Park Hotels & Resorts Inc. Price & Performance (PK)

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 eight ks 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 This morning, Tom Baltimore, our Chairman and Chief Executive Officer will review Park's fourth quarter performance and provide an outlook for 2025 while Sean DelOrto, our Chief Financial Officer, will provide additional color on fourth quarter results 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. Thank you, Ian.

And welcome everyone.

Let me begin by saying how proud I am of our performance in 2024. The year in which we achieved sector leading results while advancing multiple strategic objectives. Building a strong foundation for the company's sustained growth and long term success.

Operationally, our portfolio exceeded our expectations for both top line and bottom line performance showcasing the exceptional quality of our portfolio further enhanced by the strategic capital investments we've made and our team's steadfast commitment to operational excellence. On the capital allocation front, we continue to reshape our portfolio by strategically divesting of non core hotels, accordingly we disposed of three hotels during the year including two hotels in joint ventures that were sold for a combined $200,000,000 in addition to the early termination of a ground lease and closure of the Hilton Oakland Airport. Which incurred an EBITDA loss of nearly $4,000,000 over the prior twelve months.

Exiting these hotels improved 2024 RevPAR by $3 while increasing EBITDA margin over 30 basis points. As we enter this year, we intend to be more aggressive with our disposition efforts targeting between $300,000,000 of non core asset sales as we seek to further improve the overall quality of our portfolio enhance our long term growth profile and pay down debt. As a reminder, since 2017, we have sold or disposed of 45 hotels for over $3,000,000,000 while meaningfully upgraded the quality of our portfolio.

As we execute our strategy to sell non core assets, we remain laser focused allocating capital to maximize shareholder returns, including the reinvestment of proceeds into our core portfolio of iconic hotels. I'm incredibly proud of the value we have created through recent redevelopments at our Bonnet Creek Resort in Orlando, and Casimir Luna Resort in Key West.

Each property has delivered exceptional performance in their first year post improvement, with RevPAR increasing 17% at Bonnet Creek, In 2024, over the prior year, and EBITDA for the complex exceeding $82,000,000 which is nearly $22,000,000 or 36% above last year. At Casa Marina, RevPAR increased almost 29% since 2019 and EBITDA for the resort finished the year at $30,000,000 or over $96,000 per key and up over 31% since 2019. Looking ahead to 2025, we expect continued growth at both resorts with group revenue pace at the Bonnet Creek Complex up 15%, Additionally, we expect tailwinds from the opening of Universal's new $6,000,000,000 epic theme park, which is anticipated to accelerate leisure transient demand into the market after its expected opening this May. The Waldorf Astoria is also poised [indiscernible] from the Conde Mast recognition is a top 10 destination in 2024 For Casa Marina, we expect continued market share gains as the resort recaptures its place as the top resort in Key West, of benefiting more this year from an enhanced guest experience with the new Dorado Beach front bar and restaurant. We expect each resort to produce RevPAR growth in the upper single digits translating to double digit EBITDA growth this year exceeding our underwriting for each of these ROI projects and further demonstrating our ability to unlock embedded value in our core portfolio which remains one of our key strategic priorities.

With our proven track record of value creation, through major ROI projects. I'm excited to announce plans to reposition our Royal Palm Resort in South Beach ideally situated along the prestigious Collins Avenue corridor This transformational $100,000,000 investment is designed to significantly elevate the property's quality and overall guest experience allowing it to better compete with other premium lifestyle resorts in the market and command, a substantial ADR increase. The comprehensive renovation will encompass a full refurbishment of all three ninety three guest rooms along with the addition of 11 new rooms.

We will also reimagine all public spaces including a new lobby bar reconcepted food and beverage outlets. And expanded meeting spaces designed to enhance the overall group experience. Construction is expected to begin after peak season in May and will require us to suspend operations into Q2 of twenty twenty six with the expectation to reopen well ahead of the World Cup matches, scheduled to begin in June of twenty twenty six.

Based on our underwriting, we expect the project to generate an IRR of 15% to 20% or potentially doubling the EBITDA of the hotel once stabilized. We continue to actively additional development opportunities in key markets, such as Hawaii, Key West, and Santa Barbara Our ROI pipeline now exceeds $1,000,000,000 with an estimated incremental value creation potential of over $300,000,000 We remain disciplined and strategic in which projects we pursue as we invest our capital to unlock long term value for our shareholders. Turning to operations. We ended Q4 on a solid note following a strong pickup in demand across most segments following the presidential election with the quarter supported by double digit RevPAR gains in Orlando and Key West, coupled with solid group and business transient demand in several key urban Park, including Chicago, and New York. In Orlando, RevPAR increased nearly 30% during the quarter across our three hotels, driven by strong group production and solid gains in the leisure transient segment. I am particularly pleased with the outstanding performance of the Park Astoria Bonnet Creek following last year's renovation, with the hotel reporting an 85% surge in transient revenues our group revenues increased over 55% Additionally, the hotel generated a 40% increase in ancillary revenues As guests took advantage of the upgraded outlet facilities, and enhancements to our championship golf course.

