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.