PK Financial Analysis

Analysis Date: 1/29/2025

Business Model

Park Hotels & Resorts generates revenue primarily through owned hotel operations across rooms, food and beverage, and ancillary services

Revenue Sources

• Rooms revenue (62% of Q3 2024 revenue)
• Food and beverage revenue (24% of Q3 2024 revenue)
• Ancillary hotel revenue (10% of Q3 2024 revenue)
• Other revenue (4% of Q3 2024 revenue)

Revenue Distribution by Channel

• Group Revenue: Represents significant portion with 2024 pace up 9% year-over-year

Income Statement Analysis

• Operating income margin improved 210 bps to 14.6%
• Net income increased 83.9% to $57M despite revenue decline
• Total revenues decreased 4.4% primarily due to asset dispositions

Balance Sheet Analysis

• Strong liquidity position with over $1.4B available
• Net debt of $3.5B excluding San Francisco hotels in receivership

Cash Flow Analysis

• Strong operating cash flow performance
• Focused on debt management and strategic investments

Capital Allocation

Park maintains a balanced capital allocation strategy with focus on: 1) Strategic asset sales of non-core properties, 2) Share repurchases at discount to NAV ($35M in Q3), 3) Regular dividend payments ($0.25/share quarterly), 4) Investment in portfolio renovations ($230-250M planned for 2024)

Management Commentary

Q3 results aligned with expectations with stable second half outlook

Group revenue pace for 2024 up over 9% year-over-year

Strong liquidity position of over $1.4B

Labor union negotiations creating near-term uncertainty

Overall Sentiment: Cautiously optimistic with focus on operational execution and strategic initiatives

Recommendation

Rating: Hold

Reason for Rating: Balanced risk-reward with strong fundamentals offset by near-term headwinds

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/29/2025, 5:20:57 AM