In Key West, Casa Marina continued to exceed expectations with the hotel reporting a 77% increase in RevPAR during the quarter following the 2023 renovation with the hotels RevPAR index improving to January was particularly strong. Ending with nearly $120 ADR premium over the competitive set and a RevPAR index of 126. Marking the highest quarterly performance since 2019. The hotel saw wins across the entire operation including a total banquet contribution of $543 per group room night and a notable increase in ancillary spend per occupied room up over 25% versus the prior year period.

At the New York Hilton, RevPAR increased 3.5% during the fourth quarter driven by a 17% increase in group room nights ADR growth was approximately 3% during the quarter with the expanded group base enabling the hotel to push transient rates up nearly 4%. Notably, rig gains in December were up nearly 6% further reinforcing the hotel's strong pricing power and demand momentum. At the Hilton Chicago, RevPAR growth was nearly 15% combined with operational efficiencies contributed to a 53 basis point improvement in EBITDA margin over the prior year period. Heading into 2025, the Home Chicago is seeing healthy demand across all segments driving expectations for RevPAR growth this year above a very strong 2024. Turning to Hawaii.

As previously disclosed, results at our Hilton Hawaiian Village Hotel were negatively impacted by a forty five day labor strike coupled with disruption from the renovation of four zero four guest rooms, at the iconic Rainbow Tower collectively accounting for a nearly five forty basis point headwind the total portfolio RevPAR during the fourth Looking ahead, we anticipate a solid rebound for the resort in 2025 Despite a modest [indiscernible] with very challenging year over year comparisons during the first quarter we expect solid growth the rest of the year with fourth quarter growth aided by lapping last year's strike disruption. While we continue to see improvements in demand from Japan, most of the gains are expected to be driven by inbound domestic travelers along with increased citywide activity, with a nearly 85% increase in convention room nights this year. At our Hilton Waikoloa hotel, where full year RevPAR was down 60 due to tough comparisons and renovation disruption in the second half of the year we expect a sharp rebound in group production in 2025 group revenue pace up nearly 70% leading to anticipated positive RevPAR growth in 2025. Turning the focus to our outlook for 2025. We continue to see positive demand trends across all segments which accelerated following the presidential election in November and I feel cautiously optimistic about how the year will unfold.

From a macro standpoint, U. S. Economy remains on firm footing supported by healthy employment, strong corporate profit growth and a resilient U. S. Consumer all backed by an administration that is pro growth more rational regulation which we believe will continue to drive demand for hotels. That said, Some uncertainty remains and it's hard to predict how the new administration's policies will impact this business momentum. For Park specifically, we remain laser focused on what we can control and believe our portfolio is well positioned for long term growth based on the strategic investments we've made as well as our presence in markets with limited supply growth. More specifically, We expect 2025 to be a tale of two halves for the portfolio beginning with a first quarter that is lapping a tough comparison to last year. We wish the total portfolio outperformed in just about every market with RevPAR growth of 8%. Therefore, we expect RevPAR to be slightly negative in the first quarter followed by positive growth in the second quarter and then rounding out the year with a strong second half aided by easier comparisons as we lap the strike disruption from last year. The group segment is expected to to remain one of the strongest segments the revenue pace of 6% complemented by improving corporate business transient, and low single digit leisure transient growth.

For the year, we are expecting top line comparable RevPAR growth of 0% to 3% reflecting several key factors including a slower 110 basis points of disruption from the planned closure of the Royal Palm Resort beginning in May, and our cautious optimism about The U. S. Economy as we monitor developments under the new administration. Excluding Miami, however, growth improves by 110 basis points at the midpoint to 2.6% for the year reflecting the overall strength of the broader portfolio.

Sean will provide more details about guidance in his prepared Park. In summary, I wanted to emphasize that 2024 was another transformative year in which we achieved key objectives that have positioned our company for accelerated growth over time. Continue to yield strong returns and our return of over $400,000,000 of capital to shareholders last year and stock repurchases which totaled 8,000,000 shares at values well below net asset value.

Underscores our commitment to maximizing shareholder value.

We are optimistic about our long term growth prospects as we unlock the significant embedded value within our portfolio, with renovation projects such as the Royal Palm repositioning in Miami, while we further enhance the overall quality of our core portfolio, through our ongoing capital recycling efforts, And with that, I'd like to turn the call over to Sean. Thanks, Tom. As Tom noted, we were very pleased Q4 RevPAR was $179 a decline of 1.4%. However, if you were to exclude the impact from strike activity in the quarter, at the four affected hotels, Q4 RevPAR increased 3.1% year over year.

Occupancy for the quarter was 69.9% and ADR was $256 Q4 hotel revenue was $600,000,000 while hotel adjusted EBITDA was $147,000,000 resulting in hotel adjusted EBITDA margin of 24.6%. Or 28.1% if you were to exclude the $28,000,000 of EBITDA disruption from strike activity during the quarter. Resulting in margin expansion of nearly 20 basis points. Q4 adjusted EBITDA was $138,000,000 and adjusted FFO per share $0.39 For the full year RevPAR was up 2.9% versus 2024 and hotel adjusted EBITDA margin was 27.5%. Or down 70 basis points versus last year. When adjusting for the strike disruption, full year RevPAR increased 4.2% while hotel adjusted EBITDA margin improved by approximately 30 basis points. Adjusted EBITDA for the year was $652,000,000 inclusive of $32,000,000 of strike impact and adjusted FFO per share $2.06 In terms of CapEx, during 2024, we reinvested approximately $230,000,000 in prioritizing upgrades and resiliency work, aimed at elevating the guest experience and strengthening our assets. This included the first phase of a two phase comprehensive guest room renovation at the famed Rainbow Tower in Waikiki. And the Palace Tower at the Hilton Waikoloa Resort on the Big Island. As well as the first of a three phase guest room renovation of the eleven sixty seven room main tower at the Hilton New Orleans Riverside.

