Park Hotels & Resorts, Inc. Stock

Greetings, and welcome to the Park Hotels & Resorts Second Quarter 2026 Conference Call.

[Operator Instructions]

Please note this conference is being recorded. I will now turn the conference over to your host, Ian Weissman. Please go ahead.

Thank you, operator, and welcome, everyone, to the Park Hotels & Resorts Second Quarter 2026 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 securities laws. As described in our filings with the SEC. These statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. Actual 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.

In addition, on today's call, we will discuss certain non-GAAP financial information, such as adjusted 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 an update on our strategic initiatives and review Park's second quarter performance and outlook for the year, while Sean Dell'Orto, our Chief Financial Officer and Chief Operating Officer, will provide updates on our capital investments and additional color on guidance. Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom.

Thank you, Ian, and welcome, everyone. I am pleased to report that Park delivered another outstanding quarter. with results meaningfully exceeding our expectations and demonstrating the continued strength and resilience of our portfolio. RevPAR increased nearly 7% year-over-year, excluding Royal Palm South Beach, with growth accelerating from approximately 4% in April to 5% in May and over 11% in June. Performance was driven by strong group demand and higher-rated leisure travel across the portfolio, highlighted by the exceptional strength in Hawaii. As a result, resort RevPAR increased more than 9%, excluding Royal Palm, while our urban portfolio delivered nearly 4% RevPAR growth. These results reflect both the pace of demand across our markets and the benefits of our disciplined capital investment strategy.

Notably, our strongest performance continues to come from assets where we have invested significant capital in recent years, including Orlando, Key West and Hawaii, underscoring the value creation and outsized returns generated by our targeted reinvestment initiatives. Hawaii was among the top performers with RevPAR increasing approximately 9% year-over-year and accelerating meaningfully from the first quarter. Performance improved sequentially each month, driven by a significant increase in leisure demand and strong in-house group activity which more than offset the loss of citywide business resulting from the partial closure of the Honolulu Convention Center, which is expected to remain closed through 2027. Hilton Hawaiian Village was the clear standout with RevPAR increasing nearly 12% and EBITDA growing more than 13%.

Property continued to gain market share throughout the quarter, ending June with a RevPAR index of 117, representing a 4-point improvement compared to June 2024 or prior to the commencement of the Rainbow Tower renovation. The hotel's momentum continued into July with occupancy of 98% or a nearly 700 basis point improvement year-over-year and preliminary RevPAR growth of over 6%. Both Hilton Hawaiian Village and Hilton Waikoloa Village are benefiting from our recent capital investments as the renovated rainbow and Palace towers are generating strong guest demand and meaningful rate premiums.

Hawaii is demonstrating why it remains one of the most attractive resort markets in the country, demand trends are healthy, with the Hawaii Tourism Board recently raising its 2026 visitor arrivals forecast by a full percentage point to nearly 2%, supported by growth from East Coast markets, and improving international trends. Several major airlines, including Alaska, Delta and Southwest have also announced increased airlift to Hawaii for the remainder of the year. We remain confident that both hotels still have significant runway for future growth as they recover back to their 2023 peak earnings levels. With the Rainbow Tower and Palace Tower renovations now complete and the LeesiTower renovation at Hilton Hawaiian Village about to commence, we believe this setup for 2027 and beyond is exceptionally strong.

Turning to Florida. Our Bonnet Creek complex and Key West properties once again delivered outstanding results with RevPAR growth of 13% and 10%, respectively, underscoring the strength of our capital investments and the sustained demand for Florida's Premier resort destinations. At Bonnet Creek, the complex achieved record second quarter rooms and food and beverage revenue for the third consecutive year further validating the significant investments we have made in the assets. Both the [indiscernible] story Orlando and the Cigna by Hilton Orlando Bonnet Creek contributed exceptional performance with RevPAR increasing nearly 15% and 12%, respectively. Remarkably, Water Pastoria's food and beverage revenue surpassed last year's record by 24%, driven by strong outlet performance and meaningful group contributions. We were also pleased to see the [indiscernible] for store Orlando recognized on travel and leisure 2026 World's Best list.

In Key West, second quarter rooms and food and beverage revenue also reached new record levels, supported by strong leisure demand, and continued growth in group business. Casa Marina led performance with RevPAR increasing more than 14% year-over-year as the properties repositioning continue to drive gains in market share, which was up over 8 points in the quarter to a RevPAR index of over 120. The resort also delivered record food and beverage results with a 36% year-over-year increase, benefiting from enhanced restaurant offerings and the continued success of Dorado highlighting the strong returns generated by our recent investments. Our urban portfolio was another source of strength during the quarter. Washington D.C. led the way with nearly 17% RevPAR growth as government-related demand increased. Chicago delivered nearly 12% RevPAR growth, supported by a strong group and transient demand, an exceptionally strong banquet and catering results, which drove meaningful profit growth, while Hyatt Regency Boston benefited from continued strength in group and citywide business along with demand associated with the Boston Marathon and World Cup matches, resulting in nearly 9% RevPAR growth.

Turning to group demand, which was a major contributor to our second quarter out performance. Group rooms revenue increased 9.5% year-over-year, led by strength in Washington, D.C., Orlando and Chicago while June group revenue increased nearly 23%. Full year 2026 group revenue pace is now up nearly 6% compared with the same time last year, representing a meaningful improvement from last month, our third quarter group pace is up over 15%. We remain encouraged by overall group booking trends for the balance of the year, supported by continued strength in corporate groups, in-house events and citywide activity across several of our core markets.

Looking ahead to 2027, group revenue pace for our core portfolio is up over 6%, with double-digit increases in Hawaii, New York, Key West and San Francisco, providing us with further confidence in the continued strength of group demand. On the capital allocation front, we continue to execute our strategy of recycling capital out of underperforming non-core assets while enhancing the quality and long-term growth profile of our portfolio. Since our May earnings call, we have completed 3 additional dispositions. In May, we sold our ownership interest in an unconsolidated joint venture that owns and operates the 288-room Embassy Suites Old Town Alexandria for gross proceeds of $29 million.

In June, we exited the 262-room Embassy Suite to Austin through the termination of the short-term ground lease and sale of the hotel's operating assets, generating approximately $6 million of proceeds. Most recently in July, completed the sale of the 314 room Hilton Short Hills for $12 million. These transactions represent another step forward towards simplifying the company, lowering future capital needs and concentrating our portfolio on higher-quality assets with stronger growth prospects and more durable earnings.

Since announcing our plan in early 2025 to exit our remaining non-core assets, we have sold or disposed of 10 of the 19 identified hotels generating nearly $200 million of proceeds at an average multiple of approximately 12.5x EBITDA. And since the spin, we have now sold or disposed of 55 assets for more than $3 billion. We continue to make solid progress with the remaining non-core hotels, which today account for less than 5% of the portfolio's value and remain firmly committed to materially reducing our exposure by year-end with active marketing efforts underway for several assets. As always, we remain disciplined and laser-focused on executing transactions that strengthen our earnings, improve the long-term growth profile of the portfolio and maximize shareholder value.

Turning to capital investments. We are thrilled to have officially reopened the Royal Palm South Beach on July 22, following the successful completion of its transformative redevelopment, which was completed in just 15 months as planned. More than $100 million project included the comprehensive renovation of all 393 existing guestrooms, the addition of 11 new keys, a complete re-imagination of the lobby and public spaces, 4 new food and beverage concepts and significant enhancements to the hotel's meeting and event facilities.

We believe Royal Palm is now exceptionally well positioned to capitalize on ongoing strength of the South Florida market and compete more effectively within the upper upscale and luxury segments.

Upon stabilization, which we expect could occur over the next 2 years, we believe this investment has the potential to double the hotel's EBITDA. More importantly, it serves as another compelling example of our unique ability to create substantial shareholder value through targeted capital investments that enhance asset quality, strengthen competitive positioning and unlock meaningful earnings growth. I'd also like to recognize our design and construction team for their exceptional execution of this complex project. Their efforts further demonstrate Park's core competency to diligently evaluate and timely execute complex capital projects that will unlock embedded value across our portfolio.

As we look at the balance of the year, I remain encouraged by the continued strength across our portfolio. Despite some geopolitical and macroeconomic headwinds U.S. economy continues to show strength, benefiting from a resilient consumer, a stable labor market and ongoing business investment supporting demand across both leisure and group travel, combined with the reopening of the Royal Palm South Beach and strong group booking momentum, we believe Park is well positioned to deliver solid results through the remainder of 2026 and beyond.

I'm also incredibly proud of the progress our team has made, strengthening the portfolio through disciplined capital allocation, active capital recycling and proactive balance sheet management, which has strengthened Park's earnings power and long-term growth profile while enhancing our financial flexibility. Beyond this year, I am equally optimistic following the planned completion of the Elite Tower renovation at Hilton Hawaiian Village expected in early 2027, we will have completed nearly $350 million of transformative capital investments across our Hawaii portfolio. As a result, our Hawaiian resorts will be exceptionally well positioned to capitalize on the continued recovery in the market and further narrow the approximately $60 million EBIT -- EBITDA gap relative to your 2023 peak earnings level.

At the same time, as operations at Royal Palm South Beach ramp, we expect the property pound stabilization to contribute approximately $28 million of EBITDA over the next few years. Together with the continued benefits of our capital recycling program and core portfolio focus, these catalysts reinforced our confidence in Park's ability to drive meaningful earnings growth and create substantial long-term value for shareholders. With that, I will turn the call over to Sean.

Thanks, Tom. We are very pleased with our second quarter results, which came in well ahead of expectations. Total portfolio RevPAR increased nearly 6% to $217. And as Tom noted earlier, increased nearly 7% year-over-year, excluding Royal Palm. Total hotel revenue increased 6% during the quarter, while hotel adjusted EBITDA increased nearly 9% to $204 million, resulting in a hotel adjusted EBITDA margin of nearly 32%, up 80 basis points year-over-year. Adjusted EBITDA totaled $198 million and adjusted FFO per share was $0.70. The quarter's outperformance was driven by a balance of increasing group and leisure demand. As Tom noted earlier, group was up 9.5%, exceeding expectations by 700 basis points, with strong in the quarter for the quarter pickup, in the in-house corporate and smart segments while the leisure transient segment grew by over 13% and exceeded expectations by nearly 500 basis points.

This pickup translated to stronger-than-expected operating results at the Hilton Hawaiian Village, our Bonnet Creek complex and Casa Marina as well as at our hotels in Chicago, Santa Barbara and Washington, D.C., each of which generated double-digit year-over-year RevPAR growth during the quarter. We also realized a modest benefit from the FIFA World Cup across our host city markets of New York, Boston and San Francisco, consistent with the lower end of our expectations, contributing roughly 30 basis points towards full year portfolio RevPAR growth, essentially offsetting the 30 basis point drag expected from Royal Palm this year.

Turning to capital investments. During the second quarter, we invested a total of $64 million in capital improvements with full year CapEx expected to range between $230 million and $260 million. In Hawaii, we are set to commence the comprehensive renovation of the 348-room Ali'i Tower at Hilton Hawaiian Village this month. This investment of approximately $100 million will include a complete renovation of all guestrooms and the addition of 3 more keys within the premium oceanfront tower, along with enhancements to food and beverage outlets, including the Tropics bar and grill and the poolside outlet mix bar, all of which are expected to be completed early next year.

Upon completion, nearly 80% of the guest rooms across the nearly 3,000 room Hilton Hawaiian Village complex will have been fully renovated. And finally, in New Orleans, we commenced the third and final phase of the main tower guest room renovation in May, encompassing the remaining 489 guest rooms and expected to be completed by mid-October. Upon completion, all 1,600-plus guest rooms will have been fully renovated, significantly enhancing the quality and competitiveness of one of our most important convention-oriented assets.

Turning to the balance sheet. We ended the second quarter with net debt of approximately $3.7 billion, translating to a net debt-to-EBITDA ratio of 6.1x, roughly 0.2 of a turn lower than last quarter. Liquidity was $2.6 billion, including $260 million in cash, $1 billion of available capacity under our revolver under our delayed draw term loan and the $700 million Bonnet Creek delayed draw financing.

During the quarter, we drew $200 million under the delayed draw term loan and used a portion of the proceeds to repay the $120 million Hyatt Regency Boston mortgage ahead of its July maturity.

Looking ahead, we intend to use the remaining delayed draw terminal capacity together with the Bonnet Creek proceeds to fully repay the $1.27 billion Hilton Hawaiian Village mortgage in September and also plan to refinance the Hilton Santa Barbara mortgage later this year. These transactions are expected to meaningfully extend our debt maturities and and further enhance our financial flexibility. With respect to our dividend, on July 15, we paid our second quarter cash dividend of $0.25 per share. And on July 31, the Board approved a third quarter cash dividend of $0.25 per share to be paid on October 15 to stockholders of record as of September 30. The dividend currently translates to an annualized yield of approximately 6.5% based on recent trading levels.

Turning to guidance. We are increasing both our RevPAR and earnings guidance ranges to reflect our second quarter outperformance and strong start to the third quarter as demand trends continue to exceed expectations across our portfolio. Accordingly, we are raising our full year RevPAR outlook by approximately 225 basis points at the midpoint to a new range of 3% to 4.5%. This updated outlook reflects the roughly 370 basis points of outperformance delivered during the second quarter as well as stronger-than-anticipated results at the start of the third quarter with July RevPAR increasing 8.5% driven by continued strength in Hawaii, Key West, Austin, Santa Barbara and Washington, D.C.

Based on current booking trends and recent operating performance, we now expect third quarter RevPAR growth to trend toward the upper end of our revised guidance range and exceed prior expectations. From an earnings perspective, we are increasing adjusted EBITDA guidance by approximately $25 million at the midpoint to a new range of $617 million to $637 million, while adjusted FFO guidance increases by approximately $0.13 per share at the midpoint to a new range of $1.90 to $2 per share. This increase to guidance also reflects an assumed increase in expenses of 3% to 4%, with a stronger demand environment and higher occupancy expectations across the portfolio driving increases in variable costs such as labor and utilities, partially offset by reductions in fixed costs with $11 million in benefits achieved from successful property tax appeals in the second quarter and a 20% reduction in property insurance premiums achieved during the June 1 renewal of our program.

