MCLEAN, Va.--(BUSINESS WIRE)--
Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK), which
began publicly trading on the New York Stock Exchange as an independent
company on January 4, 2017, today announced results for the fourth
quarter and full year ended December 31, 2016. Highlights of the results
include:
Fourth Quarter 2016 Results (as compared to
Fourth Quarter 2015)
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Pro-forma RevPAR was $155.20, a decrease of 0.8%
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Net income was $17 million, a decrease of 75.4%, and net income
attributable to Parent was $17 million, a decrease of 75.0%
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Pro-forma Hotel Adjusted EBITDA margin was 26.5%, a decrease of 150 bps
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Pro-forma Adjusted EBITDA was $184 million, a decrease of 2.6%
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Pro-forma Adjusted FFO attributable to Parent was $143 million, a
decrease of 7.7%
Full Year 2016 Results (as compared to Full
Year 2015)
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Pro-forma RevPAR was $161.15, an increase of 0.5%
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Net income was $139 million, a decrease of 53.5%, and net income
attributable to Parent was $133 million, a decrease of 54.5%
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Pro-forma Hotel Adjusted EBITDA margin was 27.7%, a decrease of 110 bps
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Pro-forma Adjusted EBITDA was $756 million, a decrease of 3.0%
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Pro-forma Adjusted FFO attributable to Parent was $588 million, a
decrease of 3.0%
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Reduced debt by more than $1 billion
Thomas J. Baltimore, Jr., Chairman, President and Chief Executive
Officer, stated, “We are excited to have completed the spin-off of Park
Hotels & Resorts, which positioned us as the second largest lodging
REIT, offering an attractive alternative to investors. The scale of our
portfolio provides a strategic advantage for future growth through
targeted single-asset and portfolio acquisitions. We have assembled a
seasoned and experienced team of men and women to execute on our
strategic priorities of aggressive asset management, prudent capital
allocation and maintaining a strong and flexible balance sheet.” Mr.
Baltimore continued, “We have a portfolio of irreplaceable, iconic
assets that we are focused on maximizing and are well-positioned to grow
and diversify our portfolio with upper-upscale and luxury hotels in our
target markets.”
Selected Statistical and Financial Information
(unaudited, dollars in millions, except Pro-forma RevPAR and
Pro-forma ADR)
2016 Operating Results: Top 10 Hotels
Pro-forma RevPAR for Park’s Top 10 Hotels, which accounts for
approximately 65% of pro-forma Hotel Adjusted EBITDA, grew 0.6% for the
year, driven by a 1.9% increase in rate, partially offset by a 1.0
percentage point decline in occupancy. For the fourth quarter, pro-forma
RevPAR decreased 1.7%, resulting from a 1.5% decrease in rate and a 0.2
percentage point decrease in occupancy.
Hilton Waikoloa Village was the best performing hotel within the Top 10
Hotels in terms of RevPAR, experiencing growth of 14.3% due to strong
in-house group demand. Parc 55 Hotel San Francisco and Hilton Hawaiian
Village Beach Resort also experienced RevPAR growth with both having
increases in RevPAR of 3.6% for the year. Hilton Chicago and Hilton New
York Midtown were among the weakest performers during the year, with
decreases in RevPAR of 7.3% in and 4.9%, respectively. Chicago was
negatively impacted from a soft citywide calendar, while New York
continues to face headwinds from increased supply growth.
2016 Operating Results: Total Consolidated
Portfolio
Pro-forma RevPAR increased 0.5% for the year driven by a 2.1% increase
in rate, mostly offset by a 1.3 percentage point decline in occupancy
due to softer conditions in Chicago, New York, Orlando and Washington,
D.C. For the fourth quarter, pro-forma RevPAR decreased 0.8% with a
decline in occupancy accounting for most of the decrease. With rates
essentially flat during the quarter, rooms revenue decreased 2.0%,
although there continues to be healthy gains in food and beverage
revenue with an increase of 2.2% driven by banquets and catering. Across
major markets, Park’s hotels in Hawaii, which account for 24% of
pro-forma Hotel Adjusted EBITDA, were the best performers in 2016 with
pro-forma RevPAR growth of 5.9%, followed by Parc 55 Hotel San Francisco
and Hilton San Francisco Union Square, which generated pro-forma RevPAR
growth of 3.6% and 3.3%, respectively.
With respect to group, which accounts for approximately one-third of
Park’s business, 2016 was challenging due to conditions in Chicago
during the first half of the year, coupled with the impact of the
Moscone Center renovation in San Francisco during the second half of the
year.
