joint ventures in another 4,297 rooms in seven U.S. hotels. Park was spun out of narrow-moat Hilton Worldwide Holdings at the start of 2017, so most of the company's hotels are still under Hilton brands. The company has sold all its international hotels and 11 lower-quality U.S. hotels to focus on high-quality assets in domestic, gateway markets.

1775 Tysons Boulevard, 7th Floor
Tysons, VA, 22102
T +1 571 302-5757
Sector Real Estate
Industry REIT - Hotel & Motel
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Hard Assets
Employees 182

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