Park Hotels & Resorts Inc (PK) 2025 Q4 法說會逐字稿

Greetings and welcome to the Park Hotels & Resorts fourth quarter 2025 earnings conference call (Operator Instructions) 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 & Resorts fourth quarter and full year 2025 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 the documents filed by Park 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 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 to the most directly comparable GAAP financial measure in yesterday's earnings release as well as 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 comp full hotel basis.

This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will update on our strategic initiatives, review Park's fourth quarter and full year performance and provide an outlook for 2026, while Sean Dell'Orto, our Chief Operating Officer and Chief Financial Officer, will provide additional color on fourth quarter and full year results, our plan to address our upcoming debt maturities later this year and further details 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.

Thanks, Ian, and welcome, everyone. 2025 was another very productive year for Park, one marked by meaningful progress against our strategic priorities and continued execution across the core portfolio. Throughout the year, we remain laser-focused on reshaping and upgrading the portfolio and reinvesting in our highest quality hotels, all with the goal of positioning the company for sustained long-term success.

Our strategy has been both consistent and deliberate concentrating our ownership in core hotels with superior growth prospects, aggressively exiting noncore assets and allocating capital towards high-impact redevelopment projects with the potential to unlock meaningful embedded value across the core portfolio with ROI opportunities exceeding $1 billion.

In 2025, we executed more than $120 million in non-core sales at a blended multiple of 21 times. These transactions included the sale of the Hyatt Centric Fisherman's Wharf, and our 25% joint venture interest in the Capital Hilton as well as exiting three hotels sitting on expiring ground leases that produced no earnings on a combined basis.

As we enter 2026, we continue to make steady progress toward completing our remaining noncore asset dispositions. In January, we closed on the sale of 193-room Hilton Checkers in Downtown Los Angeles for approximately $13 million, representing over 17 times 2025 EBITDA.

We have established a strong track record of successfully recycling capital, having sold or disposed of 51 hotels for over $3 billion over the past nine years and despite a challenging transaction environment, we have sold or disposed of 13 hotels since 2023, increasing portfolio-wide nominal RevPAR by nearly 8% and hotel adjusted EBITDA margins by over 275 basis points.

While the timing of noncore dispositions may be uneven, we remain firmly committed to materially reducing our exposure to our noncore portfolio by year-end. Active work streams are currently underway across all remaining non-core properties as we continue to advance this objective.

Additionally, Building on the success of our development team, we launched our sixth major redevelopment in seven years, the $108 million transformation of the Royal Palm South Beach while making significant progress on enhancing the overall quality of our Hawaii and New Orleans properties through extensive guestroom renovations.

Together, these projects reinforce our conviction that reinvesting in the core portfolio remains the highest use of capital, which will best position Park to deliver outsized earnings growth and enhanced shareholder value over time.

Turning to operations. I remain encouraged by the relative outperformance of our core portfolio, which delivered a solid 3.2% increase in RevPAR during the fourth quarter or 5.7%, excluding the Royal Palm, representing nearly 1,500 basis points of outperformance versus our noncore portfolio.

That trend was consistent throughout much of the year, with RevPAR growth from our core portfolio, outperforming the noncore hotels by an average of 480 basis points in 2025, further reinforcing our stated strategy.

During the fourth quarter, group performance stood out, supported by convention demand in Hawaii and New York and solid corporate group activity in Orlando. Fourth quarter group revenue for our core portfolio increased 13% year-over-year, complemented by double-digit growth in banquet and catering revenues across several key markets, including Hawaii, Chicago, Orlando and Denver reflecting broad-based strength across key markets.

Among our core hotels, Hilton Hawaiian Village was one of our strongest performers during the fourth quarter, generating 22% RevPAR growth benefiting from easier year-over-year comparisons following last year's labor disruption.

We are increasingly encouraged by the outlook for both properties following the completion of the Rainbow Tower renovation at Hilton Hawaiian Village and the Palace Tower at Waikoloa Village. Following the renovation, both resorts will be operating with significantly upgraded product and should be well positioned for a step up in performance as demand trends are forecasted to improve and we lap and otherwise challenge 2025, which our resorts were meaningfully impacted by the disruption from Liberation Day and the government shutdown, the continued softness in Canadian demand and renovation displacement.

As we look ahead, we expect a multiyear recovery towards prior peak levels in Hawaii. We are beginning to see that recovery take shape, with momentum building into the second quarter. As Hawaii continues to normalize, we expect it to be one of the most meaningful contributors to earnings growth across the portfolio.

Additional standouts in the portfolio include Orlando, which delivered exceptional results with our Bonnet Creek complex generating a record fourth quarter RevPAR, up nearly 9% year-over-year, driven by a 15% increase in group revenues as the complex continues to benefit from its expand meeting platform and renovated room product. I'm also pleased to share that the Walter for story of Bonnet Creek has been named the number 1 hotel in Orlando by US.

News & World Report. The property was also ranked number 8 in Florida and within the top 100 of all hotels nationally reflecting meaningful improvements over last year's ranking. I want to acknowledge the entire Bonnet Creek team for this achievement, which further highlights the quality and benefits of unlocking embedded value within our core portfolio.

New York remained another top performer, delivering its highest fourth quarter group revenue in hotel history, up over 8% year-over-year. while the Hilton Chicago hotel posted a nearly 4% increase in group revenue despite a challenging citywide calendar, supported by improved short-term pickup strategies and in-house group.