In addition, with respect to Royal Palm, our outlook assumes only a modest earnings contribution from the hotel in the back half of the year with more meaningful earnings growth expected in 2027 and 2028 as the hotel ramps towards stabilization. We are encouraged by initial booking trends with group and transient ADRs for the balance of this year, up 21% and 53%, respectively, compared to pre-renovation levels and tracking ahead of our expectations.

These early results reinforce our confidence in the property's long-term earnings potential. Royal Palm is one of South Florida's premier lifestyle resort assets, and we continue to expect meaningful earnings growth as occupancy, ADR and ancillary revenues billed through the stabilization period. We look forward to welcoming many of you to the property during our November investor tour and showcasing the exceptional transformation firsthand. Finally, the recently completed dispositions of the 3 non-core assets Tom spoke to earlier, are expected to reduce second half EBITDA by approximately $3.5 million, which has been reflected in our updated guidance. This concludes our prepared remarks. We will now open the line for Q&A.

[Operator Instructions]

Operator, may we have the first question, please?

[Operator Instructions]

And our first question will come from Floris Van Dijkum with Ladenburg Thalmann.

So obviously, results are solid, and the sale of non-core makes it easier to see the quality of the portfolio. You've outlined in the past sort of upside in EBITDA. I think you said about $100 million of EBITDA over 25 levels simply from Hawaii and the Royal -- and the Royal Palm Beach. And then there's an incremental potential other $100 million probably from urban and from Orlando and other assets that you have. Maybe talk a little bit about the timing of when you think that potential $200 million of EBITDA could hit the bottom line in the portfolio?

Floris, thank you for your question. I appreciate all the listeners. I think the $200 million might be a little overstated. We've really focused more around $100 million. That would be sort of the $60 million to $70 million sort of recovery of Hawaii. And then, of course, as both Sean and I mentioned in our prepared remarks, about $28 million, plus or minus upon stabilization for Royal Palm. So I would sort of anchor you in that, and I would just step back and think again about what we've been saying for several quarters and the last few years, and we've been laser focused on reshaping the portfolio. We've sold or disposed of now 55 assets for north of $3 billion. We're really down to 21 core hotels and that's 9 sort of remaining non-core that only account for less than 5% of value of the company. I think that's important. 3 of those 9 are part of the dispute, which don't really require a lot of discussion at this point and only about $16 million in EBITDA.

The other 6 assets account for approximately $35 million in EBITDA, and we've got work streams underway. So we are making, as promised, significant progress, and we expect to be substantially complete by the end of the year. And then secondarily, we have been laser-focused and relentless on and really demonstrating our track record with these transformative renovations. We've said before and we'll say again, we think we can generate higher development yields over acquisition yields. And if you think about Bonnet Creek and the extraordinary success we're having with that property, if you think about the Key West 2 assets in our portfolio there, again, outstanding an outsized results, Hilton Hawaiian Village with Tapa Tower, the Rainbow Tower. And what's amazing about Hawaii when you step back, the market was largely flat, but we grew at Hilton Hawaiian Village up 12% in Hilton Waikoloa even though down slightly because it's coming back online after renovating the Palace tower, again, still gaining share at Hilton Hawaiian Village pretty dramatically there.

And then again, as you think about New Orleans and the work that we've got underway there in the third phase, Royal Palm, as we mentioned, having that completed on time. So very, very bullish as we think about the future, and I think strong execution on part of the team across the board, whether it's selling the non-core, whether it's obviously the transformative renovations, we continue to create value and a lot of that being organic, and we think that is a way that Park can really separate itself as we move forward.

My follow-up is actually regarding the capital allocation towards redevelopment or ROI projects. I mean you guys have done -- had a really strong track record of getting, call it, 20-ish percent returns on invested capital in Orlando and in Key West. You've got a number of other potential projects in the pipeline as well. Could you maybe touch on the A and B Tower, the additional tower in Hawaii Village, Santa Barbara and I believe Waikoloa and how investors should think about investment and deployment into those assets over the next 2 or 3 years?

Yes. I would, again, make the kind of broad statement. I think we have an underappreciated iconic portfolio and when you step back and look at it, there really are improving fundamentals and I think outsized growth opportunities from 2026, the second half really through 2028, and those are markets in Hawaii, that's Miami, that's Key West, that's Orlando. And if you step back and think about Hawaii again, the Ali'i Tower, Oceanfront Premium Tower, a hotel within a hotel that's got its own check in. We're going to close that down 348 keys here in the coming weeks with the expectation that we will reopen that in early next year. I could not be more excited. I think it will again demonstrate Carl Mayfield and his design and construction team at Park and their extraordinary work, so we're excited. And again, the whole objective is closing that $60 million to $70 million gap that we've been talking about in Hawaii. Royal Palm, as we mentioned, is now open. And I would also reemphasize open largely onetime as we communicated, as we planned. There are many hoteliers, some in our space and others outside that there are $4 billion plus or minus in development projects in Miami.

The fact that we were on time, largely on budget is a real credit to our unique ability to both plan and execute these types of projects. As you think about Bonnet Creek, we've continue to get growth and market share gains there. We've taken Bonnet Creek from $62 million in EBITDA. We're tracking towards $105 million to $110 million this year, and we are still not at fair share.

Let me repeat that again. So we're up 60% to 70% in cash flow but we are still not at fair share, very competitive comp set, but it still gives us the opportunity for additional growth there, which addresses your issue about us continuing to grow cash flow. So really excited about that. Key West continues to outperform as we outlined across the board, and again, very strong RevPAR index performance there as well. And Hilton Santa Barbara is another that we look at along with our partner that we think a comprehensive renovation there could generate outsized returns as well.

So those are what I would call in the lineup, outsized opportunities for significant growth. The AMB tower really don't want to talk about. Our plan there is to get it entitled. We do not think it makes sense to move forward with that at any point in the near future and are more focused on existing towers at this time. So with that, I'll stop. And so I know we've got other people in the queue.

Our next question will come from Duane Pfennigwerth with Evercore ISI.

Just given the sell-down of noncore hotels and the completion of the Miami asset, the Royal Palm, can you just speak to the longer-term trajectory of capital spending? Is this an above-average year should it been down? Or is this a level we should think about sustaining going forward?

Duane, this is Sean. I mean I think it's safe to say it's something that we would think is coming down. From a maintenance CapEx standpoint, and clearly, it's elevated because you've done some of these big ROI projects like Royal Palm, proceeding that, we've clearly done a lot of investment in Florida between Bonnet Creek and Casa Marina over the last couple of years prior to this year. So in the end, I think you kind of see it more of a -- on any big ROI projects. It's more of a maintenance CapEx that's going to be south of $200 million kind of on a run rate basis. As we think about some of these projects and certainly think about an overall capital allocation strategies and ultimately what the market is kind of driving, maybe if we ultimately see a different project that makes sense from an ROI perspective, could increase from there. But from a baseline, I would say it's coming down to the below $200 million.

And then just with respect to the upgrading guidance and across the sector, probably some of this is just good job expectation setting by the CFOs. But I guess what was your biggest surprise as you look at your own portfolio in 2Q. And specifically, what's embedded in the second half, maybe it's the same answer, maybe it's a different answer. What was the biggest surprise relative to your own internal expectations?

Look, I would say it was a broad-based surprise in a sense. I think the portfolio overall performed really well. I mean clearly, in Q1 earnings, we were talking about guidance, we still kind of -- we're looking at somewhat of an uncertain world. And with gas prices going up and all the things we know about, you certainly had some hesitation there and some uncertainty. So the surprise to see the resilience in the consumer and seeing [indiscernible], which translated to good leisure growth in the quarter for the quarter pickup really drive group for us, 700 basis points better than expected. So it was across the board. We do see early good start to Q3, and we certainly think that can continue some of these baseline macro elements here. That said, we will certainly want to be -- make sure that we're continuing to exceed expectations. So we're setting things appropriately.

And Duane, I would agree with everything Sean noted. I would also echo that that we're in the World Cup, we didn't think World Cup would be a big contributor to Park, and it essentially performed as expected. We think, again, that sets us up for '27 not having some of those difficult comps that perhaps others may have.

And we'll go next to Smedes Rose with Citi.

I wanted to ask you first, Tom, you mentioned group pace is up 6% for 2027. Could you just talk a little bit more about that? Is that bookings, is that revenues? And kind of where are you now, I guess, in terms of percent of rooms sort of on the books for next year kind of relative to your expectations?

Yes. I would -- Smedes, if you look at '26, as Sean said, we're 5.5%, 6% for the balance of '26. We were up 9.5% in the second quarter. We're looking to be up 15% is our pace in the third quarter, which is very strong. About 96% of our business is on the books, plus or minus. And I would say it's broad-based as we look just Q3, Hilton Hawaiian Village is strong, Casa is strong. Hilton Caribe, Santa Barbara, Denver, New York, Chicago. So again, we continue to see broad-based there. As we look in '27 and just focus on the core, it's really over 6% and New York City is strong, double-digit, Key West, Miami off the charts, obviously, is part of the reopening. Hawaii double-digit, San Francisco double digit. So very encouraged as we sort of look out. And even beyond that, as we look to early '28, '28 looks encouraging as well. So we are very bullish. And again, we've been intentional. We've been really sharp shooters on the capital allocation front, making sure that we're investing in our core portfolio where we can make money. And particularly, if we can take the big boxes and anchor them with significant group allows us to better yield those assets in much better profitability. And I think you're seeing results the last few quarters are great examples of that. Second quarter and we remain very bullish on the third quarter. But as Sean mentioned, we're going to be cautious. And I think certainly, our guidance reflects that.

And I would just add, too, in terms of the breakdown, I would say this year, group pace is more so on the occupancy side, but next year is more balance between [indiscernible] and rate.

Great. And Sean, can I just ask you to -- so you mentioned on the release of $11 million of positive real estate tax appeals. Are those kind of onetime? Or would you expect the property level EBITDA to be enhanced now with kind of a lower run rate tax basis going forward? Or maybe you could just sort of talk about the impact of those appeals.

Yes. I would say large part -- I mean, maybe a couple of more onetime. But really, the biggest driver of that was Chicago. I think those who kind of follow Chicago enough, there's probably some in a few of us in our peer set to have exposure in Chicago, where it's kind of an annual routine in a sense where you kind of are sealing each year essentially and ultimately, getting a benefit somewhere in the Q2 to Q3 time frame.

If you recall, last year, we had about a $5 million benefit from an appeals win in Chicago. This year, it's about $6 million. So a little bit better than that, embedded in that $11 million. The other ones were ultimately onetime in a sense in nature, one of them which was for an asset that we sold recently Short Hills. So in a sense, if you look at our comp portfolio, which shores [indiscernible]no longer in, the net year-over-year impact is not that dramatic.

And I would say, when we think about the basis point margin expansion we have for the quarter, it was 80% overall, but excluding that, it was about still 40-plus basis points better. So it will -- as we look at kind of -- let's say, fixed cost in general because that's certainly what we can kind of directly influence that a lot more -- work being done in a number of -- not only on the tax side and working on the deals, but also on the insurance side. As you look at first half, we were probably on average about 1.5 points down year-over-year on fixed cost. And with insurance helping us in the back half of the year, it's still probably about 0.5 point below. So we continue a benefit and an offset to any other cost increases we're seeing elsewhere in the operations. for the rest of '26.

And we'll hear next from Dan Politzer with JPMorgan.

I was hoping we could maybe parse out, there's a lot of moving pieces, obviously, in '26, but maybe it's a bridge to '27. Maybe just kind of the big kind of building blocks between Royal Palm, Hawaii, the non-core dispositions and the property tax, if you can kind of run through that, I think it would be helpful.

Certainly, a lot to discuss there. I would say, as you think about, I mean, '27, we'll just kind of maybe keep it pretty broad here. Ultimately, we talked about group pace. I think that's a kind of a core foundation of visibility into next year. And certainly, we don't want to get too detailed now we're thinking about guidance in any way, shape or form year. But group pace being up 6% for the core portfolio, a good balance in terms of resort and urban exposure to that. Tom talked about some of the certain markets that look pretty good. So we've got that as a foundation for the portfolio. Royal Palm ramp is certainly going to be a big story for us, and we're very happy how the product turned out and how it's certainly getting some early looks and positive feedback. I would think as we think about its impact for next year, if you just kind of take what it did in essentially before we put it under renovation last year. You kind of add that to our performance and think about '27. It's probably about 150 to 200 basis points positive impact to tailwind, just if you take, again, its performance in '24.

Clearly, we want to exceed that as we ramp up into next year. I won't be fully stabilized, but you can certainly see potential for doing better than that in terms of helping the portfolio out next year. In terms of Hawaii, group pace for next year is combined 12.5%, [indiscernible] is up over 20%. We're seeing great lift and good momentum from Waikoloa coming off the Palace Tower renovation. We expect to see Q2 rate was up 11%, again, benefiting from that. HHV, of course. We've got the Ali'i Tower being renovated, as we mentioned. We'll come off of that in the later part of Q1 and certainly expect to see the benefits of that like we're seeing with rainbow. And certainly, it's lapping the back half of '27 would ultimately be rooms out of order for Ali'i Tower in the back half of '27. So positive momentum, I think, as we kind of go kind of Q2, the back half of the year, on the Hawaii side. I think even beyond '27, I think from a Hawaii standpoint, in a good Waikoloa story is the property recently took in some business from a -- from an incentive group for the year that basically represents 10% of the revenue expected to generate this year. So a big program, a big win for the team as we kind of think about the Hawaii recovery story over the next couple of years and certainly a good nugget there for Waikoloa.

Got it. I know that's a mouthful, there's a lot there. I guess kind of more high-level question, you've made good progress on the non-core asset sales. as you kind of wind that down and there's fewer and fewer left and the contribution becomes smaller, is there any thought as to just kind of collapsing the non-core into the core and just kind of having one kind of clean number on a go forward?

It's a fair question. It's one that we'll study. I think, candidly, will depend on sort of where we are at the end of the year. We remain committed to cleaning up the portfolio and reshaping it. And I do think as you look at the core, there's about a 63% difference, obviously, in RevPAR from about $215 plus or minus to $131. And if you look at margins on core, it's about 30%, 31% versus about 16%. So pretty significant difference there. We're confident we're going to continue to make significant progress and get to the point where really the non-core is really in materials as we sort of move forward.

Our next question will come from Patrick Scholes with Truist Securities.

A similar question I've been asking other companies on earnings calls. And that's what percent of your hotels do you believe would qualify for Hilton's new RISE program or Marriott's equivalent program?