In 2025, we will execute [indiscernible] a total investment of $75,000,000 Both renovations are scheduled to start in Q3 of this year and extend through early twenty twenty six. Additionally, in New Orleans, we plan to launch Phase two of the guest room renovation a $31,000,000 investment covering four twenty eight rooms. This project, which is nearly double the rooms covered last year in Phase one, is scheduled to begin in the second quarter of this year and continue through year end.

With respect to operational excellence, we have proactively transitioned operating partners at six of our hotels over the past six months. Three of which were converted to franchise models. With impacted hotels including the Royal Palm in Miami Hilton Denver, Hyatt Centric at Fisherman's Wharf in San Francisco, Marriott Newton in Boston and both of our Chicago W hotels which have also been rebranded as part of the strategic shift. Overall, we are very excited about the upside potential further underscoring our commitment to brand and operator diversification as a key growth strategy. This transition introduces managers with strong market presence we anticipate meaningful improvements to operations. In addition to long term cost savings. Turning to guidance. As Tom noted, we are establishing full year 2025 RevPAR guidance of $187 to $192 or year over year growth of 0% to 3%. While hotel adjusted EBITDA margin is expected to be between 26.127.7%. A 60 basis point decrease to 2024 at the midpoint. With respect to earnings, we are forecasting adjusted EBITDA to be in the range of $610,000,000 to $670,000,000 and adjusted FFO per share guidance is forecast to be between $1.9 to $2.2 Assumed in our 2025 guidance is approximately $17,000,000 of EBITDA displacement associated with our Royal Palm renovation project which is scheduled to suspend operations in May the remainder of the year.

Excluding the Miami renovation, RevPAR guidance would have improved by 110 basis points at the midpoint to approximately 1% to 4% for the full year of 2025.

With respect to expense growth, our guidance implies comparable hotel operating expenses increased by 3% to 4% over the prior year period. Looking closer at the first quarter, as previously disclosed, Q1 faces tough year over year comparisons with Q1 twenty twenty four results benefiting from exceptionally strong group performance, leading to an 8% increase in RevPAR. While earnings were positively impacted nearly $10,000,000 of grants and state employment tax refunds, received during the quarter last year resulting in approximately 150 basis points of EBITDA margin tailwind. January 2025 RevPAR finished 2.7% lower than the prior year period.

Chicago, Boston and Silicon Valley. Partially offset by ongoing strength at Bonnet Creek and Casa Marina. However, portfolio performance compared to last year is expected to improve throughout the quarter. With February outperforming prior forecasts, we currently anticipate the first quarter to be down slightly last year. Finally, with respect to our dividend, on February 14, we declared our first quarter cash dividend of $0.25 per be paid on April 15 to stockholders of record as of March 31. At current trading levels, this quarterly fixed dividend translates to a 7.5% to 8% yield. This concludes our prepared remarks. We will now open the line for Q and A. Address each of your questions, we ask you limit yourself to one question and one follow-up.

Operator, may we have the first question please?

Thank you. Our first question is from Floris Van Dykem with Compass Point. Please proceed with your question. Good morning, guys. Thanks for taking my question. Good morning, Doris. Good morning, Tom. So the disposition target that you've laid out, the $300,000,000 to $400,000,000 That only covers as far as I can tell a portion of your non core assets. You've got another probably half of your at least half of your non core EBITDA that's probably left for sale Can you talk walk us through how you plan to deploy that capital? What percentage could we expect is to be spent on ROI projects versus potential share buybacks.

Yes. Thank you for the question, Forrest.

I think the it's important to sort of level set. I think we've consistently shown as a team our ability to recycle capital If you think back from the spin now, we have sold or disposed of 45 hotels for about $3,000,000,000 We've been very thoughtful about it. Even under difficult circumstances. We've been able to achieve that at least some portion of that objective each year. Last year, obviously, selling about $200,000,000 Tom Mori our Chief Investment Officer and his team are are diligently working we've set an aggressive target in this environment of about $300,000,000 to $400,000,000 We will use we'll wait and look for how best to reallocate that capital, but you can expect obviously [indiscernible] in our core portfolio. We believe passionately that we can generate really higher yields from from development projects than we can from acquisition projects at this point. So that's sort of point one. Point two, we will continue to use proceeds to pay down debt We want to make sure that the balance sheet is remains in great shape and that we've got liquidity. And then opportunistically, we will look from time to time in buying back shares where it makes sense.

I mean obviously we continue to trade at a at a really significant discount to NAV and the team is laser focused on doing everything we can to close that gap as quickly as possible.

