Q3 2024 Park Hotels & Resorts Inc Earnings Call
Operator: Ladies and gentlemen, good morning and welcome to the Park Hotels & Resorts third quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded.
Ladies and gentlemen, good morning, and welcome to the Park hotels, <unk> resorts third quarter 'twenty 'twenty full earnings conference calls.
At this time all participants are in a listen only mode.
A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Ian Weissman: It is now my pleasure to introduce your host, Ian Weissman, Senior VP, Corporate Strategy. Please go ahead, sir. Thank you, operator, and welcome, everyone, to the Park Hotels & Resorts third quarter 2024 earnings call.
Speaker Change: It is now my pleasure to introduce your host Ian Weissman Senior VP corporate strategy. Please go ahead Sir.
Ian Weissman: Thank you.
Ian Weissman: The writer and welcome everyone to the park hotels, <unk> resorts third quarter 2024 earnings call.
Ian Weissman: 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 PARC with the SEC, specifically the most recent reports on Form 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statement.
Ian Weissman: Before we begin I would like to remind everyone that many of the comments made today.
Ian Weissman: Are considered forward looking statements under federal Securities laws.
Ian Weissman: 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.
Ian Weissman: Actual future performance outcomes and results may differ materially from those expressed in forward looking statements.
Ian Weissman: Please refer to the documents filed by park with the SEC specifically the most recent reports on Form 10-K, and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward looking statements.
Ian Weissman: In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO and adjusted EBITDA. You can find this information together with reconciliations for the most directly comparable GAAP financial measure in yesterday's earnings release, as well as in our 8K file with the SEC and the supplemental financial information available on our website at pkhotelsandresorts.com. Additionally, unless otherwise stated, all operating results will be presented on a comparable basis.
Ian Weissman: In addition on today's call, we will discuss certain non-GAAP financial information, such as <unk> and adjusted EBITDA.
Ian Weissman: 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 PK hotels and resorts Dot Com <unk>.
Ian Weissman: Additionally, unless otherwise stated all operating results will be presented on a comparable basis. This morning, Tom Baltimore, Our chairman and Chief Executive Officer will provide a review of park's third quarter performance and strategic initiatives, Shawn Dellorto, Our chief financial Officer will provide additional color.
Ian Weissman: This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will provide a review of Park's third-quarter performance and strategic initiatives. Sean DeLorto, our Chief Financial Officer, will provide additional color on third-quarter results and our fourth-quarter dividend.
Ian Weissman: On third quarter results and our fourth quarter dividend. Following our prepared remarks, we will open the call for questions with that I would like to turn the call over to Tom.
Ian Weissman: Following our prepared remarks, we will open the call for questions.
Ian Weissman: With that, I would like to turn the call over to Tom.
Tom Baltimore: Thank you, Ian. And welcome, everyone. I'm pleased to report another solid quarter. and Business Fundamentals Remain Healthy. We delivered a 3.3% REVBAR growth in the third quarter, despite transitory factors that disrupted demand in certain markets in August and September. Our portfolio's performance demonstrates strong capabilities of our team. And those of our operators who execute our business priorities while also adapting and responding to various challenges that presented themselves during the quarter. And for that, I am very proud and grateful. We experience healthy growth in group and business transient demand throughout the quarter. which helped to offset moderating leisure trends in some markets.
Tom Baltimore: Thank you Ian.
Tom Baltimore: And welcome everyone.
I'm pleased to report another solid quarter.
Tom Baltimore: Business fundamentals remained healthy.
Tom Baltimore: We delivered a 3.3% revpar growth in the third quarter despite.
Tom Baltimore: Detroit factors that disrupted demand in <unk>.
Tom Baltimore: Certain markets in August and September.
Tom Baltimore: Our portfolio's performance demonstrates.
Tom Baltimore: Wrong capabilities of our team.
Tom Baltimore: And those of our operators to execute our business priorities.
Tom Baltimore: While also adapting and responding to various challenges that presented themselves during the quarter.
Tom Baltimore: And for that I.
I'm very proud and grateful.
Tom Baltimore: We experienced healthy growth in group and business transient demand throughout the quarter.
Tom Baltimore: Which helped to offset moderating leisure trends in some markets and.
Tom Baltimore: and highlighted the diversification and continued strength. of our portfolio. Results were driven by strong convention calendars in several four urban markets, including Chicago, New Orleans, and Boston, which contributed to a combined REBPAR increase of 14%. This was further complemented by solid leisure trends across several resort markets, including Orlando, Miami, and San Diego, which collectively generated an 11% REBPAR growth during the quarter. We are particularly pleased with the results from our recent redevelopment projects in Orlando and Key West. Both of which are well positioned to benefit from healthy group and leisure trends and where our recently renovated Waldorf Astoria Orlando has been ranked ninth by Condé Nast Traveler in its prestigious 2024 Reader's Choice Awards for the best resorts in the world.
Tom Baltimore: And highlighted the diversification and continued strength.
Tom Baltimore: Of our portfolio.
Tom Baltimore: Results were driven by strong convention calendars in several four urban markets.
Tom Baltimore: <unk>, Chicago, New Orleans and Boston.
Tom Baltimore: Which contributed to a combined revpar increase of 14%.
Tom Baltimore: This was further complemented by solid leisure trends across several resort markets, including Orlando, Miami and San Diego.
Which collectively generated an 11% revpar growth during the quarter.
Tom Baltimore: We are particularly pleased with the results from our recent redevelopment projects in Orlando and key west.
Tom Baltimore: Both of which are well positioned to benefit from healthy group.
Tom Baltimore: And leisure trends and where our recently renovated Waldorf Astoria.
Tom Baltimore: Orlando has been ranked ninth.
Tom Baltimore: Ninth by <unk> Nast traveler in its prestigious 2020 for readers choice Awards for.
Tom Baltimore: So the best resorts in the World.
Tom Baltimore: These projects and accolades highlight Park's best-in-class design and development expertise. and our ability to unlock significant embedded value within our portfolio, which we anticipate will remain a strategic focus for Park Hotels & Resorts.
Tom Baltimore: These projects and accolades.
Tom Baltimore: I liked park's best in class design and development expertise.
Tom Baltimore: And our ability to unlock significant embedded value within our portfolio, which we anticipate will remain a strategic focus for park.
Tom Baltimore: over the next several years as we continue to reshape the portfolio and strive to generate strong returns.
Tom Baltimore: Over the next several years as we continue to reshape the portfolio and strive to generate strong returns.
Tom Baltimore: Looking ahead. We are actively exploring additional development opportunities in key markets such as Hawaii, Key West, Santa Barbara, and Miami. which have the potential to deliver attractive returns on invested capital, similar to our recently completed project. In Orlando, our Bonnet Creek Complex witnessed rep bar growth of 22% during the quarter, driven by solid group production as the larger meeting platform allowed the hotel to layer in several groups simultaneously, resulting in an incremental 12,000 group room nights over the prior period and representing the highest Q3 group rooms and banquet revenue in parks history at the complex, surpassing the property's previous high water marks.
Looking ahead.
Tom Baltimore: We are actively exploring additional development opportunities in key markets such as Hawaii.
Tom Baltimore: The west Santa Barbara and Miami.
Tom Baltimore: Which have the potential to deliver.
Tom Baltimore: Attractive returns on invested capital similar to our recently completed projects.
Tom Baltimore: In Orlando, our Bonnet Creek complex witness revpar growth of 22% during the quarter driven by solid group production is a larger meeting platform allowed the hotel to layer in several groups simultaneously, resulting in an incremental 12000 group room nights over the prior period.
Tom Baltimore: And representing the highest Q3 group rooms, and banquet revenue and parks history at the complex.
Tom Baltimore: Passing their properties previous high watermarks.
Tom Baltimore: 2016 and 2015, respectively. in Key West. RIPPAR growth was 130% for the quarter, driven by our Casa Marina Resort Hotel, lap renovation displacement, fire year period. Looking ahead to Q4, both of our Key West hotels are expected to pace ahead of 2023, with Casa Marina continuing to see positive effects from the comprehensive renovation, while The Reach Projected to achieve mid-single-digit revenue growth due to an anticipated increase in occupancy. In Miami, operating trends remain strong as we continue to witness healthy group and leisure demand trends with REVPAR growth up over 7%. We expect this momentum to continue into the fourth quarter.
Tom Baltimore: 2016, and 2015, respectively.
Tom Baltimore: In key West Revpar growth was 130% for the quarter driven by our Casa Marina Resort hotel lapped renovation displacement.
Tom Baltimore: Your period.
Tom Baltimore: Looking ahead to Q4, both of our key West hotels are expected to pace ahead of 2023.
Tom Baltimore: Our Casa Marina continuing to see positive effects on the comprehensive renovation while the reach.
Tom Baltimore: <unk> to achieve mid single digit revenue growth due to an anticipated increase in occupancy.
Tom Baltimore: And Miami operating trends remained strong as we continue to witness healthy group and leisure demand trends with Revpar growth.
Tom Baltimore: Up over 7% we.
Tom Baltimore: We expect this momentum to continue into the fourth quarter.
Tom Baltimore: The hotel forecasted to post mid-single-digit REBPAR gains, driven by a robust The convention is scheduled in October and strong leisure transient demand during the holiday season.
Tom Baltimore: The hotel forecasted to post mid single digit Revpar gains.
Tom Baltimore: By a robust convention schedule in October and strong leisure transient demand during the holiday season.
Tom Baltimore: In New Orleans. Market hosted 8 citywide events during the quarter compared to none in the prior year, contributing to a nearly $5 million increase in group room revenues and $2 million of banquet and catering revenue at our Hilton Riverside Hotel during the quarter, driving an almost 8-point increase in occupancy. In Chicago, a healthy convention calendar, including the Democratic National Convention held in August, led to performance exceeding expectations, with the Hilton Chicago recording an impressive 20% increase in rev par for the quarter. As a hotel capitalized on citywide and in-house events, drive a 36% surge in group room revenue.
Tom Baltimore: In New Orleans.
Tom Baltimore: Market hosted eight citywide events during the quarter compared to none in the prior year contributing to a nearly $5 million increase in group room revenues.
And at $2 million of banquet and catering revenue at our Hilton Riverside Hotel during the quarter.
Tom Baltimore: Driving an almost eight point increase in occupancy.
Tom Baltimore: In Chicago, a healthy convention calendar, including the Democratic National Convention held in August but.
Tom Baltimore: Two performance exceeding expectations.
Tom Baltimore: Hilton Chicago recording an impressive 20% increase in revpar for the quarter.
Tom Baltimore: So hotel capitalize on citywide and in house events.
Tom Baltimore: Drive a 36% surge in group room revenue.
Tom Baltimore: Finally, in Boston, the market benefited from five citywide events during the quarter, translating into 25 compression nights, which helped to drive 14% REVPAR growth at our Hyatt Regency Boston Hotel. As a segment, the group continued to strengthen this quarter, with revenue increasing nearly 13% year-over-year to approximately $110 million, coupled Strong Banquet and Catering Revenue. Improvement of 9%. 2024 group revenue pace is up over 9%. This is a 2024 pickup in the year for the year, reaching nearly 100,000 room nights during the quarter, accounting for $10 million of incremental group revenue recognized in the third quarter, and $13 million of incremental group revenue anticipated in the fourth quarter.
Tom Baltimore: Finally in Boston market benefited from five citywide events during the quarter.
Tom Baltimore: Leading into 25 compression nights.
Tom Baltimore: Which helped to drive 14% Revpar growth at our Hyatt Regency Boston Hotel.