Well, clearly, this is a program that Hilton's rolled out this franchise and ownership community. When you think about our portfolio as we talk about, our portfolio is certainly heavily Hilton and call it, 85% to 90% of our business is coming from Hilton. So I'd say that's clearly the lion's share. We've got the rest kind of mix kind of evenly between Marriott and Hyatt. So certainly, it's the [indiscernible] prize program that's kind of for us. I mean, I'd say, in [indiscernible], the immediate benefits, I think, are certainly helpful, but I'd say kind of marginal as kind of as noted. And as we know, there are gating criteria that will -- franchisees like us will have to meet and we're kind of -- I think, like us, franchisees want to evaluate feasibility and timing to achieve the potential of the benefits that they're giving. So we expect it to evolve over time. I mean, clearly, Hilton is looking at ways to address owner profitability, and we certainly appreciate their focus on that. We believe and expect that this is one of many ways to do that, and they're certainly working to identify the ways to improve the operating model and owning profitability.

Okay. Go ahead.

Yes, Patrick, if I could just add a couple of points. Listen, I think it's good that the owner community is fully engaged with the leading brands and looking at ways to candidly reshape the operating model and improve the economics. I think there's no secret. Owners have had a tougher run in the last 5, 6 years. And the fact that we're engaged at the table that we're looking at whether it's through AI initiatives, whether it's through the RISE program or Marriott's equivalent or all of that makes sense. But at the end of the day, their business models don't work unless they have a very active, engaged and successful owner community. And we've got to figure out a way for margins to improve and for cash flows to grow.

And I'm glad that the brands are committed in my view to that discussion, and I know that business leaders, the men and women that that run, whether they're public or private companies and are all looking at figuring out ways to reshape that operating model. So it's a positive. And I think it really goes beyond just the RISE program.

I recall from a lodging conference a year or 2 ago, I think the quote was asset-light doesn't work if asset-heavy doesn't either. Well, I think that's another way of saying it.

You said it better, but same outcome.

Our next question will come from David Katz with Jefferies.

Just a general unspecific answer I'm looking for. Clearly, your stock, the others of your peers, for the most part, are up a lot in the last 12 months. And I always respect the notion that management teams feel like their stock should be higher, right, even if they're up a lot. But do you contemplate the notion of using that upside that has come your way by -- we've only talked about non-core asset sales, but is there a way for you, generally speaking, to play offense with that improved stock price, albeit still a little below, right? If you could make leverage lower or something like that?

David, I appreciate the question. I think you and I have had this dialogue for many years. And listen, nothing would make this team happier. We have obviously played defense. I think we've played it effectively. I think we've reshaped the portfolio. And I think we've done it as well as anyone could given the facts and circumstances. So we've intentionally been shrinking the company, getting it down to our core portfolio because that's where the real value is. The hope and expectation of obviously reinvesting in our core portfolio that we believe we can generate outsized returns and higher returns on the development side than we can on the acquisition front. We still believe that. I think the facts would support that.

And the hope is that as the company continues to rerate, we can get the multiple up and get our cost of capital down, and we would be very interested in certainly looking for those unique opportunities. We're not alone in that. And certainly, as you think about luxury and leisure, in particular, it's very competitive out there. But I think in the meantime, what we're doing in the blocking and tackling and the kind of results that we're generating in Orlando and Hawaii and Key West, I think, really speak for themselves.

And I think Santa Barbara. And you'll continue to see us anchored and focused on reshaping and with the expectation that we'll be able to go on offense. Now is that '26, '27? It's coming, and we look forward to those days.

If I may just follow up, I want to just -- nothing is ever absolute, but it sounds as though the notion of just using whatever stock about just to reduce your leverage is not something that's high on the consideration list?

I wouldn't say that, David. I think as we've said on the non-core, our priority is taking those proceeds, reinvesting with our transformative ROI projects. And we're -- we've identified those that we think have the greatest potential and Lehi will be sort of next in the queue and obviously taking excess proceeds and paying down debt. And the other way to reduce debt and reduce net debt to EBITDA is continuing to grow EBITDA. And as Sean pointed out in his prepared remarks, I mean, we've done that 0.2 of a turn. But the reality is to continue to execute. And I would put our performance up against anybody else. And what we've been doing across the board, we've been consistent in our messaging, and we've been executing and really focus on the things that we control.

Our next question will come from Chris Woronka with Deutsche Bank.

Tom, as I look at your kind of first half performance. It kind of strikes me that I think 2 markets are spot on half of your EBITDA 4 hotels. That doesn't include Miami, so to change things a little bit later. But -- and you said, "hey, not seeing a lot of acquisition opportunity right now, reinvest in hotels." So the question is, is diversification do you think you need to do it or want to do it? And that seems like the only near-term option would be to maybe sell a portion like a joint venture or some of those more chunkier assets. So is there any thoughts to that? Or how important is kind of expanding the the market's diversification?

Sure. It's always in a perfect world, Chris, you'd certainly want more diversification. But if I could -- if we could just back up for a second. If you think about where we're getting outsized returns. And if you think about Hawaii, obviously, the forecast for Miami, I think the facts will show that here in short order. If you look at Key West, if you look at Orlando, if you look at Santa Barbara, I mean that's probably north of 60%, 65% of EBITDA all growth markets. So sure, would we like Hawaii in a perfect world to be less than where it is today, but it's fee simple real estate, huge moat, very difficult to replicate what we have and near and possible from that standpoint. So we like our positioning from that standpoint.

As the stock rerates and the cost of capital comes down, we certainly will look for other opportunities, but we like our positioning right now as we look out.

Okay. Understood. And just a quick follow-up. Is the [indiscernible] and South Beach going over to Hilton and Waldorf, does that at all change your underwriting, I guess, for the better at Royal Palms since your you lose a Marriott competitor basically?

Yes.

I think incrementally, it helps from that standpoint. But I'm excited for Hilton in getting the Waldorf down there. I think that's great for the submarket. We know Miami pretty well, and there's a lot of luxury product. And I think adding Waldorf to the mix will be great. And we can't wait to show the investor community, Royal Palm and the transformation that's occurred there. It is to steal the a phrase from an executive at Marriott, stunning, and we are very, very proud of it and well positioned in the future there.

And we'll go next to Robin Farley with UBS.

Great. Kind of a longer-term question here. You have pretty staged growth in the next 24 months with a lot of these renovations coming on. And I guess when maybe what time frame should we expect for kind of news about like your next projects? Could that be as soon as this year or not necessarily something that you would be announcing that soon.

We've tried, Robin, to be very proactive. And I think as Sean mentioned, obviously, we've ramped up a little more on the CapEx the last few years, all intentional. We would probably get back to what we would call sort of a normal run rate. [indiscernible] makes sense. And as I mentioned, I think Santa Barbara is another asset that we would certainly huddle with our partner, but we think there's the opportunity to really sort of take that up to the next level, and we think that certainly the returns would generate that. But we're very thoughtful.

We tend to study the situation very carefully, both the scope, the timing, the process and minimizing the amount of disruption. There are some cases like Miami where it was so complex in 3 buildings where we ended up having to close the hotel. But if you think about [indiscernible], obviously, we're going to close that hotel where we keep the full campus up and running and operating. So the team is experienced, it's seasoned. And I think we've got a demonstrated track record that respectfully is really the best in the sector

Moving next to Rich Hightower with Barclays.

Tom, I guess maybe just to repackage some of the prior lines of questioning. But Tom, you did mention that the -- I guess, the private market bid for luxury and leisure is still fairly competitive certainly relative to kind of what else exists in hotels. And so maybe tell us what you're seeing in general terms there? And then as a second part of that, is there any structural impediment to monetizing at some point, even one of the core hotels, given the strength of that private market bid if that is indeed the case.

Yes. Richard, we've always said that the team is not entrenched and we're going to do what's in shareholders' best interest. We do get occasional call about Hawaii. It's complicated to do a joint venture not impossible but complicated. And generally, the response has been, if you want to buy Hawaii by the company and I repeat the statement that management or the Board are entrenched here. But we will continue to look. I think we're all curious to see the former strategic portfolio is being marketed. I think it will be interesting to see the pricing and how that unfolds and we'll see what comes out of that. But that's a very healthy process, and there's a lot of capital chasing, that's good for the sector.

I think price discovery is a wonderful thing, and it may lead to other deals with other participants in our sector. So we're excited to continue to watch and observe and see how that unfolds. We're not directly participating at this time. Hopefully, you've known Rich, if you looked at our portfolio or performance, you've looked at our messaging. I think it speaks for itself and how the Park team is performing vis-a-vis what we've communicated.

And our next question will come from Jack Armstrong with Wells Fargo.

Can you talk through the operating expense expectations coming up 60 basis points relative to RevPAR of 225 full year? What were some of the expense controls that brought you to that result? And can you talk through some of the changes in those expense components versus your prior expectations?

Jack, this is Sean. I mean I think -- I mean, look, I think as we think through the -- we certainly pass through what we saw in Q2, fundamentally, on the expense side, which was the biggest driver was really the occ gains that we saw. I mean occupancy was about 2/3s at least of the RevPAR growth and about 75% of the year-to-date growth. So with the backdrop of about 2% growth on a occupied room basis, we certainly saw a little bit of elevated expense there along with the elevated RevPAR. I mean given this though, we were pretty pleased with the flow-through as we look at comparisons to the prior forecast with flow-through for rooms greater than 70% and F&B was really strong at 65. So I think year-to-date increase in thus far for expenses about the midpoint of our guide, and that certainly leads to the back half being around the same amount, kind of midpoint of that 3 to 4. I would say, though, in the back -- if I think about the back half, included in that is about 120 basis points contribution from Royal Palm as it ramps back up and obviously brings on operating expenses above the carry that we had just the basic carry we had last year.

So overall, I think we've been pleased. I think certainly, it's -- it comes as you see some of these things come through, always a focus on cost controls with their managers. They did a pretty good job. But in the end, you're going to have more occupancy, more heads and beds, you're going to see certainly more labor come and we know that labor is certainly that 4% to 5% kind of growth range. So kind of managing through that, I think they did a pretty effective job at flow-through, and we certainly expect them to continue to do that.

And we'll go next to Michael Herring with Green Street Capital.

Just a follow-up on Bonnet Creek. Obviously, mentioning that the RevPAR index share has been pretty strong there. Are there any external factors such as competitive supply or other hotels in the market that were under renovation that might weigh on the near-term growth?

Not that we're aware of. We love our positioning at Bonnet Creek. And obviously, it's a competitive marketplace for sure. I'd also make, if you think about destinations and People sometimes forget that Orlando is the most visited destination in the country. I think expected 77 million to 79 million visitors this year alone, I think Vegas is around 45 million. I think New York is about 67 million, plus or minus. So love our positioning there with the 3 assets that we have particularly Bonnet Creek and the $220 million that we've put in. And as I mentioned earlier, what we've seen both in ramp-up, both in where EBITDA has gone, where we see market share.

The irony is that market share, again, we're still not back to fair share given that competitive landscape. So we are very bullish that we think there's even additional upside there and are excited about the future for Bonnet Creek as we as we look to the future.

And this now concludes our question-and-answer session. I would like to turn the floor back over to Tom Baltimore for closing comments.

We appreciate everybody -- everyone's time today. We look forward to seeing many of you in upcoming conferences, and we look forward to hosting you at Royal Palm in our investor tour in November. Have safe travels.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

Greetings, and welcome to the Park Hotels & Resorts First Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce Ian Weissman, Senior Vice President, Corporate Strategy. Please go ahead.

Thank you, operator, and welcome, everyone, to the Park Hotels & Resorts First Quarter 2026 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 securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements.

Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to documents filed by Park with the SEC, specifically the most recent reports on Form 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements.

In addition, on today's call, we will discuss certain non-GAAP financial information, such as adjusted FFO and adjusted EBITDA. You can find this information together with reconciliations with the most directly comparable GAAP financial measure in yesterday's earnings release as well 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 an update on strategic initiatives and review Park's first quarter performance and outlook for the year, while Sean Dell'Orto, our Chief Financial Officer and Chief Operating Officer, will provide updates on our capital investments and balance sheet management, along with additional color on guidance. Following our prepared remarks, we will open the call for questions.

With that, I would like to turn the call over to Tom.

Thank you, Ian, and welcome, everyone. I'm pleased to report that we delivered better-than-expected performance in the first quarter with RevPAR increasing 5.5% year-over-year, excluding our Royal Palm South Beach Hotel, which suspended operations in mid-May 2025 for a comprehensive renovation. I was incredibly impressed by the strong performance throughout the quarter, with RevPAR, excluding the Royal Palm, increasing over 6.5% in January, approximately 3.5% in February, and nearly 6.5% in March.

Results were driven by continued strength in leisure demand at our resort properties, where RevPAR increased 7.6%, excluding Rural Palm, along with healthy corporate group demand that helped our urban hotels generate over 2% RevPAR growth during the quarter.

From a capital allocation perspective, it was another productive quarter, as we remain laser-focused on enhancing the overall portfolio quality through the disposition of noncore assets, while continuing to unlock embedded value within our core assets through our transformative renovations and further strengthening our balance sheet by addressing upcoming debt maturities.

Following the January disposition of the Hilton Checkers in downtown Los Angeles, we recently sold the 396-room Hilton Seattle Airport Hotel, which was on a short-term ground lease, for $18 million, bringing total noncore asset sales for the year to $31 million or 16x 2025 EBITDA when accounting for nearly $36 million of CapEx expected for both properties. Together, these transactions reflect the continued execution of our capital recycling strategy and our commitment to improving the long-term growth profile of the company.

We continue to make solid progress on the remaining 12 noncore hotels and remain firmly committed to materially reducing our noncore exposure by year-end. To that end, we have active marketing campaigns underway on several assets, but remain disciplined in our approach to prioritize transactions that improve our portfolio's growth profile and maximize shareholder returns.

While the transaction market remains challenging, our track record speaks for itself, having sold or disposed of 52 hotels for more than $3 billion over the last 9 years, materially improving the quality and earnings power of our portfolio.

Turning to capital investments. We are making significant progress on our comprehensive repositioning of the Royal Palm in Miami, the pace and execution have been exceptional, especially given the scale and complexity of this project. We remain on track to achieve our target completion date by early June, thanks to the tireless efforts of our best-in-class design instruction team and all of our partners involved in this project.