Thanks, Tom. Maybe my follow-up is, and maybe this is more pointed towards Sean, I know it's early, but how are you thinking about the $1,200,000,000 CMBS debt on Hawaii Village And you have flexibility obviously with with cash on the balance sheet, potential more non core sales how do you think your balance sheet is going to look or how will you address that that refinancing in 2026? Yes. Thanks for the comment or question, Floris.

Yes, to just reiterate what you're thinking, and I would say it's $1,400,000,000 of CMBS that comes due and matures in the second half of 'twenty six when you include the Hyatt Regency Boston asset as well with Hawaiian Village. I think in the end, we have access to a number of debt capital markets. We continue to monitor talk with our bankers about some of the strategies and thinking about in doing this but we're certainly weighing The cost tenure, looking at our maturity table, flexibility of the capital, as well as timing of the asset sales as you noted as Tom talked through. So kind of putting all that together, it is early. We continue to monitor Park conditions change. We feel like it's compels us to go earlier. Certainly, you'll see that activity as released look to take maybe a portion of that CMBS off the table So I think as you we go further into the year, I think you'll see us address at least portion of that All that said, I would say even one scenario out there is Hawaiian Village obviously continues to perform really well and certainly a lot better has produced a lot more EBITDA and cash flow than it did when we put this CMBS debt in place back in 2016.

Certainly supports even a higher level of debt on it at this point. So that's an option.

I wouldn't say it's our first option.

But again, it goes back to saying we have a lot of scenarios we can look at with all the access that we have debt markets Again, proving that we did that last year when we accessed both term loan A [indiscernible] capital as well as bond capital And again, we'll look at some of those markets as well as we look to this solution. [indiscernible] Floriss, the other thing that I would add, just agree with everything that Sean has said is, Sean and the team have done just a fabulous job. And when you think about even coming out of the pandemic, we paid all the banks back the credibility that we have with The Street gives us optionality as strong as anybody in our peer set And so Sean and team are already out in front of this looking at different options. Obviously, it doesn't mature until late until the second half of twenty twenty six. But you can expect us to be proactive, to be disciplined and really under Sean's leadership, we'll find the right balance. Thanks, guys.

Thank you.

Our next question is from Duane Fenningworth with Evercore ISI. Please proceed with your question. Hey, thanks. Good morning. I wonder if you can walk us through the expectation for Hawaii in total over the course of the year, maybe what growth or a lack of growth look like in Q1, Q3? Is all the growth kind of Q4 weighted in that market in total. And then one of the questions we get from clients is how to convert the pacing stats you give to EBITDA. So example, Waikoloa Group pace up 70%, how does that translate to EBITDA growth for that asset?

Yes. Let me grab the first part of it. Sean can talk about the EBITDA side. I think it's important to kind of again level set. If you look historically demand into the islands north of 10,000,000 Excuse me, $8.5 to $9,500,000 plus or minus Japan has always been about Japanese have been about $1,500,000 of that. If you look back to 2023, it was around 600,000 We expected last year to be probably in that $800,000 range ended about $720,000 plus or minus still 22% above the Prior year, and then still about 54% Beneath 2019 This year, the current estimate is about nine thirty thousand visitors right now Down from closer to $1,000,000 So you're still a 41% beneath 2019 So as you think about what we're seeing right now, international arrivals are up about 5.5% but arrivals from Japan are up about 14% of same time last year including up about and includes up about 22% plus or minus in in January. And and even the domestic arrivals [indiscernible] about 3.7% over last year [indiscernible] [indiscernible] 21% plus or minus ahead of 2019 partially covering some of that international deficit. So Just Look, have no doubt that Hawaii is going to ramp up We certainly, as Sean outlined, expect that the first quarter is going to be soft.

We know that. We expect obviously the second half of the year to tail or two halves as Sean outlined. And we expect significant increase obviously in Q3, Q4 and we expect [indiscernible] both properties to be in the low to mid single digit at the end of the year in in RevPAR growth. So feel very confident seeing very good trends Southwest just also announced obviously 33 red eye flights that they're going to be adding Alaskan Airlines and their acquisition of Hawaiian Airlines. We expect that that's obviously going to be adding more capacity So clearly, the domestic traveler continues to really penetrate Hawaii, which we think is going to be good long term. And we have no doubt that as the dollar and yen settle and some of the surcharges go away, you're going to see the Japanese travelers sort of back will it be back the levels that we had historically seen certainly remains to see over time, but we're currently forecasting in that 2728 window to get back to that sort of 1,500,000 visitors into the Hawaiian Islands.

So with that, let me hand it off to Sean and he'll provide some additional color on it.

Yes. I mean, I would say it's It's not an easy formula to think through how you translate kind of group pace into EBITDA conversion. A couple of components that go into it, not to get down too in too much detail. But as you think about that group pace, it's certainly very strong, speaks to strength of that market with I think groups kind of cycling back into the big island. We had a number of hotels including ours under renovation in the comp set there. And so think you're seeing the benefits of people seeing better product coming online here. And and looking to go there for their group activity. That said, I mean, you are displacing transient and group is while a meaningful component, about 20%, I would say kind of max on peak of the demand of that asset So it's good. It's obviously great. You get [indiscernible] banqueting catering contribution. I think we'll look to be up around 20% plus this year for Waikoloa given that group [indiscernible] But you are offsetting transient customers And so when you think about the net net impact of RevPAR with that, again, 20% of being group, 8% being transient, I think what you get to is somewhat of a growth, still growth I would say it's kind of on the higher end of our range kind of growth for Waikoloa.