Turning to our Royal Palm renovation. We continue to make meaningful progress on this transformational project with more than half of the guestrooms complete in key public areas such as the lobby lounge, venters and pool deck taking shape.

Our best-in-class design and construction team is working hard to deliver the hotel by June, and we are laser-focused on achieving that goal. Overall, Miami remains one of the strongest hotel market in the country, and I am incredibly excited about the long-term outlook for this asset.

We continue to expect to realize a 15% to 20%, return on our invested capital with the hotel forecasted to more than double its EBITDA from $14 million to nearly $28 million once stabilized. We look forward to hosting many of you at the property during the next month's Citi conference to showcase this world-class asset and the remarkable transformation underway.

Looking ahead to 2026, we see several factors that could support an improving lodging environment. From a macro perspective, the US economy remains on relatively firm footing with modestly higher growth expectations, easing inflation and ongoing fiscal stimulus, all of which should provide incremental support to the US consumer.

In addition, easier year-over-year comparisons as we lap last year's government demand disruptions, together with the anticipated lift from major events such as the World Cup and the America 250 celebrations in New York, Boston and Washington, D.C are expected to benefit demand across several of our core markets.

Furthermore, New hotel construction remains muted, keeping supply growth at historical lows and supporting healthy operating fundamentals for the next several years. While we remain optimistic about the setup for the year with easier year-over-year comparisons and major event-driven demand.

Our guidance remains cautious with the potential for geopolitical or macroeconomic volatility, continuing to drive uncertainty around booking decisions and impacting short-term group pickup trends and international inbound demand, particularly from Canada. Jon will provide additional detail on earnings guidance later in the call.

In summary, 2025 was another year of meaningful progress for Park, one in which we advanced our strategic priorities, we continue to reshape the portfolio and strengthen the foundation for long-term growth. Our disciplined approach to capital allocation by accelerating noncore dispositions while reinvesting in our highest quality assets continues to unlock embedded value across the core portfolio.

The transformation underway of Royal Palm the substantial renovation work at our two iconic Hawaiian resorts and New Orleans and a broader-based momentum across several of our core markets further reinforce our conviction in the earnings power of our core portfolio.

As we move into 2026, we remain laser focused on completing our transition to a streamlined portfolio of 21 high-quality hotels located in premium gateway cities and resort markets, and we are confident in the long-term growth opportunities for Park.

And with that, I'll turn the call over to Sean.

Thanks, Tom. For the fourth quarter, RevPAR was approximately $182, representing a nearly 1% year-over-year increase or nearly 3% when excluding Royal Palm. The core portfolio, excluding Royal Palm, continue to demonstrate meaningful operational strength, delivering a RevPAR increase of 6% to nearly $216 or nearly 1,500 basis points higher than our noncore portfolio, underscoring the resilience of our highest quality assets.

Core hotel adjusted EBITDA margin also improved materially, expanding 230 basis points to 30% in sharp contrast to the noncore portfolio, which recorded a 280 basis point contraction to 10%. Overall, core hotel adjusted EBITDA increased 13% or nearly $18 million over the prior year period despite an over $4 million headwind from Royal Palm being closed, while the noncore portfolio declined 28%, creating an approximately $4 million drag on quarterly earnings.

These results underscore the strength and durability of our core portfolio and highlight the value-accretive nature of our portfolio reshaping initiative. For the full year, RevPAR came in slightly ahead of expectations, declining 2% versus 2024, while hotel-adjusted EBITDA margin was 26.5%, reflecting a 130 basis point reduction from the prior year.

As expected, the Royal Palm renovation remained the primary headwind contributing a 110 basis point drag to full year RevPAR growth and approximately 15 basis points of margin pressure. From a CapEx standpoint, in 2025, we invested nearly $300 million across the portfolio, including roughly $110 million during the fourth quarter.

Earlier in the year, we completed nearly $75 million of guest room renovations that began in 2024 at our two Hawaiian properties, the Rainbow Tower at Hilton Wine Village and the Palace Tower at Hilton Waikoloa Village.

The second and final phase of guest room renovations for the Rainbow Tower, which commenced in Q3 of last year, is expected to be completed in a few weeks, while the final phase for the Palace Tower, which also commenced in Q3 of last year, was delivered last month, bringing the total investment to the second phase across both Hawaii properties to approximately $85 million.

In addition, we completed the second of three renovation phases totaling more than $30 million at the Hilton New Orleans Riverside last month, with the third and final phase scheduled for completion in December of this year.

Looking ahead, we expect a lower level of capital investment for 2026 with $230 million to $260 million of spend planned, which includes completing the $108 million comprehensive redevelopment of the Royal Palm.

In addition, we are excited to launch a full-scale renovation of the Elite Tower at Hilton Hawaiian Village expected to encompass all 348 guestrooms, the tower lobby, its private pool and the addition of three new keys.

Total investment for the project is expected to be approximately $96 million. To expedite the construction schedule, we plan to suspend operations in the self-contained tower beginning in the third quarter of this year, a reopening plan for the middle of next year.

Overall, we expect renovation-related disruption at Hilton Wine Village to be $1 million to $2 million in 2026, representing a 10 basis point impact to portfolio RevPAR. When completed, nearly 8% of the resorts, nearly 2,900 rooms will have been newly renovated, materially enhancing the long-term competitiveness of our iconic resort.