Miami continues to be 1 of the strongest hotel markets in the country, and we remain highly confident in the long-term outlook for this asset. We are already seeing strong group demand with the property securing $1.4 million of group business as of the end of the first quarter for 2027 at an average rate of $460. This represents an increase of $108 or 31% compared to our pace for 2024 at the same point, pre-renovation.

Looking ahead, we expect returns on invested capital between 15% to 20%, with EBITDA projected to more than double from approximately $14 million to $28 million upon stabilization. or roughly $69,000 per key, positioning the hotel to be among the most profitable assets in our core portfolio.

Turning to operations. The strength of our core portfolio remains evident. Core RevPAR increased 5.4% during the quarter, excluding Royal Palm, which represented nearly a 400 basis point drag on core results. Performance was led by strong leisure demand in Bonnet Creek, Key West and Hawaii, along with a sharp rebound in Southern California, driven by improved group and leisure transient demand.

In Orlando, Bonnet Creek once again exceeded expectations, delivering approximately 16% RevPAR growth and a 20% increase in hotel adjusted EBITDA over the prior year period, driven by a 10% increase in transient revenues and a 19% rise in group production, supported by large in-house events and stronger average daily rate.

Revenues and earnings reached all-time highs with trailing 12-month EBITDA exceeding $103 million, nearly 60% above pre-renovation levels and $20 million or 24% above our projections, meaningfully exceeding our return expectations on our $220 million investment and further underscoring our ability to unlock embedded value across the portfolio.

Adding to the properties momentum, our Waldorf Astoria Orlando was recently recognized on Travel and Leisure's list of the top 500 hotels in the world, 1 of only 2 Orlando properties to receive the honor. In Key West, performance remained strong at both Casa Marina and the reach with RevPAR increasing nearly 9% and capturing meaningful market share during the quarter. Results were driven by increased transient demand and favorable holiday calendar shifts.

Like Bonnet Creek, Casa Marina also exceeded our underwriting for the $80 million investment with trailing 12-month EBITDA of nearly $36 million, exceeding our projections by over $4 million or approximately 14%.

Southern California results significantly exceeded expectations. At the Hilton Santa Barbara, RevPAR increased nearly 23% as strong transient demand helped to drive a nearly 13 percentage point increase in occupancy and a 3% increase in ADR. The Hyatt Regency Mission Bay also delivered exceptional performance with RevPAR up 12%, supported by continued strength in drive-to leisure demand.

Turning to Hawaii. We continue to see a steady rebound in demand following the completion of our comprehensive room renovations with the Rainbow Tower at the Hilton Hawaiian Village hotel and the Palace Tower at the Waikoloa Village that despite the disruption from historical storm activity resulted in a combined RevPAR increase of 2% across the 2 resorts, or approximately 5.4% when accounting for the 340 basis point drag from the storms.

Waikoloa Village delivered 6% growth, benefiting from an expanded airline contract and improved ADR following the renovation of the Palace Tower at Hilton Hawaiian Village, which was far more impacted by the storms, RevPAR increased 1% or over 4% when adjusting for the storm disruption driven by higher rate of transient demand in the newly renovated rainbow Tower.

Looking ahead, we remain very encouraged on Hawaii demand trends and expect both hotels to perform at the upper end of our guidance range for the year. Easier year-over-year comparisons, coupled with tailwinds from the completion of our tower renovations at both resorts should continue to support the higher rate of customer mix.

Group performance in the first quarter also exceeded expectations with portfolio group revenue increasing 5% year-over-year, excluding Royal Palm. Growth was led by double-digit gains in Puerto Rico, New York and our Bonnet Creek complex, driven by a higher rate of group mix and by strong in-house events, along with active citywide calendars in Denver and San Francisco.

Looking ahead, group trends remain stable, with second quarter group revenue pace up approximately 4% and full year pace improving to 3% growth, excluding Royal Palm and Hilton Hawaiian Village, which is being impacted by the partial closure of the Honolulu Convention Center.

Stronger-than-expected convention demand across several core markets, coupled with the momentum for in-the-year, for-the-year bookings has driven a greater than 180 basis point improvement in the group revenue pace since last quarter. Longer term, Group demand remains healthy with 2027, pace currently up 5.5% for the core portfolio, reflecting continued confidence in the segment.

As we look at the balance of the year, we remain cautiously optimistic based on our first quarter outperformance and the underlying strength of demand across the portfolio, but recognize the broader macro setup remains uncertain. We continue to believe fundamentals will be supported by a combination of anticipated macro and lodging-centric tailwinds, fiscal stimulus, including favorable tax policy, deregulation and potential lowering of near-term interest rates, coupled with easier year-over-year comparisons, favorable calendar shifts and incremental demand generators, such as the World Cup and America's 250th anniversary celebrations should promote a continuation of the demand growth we saw in the first quarter.

That said, growing geopolitical tensions in the Middle East and their potential impact on consumer discretionary spending and business investment sentiment certainly warrant a continued measured approach. Sean will address this more when he talks about guidance.

The first quarter was an encouraging start to the year, and I'm very pleased with the progress we have made thus far to elevate the quality of our assets and strengthen our long-term growth profile. I could not be prouder of our team's ability to execute in a challenging environment for our business. We remain laser-focused on our strategic priorities. We're investing in our iconic properties to drive long-term value. advancing the disposition of noncore hotels and further strengthening the balance sheet through successful maturity extensions and disciplined leverage reduction over time.

And with that, I will turn the call over to Sean.

Thanks, Tom. We were very pleased with our first quarter results. RevPAR exceeded $191, up approximately 2% over the prior year period, or approximately 5.5% when excluding Miami, and over 6.2% or another 75 basis points when adjusting for the Hawaii storms that Tom mentioned earlier. Total hotel revenues for the quarter were $591 million, up nearly 2% and hotel adjusted EBITDA was $152 million, resulting in a hotel adjusted EBITDA margin of approximately 26%.

Hotel operating expenses increased 2.6%, reflecting continued cost discipline and overall earnings came in ahead of expectations with adjusted EBITDA of $143 million and adjusted FFO per share of $0.45.

Core portfolio performance remained strong with RevPAR increasing 5.4% to nearly $216, excluding Royal Palm, while gains were partially offset by typical comparisons at both of our D.C. area hotels following last year's presidential inauguration in addition to a 170 basis point drag on the core portfolio as our Hilton New Orleans Riverside hotel lapped last year's Super Bowl.

As Tom mentioned, we continue to make significant progress on our comprehensive transformation of the Royal Palm South Beach Hotel in Miami. As we look ahead to the second quarter, we expect the hotel to remain a partial drag on operating results as the property ramps up at staffing ahead of its opening and rebuild its demand through Q3. Overall, we are forecasting a nearly $3 million loss for Q2, but expect the resort to ramp up quickly over the back half of the year.

During the first quarter, we also completed the second and final phase of Destin renovations at both the Rainbow Tower and the Palace Tower, bringing the total investment for Phase 2 across both Hawaii properties to approximately $85 million. In addition, we completed the second of 3 phases of room renovations, totaling more than $30 million, at the Hilton New Orleans Riverside this past January. The third and final phase scheduled for completion in the fourth quarter of this year.

Looking ahead over the balance of 2026, we expect a lower level of capital investment this year with $230 million to $260 million of planned spend, including the completion of Royal Palm and the launch of the Ali'i Tower renovation at Hilton Hawaiian Village. This project will encompass all 351 guest rooms, the tower lobby, its private pool and the addition of 3 new keys. Total investment for the project is expected to be approximately $96 million.

We expect renovation-related disruption at Hilton Hawaiian Village to have a modest impact in 2026 with the towers closure expected to have less than a $2 million impact on 2026 hotel adjusted EBITDA and representing just a 10 basis point impact to portfolio RevPAR. Once complete, nearly 80% of the resort rooms will be newly renovated, significantly enhancing the iconic hotel's long-term competitive positioning.

Turning to the balance sheet. Our liquidity at the end of the first quarter was approximately $2 billion, including $156 million of cash, plus $1.8 billion of available capacity under our $1 billion revolving credit facility and $800 million delayed draw term loan.

With respect to our 2026 maturities, we have made significant progress over the past 2 months to raise a $700 million floating rate delayed draw mortgage on Bonnet Creek, which is expected to close this week. The loan, which was upsized $50 million based on the complex strong results, will bear interest at SOFR plus 225 basis points. When combined with the $800 million delayed draw term loan, this $1.5 billion of new debt capital commitments provide us with certainty while also allowing for the flexibility to fund within par prepayment windows and closer to the maturities.

Accordingly, we expect to execute a partial draw under the delayed draw term loan in June to fully repay the $121 million Hyatt Regency Boston mortgage, which matures in July. We then expect to draw the remaining capacity in September, along with fully drawing proceeds from the Bonnet Creek mortgage financing to fully repay the $1.275 billion CMBS loan on the Hilton Hawaiian Village, which matures in early November with additional proceeds to be used for corporate purposes.

We are grateful for the continued support of our bank group whose confidence in Park's credit profile and strength of our portfolio has been instrumental in executing these transactions. Their commitment is a clear validation of our balance sheet strategy and underscores our ability to address all 2026 debt maturities in a comprehensive and highly effective manner. Upon completion of these transactions, we will have meaningfully enhanced our financial flexibility, unencumbering the Hilton Hawaiian Village, extending our weighted average debt maturity to nearly 4 years and eliminating any significant maturities for approximately 2 years.

On an annualized basis, these refinancings are expected to increase interest expense by approximately $28 million, with roughly $13 million reflected in our 2026 AFFO guidance based on the timing of these transactions.

With respect to our dividend, on April 15, we paid our first quarter cash dividend of $0.25 per share. And on April 24, our Board of Directors approved a second quarter cash dividend of $0.25 per share to be paid on July 15 to stockholders of record as of June 30. The dividend currently translates to an annualized yield of approximately 9% based on recent trading levels.

Turning to guidance. While we remain mindful of the geopolitical uncertainties and the potential impact of higher oil prices on both business and leisure travel, we were very encouraged by the strength observed in Q1 demand trends continuing into the second quarter. April RevPAR is expected to be flat, but up 3%, excluding Miami, with performance led by a continued strength in Hawaii, Bonnet Creek and Key West as well as solid spring break leisure transient demand in Santa Barbara. And while we expect performance to modestly soften in May, June looks very strong, driven by strong group demand up nearly 10% and favorable year-over-year comparisons across several key markets, including Hawaii, Orlando, Key West and New York.

Overall, we expect Q2 RevPAR to come in around the midpoint of our guidance range with roughly a 100 basis point drag from Miami. For the year, with Q1's outperformance we are increasing our RevPAR growth guidance by 50 basis points at the midpoint to a new range of 0.5% to 2.5% and adjusted EBITDA guidance by $7 million at the midpoint to a new range of $587 million to $617 million, while AFFO increases by $0.01 at the midpoint to a new range of $1.74 to $1.90 per share.

It's also worth noting that the recently sold Hilton Seattle Airport Hotel was expected to contribute approximately $3 million in EBITDA for the remainder of the year.

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?

[Operator Instructions] Our first question is from Floris Van Dijkum with Ladenburg Thalmann.

Glad to be on these calls again with you guys. If you can give us a little bit more of an update on the disposition. I think one of the key things, I think, the market is having some trouble understanding is the quality of the portfolio that's being shielded by the lower 10% of your assets. If you can talk a little bit about where the -- I know that you have pretty much all of those presumably in the market. What's the status on that? Are you having some detailed discussions. What's the pushback that you're getting from the market? And are you going to hold out for the last dollar on those assets?

Well, Floris, it's great to have you back and appreciate the question. If I could sort of frame it for a second. Keep in mind, if you think about the remaining 12 assets that we have, we currently have 33 assets in the portfolio. We have sold or disposed of 52 assets, as I said in the prepared remarks, for north of $3 billion. We have 12 assets that we're defining as sort of noncore. Three of those assets obviously rest with the dispute with Safehold, which will resolve itself, if not this year, certainly next year. The EBITDA from those assets is about $16 million, plus or minus. The remaining 9 assets account for about $41 million in EBITDA and candidly, probably, 45% of that relates to 1 asset in Florida.

So we're generally dealing with 8 assets that are small. Some have short-term ground leases, some are joint venture, some have various challenges. And I would say, obviously, the last mile is always the most difficult. I would hope the market would give us credit for the perseverance, the discipline, our ability to reshape the portfolio over the last 9 years. We are very confident we're going to make substantial progress this year on those noncore assets. And our collective team are working their tails off. We have work streams underway on all of them, and it's going to be a little lumpy and choppy. I think you'll see more reported as the year unfolds. And believe me, no shortage of effort and focus. We realize it's, while a small overhang, it's an overhang. It clearly is less. If you look at the $41 million, certainly less than 5%, 6% of overall EBITDA.

But it is a drain when you think about operating metrics. And so we're working hard to get the assets sold as quickly as we can. We're not holding out for the last dollar, but we certainly want to have counterparties who can execute and who can move to the process. And we certainly are always focused on creating value for shareholders.

Maybe a follow-up question on the [World Cup]. I know that your Royal Palm asset, I think, is opening up in June. Are you -- is that -- and that is a market potentially that could get impacted by the demand for the World Cup. What's the -- if you can talk broadly about what the impact is going to be? Or are you seeing so far I think it's everybody's sort of muted on the World Cup impact, but if you can give us a little bit more color on that, that would be great.

Yes. It's a lot to unpack there, Floris, but I'm happy to take it. I think most importantly, if we step back and think about the Royal Palm at 15 and Collins, 393 keys, we're expanding to 404, putting in approximately $112 million. We could not be more excited. We could not be prouder. We had, obviously, a group there. We can't wait to get more analysts and more investors in. I couldn't be more grateful to Carl Mayfield, who has our design and construction team who is literally spending 3 or 4 days of his week in Miami, leading. And we also have the operator -- a lead operator from Davidson, who's been on site since we launched construction in last May.

As of this morning, we had 417 men and women on site, and that includes from owners reps to general contractor to subs to owners teams to operations folks. And we are currently targeting that construction will be substantially complete by early June. And the -- what we would call the stocking and training TCO would begin in target sort of in mid-May. You've got a few weeks of testing all the fire alarm and life safety issues that have got to work through. and we're probably looking at a target public occupancy TCO and hoping for sort of mid-June.