Balance Sheet and Liquidity
Following a series of financing transactions in the fourth quarter of
2016, Park had the following debt outstanding as of December 31, 2016:
Total cash and cash equivalents were $350 million as of December 31,
2016, including $57 million of restricted cash.
Park invested $227 million in 2016 on capital improvements, including
$157 million on improvements made to guest rooms, lobbies and other
guest-facing areas. Key projects include:
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Hilton Chicago: $37 million primarily on rooms and meeting space
renovations
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Hilton New York: $33 million primarily on rooms and suite renovations
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Hilton Hawaiian Village: $17 million primarily on retail renovations,
meeting space and public area renovations
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Hilton San Francisco: $12 million primarily on rooms and lobby
renovations
Dividend
In January 2017, in order to comply with requirements related to Park’s
election to be taxed as a REIT, Park declared an Earnings and Profit
(“E&P”) dividend of $2.79 per share, or approximately $551 million in
cash and shares of Park’s common stock, payable to stockholders of
record as of January 19, 2017. The E&P dividend is expected to be paid
on or as soon as practicable after March 9, 2017.
Additionally, Park is committed to maintaining a meaningful dividend,
and in February 2017 declared a quarterly cash dividend of $0.43 per
share for the first quarter of 2017 payable on April 17, 2017, to
stockholders of record as of March 31, 2017. All future dividends are
subject to approval by Park’s Board of Directors.
Full Year 2017 Outlook
Park anticipates that its full year 2017 operating results will be in
the following range:
Full year 2017 guidance is based in part on the following assumptions:
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General and administrative expenses are projected to be $45 million,
excluding $12 million of non-cash share-based compensation expense and
$11 million of separation costs
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Fully diluted weighted average shares is expected to be 215 million,
assuming a price of $26.00 per share for the E&P dividend
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Excludes an income tax benefit of approximately $2.3 billion in the
first quarter of 2017 resulting from the derecognition of deferred tax
liabilities upon Park’s election to be taxed as a REIT
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Due to the transfer of a significant number of rooms at the Hilton
Waikoloa Village and Embassy Suites Washington, D.C. to Hilton Grand
Vacations, the results from these properties will be excluded from
Park’s comparable results in 2017, please refer to the guidance
section of the financial supplement described below for further
information.
Supplemental Disclosures
In conjunction with this release, Park has furnished a financial
supplement with additional disclosures on its website. Visit www.pkhotelsandresorts.com
for more information. Park has no obligation to update any of the
information provided to conform to actual results or changes in Park’s
portfolio, capital structure or future expectations.
Conference Call
Park will host a conference call for investors and other interested
parties to discuss fourth quarter and full year2016 results on
March 2, 2017 beginning at 10:00 a.m. Eastern Time.
Participants may listen to the live webcast by logging onto the Investor
Relations section of the website at www.pkhotelsandresorts.com.
Alternatively, participants may listen to the live call by dialing (866)
490-1886 in the United States or (719) 785-1747 internationally, and
requesting Park Hotels & Resorts’ Fourth Quarter and Full Year 2016
Earnings Conference Call. Participants are encouraged to dial into the
call or link to the webcast at least ten minutes prior to the scheduled
start time.
A replay and transcript of the webcast will be available within 24 hours
after the live event on the Investor Relations section of Park’s website
and will be available through April 2, 2017.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended.
Forward-looking statements include, but are not limited to, statements
related to Park’s current expectations regarding the performance of its
business, financial results, liquidity and capital resources, the
effects of competition and the effects of future legislation or
regulations and other non-historical statements. Forward-looking
statements include all statements that are not historical facts and, in
some cases, can be identified by the use of forward-looking terminology
such as the words “outlook,” “believes,” “expects,” “potential,”
“continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,”
“projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”
or the negative version of these words or other comparable words.
Forward-looking statements involve risks, uncertainties and assumptions.
Actual results may differ materially from those expressed in these
forward-looking statements. You should not put undue reliance on any
forward-looking statements in this press release. Additional factors
that could cause Park’s results to differ materially from those
described in the forward-looking statements can be found under the
sections entitled “Forward-Looking Statements,” “Risk Factors” and
“Management's Discussion and Analysis of Financial Condition and Results
of Operations" (or similar captions) in Park’s Information Statement on
Form 10, filed with the SEC, as such factors may be updated from time to
time in Park’s periodic filings with the SEC, which are accessible on
the SEC’s website at www.sec.gov.
Forward-looking statements speak only as of the date on which they are
made, and, except as otherwise may be required by law. Park undertakes
no obligation to update or revise publicly any guidance or other
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law.