Year over year on the RevPAR side, but certainly contributes to what we see in terms of a better total RevPAR profile for not only that asset, but the portfolio overall where we think it's about call it, 100 basis points in addition to the room RevPAR growth For the portfolio. So kinds of things contribute to it. I think it's a better mix and certainly you want to establish that foundation to help drive yield that transient. So as that kind of comes back and we think the market factors into wider range. There's a little bit of uncertainty as to how that demand comes back, but certainly could be some upside that you could garner with that strong foundation. So that all a lot to say to say how does it translate to EBITDA. I think in the end you've got positive RevPAR growth, positive revenue growth. We have to manage some of the expense assumptions as well to what as you think about the overall algorithm of converting group pace down to EBITDA.

Appreciate the thoughts. Thank you.

Our next question is from David Katz with Jefferies. Please proceed with your question.

Hi, good morning, everyone. Thanks for all of the copious details so far.

I wanted to just circle back on the Royal Palm having toward it not too long ago. When finished, right, it's a meaningful project. You just talk about its intended positioning within Miami, which obviously big important hot market Where does it fit in the landscape there? Yes, it's a great question. David, I've like you have spent a lot of time down in Miami. I've I walked it recently with the team A huge credit to Carl Mayfield, who heads our design and construction team who by the way David is best in class There isn't anybody in the lodging sector, certainly in the REIT sector that has his experience and knowledge. And and I think his track record really demonstrates that and you'll think about our success in Bonnet Creek, think about obviously our success down in Casa Marina, We have studied GrowPalm carefully for more than a year and really was given the historic nature, given the three buildings, and how best to really activate and take advantage of that bull's eye location And when you also step back and think about all of the high end [indiscernible] Faina North Miami Beach, which you had with obviously the Four Seasons and and Ritz Carlton not close from South Beach and obviously the St.

Regis and you've got on deck here the Au Beres that's coming Rosewood coming, the Aman obviously coming, the Andaz which eventually will open I mean all of that we see [indiscernible] underneath that. We don't see taking it to that level. So certainly an upper upscale lifestyle but we think we can tuck under and really raise rate significantly and give what is a varied and diverse customer base And just given what's happening in Miami, it's we don't see that slowing down. We see that just accelerating. So as we talk about the opportunity to really double EBITDA, we believe that passionately. And we believe really [indiscernible] the operation with a more activated public space different food and beverage outlets taking the pool on the Second Floor and really making that the kind of views that we'll have obviously, a renovated room product and really adding 11 keys. So we are really really excited about this. You hate to close a hotel, but really to do this right, it's the right business decision and we think it's going to create really long term value for shareholders. So very excited about it. And we don't see any slowing down.

If you look over the last twenty years, what are the three markets that have certainly been been among the strongest It's really Hawaii, it's Orlando, It's Miami. It's Key West, And in all of those markets, Park is really well positioned. I'm not sure we get the kind of credit from shareholders that we should, when you carefully look at the quality of the real estate that we have in all of those markets.

Perfect. Thank you.

Thank you. Our next question is from Smedes Rose with Citi. Please proceed with your question. I apologize, I was on mute there. That's right.

Can you hear me now? Okay. I wanted to ask you on the phonic great. On the Bonnick Creek asset, it looks like it came in in the low $80,000,000 dollars I think that's kind of around the range you had targeted kind of post investment and it just do you feel like that's kind of stabilized here? Or do you think there's sort of significant upside or just kind of sort of more normalized organic growth at this point? Yes, we are incredibly bullish Smedes and think that that's [indiscernible] in the first year, seeing RevPAR up 17% and obviously EBITDA as you noted, going from $60,000,000 to about $82,000,000 up up 36%. And the ability to really layer in multiple groups we could not be more excited Obviously, Conde Nast given the Waldorf top 10 rating [indiscernible] We are incredibly excited as you sort of look at [indiscernible] at Bonnet Creek at the Waldorf up about 15% plus or minus and what we see right now in 'twenty six. So we are very, very encouraged as we look out The other thing that really helps us to Smedes is as you think about citywides or are up this year in Orlando, so that's certainly going to be a tailwind for for the market.

And then of course Epic Universe, which is going to be opening in May plus or minus and the reported spend is about $6,000,000,000 and and 50 experiences plus plus or minus. So we think that's only going to continue to benefit the the overall market and we certainly think that that's going to benefit Bonnet Creek and our assets in Orlando.

Okay.

Thank you. And then if I could just ask one more, and Maybe I missed this, so at the risk of embarrassing myself, I'll ask it anyway.

The W hotels in Chicago look like they've been renamed. I was just wondering does that brand switch help you maybe on CapEx requirements or would you expect operational improvements there or maybe you just talk about that a little bit?