Turning to the balance sheet. As of year-end 2025, our liquidity was approximately $2 billion, including $200 million of cash, $1 billion of available capacity under our revolver and $800 million of an undrawn delayed draw term loan.

As we noted last quarter, we continue to make meaningful progress towards strengthening our balance sheet, while our long-term focus remains on further reducing leverage. As we execute non-core asset sales proceeds are expected to be used to pay down debt. While organic growth from our core portfolio is expected to further reduce leverage toward our targeted goal of below 5 times over the next couple of years.

With respect to our 2026 maturities, we intend to draw on the delayed draw term loan to fully repay the $121 million mortgage loan secured by the Hyatt Regency Boston in June. And then draw the remaining capacity in September in combination with proceeds from a planned mortgage financing for our Bonnet Creek complex in order to fully repay the [$1.275 billion] CMBS financing on Hilton Hawaiian Village which matures in early November.

We are currently in active discussions to originate a $650 million floating rate delayed draw mortgage for our Bonnet Creek complex, including both the Signia and Waldorf Astoria properties, and expect closing to be later this quarter. We expect the blended spread over SOFR between the Bonnet Creek mortgage loan and the term loan to be approximately 220 basis points to 225 basis points.

Turning to guidance. As Tom noted, we are establishing a full year 2026 RevPAR growth range of flat to up 2%, with expense growth expected to be low single digits for the full year. With respect to earnings, adjusted EBITDA is forecast to be $580 million to $610 million and adjusted FFO per share is expected to be in the range of $1.73 to $1.89.

We expect Q1 to be the most challenging quarter of the year due to difficult year-over-year comparisons. New Orleans due to lapping the Super Bowl last year and Miami, together represent an expected 450 basis point drag on RevPAR during the quarter, translating to an approximate $12 million headwind to earnings relative to last year.

Partially offsetting this pressure, we expect double-digit RevPAR growth at Bonnet Creek, Puerto Rico and San Francisco, supported by strong group pace for each along with the Super Bowl in the Bay Area as well as low single-digit growth at both of our Hawaii hotels, driven by improving leisure transient demand following their extensive room renovations. There are also a few key assumptions embedded in our guidance that are worth highlighting.

First, with respect to the Royal Palm reopening and its impact on 2026 results. As Tom mentioned earlier, we are working diligently toward a targeted grand opening in early June. However, given the challenges associated with securing advanced bookings without absolute certainty to opening out of the World Cup matches beginning in mid-June, our guidance does not assume any material benefit from World Cup-related demand at the hotel.

Overall, we expect Royal Palm to generate approximately $3 million to $4 million of hotel adjusted EBITDA this year compared to the nearly $28 million expected at stabilization and approximately $5 million reported in 2025 when the hotel was opened during high season prior to its closure in May.

Second, with respect to asset sales, our guidance excludes any impact from potential noncore dispositions in 2026 outside of what we have already closed. While we remain fully committed to selling the majority of our noncore hotels during the year, the timing of the transactions remain uncertain, making the earnings impact is difficult to estimate. For context, the remaining 13 non-core hotels generated approximately $60 million of hotel adjusted EBITDA in 2025 or just 9% of total hotel adjusted EBITDA.

Finally, our adjusted FFO guidance reflects the successful refinancing of approximately $1.4 billion of debt during the back half of the year at a blended interest rate of approximately 5.5%. On an annualized basis, this refinancing is expected to increase interest expense by roughly $20 million, of which $9 million is included in our guidance given the anticipated timing of the refinancing.

Finally, in 2025, we returned a total of $245 million of capital between $200 million of dividends and $45 million of share repurchases. And over the past three years, we have returned $1.3 billion of capital, including stock repurchases of over 12% of total outstanding shares.

With respect to this year's first quarter dividend, on February 13, we declared a cash dividend of $0.25 per share to be paid on April 15 to stockholders of record as of March 31. At current trading levels, this quarterly fixed dividend translates to an annual yield of over 8.5%. This concludes our prepared remarks.

We will now open the line for Q&A. (Operator Instructions) Operator, may we have the first question, please?

(Operator Instructions)

Smedes Rose, Citi.

Hi. Good morning. I wanted to ask you just a little bit more about how you think earnings could roll out over the course of the year, your Hawaii properties. I know you -- obviously, the fourth quarter was a pretty easy comp.

But just in terms of how you're looking at group pace given I think the convention center closed in Honolulu, it's just kind of what are you seeing kind of on the trajectory? I guess -- I mean, I guess the real question, what do you think those properties can contribute this year in terms of EBITDA?

Yes, Smedes. So this is Sean. Yes, certainly had a good comp in Q4 for Hawaii. We with the convention center closed, that's about 50,000 room nights typically that the property gets from citywide convention-related business.

It's probably done a good job, though, of replacing that as best possible with about 60% of that lost or at least ultimately converted into in-house group as well as about 20,000 room nights booked through a crew business, contract business. So they've done a good job to kind of replace that for this year.

In the end, I think Hawaii, both Hawaiian Village and what combined, it should be kind of on the higher end of our guide of RevPAR growth, the 2% range, again, with the convention are being out and kind of some early disruption from the ending of Phase II at Hawaiian Village.

