Park Hotels & Resorts Inc. (“Park” or the “Company”) (NYSE: PK) today provided an operational and liquidity update.
Highlights
Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer, stated, “I am extremely pleased with the progress we have made on many fronts as we continue to navigate this crisis. Over the past couple of months, we have opened additional hotels and experienced better than expected results through July and August, and we have begun to quantify and execute on cost-savings initiatives as we work with our operating and brand partners to reposition the operating model. Additionally, we have completed an amendment process with our lending partners to extend our revolving credit facility by two years, further improving our liquidity position and providing us additional flexibility as we look to turn the corner and pursue opportunities as they develop in the coming months. I would like to personally thank all of our partners and stakeholders for their efforts in support of Park as we weather this global pandemic.”
Hotel Reopening Update
Consolidated Hotels | ||||||||||
Status | Number of Hotels |
Total Rooms |
Rooms Suspended |
Rooms Available |
Percentage of
|
|||||
Open | 39 |
15,365 |
3,397 |
11,968 |
22% |
|||||
Operations suspended | 14 |
13,566 |
13,566 |
— |
100% |
|||||
Total | 53 |
28,931 |
16,963 |
11,968 |
59% |
|||||
Unconsolidated Hotels | ||||||||||
Status | Number of Hotels |
Total Rooms(1) |
Rooms Suspended |
Rooms Available |
Percentage of
Suspended |
|||||
Open | 7 |
4,297 |
1,682 |
2,615 |
39% |
|||||
Operations suspended | — |
— |
— |
— |
—% |
|||||
Total | 7 |
4,297 |
1,682 |
2,615 |
39% |
Operational Update
|
Change in
|
|
|
Change in
|
|
|
Change in
|
|
|
Pro-forma
|
|
||
January |
(1.0 |
)% |
|
1.6 |
% |
pts |
1.2 |
% |
|
73.8 |
% |
||
February |
(0.7 |
) |
|
0.9 |
|
|
0.4 |
|
|
79.2 |
|
||
March |
(10.1 |
) |
|
(49.4 |
) |
|
(63.8 |
) |
|
33.3 |
|
||
April |
(47.0 |
) |
|
(80.9 |
) |
|
(97.6 |
) |
|
3.9 |
|
||
May |
(54.1 |
) |
|
(79.9 |
) |
|
(97.3 |
) |
|
4.9 |
|
||
June |
(36.5 |
) |
|
(78.5 |
) |
|
(93.0 |
) |
|
9.7 |
|
||
July |
(31.7 |
) |
|
(71.3 |
) |
|
(88.3 |
) |
|
14.7 |
|
||
August |
(38.1 |
) |
|
(65.5 |
) |
|
(85.4 |
) |
|
20.3 |
|
|
|
Number of
|
|
Change in
|
|
|
Change in
|
|
|
|
Change in
|
|
|
Pro-forma
|
|
January |
|
53 |
|
(1.0 |
)% |
|
1.6 |
% |
pts |
1.2 |
% |
|
73.8 |
% |
|
February |
|
53 |
|
(0.7 |
) |
|
0.9 |
|
|
0.4 |
|
|
79.2 |
|
|
March |
|
25 |
|
(13.2 |
) |
|
(44.9 |
) |
|
(60.9 |
) |
|
36.9 |
|
|
April |
|
18 |
|
(41.8 |
) |
|
(72.1 |
) |
|
(90.3 |
) |
|
14.4 |
|
|
May |
|
18 |
|
(49.7 |
) |
|
(65.7 |
) |
|
(88.1 |
) |
|
20.4 |
|
|
June |
|
22 |
|
(48.6 |
) |
|
(58.5 |
) |
|
(82.5 |
) |
|
30.2 |
|
|
July |
|
33 |
|
(24.3 |
) |
|
(53.4 |
) |
|
(71.5 |
) |
|
32.3 |
|
|
August |
|
37 |
|
(28.6 |
) |
|
(42.2 |
) |
|
(65.8 |
) |
|
38.8 |
|
Liquidity Update
Park had cash and cash equivalents of $1,248 million, including $35 million of restricted cash as of July 31, 2020. Park’s actual monthly average burn rate during the second quarter of 2020 was $59 million based on operations during that period and was reduced to $51 million during July 2020. With current total liquidity of $1.5 billion, including the $0.3 billion of available capacity remaining under the Company’s revolving credit facility, and a burn rate of approximately $50 million per month, which takes into account current operations from both open and suspended hotels and uses an accrual-based methodology, Park estimates it currently has approximately two and a half years of liquidity available to meet its financial obligations.