Yes, we think on both sides. We think obviously that both expected obviously to be part of the Tribute [indiscernible] both having that flexibility both having new operators and we think leaner more nimble So we're very excited about that decision As Sean noted in his prepared remarks, we've changed out really six operators. In this case, we're also changing converting to a franchise model certainly staying within the Marriott family. So really excited about these decisions again. Credit to our asset management team and and our development team that's worked very hard over the last last year plus in discussions with Marriott to make that happen and we think it's really a win win for everybody.

Great. Okay.

Thank you. Great.

Thank you.

Our next question is from Chris Vooranka Deutsche Bank Thanks for taking the question. Good morning. So if I could follow-up a little bit on the Chicago and maybe go a little bit just a little bit deeper. Tom, can you comment on whether those are longer term franchises with the with the new, I think, ones that attribute, ones that Marriott independent, because I think it's pretty well known that Lakeshore was shopped A few times. And so does this does what you've done with the change impact your ability to sell the assets or how buyer might view them as being long term encumbered or unencumbered by brands? [indiscernible] Yes. We actually think it gives us more optionality. Chris, obviously having those being in a franchise situation, obviously having new operators Again, spent a lot of time with Marriott negotiating and and we didn't think either asset really were W caliber in terms of what Marriott was looking for and we wanted the optionality of more of those soft brands. So we're we found the right balance. We'll continue to to look how we can create shareholder value and if that means selling or monetizing asset as we've demonstrated time and time again, we'll we will certainly do that.

But we are confident that we've arrived at the at the right decision and the right outcome here. Okay, very good. Just a follow-up. If I could.

And that's on a similar kind of question, but on Miami kind of post renovation it sounds like you stay in the Marriott staying with the Tribute, but does that renovation, I mean, is there a reset of the of the franchise contract? I think that was one of the first tribute in the in the old Starwood portfolio in 2015, if I remember. So is there like a reset on are you going to be kind of wedded to Tribute portfolio for that for a much longer period or Park you still going to optionality there? We have significant optionality there in Europe.

We've all been around a long time, Chris. In fact, it was first tribute is our understanding as well. With Starwood and really under the same [indiscernible] At this point, doesn't mean that that can't change, but that's the current structure and Marriott has been a great partner and been working with us They can certainly speak for themselves, but the feedback that we've gotten is they are [indiscernible] with our program with our design features, how we're going to reimagine the public space, the food and beverage offerings, we are very excited about and again a shout out to our team who have worked incredibly hard for more than a year as we've planned this out and at the end of peak season, we're going to hit the ground running with strong confidence that we will deliver before the for the World Cup next year.

Okay. Very good. Thank you.

Thank you. Our next question is from Chris Darling with Green Street. Please proceed with your question. Thanks. Good morning. Hey, Chris.

Tom, can you walk through your expectations for New York this year? Would be curious your perspective on the overall market as well as your Hilton Midtown specifically? And then additionally, would all also be curious to hear about how you're thinking about margins at your property there?

I mean, if you think about New York, I mean, obviously, we ended fourth quarter, I think, up about 3.5% in RevPAR and I think for the full year just south of 4%. Group pace in 2025, I think we're looking up about 10% There's been little supply increase in New York. So 25%, I think, were about 2% in the overall market and continues to decline think 0.5%, 0.626% and I think clearly just flat 2027.

And Manhattan Supply is on my 8%, 9% since 2019. So look, New York has turned out to be a stronger Park. Obviously, some of the restrictions that have been imposed and required on Airbnb have helped the market Our hotel continues to gain market share There are really only two hotels that can [indiscernible] large groups So we're we're encouraged. Obviously, group room nights, I think we're going to be down a little bit here in the first quarter. But we still expect that we're going to finish the year [indiscernible] low single digits in terms of RevPAR. [indiscernible] existing contract with labor doesn't expire until '26. I've got no comment on that as to when our operator start to engage.

But we I suspect that will be [indiscernible] But remain cautiously optimistic in New York. I think New York and you think about return to office, you think about visitation, think about what's happening it continues to be a solid Park.

All right. That's helpful thoughts.

And then just one more shifting gears a little bit. Thinking about the transaction market, just curious your perspective, do you see any increased appetite among private buyers to transact at scale, portfolio transactions, anything like that? Or do you think it's really more of a a one off deal situation still these days?

Yes, it's a great question. Chris, you would expect obviously rumors are there's some $400,000,000,000 of private equity real estate capital kind of on the sidelines Obviously, that includes some of the large players, that also includes some small to midsize players. You've got family officers and owner operators I certainly think the debt markets are open. Pricing seems to have improved slightly. Would expect obviously that you're going to see sellers perhaps, I don't want to say capitulation, but I think I think the gap is narrowing between buyers and sellers. So I would [indiscernible] on the transaction market to continue to improve, probably more the second half of this year. While I think there's optimism certainly with the new administration [indiscernible] more rational regulation, expectation of lower taxes, At some point, hopefully, rates start to come in. But there is uncertainty. [indiscernible] inflation still while coming in still a little sticky. And obviously, the impact of some of the decisions that are being talked about, including tariffs, So I think there's still optimism but a little bit of wait and see. But we fully expect that we are going to be more active in in the second half of the year.

Appreciate that.

