Park Hotels & Resorts Inc

Greetings and welcome to the Park, Hotels, and Resorts First Quarter 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ian Weissman, Senior Vice President, Corporate Strategy. Please go ahead.

Thank you, operator, and welcome everyone to the Park Hotels and Resorts first quarter 2026 earnings call. Before we begin, I would like to remind everyone that many of the comments made today are considered forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed and we are not obligated to publicly update or revise these forward-looking statements. Actual future performance outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to documents filed by PARCC with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. In addition, on today's call, we will discuss certain non-GAAP financial information, such as adjusted FFO and adjusted EBITDA. You can find this information together with reconciliations with the most directly comparable GAAP financial measure in yesterday's earnings release, as well in our 8-K filed with the SEC and the supplemental financial information available on our website at pkhotelsandresorts.com. Additionally, unless otherwise stated, all operating results will be presented on a comparable hotel basis. This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will provide an update on strategic initiatives and review PARCC's first quarter performance and outlook for the year. while Sean DeLorto, our Chief Financial Officer and Chief Operating Officer, will provide updates on our capital investments and balance sheet management, along with additional color on guidance. Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom.

Thank you, Ian, and welcome, everyone. I'm pleased to report that we delivered better than expected performance in the first quarter, with RevPAR increasing 5.5% year over year, excluding our Royal Palm South Beach Hotel, which suspended operations in mid-May 2025 for a comprehensive renovation. I was incredibly impressed by the strong performance throughout the quarter, with RevPAR excluding the Royal Palm, increasing over 6.5% in January, approximately 3.5% in February, and nearly 6.5% in March. Results were driven by continued strength in leisure demand at our resort properties, where RevPAR increased 7.6%, excluding Royal Palm, along with healthy corporate group demand that helped our urban hotels generate over 2% RevPAR growth during the quarter. From a capital allocation perspective, it was another productive quarter as we remain laser focused on enhancing the overall portfolio quality through the disposition of non-core assets, while continuing to unlock embedded value within our core assets through our transformative renovations, and further strengthening our balance sheet by addressing upcoming debt maturities. Following the January disposition of the Hilton Checkers in downtown Los Angeles, we recently sold the 396th room Hilton Seattle Airport Hotel, which was on a short-term ground lease for $18 million, bringing total non-core asset sales for the year to $31 million, or 16 times 2025 EBITDA when accounting for nearly $36 million of CapEx expected for both properties. Together, these transactions reflect the continued execution of our capital recycling strategy and our commitment to improving the long-term growth profile of the company. We continue to make solid progress on the remaining 12 non-core hotels and remain firmly committed to materially reducing our non-core exposure by year end. To that end, we have active marketing campaigns underway on several assets, but remain disciplined in our approach to prioritize transactions that improve our portfolio's growth profile and maximize shareholder returns. While the transaction market remains challenging, our track record speaks for itself, having sold or disposed of 52 hotels for more than $3 billion over the last nine years, materially improving the quality and earnings power of our portfolio. Turning to capital investments, we are making significant progress on our comprehensive repositioning of the Royal Palm in Miami, The pace and execution have been exceptional, especially given the scale and complexity of this project. We remain on track to achieve our target completion date by early June, thanks to the tireless efforts of our best-in-class design and construction team and all of our partners involved on this project. Miami continues to be one of the strongest hotel markets in the country, and we remain highly confident in the long-term outlook for this asset. We are already seeing strong group demand with the property securing $1.4 million of group business as of the end of the first quarter for 2027 at an average rate of $460. This represents an increase of $108 or 31% compared to our pace for 2024 at the same point pre-renovation. Looking ahead, We expect returns on invested capital between 15 to 20%, with EBITDA projected to more than double from approximately 14 million to 28 million upon stabilization, or roughly 69,000 per key, positioning the hotel to be among the most profitable assets in our core portfolio. Turning to operations, the strength of our core portfolio remains evident. Core rev par increased 5.4% during the quarter, excluding Royal Palm, which represented nearly a 400 basis point drag on core results. Performance was led by strong leisure demand in Bonnet Creek, Key West, and Hawaii, along with a sharp rebound in Southern California, driven by improved group and leisure transient demand. In