So when you think about where that all unfolds as it relates to the World Cup, we have included in our guidance that Sean outlined in his prepared remarks, we have no contribution coming from Miami in that process. at this time. So if we are able to get open, I think the 2 prominent games in Miami will be July 11 and July 18. We are cautiously optimistic that we should be open in time for those, and that's what we're all working our tails off to make sure that, that occurs. Again, we don't have anything in the current guidance. So we've been quite conservative in that intentionally just given all of the geopolitical but also the complexity of the inspection and regulatory process as we close out the job.

You may recall, other projects in the months, and in some cases, years, I think that this, again, speaks to the core competency, the leadership that we have at Park, our experience, the extraordinary success that we're having, obviously, at Bonnet Creek and also what we're seeing also in Key West, and we feel the same way about Royal Palm as we look out. So we're very, very bullish and excited about this project, and I think we're going to have a tremendous success there over time.

Our next question is from Smedes Rose with Citi.

I wanted to ask you, in your guidance, it looks like the expense expectations moved up around 40 basis points versus your prior guidance. And I was just kind of wondering what was behind that.

Yes, Smedes, we -- this is Sean. Obviously, in Q1, we had some outperformance top line. A lot of that was occupancy based. So we certainly naturally see while cost product grade room solid in terms of basically 50 basis points or so growth with the extra occupancy expense growth was a little more than expected as well. So we're kind of carrying that through much we do with the top line. into the expense. Certainly, it's expected the rest of the year expenses that kind of operate as we expect, much like we're thinking out the top line kind of expecting that to perform as we expected for Q2 through Q4.

Okay. Yes. That's helpful. And then, Tom, you mentioned that you think the Hawaii assets this year can trend towards the upper end of your expected ranges. Can you just remind us what that range was for this year?

Well, I think ultimately, you're talking about the upper end of our guidance range. So certainly -- yes. So 2.5%, so somewhere in that zone or a little better.

We said you didn't provide any EBITDA outlook.

Yes, Smedes, the other part is we do have, obviously, some favorable comps coming up the heels of renovations and certainly some softening activity that we saw last year in Hawaii. So to Sean's point, we feel good about that. And if anything, it's conservative, but that's intentional given all the uncertainty right now.

Our next question is from Duane Pfenningwerth with Evercore ISI.

This is Peter on for Duane. I think I'd like to maybe just piggyback off Smedes last question on Hawaii. And bigger picture, Tom, if you could just kind of lay out the building blocks of the recovery in Hawaii getting back to kind of pre-strike levels. What do you need to see happen? And what kind of the cadence of that recovery look like?

Yes. Pete, it's a fair question. I would just again kind of frame it a little bit. If you look historically, O'ahu is as RevPAR growth has always outpaced the U.S. pretty consistently by about 120 basis points. And I think Key West and Hawaii, both are around a CAGR of about 4.5% versus certainly 3.3%. And Obviously, you got very limited supply growth in Hawaii through 2030. And again, the investment that we're making that we continue to make and after we have finished the Ali'i Tower, at least 80% of the rooms at Hilton Hawaiian Village in particular will be renovated.

And we've been looking to sort of reposition if you think about the Japanese traveler. We're about 750,000 visitation versus about 1.5 million historically. So we've been seeing that shift away, and we've been really repositioning the business to account for that. So Japanese travel are really accounting for about 3% of our business approximately, which it was probably high teens, 18% to 20% kind of pre-pandemic.

So as we look out, we're still very encouraged. Obviously, right now, you do have current headwinds. Obviously, given what's happening on the -- with the conflict and the impact it's going to have on fuel and fuel surcharges and obviously, the strong dollar versus the yen. And candidly, some cheaper alternatives.

Having said that, when you look at the investment we've made, if you think about the favorable comps that we have, we think there's an opportunity for certainly Hawaii to be to perform on the higher end of our guidance, if not exceed that. Don't want to get ahead of ourselves, but we're certainly very, very bullish over the intermediate and long term. We still, last year, generated north of $140 million in EBITDA, plus or minus. If you think about the highs, it was about $185 million, plus or minus coming off the pandemic. So with that backdrop and some of those headwinds, we're really not that far. We continue to think about repositioning and get back some of the higher-end business. And certainly, as the convention center is also done, we also see that as another tailwind for us as we look out in the outer years.

So we remain very, very encouraged for Hawaii over the intermediate and long term. And as it relates to Waikoloa, we are just very, very bullish, obviously, completing the Palace Tower renovation you look at the second half of this year and what we're lapping, we had 20,000 out-of-order rooms last year. That also is going to think, be a favorable dynamic for us as we finish '26 and look to '27 and beyond.

Great. And then my follow-up, you mentioned group pace improving from the beginning of the year, group pace ex Hawaii and Miami. Could you highlight maybe some markets that you saw some sequential improvement and the flavor of those bookings? Is it corporate groups in the year for the year? Is it convention blocks booking up? Some details there would be helpful.

Yes. So jumping in on this. I would say from a -- what we saw for Q1, we saw some help in New York on group where we had a nurses strike there. And then ultimately, we're at a table taking some of the temporary labor at a group block there for a few weeks. So that was really helpful. We've seen some of the disruptive forces in Mexico and the Middle East, allowed some groups to transition or change out and come into markets like Hawaii. So we've seen some benefit there and some of that will be in future periods. So I think those are kind of the bigger things.

I think we've seen revaluations across the portfolio for group be stronger where groups are outperformed their blocks. And so we've seen a little bit of that across the board in both in-house group and ultimately convention.

Our next question is from Aryeh Klein with BMO Capital Markets.

Maybe following up on Hawaii. First, I guess, is that market benefiting from some rotation from Mexico? Maybe it's also a benefit Puerto Rico. And then, Tom, you kind of touched on this, but if oil prices do materially impact airline prices, do you think that disproportionately impact Hawaii relative to the rest of your portfolio?

Yes. I mean, look, you have to believe. I think it's a fair question. If we get a prolonged supply shock and the conflict continues indefinitely, you certainly have to believe that it's going to have an impact, not only on long air travel, but certainly on air travel broadly and certainly affect the sector. So I'm certainly not going to argue that point.

I would think as you think about sort of rerouting, one of the things that I think would be important to point out is if you think about inbound traffic into the U.S., we still haven't gotten back to pre-pandemic. We were about 79% million. I think today we're somewhere in the 67%, 68% million. We're about 86%. And if you think about outbound from the U.S., I mean that had gotten up to about 110% to 112%. I think given the conflict, if anything, you might see some of that reroute and people start to onshore themselves, if you will, to the U.S. And I think Hawaii could certainly benefit from that. as well as certainly the Caribbean and seeing Puerto Rico benefit from that.

So obviously, in Mexico, I think we are already as an industry seeing sort of rerouting and seeing certainly Florida, the Caribbean, Certainly, we're seeing that in Puerto Rico. Puerto Rico is off to had a great first quarter. We're very encouraged about second quarter as well. And certainly seeing that and those benefits also in California and other parts of the U.S. So to me, those are sort of natural, and I think we're seeing certainly some evidence of that.

If you think about all the various cycles over the last 30-plus years, Hawaii has always been a fan favorite generations, families, both domestic and international. We certainly think that there's no risk of that changing materially. The mix may change and we're certainly spending our time as we make these big investments and you think about Ali'i is a great example, a hotel within a hotel and the amount of investment that we're going to make and that really flagship with its own check in its own pool, an elevated experience. We think that just continues to help us as we continue to reposition Hilton Hawaiian Village over the future.

We also have the opportunity in Waikoloa, which is by way of right to certainly continue not only as we've renovated, but certainly add additional keys when market dynamics certainly makes sense for us. So very -- remain bullish on Hawaii. And as I said, if you look historically, from a CAGR standpoint, it certainly has been among, if not one of the top performers certainly over the last 20-plus years, and I think the evidence would support that.

And then I just had 2 clarifications on group pace. For the fourth quarter, I think previously it was down 8% and it was going to be a headwind. Just curious with the improvement, what that now looks like. And then on 2027, the 5.5% growth in case, does that also exclude Hawaii and Royal Palm?

It does not. I mean -- yes, it includes Hawaii and Royal Palm. So if you think about 2027, just for a second, I mean, it's as Sean said in his prepared remarks, I think the core was up 5.5%. But I mean you've got New York up mid-teens. You've got New Orleans up mid-teens. You got Hilton Waikoloa up 17%, Bonnet Creek up mid-single digits, Key West up significant north of 20%. So we're -- Hilton Hawaiian Village is down in part slightly there. And you also keep in mind that you've got the convention center that will be under renovation at that point. But it's broad-based, and we're very, very bullish as we look out to '27.

And I'd just add on Q4, we were thinking about pace down 8% last time around, we're about down 4% now.

Our next question is from Chris Woronka with Deutsche Bank.

So first question, I was hoping maybe we could spend a minute going back to the transactional market and good progress so far to date. The question would kind of be, are you seeing a difference in the buyer pool in terms of broadening out or being more institutional as opposed to local or owner operator?

Chris, it's a great question. I would say, candidly, for these types of assets, and again, as I try to frame for listeners, I mean, we're dealing -- as you think about the 8% for a second, these are smaller assets, not big EBITDA contributors, more attractive, I would say, generally to owner operators, entrepreneurial could be small PE firms, clearly experienced and see value and see the opportunity to reposition in some cases. So no shortage of interested parties.

Some markets are more attractive. No secret. L.A. certainly wouldn't be at the top of anybody's list given some of the challenges there. And I'd say Chicago, generally a more tougher market. But certainly, as you look across in the assets that we're marketing, we've got a healthy buyer pool and interested parties. It's just really working through the process, which the last mile is always the toughest. Many of these assets were assets that had been in the old Hilton portfolio. And they weren't a high priority for obvious reasons. And then after when Hilton was sold, it wasn't a high priority to that buyer. And the Park team has the challenge. We accept the challenge. No excuses, we own it. And we've got to make it happen, and we're going to do that. And I think we've demonstrated that.

And keep in mind, again, the long track record, we've sold assets before the pandemic, during the pandemic, after the pandemic. That also included 14 international. All of those assets and all of these assets have some are legal issues, some are joint ventures, some are tax-related issues, whatever it is, we're up to the challenge, and we're going to get it solved, and you're going to see significant progress this year.

Okay. And as a follow-up -- follow-up on Miami, the Royal Palm. I think you guys have outlined kind of EBITDA expectations fully ramped and timing of opening. So my question is when that thing opens and inserts the ramp, -- how much does the composition of the earnings change to get to your EBITDA target in terms of -- this has been a heads-in-bed strategy don't tell Miami market. But in terms of ancillary and getting the higher rate and maybe some on a beach club there, things like that. So just maybe how does the conversation look versus what it had been pre-renovation?

Yes. It's -- I don't have all of that with me other than to just tell you how excited. If you think about the ADR pre-renovation, I think we were $265. I think we've underwritten this at around $400. I think in the prepared remarks, I talked about business that we're already getting at $460, plus or minus. And when you see it and you see the second floor, which had had a pool and now it's got outdoor really entertainment space, plus as we're bringing all 3 of the buildings together, all of the opportunities for an elevated guest experience. And we're planning to really tuck underneath when you think about the Albers and Rosewood and the [ Aman and Andaz ] and the Delano and all of those and where they're going to be priced at $600, $700, $800 or more and us underwriting at $400, I personally believe that we'll exceed that.

I think there's a significant opportunity for us in just the response that we're getting is really exceeding expectations. So we are very, very bullish and very excited about it. And again, I would draw your attention to the success that we're having at Bonnet Creek. We've taken that already from $60 million in EBITDA to north of $100 million. And you think about, obviously, the success that we're having at Casa. I think it really speaks, we believe passionately, and I think the track record is demonstrating that we can generate higher returns on development deals than we can on acquisition deals. And I think it's a real core competency for the team.

So we're excited to finish it and then to have an event and have analysts and investors down to see it and to see what what an incredible transformation really looks like. So we got to get it done. We know that. As I mentioned, we've got north of 400 people on site right now working 2 shifts and really to get the construction completed and to get as much of the World Cup as we can, but also keeping in mind we didn't plan for any benefit in the World Cup as part of our guidance as it relates to Miami Royal Palm. So anything we get, we think is going to be incremental gravy and we're pretty excited about the challenge and look forward to getting it done.

Our next question is from David Katz with Jefferies.

So I feel like we always cover the quarters quite well, and I wanted to ask something a little longer term. Ian always reminds us about the pipeline of longer-term repositionings. Clearly, Royal Palm gets done Hawaii, I think you've given pretty good updates on it. Do you have -- or can you talk about in qualitative terms, some of the ones that might be next and how we think about sort of building the portfolio a little longer term?

Yes. There are a few, obviously, that come to mind. Obviously, Santa Barbara, we think, obviously, that there is just significant upside. And we have a proposal to add approximately 70 keys, plus or minus. And so we've been working through sort of the entitlement process there. Really excited. And when you think about, obviously, that's unencumbered and will be unencumbered. We have a great JV partner, but unencumbered in terms of its visibility and views. So pretty excited about that as we sort of look out.

As you think about, obviously, Hawaii in like Waikoloa. By way of right, we have the opportunity to add another 200 keys. I wouldn't say that, that would be on the front burner. And so obviously, we see the market recovered enough to where that makes sense. But it certainly is in the pipeline. We have the ability, obviously, with our Doubletree in Crystal City. Not sure that the market conditions warrant that right now. But when you think about just bull's-eye real estate and where it sits in the location at the front of the Amazon headquarters to certainly pretty excited about that over the long term. I don't think that, that's something intermediate as we sort of look out right now.

The one that we continue to noodle and study, and we're working on obviously some of the elevator modernization in New York. But there's no doubt, as we think about New York and how to reposition that. That certainly is also a priority and one that certainly needs to be addressed within the portfolio. We know that is just trying to figure out what's going to make the most sense for that asset over the intermediate and long term. We certainly think that there is significant value as you think about just the sheer scale of it. It continues to certainly improve from a performance standpoint. And we certainly think that there are opportunities, different things that can certainly occur with that asset over time. So just to give you a few that are sort of on the mine and ones that we certainly think about.

Our next question is from Dan Politzer with JPMorgan.

I just had a quick follow-up on the second quarter. I think you mentioned RevPAR in that range, but I think you had a comment on May and how it's tracking. I was wondering if you could just kind of give a little bit more detail on what is driving that because I think you kind of characterized it as mix.