Tom Baltimore: As a segment group continue to strengthen this quarter with revenue, increasing nearly 13% year over year to approximately $110 million.
Tom Baltimore: Coupled.
Strong banquet and catering revenue.
Tom Baltimore: Improvement of 9%.
Tom Baltimore: 2020 for group revenue pace is up over 9%.
Tom Baltimore: For 2020 for pick up in the year for the year, reaching nearly 100000 room nights during the quarter accounting for $10 million of incremental group revenue recognized in the third quarter.
Tom Baltimore: $13 million of incremental group revenue anticipated in the fourth quarter.
Tom Baltimore: Looking ahead to 2025. Group revenue pace continues to be up in the mid to upper single-digit range. Led by Double-Digit Gains in Orlando, Denver. Key West and San Francisco, while Pace at our Hilton Waikoloa Resort is up nearly 80% versus the same time last year. We are also encouraged with the booking windows further extending into the future. 2026 PACE, currently up 10%.
Tom Baltimore: Looking ahead to 2025.
Tom Baltimore: Group revenue pace continues to be up in the mid to upper single digit range.
Tom Baltimore: Led by double digit gains in Orlando Denver.
Tom Baltimore: West and San Francisco, well pace at our Hilton Weka lower resort.
Tom Baltimore: Nearly 80% versus same time last year.
We're also encouraged with the booking windows further extending into the future.
Tom Baltimore: 126 pace currently up 10%.
Tom Baltimore: Turning to Hawaii. Q3 REVPAR declined by a combined 8% at our two Hawaii hotels, with results negatively impacted by several factors, including disruption from labor strikes at Hilton Hawaiian Village. Tough year-over-year comparisons at Hilton Waikoloa. Disruption of multi-phase room renovations at both hotels. In addition, inbound travel from Japan during the quarter was further hampered by three severe weather events in August. which led to widespread flight cancellations, travel disruptions across Japan, and a 17% decline of inbound travel from Japan during the month. Overall, we have been encouraged by the pace of improvement in Japanese travel prior to these storms, averaging over 50% year-to-date.
Tom Baltimore: Turning to Hawaii.
Tom Baltimore: Q3, Revpar declined by a combined 8% at our two Hawaii hotels with results negatively impacted by several factors, including disruption from labor strikes at Hilton Hawaiian village.
Tom Baltimore: Year over year comparisons at Hilton Wyck Aloha.
Tom Baltimore: Disruption multiphase room renovations at both hotels.
Tom Baltimore: In addition.
Tom Baltimore: Inbound travel from Japan during the quarter was further hampered by three severe weather events in August.
Tom Baltimore: Which led to widespread flight cancellations travel disruptions across Japan, and a 17% decline of inbound travel from Pan during the month.
Overall, we had been encouraged by the pace of improvement in Japanese travel prior to the storms, averaging over 50% year to date.
Tom Baltimore: Through July.
Tom Baltimore: Through July.
Tom Baltimore: From a capital allocation perspective, we remain laser-focused on our strategic priorities to dispose of non-core assets and recycle capital to unlock the significant embedded value in our core portfolio through a creative ROI investment. while also opportunistically buying back stock at historically deep discounts to net asset value. during the third quarter. Opposed of two non-core assets, the Hilton La Jolla, Torrey Pines. And at Hilton Oakland Airport, we continue to reshape the portfolio and enhance our long-term growth profile. Sale of Torrey Pines closed in July, generated our pro-rata share of gross sale proceeds of over $40 million.
Tom Baltimore: From a capital allocation perspective.
Tom Baltimore: We remain laser focused on our strategic priorities to dispose of non core assets and recycle capital to unlock the significant embedded value in our core portfolio through accretive ROI investments.
Tom Baltimore: Also opportunistically buying back stock that historically keep discounts to net asset value.
Tom Baltimore: During the third quarter.
Posed of two noncore assets to Hilton La Jolla Torrey Pines.
Tom Baltimore: Hilton the Oakland Airport, we continue to reshape the portfolio.
Tom Baltimore: And enhance our long term growth profile.
Tom Baltimore: Sale of Torrey Pines closed in July generated our pro rata share of gross sale proceeds of over $40 million and.
Tom Baltimore: and represented a nearly 12-times gross multiple on 2023 EBITDA. Additionally, transaction helped to further improve our balance sheet, with our unconsolidated debt balance reduced by approximately $17 million, while net proceeds were used to partially fund repurchase of 2.5 million shares of our common stock. You're in the third quarter for $35 million.
Tom Baltimore: It represented a nearly 12 times gross multiple on 2023 EBITDA.
Additionally transaction helped to further improve our balance sheet.
Tom Baltimore: Our unconsolidated debt balance reduced by approximately $17 million, while net proceeds were used to partially fund the repurchase of two and a half million shares of our common stock.
During the third quarter with $35 million.
Tom Baltimore: With respect to the Hilton Oakland Airport Hotel, in late August, we permanently closed the hotel, non-core asset with less than 10 years remaining on a ground level. Oakland remains a very challenged market, with the hotel recognizing $3 million loss over the trailing 12 months. A reporting REV PAR of just $68. Closure is expected to result in a positive $1 million impact to earnings during the fourth quarter, while adding approximately $2 to nominal REV PAR and 30 basis points to hotel-adjusted EBITDA. on an annualized basis.
Tom Baltimore: With respect to the Hilton Oakland Airport Hotel.
Tom Baltimore: In late August we permanently closed the hotel.
Tom Baltimore: Noncore asset with less than 10 years remaining on our ground lease.
Tom Baltimore: Oakland remains a very challenged market with the hotel recognizing $3 million loss over the trailing 12 months.
Tom Baltimore: Our reporting Revpar of just $68.
Tom Baltimore: Closure is expected to result in.
Tom Baltimore: A positive $1 million impact to earnings during the fourth quarter, while adding.
Tom Baltimore: Approximately $2 nominal revpar.
Tom Baltimore: And 30 basis points of hotel adjusted EBITDA.
Tom Baltimore: On an annualized basis.
Tom Baltimore: In addition, during the third quarter, We commenced over $200 million of comprehensive guest room renovations at the iconic Rainbow Tower at the Hilton Hawaiian Village. Palace Tower at Hilton Waikoloa, and Main Tower at the Hilton New Orleans Riverside. Phase 1 of 2 for both Hawaii renovations is expected to be completed by Q1 2025. While Phase I of the room's renovation in New Orleans Expected to be completed in Q4 of this year and ahead of the Super Bowl in February 2025. We are particularly excited about the potential impact reimagined rooms are expected to have on our results.
Tom Baltimore: In addition, during the third quarter.
Tom Baltimore: We commenced over $200 million of comprehensive Guestroom guestroom renovations at the iconic Rainbow tower at the Hilton Hawaiian village.
Tom Baltimore: Palace tower at Hilton why Koloa, the main tower at the Hilton New Orleans Riverside.
Tom Baltimore: Phase one or two for both Hawaii renovations is expected to be completed by Q1 2025.
Tom Baltimore: Phase one of the rooms renovation in New Orleans.
Tom Baltimore: It would be completed in Q4 of this year and ahead of the Super Bowl in February 2025.
We are particularly excited about the potential impact re imagined rooms are expected to have on our results.
Tom Baltimore: especially in Hawaii. A recent successful renovation of the 1,000-room Tapa Tower at Hilton Hawaiian Village delivered a significant ADR premium compared to other resort room types once it was back online.
Tom Baltimore: Especially in Hawaii.
Tom Baltimore: Our recent successful renovation of the 1000 room Tapa tower at Hilton.
Tom Baltimore: Hawaiian village delivered a significant ADR premium compared to other resort room types. Once it was back online.
Tom Baltimore: Turning to Guidance. due to the uncertainty surrounding continuing negotiations between our operators and labor unions. The Related Impacts on Operating Results. which are not factored into our prior guidance. We are not in a position to update full year 2024 REBPAR and EBITDA guidance at this time. Our operators continue to work toward reasonable solutions that are in the best interest of all parties. Once the appropriate agreements have been ratified, We have a better understanding of the impacts. We will provide a financial update. including an update on Earnings Guided. I want to emphasize that we continue to be confident.
Tom Baltimore: Turning to guidance.
Due to the uncertainty surrounding continuing negotiations between our operators and labor unions.
Tom Baltimore: And the related impacts on operating results.
Tom Baltimore: Which are not factored into our prior guidance we.
Tom Baltimore: We are not in a position to update full year 2020 for Revpar and EBITDA guidance at this time.
Tom Baltimore: Our operators continue to work toward reasonable solutions that are in the best interest of all parties.
Tom Baltimore: Once the appropriate agreements have been ratified.
A better understanding of the impacts we will provide a financial update.
Tom Baltimore: Putting an update on earnings guidance.
Tom Baltimore: I want to emphasize that we continue to be confident.
Tom Baltimore: The core strength of both business and leisure demand trends. throughout the balance of the portfolio. With year-to-date 2024 REVPAR up 4.3% despite some of the challenges we faced towards the end of the third quarter.
Tom Baltimore: A core strength of both business and leisure demand trends.
Tom Baltimore: Throughout the balance of the portfolio.
Tom Baltimore: With year to date 2020 for Revpar up 4.3%.
Tom Baltimore: Right some of the challenges we faced.
Tom Baltimore: Towards the end of the third quarter.
Tom Baltimore: As we look ahead to 2025, we expect to continue aggressively pruning our non-core portfolio. Proceeds expected to be used to buy back our common stock and fund our growing development and renovation pipeline.
Tom Baltimore: As we look ahead to 2025.
Tom Baltimore: Expect to continue aggressively pruning noncore portfolio.
Tom Baltimore: Proceeds expected to be used to buy back our common stock and fund our growing development and renovation pipeline.
Tom Baltimore: In closing... We believe. There is simply no better use of our capital. and reinvesting it back into our portfolio at returns that far exceed acquisition yields to create long-term value for shareholders.
Tom Baltimore: In closing.
Tom Baltimore: We believe.
Tom Baltimore: There is simply no better use of our capital.
And reinvesting it back into our portfolio at returns that far exceed acquisition yields to create long term value for shareholders.
Sean DeLorto: With that, we'll turn the call over to Sean. Thanks, Tom. Q3 REBPAR for the portfolio was approximately $190, representing year-over-year growth of 3.3%, with occupancy gaining 2.5 percentage points and rates flat year-over-year at $243. When adjusting for roughly 70 basis points of disruption from Hurricane Helene and labor strike activity, REBPAR growth for the quarter would have been 4.0%. Similar activity has impacted October, with RevPAR growth disrupted by Hurricane Milton by roughly 80 basis points. Adjusting for this disruption, we anticipate RevPAR will be relatively flat for the month, despite additional headwinds stemming from the holiday calendar shift and ongoing strike activity at certain hotels for a majority of the month, which were offset by solid performance elsewhere in the resort and urban portfolios.
Speaker Change: With that I'll turn the call over to Sean.
Thanks, Tom.
Sean: Q3, Revpar for the portfolio was approximately $190 representing year over year growth of three 3% with occupancy gaining two five percentage points and rates flat year over year at $243.
Sean: When adjusting for roughly 70 basis points of disruption from Hurricane Helene and labor strike activity Revpar growth for the quarter would have been 4.0%.
Similar activity Hasnt packet October with Revpar growth disrupted by Hurricane Milton by roughly 80 basis points adjusting for this disruption we anticipate revpar will be will be relatively flat for the month. Despite additional headwinds stemming from the holiday calendar shift and ongoing strike activity at certain hotels for a majority of the month, which were offset.