I think you'll see some rate some rate growth but not tremendous, again, just given the mix change there. I think you'll see certainly some decent growth overall for the -- on the EBITDA level, kind of in mid-single digits or so growth combined for the properties, while certainly has an easier comp, certainly had challenges last year, and we certainly expect to see that materialize into a better probably low double-digit growth on the EBITDA level for Wikel overall. So blended together, again, kind of a top line, top of the end of the range, 2% growth, plus or minus on RevPAR translating into kind of mid-single-digit growth for the combined for the properties.

And Smedes, this is Tom Baltimore. I agree with everything that Sean just outlined. If I could just add a comment about Japanese visitation. Obviously, relatively flat last year. but we are seeing some green shoots and certainly believe that we'll be in kind of mid-single-digit growth in terms of visitation, perhaps somewhere in the 750,000 visitors to Hawaii, which is certainly a continued progress.

Obviously, we'd like for that to accelerate as much as possible, but we are seeing green shoots there. And as we sort of look out and get the data on various forecasts, it looks like that continues at 5% to 6% into 2027 as well. So we see both of those are certainly encouraging tailwinds as well.

Great. And then, Tom, could you maybe just comment portfolio-wide just kind of like the -- what you're seeing on the pace of group revenues for this year?

For Hawaii?

No, just for your portfolio-wide.

Portfolio-wide, if you exclude, obviously, Miami and Hilton Hawaiian Village and obviously, tough comp in New Orleans, up about 3% for the year in '26. And then if you look out to '27, just our core portfolio alone, we're about 4%, 4.5%. So very encouraging from that standpoint.

Okay. Thank you. Appreciate it.

Duane Pfennigwerth, Evercore ISI.

Hey, thanks. Good morning. And sorry for -- if I may, can you repeat anything. But just on the sequential for Hilton Hawaiian Village, I think we're going from like a plus 20 to low singles. So can you just speak to what would be driving that specifically for the March quarter?

For -- I'm sorry, for Q1, Duane?

Yeah. Aren't we pacing at a very high rate in 4Q to a low single-digit rate. So just why that changed sequentially?

You have group pace down in Hawaiian Village, again, speaking to while they have replaced business here and there from the convention center, but pay down 37% in Hawaiian Village for Q1, certainly a big driver there for kind of how even though it certainly is lapping Q1's performance, it's roughly kind of in that flattish range for the quarter.

Okay. That's helpful. And then just on Miami, can you talk about any refinement to your estimate on when that will be up and running? And how do you think about capturing some of the World Cup demand just given you may reopen kind of close to that time frame? In other words, it's probably hard to commit to that now, but maybe as you gain confidence in the reopening, just how you think about that from a positioning and revenue management perspective.

A couple of things to Miami. I've been down to Miami quite a bit and tour the property. And obviously, I say this with humility, but also with great confidence. I think we've demonstrated a track record really second to none in our sector in terms of being able to handle these types of very complex projects. If you think about Bonnet Creek and the success and the complexity of that.

This really mirrors that. Carl Mayfield heads our design and construction team is personally on site at least two or three days a week. We've got somewhere between 275 to 325 construction workers working six days a week, one to two shifts, and they're very confident. We're doing everything humanly possible to get done in that June time frame. I'm -- we'll be down there this weekend and touring again Monday morning.

So as Sean said in his prepared remarks, as you think about us opening in early June, plus or minus, and then obviously, the World Cup the ability to be able to sell and commit that makes it a little more challenging, just given the amount of demand expected and how well I think we all believe Miami will do with the World Cup, we think, obviously, getting open, we'll be able to capture and certainly be able to capture at very attractive rates.

So very, very bullish, very excited about the project. And as Sean also noted, I mean we're not -- we're not being overly ambitious in terms of the impact that this hotel will have on the overall performance for the year.

So if anything, we've been conservative, that's intentional, and we're certainly hoping that we can exceed that. But again, remain enthusiastically excited about this transformation. We can't wait to host many of you next weekend, as you can see for yourself the progress and the real-time work that's underway there. And we're 100 days plus or minus from completion and when everything we can to make that happen.

Okay. Thank you.

Rich Hightower, Barclays.

Hey, good afternoon, guys.

Definitely, Rich.

Good to be on the part call again. So Sean, I know that you kind of laid out a little bit of the color on the first quarter specifically with respect to the cadence of growth in '26. And then obviously, there was some color on Hawaii specifically. But if you guys wouldn't mind maybe just help us understand how that works kind of broadly for the portfolio over the course of all the different quarters of the year within the context of that flat to two RevPAR guide?

Sure, Rich, and welcome back. Great to hear the voice on the call here. The -- yeah, just with respect to the kind of the quarterly cadence as you think about Q1 is certainly one where we think it's weaker quarter of the year where it's probably performing a little bit better than expected, but certainly came into the year with a kind of -- I believe that will be down slightly, maybe ultimately gets to flat, we'll see, but certainly in the bottom end of the range. as we think about Q1. Q2 and Q3 certainly should pick up.

You're lapping some of this disruption from last year's policy initiatives, whether it's tariff related dose. Obviously, the Canadians and they're kind of decline in travel into the states. You start to see the impacts of that in Q2 and Q3.

And so we're lapping that on top of a World Cup that we believe our exposure in New York and Boston, particularly, you could probably drive about 30, 35 basis points for the year. So seen some positive impact we're thinking of in kind of Q2 into Q3 as well.

So those should ultimately drive towards the higher end of year -- the range, I should say, for the year. And then Q4 is one where we got group pace down 8%. So as Tom mentioned, if you cut a couple of properties, we're certainly up, but I'd say overall portfolio is down slightly -- the big are for that is Q4.