Yes. Ultimately, to just talk to the second quarter, April, obviously, almost finished here, just kind of looking -- we probably have about a week or so of data to get in and kind of get real time. But like I say, tracking flattish might be a little bit better there, certainly better than expectations, so it kind of continues from Q1. May is the weakest, I think, set up right now for the quarter with group pace just down slightly, transient, we ultimately need there to make the kind of the numbers we're thinking, which are kind of a flattish type of result. But there's some risk there. So we kind of hold that out as the one where we're going to monitor May, but June is really strong.

So June makes the quarter as we look at it right now, pace is up double digits for group Obviously, we've got some things related to World Cup and June teenth and other activities going on around that month. Certainly, we think it's going to be a good performer. But altogether, just kind of April kind of be flattish May, where we see a little bit of risk and then June strong kind of comes together to be plus or minus kind of the midpoint of the guide for the year.

Got it. And just for my follow-up. I know we spent a lot of time talking about the World Cup as it relates to Miami. But I guess more broadly, as you think about where your footprint is and across the portfolio, have you seen kind of a change in terms of the demand for World Cup maybe versus, say, 3 or 6 months ago?

Nothing -- I mean, nothing dramatic. I think for us, you put Royal Palm aside, Miami aside, Tom talked to that. Really, the 2 big markets for us are New York and Boston. And these are 2 markets that typically have been 90% occupied during this time frame in June and July. So it's really kind of a rate play. I think the positioning right now is good in those 2 markets around the matches. I think it remains to be seen. Clearly, there's a lot of uncertainty around this event. But right now, we think we try to have a good position. I wouldn't say it's -- we would say it's fantastic like people have thought coming into the year. But we said about that impact between those 2. I would say those 2 markets considerably make up the most of the impact for the year for the portfolio.

It's probably -- we probably said 35 or so plus or minus basis points, might come off a little bit from that from our expectations today. But still a demand generator still a positive, but I wouldn't say it's dramatic as we thought necessary as we go into it. We'll see. It could change, but I think there's a lot of things and a lot of unknowns around this event right now.

Our next question is from Chris Darling with Green.

Quick one, circling back to Hilton Hawaiian Village, maybe framing the trajectory there in a different way. Can you update us on where your RevPAR index share is and where you see that metric heading over time as you sort of realize the benefit of the capital you've invested over the last few years?

Yes. The RevPAR index or so is kind of tracking in that 95 to just around 100 kind of -- and I think we've seen that -- but last year and this year, as we kind of started the year because we've had some of that work going on at the Rainbow Tower. What we've seen last year is once we got past kind of first quarter, we saw that kind of pick up a little bit more. But in terms of kind of recovery, where we see it going from there is really kind of back to that historical levels of 110 to 115 range. That's where we kind of we're sitting ahead of the renovation and some of the other events like the strike -- but I think that's kind of where we want to ultimately see it come back to. And certainly, we can get there more on a rate profile as well that's going to certainly help the bottom line given the renovation work.

Okay. Understood. And you may not have a perfect answer to this, but just -- how are you thinking about the timing in terms of that index share? Is that a 1-year time line, 3-year time line? And maybe you can't quantify?

Because we would hope that just if you look historically in the amount of investment that we've made the corporate resources that we're devoting in addition to our operating partners at Hilton, we would expect that ramp-up to accelerate. And again, once we get the Ali'i Tower done, and again, that's somewhat isolated and self-contained. So we think that's going to help. And obviously, we project, obviously, there's going to be minimal disruption. But when you get that done and you got 80% of the campus done, we think that's just going to really continue to reposition and candidly give us the opportunity to change the customer mix as well.

So very excited, remain committed to it. And also when we pay off the mortgage, keep in mind, we'll have to marquee assets in Hawaii completely unencumbered, very rare. Most of those resorts in many of the assets owned or under long-term ground leases. That's not the case with Parks portfolio. So that's a real benefit for us, too, and gives us a lot of optionality.

Our next question is from Cooper Clark with Wells Fargo.

Great. Could you just talk us through some of the building blocks for the updated OpEx guide for the full year and what you're expecting to see from a growth perspective on wages and benefits, insurance and utilities?

Sure. Like I mentioned before, we have a range right now kind of in the mid-2s to mid-3s labor and wage growth. Should be kind of in that 5% plus or minus as you kind of go throughout the year on average. We've got some of the offsets to that fundamentally, our insurance, we do embedded in our kind of budgets, favorable premium reduction, certainly continues to be a good market for the insureds, as we look to renew, we renew on June 1. So we'll get the continuation of our reduction from last year through May and then ultimately pick up for the next 7 months what we expect to be a favorable outcome, and we'll give more color to that when we know more in the back part of the year.

Real estate taxes. Once again, we kind of find ourselves with probably about 5% increase right now for the budget process, but we'll appeal processes in place and don't haven't fully factored that into any guidance because we just don't know in terms of outcomes, amounts, timing and the like. So I'd say labor wage is clearly the big driver on the growth side, but certainly some good offsets and continue to kind of work with our asset management teams and the operators define those meaningful ways to further offsets.

Great. And then a quick follow-up. Just curious how much, if any, impact the Hilton Seattle sale had on the RevPAR guidance raise?

RevPAR guidance ratio was obviously a growth and its comparable growth. So we ultimately removed that from the portfolio on a like-for-like basis, so no impact. Clearly, from a nominal RevPAR, you'll see a nice increase.

Our next question is from Robin Farley with UBS.

Great. Most of my questions have been answered. I wonder if you could just on the -- can you hear me okay?

Yes, we can. Go ahead.

Okay. Great, sir. Yes, most of my questions have been covered. Just going back to the Ali'i Tower Tower in Hawaii. I wonder if you could walk us through a little bit about what you're expecting in terms of returns and change in RevPAR kind of the way you -- I think you've given great color on Royal Palm. Just kind of what you're expecting from that Hawaii tower.

Yes. Well, we would certainly think, again, the opportunity is to take it from 351 keys to probably pick up 3 keys, incremental budgeting approximately about $96 million. Any of these transformations, we've got to be returns in the 15% to 20%. And again, if you think about Bonnet Creek and Key West that we've talked about already confidently exceeding that.

The opportunity here is it's really a hotel within a hotel. You've got your own separate check-in. You've got obviously an embedded pool, given its premier location on the village just really, really excited about and it hasn't had really that sort of upgrade for some time. So we're excited about it. Again, we'll start that later this year and expect to finish that in the middle of next year, plus or minus. And given the experience that we've had, the success that we've had with the Tapa Tower there, obviously, the Rainbow Tower. This is really the next in line to really reposition and again, take the opportunity to change the customer mix, and we're pretty excited about it.

And are there any limits on brand there in terms of do you have to stay with something Hilton branded? Or could you do something completely different?

It would have to stay within the Hilton family. And we've looked at do you want to rename? But the reality given the fact that Hilton Hawaiian Village is iconic. When you think about that north of 60 years, plus or minus, and Ali'i Tower, obviously, has its own following. So we think really just the repositioning and the upgrade is really the right answer there. But we'll continue to look and continue to study it. But at this point, we've concluded really just the repositioning in the upgrade. And we're getting a phenomenal response not only from Tapa but also the Rainbow Tower in the room product and the quality of the renovation and how thoughtful we were about it.

So again, really excited and thank, obviously, to the point that Sean was making about RevPAR index, getting the whole village back into that 110 and above range. We certainly think is within our eyesight. And that will be accelerated once we get this final tower done.

There are no further questions at this time. I would like to turn the floor back over to Tom Baltimore for any closing remarks.

I appreciate everybody taking time and look forward to seeing many of you at upcoming meetings, one hosted by Wells Fargo, JPMorgan and of course, NAREIT. Safe travels, and I look forward to seeing you all.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the Park Hotels & Resorts Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Ian Weissman, Senior Vice President, Corporate Strategy. Please go ahead.

Thank you, operator, and welcome, everyone, to the Park Hotels & Resorts Fourth Quarter and Full Year 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 securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed, and we are not obligated to publicly update or revise these forward-looking statements. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by 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 forward-looking statements.

In addition, on today's call, we will discuss certain non-GAAP financial information, such as adjusted 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 update on our strategic initiatives, review Park's fourth quarter and full year performance and provide an outlook for 2026, while Sean Dell'Orto, our Chief Operating Officer and Chief Financial Officer, will provide additional color on fourth quarter and full year results, our plan to address our upcoming debt maturities later this year and further details on guidance. Following our prepared remarks, we will open the call for questions.

With that, I would like to turn the call over to Tom.

Thanks, Ian, and welcome, everyone. 2025 was another very productive year for Park, one marked by meaningful progress against our strategic priorities and continued execution across the Core portfolio. Throughout the year, we remain laser-focused on reshaping and upgrading the portfolio and reinvesting in our highest quality hotels, all with the goal of positioning the company for sustained long-term success.

Our strategy has been both consistent and deliberate, concentrating our ownership in 21 core hotels with superior growth prospects, aggressively exiting Non-Core assets and allocating capital towards high-impact redevelopment projects with the potential to unlock meaningful embedded value across the Core portfolio with ROI opportunities exceeding $1 billion.

In 2025, we executed more than $120 million in Non-Core sales at a blended multiple of 21x. These transactions included the sale of the Hyatt Centric Fisherman's Wharf, and our 25% joint venture interest in the Capital Hilton as well as exiting 3 hotels sitting on expiring ground leases that produced no earnings on a combined basis.

As we enter 2026, we continue to make steady progress toward completing our remaining Non-Core asset dispositions. In January, we closed on the sale of 193-room Hilton Checkers in Downtown Los Angeles for approximately $13 million, representing over 17x 2025 EBITDA. We have established a strong track record of successfully recycling capital, having sold or disposed of 51 hotels for over $3 billion over the past 9 years and despite a challenging transaction environment, we have sold or disposed of 13 hotels since 2023, increasing portfolio-wide nominal RevPAR by nearly 8% and hotel-adjusted EBITDA margins by over 275 basis points. While the timing of Non-Core dispositions may be uneven, we remain firmly committed to materially reducing our exposure to our Non-Core portfolio by year-end. Active work streams are currently underway across all remaining Non-Core properties as we continue to advance this objective.

Additionally, building on the success of our development team, we launched our sixth major redevelopment in 7 years, the $108 million transformation of the Royal Palm South Beach while making significant progress on enhancing the overall quality of our Hawaii and New Orleans properties through extensive guestroom renovations. Together, these projects reinforce our conviction that reinvesting in the Core portfolio remains the highest use of capital, which will best position Park to deliver outsized earnings growth and enhanced shareholder value over time.

Turning to operations. I remain encouraged by the relative outperformance of our Core portfolio, which delivered a solid 3.2% increase in RevPAR during the fourth quarter or 5.7%, excluding the Royal Palm, representing nearly 1,500 basis points of outperformance versus our Non-Core portfolio. That trend was consistent throughout much of the year, with RevPAR growth from our Core portfolio, outperforming the Non-Core hotels by an average of 480 basis points in 2025, further reinforcing our stated strategy.

During the fourth quarter, group performance stood out, supported by convention demand in Hawaii and New York and solid corporate group activity in Orlando. Fourth quarter group revenue for our Core portfolio increased 13% year-over-year, complemented by double-digit growth in banquet and catering revenues across several key markets, including Hawaii, Chicago, Orlando and Denver, reflecting broad-based strength across key markets. Among our core hotels, Hilton Hawaiian Village was one of our strongest performers during the fourth quarter, generating 22% RevPAR growth, benefiting from easier year-over-year comparisons following last year's labor disruption. We are increasingly encouraged by the outlook for both properties following the completion of the Rainbow Tower renovation at Hilton Hawaiian Village and the Palace Tower at Waikoloa Village. Following the renovation, both resorts will be operating with significantly upgraded product and should be well positioned for a step up in performance as demand trends are forecasted to improve and we lap and otherwise challenge 2025, which our resorts were meaningfully impacted by the disruption from Liberation Day and the government shutdown, the continued softness in Canadian demand and renovation displacement.

As we look ahead, we expect a multiyear recovery towards prior peak levels in Hawaii. We are beginning to see that recovery take shape, with momentum building into the second quarter. As Hawaii continues to normalize, we expect it to be one of the most meaningful contributors to earnings growth across the portfolio. Additional standouts in the portfolio include Orlando, which delivered exceptional results with our Bonnet Creek complex generating a record fourth quarter RevPAR, up nearly 9% year-over-year, driven by a 15% increase in group revenues as the complex continues to benefit from its expand meeting platform and renovated room product.

I'm also pleased to share that the Waldorf Astoria Bonnet Creek has been named the #1 hotel in Orlando by U.S. News & World Report. The property was also ranked #8 in Florida and within the top 100 of all hotels nationally, reflecting meaningful improvements over last year's ranking.

I want to acknowledge the entire Bonnet Creek team for this achievement, which further highlights the quality and benefits of unlocking embedded value within our Core portfolio. New York remained another top performer, delivering its highest fourth quarter group revenue in hotel history, up over 8% year-over-year while the Hilton Chicago hotel posted a nearly 4% increase in group revenue despite a challenging citywide calendar, supported by improved short-term pickup strategies and in-house group.

Turning to our Royal Palm renovation. We continue to make meaningful progress on this transformational project with more than half of the guestrooms complete in key public areas such as the lobby lounge, [indiscernible] terrace and pool deck taking shape. Our best-in-class design and construction team is working hard to deliver the hotel by June, and we are laser-focused on achieving that goal.

Overall, Miami remains one of the strongest hotel market in the country, and I am incredibly excited about the long-term outlook for this asset. We continue to expect to realize a 15% to 20% return on our invested capital with the hotel forecasted to more than double its EBITDA from $14 million to nearly $28 million once stabilized. We look forward to hosting many of you at the property during the next month's Citi Conference to showcase this world-class asset and the remarkable transformation underway.

Looking ahead to 2026, we see several factors that could support an improving lodging environment. From a macro perspective, the U.S. economy remains on relatively firm footing with modestly higher growth expectations, easing inflation and ongoing fiscal stimulus, all of which should provide incremental support to the U.S. consumer. In addition, easier year-over-year comparisons as we lap last year's government demand disruptions, together with the anticipated lift from major events such as the World Cup and the America 250 celebrations in New York, Boston and Washington, D.C. are expected to benefit demand across several of our core markets.

