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Park Hotels' (PK) Portfolio Sees Robust Q4 Operating Trends
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Per Park Hotels & Resorts’ (PK - Free Report) recently released operating update, it witnessed strong momentum in October and November, mainly driven by the solid performance in its urban portfolio, aided by the revival in business travel. The company’s portfolio witnessed comparable revenue per available room (RevPAR) growth of 10% on a year-over-year basis in these two months.
Shares of the company witnessed a rise of 2.4% on the Dec 21 regular trading session on the NYSE.
Per the operating update, management stated that business travel has accelerated in Boston, Chicago, New York and Denver, in addition to the continued upside from group and leisure business at its Hawaii hotels. Encouragingly, the company’s RevPAR for the Hawaii hotels climbed 9.3% in October from the prior year’s same-period levels. Continuing the momentum, the metric increased 14.5% in November.
Park’s urban portfolio experienced year-over-year comparable RevPAR growth of 9.1% and 11.2% in October and November, respectively, owing to continued recovery in the segment’s demand.
Notably, New York and Chicago were among the top-performing urban markets in November, registering RevPAR growth of 15.1% and 14.4%, respectively, from the prior year levels. This was followed by Boston, Denver, San Francisco and Washington, D.C., whereby each market experienced more than 10% growth on a comparable basis.
The lodging real estate investment trust’s (REIT) Hotel net income for October and November came in at $39 million and $17 million, respectively.
The company’s comparable occupancy for October increased 1.9% year over year to 77.3% and for November climbed 2.7% to 71.4%. Although comparable occupancy in October improved from the third quarter’s 75.3%, it exhibited a decline in November. PK’s comparable average daily rate ("ADR") for October and November was $254.47 and $241.60, respectively.
The comparable Hotel adjusted EBITDA margin for October was 32.6%, which declined 35 bps year over year but increased 53 bps to 25% for November.
In addition, PK continues to make meaningful progress on its transformation and renovation projects. It expects to complete the $230 million transformative expansion and full-scale renovation of The Waldorf Astoria Orlando and Signia by Hilton Orlando Bonnet Creek hotels at Bonnet Creek in January 2024. The transformation is expected to better the group positioning of the hotels, in turn aiding a rise in ADR for future group business by an average of more than 10% through 2025.
As of Dec 6, 2023, the $80 million renovation at Casa Marina Key West, Curio Collection was near completion, with all the guest room inventory online. The overall group revenue pace at the hotel compared with the 2019 level is up 9%.
Also, the multi-phased renovation project of the 1,021-room Tapa Tower at the Hilton Hawaiian Village Waikiki Beach Resort is likely to conclude by this week.
Park Hotels enjoys a geographically diverse portfolio of premium-branded hotels and resorts located in the prime U.S. markets. Notably, 86% of the hotels and resorts are in the luxury or upper upscale segment. Moreover, around 80% of the portfolio is strategically located in the central business districts of major cities or resort or conference destinations, which serve as key demand drivers.
Amid the rebounding lodging industry fundamentals, the company continues to experience improvement in overall demand across its portfolio. It expects the positive momentum in the lodging industry to continue through the remainder of 2023 and into 2024 based on improved international travel and current demand trend.
Per Thomas J. Baltimore, Jr., chairman and CEO of the company, “As we look ahead to 2024, we are excited about our growth prospects. Our reduced market exposure to San Francisco helps to change the narrative for the company and we remain well positioned to execute on our strategic growth priorities with $1.3 billion of liquidity expected to be available following the payment of our fourth quarter and special cash dividend.”
The company has maintained its guidance for 2023. Per the third-quarter earnings release, it expects adjusted funds from operations (FFO) per share to range between $1.92 and $2.03. The Zacks Consensus Estimate for the metric currently stands at $1.99, which is within the excepted range.
Comparable RevPAR is projected in the range of $177-$179 million. Adjusted EBITDA is estimated between $644 million and $668 million, whereas comparable Hotel adjusted EBITDA margin is anticipated to range from 27.7%-28.2%.
PK currently sports Zacks Rank #1 (Strong Buy). Its shares have gained 39% in the past three months compared with the industry’s upside of 15%.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has been raised 1.7% over the past two months to $7.31.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally north in the past two months to $7.70.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share has been raised 1.3% upward over the past two months to $2.28.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.