And so while there's work to be done and there's certainly some potential upside in terms of pickup in the -- for the year pickup, I think that's kind of where our conservative comes in as well. We certainly think we've got about million of revenue more to pick up than last year.

And so we've seen kind of the last couple of years, how things have gone. So we certainly want to take a little bit more cautious tone to that looking at the pace being down about 8% for group in Q4. So that ends up making Q4 a little bit more closer years we think, to the bottom of the range for sure.

That's great color. And I guess my follow-up is on the expense side of it. So you've got 2% to 3% kind of total OpEx guidance for the year. I think we heard earlier in the week that labor could run around 4% to 5%. And so just how do you feel about the potential flex on that guidance range? And also, I think within the context of the union renegotiation in New York later this year. Thanks.

Yeah, you're right. You're -- we're expecting about low single-digit kind of growth. And certainly, with the CBAs, both that have been renewed or only upcoming, we certainly see something in the mid-single digits type growth as you talked about with labor.

But offsetting that, you've got -- again, if you're kind of looking at top line and revenue-based type of fees and everything else, you're going to see lower end of the range there. We talked about doing deep dives at our properties last year. A lot of that came through multiple kind of the back half of the year. And so we certainly get the benefit of the full year impact of that this year.

So that's a nice little offset, we think, as well to the labor growth as well as, I think, fixed costs will continue to be one where we see certainly below inflationary type growth insurance, another good year, no big claims, certainly from us, but I think across the board there with events from hurricanes and the like, absent the fires in L.A at the beginning of the year, but ultimately, not to a point where I think the underwriters will need to kind of look to grow their premiums, I think we'll certainly be a favorable market.

So we certainly expect to see continued improvement there as well, along with taxes, we think would ultimately -- well, it can be choppy at times, ultimately being checked for the year. So those are I think some of the offsets the labor that gets us down to what we're talking about.

That's great. And congrats on the big promotion, by the way.

Thank you. Appreciate that.

Aryeh Klein, BMO Capital Markets.

Thanks, and good afternoon. Just on the non-core asset -- just on the non-core asset sales, how -- what's the level of interest, I guess, you're seeing in those assets? And how quickly do you think you can move there? And then, obviously, the focus is on selling those non-core hotels, but is there -- could there be some consideration to selling any of the core hotels if an opportunity arose. Thanks.

A lot to unpack there. Let me try to frame it a little bit for you. We have been laser-focused as we said, I think, a couple of times in the prepared remarks and continuing to really reshape the portfolio. I think it's important to remind listeners, the core hotels account for 90% of the EBITDA in the company and 90% of the value if you take sort of RevPAR, the core RevPAR is around $215, $218. That's about 69%, plus or minus, higher than the non-core.

The core hotels generate about $40,000 in EBITDA per key and 30% EBITDA margins, whereas noncore and RevPAR of approximately $129 plus or minus and about 14% margins and about $10,000 in EBITDA per key. So I mean a really stark contrast, hence, the reason that we're so aggressively working, and we have been working, I think it's also important to note, we've sold or disposed of 51 assets.

And I think people sometimes forget that includes 14 international joint ventures in Dublin, in Brazil, two in Germany, the Netherlands, South Africa, many complex assets here in the US. So the team is skilled, the team is experienced. We've done it in the worst of times. We were selling during the pandemic.

We've been selling post pandemic. They're our buyers. I think everybody knows that we're a net seller. And so in some situations, some of the assets have short-term ground leases or joint ventures or low tax basis. So every single one has a story, but we've had aggressive work streams underway.

Our investments team and our legal team and are working incredibly hard. And we're confident that we're going to get it solved. We've made significant progress before we can handle this. And the goal is to get as many of them, if not all of them done this year. We do have a few that are involved in a dispute, obviously, so those will probably lag.

But the other 10 hotels, we are aggressively working every day late into the evenings and multiple discussions are underway and we look forward to keeping investors informed and we look forward, most importantly, closing them using those proceeds to pay down debt and really reinvest back into the core portfolio where we're confident we can generate outsized returns. We believe, obviously, that we can generate higher yields from development projects than we can from acquisition projects at this time.

Thanks for the color. And then maybe just a follow-up on Miami and the Royal Palm. How quickly -- or how much in front of the actual opening can you actually start -- can you start to take bookings especially in front of a massive event like the World Cup and then just the pathway towards getting to those stabilized EBITDA levels. How long do you think it takes to get there? Is it '27, '28 or beyond, I suppose?

Yeah. Well, we're -- I guess, first, we're confident, obviously, in being able to take what was $14 million in EBITDA from tired and certainly an asset that needed really a transformational renovation to $28 million on a stabilized basis.

We certainly would think a couple of years is not unreasonable. Just given the extraordinary amount of development and activity occurring, and I don't need to tell anyone on this phone not only from a business standpoint, but the number of people relocating to the region as well and proximate to us is probably $4 billion of development activity, not all of that hotels but other asset classes as well.

So we remain very, very bullish on Miami as we look out regarding your question, obviously, as to how quickly we can get opened. We're in frequent contact obviously with both planning, both the approval process from the regulators and as soon as we're ready.

And as soon as we get the signal, we will be up and running. We've kept obviously our General Manager who's on site every day. We've kept obviously the key leadership team of the operating group. So we'll be able to pivot and move very quickly.