Furthermore, new hotel construction remains muted, keeping supply growth at historical lows and supporting healthy operating fundamentals for the next several years. While we remain optimistic about the setup for the year with easier year-over-year comparisons and major event-driven demand. Our guidance remains cautious with the potential for geopolitical or macroeconomic volatility, continuing to drive uncertainty around booking decisions and impacting short-term group pickup trends and international inbound demand, particularly from Canada. Sean will provide additional detail on earnings guidance later in the call.

In summary, 2025 was another year of meaningful progress for Park, one in which we advanced our strategic priorities, we continue to reshape the portfolio and strengthen the foundation for long-term growth. Our disciplined approach to capital allocation by accelerating Non-Core dispositions while reinvesting in our highest quality assets continues to unlock embedded value across the Core portfolio. The transformation underway of Royal Palm, the substantial renovation work at our 2 iconic Hawaiian resorts in New Orleans and a broader-based momentum across several of our core markets further reinforce our conviction in the earnings power of our Core portfolio. As we move into 2026, we remain laser-focused on completing our transition to a streamlined portfolio of 21 high-quality hotels located in premium gateway cities and resort markets, and we are confident in the long-term growth opportunities for Park.

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

Thanks, Tom. For the fourth quarter, RevPAR was approximately $182, representing a nearly 1% year-over-year increase or nearly 3% when excluding Royal Palm. The Core portfolio, excluding Royal Palm, continue to demonstrate meaningful operational strength, delivering a RevPAR increase of 6% to nearly $216 or nearly 1,500 basis points higher than our Non-Core portfolio, underscoring the resilience of our highest quality assets.

Core hotel adjusted EBITDA margin also improved materially, expanding 230 basis points to 30% in sharp contrast to the Non-Core portfolio, which recorded a 280 basis point contraction to 10%. Overall, Core hotel adjusted EBITDA increased 13% or nearly $18 million over the prior year period despite an over $4 million headwind from Royal Palm being closed, while the Non-Core portfolio declined 28%, creating an approximately $4 million drag on quarterly earnings. These results underscore the strength and durability of our Core portfolio and highlight the value-accretive nature of our portfolio reshaping initiative.

For the full year, RevPAR came in slightly ahead of expectations, declining 2% versus 2024, while hotel-adjusted EBITDA margin was 26.5%, reflecting a 130 basis point reduction from the prior year. As expected, the Royal Palm renovation remained the primary headwind contributing a 110 basis point drag to full year RevPAR growth and approximately 15 basis points of margin pressure.

From a CapEx standpoint, in 2025, we invested nearly $300 million across the portfolio, including roughly $110 million during the fourth quarter. Earlier in the year, we completed nearly $75 million of guest room renovations that began in 2024 at our 2 Hawaiian properties, the Rainbow Tower at Hilton Hawaiian Village and the Palace Tower at Hilton Waikoloa Village. The second and final phase of guest room renovations for the Rainbow Tower, which commenced in Q3 of last year, is expected to be completed in a few weeks, while the final phase for the Palace Tower, which also commenced in Q3 of last year, was delivered last month, bringing the total investment to the second phase across both Hawaii properties to approximately $85 million. In addition, we completed the second of 3 renovation phases totaling more than $30 million at the Hilton New Orleans Riverside last month, with the third and final phase scheduled for completion in December of this year.

Looking ahead, we expect a lower level of capital investment for 2026 with $230 million to $260 million of spend planned, which includes completing the $108 million comprehensive redevelopment of the Royal Palm. In addition, we are excited to launch a full-scale renovation of the Ali'i Tower at Hilton Hawaiian Village expected to encompass all 348 guestrooms, the tower lobby, its private pool and the addition of 3 new keys. Total investment for the project is expected to be approximately $96 million. To expedite the construction schedule, we plan to suspend operations in the self-contained tower beginning in the third quarter of this year with a reopening plan for the middle of next year. Overall, we expect renovation-related disruption at Hilton Hawaiian Village to be $1 million to $2 million in 2026, representing a 10 basis point impact to portfolio RevPAR. Once completed, nearly 8% of the resorts, nearly 2,900 rooms will have been newly renovated, materially enhancing the long-term competitiveness of our iconic resort.

Turning to the balance sheet. As of year-end 2025, our liquidity was approximately $2 billion, including $200 million of cash, $1 billion of available capacity under our revolver and $800 million of an undrawn delayed draw term loan. As we noted last quarter, we continue to make meaningful progress towards strengthening our balance sheet, while our long-term focus remains on further reducing leverage. As we execute Non-Core asset sales, proceeds are expected to be used to pay down debt while organic growth from our Core portfolio is expected to further reduce leverage toward our targeted goal of below 5x over the next couple of years.

With respect to our 2026 maturities, we intend to draw on the delayed draw term loan to fully repay the $121 million mortgage loan secured by the Hyatt Regency Boston in June and then draw the remaining capacity in September in combination with proceeds from a planned mortgage financing for our Bonnet Creek complex in order to fully repay the $1.275 billion CMBS financing on Hilton Hawaiian Village which matures in early November. We are currently in active discussions to originate a $650 million floating rate delayed draw mortgage for our Bonnet Creek complex, including both the Signia and Waldorf Astoria properties, and expect closing to occur later this quarter. We expect the blended spread over SOFR between the Bonnet Creek mortgage loan and the term loan to be approximately 220 to 225 basis points.

Turning to guidance. As Tom noted, we are establishing a full year 2026 RevPAR growth range of flat to up 2%, with expense growth expected to be low single digits for the full year. With respect to earnings, adjusted EBITDA is forecast to be $580 million to $610 million and adjusted FFO per share is expected to be in the range of $1.73 to $1.89. We expect Q1 to be the most challenging quarter of the year due to difficult year-over-year comparisons. New Orleans due to lapping the Super Bowl last year and Miami, together represent an expected 450 basis point drag on RevPAR during the quarter, translating to an approximate $12 million headwind to earnings relative to last year. Partially offsetting this pressure, we expect double-digit RevPAR growth at Bonnet Creek, Puerto Rico and San Francisco, supported by strong group pace for each along with the Super Bowl in the Bay Area as well as low single-digit growth at both of our Hawaii hotels, driven by improving leisure transient demand following their extensive room renovations.

There are also a few key assumptions embedded in our guidance that are worth highlighting. First, with respect to the Royal Palm reopening and its impact on 2026 results. As Tom mentioned earlier, we are working diligently toward a targeted grand opening in early June. However, given the challenges associated with securing advanced bookings without absolute certainty to opening out of the World Cup matches beginning in mid-June, our guidance does not assume any material benefit from World Cup-related demand at the hotel. Overall, we expect Royal Palm to generate approximately $3 million to $4 million of hotel-adjusted EBITDA this year compared to the nearly $28 million expected at stabilization and approximately $5 million reported in 2025 when the hotel was opened during high season prior to its closure in May. Second, with respect to asset sales, our guidance excludes any impact from potential non-core dispositions in 2026 outside of what we have already closed. While we remain fully committed to selling the majority of our Non-Core hotels during the year, the timing of the transactions remain uncertain, making the earnings impact difficult to estimate. For context, the remaining 13 Non-Core hotels generated approximately $60 million of hotel-adjusted EBITDA in 2025 or just 9% of total hotel-adjusted EBITDA.

Finally, our adjusted FFO guidance reflects the successful refinancing of approximately $1.4 billion of debt during the back half of the year at a blended interest rate of approximately 5.5%. On an annualized basis, this refinancing is expected to increase interest expense by roughly $20 million, of which $9 million is included in our guidance given the anticipated timing of the refinancing.

Finally, in 2025, we returned a total of $245 million of capital between $200 million of dividends and $45 million of share repurchases. And over the past 3 years, we have returned $1.3 billion of capital, including stock repurchases of over 12% of total outstanding shares.

With respect to this year's first quarter dividend, on February 13, we declared a cash dividend of $0.25 per share to be paid on April 15 to stockholders of record as of March 31. At current trading levels, this quarterly fixed dividend translates to an annual yield of over 8.5%. This concludes our prepared remarks.

We will now open the line for Q&A. [Operator Instructions] Operator, may we have the first question, please?

[Operator Instructions] And our first question comes from the line of Smedes Rose with Citi.

I wanted to ask you just a little bit more about how you think earnings could roll out over the course of the year, your Hawaii properties. I know you -- obviously, the fourth quarter was a pretty easy comp. But just in terms of how you're looking at group pace given I think the convention center is closed in Honolulu, it's just kind of -- what are you seeing kind of on the trajectory? I guess -- I mean, I guess the real question is what do you think those properties can contribute this year in terms of EBITDA?

Yes, Smedes. So this is Sean. Yes, certainly had a good comp in Q4 for Hawaii. With the convention center closed, that's about 50,000 room nights typically that the property gets from citywide convention-related business. It's probably done a good job, though, of replacing that as best possible with about 60% of that lost or at least ultimately converted into in-house group as well as about 20,000 room nights booked through a crew business, contract business. So they've done a good job to kind of replace that for this year. In the end, I think Hawaii, both Hawaiian Village and Waikoloa combined, it should be kind of on the higher end of our guide of RevPAR growth, 2% range, again, with the convention center being out and kind of some early disruption from the ending of Phase 2 at Hawaiian Village.

I think you'll see some rate growth but not tremendous, again, just given the mix change there. I think you'll see certainly some decent growth overall for the -- on the EBITDA level, kind of in mid-single digits or so growth combined for the properties. Waikoloa certainly has an easier comp, certainly had challenges last year, and we certainly expect to see that materialize into a better, probably low double-digit growth on the EBITDA level for Waikoloa overall. So blended together, again, kind of a top line, top of the end of the range, 2% growth, plus or minus on RevPAR, translating into kind of mid-single-digit growth combined for the properties.

And Smedes, this is Tom Baltimore. I agree with everything that Sean just outlined. If I could just add a comment about Japanese visitation. Obviously, relatively flat last year, but we are seeing some green shoots and certainly believe that we'll be in kind of mid-single-digit growth in terms of visitation, perhaps somewhere in the 750,000 visitors to Hawaii, which is certainly a continued progress. Obviously, we'd like for that to accelerate as much as possible, but we are seeing green shoots there. And as we sort of look out and get the data on various forecasts, it looks like that continues at 5% to 6% into 2027 as well. So we see both of those are certainly encouraging tailwinds as well.

Great. And then, Tom, could you maybe just comment portfolio-wide just kind of like the -- what you're seeing on the pace of group revenues for this year?

For Hawaii?

No, just for your portfolio-wide.

Portfolio-wide, if you exclude, obviously, Miami and Hilton Hawaiian Village and obviously, tough comp in New Orleans, up about 3% for the year in '26. And then if you look out to '27, just our core portfolio alone, we're about 4%, 4.5%. So very encouraging from that standpoint.

The next question comes from the line of Duane Pfennigwerth with Evercore ISI.

And sorry for -- if I'm making you repeat anything. But just on the sequential for Hilton Hawaiian Village, I think we're going from like a plus 20% to low singles. So can you just speak to what would be driving that specifically for the March quarter?

For -- I'm sorry, for Q1, Duane?

Yes. Aren't we pacing at a very high rate in 4Q to a low single-digit rate. So just why that changed sequentially?

You have group pace down in Hawaiian Village, again, speaking to while they have replaced business here and there from the convention center, but pace down 37% in Hawaiian Village for Q1, certainly a big driver there for kind of how even though it certainly is lapping Q1's performance, it's roughly kind of in that flattish range for the quarter.

Okay. That's helpful. And then just on Miami, can you talk about any refinement to your estimate on when that will be up and running? And how do you think about capturing some of the World Cup demand just given you may reopen kind of close to that time frame? In other words, it's probably hard to commit to that now, but maybe as you gain confidence in the reopening, just how you think about that from a positioning and revenue management perspective?

A couple of things to win. I've been down to Miami quite a bit and tour the property. And obviously, I say this with humility, but also with great confidence. I think we've demonstrated a track record really second to none in our sector in terms of being able to handle these types of very complex projects. If you think about Bonnet Creek and the success and the complexity of that. This really mirrors that. Carl Mayfield, heads our design and construction team, is personally on site at least 2 or 3 days a week. We've got somewhere between 275 to 325 construction workers working 6 days a week, 1 to 2 shifts, and they're very confident. We're doing everything humanly possible to get done in that June time frame. I'm -- we'll be down there this weekend and touring again Monday morning.

So as Sean said in his prepared remarks, as you think about us opening in early June, plus or minus, and then obviously, the World Cup, the ability to be able to sell and commit that makes it a little more challenging, just given the amount of demand expected and how well I think we all believe Miami will do with the World Cup, we think, obviously, getting open, we'll be able to capture and certainly be able to capture at very attractive rates. So very, very bullish, very excited about the project. And as Sean also noted, I mean we're not -- we're not being overly ambitious in terms of the impact that this hotel will have on the overall performance for the year. So if anything, we've been conservative, that's intentional, and we're certainly hoping that we can exceed that. But again, remain enthusiastically excited about this transformation. We can't wait to host many of you next weekend, as you can see for yourself the progress and the real-time work that's underway there. And we're 100 days plus or minus from completion and doing everything we can to make that happen.

The next question comes from the line of Rich Hightower with Barclays.

Good to be on the Park call again. So Sean, I know that you kind of laid out a little bit of the color on the first quarter, specifically with respect to the cadence of growth in '26. And then obviously, there was some color on Hawaii specifically. But if you guys wouldn't mind maybe just help us understand how that works kind of broadly for the portfolio over the course of all the different quarters of the year within the context of that flat to 2% RevPAR guide?

Sure, Rich, and welcome back. Great to hear the voice on the call here. The -- yes, just with respect to the kind of the quarterly cadence as you think about Q1 is certainly one where we think it's the weaker quarter of the year where it's probably performing a little bit better than expected, but certainly came into the year with a kind of -- I believe that will be down slightly, maybe ultimately gets to flat, we'll see, but certainly in the bottom end of the range as we think about Q1. Q2 and Q3 certainly should pick up. You're lapping some of this disruption from last year's policy initiatives, whether it's tariff related doge. Obviously, the Canadians and they're kind of decline in travel into the states. You start to see the impacts of that in Q2 and Q3.