Sean: Solid performance elsewhere in the resort in urban portfolios.
Sean DeLorto: Total RepR for the third quarter increased by 3.8%, driven mostly by a 4.4% increase in F&B revenue as group-driven banquet and catering revenue increased nearly 9%. Hotel revenue was $625 million during the quarter, and hotel-adjusted EBITDA was $170 million, resulting in a nearly 27.2% hotel-adjusted EBITDA margin. Note that the year-over-year margin comparison was negatively impacted by nearly $8 million of property tax benefits and relief grants received last year, in addition to nearly $4 million of hurricane and labor strike disruption in the third quarter of this year. Excluding these items, hotel adjusted even a margin would have been comparable year over year.
Sean: Total revpar for the third quarter increased by three 8% driven mostly by a four 4% increase in F&B revenue as group driven banquet and catering revenue increased nearly 9%.
Sean: Hotel revenue was $625 million during the quarter and hotel adjusted EBITDA was $170 million, resulting in a nearly 27, 2% hotel adjusted EBITDA margin.
Sean: Note that the year over year margin comparison was negatively impacted by nearly $8 million of property tax benefits and relief grants received last year in.
Sean: In addition to nearly $4 million of Hurricane and labor strike disruption in the third quarter of this year.
Sean: These items hotel adjusted EBITDA margin would have been comparable year over year.
Sean DeLorto: With respect to Hurricanes Helene and Milton, our hotels located in Key West, Miami and Orlando remain fully operational while sustaining minimal damage and business interruption. Overall, we estimate the total impact from both hurricanes to account for roughly $2 to $3 million of hotel-adjusted EBITDA disruption, with most of the impact occurring in Q4. With respect to our dividend, on October 15th, we paid our third-quarter cash dividend of $0.25 per share and anticipate paying a fourth-quarter dividend, which is subject to Board approval, in accordance with our typical practice of targeting 65% to 70% of our full-year adjusted FFO per share, comprised of a $0.25 fixed quarterly component plus a to-be-determined annual top-off component to meet our target.
With respect to hurricane to lean in Milton our hotels located in key West Miami, and Orlando remained fully operational while sustaining minimal damage and business interruption.
Sean: Overall, we estimate the total impact from both Hurricanes to account for roughly $2 million to $3 million of hotel adjusted EBITDA disruption with most of the impact occurring in Q4.
Sean: With respect to our dividend on October 15, we paid our third quarter cash dividend of 25 per share and anticipate paying a fourth quarter dividend, which is subject to board approval in accordance with our typical practice of targeting 65% to 70% of our full year adjusted <unk> per share comprised of a <unk>.
Sean: Five fixed quarterly component plus a to be determined annual top off component to meet our target.
Operator: This concludes our prepared remarks. We will now open the line for Q&A. To address each of your questions, we ask that you limit yourself to one question and one follow-up. Operator, may we have the first question, please? Thank you. Ladies and gentlemen, we will now be conducting a question-answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
This concludes our prepared remarks, we will now open the line for Q&A to address each of your questions. We ask that you limit yourself to one question and one follow up operator may we have the first question. Please.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, I'll, even in I'll be conducting a question answer session.
Speaker Change: If you'd like to ask a question. Please press star and one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Speaker Change: You May press star two if you'd like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the stock east.
Operator: Ladies and gentlemen, we will wait for a moment while we poll for questions.
Speaker Change: Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Smedes Rose: The first question comes from the line of Smedes Rose from Citibank. Please go ahead. Hi, good morning. I wanted to ask just a little bit more, probably predictably, about Hawaii. You saw REVPAR down 8% across the two properties. I think on your second quarter call, you had talked about maybe more like 2% to 3% down in the second half, and you mentioned a few things that went on in the quarter.
Speaker Change: The first question comes from the line of Smedes Rose from Citibank. Please go ahead.
Speaker Change: Hi, good morning.
Smedes Rose: Just ask a little bit high I wanted to ask just a little bit more you know probably predictably about Hawaii, you saw revpar down 8% across the two properties I think on your second quarter call. You had talked about you need maybe more like 2% to 3% down in the second half and you mentioned a few things that went on in the quarter, but could you just sort of maybe.
Tom Baltimore: But could you just maybe talk a little bit more about what you were seeing sort of on an underlying basis for leisure demand into Hawaii and how you're thinking about it kind of going forward over the next several quarters, putting aside the strike? I'd make a couple observations, Smedes. Obviously, we were lapping what happened in Maui. We certainly had gotten benefit there. We knew, as you think about Hilton Waikoloa, obviously that was going to be really a tough comp. And so we obviously expected that to be choppy. I mean, obviously, given what happened with weather-related and Japanese travel, I clearly did not expect that as we talked about it in the last call.
Smedes Rose: Talk a little bit more about what you were seeing sort of on an underlying basis for leisure demand and into Hawaii, and how you were thinking about it kind of going forward over the next several quarters, putting aside the strike.
Smedes Rose: Right.
Speaker Change: I'd make a couple of observations made some.
Obviously, we were lapping.
Speaker Change: What happened in Maui, we certainly have gotten benefit there we knew.
Speaker Change: As you think about Hilton like Aloha, obviously that was going to be really a tough comp.
Speaker Change: So we obviously expect that to be choppy I mean, obviously, given what happened with weather related and in Japanese travel clearly did not expect that as we as we've talked about it in the last call.
Tom Baltimore: We remain very bullish on Hawaii long-term. I think if you look over the last 20 years, Oahu's REBPAR growth is... We've sort of outpaced the U.S. by nearly 300 basis points, and I think while exceeding kind of other resort markets by about 150 bps. So I think the U.S. KGAR is about 2%, and Oahu is north of 5%. So this is, in our view, temporary and transitory.
Speaker Change: We remain very bullish on on Hawaii, our long term.
Speaker Change: I think if you look over the last 20 years Wahoo is a revpar growth is.
Speaker Change: Sort of outpaced the U S by nearly 300 basis points.
Speaker Change: I think well exceeding kind of other resort markets by about 150 bps. So I think the U S. A CAGR is about 2% and in Oahu is north of 5%. So.
Speaker Change: This is in our view.
Speaker Change: The temporary and transitory.
Tom Baltimore: We certainly don't see anything that alarms us in terms of the underlying fundamentals. Obviously, the other matter, obviously, we've, you know, I've addressed that in my prepared remarks.
Speaker Change: We certainly don't see anything that alarms us in terms of the underlying fundamentals I'm obviously, the other matter. Obviously, we've you know I've I've addressed that in my prepared remarks.
Tom Baltimore: Okay, so just to be clear, I mean, it sounds like the difference relative to prior expectations is really driven by weather events in Japan that impacted Japanese travel, but you're not seeing anything that would concern you around kind of the state of the US-based kind of leisure demand relative to whatever your expectations were. We are not. You know, we expected at the last call that visitation would be about 770,000, up from 600,000 last year in terms of overall Japanese visitation. I think now that's come down a little bit. I think largely, you know, given the weather-related and the cancellations, down to about 720,000, so that's still about 22 percent over last year, and it's still about 54 percent below 2019, so, you know, we expect to probably get back to pre-pandemic in 2026, 2027, based on current forecast right now.
Speaker Change: Okay. So just to be clear I mean, it sounds like so the difference relative to prior expectations is really driven by weather events in Japan that ended that impacted Japanese travel, but you're not seeing anything that would concern you around kind of the state of the U S states kind of leisure demand relative to whatever your expectations were.
We are not we expected at the last call that visitation would be about 770000.
Speaker Change: Up from 600000 last year in terms of overall Japanese visitation I think now that's that's come down a little bit I think largely you know given the weather related and the cancellations down to about 720000. So that's still about 22% over last year and it's still about 54% below two.
Smedes Rose: 2019, Smedes. So you know, we expect to probably get back to pre pandemic and 'twenty 'twenty six 2020 seven based on current forecast right now.
Tom Baltimore: In Smedes, I would add, you know, we talked about demand, but you also had Hurricane Hone that came through and I think more so impacted Big Island, some of that hurricane activity that was more specific to Hawaii that was disruptive in August as well. So we looked at inbound flights that were tracking, at least in the Honolulu, on average about 10% each month, year over year, and ultimately dropped to about 3% in August. So you can see some of that activity, some of that disruption from weather impacting the market.
Speaker Change: And Smedes I would add you know we've talked about and but you also had hurricane huni that came through and I think more so impacted big island from the hurricane activity that was more specific to Hawaii that was disruptive in August as well. So we looked at inbound flights they were tracking at least in the Honolulu.
Speaker Change: On average about 10% each month, a year over year and ultimately dropped about 3% in August. So you can see some of that activity some of that disruption from weather impacting the market.
Smedes Rose: Okay. Thanks, Mike.
Smedes Rose: Thank you.
Smedes Rose: Walk them all with these hurricanes, but thank you.
Speaker Change: Appreciate your comments.
Speaker Change: Thank you.
Speaker Change: Thank you.
Floris van Dijkum: The next question is from the line of Floris van Dijkum from Compass Point. Please go ahead. Hey guys, um...
Speaker Change: The next question is from the line of Florida Vandyken from Compass point. Please go ahead.
Speaker Change: Hey, guys.
Tom Baltimore: Hey, I'm going to ask a little bit about the elephant in the room. I know that you're limited maybe in what you can you can talk about, but is the hotel taking bookings? Hawaii Village, I'm talking about, and how quickly can it ramp up should, you know, negotiations get settled, and how quickly before EBITDA starts to come online there, and, you know, your best estimate? First of all, the hotel has never, never closed and it's continued to provide services to guests and so that hasn't been an issue at all. I think, as I said in the prepared remarks, obviously due to the uncertainty surrounding the continuing negotiations between our operators and the labor unions.
Speaker Change: Hey.
Speaker Change: Ask a little bit about the elephant in the room I know that you're.
Florida Vandyken: Limited maybe even what you can you can talk about but is the hotel taking bookings.
Florida Vandyken: Hawaiian village I'm talking about and how quickly can it ramp up should you know negotiations get settled in and how quickly before it before EBITDA starts to come online there in your your best estimate.
Speaker Change: Hum of course first of all the hotel is never never closed and it's continued to provide.
Speaker Change: Services to guests and so that that hasn't been an issue at all.
Speaker Change: I think as I as I said in the prepared remarks, obviously due to the uncertainty surrounding the continuing negotiations between.
Speaker Change: Our operators and are in the labor unions.
Tom Baltimore: We're just not in a position to update guidance or provide any of those details at this time. The appropriate agreements have been negotiated and ratified. We'll have a better understanding of the impact and certainly provide an update at that time. But rest assured that the Hilton Hawaiian Village has remained open during the strike.
Speaker Change: We're just not in a position to update guidance or provide any of those details at this time.
As soon as well.
Speaker Change: The appropriate agreements have been negotiated and ratified them you know, we'll have a better understanding of the impact in.
Speaker Change: And certainly.
Provide an update at that time, but rest assured that the Hilton Hawaiian village has remained open during the strike.
Tom Baltimore: And then I guess the follow-up question is, does this, how, you still have, you know, call it 14, based on our estimates, 14 non-core hotels. Does this make you evaluate your, or maybe accelerate some of your plans to dispose of those hotels, or is that dependent on the capital markets activity and the financing availability for potential buyers as you think about, you know, focusing more on your top 25 motels? It's a great question, Floris. I mean, I think we've demonstrated we are laser-focused on really continuing to reshape the portfolio. Just to remind listeners, obviously, since the spin now, we have sold or disposed of 44 assets for nearly $3 billion, and it's obviously a much stronger portfolio, but we still have another 14 assets, plus or minus, that are non-core, and we will continue to work aggressively to really recycle that capital.
And then I guess as a follow up question is does this.
Speaker Change: How are you still have you know call. It four team based on our estimate 14 noncore hotels does this make you evaluate your or maybe accelerate some of your plans to.
Speaker Change: Dispose of those hotels or does that is that dependent on the capital markets activity and the financing availability for potential buyers are as you as you think about you know focusing more on your on your top 25 hotels.
Speaker Change: Yes, it's a great question Floris I mean, I think we've demonstrated we are we are laser focused on.
Speaker Change: Continuing to reshape the portfolio just to remind listeners obviously since the spin now we have sold or disposed of.
Speaker Change: 44 assets for nearly $3 billion and it's obviously a much stronger portfolio, but we still have another 14 assets plus or minus that are that are not that are noncore and we will continue to work aggressively to.
Speaker Change: Really recycle that capital and as I as I said in the prepared remarks and in our view there's nothing.
Tom Baltimore: And as I said in the prepared remarks, in our view, there's nothing that can create more value than really investing back into our portfolio. And, you know, as you think about kind of the Casa Marina as an example and the extraordinary work done there, we're expecting EBITDA this year at about $30 million, plus or minus, and that's about 35% over the pre-pandemic high-water mark, and this is in the first year. Obviously, Bonnet Creek is – just given the award we've gotten regarding the Waldorf, just given the growth potential there, we remain very bullish on our core portfolio, and we remain bullish on Hawaii and certainly adding another tower at Hilton Hawaiian Village.
Speaker Change: And that can create more value than really investing back into our portfolio and you know as you think about kind of a cast of marine as an example, and the extraordinary work down there we're expecting EBITDA this year at about 30.
Speaker Change: $30 million, plus or minus and that's about 35% over the pre pandemic high watermark.
Speaker Change: And that this is in the first year, obviously Bonnet Creek is.
Speaker Change: Because given the award we've gotten regarding the Waldorf just given the growth potential there.
Speaker Change: We remain very bullish on our core portfolio and we remain bullish on Hawaii, and and certainly adding another tower at Hilton Hawaiian village, we look forward to adding another 200 keys plus or minus at Hilton like Aloha, which were already entitled to do in a cup.
Tom Baltimore: We look forward to adding another 200 keys, plus or minus, at Hilton Waikoloa, which we're already entitled to do, and coupled with adding additional supply and product at the Hilton Santa Barbara, and then really a complete transformation of the Royal Palm in Miami. So we just think that there's tremendous upside for shareholders and value to be created, and it's all embedded within this core portfolio.
Coupled with adding additional supply and in product that the Hilton Santa Barbara and then really a complete transformation of the Royal Palm and Miami. So we just think that there's tremendous upside for shareholders.
Speaker Change: And value to be created and it's all embedded within this core portfolio.
Tom Baltimore: Thanks, Tom. Thank you.
Speaker Change: Thanks, Tom.
Tom Baltimore: Thank you.
Duane Pfennigwerth: The next question is from the line of Duane Pfennigwerth from Evercoil ISI, please go ahead. Hey, thank you. Just on group pace for next year, I wonder if you could go into more detail on the key markets you think would outperform, key markets that you think would lag, and any sense for the composition of the types of groups that are driving the improvement. As you know, we had a really strong group performance this year, up about 9%. Obviously, Waikoloa and Bonnet Creek, obviously, have been strong. Clearly, what we've seen, obviously, in Chicago and New Orleans, obviously, also been very strong as well.
Speaker Change: The next question is from the line of Duane <unk> from Evercore ISI. Please go ahead.
Speaker Change: Hey, Thank you.
Duane <unk>: Just on group pace for for next year I'm wondering if you could go into more detail on our key markets. Do you think would would outperform key markets that you think would lag and any any sense for the composition of the types of groups that are that are driving the improvement.
No.
Duane <unk>: As you know we had a.
Duane <unk>: Oh really strong.
Duane <unk>: Group performance this year up about 9%, obviously, Oh, why Colo and Bonnet Creek, obviously have been they've been strong.
Clearly, what we've seen obviously in Chicago and New Orleans.
She also had been very strong as well and you know as we sort of look out next year.
Tom Baltimore: And, you know, as we sort of look out next year, you know, as we said in prepared remarks, sort of that mid to high single digits, I'd say we're probably 5% to 7% right now. There are a number of tentatives, so we think that's certainly going to improve. As we think about those markets, obviously, Hilton Hawaiian Village, Hilton Waikoloa, excuse me, which was down 44%, I believe, this year. We're looking at the group pace being up almost 77% next year, which is going to be very, very encouraging for us as we look out. Denver looks strong.
Duane <unk>: We're as we said in prepared remarks sort of that mid to high single digits I'd say, we're probably 5% to 7% right. Now there are a number of tentative. So we think that's certainly going to improve as we go.
Duane <unk>: [noise] about those those markets, obviously Hilton Hawaiian village Hilton Weicker lowest excuse me, which was down 44% I believe this year, we're looking at the group pace being up almost 77% next year, which is going to be very very encouraging for us is as we look at our Denver looks strong.
Tom Baltimore: Bonnet Creek continues to be strong. Probably Waikoloa, I think, was in the mid-40s. I think overall we're looking at probably mid to high teens in terms of growth pace there. Mid single digits for New York Midtown. Even San Francisco, as we think about the Union Square property there, looks to be in the 25% to 30% increase. So still very, very encouraged by that. Thanks, Tom.
Duane <unk>: Bonnet Creek continues to be a.
Duane <unk>: Strong probably like low I think it was in the mid.
Duane <unk>: Mid Forty's I think overall, we're looking at probably a mid to high teens in terms of growth pace there.
Mid single digits for New York Midtown.
Duane <unk>: Even San Francisco, So we think about the Union square property there.
Duane <unk>: It looks to be in the 25% to 30% increase so still very very encouraged by that and as you also think about 2026, we're already looking at a group pace, it's up about 10%. There. So very encouraged when you think about our portfolio and I think a real strength of our portfolio Dwayne.
Smedes Rose: Thanks, Tom and maybe just to come back to Orlando can you help frame you know the performance that you're seeing versus maybe a pre renovation.
Tom Baltimore: And maybe just to come back to Orlando, can you help frame, you know, the performance that you're seeing versus maybe a pre-renovation baseline? I don't know if you have it handy, and I don't want to put you on the spot, but like a REVPAR index improvement that you may be realizing relative to, you know, pre-reno or maybe 2019? And thanks for taking the question. Yeah, I'll take a stab. Let me just talk about kind of Orlando overall and then regarding the REVPAR index. I don't have that. Perhaps Sean has that. But when you think about Orlando, I mean, you've got, I think, last year about 74 million visitors.
Baseline I don't I don't know if you have it handy and I don't want to put you on the spot, but like our Revpar index improvement that you maybe realizing relative to you know pre reno or or maybe 2019 and thanks for taking the questions.
Speaker Change: Yeah, Oh, I'll take a stab and let me just talk about kind of Orlando overall, and then regarding the rep. The Revpar index I don't have that perhaps Sean Sean has that but when you think about Orlando I mean, you've got I think last year about 74 million visitors.
Tom Baltimore: If you think about Vegas, it's probably in the mid-40 range. And you think about Epic Universal and their own record, I think, of about a $5 billion investment, plus or minus. That's opening in the spring of next year. Obviously, Disney's talked about spending another $60 billion over the next 10 years, plus or minus. So we are very, very bullish on Orlando long-term. If you think about city-wise, this year there were about 98 city-wise for about 1.1 million room nights. I think next year, while fewer events, an increase of about 8% in room nights to about almost 1.2 million, plus or minus.
If you think about Vegas is probably in the mid 40 range.
Smedes Rose: And you think about epic universal and their own record I think of about a $5 billion investment plus or minus that's opening in the spring of next year, obviously Disney's talked about spur.
Smedes Rose: Spending another 60 billion over over the next 10 years plus or minus so we are very very bullish on Orlando long term you should think about the city Wides. This year. There were about 98 city Wides for about $1 1 million room nights I think next year, while fewer events and increase.
Smedes Rose: <unk> of.
Of about 8% in room nights to about almost $1 2 million plus or minus so very very bullish and we think obviously as we saw in third quarter, given the size and adding another 100000 square feet of meeting space and Multifunction space. It allows us to simultaneously layer.
Tom Baltimore: So very, very bullish. And we think, obviously, as we saw in third quarter, given the size and adding another 100,000 square feet of meeting space and multifunction space, it allows us to simultaneously layer in multiple groups, coupled with a world-class golf course and all of the other resort amenities, and proximate to both Disney and Universal. We are very, very bullish on Orlando, both in the near-term and in the long-term. Thank you.
Smedes Rose: In multiple groups, coupled with a world class Golf course, and all of the other resort amenities and proximity to both Disney and Universal.
Smedes Rose: We're very very bullish on on Orlando, both in the near term and in the long term.
Thank you.
Smedes Rose: Yeah.
Smedes Rose: Thank you.
Dany Asad: The next question comes from the line of Dany Asad from Bank of America. Please go ahead. Hi. Good morning, everybody.
Speaker Change: The next question comes from the line of Danny I said from Bank of America. Please go ahead.
Speaker Change: Hi, good morning, everybody.
Sean DeLorto: Tom or Sean, when we look at 2025, can you share any insight with us on how your large corporate accounts are shaping up? We've heard from airlines calling out stronger large corporates heading into next year. So just curious to see what you guys. Yeah, I mean, it's always a little tricky. We're kind of, I think, in that season right now, Danny, and I also say a lot of the contracts over time, you know, have gone from kind of just doing your typical, your historical fixed, hey, let's increase it 4 or 5 percent to more dynamic pricing, such that it's more just a percentage of bar driving it.
Hey, Tom and Sean when we look at 2025 can you share any insight with us on how you.
Speaker Change: Very large corporate accounts are shaping up we've heard from airlines, calling out stronger and large corporate heading into next year. So just curious to see what you guys are hearing.
Speaker Change: Yeah.
Speaker Change: Yes, I mean, it's always a little tricky, we're kind of I think in that season right now Dan and I also say a lot of the contracts over time, you have gone from kind of just doing your typical your historical fixed hey, let's increase at four 5% to more dynamic pricing and.
Speaker Change: Such that it's more just a percentage of bar driving it and so as you think about kind of where we think you know rates could go next year and obviously, we're still in the throes of and the beginnings of a budget discussions I'm kind of hard to say exactly and pinpoint any kind of range percent I certainly know what's up.
Sean DeLorto: And so as you think about kind of where we think, you know, rates could go next year, and obviously we're still in the throes of, in the beginnings of budget discussions, kind of hard to say exactly and pinpoint a kind of range percent. I certainly know it's up. And also I think when you look at the behavior of the corporate negotiated subsegment, it's been an outperformer this year versus expectations. And so we think we've seen about 6 percent or so, plus or minus, up this year throughout the year. So I think that kind of, I think, bodes well and I think plays into what you maybe hear from other industries about likely strong performance for that group remaining, you know, continuing in 2025.
And also I think when you look at the behavior of the corporate negotiated subsegment.
Speaker Change: It's been an outperformer this year versus expectations and so we think we've seen about 6% or so plus or minus up this year throughout the year. So I think that Pam I think bodes well and I think plays into what you hear from other industries about likely strong performance for that group remaining continuing into 2025.
Sean DeLorto: Understood. Thank you, Sean.
Pam: Understood. Thank you Sean and for my follow up you know we've heard from other owners and some of the brands, including Hilton that you know November demand.
Sean DeLorto: And for my follow up, you know, we've heard from other owners and some of the brands, including Hilton, that, you know, November demand is, you know, just yeah, it could be softer around the edges, especially when we're talking about like, you know, the elections and kind of right that period of November specifically. Curious to see what you guys are thinking and, and more importantly, how, how that feels relative to your, you know, expectations for maybe 30 or 60 days ago. Yeah, I think, you know, it is having an impact. I would say in general pace is down that week around 13 percent.
Just yet, but it could be softer around the edges, especially you know what I'm talking about like you know the elections and kind of write that period of November specifically.
Speaker Change: Curious to see what you guys are thinking and and and more importantly, how.
Speaker Change: How that feels relative to your expectations for maybe 30 or 60 days ago.
Speaker Change: Yeah, I think it adds it is having an impact I would say in general paces down that week around 13% I would even say the week. After that is down about 11%. So I think not surprisingly I think people are now likely to travel make any plans.
Sean DeLorto: I would even say the week after that's down about 11 percent. So I think, you know, not surprisingly, I think people are not electing to travel, make any plans that certainly that the week of. I would say I think pick the week after is picking up positively. So that could be something that's something to watch depending on what happens post-election. But you're definitely seeing that. And then as you get beyond election time frame, you start getting into, you know, holiday shifts, which I'm sure you guys will pick up as we get through it. But, you know, Thanksgiving is on a different week, a later week this year, the next year.
Speaker Change: That certainly that the week of I would say think pick the week. After is picking up a positively so that could be something that's something to watch depending on what happens post election.
But you're definitely seeing that and then as you get beyond election timeframe you start getting into you know holiday shifts, which I'm sure you guys will pick up as we get through it but.
Speaker Change: Thanksgiving's on a different week later weak this year. The next year. So you can have some flip flops of different weeks as you kind of really dig into it but on the whole I would say you know December is a little bit beneficiary of some of the shifts versus November new members definitely are weaker months of the quarter put it all together they'll combined November December I think you're you're kind of looking at similar.
Sean DeLorto: So you're going to have some flip-flops of different weeks as you kind of really dig into it. But on the whole, I would say, you know, December is a little bit beneficiary of some of the shifts versus November. November is definitely a weaker month of the quarter. Put it all together, though, combined November, December, I think you're kind of looking at similar growth, you know, on average between the two if you were just obviously combine them relative to kind of comparable to October. But it's definitely a weak November offset by a stronger December.
Both you know on average between the two if you were just kind of obviously combine them relative to kind of comparable in October, but it's definitely a week November offset by a stronger December.
Tom Baltimore: And Dany, if you think about the last election, I think similar sort of framework occurred as well back to 2020 and I think even in 2016, so we're not overly alarmed by it. Thank you.
Speaker Change: Danny.
Yeah. If you think about the last election I think similar similar.
Speaker Change: Sort of framework occurred as well back to 2020, and I think even in 2016. So we're not we're not overly alarmed by it.
Got it thank you Tom.
Tom Baltimore: Thank you.
Aryeh Klein: The next question comes from the line of Aryeh Klein from BMO Capital Markets. Please go ahead. Thanks. Maybe just following up on the last question, I think previously you were expecting, you know, maybe one, one, two percent red card growth in the fourth quarter based on the prior guide. Setting aside the strike impact, is that still a fair expectation or kind of how should we think about it? Yeah, it's hard to decouple, obviously, given what's happening with the other activities. And obviously, you've also had the weather-related activity.
Thank you.
Speaker Change: Next question comes from the line of <unk> Klein from BMO capital markets. Please go ahead.
Speaker Change: Thanks, maybe just following up on that.
Speaker Change: I think that previously you were expecting maybe 112% revpar growth in the fourth quarter based on the prior guide.
Speaker Change: Setting aside the striking.
Speaker Change: Is that still a fair expectation or kind of how should we think about.
Speaker Change: The performance this quarter.
Speaker Change: Yes.
It's hard to decouple, obviously, given what's happening with the other activities and obviously you've also had the.
The weather related activity, so I'd rather wait.
Tom Baltimore: So I'd rather wait and provide that information when we provide the update once our operators and the unions have finalized any outstanding agreements and we can provide a clear update. No doubt, as Sean said, as you think about November, certainly the week of the election, and probably a little after that. And I think just given the uncertainty, given how divided things are, you're probably going to see less travel during that period of time. And I don't think that's a real surprise. And as I said at the end of the conversation that Dany asked, if you look back to 2020 and 2016, I really think that was what we experienced as well.
Wait and.
Provide that information when we provide the update once our.
<unk> and the unions have.
Finalize any outstanding agreements and.
And we can provide a clear update.
Speaker Change: No doubt as Shaun said as you think about November certainly the week of the election.
Probably a little after that.
Just given the uncertainty given how divided things are you know you're probably going to see less traveled during that period of time and I don't think that's a real surprise.
And as I said at the end of the conversation that Danny asked if you look back to 2020 in 2016, I really think that was what we experienced as well.
Tom Baltimore: understood. And then maybe, as we think about 2025, When we're looking at expenses, what is 4% to 5% kind of a reasonable expectation for next year? And if that is the case, what type of red part growth do you think you would need to grow Evita? We're just beginning the budgetary process. We will provide guidance as we've done historically. Obviously, we're all concerned about what's going to happen with the top line as we look forward, as well as the corresponding expenses.
Speaker Change: Understood and then maybe as we think about 2025.
When we're looking at expenses, what is 4% to 5% kind of a reasonable expectation for next year and if that is the case what type of Revpar growth do you think you would need to grow EBITDA.
Speaker Change: Yes, we are.
Speaker Change: We're just beginning the budgetary process alright.
It's another we will provide guidance as we've done.
Historically and I mean, obviously, we're you know we're all concerned about.
What's going to happen with the top line as we look forward as well as the corresponding expenses, but we will we'll have more more information on that at a at a later date, we still feel very good about our portfolio. This obviously is a is a solid third quarter.
Tom Baltimore: But we'll have more information on that at a later date. We still feel very good about our portfolio. This obviously is a solid third quarter, probably going to be among sector leading, as you think about the top line. And obviously, if you take out both the strike activity and obviously some of the weather-related, it's probably close to a 4% print. So we feel very good about our portfolio.
We are gonna be among sector, leading us to think about the top line and obviously if you take out.
Both the strike activity and obviously some of the weather related it's probably close to a 4% print. So we feel very good about our portfolio and we're going to continue to focus on selling noncore reinvesting back in the portfolio, reducing leverage and and then returning capital to.
Tom Baltimore: We're going to continue to focus on selling non-core, reinvesting back in the portfolio, reducing leverage, and then returning capital to shareholders. We've returned north of $630 million, I think, last year. We're probably going to be somewhere in the $300 million, $350 million this year. That includes buying back 19, 19.5 million shares over the last 18, 20 months. So we feel very good about our performance and really our capital allocation decisions.
Speaker Change: Shareholders we've returned.
The $630 million I think last year and.
We're probably going to be somewhere in the 300 and $350 million. This year and you know that includes buying back of 1919 5 million shares over the last 18 20 months, so feel very good about our performance and and really our capital allocation decisions.
Tom Baltimore: Thank you.
Speaker Change: Thank you.
Thank you.
David Katz: The next question comes from the line of David Katz from Jefferies, please go ahead. Hi, everyone. Good morning. Hey, thanks for all the information so far.
Speaker Change: The next question comes from the line of David Katz from Jefferies. Please go ahead.
David Katz: Hi, everyone. Good morning.
Speaker Change: Hey.
David Katz: Thanks for all the information so far I wanted to ask kind of a bigger broader question you know about the subject to weather and how you think about that in your underwriting whether that's for capital spending in certain markets that are exposed more so than others or you know any potential.
David Katz: I wanted to ask kind of a bigger, broader question about the subject of weather and how you think about that in your underwriting, whether that's for capital spending in certain markets that are exposed more so than others, or any potential acquisitions down the road. I think Smedes maybe used the term whack-a-mole earlier on, and I think it may be apropos, right, where it's a recurring, non-recurring event, and the degree to which we sort of contemplate that in underwriting or whether we should keep looking through it or we should be thinking about it too. Yeah, Dave, it's a great question.
So the acquisitions down the road I think Smedes, maybe you used the term whack a mole you know earlier on in it and you know I think it may be apropos, right, where it's a recurring nonrecurring event.
Speaker Change: And the degree to which you know we sort of contemplate that in underwriting or whether we should keep looking through it or we should be thinking about it too.
Speaker Change: Yeah, David It's a great. It's a great question and I would say if you.
Tom Baltimore: And I would say if you think back over the last few years, obviously, at Park, we've been fortunate in that we haven't had any direct hit. But obviously, we've been certainly impacted by it. And it's an area that we really separate ourselves. A huge credit to Carl Mayfield, who heads our design and construction team. We, as you think about any of the storms, Helene and Milton is an example. We had first responders on site within 72 hours of the event. We've set up tiger dams. We've looked at the resiliency of our buildings as part of the complete transformation of the Casa Marina, taking all the building systems that were in the catacombs and below grade and removing those.
If you think back over the last few years, obviously it at park, we've been we've been fortunate.
And that we haven't had any direct hit but obviously we've been.
Certainly impacted.
Impacted by it and it's an area that we really separate ourselves a huge credit to Carl Mayfield, who heads our design and construction team.
We as you think about any of the storms.
Speaker Change: Helene and Milton as an example, we had first responders on site.
Within 72 hours of the event.
Speaker Change: We've setup Tiger dams.
We've looked at is the resiliency of our buildings as part of a complete transformation of the Casa Marina taking all the building systems that were in the catacombs and below grade and removing those and.
Tom Baltimore: And we've also looked at sand nourishment and what things we can do to be incredibly proactive. And you see that really reflected in our insurance costs. Sean and Carl have done an extraordinary job. And as a result, our insurance costs were down. I doubt very many of our peers could say that. And I think it's these proactive measures that we have in place. We take it seriously. And you can also see the tie-in to our corporate social responsibility report as well. Emily Smith and the other team members that work on that. And so it is very important, particularly given our portfolio and really where the demand generators are.
We've also looked at San nourishment, and how what what what things we can do to be incredibly proactive and you see that really reflected in our insurance cost.
Shawn and and Karl have done an extraordinary job and as a result, our insurance costs were down.
Speaker Change: I doubt very many of our peers could say that and I think it's these proactive measures that we have in place we take it seriously and you can also see the tie into our corporate social responsibility report as well Emily Smith and the other team members that work on that and so.
Speaker Change: So it's it is very important, particularly given our portfolio and really where the demand generators are and so it's something that we've got to continue to monitor and be proactive we do factor it into our underwriting we think about well what.
Tom Baltimore: And so it's something that we've got to continue to monitor and be proactive. We do factor it into our underwriting. We think about what that risk may be as part of that investment and that assessment of that opportunity. So it is something where Park has really distinguished themselves vis-a-vis our peers. Appreciate it. Thank you.
What that risk may be is as part of that that investment in that assessment is that of that opportunity. So it is something where we're park is really distinguish themselves vis vis our peers.
Speaker Change: Yeah.
I appreciate it thanks very much.
Speaker Change: Thank you.
Thank you. The next question comes from the line of Patrick Scholes from <unk> Securities. Please go ahead.
Patrick Scholes: The next question comes from the line of Patrick Scholes from Truist Securities. Please go ahead. Thank you, Patrick. Good morning. Thank you.
Hi, Patrick.
Speaker Change: Morning.
Tom Baltimore: My first question. time. Can you give us a little bit of thoughts about... Expectations for the inbound Japanese. Traveler to Hawaii for 4Q and what potentially next year might look like for that. Thank you. Yeah, I think if you, if you look historically, Patrick, you know, Japanese travel, and this is sort of pre pandemic was about 1.5 million. That was about 17% of demand. Obviously, in 2023, it was about 600,000. So it's about 60% below pandemic. 2024, as I think I said earlier, you know, we were expecting it to be probably in the beginning of the year, probably about 850 to 880,000.
My first question.
Can you give us a little bit about our thoughts about your expert expectations for the inbound Japanese.
Traveler to Hawaii.
<unk> and what potentially next year might look like for that thank you.
Yeah, I think if you if you look historically and Patrick.
Japanese traveler and this is sort of pre pandemic was about $1 5 million.
Speaker Change: And that was about 17% of demand obviously in 2023. It was about 600000, so its about 60% below par.
Speaker Change: Pandemic.
Speaker Change: 'twenty 'twenty four is I think I said earlier, we were expecting it to be.
Probably in the beginning of the year, probably about 850 to two 880000, that's been revised downward part of Thats because of the weather related issues that occurred both in Japan as well as the three storms and so now we're looking at about 720000.
Tom Baltimore: That's been revised downward. Part of that's because of the weather related issues that occurred both in Japan as well as the three storms. And so now we're looking at about 720,000 on an annualized basis. And that's, that's about 22% above last year. And it's still about 50 to 54% below 2019 levels.
On an annualized basis, and that's that's about 22% above last year, and it's still about 50% to 54% below 2019 levels. We think we get back to pre pandemic, probably in that 2026 to 2020.
Tom Baltimore: We think we get back to pre pandemic probably in that 2026 to 2027 timeframe, where we are in terms of the fourth quarter, I don't have the fourth quarter data, I don't know whether, but we'll, we'll follow up with you and make sure you have that we've got it more on the annualized and not, not the individual quarter. Okay, and thank you.
Seven timeframe.
Speaker Change: Where we are in terms of the fourth quarter I don't have the fourth quarter data I don't know whether.
But we will follow up with you and make sure you have that we've got it more on the annualized and not not the individual quarter.
Speaker Change: Okay. Thank you.
Tom Baltimore: My second question, you know, now that the... The Stripes seem to be dragging on, especially in Hawaii. At this point, is Hilton notifying... Transient and group death pre-arrival about the strikes. Thank you. Yeah, the answer is, I mean, obviously, Look, I think they've been publicly disclosed, and so I'm sure through their channels they're making sure that people are aware. I do think it's important to note, obviously, as it relates to Hawaii, I'm not going to comment on the specifics. Obviously, our operator and the unions are on ongoing discussions, and when that agreement is reached and when it's ultimately ratified, we'll all get back to normal.
Speaker Change: My second question now that.
As you know the strike seem to be dragging on especially in.
Why you know at this point.
As Hilton notifying.
Our transient and group get pre arrival about the strikes. Thank you.
Speaker Change: Yeah.
The answer is I mean, obviously.
Speaker Change:
Speaker Change: Look I think they they've been publicly disclosed.
So I'm I'm sure through their channels, there, making sure that that people are aware.
I do think it's important to note obviously as it relates to Hawaii, I'm not going to comment on the specifics obviously, our operator and the unions are on ongoing discussions and.
When that agreement is reached.
Speaker Change: When it's ultimately ratified.
Get back to normal we do believe that this is a transitory matter.
Tom Baltimore: We do believe that this is a transitory matter, and we remain, as I've said throughout the call, we remain very bullish on Hawaii on the intermediate and long term. I'd also like to point out, as it relates to other markets, in Boston, for example, we understand that our operator reached agreement with the union in Boston last evening, and that a vote is scheduled for later this week, and then also our operator has reached agreement in San Jose, and that agreement has also been ratified. The process will last as long as the process lasts, and obviously when our operator and the unions have reached agreement and it's been ratified, obviously we'll move forward.
And we remain as is as I've said throughout the call. We remain very bullish on Hawaii on the intermediate and long term.
I'd also like to point out of.
As it relates to.
Other markets in Boston for example, we understand that our operator reached agreement with the Union in Boston last evening.
And that a vote is scheduled for later this this week.
And then also our operator has reached agreement in San Jose and that agreement has also been been ratified so.
Speaker Change: These these the process will last as long as the process last and obviously when our operator and the unions have reached agreement and.
It's been ratified obviously, we'll move forward.
Tom Baltimore: Okay, thank you.
Speaker Change: Okay. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Chris Woronka: The next question comes from the line of Chris Woronka from Deutsche Bank. Please go ahead. Hey, Chris. Good morning, guys. Hey, Tom. Good morning.
Speaker Change: The next question comes from the line of Chris <unk> from Deutsche Bank. Please go ahead.
Hey, Chris Hey, good morning, guys.
Good morning.
Tom Baltimore: So, Tom, I think it's kind of, I guess, implied in your earlier comments, but as you think about all your ROI, CapEx projects moving forward, and I look back to that list you guys provided in May, and all but maybe two of those are kind of in union markets. So, yeah, these things are going to get settled, like you said. Can I, can we just assume from your comments? You know, whatever may happen, whatever the outcome is financially, it's not going to deter you at all. Projects and does it does it does it cause you to shift any prioritization?
So Tom I think it's kind of I guess you implied in your earlier comments, but as you think about all your your ROI.
Speaker Change: Roy Capex projects moving forward and then I look back to that list you guys provided in May.
Speaker Change: All but maybe two of those are kind of in union market. So these things are going to get settled like you said.
Can I can I can we just assumed from your comments that you know whatever may happen whatever the outcome is financially its not going to deter you at all from these these projects. It does it does it does.
Is it does it cause you to shift any prioritization in terms of a market that gets capex dollars before before another.
Tom Baltimore: a market that gets capex dollars before before Yeah, Chris, it's a great question. And as I said earlier, as you think about Hawaii as an example, if you look over the last 20 years, I mean, you know, Oahu's REPAR growth rate, you know, it's outpaced the U.S. by nearly 300 basis points. And given, obviously, the difficulty of adding new supply and given those barriers to entry, we remain bullish on Hawaii, and we're confident that our operator and the union will get this resolved and things will move forward. But we remain bullish, and, you know, those priorities that we've outlined is, you know, we've already started the renovation of the Rainbow Tower at Hilton Hawaiian Village.
Yes, Chris it's a it's a it's a great question and as I as I said earlier as you think about Hawaii as an example.
If you look over the last 20 years.
You know wahoo is revpar growth rate.
It's outpaced the U S by nearly 300 basis points and.
Speaker Change: And given obviously, the the difficulty of adding new supply.
And given those barriers to entry we remain bullish on Hawaii, and we're confident that our.
Our operator, and the Union will get this resolved in <unk>.
And and things will move forward, but we remain bullish and you know those those priorities that we've outlined as we've already started the renovation of the Rainbow tower.
Hilton Hawaiian village, we've started the renovation of the palace tower.
Tom Baltimore: We've started the renovation of the Palace Tower at Hilton Waikoloa. And this is just bullseye real estate that has performed well, and we expect it over the intermediate and long term to continue to perform well. We are more successful today at Hilton Waikoloa as a 600-room hotel than we were as a 1,200-room hotel, which I think you've heard me say many times. As we look at Miami and Royal Palm and, you know, just bullseye real estate there on the beach as well, there's a great opportunity to really transform that property, not dissimilar to, you know, what we did in the Casa Marina and the Reach, both of which have had huge success.
Speaker Change: At Hilton like Aloha.
Speaker Change: And this is just bullseye real estate that.
As has performed well and we expect it over the intermediate and long term to continue to perform well.
Speaker Change: More successful today at Hilton Hawaiian Aloha.
Speaker Change: 600 room Hotel, then we was a 1200 room hotel, which I think you've heard me say many times as we look at Miami and the Royal Palm and just Bullseye real estate there on the beach as well.
Speaker Change: There is a great opportunity to really transform.
That property not dissimilar to what we did in the CASM arena, which and the reach both of which are have had huge success. So it's really part of our strategy continue to invest in high quality real estate that.
Tom Baltimore: So it's really part of our strategy to continue to invest in high-quality real estate that can generate outsized returns for investors.
That can generate outsized returns for investors.
Tom Baltimore: Okay, yeah, I appreciate that, the thoughts, Tom. The follow-up question is, you know, I guess, maybe this is where we are at the time of the year. I know you're going through the early stages of budgeting and won't be giving any 25 guidance till early in 2020, next year, but maybe you can give us a refresher or tutorial on kind of how your approach to guidance when you give it, because this year I think we saw the brand companies, you know, their REVPAR guidance evolve a little bit, and there were obviously some weather impacts, and then there were some, you know, things, the calendars that, you know, maybe shouldn't have been a surprise, but maybe you can just give us a quick refresher and tutorial on how you guys, you know, take budgets and formulate them into annual guidance.
Okay, Yeah, I appreciate that the thoughts Tom a follow up question.
Speaker Change: I guess.
Maybe this is where we are at the time of the year I know you're going through the early.
Speaker Change: Early stages of budgeting and won't be giving any 25 guidance till early in 2020 next year, but maybe.
Maybe you can give us a refresher or tutorial on kind of how your approach to guidance. When you give it because this year I think we saw the brand companies.
Their revpar guidance evolve a little bit and there were obviously some weather impacts and then there were some things the calendars.
Speaker Change: Maybe.
It had been a surprise, but maybe can you just give us a quick refresher on tutorial on how you guys.
Budgets and formulate them into annual guidance. Thanks.
Tom Baltimore: Well, obviously, Chris, we've been, I've been around a long time, so I've been through the cycles, and obviously you had calendar shifts this year, you had weather, it's a very detailed process, it's thoughtful between obviously the owners and operators, and you know, you put in a lot of work, and you try to have the appropriate spread between those quarters, and sometimes as an industry, we're more right than others, so I think this year you had the calendar shifts, but you also had dramatic swings in weather that certainly impacted, so that certainly played a role. I think overall for the park portfolio, it is holding up very well and performing well, and I think we said earlier in the year we expected that we would be 100, probably net of renovation disruption premium to our peers, and I think that's probably holding true, and so we feel very good about our performance and where we are, and obviously the other matters will get themselves resolved when they're resolved.
Well, obviously, Chris we've been.
Speaker Change: Hum.
I've been around a long time, so I've been through the cycles and obviously you had a calendar shifts this year you had weather.
Speaker Change: It's a very detailed process, it's thoughtful between obviously the owners and operators.
Speaker Change: And.
Speaker Change: You.
Speaker Change: You put in a lot of work.
And you try to have the appropriate spread between those quarters in.
Speaker Change: And sometimes as an industry. We're we're more right than others. I think this year you had the calendar shifts, but you also had dramatic swings in weather that certainly impacted so that certainly played a role.
I think overall for the park portfolio. It's it is holding up very well and performing well and I think we said earlier in the year. We expected that we would be 100, probably net of renovation disruption premium to our peers.
Speaker Change:
I think that's probably holding true and so we feel very good about our performance and where we are and obviously the other matters will get themselves resolved.
Speaker Change: When they're resolved.
Tom Baltimore: Okay, understood.
Speaker Change: Okay understood. Thanks, Tom I appreciate the time.
Tom Baltimore: Hey, thanks, Tom. Appreciate your time. All right.
Tom Baltimore: Thank you.
Speaker Change: Yes.
Speaker Change: Yeah.
Jay Kornreich: The next question comes from the line of Jay Kornreich from Wedbush Securities. Please go ahead. All right. Thank you. Good morning. You mentioned remaining bullish long-term on Hawaii, which has been a great market. I'm curious how you think about how that market can perform in the first three quarters of 2025. We had some tough comps. I guess it'll have a tough comp from 1 to 24 this year. Is there an opportunity for further rev par upside next year?
Thank you.
Speaker Change: The next question comes from the line of <unk> Khan Rich from Wedbush Securities. Please go ahead.
Hi, Thank you good morning.
Speaker Change: Good morning.
You mentioned being remaining bullish long term on why it's been a great market and I'm curious just how you think about how that market to perform in the first three quarters of 2025, you know we.
We had some tough comps I guess it'll have a tough comp from 124 this year.
And is there an opportunity for further revpar upside next year or should we kind of think about that market in the first three quarters being somewhat down before lapping an easier fourth quarter conflicts hopefully that the union issue being resolved.
Tom Baltimore: Or should we think about that market in the first three quarters being somewhat down before lapping an easier fourth quarter comp with hopefully the union issue being resolved? Again, I go back to my earlier statement. If you look over the last 20 years, I mean, I think it's either been first or second strongest market over that period of time. I think about the barriers to entry. I think about the improved airlift. I think about just the extraordinary beauty. You think about the international visitation. The Japanese traveler will return. Historically, they were averaging about 100, and we were doing about 150 weddings a year at Hilton Hawaiian Village is one example.
Speaker Change: Again I go I go back to my earlier statement. If you look over the last 20 years I mean, I I think it's either been first or second strongest market over that period of time I think about the barriers to entry I think about the improved air lift.
Think about just the extraordinary beauty.
You think about the international visitation.
Japanese traveler will return.
And historically they were averaging about 100, and we were doing about 150 weddings a year at Hilton Hawaiian village. As one example, we're doing a small fraction of that today. So we really haven't gotten back to just sort of a pre pandemic. When you think about the international piece and there are growing segments.
Tom Baltimore: We're doing a small fraction of that today. So we really haven't gotten back to sort of pre-pandemic when you think about the international piece. And there are growing segments there, coupled with the fact that the additional airlift.
They are coupled with the fact that the additional air lift.
Tom Baltimore: So I would still, as we think about markets that are a high priority in terms of future investment, Hawaii remains a top market for us.
So I would I would still.
Speaker Change: We think about markets that are a high priority in terms of future investment Hawaii remains a top market for us.
Speaker Change: Okay.
Sean DeLorto: As a follow-up, you may have mentioned at the end of your prepared remarks, just as October is coming to a close, are you able to give a range as to what October REBPAR growth within the portfolio is? Yeah, we, Sean provided that in prepared remarks, we were, we're trending flat to down 1%, and that's if, if you were Yeah, I mean, ultimately, I mean, that's the case. And if you, if you clearly had Milton in October, so if you adjust for that hurricane disruption, you're probably kind of in the in the zone of being flat.
Okay, and then as a follow up you had mentioned at the end of your prepared remark.
To make sure I.
Cooper's coming to a close.
You could kind of give a range as to why October revpar growth within the portfolio with.
Yes sure.
Shawn provided that in the prepared remarks, we were.
We're trending flat to down 1%.
Speaker Change: And that's if if you were.
Speaker Change: Yeah, Yeah, I mean, ultimately I mean, that's the case and if you. If you clearly you had noted in October. So if you adjust for that hurricane disruption, you're probably kind of in the in Arizona being flat. So again, we set some outperformance in other parts of the portfolio clearly we have other disruption elsewhere with union activity and strikes.
Sean DeLorto: So again, we've had some outperformance in other parts of the portfolio. Clearly, we have other disruption elsewhere with union activity and strikes, but ultimately, we're kind of looking at that, that general range. Clearly, we've got a few days left in the month.
Ultimately, we kind of looking at that that general range clearly you've got a few days left in the month end.
Sean DeLorto: And we're, as Tom noted, when we kind of look to give people a readout, once things are resolved, we'll certainly give people a sense of what how October ends. Okay, great. Thanks very much for the clarification. Thank you.
As Tom noted when we kind of look to give people a readout once things are resolved, we'll certainly give people a sense of what of how October ended.
Okay, great. Thanks, so much for the clarification.
Thank you.
Robin Farley: The next question comes from the line of Robin Farley from UBS. Please go ahead. Great, thanks.
Speaker Change: The next question comes from the line of Robin Farley.
Speaker Change: UBS. Please go ahead.
Great. Thanks, I Wonder if you could just help us quantify when we think about the properties, where there's disruption from labor negotiations.
Sean DeLorto: I wonder if you could just help us quantify, when we think about the properties, where there's disruption from labor negotiations, what do they represent typically as a percent of your total EBITDA? And then, and then maybe we can take Boston and San Jose out of that, thinking about here forward in terms of kind of what percent of your EBITDA is being disrupted. Yeah, we'll, we'll stay Robin away from the from the EBITDA portion of it, but if you were to take just... Hilton Hawaiian Village and Boston Logan out of Q3. And that was about 240 basis point drag on rev bar.
I present, typically as a percent of your total EBITDA.
Speaker Change: And then and then maybe we can take Boston San Jose.
Speaker Change: In terms of what percent of your EBITDA.
Speaker Change: Is being disrupted.
Speaker Change: Okay.
Yeah, well, we'll stay Robyn away from the.
Speaker Change: From the EBITDA portion of it but if you were to take just.
Hilton Hawaiian village in Boston Logan.
Speaker Change: Out of Q3.
It was about 240 basis point drag on Revpar.
Speaker Change:
Sean DeLorto: And so, obviously, instead of that 3.3, probably closer to 5.7, I think, plus or minus. And, you know, as we think about sort of October, as Sean said, you've got really about, you know, 80 basis points of, of, of. So, you're essentially flat there. If you were to also take out Boston Hilton Wine Village, you probably would have been in the middle of the city. Thank you. Again, the month hasn't closed out, but probably somewhere in that range. Okay, thanks.
And so obviously instead of that three three probably closer to five seven I think plus or minus.
You know and as we think about sort of October as Sean said, you've got really about 80 basis points of of weather.
Weather related so you're essentially flat there.
If you were to also take out.
The Boston Hilton Hawaiian village, I mean, you probably would've been.
Speaker Change: And.
Speaker Change:
For over 4% in Revpar plus or minus.
Again, the month hasn't closed out, but probably somewhere in that range.
Speaker Change: Okay.
Tom Baltimore: And then just looking at your group pace for 2025, it looked like maybe it ticked down a little bit compared to where group pace was at the end of Q2, and is that just something that we should think about a seasonal, or do you think that's the labor disruption impacting that, or is it just tougher comps with groups for next year? Thanks. Yeah, I think you got two things. You got the tougher comps. Obviously, Chicago and New Orleans are having, you know, really strong years. New Orleans, we expect that to continue into 2025. Chicago will drop down.
Okay. Thanks, and then just looking at your group.
Speaker Change: Piece for 2025.
It looks like maybe it ticked down a little bit compared to where a great piece was.
At the end of Q2.
Is that just something that.
We still got a seasonal or do you think thats the law.
Labor disruption impacting that or is it just tougher comps with group for next year. Thanks.
I think you've got a <unk>.
Speaker Change: Two things you've got some tougher comps, obviously Chicago, New Orleans are having really strong years, New Orleans, we expect that to continue into 'twenty five.
Chicago will.
Speaker Change: Drop will dropdown.
Tom Baltimore: We're bullish. Hilton Waikoloa, obviously, is having a soft year, down about 44%. We think that's going to increase up to about 77% as group pace as we look in 2025. You've got tentatives. You know, it's a fluid situation, but we are very, very bullish as we look at it. You know, Bonnet Creek, which is obviously having a very strong year this year, we expect that's going to continue next year in the out years. So, as we said, we expect that we'll finish, we'll end up, we'll sort of begin the year in 2025. It's sort of mid to high single digits, and we're already at up 10% as we look out to 2026.
We are bullish Hilton like Aloha, obviously is having a soft year down about 44%. We think that's going to increase up to about 77% as group paces were look in 'twenty 2025, you've got tentative.
Speaker Change: Fluid situation, but we are.
Very very bullish as we look out at Bonnet Creek, which is.
Obviously, having a very strong year. This year, we expect that's going to continue next year in the out years. So as we said we expect it will finish Linda so to begin the year in 2025, it sort of mid <unk>.
At a high single digits and we're already at 10% as we look out to 2026. So we see that again is a really strong.
Tom Baltimore: So, we see that, again, as a really strong growth segment for us, Robin, as we move forward. Great. Thanks.
Speaker Change: Growth segment for Us Robin as we move forward.
Speaker Change: Yeah.
Speaker Change: Great. Thanks, maybe if I could just squeeze one final opinion on your.
Tom Baltimore: Maybe if I could just squeeze one final thing in on your asset sale plans. Just if you could describe a little bit, I don't know if sort of I would assume there's maybe, you know, heading into the election that things were a little slower in terms of that. Do you think the timing, is it, you know, waiting for other rate cuts? I mean, when you think about potential buyers, is it waiting for additional rate cuts? Is it waiting to see how the labor negotiations conclude both this year and then maybe some to come next year?
Asset sale plans, just if you could describe a little bit I don't know if sort of I would assume there.
Maybe you know.
Heading into the election that things were a little slower in terms of that.
Do you think the timing is it.
Waiting for other rate cuts I mean, when you think about potential buyers isn't waiting for additional rate cuts is it is it waiting.
To see how the labor negotiations conclude does this year and then maybe some to come next year I guess, how should we think about it.
Tom Baltimore: I guess, how will we think about your expectation for timing of further asset sales? Thanks. Yeah, I think a lot of that has to do with just buyer and sellers and closing that gap, obviously, with lower rates, that really will be a positive catalyst and certainly the debt markets are open. But I think as both sides get into 2025, I think you can expect the transaction market to accelerate. Again, we've had no trouble, as you think through. And as I said earlier, I mean, we've sold or disposed of now since the spin about 44 assets, nearly $3 billion, including 14 international, many of those complicated with legal tax, joint ventures.
Your expectation for timing of further asset sales.
Speaker Change: Yes, I think a lot of that has to do with the <unk>.
Just buyer and sellers and closing the gap, obviously with lower rates.
Speaker Change: It really will be a positive catalyst in.
Certainly the debt markets are open.
Speaker Change: But I think as.
Both sides getting into 2025, I think you can expect the transaction market to accelerate in.
Again, we've had no trouble as you think through and as I said earlier, I mean, we've sold or disposed of announced since the spin of about 44 assets nearly 3 billion.
Speaker Change: <unk> 14 international many of those complicated with legal tax joint ventures.
Tom Baltimore: We've seen it all, and we've got a very talented team who are working aggressively. And, you know, we're not a distressed seller, so we're looking for a fair price. We're going to be thoughtful about it, but clearly it is a strong priority for us to continue to recycle that capital and invest it back into our core markets. Our top 25 assets really account for about 90% of the value of the company, and that's where we want to be growing in the future. Great, thank you. Thank you.
<unk> seen it all and we've got a very talented team who are working aggressively and we're not a distressed seller. So we're looking for a fair price, we're going to be thoughtful about it but clearly it is a strong priority for us to continue to recycle that capital and invest it back into our core markets our top 25.
Assets really account for about 90% of the value of the company and that's where we want to be growing in the future.
Speaker Change: Great. Thank you.
Thank you. The next question comes from the line of Chris Sterling from Green Street. Please go ahead.
Chris Darling: The next question comes from the line of Chris Darling from Green Street.
Sean DeLorto: Please go ahead. Thanks. Good morning. Going back to some of the comments around group pace in 2025, how much of total anticipated group revenue for the next year would typically be on the books at this point in time, just trying to get a better sense of what's kind of baked in for next year? Yeah, Chris, I would say we're probably looking at, I'd put it in relation to kind of our current forecast for this year's group. We're probably about tracking about 70% or so at this point in time. So, certainly, we look to improve that as we get closer to the end of the year.
Thanks, Good morning.
Speaker Change: Good morning, good morning.
Chris Sterling: And going back to some of the comments around group pace and twenty-five how much a total anticipated group revenue for the next year would typically be on the books at this point in time, just trying to get a better sense of what's kind of baked in for next year.
Speaker Change: Yeah.
Yeah, Chris I would say, we're probably looking at.
I'd say I'd put in relation to kind of our current forecast for this year's group, we're probably about tracking about 70% or so.
At this point in time, so we certainly look to improve that as we get closer to end of the year. That's about where we are a proxy for where we are right now.
Sean DeLorto: That's about where we are, approximately where we are right now.
Sean DeLorto: Okay, I'm going to call it then. That would be consistent with prior years, as Sean is pointing out, Chris, so that's not unusual. Makes sense.
Speaker Change: Okay. That's helpful.
That would be consistent with prior years as shown is pointing out Chris So that's not that's not unusual.
Speaker Change: It makes sense.
Sean DeLorto: Thanks.
Tom Baltimore: As you have assets still in the market, I'm sure you're still underwriting assets that are coming to market. Any changes you've observed in pricing, or maybe another way to frame it, any changes you've observed in the bid-ask spread out in the market these days relative to maybe 3-6 months ago? Yeah, it's narrowing, but I think that's going to accelerate. I think, obviously, we were all expecting, you know, some looking at three, four, five rate cuts. I think now it's obviously the 50 basis points that are in the books and probably another one or two are sort of expected.
Helpful Comments, then and then a second question for you just you know as you have assets still in the market as you mentioned and I'm sure you're still underwriting assets that are coming to market and any changes you've observed in pricing them or maybe another way to frame it and any changes you've observed in sort of the bid ask spread out in the market. These days.
It is relative to maybe three six months ago.
Speaker Change: Yeah.
It's narrowing but I think that's going to accelerate I think obviously, we were all expecting some looking at three or four or five rate cuts I think now it's.
Honestly, the 50 basis points that we've that are in the books and probably another one or two or sort of.
Tom Baltimore: As the cost of debt comes down, that clearly is going to help bridge that gap. But there's no shortage of private capital out there. You've got probably $400 billion just on the private equity, real estate funds. You've got family offices. You've got owner-operators. So, as you know, we've always had a very active trading market and secondary market and lodging, so we fully expect that that's only going to accelerate. And, you know, many of those funds, the clock is ticking for them, so they've got to start to put that capital to work. So we expect the 25, particularly as rates begin to normalize, we expect the transaction market will continue to improve.
Speaker Change: <unk>.
Speaker Change: The cost of debt comes down that clearly is going to help bridge that gap, but there's no shortage of private capital out there you've got probably 400 billion just on the private equity.
Real estate funds, you've got family offices, you've got owner operators. So as you know we've always had a very active trading market and secondary marketing and lodging. So we fully expect that that's only going to accelerate in.
Speaker Change: Many of those funds the clock is ticking for them. So they've got to start to put that capital to work. So we expect a 25, particularly as rates begin to normalize we expect the transaction market will continue to improve.
Tom Baltimore: I appreciate the time.
I appreciate the time, that's all from me.
Tom Baltimore: That's all for me.
Tom Baltimore: Thanks, Chris.
Thanks, Chris.
Dori Kesten: Thank you.
Tom Baltimore: The next question comes from the line of Dori Kesten from Wells Fargo. Please go ahead. The Royal Palm isn't currently on your renovation table. What's the likelihood that the project is undertaken in 2025? There is a, I'd say greater than... A high probability that we move forward. We are working through design, we're working through a model room, obviously there's a permitting process. We're also trying to find the right window, but this is an opportunity that we're very bullish on, Dori. It's bullseye real estate, 393 keys, plus or minus, and really given the high-end assets that are being developed, whether it's the Auberges and Amman and others, we think there's a great opportunity to sort of tuck underneath, not at that level, but certainly raise REVPAR and really the overall performance of the property.
Thank you. The next question comes from the line of Dori Kesten from Wells Fargo. Please go ahead.
How are you doing.
Speaker Change: Good good afternoon now.
The Royal Palm isn't currently on your renovation table, what's the likelihood that the project is undertaken.
In 2005.
Speaker Change: Okay.
Speaker Change: There is a.
Speaker Change: Oh, I'd say greater than.
A high probability that we move forward. We are we are working through design, we're working through a model room, obviously theres a permitting process.
Speaker Change: We're also trying to find the right window.
But this is an opportunity that we're very bullish on jewelry.
It's a bull's eye real estate and the <unk>.
393 keys plus or minus.
And really given the high end property.
Assets that are being developed or.
Speaker Change: Whether it's the bears in Oman, and others, we think theres, a great opportunity to sort of tuck underneath.
That level, but certainly raise revpar and really the overall performance of the property. So we're pretty excited about it.
Tom Baltimore: So we're pretty excited about it, and again, not dissimilar to the success that we've demonstrated both in Casa, both at Bonnet, what we're doing in Hawaii. So we're pretty excited about it as we move forward, but we'll find the right window. We're very sensitive to minimizing disruption, and again, I think it's an area where our team has really sort of distinguished themselves.
Speaker Change: And again not dissimilar to the success that we've demonstrated both in Casa both upon at.
What we're doing in Hawaii, So we're pretty excited about it as we move forward, but we will we'll find the right window, we're very sensitive to minimizing disruption and again I think it's an area where our team is really sort of.
Speaker Change: With themselves.
Tom Baltimore: Okay, and then just one more on Hawaiian Village. I think that property is about 85% transient, 15% group. Are cancellation policies held or are they put on hold for transient guests when a strike is ongoing? You know, many times we leave that up to the on-site leadership team. We've got a very talented team there. It can be a judgment call. It can be whether there's a discount, whether there's a rescheduling. You know, all of those items, obviously, would be on the table. But, you know, Hilton Hawaiian Village, despite this matter, has remained open every day and continues to take care of it.
Speaker Change: Okay, and then just one more on this one I think that property is now 85% transient 15% group.
Speaker Change: Our cancellation policies and how old are they put on hold.
For transient guests when it's when the strike's ongoing.
Yeah, you know many times, we leave that up to the the on site leadership team. We've got a very talented team there it can be a judgment call it can be.
Speaker Change: Whether there is.
Speaker Change: Discount whether there is a rescheduling.
All of those items, obviously would be on the table, but Hilton Hawaiian village despite.
This matter has remained open every day and continues to take guest.
Dori Kesten: Thank you very much. Okay, thank you. Thank you.
Okay. Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you.
Floris van Dijkum: We have a follow-up question from Floris van Dijkum from Compass Point. Please go ahead. Thanks, guys, for taking the fall off as well. I don't know whether you have the answer handy or not, but you mentioned something about Oahu outpacing… I don't know if you have the answer handy or not, but you mentioned something about Oahu You know, the U.S. hotel market by 500 bases points over, I think it was the last decade, I believe, is what you said in terms of Red Spark. I said 300 I think over the last 20 years is what I said, Floris, and I'm going from memory, but I think that's fair.
A follow up question from Floris Van <unk> from Compass point. Please go ahead.
Hey, Thanks, guys for taking my follow up as well.
Speaker Change: Tom.
And I don't know whether you have the the answer a handy or not but you mentioned something about Oahu outpacing.
Speaker Change: You know the U S hotel market by 500 basis points over I think it was the last decade I believe is what you said in terms of Revpar.
But yes.
Speaker Change:
<unk> hundred I think over the last 20 years is what I said for us.
Speaker Change: And I'm going from memory, but I think that's a <unk>.
Of a fair.
Tom Baltimore: Sean and Ian can fact check me and follow up with you, but I'm pretty good with the numbers, as you know. But I think it's 300, basically, over the last 20 years.
Shawn and Ian can fact check me and follow up with you but.
I'm pretty good with the numbers as you know.
But I think it's 300 basis points over the last 20 years, yeah sorry.
Tom Baltimore: Sorry, I misspoke.
Tom Baltimore: I was curious as to how Hawaii Village did relative over that period. And then also, I'm probably most interested in seeing, because again, I think this is something you've been espousing for as long as I've known you, is your larger assets grow at higher rates than the overall market. And I'd be curious to see where you have it available, what the EBITDA CAGR has been for your Hawaii assets over the last 20 years, and also maybe your top 25 assets relative to the overall market or relative to the rest of your portfolio. Yeah, it's... And going back to the envelope here, memory, we think around 4.5% plus or minus.
Speaker Change: I Misspoke I bought I was curious as to how Hawaiian village did relative over that period and then also.
Speaker Change: I'm, probably most interested in seeing it because again I think and this is something you've been espousing for.
Speaker Change: As long as I've known you with your larger assets grow at higher rates than the overall market and I'd be curious to see where you have it available what the EBITA CAGR has been for your before Hawaii. During that you know Youre your Hawaii assets over the last.
20 years in and also maybe your top 25 assets relative to the overall market or relative to the rest of your portfolio.
Speaker Change: Okay.
Speaker Change: Yeah.
And going back the envelope here memory, we think around four 5% plus or minus.
Tom Baltimore: But we'll confirm that for us and get back to you, but there's no doubt that when you think about Hilton Hawaiian Village, you think about Waikoloa, just the quality of that real estate, it's fee simple, they've been strong performers for really for generations. And you can't replicate what we have in both situations.
Well, we will confirm that for us and get back to you, but there is no doubt that when you think about Hilton Hawaiian village. If you think about why Colo just the quality of that real estate, it's fee simple.
They've been strong performers for really for generations.
Speaker Change: And you can't replicate what we have in both situations.
Speaker Change: Yeah.
Tom Baltimore: Okay, thanks, Tom. Okay, thank you. Thank you.
Speaker Change: Okay. Thanks, Tom.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you.
Tom Baltimore: As there are no further questions, I would now hand the conference over to Tom Baltimore, Chairman and Chief Executive Officer, for his closing comments. We really appreciate everyone taking time today and we look forward to seeing many of you in the coming weeks and certainly out at NARED in Las Vegas, so safe travels and be well. Thank you.
There are no further questions I would now hand, the conference over to Tom Baltimore, Chairman and Chief Executive Officer for his closing comments.
Tom Baltimore: Really appreciate everyone taking time today, and we look forward to seeing many of you in the coming weeks and certainly added may read and and Las Vegas, So safe travels and be well.
Tom Baltimore: Thank you.
Operator: The conference of Park Hotels & Resorts has now concluded. Thank you for your participation.
Speaker Change: So park hotels <unk> resorts has now concluded. Thank you for your participation you may now disconnect your line.
Operator: You may now disconnect your line.
Tom Baltimore: Okay.
Tom Baltimore: Yeah.
Tom Baltimore: [music].