And again, as Sean noted in his prepared remarks, north of 50% of the guest rooms are already complete. So we are making great progress. And are working around the clock and going to do everything we can to make that date.

Thank you.

David Katz, Jefferies.

Good morning.

Good morning.

Good afternoon. Thanks for taking my questions. Look, if we're laying out a 2026 where I'll make the leap that you're likely to be successful getting divested of your noncore hotels my expectation of those is that their earnings level are such where they would be meaningfully delevering events for Park. Do you think and we don't want to get ahead of ourselves, but you think 2027 could be a year of potentially playing offense and maybe getting ready to buy something?

Nothing, David, would make me and this team more excited than to be able to make that pivot from playing defense to offense. And I think you really hit the nail on the head. We've been working our tails off. And as you know, you've been along the journey with us, and you've watched the effort.

And I think there are a few doubters out there, but I think you can remind people through the pin of just the hard work and the heavy lifting and the complexity of work that we've done in reshaping not only the 51 hotels that we've sold, but also keep in mind, we were self operating five hotels, and we also had three laundry facilities that have subsequently been closed.

So the team is tested. It's experienced. We share that belief and that the sooner we can substantially reduce the noncore so that it's no longer -- not only an overhang, but even a discussion point, gives us the opportunity, I think, for consideration for a rerating of the company, hopefully, our multiple and allows us to go on offense.

There are a lot of interesting opportunities that I think are out there today, and I think there'll be more in the future. And I think getting down to low 20s in terms of our core portfolio gives us a lot of optionality. The other thing to keep in mind as you think about some of our core assets in Bonnet Creek and the two iconic resorts in Hawaii and all the capital that we're putting and you think about also what we're doing in Miami. We own all of that fee simple, very rare.

And all of that, we think, is also going to be advantageous for parking gives us a lot of optionality as we can think about where it makes sense to continue to grow and in some cases, to monetize if that makes sense.

It does. And look, I know it's hard. It sounds like a couple of the assets are in some form of groups have to tell, but is it reasonable to expect that most of the assets that are noncore are going to get done within 2026?

Yes. Yes. That is the goal. That is the mission. We know it's a stake, and we're working as hard as we can. Obviously, there are things that happen beyond our control, David, but I think you've seen the effort you and others have witnessed the amount of work that we've done in this respect. And it has not been easy, but we're up to the task.

Got it. Thank you.

Chris Woronka, Deutsche Bank.

Hey, good afternoon, guys. Thanks for taking my questions. So maybe just to kind of double click back to the asset sales. I guess, Tom, is there a way -- I think we're really talking about 10 hotels if we exclude the three leases. Is there a way you could maybe bucket the type of buyers that you're maybe working with or characterize them in any way? I think we see headlines in the market every day about isolated struggles on the private side. And I think investors are kind of wondering whether any of that potentially is a roadblock to moving any of those assets.

Yeah, Chris, it's a great question. I would say one thing globally. There's plenty of equity capital. That's the first comment. The second, there's plenty of debt capital and private credit. So there's no issue there. There are also interested buyers, whether they be small family offices, whether they be owner-operators whether they're deep value entrepreneurs.

And look, some of the buyers tend to be -- have a little sharper elbows in this kind of situation because they realize, in some cases. These are deep returns and some reposition opportunities. But there's more than an adequate buyer pool out there.

Some markets are a little tougher. I'd say, obviously, Chicago and L.A are a little tougher than San Francisco right now for all the obvious reasons. But there are buyers not our first rodeo. It's up to us to figure it out and solve it. You don't want to hear excuses.

Our investors don't want to hear excuses, and we know what's required to do. And at the same time, we've got to make sure that we're getting fair value and that we're executing as quickly and as efficiently as we can. But there are work streams underway on all of them. There are some that have -- whether they be short-term ground leases or low tax basis.

I mean all -- it's a little bit of all of that. But that's no different than what we experienced candidly, within the 51 assets that we've sold, particularly some of those more complicated international assets that we sold a few years ago.

Okay. Fair enough. Thanks, Tom. Then as a follow-up, obviously, you have the New York labor contract coming up. I think, Tom, you might have mentioned in the past that once you get through that and you kind of understand what the new math looks like, you might consider a longer-term plan there, that could include a lot of different things, maybe conversations with Hilton. So is there anything you could add to that at this point as we move closer to the union reset?

Yeah. Obviously, I'm going to be careful here, Chris, as you can imagine. I'd make a couple of observations. We've got an excellent operating team on site. You saw the results that we delivered last year. New York was incredibly strong. Record fourth quarter up 5% to 7% for the year.

We're encouraged as we sort of look out here I don't think it's in anybody's best interest across the city for protracted negotiations or any kind of strike of that type of activity. We're ones at the table. There are a lot of other owners also involved in this.

You've also got, obviously, the World Cup and we're going to be on the world stage. And I think -- I think as we think about tailwinds for us being the largest hotel in the city and there's probably a little bit of upside opportunity there and from a demand standpoint. So -- so we're encouraged. We think it will get done. We have assumptions in our guidance as to what we think that impact will be. And obviously, we're not going to negotiate publicly, but we think we've got it covered from that standpoint.

And as we think about the hotel, there's -- we're doing some modernization work on the infrastructure will then huddle with Hilton, we'll look internally as to what we think makes the most sense. But no doubt, when you think about you've only got really two big boxes in New York that can handle large groups.