Non-GAAP Financial Measures
Park presents certain non-GAAP financial measures in this press release,
including NAREIT FFO attributable to Parent, or stockholders, Adjusted
FFO attributable to Parent, or stockholders, EBITDA, Adjusted EBITDA,
Hotel Adjusted EBITDA, and Hotel Adjusted EBITDA margin. These non-GAAP
financial measures should be considered along with, but not as
alternatives to, net income (loss) as a measure of its operating
performance. Please see the schedules included in this press release
including the “Definitions” section for additional information and
reconciliations of such non-GAAP financial measures.
Pro-Forma Financial Information
Certain financial measures and other information have been adjusted for
Park’s historical debt and related balances and interest expense to give
the net effect to financing transactions that were completed prior to
spin-off, incremental fees based on the terms of the post spin-off
management agreements, adjustments to income tax expense based on Park’s
post spin-off REIT tax structure, the removal of costs incurred related
to the spin-off and the establishment of Park as a separate public
company and the estimated excise taxes on certain REIT leases. Further
adjustments have been made to reflect the effects of hotels disposed of
or acquired during the periods presented. When presenting such
information, the amounts are identified as “Pro-forma.”
About Park
Park is a leading lodging REIT with a diverse portfolio of hotels and
resorts with significant underlying real estate value. Park’s portfolio
consists of 67 premium-branded hotels and resorts with over 35,000 rooms
located in prime United States and international markets with high
barriers to entry.
PARK HOTELS & RESORTS INC.
DEFINITIONS
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and
Hotel Adjusted EBITDA Margin
Earnings before interest expense, taxes and depreciation and
amortization (“EBITDA”), presented herein, reflects net income (loss),
excluding interest expense, a provision for income taxes and
depreciation and amortization. The Company considers EBITDA to be a
useful measure for investors in evaluating and facilitating comparisons
of its operating performance between periods and between REITs by
removing the impact of the Company’s capital structure (primarily
interest expense) and asset base (primarily depreciation and
amortization) from its operating results.
Adjusted EBITDA, presented herein, is calculated as EBITDA, as
previously defined, further adjusted to exclude gains, losses and
expenses in connection with: (i) asset dispositions for both
consolidated and unconsolidated investments; (ii) foreign currency
transactions; (iii) debt restructurings/retirements; (iv) non-cash
impairment losses; (v) furniture, fixtures and equipment (“FF&E”)
replacement reserves required by certain lease agreements; (vi)
reorganization costs; (vii) share-based and certain other compensation
expenses; (viii) severance, relocation and other expenses; and (ix)
other items.
Hotel Adjusted EBITDA measures property-level results before debt
service, depreciation and corporate expenses of the Company’s
consolidated properties, including both comparable and non-comparable
hotels but excluding properties owned by unconsolidated affiliates, and
is a key measure of the Company’s profitability. The Company presents
Hotel Adjusted EBITDA to help the Company and its investors evaluate the
ongoing operating performance of the Company’s consolidated properties.
Hotel Adjusted EBITDA margin, is calculated as Hotel Adjusted EBITDA as
a percentage of Total Hotel Revenue.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA
margin are not recognized terms under United States (“U.S.”) GAAP and
should not be considered as alternatives to net income (loss) or other
measures of financial performance or liquidity derived in accordance
with U.S. GAAP. In addition, the Company’s definitions of EBITDA,
Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin
may not be comparable to similarly titled measures of other companies.
The Company believes that EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA
and Hotel Adjusted EBITDA margin provide useful information to investors
about the Company and its financial condition and results of operations
for the following reasons: (i) EBITDA, Adjusted EBITDA, Hotel Adjusted
EBITDA and Hotel Adjusted EBITDA margin are among the measures used by
the Company’s management team to evaluate its operating performance and
make day-to-day operating decisions; and (ii) EBITDA, Adjusted EBITDA,
Hotel Adjusted EBITDA and Hotel Adjusted EBITDA margin are frequently
used by securities analysts, investors and other interested parties as a
common performance measure to compare results or estimate valuations
across companies in the industry.
EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA
margin have limitations as analytical tools and should not be considered
either in isolation or as a substitute for net income (loss) or other
methods of analyzing the Company’s operating performance and results as
reported under U.S. GAAP.
Parent
Parent refers to Hilton Worldwide Holdings Inc.
NAREIT FFO attributable to Parent, or
stockholders, and Adjusted FFO attributable to Parent, or stockholders
NAREIT FFO attributable to Parent, or stockholders, presented herein, is
calculated as net income (loss) attributable to Parent, or stockholders,
(calculated in accordance with U.S. GAAP), excluding gains (losses) from
sales of real estate, the cumulative effect of changes in accounting
principles, real estate-related depreciation, amortization and
impairments and adjustments for unconsolidated joint ventures.