Orlando, Bonnet Creek once again exceeded expectations, delivering approximately 16% RevPar growth and a 20% increase in hotel-adjusted EBITDA over the prior year period, driven by a 10% increase in transient revenues and a 19% rise in group production, supported by large in-house events and stronger average daily rate. Revenues and earnings reached all-time highs with trailing 12-month EBITDA exceeding $103 million, nearly 60% above pre-renovation levels, and 20 million or 24% above our projections, meaningfully exceeding our return expectations on our $220 million investment and further underscoring our ability to unlock embedded value across the portfolio. Adding to the property's momentum, our Waldorf Astoria Orlando was recently recognized on Travel and Leisure's list of the top 500 hotels in the world, one of only two Orlando properties to receive the honor. In Key West, performance remained strong at both Casa Marina and The Reach, with RevPar increasing nearly 9%, in capturing meaningful market share during the quarter. Results were driven by increased transient demand and favorable holiday calendar shifts. Like Bonnet Creek, Castle Marina also exceeded our underwriting for the $80 million investment, with trailing 12-month EBITDA of nearly $36 million, exceeding our projections by over $4 million, or approximately 14%. Southern California, results significantly exceeded expectations. At the Hilton Santa Barbara, RevPAR increased nearly 23%, as strong transient demand helped to drive a nearly 13 percentage point increase in occupancy and a 3% increase in ADR. The Hyatt Regency Mission Bay also delivered exceptional performance, with RevPAR up 12%, supported by continued strength in drive-to leisure demand. Turning to Hawaii, we continue to see a steady rebound in demand following the completion of our comprehensive room renovations for the Rainbow Tower at the Hilton Hawaiian Village Hotel and the Palace Tower at the Waikoloa Village that despite the disruption from historical storm activity resulted in a combined rev par increase of 2% across the two resorts or approximately 5.4% when accounting for the 340 basis point drag from the storms. Waikoloa Village delivered 6% growth, benefiting from an expanded airline contract and improved ADR following the renovation of the palace tower. At Hilton Hawaiian Village, which was far more impacted by the storms, REVPAR increased 1% or over 4% when adjusting for the storm disruption, driven by higher rated transient demand in the newly renovated Rainbow Tower. Looking ahead, we remain very encouraged on Hawaii demand trends and expect both hotels to perform at the upper end of our guidance range for the year. Easier year-over-year comparisons, coupled with tailwinds from the completion of our tower renovations at both resorts, should continue to support a higher rate of customer mix. Group performance in the first quarter also exceeded expectations. with portfolio group revenue increasing 5% year-over-year, excluding Royal Palm. Growth was led by double-digit gains in Puerto Rico, New York, and our Bonnet Creek complex, driven by a higher-rated group mix and by strong in-house events, along with active citywide calendars in Denver and San Francisco. Looking ahead, group trends remain stable, with second quarter group revenue pace up approximately 4% and full year pace improving to 3% growth, excluding Royal Palm and Hilton Wine Village, which is being impacted by the partial closure of the Honolulu Convention Center. Stronger than expected convention demand across several core markets, coupled with the momentum for in the year, for the year bookings, has driven a greater than 180 basis point improvement in the group revenue pace since last quarter. Longer term, group demand remains healthy with 2027 pace currently up 5.5% for the core portfolio, reflecting continued confidence in the segment. As we look at the balance of the year, we remain cautiously optimistic. Based on our first quarter outperformance and the underlying strength of demand across the portfolio, but recognize the broader macro setup remains uncertain. We continue to believe fundamentals will be supported by a combination of anticipated macro and lodging-centric tailwinds, fiscal stimulus, including favorable tax policy, deregulation, and potential lowering of near-term interest rates, coupled with easier year-over-year comparisons, Favorable calendar shifts and incremental demand generators such as the World Cup and America's 250th anniversary celebrations should promote a continuation of the demand growth we saw in the first quarter. That said, growing geopolitical tensions in the Middle East and their potential impact on consumer discretionary spending and business investment sentiment certainly warrant a continued measured approach. Sean will address this more when he talks about guidance. The first quarter was an encouraging start to the year, and I'm very pleased with the progress we have made thus far to elevate the quality of our assets and strengthen our long-term growth profile. I could not be prouder of our team's ability to execute in a challenging environment for our business. We remain laser-focused on our strategic priorities. reinvesting in our iconic properties to drive long-term value, advancing the disposition of non-core hotels, and further strengthening the balance sheet through successful maturity extensions and disciplined leverage reduction over time. And with that, I will turn the call over to Sean.