We think that gives us a unique positioning and a unique opportunity for us over the intermediate and long term. And -- and again, we had an outstanding year in 2025, and we're very, very encouraged as we look out in 2026 for the New York Midtown.

Okay. Very good. Appreciate all the color. Thanks, Tom.

Dan Politzer, JPMorgan.

Hey, good afternoon, everyone. Thanks for taking my questions. First, I just wanted to touch on the RevPAR range. It came in a little bit lower than we were expecting. It sounds like there's a fair degree of conservatism in there you're baking the possibility of macro and political uncertainty. But perhaps you could maybe book end or paint a picture where are the areas of conservatism in the guide, specifically as it relates to some of the properties or markets where you're most excited about.

Certainly. Look, I think, again, I'll start with just from a macro standpoint in terms of -- I talked about the quarter, quarterly cadence was Rich earlier and just kind of what that means when you think about Q4 and it being down 8%, that's kind of where good [point] of conservative would be. You think about where we see some of that softness, whatever you want to call it, in Q4, it is back to Hawaiian Village.

It's down about 50% on pace in Q4 Midtown, while it's got a good setup for the year overall, down 6% for the year in pace its weakest quarter is Q4. So I think, again, going into that, I think that's where we kind of feel there are obviously bigger impact to hotels.

We continue to find our way to just make sure that we use caution against some of the near term in the year for the year pickup trends as we get through the rest of the year. But yes, there's certainly a case to be made that things could be better. But ultimately, I think as we think through what we've seen in the past. I think those are some of the -- that's the time period, and those are some of the markets were a little bit more hesitant on right.

I would also add, just to -- just sort of step back, you can paint, I think, a rosier picture. The tailwinds for 2026 are encouraging. Obviously, we all expect a more accommodative Fed and and perhaps lower interest rates. I mean we're lapping those, Liberation Day, government shutdown. You've got the major events.

Obviously, World Cup, you've got Americas to 250 celebrations, deregulation, fiscal stimulus that's all encouraging. We've got the massive AI investment cycle and what we all hope and expect will be productivity gains at some point. Easing inflation didn't show quite that way today in the PCE report.

But the other side of that, you've also got some risk out there. You've got geopolitical. And obviously, we look at what's happening in the Middle East and Iran in the US right now. Inflationary pressures are still there. International travel really hasn't rebounded yet. We're seeing some green shoots. But we're certainly still down pre-pandemic. And the consumer is cautious. And we've got a K-shaped economy right now.

So look, we are -- we think it was prudent to be conservative and cautious for all the reasons that Sean outlined, particularly as you went quarter-by-quarter, and obviously, as I give you sort of macro, we should think about the tailwinds, but there are some headwinds out there.

And if you think about what's happened in the last few years in the sector, first quarter came out to be pretty good. And then for many of us, if not all of us, we saw somewhat of a downward trend. So we think right now makes sense to just be a little more measured, a little more cautious coming out of the box.

But we are crystal clear as to the business priorities for Park. What we're focused on selling noncore, investing in our core portfolio, paying down debt looking for all of the operational efficiencies we can and really outperforming. We'd rather have a lower bar and outperform, and we're aligned as a management team there and really focused on continuing to deliver for shareholders.

Got it . Thank you. That's helpful. And then just for my follow-up, Tom, Sean, whoever wants to take it, it's more on capital allocation and leverage. Sean, you mentioned the target of five turns in the next couple of years. how do you think about that the -- given that's kind of where you're setting this expectation, like how do you think about near term the allocation between capital between some of the project and investment opportunities, share repurchases given the price and valuation of stock or even the dividend, which obviously I don't know how secure you view that kind of tied you are to that level, but just kind of broad strokes how you think about those buckets?

Well, I think as we -- certainly as our sales is noncore, we've been focused on readable capital towards deleveraging. So I think that's the probably the main focus and certainly helps bring us with that target with that. But obviously, the investments we made already and we continue to make with things like Royal Palm, some other projects we have lined up, we think, again, those drive nice returns for us.

And over the next couple of years as those ramp up, along with longer kind of a recovery here in Hawaii back to kind of where we were achieving EBITDA levels in 2023. Those are the things that we think organically get the growth to help kind of bring us towards that 5 times target.

Got it. Thanks so much.

Cooper Clark, Wells Fargo.

Great. Thanks for taking my question. Hello. Thank you very much. Curious if you speak to the RevPAR uplift from the World Cup and America 250 celebration that's currently embedded in guide? And if on the World Cup, that uplift is mainly just coming from the Hilton Midtown asset.

Yeah. I think for the full year, for the portfolio, the impact -- we estimate somewhere in that 30 basis points to 35 basis points, probably about 20 of that or so from New York, another call it 10 from Boston and 5 from kind of other markets that aren't as big for us, but ultimately, obviously, have games going on or matches going on there.

Great. Thanks. And then I appreciate some of the earlier color on individual projects and puts and takes. But curious if you could talk about the total RevPAR disruption and EBITDA disruption from renovations this year. How that compares to '25 and then maybe how we should be thinking about potential tailwinds from renovation in '27 as you look out?

Yeah, certainly. I mean, obviously, Royal Palms is a big one. It's certainly a big benefit -- it certainly helps the portfolio in the back half of the year after it opens up. But in the first part of the year, you're talking about 300 basis points of RevPAR impact within the quarters. Altogether, though, if you kind of remove -- your Miami just has about 30 basis point impact to full year guide.