This estimate does not take into account capital expenditures (which were reduced by 75% in 2020 to approximately $4 million per month) or any possible alternative sources of revenue that may arise, any hotel property dispositions for the remainder of the year or payment of cash dividends or other distributions not already declared and paid in 2020, if any. This estimate also does not take into account the impact of the amendments to the credit facility as discussed further below. The estimated burn rate has not been reduced by any amount available to Park under existing or future debt facilities, or proceeds from issuance of any additional debt, equity or equity-linked securities.
Park continues to take proactive measures to reduce the near-term burn rate, including deferral of payments, hiring freezes and other cost reduction measures.
Credit Facility Amendments
Park announced today that it has entered into further amendments (the “September Credit Amendments”) to its Revolver, its $631 million term loan due December 2021 (the “2016 Term Loan”) and its existing $670 million term loan (the “2019 Term Loan”). The effectiveness of the September Credit Amendments is subject to certain conditions, including the prepayment in full of the 2016 Term Loan using the proceeds of certain permitted capital markets transactions (such effective date, the “Amendments Effective Date”).
The September Credit Amendments will increase the commitments under the Revolver by $75 million to $1.075 billion, extend the waiver period for the testing of the financial covenants from the date the financial statements are delivered for the quarter ending June 30, 2021 to the date the financial statements are delivered for the quarter ended March 31, 2022, and extend the maturity of the Revolver to December 2023 with respect to 90.1% of the Revolver commitments as of the Amendments Effective Date.
Key terms of the September Credit Amendments include the following:
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements related to Park’s current expectations regarding the effectiveness of the September Credit Amendments, the performance of its business, financial results, liquidity and capital resources, the effects of competition and the effects of future legislation or regulations, the expected completion of anticipated dispositions, the declaration and payment of future dividends, and other non-historical statements. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company’s control and which could materially affect its results of operations, financial condition, cash flows, performance or future achievements or events. Currently, one of the most significant factors is the potential adverse effect of COVID-19, including possible resurgences, on the Company’s financial condition, results of operations, cash flows and performance, its hotel management companies and its hotels’ tenants, and the global economy and financial markets. The extent to which COVID-19 impacts the Company, its hotel managers, tenants and guests at the Company’s hotels will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its effect, additional closures that may be mandated or advisable even after the reopening of certain of the Company’s hotels on a limited basis, whether due to an increased number of COVID-19 cases or otherwise, and the direct and indirect economic effects of the pandemic and containment measures, among others.
Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements and Park urges investors to carefully review the disclosures Park makes concerning risk and uncertainties in Item 1A: “Risk Factors” in Park’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and Annual Report on Form 10-K for the year ended December 31, 2019, as such factors may be updated from time to time in Park’s filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Except as required by law, Park undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
About Park
Park is the second largest publicly traded lodging REIT with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio currently consists of 60 premium-branded hotels and resorts with over 33,000 rooms primarily located in prime city center and resort locations. Visit www.pkhotelsandresorts.com for more information.
PARK HOTELS & RESORTS INC.
DEFINITIONS
Occupancy
Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels. Room nights available to guests have not been adjusted for suspended or reduced operations at certain of our hotels as a result of COVID-19, unless otherwise noted. Occupancy measures the utilization of the Company’s hotels’ available capacity. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help management determine achievable Average Daily Rate (“ADR”) levels as demand for rooms increases or decreases.
Average Daily Rate
ADR represents rooms revenue divided by total number of room nights sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the hotel industry, and management uses ADR to assess pricing levels that the Company is able to generate by type of customer, as changes in rates have a more pronounced effect on overall revenues and incremental profitability than changes in occupancy, as described above.
Revenue per Available Room
Revenue per Available Room (“RevPAR”) represents rooms revenue divided by the total number of room nights available to guests for a given period. Room nights available to guests have not been adjusted for suspended or reduced operations at certain of our hotels as a result of COVID-19. Management considers RevPAR to be a meaningful indicator of the Company’s performance as it provides a metric correlated to two primary and key factors of operations at a hotel or group of hotels: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods.
References to RevPAR and ADR are presented on a currency neutral basis (prior periods are reflected using current period exchange rates), unless otherwise noted.
Pro-forma
The Company presents certain data for its consolidated hotels on a pro-forma hotel basis as supplemental information for investors: Pro-forma RevPAR, Pro-forma Occupancy and Pro-forma ADR. The Company presents pro-forma hotel results to help the Company and its investors evaluate the ongoing operating performance of its hotels. The Company’s pro-forma metrics exclude results from property dispositions and include results from property acquisitions as though such acquisitions occurred on January 1, 2019.
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Investor Contact
Ian Weissman
+ 1 571 302 5591