Adjustments for unconsolidated joint ventures are calculated to reflect
the Company’s pro rata share of the FFO of those entities on the same
basis. The Company calculates NAREIT FFO attributable to Parent, or
stockholders, for a given operating period in accordance with the
guidelines of the National Association of Real Estate Investment Trusts
(“NAREIT”). As noted by NAREIT in its April 2002 “White Paper on Funds
From Operations,” since real estate values historically have risen or
fallen with market conditions, many industry investors have considered
presentation of operating results for real estate companies that use
historical cost accounting to be insufficient by themselves. For these
reasons, NAREIT adopted the FFO metric in order to promote an
industry-wide measure of REIT operating performance.
Adjusted FFO attributable to Parent, or stockholders, presented herein,
is NAREIT FFO attributable to Parent, or stockholders, as previously
defined, further adjusted to exclude: (i) foreign currency (gains)
losses; (ii) acquisition costs; (iii) litigation gains and losses; and
(iv) other items. In certain circumstances, the Company may also adjust
NAREIT FFO attributable to Parent, stockholders, for additional gains or
losses that the Company’s management believes are not representative of
its current operating performance.
NAREIT FFO attributable to Parent, or stockholders, and Adjusted FFO
attributable to Parent, or stockholders, are not recognized terms under
U.S. GAAP and should not be considered as alternatives to net income
(loss) or other measures of financial performance or liquidity derived
in accordance with U.S. GAAP. In addition, the Company’s definitions of
NAREIT FFO attributable to Parent, or stockholders, and Adjusted FFO
attributable to Parent, or stockholders, may not be comparable to
similarly titled measures of other companies.
The Company believes that NAREIT FFO attributable to Parent, or
stockholders, and Adjusted FFO attributable to Parent, or stockholders,
provide useful information to investors about the Company and its
financial condition and results of operations for the following reasons:
(i) these measures are among the measures used by the Company’s
management team to evaluate its operating performance and make
day-to-day operating decisions; and (ii) these measures are frequently
used by securities analysts, investors and other interested parties as a
common performance measure to compare results or estimate valuations
across companies in the industry.
NAREIT FFO attributable to Parent, or stockholders, and Adjusted FFO
attributable to Parent, or stockholders, have limitations as analytical
tools and should not be considered either in isolation or as a
substitute for net income (loss), cash flow or other methods of
analyzing results as reported under U.S. GAAP.
Occupancy
Occupancy represents the total number of room nights sold divided by the
total number of room nights available at a property or group of
properties. Occupancy measures the utilization of the Company’s
properties available capacity. Management uses occupancy to gauge demand
at a specific property or group of properties in a given period.
Occupancy levels also help management determine achievable Average Daily
Rate (“ADR”) levels as demand for rooms increases or decreases.
Average Daily Rate
ADR represents rooms revenue divided by total number of room nights sold
in a given period. ADR measures average room price attained by a
property and ADR trends provide useful information concerning the
pricing environment and the nature of the customer base of a property or
group of properties. ADR is a commonly used performance measure in the
hotel industry, and management uses ADR to assess pricing levels that
the Company is able to generate by type of customer, as changes in rates
have a more pronounced effect on overall revenues and incremental
profitability than changes in occupancy, as described above.
Revenue per Available Room
Revenue per Available Room (“RevPAR”) represents rooms revenue divided
by total number of room nights available to guests for a given
period. Management considers RevPAR to be a meaningful indicator of the
Company’s performance as it provides a metric correlated to two primary
and key drivers of operations at a property or group of properties:
occupancy and ADR. RevPAR is also a useful indicator in measuring
performance over comparable periods for comparable hotels.
References to RevPAR and ADR are presented on a currency neutral basis
(all periods use the same exchange rates), unless otherwise noted.
Comparable Data
The Company presents certain data for its properties on a comparable
hotel basis as supplemental information for investors. The Company
defines its comparable hotels as those that: (i) were active and
operating in its system since January 1st of the previous year; and (ii)
have not sustained substantial property damage, business interruption,
undergone large-scale capital projects or for which comparable results
are not available. The Company presents comparable hotel results to help
the Company and its investors evaluate the ongoing operating performance
of its comparable hotels.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170301006418/en/
Park Hotels & Resorts Inc.
Investor Contact
Ian
Weissman, +1 703-584-7441
Source: Park Hotels & Resorts Inc.