So it's a little bit of first half, second half there. Other projects aren't net disruptive to the portfolio, maybe to the tune of 20 basis points, 30 basis points of impact. Certainly, going forward, clearly, Miami will continue to have an outsized impact to the portfolio.

We certainly expected to see that in kind of 100 basis-plus point positive impact to the portfolio going forward as it ramps back up. And I think, certainly, we expect to see some -- certainly expect to see some nice recovery in the wine assets from the investments we made in New Orleans, which already is getting good reception from meeting planners winning business based on the product we have there. We certainly expect that to kind of be a nice tailwind for us over the next year or two.

Great. Thank you.

Robin Farley, UBS.

Great. Thanks. Just wanted to get a little more color around the new project in Hawaii, the renovation. You mentioned $1 million to $2 million of disruption in '26. So I think that starts midyear. So is it -- I guess if we think about what that power specifically generates in EBITDA, would that mean sort of $3 million to $4 million? And where do you think that goes after renovation?

And then just to tack on to that, if I remember at Hilton Hawaiian Village, there's a, I guess, underdeveloped parcel there, right? I don't know if there were stores you're staying on it that -- I think you've talked about being like a site for potential future development. I know you really focused on delivering now, but does the additional renovation here in Hawaii, is that a sign that you're thinking about kind of more investment going forward in Hawaii? Thanks.

Yeah, Robin, a lot to unpack there. Listen, I think the big message is we are absolutely committed to Hawaii, particularly Hilton Hawaiian Village, 23 acres, fee simple, iconic. We've obviously renovated the Tapa Tower 1,100 keys. We've just finished Rainbow Tower north of 800 keys, plus or minus, Ali'i Tower, as Sean mentioned, 351 keys. We think we can add another three keys there.

It's self-contained. So it's sort of the higher-end product on the campus at the village there. And so we really think that this is the window to renovate that. Obviously, there's a gym, self-contained restaurant. So we really believe that the window that we've identified that the disruption will be minor, the couple of million dollars that we mentioned and that this is the window to get it done.

So excited about it, thrilled about it. It's really separate from the AMB Tower. The AMB Tower was more opportunistic. We wanted to grab that last night. We are still finishing up the final entitlements. We have no intention of proceeding with that project at any time soon until obviously, demand has fully recovered.

We think that's a long term, and I emphasize long-term play at a future date. We have no intention of proceeding with that at this point. But Ali'i Tower, we think, is prudent. We think that's going to continue to really give now a tailwind but significant lift in a way to distinguish the property even further from its competitive set. So we're excited about getting that down.

And as Sean noted in his prepared remarks, north of 80% of the rooms at what's already a 2,900 room campus in Village would be completed and fully renovated, which we think really helps us as we look to '27 and beyond. So hopefully, that gives you a good framework.

That's very helpful. Just one quick follow-up on the Ali'i Tower. If I remember, it has its own entrance and sort of like [pool air] maybe even. Is there a thought that -- or potential for you to -- for that to be a different brand or like a different price point after the renovation that it could be like a hotel within a hotel or anything along those lines?

Yeah, it's certainly something that we've looked at from time to time. No doubt it will have an elevated price point, whether or not it's a hotel within a hotel with something that the asset management team here at Park and the operators and our operating partners at Hilton will look at.

We've studied that from time to time. It clearly is the most elevated product, and we're obviously going to take it to the next level and are really, really excited about the work that's going to commence there and get done, obviously, as we've said and certainly by the middle of 2027.

Great. Thank you.

Jay Kornreich, Cantor Fitzgerald.

Hey, thanks so much. Obviously, a lot of ground already covered here, but just curious on the out-of-room F&B spend has been quite strong as of late. So just wondering what you're seeing from customers and groups there on that front and how much revenue growth there could be from the out-of-room spend this year.

Yeah, sure. I mean you're right, it has been very strong. I'd say on total, it's probably about 40 basis points, 50 basis points above kind of where our RevPAR is translating to truckload RevPAR. And we think it's the same this year as we think about the guide as well. big drivers, in-house group as well as even Smurf will think helped to drive banquet and catering even to a decent amount this year.

Outlet spend is and the resorts has been strong. headlined by our El Dorado restaurant, for example, in Casa Marina, which we opened up last year and drove outlet spend up 40% in that property. We expect that to actually be -- it's now open, obviously, for the high season this year. So we expect to see continued growth in those areas.

Other things, I think, are just more -- a little bit more in line, kind of single-digit, low single-digit type growth, whether it's parking and other fees generated in that respect. But for the most part, it banquet and catering, the group continue to spend. We don't see much pressure from that as well as get in the resorts, certainly, the higher-end properties you certainly see the benefits of the higher income guests who are spending in the outlets.

That's fair. Appreciate the color. I'll leave it there.

Thank you. This concludes the question-and-answer session. I'd like to turn the call back over to Tom Baltimore for his remarks.

I appreciate all of you taking time today. Look forward to seeing many of you at the Citi conference and another week or so. And I also just want to take a moment to congratulate my partner, Sean Dell'Orto, on his promotion well deserved.

Sean has been just an extraordinary CFO, a great business partner, a great leader. I know that I speak for the Board and myself, we are thrilled that Sean is taking on the CEO title in addition to the CFO title, and I look forward to working with him for many years to come. So congratulations, Sean, and look forward to seeing all of you in the near future.

This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.