I think we've demonstrated yes, Chris, I think we've demonstrated again and as we said in our prepared remarks and I said earlier, look, when you've moved 45 hotels and in the last five years or five years from the pandemic, I mean we have been as active and even in difficult circumstances, the pandemic, international assets, etcetera, We've been able to close deals and and get deals done. So I expect you'll continue to see that kind of execution from us.

Understood. Thank you, Tom. Thank you.

Thank you. Our next question is from Patrick Scholes with Truist Securities.

That amongst international travelers, Canadian inbound is the most important international travel to traveler to Florida. Have you seen any impact on the propensity to visit your Florida properties From Canadian travelers given all of the attention and whatnot with tariffs? Thank you.

It's a great question. The answer is we have not at this point We continue to monitor that. And as you correctly point out, as you think about The inbound visitation it's still about half of that coming from Canada and Mexico. Softening or slowdown and Florida and particularly our properties certainly remain strong and and we are encouraged at this point.

Okay. Thank you. Thank you.

Our next question is from Jay Kornreich with Wedbush Securities.

Hey, good morning. Thanks so much.

Just to ask a question going back to the outlook for '25 is a pretty wide range for adjusted EBITDA. So I was just curious if you can give any more of the puts and takes you're considering that might lead you to the high end versus the low end of that range?

Again, I think just starting with the top line, of 0% to 3%, certainly a wide range that we typically given. We kind of ultimately widen the range out there for the EBITDA as well as we Thanks Again, opportunities you're starting for one, you're starting with the negative for softer first quarter we talked about. I think certainly puts us to the lower end of from a conservative standpoint. And an opportunistic standpoint, you think about Hawaii and kind of seeing through Q1 that we've seen pickup really starting to get back to levels that we saw are going to equate to pre strike levels. And so the question will be just kind of how much that can kind of recover and build through the year that helps, I think, drive again the the opportunity in top line of the range. So I think it's more kind of operational. I wouldn't say there's anything transactional in it. In any sense, just more kind of we think about the operational potential of Hawaii and really the conservatism of kind of the slower start to the quarter for Q1 the year for Q1.

Okay. And then just as we're halfway through the first quarter, naturally as you mentioned, there's a tough comp in Hawaii, but there should be some other markets some onetime benefits such as the Super Bowl being in New Orleans, Inauguration DC, maybe is there any other just core portfolio or market comments that you would outlined just in terms of as we think performance so far in the quarter?

Yes. Obviously, New Orleans very strong very encouraged I think January was a little softer and down 4% or 5% in New Orleans, but we were we had a Just given the location, headquarter hotel, we had one of the teams and we were up mid teens and RevPAR there and probably looking at a for first quarter probably up in the 5% to 7% range [indiscernible] So certainly very strong and as I pointed out, feel very good about what we're seeing in Florida and Orlando in in particular and as we look out in as Sean pointed out Hawaii we had a tough comp and Hawaii is certainly going to be a little softer in the first quarter. No surprise there, but as we look out to the second half of the year, very, very encouraged and I gave you some of the stats of what we're seeing already. And both in as well as domestic. So certainly expect first quarter down in that low single digit range plus or minus. But very encouraged as we look out for the balance of the year.

Okay. Thank you.

Thank you. Thank you. Our next question is from Robin Farley with UBS.

Thanks. On Miami, when you talk about doubling EBITDA there, is that something that you think you would ramp up to or would you be at that rate in by 2027, understanding that next year is not a full year?

Yes. I mean, obviously, we would as we've we've seen obviously and in both CASA and Bonnet, mean obviously you've seen a pretty quick ramp up, but I would see that as Two to three years I think would be sort of a normal ramp up in the kind of transformation that we're talking about and also dependent on how that market is doing. But when you're bringing in that kind of high end product above us, we certainly think that gives us the right opportunity to sort of tuck underneath and really push rate And given the premier location that we have in South Beach, we're very excited about the opportunity.

Okay. Great. Thank you. And maybe just one more on Q1. Just given the Easter shift, it would be kind of helping Q1.

And others are talking about leisure demand still being up in '25 versus '24. Is there something in particular at a property or two that maybe was a large group or something in last year's Q1 that you would call out as sort of the the driver of the decline?

The decline, I'm sorry, decline this year versus last year?

Yes. You're guiding to Q1 RevPAR while others are kind of calling out Q1 benefiting from the Easter shift and just wondering if there's something in particular for your comps. Others are talking about leisure still being up. I know you said it's obviously 8% growth last year, but there's something else in there that again sort of specific to Q1 last year that isn't recurring or what others are kind of pointing to leisure being up in Q1.

Yes. I think in the end, it was as we've mentioned before, Robin, it was broad based. We've had some group strength and we also had transient leisure strength across a number of our Park. I would say it was probably more centered in January, February than it was in March. In terms of that strength. So certainly was more bigger driver what we saw in Q1 relatively kind of a specific Easter shift impact of March Okay. Thank you.

Thank you.

Thank you. Our next question is from Dori Kirschkin with Wells Fargo. Please proceed with your question. Thanks.

Do these two Do the two phases of renovations at Hawaiian Village, Waikoloa and Riverside effectively offset each other from a RevPAR perspective this year? And then how should we start think about the aggregate of those tailwinds for next year?