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Park Hotels' (PK) Portfolio Sees Robust Q4 Operating Trends
Per Park Hotels & Resorts’ (PK - Free Report) recently released operating update, it witnessed strong momentum in October and November, mainly driven by the solid performance in its urban portfolio, aided by the revival in business travel. The company’s portfolio witnessed comparable revenue per available room (RevPAR) growth of 10% on a year-over-year basis in these two months.
Shares of the company witnessed a rise of 2.4% on the Dec 21 regular trading session on the NYSE.
Per the operating update, management stated that business travel has accelerated in Boston, Chicago, New York and Denver, in addition to the continued upside from group and leisure business at its Hawaii hotels. Encouragingly, the company’s RevPAR for the Hawaii hotels climbed 9.3% in October from the prior year’s same-period levels. Continuing the momentum, the metric increased 14.5% in November.
Park’s urban portfolio experienced year-over-year comparable RevPAR growth of 9.1% and 11.2% in October and November, respectively, owing to continued recovery in the segment’s demand.
Notably, New York and Chicago were among the top-performing urban markets in November, registering RevPAR growth of 15.1% and 14.4%, respectively, from the prior year levels. This was followed by Boston, Denver, San Francisco and Washington, D.C., whereby each market experienced more than 10% growth on a comparable basis.
The lodging real estate investment trust’s (REIT) Hotel net income for October and November came in at $39 million and $17 million, respectively.
The company’s comparable occupancy for October increased 1.9% year over year to 77.3% and for November climbed 2.7% to 71.4%. Although comparable occupancy in October improved from the third quarter’s 75.3%, it exhibited a decline in November. PK’s comparable average daily rate ("ADR") for October and November was $254.47 and $241.60, respectively.
The comparable Hotel adjusted EBITDA margin for October was 32.6%, which declined 35 bps year over year but increased 53 bps to 25% for November.
In addition, PK continues to make meaningful progress on its transformation and renovation projects. It expects to complete the $230 million transformative expansion and full-scale renovation of The Waldorf Astoria Orlando and Signia by Hilton Orlando Bonnet Creek hotels at Bonnet Creek in January 2024. The transformation is expected to better the group positioning of the hotels, in turn aiding a rise in ADR for future group business by an average of more than 10% through 2025.
As of Dec 6, 2023, the $80 million renovation at Casa Marina Key West, Curio Collection was near completion, with all the guest room inventory online. The overall group revenue pace at the hotel compared with the 2019 level is up 9%.
Also, the multi-phased renovation project of the 1,021-room Tapa Tower at the Hilton Hawaiian Village Waikiki Beach Resort is likely to conclude by this week.
Park Hotels enjoys a geographically diverse portfolio of premium-branded hotels and resorts located in the prime U.S. markets. Notably, 86% of the hotels and resorts are in the luxury or upper upscale segment. Moreover, around 80% of the portfolio is strategically located in the central business districts of major cities or resort or conference destinations, which serve as key demand drivers.
Amid the rebounding lodging industry fundamentals, the company continues to experience improvement in overall demand across its portfolio. It expects the positive momentum in the lodging industry to continue through the remainder of 2023 and into 2024 based on improved international travel and current demand trend.
Per Thomas J. Baltimore, Jr., chairman and CEO of the company, “As we look ahead to 2024, we are excited about our growth prospects. Our reduced market exposure to San Francisco helps to change the narrative for the company and we remain well positioned to execute on our strategic growth priorities with $1.3 billion of liquidity expected to be available following the payment of our fourth quarter and special cash dividend.”
The company has maintained its guidance for 2023. Per the third-quarter earnings release, it expects adjusted funds from operations (FFO) per share to range between $1.92 and $2.03. The Zacks Consensus Estimate for the metric currently stands at $1.99, which is within the excepted range.
Comparable RevPAR is projected in the range of $177-$179 million. Adjusted EBITDA is estimated between $644 million and $668 million, whereas comparable Hotel adjusted EBITDA margin is anticipated to range from 27.7%-28.2%.
PK currently sports Zacks Rank #1 (Strong Buy). Its shares have gained 39% in the past three months compared with the industry’s upside of 15%.
Image Source: Zacks Investment Research
Other Stocks to Consider
Some other top-ranked stocks from the REIT sector are Lamar Advertising (LAMR - Free Report) , EastGroup Properties (EGP - Free Report) and Stag Industrial (STAG - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamar Advertising’s current-year FFO per share has been raised 1.7% over the past two months to $7.31.
The Zacks Consensus Estimate for EastGroup Properties’ 2023 FFO per share has moved marginally north in the past two months to $7.70.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share has been raised 1.3% upward over the past two months to $2.28.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs.