Q2 2025 Park Hotels & Resorts Inc Earnings Call

Ian Weissman: Greetings, and welcome to the Park Hotels & Resorts' second quarter 2025 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 zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ian Weissman, Senior Vice President of Corporate Communications. Thank you. You may begin.

Greetings and welcome to the park hotels and resorts second quarter 2025 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.

Require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ian Weissman, Senior Vice President.

Sean Dell'Orto: Thank you, Operator, and welcome, everyone, to the Park Hotels & Resorts' second quarter 2025 earnings call. Before we begin, I would like to remind everyone that many of the comments made today are considered forward-looking statements under federal security laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. Actual future performance outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Park with the SEC, specifically the most recent reports on forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

Of corporate Communications. Thank you. You may begin.

Thank you, operator and welcome everyone to the park hotels and resorts second quarter, 2025 earnings call.

Before we begin, I would like to remind everyone that many of the comments made today are considered forward-looking statements under Federal Security 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 Express. And we are not obligated to publicly update or revise, these forward-looking statements,

Actual future performance outcomes and results May differ materially from those expressed in forward-looking statements, please refer to the documents filed by park with the SEC. Specifically, the most recent reports on forms 10K and 10q, which identify important risk factors that could cause

Sean Dell'Orto: 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 to the most directly comparable GAAP financial measure in yesterday's earnings release, as well as in our 8-K filed with the SEC and the supplemental financial information available on our website at pkhotelsandresorts.com. Additionally, unless otherwise stated, all operating results will be presented on a comparable hotel basis. This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will provide a review of Park's second quarter performance and strategic initiatives, as well as provide an update to our 2025 outlook. Sean Dell'Orto, our Chief Financial Officer, will provide additional color on second quarter results, an update on our balance sheet, and 2025 guidance. Following our prepared remarks, we will open the call for questions.

actual results to differ from those contained, in the forward-looking statements,

In addition, on today's call we will discuss certain non-gaap financial information such as ffo and adjusted IBA.

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 8K filed, with the SEC

And the supplemental financial information is available on our website.

At PK hotels and resorts cam.

Additionally, unless otherwise stated all operating results will be presented on a comparable Hotel basis.

This morning, Tom Baltimore, our chairman and chief executive officer will provide a review of parks second quarter performance and strategic initiatives as well as provide an update to our 2025 Outlook.

Sean dellorto our Chief Financial Officer will provide additional color on, second quarter results and update on our balance sheet and 2025 guidance.

Sean Dell'Orto: With that, I would like to turn the call over to Tom.

Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom.

Tom Baltimore: Thank you, Ian, and welcome, everyone. Overall, I was very encouraged by our second quarter results, driven by continued outperformance from recently completed ROI projects, disciplined cost controls across the portfolio, and steady progress on our strategic initiatives. Q2 RevPAR was relatively flat year over year, when excluding the Royal Palms South Beach in Miami, which suspended operations in mid-May for a transformative renovation and repositioning. Performance was led by strength in several of our resort markets, including Orlando, Key West, and Puerto Rico, as well as continued improvement in business travel, which drove solid results in urban markets such as New York, San Francisco, Denver, and Boston.

Thank you, Ian.

And welcome everyone.

Overall, I was very encouraged by our second quarter results.

Driven by continued outperformance.

From Recently completed Roi projects.

Discipline cost controls across the portfolio.

And steady progress on our strategic initiatives.

Q2 revpar was relatively flat year-over-year.

Analysis in Miami.

Which suspended operations in mid-may for a transformative renovation and repositioning.

Performance was led by strength in several of our resort markets, including Orlando and Key West.

And Puerto Rico, as well as continued Improvement in business travel, which drove solid results. In urban markets such as New York,

San Francisco.

Tom Baltimore: An aggressive asset management strategy is one of our three guiding principles, and I am incredibly proud of the efforts by our team and our operating partners to drive effective expense controls across our portfolio, resulting in total expense growth of just 40 basis points for the quarter, or just 1% when excluding Royal Palms South Beach, marking the second consecutive quarter in which expenses grew by approximately 1% or less. Looking ahead to the remainder of the year, we expect continued low-expense growth driven by cost savings identified through our deep-dive analysis into cost structures in the first half of the year, in addition to the benefits of a sector-leading 25% reduction in property insurance premiums, which will result in an incremental $5 million in savings through year-end.

Denver, and Boston.

And aggressive asset management strategies are one of our three guidelines. I am incredibly proud of the efforts by our team and our operating partners to drive effective expense controls across our portfolio, resulting in total expense growth of just 40 basis points for the quarter.

or just 1% when excluding Royal Palm South Beach.

marking the second consecutive quarter in which expenses grew by approximately 1% or less.

Looking ahead to the remainder of the year.

We expect continued low expense growth, driven by cost savings identified through our deep dive analysis and cost structures. In the first half of the year, in addition to the benefits of a sector-leading performance.

25% reduction in property insurance premiums, which will result.

Tom Baltimore: From a capital allocation standpoint, we made meaningful progress toward our goal of $300 to $400 million in non-core dispositions, with the sale of the Hyatt Centric Fisherman's Wharf for $80 million at an impressive multiple of 64 times 2024 EBITDA, demonstrating the underlying real estate value supported in the private markets. While the transaction market remains challenging, we are actively engaged in discussions with potential buyers for several non-core assets, and we remain laser-focused on achieving our target by year-end. As a reminder, our strategic initiative to dispose of our remaining 18 non-core hotels is expected to meaningfully enhance the overall quality and long-term growth profile of the company.

Through year end.

From a capital, allocation standpoint, we made meaningful progress. Toward our goal of 300 to 400 million in non-core dispositions.

With the sale of the highest Centric Fisherman's Wharf for 80 million at an impressive multiple of 64 times. 2024 ibida.

Demonstrating the underlying Real Estate Value supported in the private markets.

While the transaction Market remains challenging.

We are actively engaged in discussions with potential buyers for several non-core assets and we remain laser focused on achieving our Target.

By year end.

Tom Baltimore: In line with our strategic priorities, we made the decision to close the 266-room Embassy Suites Kansas City Plaza Hotel by the end of September, as the asset is projected to achieve just $73 in 2025 RevPAR and generate very little EBITDA. In connection with the hotel closure, we recently agreed to an early termination of the hotel ground lease, which was set to expire in January 2026. We also made the decision to exit two additional non-core hotels, the Doubletree Seattle Airport and Doubletree Sonoma, both of which are subject to a ground lease that will terminate at the end of this year, at which time the properties will revert to the landlord.

as a reminder, our strategic initiative to dispose of our remaining 18 non-orthodox,

Company in line with our strategic priorities. We made the decision to close the 266-room Embassy Suites Kansas City Plaza Hotel by the end of September.

As the asset is projected to achieve just $73 in 2025 RevPAR and generate very little adjusted EBITDA.

In connection with the hotel closure. We recently agreed to an early termination of the hotel ground lease which was set to expire in January 2026.

We also made the decision to exit 2, additional non-core hotels, the Double Tree Seattle airport.

Tom Baltimore: Removal of these assets will materially enhance the quality of our portfolio, increasing nominal RevPAR by over $5 and margins by nearly 70 basis points, and bring us closer to our core portfolio of 20 consolidated hotels, which represents approximately 90% of the value of our portfolio. This core portfolio remains among the highest quality in the sector, with an average RevPAR of nearly $215 in EBITDA per key exceeding $40,000 based on 2024 performance adjusted for last year's strike disruption. Looking ahead, we expect the core portfolio to outperform the forecasted US average RevPAR growth in the coming years. With respect to capital investments, during the second quarter, we commenced the comprehensive renovation project at our Royal Palms South Beach Resort, which we expect will generate returns of 15 to 20% on our $103 million investment, with the hotel's EBITDA expected to double to nearly $28 million once stabilized.

And DoubleTree Soma, both of which are subject to a ground lease that will terminate at the end of this year, at which time the properties will revert to the landlord.

Removal of these assets will materially enhance the quality of our portfolio. Increasing nominal ryft Power by over 5 dollars and margins by nearly 70 basis points, and bring us closer to our core portfolio of 20 Consolidated hotels.

Which represents approximately 90% of the value of our portfolio.

This core portfolio remains among the highest quality in the sector.

With an average rev part of nearly 2115 and ibaa per key exceeding 40.7%.

Adjusted for last year's strike disruption.

Looking ahead.

We expect the core portfolio to outperform the forecasted U.S. average RevPAR growth.

And the coming years.

With respect to Capital Investments. During the second quarter, we commenced the comprehensive renovation project at our Royal Palm South Beach Resort.

Which we expect will generate returns of 15 to 20%.

On our 103 million investment.

Tom Baltimore: Our in-house design and construction team is working diligently to ensure the hotel opens in Q2 of next year, ahead of the 2026 World Cup, during which Miami is scheduled to host seven matches in June and July. Additionally, we expect to launch the final phases of room renovation projects for two of our rooms, towers in Hawaii this month at Hilton Hawaiian Village. The second and final phase will encompass a full renovation of the remaining 404 guest rooms in the iconic Rainbow Tower and the addition of 14 new guest rooms, with a total investment of $48 million. At the Hilton Waikoloa Village, this $36 million phase will fully renovate the remaining 203 guest rooms in the Palace Tower and add eight new guest rooms. We expect both projects to be completed in early Q1 of next year.

With the hotel's IBA expected to double to nearly 28 million once stabilized.

Our in-house design and construction team is working diligently to ensure the hotel opens in Q2 of next year.

Ahead of the 2026 World Cup, during which Miami is scheduled to host 7 matches in June and July.

Additionally. We expect to launch the final phases of room, renovation projects for 2 of our rooms Towers in Hawaii this month.

At Hilton Hawaiian Village.

The second and Final Phase will Encompass a full renovation of the remaining 44 guest rooms in the iconic rainbow Tower.

And the addition of 14 new guest rooms, with a total investment of 48 million.

At the Hilton woa Village. This 36 million phase will fully renovate. The remaining 203 guest rooms in the palace Tower and add 8. New guest rooms.

Tom Baltimore: Finally, at the Hilton New Orleans Riverside, we are currently underway with the second phase of a three-phase renovation project, investing $31 million to upgrade an additional 428 guest rooms in the main tower, while the remaining 489 guest rooms of the 1,167-room tower are scheduled for renovation in 2026. I'm very excited about the investments we've made in our core portfolio as we continue to enhance asset quality and strategically allocate capital to maximize long-term shareholder value. We are confident that reinvesting in our portfolio is the highest and best use of our capital, positioning us for sustained growth and outperformance. Since 2018, Park will have invested more than $1.4 billion in our core 20 consolidated hotels through 2025, upgrading nearly 8,000 guest rooms and fully repositioning several of our most iconic hotels.

We expect both projects to be completed in early Q1 of next year.

Finally, at the Hilton, New Orleans Riverside. We are currently underway with the second phase of a 3-phase renovation project.

Investing $31 million to upgrade an additional 428 guest rooms in the main tower.

While the remaining 489 guest rooms of the 1,167-room Tower are scheduled for renovation in 2026.

Maximize long-term shareholder value.

We are confident that reinvesting in our portfolio is the highest and best use of our capital.

Positioning us for sustained growth and outperformance.

Since 2018, Park will have invested more than $1.4 billion in our core.

20 Consolidated hotels through 2025.

Tom Baltimore: Turning to operations, we witnessed continued strength in Orlando, with our Bonner Creek Complex delivering record-setting revenue for the second quarter. RevPAR for the complex exceeded expectations, increasing nearly 12% year over year, with strong transient demand driven by a surge in advanced purchase activity and enhanced commercial strategies. The Waldorf Astoria was particularly strong, reporting a 24% increase in RevPAR year over year as demand improved for both group and transient segments, each posting approximately 20% growth compared to last year. Notably, this quarter marked the 15th consecutive quarter of year-over-year group revenue outperformance at the complex. I'm also pleased to share that the Waldorf Astoria Orlando was recently recognized in Travel and Leisures 2025 World's Best Awards as the fourth best resort in Florida and the top-ranked resort within the Orlando market.

Upgrading nearly 8,000 guest rooms and fully repositioning several of our most iconic hotels.

Turning to operations.

We witnessed continued strength in Orlando with our Bonnet Creek, complex delivering record, setting revenue for the second quarter.

RevPAR for the complex exceeded expectations.

Increasing nearly 12% year-over-year with strong transient demand driven by a surge in advanced purchase activity and enhance commercial strategies.

The Walther P story was particularly strong.

Reporting a 24% increase in RevPAR year-over-year as demand improved for both group and transient segments.

Each posting approximately 20% growth compared to last year.

Notably, this quarter marked the 15th consecutive quarter of year-over-year group revenue outperformance at the complex.

I'm also pleased to share that the Walter for story Orlando.

Tom Baltimore: Looking ahead, both transient and group demand remain strong at the complex, which is expected to deliver high single-digit RevPAR growth throughout the remainder of the year. Overall results at the Bonner Creek Complex have exceeded our underwriting expectations, with 2025 EBITDA now forecasted to be well over $90 million and nearly 40% above prior peak, further validating our strategy to invest in our core assets. Turning to Key West, our Casa Marina Resort reported a nearly 4% year-over-year increase in RevPAR during the quarter, with transient occupancy increasing by over 20% as the hotel continues its position as one of Key West's premier hotels. Food and beverage outlet and ancillary revenue outperformed last year by 8% during the quarter, resulting from the increased transient volume and the newly added Dorado Restaurant that opened in Q3 of 2024.

Was recently recognized in travel and leisure's, 2025 world's best Awards as the fourth best resort in Florida and the top ranked Resort within the Orlando market.

Looking ahead.

Both transient and group demand remain strong at the complex.

Which is expected to deliver high single-digit, revpar growth throughout the remainder of the year.

Overall results at the Bonnet Creek complex have exceeded our underwriting expectations, with 2025 EBITDA now forecasted to be well over $90 million and nearly 40%.

Above prior Peak.

Further validating our strategy to invest in our core assets.

Turning the Key West, our cast Marina Resort reported a nearly 4% year-over-year increase in revpar during the quarter.

With transient occupancy increasing by over 20% as the hotel continues. Its position is 1 of key. West's Premier hotels,

Food and beverage outlet and ancillary Revenue outperformed last year by 8% during the quarter.

Tom Baltimore: Notably, total food and beverage revenue for our Key West hotels reached a new Q2 record. Looking ahead to the second half of the year, we expect continued strong performance at both hotels, driven by sustained transient room demand and food and beverage activity, with total RevPAR projected to grow high single digits over last year. In Puerto Rico, strong leisure and business transient demand drove a nearly 18% increase in RevPAR for the quarter compared to last year. Consistently high occupancy contributed to Caribe Hilton outperforming its comp set and delivering a RevPAR index of 120%, a positive trend we expect to continue, leading to mid to upper single-digit RevPAR growth expected for the back half of the year.

Resulting from the increased transient volume and the newly added Dorado restaurant that opened in Q3 of 2024.

Notably total food and beverage revenue for our Key. West hotels, reached a new

Q2 record.

Looking ahead to the second half of the year. We expect continued strong performance at both hotels, driven by sustained, transient room, demand and food, and beverage activity with total. Rev Bar projected to grow High single digits over last year.

In Puerto Rico.

Strong Leisure and business, transient demand, drove a nearly 18% increase in rev park for the quarter compared to last year.

Consistently High occupancy. Contributed to kibbe Hilton. Outperforming its compet

And delivering a revpar index of 120%, a positive trend we expect to continue.

Tom Baltimore: In our urban portfolio, we were particularly pleased with the ongoing strength of business travel during the second quarter, which contributed to solid RevPAR growth in New York, San Francisco, Denver, and Boston. At our JW Marriott Hotel in San Francisco, RevPAR growth exceeded 17%, driven by solid transient and group demand as the city benefited from an increase in convention room nights during the quarter. In New York, our Hilton Midtown Hotel delivered a nearly 10% RevPAR increase during the quarter, supported by a 16% increase in group revenue and a more than 11% increase in leisure revenue, both of which helped to drive a nearly 230 basis point increase in RevPAR index during the quarter. In Denver, RevPAR growth at our Hilton Denver Hotel exceeded 6% during the quarter, fueled by strong performance across both group and leisure segments.

Leading to Mid to Upper single-digit, repar growth expected for the back, half of the year.

In our urban portfolio, we were particularly pleased with the ongoing strength of business travel. During the second quarter, this contributed to solid red bar growth in New York, San Francisco, Denver, and Boston.

At our JW Marriott Hotel, in San Francisco, rep bar growth exceeded, 17% driven by solid transient, and group demand as a city benefited. From an increase in convention room nights during the quarter,

In New York.

Our Hilton Midtown Hotel delivered, a nearly 10% rep for increase during the quarter supported by a 16% increase, in group revenue, and a more than 11% increase in Leisure Revenue.

Both of which helped to drive a nearly 230 basis. Point increase in rev bar index during the quarter,

Tom Baltimore: Meanwhile, in Boston, an over 22% increase in leisure revenue contributed to a 5% RevPAR gain at our Hyatt Regency Hotel. Turning to Hawaii, while we continue to face some near-term headwinds, we are encouraged by the sequential improvement we are seeing, especially at our Hilton Hawaiian Village, even as inbound international travel has not fully recovered. Combined RevPAR at our two properties declined by approximately 12% during the quarter, with Hawaii continuing to be impacted by weaker inbound travel from abroad. With respect to Hilton Hawaiian Village, the resort continues to recover from the Q4 labor strike last year. However, we are encouraged by the hotel's continual improvement in market share, regaining over 1,600 basis points since the beginning of the year and exceeding full share since May.

Fueled by strong performance across both group and Leisure segments.

Meanwhile in Boston and over 22% increase in Leisure Revenue, contributed to a 5% repar gain at our high at Regency Hotel.

Turning to Hawaii.

While we continue to face some near-term headwinds, we are encouraged by the sequential improvement we are seeing.

especially at our Hilton Hawaiian Village.

Even as inbound, international travel has not fully recovered.

Combined rev part of our 2 properties declined by approximately 12%. During the quarter, with Hawaii, continuing to be impacted by weaker inbound travel from abroad.

With respect to Hilton Hawaiian Village, the resort continues to recover from the Q4 labor strike last year.

However, we are encouraged by the hotel's continual improvement in market share.

Tom Baltimore: Looking ahead in the near term, we expect the sequential recovery for Hilton Hawaiian Village to continue, evidenced by a strong forecast for July that had occupancy over 90% and RevPAR index above pre-strike levels. However, this momentum is expected to be offset by Hilton Waikoloa's weakest quarter of the year, producing a combined RevPAR decline that is expected to be slightly better than Q2. Beyond Q3, performance in Hawaii is expected to accelerate meaningfully in the fourth quarter as Hilton Hawaiian Village lapsed the labor strike disruption from last year that drove RevPAR down over 25% in 2024. In addition, combined group pace across our two Hawaii resorts is forecasted to increase by nearly 50%, which we expect will translate into high teens combined RevPAR growth during Q4.

Regaining over 1,600 basis points since the beginning of the year and exceeding full share since May.

Looking ahead in the near term, we expect the sequential recovery for Hilton Hawaiian Village to continue.

Evidenced by a strong forecast for July, occupancy was over 90% and the RevPAR index was above pre-strike levels. However, this momentum is expected to be offset by Hilton's weakest quarter of the year.

Producing a combined red part decline that is expected.

To be slightly better than Q2.

Beyond Q3 performance in Hawaii, is expected to exceed meaningfully in the fourth quarter as Hilton Hawaiian Village. Lapse the labor strike disruption from last year that drove revpar down over 25% in 2024

In addition combined group Pace across our 2, Hawaii. Resorts is forecasted to increase by nearly 50%.

Tom Baltimore: Looking ahead, the long-term outlook for Hawaii remains very favorable, supported by very limited new supply expected through at least 2030 and the anticipated improvement of inbound travel from abroad. In our opinion, Hawaii is one of the most dynamic and resilient resort markets in the country, with less supply growth forecasted versus any other US market and with over 3,500 fee-simple guest rooms at a huge discount to replacement cost. Park remains well-positioned to deliver above-average long-term growth for shareholders. And finally, I am pleased to report that neither of our Hawaii hotels sustained any damage following the 8.8 magnitude earthquake off the Russian coast on Wednesday and subsequent tsunami alerts throughout the Pacific Ocean.

Which we expect will translate into High Teens combined revpar growth during Q4.

Looking ahead. The long-term outlook for Hawaii remains very favorable.

Supported by very limited new Supply expected to at least 2030.

Anticipated improvement of inbound travel from abroad.

In our opinion.

Hawaii is one of the most dynamic and resilient resort markets in the country, with less supply growth forecasted compared to any other U.S. market.

And with over 3,500 fee, simple, guest rooms.

At a huge discount to replacement cost.

Park remains well positioned to deliver above-average, long-term growth for shareholders.

and finally,

I am pleased to report that neither of our Hawaii hotel sustained any damage following. The 8.8 magnitude, earthquake off the Russian Coast on Wednesday and subsequent tsunami alerts throughout the Pacific Ocean.

Tom Baltimore: With respect to fundamentals over the back half of the year, the outlook remains mixed as the ongoing uncertainty around tariffs, elevated inflation, and geopolitical issues are expected to continue weighing on travel demand during the third quarter, while easier comps and improved group travel will help to support strong trends during Q4. Overall, July results have been modestly weaker than expected, with preliminary RevPAR declining by approximately 4% when you include the nearly 130 basis points of renovation disruption at the Royal Palms South Beach. Recent trends are persisting, with continued strength in Orlando, Key West, and New York City, offset by modestly softer than expected results in Hawaii and Southern California. Based on our current forecast, Q3 RevPAR is expected to decline by approximately 4 to 5%.

With respect to fundamentals over the back half of the year.

The Outlook remains mixed as the ongoing uncertainty around tariffs elevated inflation and geopolitical issues are expected to continue. Weighing on travel demand during the third quarter.

While easier comps and improved Group Travel will help to support strong Trends during Q4.

Overall.

July results. Have been modestly weaker than expected with preliminary. Rev part declining by approximately 4%. When you include the nearly 130 basis points of renovation disruption.

At the Royal Palm South Beach.

Recent Trends are persisting.

With continued strength in Orlando, Key West in New York City offset by modestly softer than expected results in Hawaii.

And Southern California.

Based on our current forecast.

Q3 RevPAR is expected to decline by approximately 4% to 5%.

Tom Baltimore: Our revised forecast reflects softer than anticipated group demand, with group pace lower by 380 basis points to down 14%, our weakest quarter of the year, coupled with softer leisure transient demand forecasted for Q3, mainly due to heightened economic uncertainty, reduction in government demand, and weaker inbound international visitation. We expect a significant improvement during the fourth quarter, with group revenue pace increasing 18%, which, when combined with significantly easier year-over-year comparisons, we expect RevPAR growth to reaccelerate to 3 to 5% in the fourth quarter. Overall, the improvement is relatively broad-based, with outsized gains expected for Hawaii, Denver, Orlando, Key West, Boston, Seattle, and Chicago. Additionally, we remain laser-focused on our strategic objectives of reshaping the portfolio through reinvestments in our iconic portfolio to drive long-term value for shareholders, executing non-core asset dispositions, and further strengthening our balance sheet by extending maturities and reducing leverage over time.

Our revised forecast, reflects softer than anticipated group demand.

With group pace lower by 380 basis points, to down 14%.

Our weakest quarter of the year, coupled with softer leisure transit demand, is forecasted for Q3.

Mainly due to heightened economic uncertainty, reduction in government demand, and weaker inbound international visitation.

We expect a significant Improvement during the fourth quarter.

increasing 18%, which when combined with significantly easier year-over-year comparisons,

We expect RevPAR growth to re-accelerate to 3% to 5% in the fourth quarter.

Overall, the improvement is relatively broad-based.

With outsized gains expected for Hawaii.

Denver or Lando, Key West.

Boston, Seattle and Chicago. Additionally, we remain laser focused on our strategic objectives of reshaping the portfolio.

Through reinvestments in our iconic portfolio.

To drive long-term value for shareholders.

Tom Baltimore: These priorities keep us focused on what we can control and position us to navigate near-term volatility while building a stronger, more resilient platform for sustainable long-term growth. And with that, I'd like to turn the call over to Sean.

Executing non-core asset dispositions and further strengthening our balance sheet by extending maturities and reducing leverage over time.

These priorities keep us focused on what we can control.

And position us to navigate near-term. Volatility of building a stronger. More resilient platform for sustainable long-term growth.

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

Sean Dell'Orto: Thanks, Tom. Q2 RevPAR was largely in line with expectations, with reported results of $196, representing a 160 basis point decline over the prior year period. However, excluding our Hilton Hawaiian Village Hotel, which continues to recover from last year's labor strike, and the Royal Palms South Beach, which suspended operations in May for a full-scale renovation, year-over-year RevPAR growth would have exceeded 2%, as these two properties together accounted for a 375 basis point drag on portfolio performance. Total hotel revenues for the quarter were $645 million, and hotel adjusted EBITDA was $191 million, resulting in a hotel adjusted EBITDA margin of 29.6%. Adjusted EBITDA for the quarter was $183 million, and adjusted FFO per share was $0.64, both exceeding expectations.

Thanks Tom.

Q2 results were largely in line with expectations, with reported results of $196 million.

Representing a 160-basis-point decline over the prior year period.

However, excluding our Hilton Hawaiian Village hotel, which continues to recover from last year's labor strike and the Royal Palm South Beach, which suspended operations in May for a full-scale renovation. Year-over-year rep Park growth would have exceeded 2%

as these 2 properties together, accounted for a 375 basis point drag on portfolio performance,

Total hotel revenues for the quarter were $645 million, and hotel adjusted IBA was $191 million, resulting in a hotel adjusted IBA margin of 29.6%.

Adjusted even up for the quarter was $183 million, and adjusted FFO per share was 64 cents, both exceeding expectations.

Sean Dell'Orto: Turning to the balance sheet, we are actively working to address our 2026 debt maturities, including the $1.275 billion CMBS loan on our Hilton Hawaiian Village Resort and the $123 million mortgage loan on our Hyatt Regency Boston Hotel. With our strategic priorities in mind, we remain focused on solutions that offer near-term commitments that maximize optionality and minimize cost, and we're currently in the middle of a process to secure the debt and liquidity sufficient to address the $1.4 billion outstanding and reasonably confident we will complete a transaction in the third quarter. With respect to our dividend, on July 15th, we paid our second quarter cash dividend of $0.25 per share, and on July 25th, we declared a third quarter cash dividend of $0.25 per share to be paid on October 15th to stockholders of record as of September 30th.

Turning to the balance sheet, we are actively working to address our 2026 debt maturities, including the 1.275 billion. Cmbs loan on our Hilton Hawaiian Village Resort in the 123 million mortgage loan on our higher, Regency Boston Hotel.

With our strategic priorities in mind. We remain focused on solutions that offer near-term commitments, that maximize optionality and minimize cost, and we're currently in the middle of a process, to secure the debt and liquidity. Sufficient to address the 1.4 billion outstanding and reasonably confident. We will complete a transaction in the third quarter.

Sean Dell'Orto: The dividend currently translates to an annualized yield of approximately 9%. Turning to guidance, given some of the near-term headwinds Tom discussed earlier, we are lowering our full-year RevPAR forecast by 150 basis points at the midpoint to a new range of negative 2% to flat growth. We're essentially flat at the midpoint when excluding the Royal Palms South Beach. With respect to earnings, we are increasing our adjusted EBITDA forecast by $2 million at the midpoint to $620 million, within a tightened range of $595 million to $645 million, resulting from the improved outlook for annual expense growth that Tom alluded to earlier, helping to offset the softer top line expectations. As a result, hotel adjusted EBITDA margin range is now 26.1% to 27.5%, or an increase of 30 basis points at the midpoint versus our prior guidance range.

With respect to our dividend on July 15th, we paid our second quarter cash, dividend of 25 cents per share. And on July 25th, we declared a third quarter cash dividend of 25 cents per share to be paid on October 15th to stockholders of record, as of September 30th.

The dividend currently translates to an annualized yield of approximately 9%.

Turning to guidance, given some of the near-term headwinds, Tom discussed earlier that we are lowering our full-year repair forecast by 150 basis points at the midpoint.

Between new range of negative, -2% to Flat growth.

We're essentially flat at the midpoint, when excluding the Royal Palm South Beach.

With respect to earnings, we are increasing our adjusted EVA forecast by $2 million at the midpoint to $620 million, within a Titan range of $595 million to $645 million.

Resulting from the improved outlook for annual expense growth. That Tom alluded to earlier helping to offset the softer Topline expectations.

Sean Dell'Orto: And finally, adjusted FFO per share increases by $0.01 at the midpoint to $1.95, with a range of $1.82 to $2.08 per share. Finally, I wanted to provide a brief update on the status of the two San Francisco hotels, which have been in receivership since October 2023. After a two-year process, I'm very pleased to report that the receiver has made substantial progress toward the sale of the two hotels, with a purchase and sale agreement recently signed and closing expected by October 29th. 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?

As a result Hotel, adjusted, even a margin range is now 26.1% to 27.5% or an increase of 30 basis points at the midpoint versus our prior guidance range.

And finally, adjusted FFO per share increases by 1 cent at the midpoint to $1.95, with a range of $1.82 to $2.28 per share.

Finally, I wanted to provide a brief update on the status of the 2, San Francisco hotels, which have been in receivership since October 2023.

After a 2-year process, I'm very pleased to report that the receiver has made substantial progress toward the sale of the 2 Hotel.

With a purchase and sale agreement recently signed, closing is expected by October 29th.

Yourself to 1 question and 1 follow-up.

Operator, may we have the first question, please?

Speaker 7: Thank you. We will now be conducting a question-and-answer session. Again, we ask that all callers limit themselves to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would 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. Our first question comes from the line of Smeads Rose with City. Please proceed with your question.

Thank you. We will now be connecting your question-and-answer session again. We ask that all callers limit themselves to one question and one follow-up.

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Our first question comes from the line of Smee's Rose with City. Please proceed with your question.

Smedes Rose: Hi. Thanks. Good morning. I wanted to ask you just a little bit morning. I wanted to ask you a little bit on your the guidance bridge, looking at the first quarter kind of comp set guidance for hotels versus the second quarter. It looks like the decline in revenues is almost offset kind of one for one on the expense side, which seemed, you know, kind of aggressive. And I'm just wondering if you could sort of talk to that a little bit, or maybe the same sort of pool is a little bit different for the first quarter versus the second quarter in your guidance, or that's my first question.

Uh, hi, thanks. Good morning. Um, I I wanted to ask you just a little bit morning, I, I wanted to ask you a little bit on your, um, the, the guidance Bridge. Um, looking at the first quarter kind of comp, set guidance for hotels versus the second quarter. It, it looks like the decline in revenues is almost offset kind of 1 for 1 on the expense side, which seems, you know, kind of aggressive. And I just wondering, um, if you could sort of talk to that a little bit or maybe the the same store, pool is a little bit different for the first quarter, versus the second quarter in your guidance or

Um, that’s my first question.

Sean Dell'Orto: Yeah. Smeads, this is Sean. I'll address that. I mean, first and foremost, I think one thing that we've that's not the only you're not the only one to ask that question. And I guess when looking at the first quarter guidance relative to the second quarter, you know, in between that, we sold Fisherman's Wharf. So there's an adjustment that needs to be made for that. I won't get into all the details there, but I'll talk with Ian and Zach on that one. But I think it goes back to what Tom mentioned in his prepared remarks around, you know, the cost savings that we've produced here. I mean, it comes back to his comment around our aggressive asset management being a guiding principle. I think a couple of things happened over the last several months.

Sean Dell'Orto: One in particular, from our asset management team side, you know, they work together with our operators, both kind of corporate level and on property, working with them on site, you know, over a dozen properties over the last several months, just kind of doing a deep dive, looking at revenue strategies, finding ways to increase non-room revenues, and ultimately reducing costs across just about every line item you can find in the properties. And so with all that work, which has gone over the last couple of months, I would say we've looked to produce about a $10 million benefit to GOP. So that's been very productive there, and kudos to all the efforts they've done there for us. And we've got another group of hotels we're looking to do in Q3 kind of ongoing right now through July and into August.

Yes me, this is Sean. I'll I'll address that. I mean, first and foremost. I think if 1 thing that we it's not the only you're not the only 1 to ask that question. And I guess when looking at the first quarter guidance relative to second quarter, you know, in between that we sold Fisherman's Wharf. So there's an adjustment that needs to be made for that. I won't get into all the details there but you know, certainly talk with Ian. Zack on that 1 goes back to what Tom mentioned is prepared marks around. Um, you know, the cost savings that we've um, we've produced here. I mean, it comes back to his comment around our aggressive Asset Management being a guiding principle. I think a couple of things happened over the last several months. Uh, 1 in particular um from our asset management team side, you know, they work together with our operators, both kind of corporate level and on property working with them on site. Um, you know, over a dozen properties over the last several months. Just kind of doing a deep dive, looking at Revenue strategies, finding ways to increase non- room revenues. Um, and ultimately reducing

Sean Dell'Orto: Also, we've aggressively, our team on the tax side, aggressively pursue appeals, and we certainly benefited from a few wins over the last quarter or so. It certainly wasn't part of our guidance before. We took a $5 million benefit in Q2, and we've also got the benefit of about $2.5 million of savings in the back half of the year against what we accrued against property taxes previously. And then finally, you know, we often talk too about our best-in-class risk management program and how we put a lot of emphasis on protecting our assets. We have first responder programs where first responders are assigned to each property, trained along with our property operator teams to prepare for situations like hurricanes, water leaks, etc. We also invest in technology to protect both the inside and outside of the hotels. We make investments to harden the assets in coastal areas.

Costs across just about every line item you can find in the properties. And so with all that work, which has gone on over the last couple of months, I would say we look to produce about a $10 million benefit to GOP. Um, so that's been very productive there, and kudos to all the efforts they've done for us. And we've got another group of hotels we're looking to do in Q3, kind of ongoing right now, through July and into August. Um, also, um, we've aggressively had our teams on the tax side.

Aggressively pursue appeals, and we were certainly benefited from a few wins over the last quarter. So, it certainly wasn't part of our guidance before we took a $9 million benefit in Q2. We've also got the benefit of about $2.5 million of savings in the back half of the year against what we accrued against property taxes.

Sean Dell'Orto: And all this work and effort gets acknowledged by our insurance carriers. And so with our last renewal on June 1st, we saw a decrease by 25% of our annual premiums. And so that gives us a benefit of $1 million roughly in Q2 and then another $5 million in the back half of the year. So when you put all that together, it's about $24 million of we kind of kind of bottom-line benefits we've derived from all the efforts that we, you know, undertook over the last several months. I think that's how you see kind of the good flow-through pattern you're seeing.

Uh, previously. And then finally, um, you know, we often talk to about our best-in-class risk management program and how we put a lot of emphasis on protecting our assets. We have first rep responder programs. We were First Responders were assigned each property, trained along with our property. Operator teams to, you know, prepare for situations, like hurricanes, water leaks, Etc. We also invest in technology to protect both the inside. And outside the hotels, we make investments, the hardened, the assets and coastal areas. I mean, all this work and effort gets acknowledged by our insurance carriers. And so, with our last renewal on June 1st, we saw a decrease by 25% of our annual premiums and so that gives us a benefit of $1 million roughly in Q2 and then another $5 million in the back half of the year. So, when you put all that together, it's about 24 million dollars. If we kind of kind of bottom line benefits, we've derived from all the efforts that we, you know, owner took over the last several months and I think that's how you see kind of the good flow through pattern. You're seeing

Smedes Rose: Okay. All right. Thank you. And then I guess I just wanted to ask you a little bit oh, yes, go ahead. Sorry.

Okay. All right. Thank you. And then I guess I just wanted to ask you a little bit. Yes, go ahead. Sorry.

Tom Baltimore: Yes, Smeads, it's Tom. I just wanted to just another shout-out to really Sean and to Carl Mayfield, heads of design and construction, and just the team of men and women that work on the insurance side. What they've accomplished over the last several years is nothing short of extraordinary. And the discipline and the amount of work we've done on the resiliency and to get a 25% reduction, there isn't any of our peers even remotely close to that. And furthermore, no one really has the depth of experience or the embedded team internally to be able to work the way that we have. And I'm really proud and I'm grateful, but I think all of that work, in addition to the deep dive on the operating side, and particularly in this challenging environment, really shows, I think, the strength of the team.

Yeah, yeah, it's me. This is Tom. I just wanted to give another shout out to really Sean Dell'Orto and to Carl Mayfield. Heads up to Designing Construction and just...

And the team of men and women that work on the insurance side. Um, what they've accomplished over the last several years is nothing short of extraordinary.

uh you know the discipline and the amount of work we've done on the resiliency uh and to get a 25% reduction, there isn't any of our peers even remotely close

Tom Baltimore: And again, going back to one of our guiding principles of being really an aggressive asset manager. So very, very pleased with it, and I think it shows in the results.

And I'm really proud and I'm grateful. But I think all of that work, in addition to the Deep dive on the operating side, in particularly in this challenging environment, really shows, I think the strength of the team. And again, going back to 1 of our guiding principles of of being really, an aggressive asset manager. So very, very pleased with it. And I think it shows in the results.

Smedes Rose: Thank you. I wanted to ask, you mentioned kind of slightly weaker third-quarter expectations, fourth quarter getting better, you know, partly driven, it sounds like, to some solid group business coming online. Are you seeing a continuation of strength on the group booking side into 2026, and are there any particular markets where you're seeing relative strength or maybe relative weakness?

Thank you. I wanted to ask you, you mentioned kind of slightly weaker third quarter expectations.

Fourth quarter, getting better, you know, partly driven. That sounds like some solid group business coming online. Are you seeing a continuation of strength on the group booking side since 2026? And are there any particular markets where you're seeing relative strength or maybe relative weakness?

Tom Baltimore: Yeah. I would say as we look to '26, I think probably relatively flat right now. Not unsurprising as we look out to '27, probably up 4 to 5 percent right now. But key markets in '26 that look particularly strong, Bonner Creek continues to perform well. That transformation is the gift that keeps giving and probably up another 10% or more in '26 there. San Diego up probably 53% in group pace. Chicago up 11%. Hilton Caribe, I think, up another over 40%. Seattle up double digits. So, you know, we continue to see really strong on the group side there. So it's strong there and looks very good as we look out to '27 as well. And fourth quarter is particularly strong. We're not seeing any softening at all. Again, third quarter will be tougher, as Sean mentioned, as I had my prepared remarks down about 14%.

Yeah, I I would say as we as we look to 26, I think probably relatively flat right now. Um not unsurprising as we look out the 27 probably up uh 4 to 5% right now, but key markets in 26 that look particularly strong Bonnet Creek. Uh continues to perform well that transformation is the the gift that keeps giving and probably up another 10% or more in 26 their San Diego up uh probably 53% in group pace.

A Chicago up 11% um uh Hilton kbey. I think up another Oppo over 40% Seattle up, double digits.

Tom Baltimore: And then obviously the fourth quarter up about 18% in group pace. This in the year 2025.

So, you know, we we continue to see really strong on the on the group side there. So it's, uh, um, a strong there and looked very good as we look out to 27 as well and in fourth quarter is particularly strong. We're not seeing any softening at all. Again, third quarter will be tougher. As Sean mentioned, as I had my prepared remarks down about 14% And then obviously the fourth quarter up about 18% in group group Pace, um, this in, in the year 2025.

Smedes Rose: Okay. Thank you. I appreciate it.

Okay, thank you. I appreciate it.

Tom Baltimore: Thank you.

Thank you.

Speaker 7: Our next question comes from a line of Duane Fenningworth with Evercore. Please proceed with your question.

Our next question comes from the line of Dwayne Fungworth with Evercore. Please receive his questions.

Sean Dell'Orto: Yeah. Hi. This is Peter on for Duane. Thanks for taking the questions. Sean, could you maybe unpack the comment about the possible refinancing in 3Q and what sort of options you're looking at? Sure. We're, as I mentioned, we're down the process. I won't get to too many specifics. But, you know, we're we're certainly working with our banks to find a capital that will kind of get us, again, the commitments that would, you know, kind of give us comfort. Obviously, as these loans go current later this year, with the ability to kind of really just draw down on them later next year when we get as we get close to the maturity so we can obviously push off, you know, what is going to be inevitable increases in interest as well as getting into the par prepayment windows for these loans.

Yeah. Hi. This is, uh, Peter on for Dwayne. Thanks for taking the questions.

Sean could you, maybe I'm unpack the comment about the possible refinancing in 3Q and what sort of options you're looking at

Sean Dell'Orto: So that's kind of between a revolver and some other financing. We'll kind of have that, like I said, we'll have the commitments and the liquidity available to address those. And then we'll probably, whether it's the end of this year or into next year, we'll look to work on a second phase of this process, which will probably be something of a mortgage-secured loan against Bonner Creek to fulfill the rest of the need.

Uh, sure, we're we're, as I mentioned, we're down the process. I won't get to too many specifics. Um, but, you know, we're we're certainly working with our banks to find a Capital that will kind of get us again the commitments. Um, that would, you know, kind of give us Comfort. Obviously these uh, these loans go current later this year. Um, but the ability to kind of really just draw down on them. Um, later next year, when we get as we get close to the maturity, so we can obviously push out. Um, you know, we're just going to be inevitable, um, increases in interest as well as, uh, as as well as getting into the par prepayment windows for these loans. So that's kind of between a revolver, um, and some other financing. Um, we'll kind of have that. Like I said, we have the, the commitments in the, in the liquidity available at the address those, um, and they will probably whether it's the end of this year. In the next year, we'll look, work work, work. Work on a second phase, uh, of this process, uh, which will probably be something of a mortgage secured loan against Bonnet Creek to fulfill the rest. Um,

Of the need.

Smedes Rose: Got it.

Tom Baltimore: And then, Peter gives us the optionality of one little friction cost for other strategic things we may explore, and then having both properties in Hawaii completely unencumbered. So, you know, that's one of the goals that we have through this process. So we are very confident. Sean and the team have done a great job. We're out in front. We've got great banking relationships, and so we don't anticipate any issues, and the process is unfolding very, very well.

Got it. But and then Peter Peter gives it gives us the optionality of

Um, 1 little friction cost.

Uh, for other strategic things, we may explore and then having both properties in Hawaii, completely unencumbered. So, you know, that's, uh, 1 of the goals that we have through this process. So we we are very confident, Sean and the team have done uh a great job. We're out in front. Uh, we've got great banking relationships and so we don't anticipate any issues and processes, uh, unfolding very, very well.

Sean Dell'Orto: Thanks for that. And just quickly on the transaction front, could you speak to maybe what kind of feedback you're getting for assets that are currently being marketed and, you know, if possible, what sort of timeline we could be working with for further announcements? Thanks for taking the question.

Tom Baltimore: Yeah. Great question. Look, it's a challenging environment. Some have used the phrase sort of frozen or stalled. I think it's an environment where you've just got to work a little harder, and we're certainly up to that challenge. I think if you think back, obviously, over the last several years, we have sold or disposed of now 46 assets for north of $3 billion. We were even selling in the worst of times during the pandemic. So we've obviously completed one asset sale of Fisherman's Wharf in San Francisco at $80 million and multiple, I believe, at about 64 times. So there's plenty of liquidity, both on the equity and the debt side. Obviously, buyers are being cautious with their underwriting and being disciplined, and we are in active discussions with a number of hotels of multiple work streams.

Thanks for that and just quickly on the transaction front. Um do you speak to maybe? What kind of feedback you're getting for assets? That are currently being marketed? And you know if possible what sort of timeline we could be working with for uh for further announcements. Thanks for taking the questions.

Yeah, great. Great question. Um, look, it's a challenging environment. Some of you use the phrase "frozen" or "stalled." Um, I think it's an environment where we just got to work a little harder, and we're certainly up to that challenge. I think if you think back,

Several years, we have sold or disposed of now 46 assets for north of $3 billion. We were even selling in the worst of times during the pandemic. So we've obviously completed one asset sale: Fisherman's Wharf in San Francisco at $800 million and multiple, I believe, at about 64 times.

Tom Baltimore: And we're confident that we will meet our range that we've communicated from the beginning of the year of $300 to $400 million in asset sales, obviously using those proceeds to invest back into our core portfolio, reduce debt, and then we'll look opportunistically on potential buybacks. Obviously, we bought back approximately 3 million shares in Q1. We didn't buy back any shares in Q2, but we have purchased, we've bought back about 38 and a half million shares over the last three-plus years, about 20% of our flow. So, you know, we've been very disciplined about recycling capital, and particularly given all of our capital allocation decisions, and we'll continue to proceed accordingly.

So we're there's plenty of liquidity, both on the equity and the debt side. Obviously buyers are are being cautious with their underwriting and, uh, and being disciplined and uh, we are an active discussions with a number of hotels of multiple work streams.

um and we're confident that we will um meet our our our range that we've

Uh, communicated from the beginning of the year of 300 to 400 million. In asset sales, obviously, using those proceeds to invest back into our core portfolio, uh, reduced debt and then we'll look opportunistically on on potential BuyBacks. Obviously we bought back uh uh, approximately 3 million shares in in q1. We didn't buy back. Any shares in Q2, but we have uh purchased. Uh, We've bought back about 38 and a half million shares over the last 3 plus years about 20% of our float. So, you know, we've been very disciplined about recycling Capital. Um, and and in particularly given all of our capital

Application decisions, and we'll continue to proceed accordingly.

Sean Dell'Orto: Thanks, Tom.

Thanks Tom.

Tom Baltimore: Thank you.

Thank you.

Speaker 7: Our next question comes from a line of Chris Moronko with Deutsche Bank. Please proceed with your question.

Our next question comes from the line of Chris Warona with Deutsche Bank. Please proceed with your question.

Chris Woronka: Hey, hey guys. Good morning. Hey, good morning. Thanks for taking the question. Morning, Tom. So I guess it wouldn't really be a conference, you know, a quarterly conference call if we didn't go to the Hawaii question. But I wanted to kind of direct it more on the, you know, on the city-wide front, on the marketing front, and the airlift front, Tom. You know, do you think, you know, all the interested parties at the on the ground level with the, you know, the government and the travel people, do you think they're, you know, adequately getting, you know, enough messaging out there to get folks back? And do you think the airlines are any closer to adding more international flights in now? Thanks.

Hey, hey guys, good. Good morning.

Morning! Thanks for taking the question. Morning, morning talk. Um,

So I guess it wouldn't really be a conference, you know, quarterly conference call, if we didn't go to the Hawaii question. But I I want to kind of direct it more more on the, you know, on the Citywide front on the marketing front and the airlift front Tom, you know, do you do you think, um, you know, all the interested parties at the on the ground level with the, you know, the the government the travel people? Do you think they're, you know, adequately getting, you know, an off messaging out there to get folks back. And and do you think the airlines are any closer to adding more international flights in now? Thanks.

Tom Baltimore: Yeah, it's a great question, Chris. Look, if you think about over the last 20 years and kind of Oahu as an example, I mean, their RevPAR growth has sort of outpaced the US by approximately 120 basis points. And if you look at sort of Key West, Hawaii, you know, their compound annual growth rate has been about 4.5% versus, I think, the broader US at about 3%. And then, of course, you've had negative, effectively negative supply growth in Oahu over the last 20 years. And as we had in the prepared remarks, we're looking at probably about 0.3% supply growth over the next five years. So, you know, as we look out and having, you know, two world-class resorts owned fee-simple, we are very encouraged about Hawaii long-term. No doubt the ramp-up after the strike is a little longer than certainly we would have hoped.

Yeah. It's a it's a great question. Uh Chris look at if you think about over the last 20 years and kind of a wahoo as an example, I mean, they're rev Park

Growth is sort of outpaced the US by approximately 120 basis points. And if you look at sort of Key West Hawaii,

You know, their compound annual growth rate has been about 4.5 percent versus, I think, the broader U.S. at about 3 percent.

Tom Baltimore: You know, we were down about 18% in HHV in Q1, about 13% Q2. You know, we're obviously expecting probably in the 7% to 8% range in Q3, but obviously a very, very strong Q4. Obviously, we've got favorable comps, but we've also got significant group business, you know, 18% and about 50% in Hawaii as an example. Airlift, domestic airlift is obviously, I think, increased north of 20% since 2019. Obviously, with Southwest and Alaska, obviously United, so Delta, we're very encouraged on that front. So this is obviously part of the ramp-up, but we certainly see no concerns. On the Japanese front, taking a little longer. They had peaked, prior peaked at about 1.5 million. You know, we think this year is probably going to be in the 700,000 passenger visitation range. So, you know, a little behind what we had expected.

and then of course, you've had negative effectively negative Supply growth and and in a wahoo over the last uh, 20 years. And as we had in the prepared remarks, we're looking at probably about 0.3% Supply growth over the next 5 years. So, you know, as we look out and having, you know, 2 world class Resorts owned fees, simple. Um, we are very encouraged about Hawaii long-term, uh no doubt the ramp up. Um, after the strike is a a little longer than certainly, we would have hoped, you know, we were down about 18% in hhv and q1 about 13% Q2.

You know, we're obviously expecting um probably in the 7 8% range in in Q3 but obviously a very, very strong. Uh, Q4 obviously, we've got favorable comps but we've also got significant Group business, you know, 18%.

And about 50% in Hawaii is an example um airlifts. Uh domestic Air Lift is obviously I think increased north of 20%.

Since 2019, obviously with Southwest and Alaska. Uh, obviously United. So Delta we're we're very encouraged on, on that front. Um, so this is obviously part of that part of the ramp up, but we certainly see no concerns on the Japanese front, taking a little longer,

Tom Baltimore: But as you sort of look out, they expect to get back to in the million range by probably 27, 28. So, but a lot of that's being replaced by certainly domestic, certainly coming out of Canada as well, and as well as other international destinations as well. So we're not at all concerned over the intermediate long term. And I think it's also fair to say when you went through Hilton Hawaiian Village was the only asset in Hawaii that had a strike. It was targeted. It was aggressive. It was a long process. We got through the process. We're all friends in working through and aggressively working together to accelerate the ramp-up.

That's being replaced by by, uh, certainly domestic. Uh, certainly coming out of Canada as well, uh, and as well as other other International destinations as well. So we're, we're not at all concerned over the intermediate long-term and I think it's also fair to say when you went through, Illinois village was the only asset in Hawaii. That that had a strike, it was targeted, it was aggressive. Um, it was a long process. Um, we got through the process, we're all friends, and and uh, and working through, and and aggressively um, working together to accelerate the ramp up

Chris Woronka: That's great. Thanks for all that color, Tom. As a quick follow-up, you know, you guys got Fisherman's Wharf done. You talked about Kansas City. If we look at the handful of other kind of non-core airport/gram lease hotels, if we isolate those, is there any way to think about how much that can add to comparable RevPAR or margins, just to kind of frame what that could look like going into next year? Thanks.

That's, that's great. Thanks for all that color Tom. Um, as a quick follow-up. You know, you guys got the insurance work done. Um, you you talked about Kansas City, um, if we if we look at the handful of other kind of non-core airport, scrambly hotels, if we isolate those. Is there any way to think about how much that can can add to comparable repar or margins or read at that? Just to kind of frame? What what that could look like going into next year. Thanks.

Tom Baltimore: Yeah, it's a great question. And in my prepared remarks, we made the comment that if you take out sort of our non-core and just look at our core, I think the RevPAR is about $215 and would be certainly as strong as any of our peers. Chris, we've had this conversation many times. As you know, we are laser-focused on reshaping the portfolio and candidly getting down to that core portfolio and taking that overhang, if you will. We've sold or disposed of 46 assets. We've got three that we talked about. Obviously, today, the two leases that are expiring, we're not going to extend. And then obviously the give-back in Kansas City. And we've got many other discussions underway.

Tom Baltimore: And the sooner that we can reshape and clean that up, we'd love to do just one cleanup trade, but the reality is every asset's got its own story with legal and tax and, in some cases, joint venture and other complexities. But rest assured, the team is led by Tom Morey and his great team on the investment side are working really hard to reshape the portfolio and to clean up those non-core as quickly as we can. And you can expect we'll have announcements here in the coming months.

Yeah, it's a it's a great question. In, in my prepared remarks, I made the comment that if you, if you take out sort of our non-core and just look at our core. I think the red part is about 215 dollars and would be certainly as strong as, uh, as any of our peers. Um, Chris we've had this conversation many times as you know, we are laser focused on reshaping the portfolio. Um, and candidly getting down to that core portfolio and taking that, that overhang if you will, um, we've sold or disposed of 46 assets. We've got 3 that we talked about, um, obviously today, uh, the, the 2 leases that are expiring. We're not going to extend and then obviously the give back in Kansas City and uh, we've got many other discussions underway and the sooner that we can reshape and clean that up. Uh, we'd love to do just 1 cleanup trade but the reality is every asset has got its own story with legal and tax and uh, and

In some cases joint venture and other other other other complexities. But rest assured, the team is uh led by Tom Moore and his great team on on the investment side. Um are working really hard uh to reshape the portfolio and to clean up those non-core as quickly as we can and you can expect, we'll uh, we'll have announcements here in the uh, in the coming months.

Chris Woronka: Okay. Very good. Very helpful. Thanks, Tom.

Okay. Uh, very good. Very helpful, thanks, Tom.

Tom Baltimore: Thank you.

Thank you.

Speaker 7: Our next question comes from a line of Floris van Dijkum with Latenberg. Please proceed with your question.

Our next question comes from the line of Flores Van Dyk with Ladenburg. Please proceed with your question.

Sean Dell'Orto: Hey guys, thanks for taking my question.

Chris Woronka: Of course.

Sean Dell'Orto: Just a follow-up on the disposals. I think you mentioned 18 non-core hotels, three of them were ground leases. So that would appear as 15 left. Do you think by the end of next year, all of those hotels will be out of the portfolio? And sort of to give you a clean, get a sense of what the clean EBITDA production will be. And then maybe if you can also, as you know, relate it, do you think that '26 is going to be a year where Hawaii Village stabilizes, or do you think it's more likely to be '27 before you get back to 185 million of EBITDA level?

Hey guys, thanks for taking my question. Um, I just follow up on the uh um follow up on the disposals. Uh, it, I think you mentioned 18, non-core hotels, 3 of them were Ground leases

So that, that would appear. So 15 left, do you think by, uh, the end of next year? Uh,

All of those hotels will be out of the portfolio and and sort of to give you a a clean. Get a sense of what the clean ebita production will be and then maybe if you can also as as you know related uh is is, do you think that 26 is going to be a year where Hawaii Village stabilizes or do you think it's more likely to be 27 before you you get back to 185 million of of IBA level?

Tom Baltimore: Yeah, great questions. I'll take the first. Look, we'd love to have the non-core solved next quarter, as you know, Floris. I think you know and other listeners how hard we've been working. I would expect by the end of next year that we have made significant that the vast majority, there could be a straggler or two that remains. But we're doing everything in our power to clean up as quickly as we can. We know there's a small overhang there. We want it removed and to get back to that core portfolio because it gives us such great optionality. And I think it really reflects the core value of the park portfolio. As we've said, that accounts for about 90% of the value of the company. And you can see where we're investing those dollars.

Yeah, great. Great questions. I'll I'll I'll take the first. Um look we we'd love to have the non-core solved uh, next quarter as you know for us I think, you know and and other listeners how hard we've been working. Um, I would expect by uh, the end of next year that we have made significant that the the the vast majority, there could be

Tom Baltimore: And we really believe that we can generate higher development yields than we can through acquisition yields at this point. I think the great work in Orlando, I think the extraordinary work in Key West, I think are just great examples of that, of how well they've done. And you think about just Orlando being obviously listed as our Bonner Creek, the Waldorf Astoria being the top hotel in Orlando, and just given the complete transformation and the north of $200 million that we put in the entire complex, and then what we're seeing in terms of that outperformance. So very proud of that, very pleased with that. We really want to focus our energy, obviously, on the core portfolio. You know, on the Hawaii front, I don't think it's a matter of if, but when.

Tom Baltimore: And I would fully expect that '26 would certainly be, we would be closer to that peak EBITDA range and that $185 million. Clearly, that will not occur, obviously, in 2025, but very encouraged as we look out, sequentially improving. And then obviously, we're expecting the fourth quarter to be very, very strong across the entire portfolio, but particularly given, obviously, the favorable comps that we have in Q4 in Hawaii.

Obviously listed as the our, our Bonnet Creek the water, forstoria being the top hotel in Orlando and just giving the the complete transformation in the north of 200 million dollars that we put in the entire complex. And then what we're seeing in terms of that that outperformance. So very proud of that very pleased with that. And we really want to focus our energy obviously on those on the on the core portfolio, you know, on the on the Hawaii front. Um, I don't I don't think it's a matter of uh, if but when and I would fully expect that 26 would certainly be, we would be closer uh, to that uh, Peak IAA range and that 185 million, uh, clearly that will not occur, obviously, in, uh, in 2025, but very encouraged as we look out sequentially improving. And then, obviously, we're expecting, uh, the fourth quarter to be a very, very strong, uh, across the entire portfolio. But particularly given obviously the favorable, uh,

Comps that we have in the Q4 in Hawaii.

Sean Dell'Orto: Thanks, Tom.

Thanks Tom.

Tom Baltimore: Thank you.

Thank you.

Speaker 7: Our next question comes from a line of David Katz with Jefferies. Please proceed with your question.

Our next question comes from the line of David Katz with Jeffrey's, please proceed with your question.

Tom Baltimore: Hey, David. Hi. Morning, everybody. Thanks for all the commentary and perspective on stuff. I'd like to just go back, and if we're double or clicking on this, I hope you'll humor me. But I'd like to understand and just discuss Hawaii a bit and just unpack kind of where you are because, you know, the sort of demand dynamics are a little bit complex. And, you know, there's some work being done there too. And, you know, we've heard some peer reports, you know, where Maui went, you know, super well for them. And I know everybody's assets are not the same place and the same thing. So that's what I'd like your help with if you can.

Hey, David.

Hi morning, everybody. Thanks for all of the commentary and and perspective on stuff. I, I'd like to just go back and if and if we're double or clicking on this, I hope you'll humor me. Um, but, but I'd like to understand and just discuss Hawaii a bit and, and just unpack kind of where you are. Because

You know, the the sort of demand Dynamics are a little bit complex and you know, there's some work being done there too. And you know, we've heard some peer reports, you know, where where where Maui went, you know, super well for them and I know everybody's assets are not same place in the same thing. So that's what I'd like your help with. If if you can

Tom Baltimore: Yeah, I think one way, David, just to take another sort of step back, you know, as I said, the last 20 years, it's certainly been among the strongest performers, both from a demand and performance standpoint. Obviously, you've got muted supply, virtually negative supply over the last 20 years. Obviously, we think over the next five years, it's going to continue to be muted, you know, 0.3%. You know, you've got, you're coming on the heels of a really intense 45-day strike. It was not helpful during that period of time and certainly impacted demand group pace. So that you can't sort of dismiss that. I don't want to use that as an excuse, but it certainly was an impediment as we came out of that, as we began the year.

Yeah, I-I-I think the

I think one way, David, just to take another sort of step back.

Um you know as I as I said the last 20 years um it's certainly been among the strongest performers both from a demand and performance standpoint obviously you've got muted Supply virtually negative supply of the last 20 years. Obviously we think over the next 5 years it's going to continue to be muted, you know? 0.3% you know you've got you're you're coming on the heels of

Of a really intense 45-day strike.

Tom Baltimore: As you look at, obviously, the demand patterns, as we've talked about, we were down 18% in Q1, down 13% here in Q2, Hilton Hawaiian Village, and then obviously down, you know, we expect probably 7% to 8% in the fourth and the third quarter, and then probably up high teens, you know, plus or minus in the fourth quarter. And so very well set for there. We're not at all concerned from an operational standpoint. We also have continued to gain a RevPAR index. We're up to about 102%. We were probably running 115%, 120%, probably pre-strike. We were certainly sub-100%, obviously, coming out of the strike. So that's ramping up as well. And then you've got sort of cleanup trade.

uh, was not helpful during that period of time and certainly impacted, um, demand group Pace. Um, so that you, you can't sort of dismiss that I don't want to use that as an excuse, but it certainly was an impediment. As we came out of that as we began the year. As you look at, obviously, the demand patterns as we've talked about. We were down 18% in q1, uh, down 13% here in Q2 Hilton Hawaiian Village. And then, obviously down. And we know we expect probably 78% in the, in the fourth, in the third quarter. Um,

Uh, and then probably up, um, uh, high teens.

You know, plus or minus on the in the fourth quarter. And so very work, very well Set, uh, for their, um,

We we're not at all concerned um from an operational standpoint we also have continued to gain. Um,

Tom Baltimore: As you know, through TripAdvisor and, you know, the sooner we get through to sort of wash through the cleaner reviews will also make the destination more attractive as well. So that also will help as we sort of look to the future. Airlift continues to grow. We see Canada continuing to pick up. That's been a growth. Japan continues to lag. I mean, that has been certainly a disappointment. Pre-pandemic, again, about 1.5 million. We expect this year, originally expected to be at about 770. They've sort of lowered that forecast now to about 700,000, but we fully expect to get back. They're targeting now about a million, probably.That

Uh, RevPAR index. We're up to about 102%. We were probably running 115% to 120%, probably pre-strike. We were certainly sub 100%, obviously coming out of the strike. So, that's ramping up as well. And then you've got sort of cleanup trade, um, as you know, through TripAdvisor, and, you know, the sooner we get...

Ian Weissman: 2027-2028 range from that standpoint. So hopefully that helps, David, give you a little more, a little more color on it. We're not at all concerned over the intermediate and long term. We think, obviously, over, again, over the long term, it's been one of the strongest performers in all of the US. So, and the fact that we own both resorts, completely fee simple, we're investing significant capital and excited. And if you think about the results that we've seen with the renovated product, you can take TAPA as an example, the TAPA Tower. And, you know, we ended up getting a $50, $60, $70 increase in ADR, after renovating that tower.

Targeting now, um, about a million probably in that 2027 2028 range from that standpoint. So hopefully, that helps David give you a little more, a little more color on it. We're not at all concerned over the intermediate and long term. We think, obviously over again, over the long term, it's been 1 of the strongest performers and, and all of the US. So, and the fact that we own both Resorts completely free. Simple. We're investing significant capital and excited. And if you think about the results that we've seen with the renovated product, you can take tap as an example, the tapa Tower. And you know, we ended up getting a 50, 60, 70 increase in ADR, um, after renovating that Tower.

Speaker 2: Yeah. Thank you. Appreciate it.

Ian Weissman: Thank you.

Yo, thank you. Appreciate it.

Thank you.

Operator: Our next question comes from the line of Dan Politzer with JP Morgan. Please proceed with your question.

David Brown: Hey, good morning everyone, and thanks for taking my collection. I wanted to go back to the group commentary that you gave, Tom. I think you said 2026 group would be flat, 2027 would be up 4 to 5%. Can you just maybe talk about that dynamic? Has that, like, has that changed, I guess, from, you know, a few months back in terms of what you're seeing? And can you kind of talk about lead volumes? Are there rotations in there? I'm just trying to get a better sense of that dynamic where it feels like Q3 came in a bit lighter on group, next year is going to be flat, but then, you know, on the other side, you have Q4 and 2027.

Our next question comes from the line of Dan Pollitzer with J.P. Morgan. Please proceed with your question.

Hey, good morning everyone, and thanks for taking my question.

Um I wanted to go back to to the group commentary that he gave Tom. Um I think you said 2026 group would be flat 2027 would be up. 45% can you just maybe talk about that Dynamic? It it has that like has that changed I guess from from you know a few months back in terms of what you're seeing and can you kind of talk about lead volumes are are their rotations in there? I'm just trying to get a better sense of

That dynamic, where it feels like 32, came in a bit lighter on group. Next year is going to be flat. But then, you know, on the other side, you have fourth quarter and 2027.

Ian Weissman: Yeah, let me try to frame kind of just the scope of it and take Q4 as an example. yes, Q3 is a little softer, I think about 380 basis points, so down about 14.4%. We knew that was going to be, our toughest quarter, but also keep in mind we had, we had tough comps, right? We had Chicago last year, the DNC over 100,000, group room nights there. New Orleans had an incredibly stronger year. so you've got that tough comp that certainly impacts. So you look at Q4 up 18% and it's broad-based. Still in the Lion Village, up 54%. New York City, up north of 19%. Hilton Chicago, again, up 14%. New Orleans up 11%. Bonnet Creek obviously continues to be a strong performer, up 45%, I believe. Washington, D.C. up 25%. And then San Francisco, and this number is accurate, up 214%.

Yeah, let me try to frame kind of just the...

The scope of it and take, take Q4, as an example. Um, yes, Q3 is a little softer. I think about 380 basis points. So down about 14.4%, we knew that was going to be, um, our toughest quarter. But also keep in mind, we had we had tough comps, right? We had Chicago last year, the DNC over 100,000, um, uh, group room nights. Their New Orleans had an incredibly stronger year. Um, so you've got that tough comp, that's certainly impacts. So, you look at Q4 up 18% and it's broad-based still in the wine. Village up 54% New York, City up, uh, north of 19% Hilton Chicago. Um, again up 14% New Orleans up, 11% um Bonnet Creek, obviously continues to be a strong performer.

Ian Weissman: and so again, we're not, and we're not seeing any pullback. And if you take, Hawaii out of it as an example, we're still up 14% as we look at the group pace for Q4. So we feel very good about 2025. 2026, there are puts and takes there. again, we would expect that to continue to improve. And then as we look out to 2027, you know, we're already up, same time last year, we're up about 4 or 5%, based on obviously the earlier commentary that I gave. So I feel very good. Lead volumes look good. obviously national sales and our partners at Hilton, among others, and our operators are working very hard.

Up 45%, I believe Washington, D.C. is up 25%, and then San Francisco, um, and this number is accurate: up 214%.

Ian Weissman: So, and again, given the renovated product and the amount of capital that we're putting in, particularly into our core, our core portfolio, we think obviously we'll continue to position and strengthen those assets as we move forward. So we're very, very encouraged about group as we look out. Obviously, an accelerated economic environment and less uncertainty. You know, clearly the uncertainty out there is, you know, causing some groups and, and, and, business leaders to sort of pause and wait for clarity. But despite that, I mean, we're having, we're still having obviously a solid year as you look at obviously EBITDA and flows. top line, you know, continues to be a little softer, but you know, we're in a GDP environment when you combine Q1 and Q2 really at about 1.2%. So probably not unexpected. It's a little choppy right now.

And so again, we're not and we're not seeing any pullback, and if you take, um, Hawaii out of it. As an example, we're still up 14% as we look at the group pace for for Q4. So we feel very good about 25 26, there puts and takes their, um, again, we would expect that to continue to improve. And then, as we look out to 27, you know, we're already up same time. Last year, we're up about 4 or 5%. Um, uh, based on, obviously the earlier commentary that I gave. So, feel very good lead volumes look. Good. Um, obviously the national sales and our partners at at Hilton among others are in our operators are working very hard. So, and again, giving the renovated product in the amount of capital that we're putting in, particularly into our core, our core portfolio, we think obviously will continue to position and strengthen those assets as we move forward. So we're very, very encouraged.

Encouraged about the group as we look out.

Obviously a a accelerated economic environment and less uncertainty. You know, clearly the uncertainty out there is, you know, causing some groups and, and, and Business Leaders to sort of pause and wait for clarity. But despite that, I mean, we're having, we're, we're still having obviously a, a solid year as you look at, obviously, Eva done and and flows, uh, Top Line and, you know, continues to be a little softer. But, you know, we're in a GDP environment when you combine q1 and Q2 really at about 1.2%. So probably not unexpected. It's a little choppy right now.

David Brown: That makes, that makes sense. Thank you for the detail. And then just for my follow-up, you guys have done an impressive job managing your operating expenses. And it sounds like, you know, a good chunk of that's in the labor line. how should we think about the expenses there this year? And then as you think about kind of puts and takes the 2026, you know, how are you kind of, how should we think about labor expense growth, you know, as we kind of look out?

Think about kind of puts and takes the 26. Um, you know, how are you kind of, how should we think about Labor, expense growth, you know, as as we kind of look out?

Sean Dell'Orto: Well, I think just given that we do have a good amount of union in our portfolio and, you know, a lot of it went through last year in terms of agreements being negotiated, I think it's pretty consistent as you kind of think about going into 2026 from a labor standpoint. You know, a lot of things we've done, I talked about, will be sustained, we believe, and we're certainly going to be, the team will be very focused out during the budget process. There are some, you know, you obviously got a rule of palm coming back online that will be an adjustment that we're already making this year as well. So that'll be a kind of a, you know, put and take to consider.

Sean Dell'Orto: But I think kind of on the whole, I think we kind of see just continued kind of labor benefits growth kind of in that 4, 4.5% range.

Well, I think just given that we do have a good amount of Union uh, in our portfolio. And, you know, that's in a lot of it went through last year in terms of uh, agreements being negotiated. I think it's pretty consistent as you kind of think about, uh, going into 26, uh, from a labor standpoint. You know, a lot of things we've done. I talked about are, will be sustained, uh, we believe and we're certainly going to be, uh, team will be very focused on that during the budget process. Um, there are some, you know, you obviously got to roll Palm coming back online. That will be an adjustment that we're already making this year as well. Um, so that'll be a kind of a, you know, put and take to consider but I think a, a kind of on the whole. I think we kind of see just continue kind of Labor benefits, growth kind of in that 4 4 and a half percent range.

David Brown: Got it. Thank you so much.

Got it. Thank you so much.

Ian Weissman: Thank you.

Thank you.

Operator: Our next question comes from the line of Cooper Clark with Wells Fargo. Please proceed with your question.

Our next question comes from the line of Cooper Clarke with Wells. Fargo, please receive with your question.

Tom Baltimore: Great. Thank you for taking the question. On the Royal Palm, appreciate the confidence on executing there from a timing perspective. Just wondering how we should think about the ramp-up on that asset sequentially come 2026 in terms of your underwriting assumptions and how much of that is driven by expected demand from the World Cup games in early to mid-June.

Great. Thank you for taking the question on the Royal Palm. I appreciate the confidence in executing there from a timing perspective. I'm just wondering how we should think about the ramp-up on that asset sequentially come 2026 in terms of your underwriting assumptions. And how much of that is driven by expected demand from the World Cup games in early to mid-June?

Ian Weissman: Yeah, let me take the first part of it. We are really excited about this transformation. It's bullseye real estate, well located, obviously in South Beach. We've studied it carefully. A $103 million investment. We think the internal rate of return unlevered 15 to 20%. And, you know, we've said in my prepared remarks about doubling EBITDA. If you think about RevPAR pre-renovation was about $265. And you look at all of the ultra luxury that exists in South Beach and on the Albars, that's in the works. Obviously, the Rosewood, the Amman, the Andaz recently done. And then as you go further up to sort of North Miami Beach and the Four Seasons, St. Regis and others, and the kind of rates there, you know, we've really underwritten this at inside of $400.

Yeah, let me take the first part of it. Um, we are

Really excited about this transformation. It's Bullseye Real Estate, well located, obviously, in South Beach. We've studied it carefully.

um,

Uh, $103 million investment. Uh, we think the internal rate of return on lever is 15% to 20%.

And, you know, we’ve said in my prepared remarks about doubling. Even though if you think about RevPAR pre-renovation, it was about $265.

Ian Weissman: And at that level, we're confident that we can certainly double obviously EBITDA to the $27, $28 million range that we've communicated. Obviously, you're opening in May. You're sort of late into the season. Obviously, we want to certainly be there for the World Cup, which will be significant. But, you know, we certainly don't expect that we'll be double EBITDA, even half of that, given the fact that we're opening in that May timeframe. Sean may have some additional thoughts and comments to share on that.

And you look at all of the ultra-luxury that exists in South Beach and from the oars that's, um, that's in the works. Obviously, the Rosewood, the Aman, the Andaz recently done. And then as you go further up the sort of North Miami Beach in the Four Seasons, St. Regis, and others, and the kind of rates there, you know, we've really underwritten this that, um, inside of $400 and at that level, I'm confident that we can certainly, uh, double um,

Uh, obviously ibida to the 2728 million range that we've communicated. Um, obviously your opening in May is sort of late into the season. Obviously, we want to certainly be there for for the World Cup, which will be significant. Um, but you know, we certainly don't expect that, we'll be double ibao, even even half of that given. The fact that we're opening in that may time frame. Um,

Speaker 7: No, I'll concur with Tom. You're missing the peak season, obviously. You get a little bit of benefit from, we expect from the World Cup coming through kind of in a low season timeframe. But I would say that we probably won't generate kind of, you know, EBITDA for 2026 relative to where it was before. But obviously, we expect that to kind of really grow towards that double, you know, call it high 20s EBITDA as we approach 2027.

Sean may have some additional thoughts and comments to share on that.

No, I would concur with Tom; you're missing the peak season. Obviously, you get a little bit of benefit from what we expect from the World Cup coming through kind of in the low season time frame. Um, but I would say that we probably won't generate kind of, you know, EBIT up for 2026, you know, relative to where it was before. But, obviously, we expect that to kind of really grow towards that double, you know, call it high 20s. But, uh, as we approach, uh, 2027.

Tom Baltimore: Great, thanks. And then just to follow up on some of the CapEx projects, just curious, following the Royal Palm, what the timing is on sort of the next big project. You spoke to some renovations in Hawaii next year where you have a good track record on execution, but just wondering kind of the next big project and what's the right way to think about reno disruption long term with the CapEx spend?

Great, thanks. And then just to follow up on some of the capex projects, I'm just curious, following the Royal Palm, what the timing is on sort of the next big project. You spoke to some renovations in Hawaii next year where you have a good track record on execution. But I'm just wondering, kind of the next big project and what's the right way to think about renovation disruption long term with the capex spend?

Ian Weissman: Well, it's a great question. The next phase last year, next year will be obviously the third phase in New Orleans and finishing that tower. We'll continue to look at the Alaya Tower in Hawaii, a smaller tower, but certainly renovating that as well. We've been really laser-focused on putting capital back into those core assets. And obviously, again, we're confident that we can deliver higher development yields than we can acquisition yields at this point. We are going to study New York and look at the timing of a potential renovation there, but I certainly don't see that being in 2026. But there'll be more to follow in the future as we obviously complete our current pipeline of the ROI projects.

Uh, it's it's it's a, it's a great question. The next phase last year next year will be, obviously the the third phase in New Orleans and finishing that that Tower um will continue to look at Ilya Tower in in Hawaii uh smaller Tower and but but certainly renovating that as well. Um, we've been really laser focused on putting Capital back into that those core assets. And obviously, again we're confident that we can deliver higher development yields than we can acquisition yields at this point.

We are going to study New York.

Um, uh, and look at the timing of a potential renovation there, but I certainly don't see that being in 2026.

Uh, but they'll they'll be more to follow in the future as we uh as we obviously complete our our Uh current pipeline of the ROI projects.

Tom Baltimore: Thank you.

Thank you.

Operator: Our next question comes from a line of Robin Farley with UBS. Please proceed with your question.

Our next question comes from a line of Robin Farley with UBS. Please proceed with your question.

Smedes Rose: Hey, Robin.

Operator: Great, thanks. Hi, how are you? I wanted to ask about 2026. You mentioned that labor costs might be up about 4 to 4.5% next year. This year, you've done an amazing job of, you know, other offsets between insurance and maybe some tax credits. And I guess, are there other levers for 2026 that we should think about how you could offset this, you know, that higher wage level next year?

Um, great thanks. Hi. How are you? I wanted to ask about 2026, you mentioned that labor costs might be up about 4 to 4 and a half percent. Next year this year you've done an amazing job of you know other um offsets between insurance and and maybe some tax credits and I guess are there other levers for 2026 that we should think about what what how you could offset this. You know that higher wage level next year?

Ian Weissman: Yeah, let me make one observation, Robin, and then Sean can jump in. I don't think it's just think about wage rates and where people thought. And obviously, given the fact that we do have some union-operated and, and, and I think very fair and equitable, deals with our labor partners. again, a credit to our operators in negotiating those. But, you know, in that 4 to 4.5% range, we don't see that really being out of bounds. and again, to our asset management team, Joe P. and and Sean and the team and the amount of work that we're doing, just line item in those deep dives. We we remained very, very confident in the team's ability to continue to take cost out of the business and to think about it differently. And candidly, advances in technology.

Ian Weissman: We think that there are going to be, opportunities, through technology to continue to find different ways to be more efficient. And whether that's, sales and marketing, the guest experience. I mean, we've all got to be thinking about, how we can respond to those customer needs, but also taking cost out of the business, given the operating model. So I know our peers have talked about that, are working on it. And it's certainly an area that we too are spending time, and we're also encouraging the brands and our operators to continue to think out of the box as well.

Yeah, let let let me make 1 observation Robin, and then, Sean can can jump in. I, I don't think, is it? It's just think about wage rates and where people thought and obviously, given the fact that we do have some Union operated and and, uh, and I think very fair and Equitable, uh, deals with our, with our labor Partners. Um, again, a credit to our operators and negotiating those but, you know, in that 4 to 4 and a half percent range, we don't see that really being out of bounds um, and and again, to our asset management team, uh, Joe p and and Sean, and the team, and the amount of work that we're doing, just line item in those deep Dives. We, we remained very, very confident in the team's ability to continue to take cost out of the business and to think about it differently and and candidly advances in technology. We think that they're going to be um, opportunities uh, through technology to

Continue to find different ways to be more efficient. And whether that's um, sales and marketing, the C. The guest experience, I mean, we've all got to be thinking about, um, how we can respond to those customer needs but also taking cost out of the business, uh, given the operating model. So I know our peers have talked about that are working on it and and it's certainly an area that that we too are are spending time. And we're also including encouraging, our the brands and our operators to to continue to think out of the box as well.

Smedes Rose: Great. No, it's super helpful. Thank you. And then also, you know, you talked about addressing some debt maturities. Do you need that $300 to $400 million of asset sales to be completed before we're likely to see the maturities addressed? Like, in other words, is a lot of your negotiations currently sort of contingent on those asset sales happening?

Okay. Now it's super helpful. Thank you. Um, and then also,

We need that $300 to $400 million of asset sales to be completed before we’re likely to see.

The, um, maturities address. Like, in other words, this is a lot of a lot of your negotiations currently sort of contingent on those asset sales happening.

Speaker 7: No. I guess the short answer is no, Robin.

Ian Weissman: Yeah, Robin, we enjoy great banking relationships. And I just remind some of the listeners, think about during the pandemic. We did three bond deals. We pushed out maturities. We paid back all of the banks. And plus everybody earned fees. We have no shortage of banks that want to work with us. Huge credit to Sean, his leadership in the team. And very confident that we will get this done in the third quarter. And again, we don't, they're not at all dependent on those asset sales.

No, because it's a short answer. No, Robin.

yeah, Robin, we we are, we enjoy great banking relationships and I, I just remind, um, some of the listeners think about during the pandemic

We completed three bond deals. We extended the maturities and repaid all of the banks.

And and plus everybody, you're in fees. Um we have no shortage of banks that want to work with us. Uh huge credit to shun uh his leadership in the team and uh, very confident that we will get this done in the third quarter, and uh, again we don't if they're not at all dependent on those assets. So,

Smedes Rose: Okay. No, thank you. Can I squeeze in a tiny clarification on Hawaii? If that, if you don't mind, one more line on Hawaii. Just when you were calling out group, so flat for next year overall, but you mentioned you called out a number of hotels where it was up significantly. I was surprised that Hawaii wasn't in the sort of, you know, 26 being up significantly versus 25, given the sort of challenging 25 Hawaii has had. Is that just, you know, you think it will be up, just didn't happen to mention it in that list, or is there, is there still sort of ongoing group issues in Hawaii? Thank you.

In a tiny clarification on Hawaii. If that.

Ian Weissman: That's it. Hawaii generally has a smaller percentage, so, but we, no, we don't expect.

If you don't mind what 1 more line on Hawaii, um, just when you were calling out groups, um, so flat for next year, overall, but you mentioned you called out a number of hotels, where it was up significantly. I was surprised that Hawaii wasn't in the sort of, you know, 26 thing up significantly versus 25 given the sort of challenging 25 Hawaii has had, is that was that just, you know, you think it will be up, just didn't happen to mention it in that list or is there, is there still sort of ongoing group issues in Hawaii? Thank, you know, that's it. Hawaii General has a smaller percentage. So

um,

But we, you know, we don't expect, uh,

Speaker 7: I mean, I would say too, you've got, you're up 50% in Q4. We'll lap that. The convention center is shutting down for renovation, which will impact 26 in terms of at least convention-related type of business. So there's a few things going on that we'll kind of have grouped down. As Tom noted, though, it's not obviously a major part of that demand for that asset.

I mean, I would say to you, you're up 50% in Q4. We'll lap that.

Smedes Rose: Okay. Thank you very much. Thanks.

Is shut down for renovation which will impact 26 and patients in terms of at least convention related type of business. So there's a few things going on that will kind of have a group time. It's time to noted though. It's not obviously a major part of that uh, demand for that that asset

Okay, thank you very much. Thanks.

You.

Ian Weissman: Thank you.

Operator: Our next question comes from a line of Ken Billingsley with Compass Point. Please proceed with your question.

Our next question comes from the line of Ken Billingsley with Compass Point. Please proceed with your question.

Chris Woronka: Hi. Hello. I wanted to ask about visitor spending. It looks like overall total RevPAR growth has been stronger than hotel RevPAR. Could you talk about where they're spending their dollars out of the room and any near-term concerns just given market conditions?

Market conditions.

Speaker 7: Sure. I think for one, on the group side, banqueting and catering continues to be a strength, inclusive of audio-visual. The groups that are, you know, we still see strong performance, certainly the in-house groups in their spending related to, you know, banqueting and catering, which catering contribution was up 5% in Q2. And again, looking against prior forecasts, and there's a number of things that we look at and have seen some, obviously, some deterioration. I would say this is one thing that we're not seeing. We're starting to continue to strengthen spend on that side. Outlets roughly up about 1.5% in Q2. You know, helped by things like Casa Marina was up 18% year over year with the help of the addition of our Dorada restaurant, the nice oceanfront restaurant. So you're seeing enough spending and sufficient spending in the outlets, especially in the resort areas.

Speaker 7: Parking was up 9%. Continuing a strong trend along with some ancillary fees that we continue to kind of evaluate the market and increase things like facility fees and whatnot. Those were up 6% in June. Expect them to be up 5% for the year. So yeah, I would say overall across the board, we've got some healthy out-of-room spend across the portfolio.

Sure. Uh, I think for 1, uh, on the group side, banquet and catering continues to be a strength, uh, inclusive of audiovisual, um, the groups that are that, you know, we still see strong performance certainly, as the in-house groups, uh, and they're spending related to, you know, banquet and catering which uh, catering contribution was up to up 5%, Q2. Um, and again looking against prior forecast and there's a number of things that we look at and and have seen some um, obviously some deterioration. I would say this is 1 thing that we're not seeing. Um, we're going to continue to strengthen spend uh on that side. Outlets roughly up about 1.5% uh, in Q2 um, you know, helped by things like Casa Marina was up 18% year-over-year with the help of the addition of our data restaurant. The nice Ocean Front Restaurant. So you're seeing enough spending and sufficient spending in the atlas, especially in the resort areas, uh, parking was up, 9%, uh, continuing a strong Trend along with some ancillary fees that we continue to kind of be, uh, evaluate the market and increase things.

Um um like facility fees and whatnot, um, that you know, those are up uh, 6% in June, uh, for expect them to be up 5%, uh, for the year. So, yeah, I would say, overall across the board. It's it, you know, we got some healthy out of room to spend, um, across the portfolio.

Chris Woronka: And a follow-up on that. Specifically, I know urban RevPAR was strong, bright spot in the quarter, but it looked like total RevPAR for this group has had softer growth. In fact, almost like it's declined. Can you talk about maybe what's going on on the urban side with out-of-room spend?

And and and to follow up on that specifically, um I know Urban rugar was strong um right spot in the quarter but it looked like total rugar for this group, um, has has had softer growth? Uh, in fact, almost like a decline. Can you talk about maybe? What's, what's going on on the urban side with out of room spin?

Speaker 7: I don't necessarily think it's dramatic. I would have to get back, we'd have to look at that. I don't have that in front of me as to kind of where we're seeing some of that softness that you're talking about.

I don't necessarily think, um, it's dramatic. Um, I would have to get back; we’d have to look at that. I don't have that in front of me as to kind of where we're seeing some of that softness that you're talking about.

Chris Woronka: Okay. I'll follow up with those. Thank you.

Okay, I'll follow up with you. Thank you.

Operator: We have no further questions at this time. I'd like to turn the floor back over to management for closing comments.

We have no further questions at this time. I'd like to turn the floor back over to management for closing comments.

Ian Weissman: Well, we appreciate everybody taking time, and we look forward to seeing you at upcoming conferences, and we hope you have a great summer. And please know that the team at Park continues to be laser-focused on our strategic priorities and excited about Q3, Q4, and closing out 2025 on a high note.

Well, we appreciate everybody taking the time, and we look forward to seeing you at upcoming conferences. We hope you have a great summer.

Um,

and please know that the team at Park continues to be laser-focused on our strategic priorities and

And, uh, excited about, uh, Q3 and Q4.

Uh, uh, in closing out 2025 on a high note.

Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.