Yes, Dori, in the first Park, I'd say essentially they lap each other. I mean, I think it's maybe 10 basis points to 20 basis of impact. We had a little bit of disruption in January in Hawaii Hawaiian Village, some of the Phase one we can But overall, I think it's not dramatic impact to the top line and go obviously some impact to the bottom line at all.

And then just regarding your operating cost growth assumptions for this year. I think we were a little bit surprised at the low end of the range just given labor cost headwinds. So can you just walk us through does it assume fewer FTEs? Are there some relatively low growth Some lower insurance assumptions?

Yes. I mean, from a from a cost standpoint, I would say, in general, it's overall cost, it's kind of a net three ish, 3.5% range.

Clearly wages are elevated and certainly north of inflationary costs Union negotiations certainly are on the higher end. Ultimately in the 5% to 6% range. Offset by kind of nonunion elements that are kind of in the three kind of little bit [indiscernible] [indiscernible] all put together, from a wage standpoint, it's probably in that mid single digits offset by things that insurance, rent and other kinds of elements of costs utilities they're helping to offset that. Kind of put us down to kind of that three ish 3.5% range as you think about kind of think about our midpoint of our guidance. If you think about lower end, clearly there are some assumptions that go into that that driving that you'll have less expenses. Okay. Thanks, Sean.

Our next question is from David Hargreaves Barclays Park.

Hi. So I know that you're sort of guiding to of flattish top picture. But with everything that's going on spend wise, I'm wondering if you have plans to be accessing the debt market soon.

We don't have a need to access the debt markets at this time. Obviously, we've got the revolver, we've got about $1,400,000,000 in liquidity plus or minus We obviously are going to be working to recycle capital and and sell as we've said about $300,000,000 to $400,000,000 in non core assets which gives us a lot of optionality to pay down debt and also really reinvest back into our portfolio. We've been laser focused and pretty consistent with that strategy. Over the last few years and you're really not going to see that change. We will as we think about our maturities next year and very seasoned and experienced team here and Sean and team are already thinking about maturities next year and we'll have lots of optionality and we'll think carefully about what creates the most value for shareholders but gives us the optionality as we think about other strategic options as well for the company. [indiscernible] Thank you for that. And in the past, I think you've expressed comfort level leverage wise in the three to five times range.

I'm just wondering if that's updated at all if if that's still your policy?

It's still Sean and I from day one really really three to five is is sort of a guiding principle. We were sort of at 4% ish pre pandemic. Obviously, we were above that. Certainly, a little higher than we'd like on a normalized but we're confident that we'll be able to get sort of inside of at five times at some point here in the near future. Other than a year or two, we certainly will make that happen.

Very helpful. Thank you so much. Our next question is from Ari Klein with BMO Capital Markets Park.

Please proceed with your question.

Thanks.

Maybe just going back to the Royal Palm renovation, I was wondering if you can help unpack the expected disruption related to it It looks like the hotels did about $14,000,000 in 2024 EBITDA.

Will be opened into May. But the anticipated disruption for $25,000,000 is about $17,000,000 Maybe you can help reconcile that.

Yes. I mean, certainly, our team does a good job of kind of digging in through all that to establish the disruption of numbers, but certainly shutting down the hotel, we still are carrying costs not only from a fixed cost standpoint, but we still have a manager in place that we to have maintain teams there as we look to kind of come back out and ramp back up. So it's just a factor of carrying costs through the rest of the year, Ari.

Okay, got it.

And then maybe just from a RevPAR guidance standpoint, it looks like group pace is up 6% for the year, BT is improving, leisure expected to grow low single digits, And the but the RevPAR guide is I guess, plus 1.5% at the midpoint.

Is that reflective of some conservatism on your part or is it maybe something else Yes.

I think as you think again as we're starting the year, it's early. We want to kind of establish ourselves in a way that we think we'll get understanding the business We've got about 80% or so of our kind of group forecast on the books.

Right now. And certainly, there's reach to get to on the group side and the transient side is obviously very short term in nature unpredictable. And we want to kind of just level set there. If things feel good, Right now, I think we've seen in the past things have have somewhat not come to fruition. And so I think we're just taking I think, a realistic tone here to start the year. But I would say, yes, I mean, business transient has been has been stronger of late. Group remains solid. Leisure I think, is again, continues to be a moderated segment, which is the largest segment in our demand pattern. So it's [indiscernible] low single digits, maybe even kind of flattish. So I think as we look at the outlook, and the predictability of the business, we comfortable with with the range we've given Thanks. If I could just squeeze in one last clarification, just on the 2020 top guidance. 2024 had some nonrecurring tax benefits. Is there anything like that or one timers in the '25 guide that we should be aware of?

No, nothing baked into that, all right. Thanks. Thank you. There are no further questions at this time. I would like to hand the floor back over to Tom Baltimore for any closing comments.

I appreciate everybody taking time today. We look forward to seeing many of you at the Citi Conference and safe travels And laser focused here at Park and excited about 2025 and and look forward to seeing many of you soon.

This concludes today's conference. May disconnect your lines at this time. Thank you for your participation.