TYSONS, VA—Park Hotels & Resorts Inc. revealed a 2.6% uptick in RevPAR for its third quarter earnings results and continues to make headway on strategic initiatives.
“I am extremely pleased to announce another solid quarter, with RevPAR increasing 2.6%, or 3.2% if you exclude the impact of weather related events and the labor strike in Chicago,” said Thomas J. Baltimore, Jr., chairman/president/CEO,Park Hotels & Resorts Inc. “We continue to make meaningful progress on our internal growth initiatives, with comparable hotel adjusted EBITDA margins improving 10 basis points during the quarter and 60 basis points year-to-date. Looking ahead, we remain optimistic on the fundamentals of our business, as both transient demand and group pace continue to accelerate. Group pace for 2018 is up almost 5%, and 2019 pace is up nearly 12%, further supporting our continued success and confident outlook.”
Top 10 Hotels
RevPAR at Park’s top 10 hotels, which account for approximately 65% of third quarter Hotel Adjusted EBITDA, increased 1.7% during the quarter and 3.1% year-to-date, primarily due to an increase in rate, as compared to the same periods in 2017.
Highlights include:
- Hilton San Francisco Union Square/Parc 55 San Francisco – a Hilton Hotel: Combined RevPAR increased 5.8% for the quarter and 6.1% year-to-date from increases in group business of 11% for the quarter and 13% year-to-date, coupled with an increase in contract business. Hotel Adjusted EBITDA margins for the two hotels collectively improved approximately 160 basis points during the quarter and 190 basis points year-to-date;
- Hilton Chicago: Despite the labor strike in September, RevPAR increased 8.6% during the quarter and 6.3% year-to-date, from increases in both group and transient business. Excluding the impact of the labor strike, RevPAR at the hotel would have increased 11.6% during the quarter;
- Hilton Hawaiian Village Waikiki Beach Resort: RevPAR growth was 0.2% for the quarter, which was impacted by Hurricane Lane and other storms that caused a decline in occupancy that mostly offset the growth. Year-to-date RevPAR increased 1.4% as a result of increased group business in the first half of the year;
- Hilton New Orleans Riverside: RevPAR growth was 0.4% for the quarter and 2.1% year-to-date from an increase in contract business in the third quarter and an increase in transient business year-to-date. Despite the relatively flat RevPAR growth during the quarter, Hotel Adjusted EBITDA margins increased 220 basis points;
- New York Hilton Midtown: RevPAR decreased 0.3% for the quarter primarily due to a decline in group business from weak citywide demand. Despite the decrease in the quarter, RevPAR increased 1.5% year-to-date benefitting from an increase in group business during the second quarter;
- Hilton Orlando Bonnet Creek/Waldorf Astoria Orlando: Combined RevPAR decreased 5.7% for the quarter and increased 0.4% year-to-date. The decrease in the quarter resulted from a decline in occupancy as the hotels benefited from significant demand in September 2017 from those displaced by Hurricane Irma;
- Casa Marina, A Waldorf Astoria Resort: RevPAR increased 7.2% during the quarter and 0.5% year-to-date. The increase during the quarter is primarily attributed to the hotel being closed during a portion of September 2017 following Hurricane Irma; and
- Hilton Waikoloa Village: RevPAR decreased by 9.2% for the quarter due to continued disruption caused by the eruption of the Kilauea volcano, Hurricane Lane and other storms. RevPAR increased 3% year-to-date, benefitting from increases in both group and transient rates in the first half of the year.
Total Consolidated Comparable Hotels
Comparable RevPAR increased 2.6% for the quarter and 2.7% year-to-date primarily due to a 2.3% and 2.2% increase in rate, respectively, as compared to the same periods in 2017. For rooms revenue during the third quarter, transient increased 1.3%, group decreased 0.2% and contract increased 24.5% as compared to the same period in 2017. For rooms revenue year-to-date, transient decreased 0.7%, group increased 5.4% and contract increased 23.6% as compared to the same period in 2017.
The overall increase in comparable RevPAR for both the quarter and year-to-date was primarily a result of increases in group business at Park’s San Francisco hotels and the Hilton Chicago hotel, which also led to an increase in the transient rate. Additionally, Hilton Hawaiian Village Waikiki Beach Resort contributed to the overall RevPAR growth year-to-date as a result of increased group business, partially offset by the disruption from weather related events affecting Hawaii.
The overall increase in comparable RevPAR for both periods was partially offset by a decline in RevPAR at Park’s Orlando hotels attributable to a decrease in transient demand in the market during the third quarter, coupled with challenging year-over-year comparisons related to the significant increase in business in September 2017 from those displaced by Hurricane Irma.
Property Redevelopment
Excluding the redevelopment of the Caribe Hilton, Park invested $30 million in the third quarter (and $108 million year-to-date) on capital improvements at its hotels, including $15 million on improvements made to guestrooms, meeting spaces and other guest-facing areas. Key projects for the quarter included:
- Hilton Hawaiian Village Waikiki Beach Resort: $4 million primarily on exterior renovations;
- Hilton Boston Logan Airport: $3 million primarily on phase one of guestroom renovations;
- Hilton Waikoloa Village: $3 million primarily on restaurant and pool renovations;
- New York Hilton Midtown: $2 million primarily on phase four of guestroom and premium suites renovations;
- Hilton San Francisco Union Square: $2 million primarily on final phase of guestroom renovations;
- Hilton New Orleans Riverside: $2 million primarily on renovations to meeting rooms; and
- Hilton Short Hills: $1 million primarily on renovations to add 10 new rooms to the property, new bathrooms and soft goods.