And so we're lapping that on top of a World Cup that we believe our exposure in New York and Boston, particularly, you could probably drive about 30, 35 basis points for the year. So certainly, some positive impact we're thinking of in kind of Q2 into Q3 as well. So those should ultimately drive towards the higher end of year -- the range, I should say, for the year. And then Q4 is one where we got group pace down 8%. So as Tom mentioned, if you exclude a couple of properties, we're certainly up, but I'd say overall portfolio is down slightly -- the big driver for that is Q4. And so while there's work to be done and there's certainly some potential upside in terms of pickup in the -- for the year pickup, I think that's kind of where our conservative comes in as well. We certainly think we've got about $20 million of revenue more to pick up than last year. And so we've seen kind of the last couple of years, how things have gone. So we certainly want to take a little bit more cautious tone to that looking at the pace being down about 8% for group in Q4. So that ends up making Q4 a little bit more closer we think, to the bottom of the range for sure.

That's great color. And I guess my follow-up is on the expense side of it. So you've got 2% to 3% kind of total OpEx guidance for the year. I think we heard earlier in the week that labor could run around 4% to 5%. And so just how do you feel about the potential flex on that guidance range? And also, I think within the context of the union renegotiation in New York later this year.

Yes, you're right. You're -- we're expecting about low single-digit kind of growth. And certainly, with the CBAs, both that have been renewed or ultimately upcoming, we certainly see something in the mid-single digits type growth as you talked about with labor. But offsetting that, you've got -- again, if you're kind of looking at top line and revenue-based type of fees and everything else, you're going to see lower end of the range there. We talked about doing deep dives at our properties last year. A lot of that came through multiple -- kind of the back half of the year. And so we certainly get the benefit of the full year impact of that this year.

So that's a nice little offset, we think, as well to the labor growth as well as, I think, fixed costs will continue to be one where we see certainly below inflationary type growth insurance, another good year, no big claims, certainly from us, but I think across the board there with events from hurricanes and the like, absent the fires in L.A. at the beginning of the year, but ultimately, not to a point where I think the underwriters will need to kind of look to grow their premiums, I think we'll certainly be a favorable market. So we certainly expect to see continued improvement there as well, along with taxes, we think ultimately -- well, it can be choppy at times, ultimately being checked for the year. So those are I think some of the offsets the labor that gets us down to what we're talking about.

That's great. And congrats on the big promotion, by the way.

Thank you. Appreciate that.

The next question comes from the line of Aryeh Klein with BMO Capital Markets.

Just on the non-core asset -- just on the non-core asset sales, how -- what's the level of interest, I guess, you're seeing in those assets? And how quickly do you think you can move there? And then, obviously, the focus is on selling those Non-Core hotels, but is there -- could there be some consideration to selling any of the Core hotels if an opportunity arose?

Aryeh, a lot to unpack there. Let me try to frame it a little bit for you. We have been laser-focused as we said, I think, a couple of times in the prepared remarks and continuing to really reshape the portfolio. I think it's important to remind listeners, the Core hotels account for 90% of the EBITDA in the company and 90% of the value. If you take sort of RevPAR, the Core RevPAR is around $215, $218. That's about 69%, plus or minus, higher than the non-core. The Core hotels generate about $40,000 in EBITDA per key and 30% EBITDA margins, whereas non-core RevPAR of approximately $129 plus or minus and about 14% margins and about $10,000 in EBITDA per key.

So I mean a really stark contrast, hence, the reason that we're so aggressively working, and we have been working, I think it's also important to note, we've sold or disposed of 51 assets. And I think people sometimes forget that includes 14 international joint ventures in Dublin, in Brazil, 2 in Germany, the Netherlands, South Africa, many complex assets here in the U.S. So the team is skilled, the team is experienced. We've done it in the worst of times. We were selling during the pandemic. We've been selling post pandemic. They're our buyers. I think everybody knows that we're a net seller. And so in some situations, some of the assets have short-term ground leases or joint ventures or low tax basis. So every single one has a story, but we've got aggressive work streams underway. Our investments team and our legal team are working incredibly hard and we're confident that we're going to get it solved. We've made significant progress before. We can handle this. And the goal is to get as many of them, if not all of them done this year. We do have a few that are involved in a dispute, obviously, so those will probably lag. But the other 10 hotels, we are aggressively working every day late into the evenings and multiple discussions are underway and we look forward to keeping investors informed and we look forward, most importantly, closing them using those proceeds to pay down debt and really reinvest back into the Core portfolio where we're confident we can generate outsized returns. We believe, obviously, that we can generate higher yields from development projects than we can from acquisition projects at this time.

And then maybe just a follow-up on Miami and the Royal Palm. How quickly -- or how much in front of the actual opening can you actually start -- can you start to take bookings especially in front of a massive event like the World Cup and then just the pathway towards getting to those stabilized EBITDA levels. How long do you think it takes to get there? Is it '27, '28 or beyond, I suppose?

Yes. Well, we're -- I guess, first, we're confident, obviously, in being able to take what was $14 million in EBITDA from tired and certainly an asset that needed really a transformational renovation to $28 million on a stabilized basis. We certainly would think a couple of years is not unreasonable. Just given the extraordinary amount of development and activity occurring, and I don't need to tell anyone on this phone not only from a business standpoint, but the number of people relocating to the region as well and proximate to us is probably $4 billion of development activity, not all of that hotels but other asset classes as well. So we remain very, very bullish on Miami as we look out.

Regarding your question, obviously, as to how quickly we can get opened. We're in frequent contact obviously with both planning, both the approval process from the regulators and as soon as we're ready and as soon as we get the signal, we will be up and running. We've kept obviously our General Manager who's on site every day. We've kept obviously the key leadership team of the operating group. So we'll be able to pivot and move very quickly. And again, as Sean noted in his prepared remarks, north of 50% of the guest rooms are already complete. So we are making great progress. And are working around the clock and going to do everything we can to make that date.

The next question comes from the line of David Katz with Jefferies.

Look, if we're laying out a 2026 where I'll make the leap that you're likely to be successful getting divested of your Non-Core hotels, my expectation of those is that their earnings level are such where they would be meaningfully delevering events for Park. Do you think and we don't want to get ahead of ourselves, but you think 2027 could be a year of potentially playing offense and maybe getting ready to buy something?

Nothing, David, would make me and this team more excited than to be able to make that pivot from playing defense to offense. And I think you really hit the nail on the head. We've been working our tails off. And as you know, you've been along the journey with us, and you've watched the effort. And I think there are a few doubters out there, but I think you can remind people through the pen of just the hard work and the heavy lifting and the complexity of work that we've done in reshaping not only the 51 hotels that we've sold, but also keep in mind, we were self operating 5 hotels, and we also had 3 laundry facilities that have subsequently been closed. So the team is tested. It's experienced. We share that belief and that the sooner we can substantially reduce the non-core so that it's no longer -- not only an overhang, but even a discussion point, gives us the opportunity, I think, for consideration for a rerating of the company, hopefully, our multiple and allows us to go on offense.

There are a lot of interesting opportunities that I think are out there today, and I think there'll be more in the future. And I think getting down to low 20s in terms of our Core portfolio gives us a lot of optionality. The other thing to keep in mind as you think about some of our core assets in Bonnet Creek and the 2 iconic resorts in Hawaii and all the capital that we're putting and you think about also what we're doing in Miami. We own all of that fee simple, very rare. And all of that, we think, is also going to be advantageous for Park and gives us a lot of optionality as we can think about where it makes sense to continue to grow and in some cases, to monetize if that makes sense.

It does. And look, I know it's hard. It sounds like a couple of the assets are in some form of [indiscernible] tough to tell, but is it reasonable to expect that most of the assets that are non-core are going to get done within 2026?

Yes. Yes. That is the goal. That is the mission. We know it's at stake, and we're working as hard as we can. Obviously, there are things that happen beyond our control, David, but I think you've seen the effort. You and others have witnessed the amount of work that we've done in this respect. And it has not been easy, but we're up to the task.

The next question comes from the line of Chris Woronka with Deutsche Bank.

So maybe just to kind of double click back to the asset sales. I guess, Tom, is there a way -- I think we're really talking about 10 hotels if we exclude the 3 leases. Is there a way you could maybe bucket the type of buyers that you're maybe working with or characterize them in any way? I think we see headlines in the market every day about isolated struggles on the private side. And I think the investors are kind of wondering whether any of that potentially is a roadblock to moving any of those assets.

Yes, Chris, it's a great question. I would say one thing globally. There's plenty of equity capital. That's the first comment. The second, there's plenty of debt capital and private credit. So there's no issue there. There are also interested buyers, whether they be small family offices, whether they be owner-operators, whether they're deep value entrepreneurs. And look, some of the buyers tend to be -- have a little sharper elbows in this kind of situation because they realize, in some cases these are deeper turns and some reposition opportunities. But there's more than an adequate buyer pool out there. Some markets are a little tougher. I'd say, obviously, Chicago and L.A. are a little tougher than San Francisco right now for all the obvious reasons. But there are buyers not our first rodeo. It's up to us to figure it out and solve it. You don't want to hear excuses.

Our investors don't want to hear excuses, and we know what's required to do. And at the same time, we've got to make sure that we're getting fair value and that we're executing as quickly and as efficiently as we can. But there are work streams underway on all of them. There are some that have -- whether they be short-term ground leases or low tax basis. I mean all -- it's a little bit of all of that. But that's no different than what we experienced candidly, within the 51 assets that we've sold, particularly some of those more complicated international assets that we sold a few years ago.

Okay. Fair enough. Then as a follow-up, obviously, you have the New York labor contract coming up. I think, Tom, you might have mentioned in the past that once you get through that and you kind of understand what the new math looks like, you might consider a longer-term plan there, that could include a lot of different things, maybe conversations with Hilton. So is there anything you could add to that at this point as we move closer to the union reset?

Yes. Obviously, I'm going to be careful here, Chris, as you can imagine. I'd make a couple of observations. We've got an excellent operating team on site. You saw the results that we delivered last year. New York was incredibly strong. Record fourth quarter up 5% to 7% for the year. We're encouraged as we sort of look out here in '26. I don't think it's in anybody's best interest across the city for protracted negotiations or any kind of strike of that type of activity. We're one seat at the table. There are a lot of other owners also involved in this. You've also got, obviously, the World Cup and we're going to be on the world stage. And I think -- I think as we think about tailwinds for us being the largest hotel in the city and there's probably a little bit of upside opportunity there and from a demand standpoint. So -- so we're encouraged.

We think it will get done. We have assumptions in our guidance as to what we think that impact will be. And obviously, we're not going to negotiate publicly, but we think we've got it covered from that standpoint. And as we think about the hotel, there's -- we're doing some modernization work on the infrastructure. We will then huddle with Hilton. We'll look internally as to what we think makes the most sense. But no doubt, when you think about you've only got really 2 big boxes in New York that can handle large groups. We think that gives us a unique positioning and a unique opportunity for us over the intermediate and long term. And -- and again, we had an outstanding year in 2025, and we're very, very encouraged as we look out in 2026 for the New York Midtown.

The next question comes from the line of Dan Politzer with JPMorgan.

First, I just wanted to touch on the RevPAR range. It came in a little bit lower than we were expecting. It sounds like there's a fair degree of conservatism in there you're baking the possibility of macro and political uncertainty. But perhaps you could maybe book end or paint a picture where are the areas of conservatism in the guide, specifically as it relates to some of the properties or markets where you're most excited about?

Certainly. Look, I think, again, I'll start with just from a macro standpoint in terms of -- I talked about the quarter -- quarterly cadence with Rich earlier and just kind of what that means when you think about Q4 and it being down 8%, that's kind of where a good point of conservative would be. You think about where we see some of that softness, whatever you want to call it, in Q4. It is back to Hawaiian Village. It's down about 50% on pace in Q4. Midtown, while it's got a good setup for the year overall, down 6% for the year in pace its weakest quarter is Q4. So I think, again, going into that, I think that's where we kind of feel there are obviously bigger impact to hotels. We continue to find our way to just make sure that we use caution against some of the near term in the year for the year pickup trends as we get through the rest of the year. But yes, there's certainly a case to be made that things could be better. But ultimately, I think as we think through what we've seen in the past. I think those are some of the -- that's the time period, and those are some of the markets we're a little bit more hesitant on right now.

I would also add, just to -- just sort of step back, you can paint, I think, a rosier picture. The tailwinds for 2026 are encouraging. Obviously, we all expect a more accommodative Fed and perhaps lower interest rates. I mean we're lapping those, Liberation Day, government shutdown. You've got the major events. Obviously, World Cup, you've got America's 250 celebrations, deregulation, fiscal stimulus that's all encouraging. We've got the massive AI investment cycle and what we all hope and expect will be productivity gains at some point. Easing inflation didn't show quite that way today in the PCE report.

But the other side of that, you've also got some risk out there. You've got geopolitical. And obviously, we look at what's happening in the Middle East and Iran in the U.S. right now. Inflationary pressures are still there. International travel really hasn't rebounded yet. We're seeing some green shoots. But we're certainly still down pre-pandemic. And the consumer is cautious. And we've got a K-shaped economy right now. So look, we are -- we think it was prudent to be conservative and cautious for all the reasons that Sean outlined, particularly as you went quarter-by-quarter, and obviously, as I give you sort of macro, we should think about the tailwinds, but there are some headwinds out there.

And if you think about what's happened in the last few years in the sector, first quarter came out to be pretty good. And then for many of us, if not all of us, we saw somewhat of a downward trend. So we think right now makes sense to just be a little more measured, a little more cautious coming out of the box. But we are crystal clear as to the business priorities for Park. What we're focused on selling non-core, investing in our Core portfolio, paying down debt, looking for all of the operational efficiencies we can and really outperforming. We'd rather have a lower bar and outperform, and we're aligned as a management team there and really focused on continuing to deliver for shareholders.

Got it . That's helpful. And then just for my follow-up, Tom, Sean, whoever wants to take it, it's more on capital allocation and leverage. Sean, you mentioned the target of 5 turns in the next couple of years. How do you think about that the -- given that's kind of where you're setting this expectation, like how do you think about near term the allocation between -- of capital between some of the project and investment opportunities, share repurchases given the price and the valuation of stock or even the dividend, which obviously I don't know how secure you view that or how kind of tied you are to that level, but just kind of broad strokes how you think about those buckets?

Well, I think as we -- certainly, as we sell non-core, we've been focused on redeploying that capital towards deleveraging. So I think that's probably the main focus and certainly helps bring us to that target with that. But obviously, the investments we made already and we continue to make with things like Royal Palm, some other projects we have lined up, we think, again, those drive nice returns for us. And over the next couple of years as those ramp up, along with longer kind of a recovery here in Hawaii back to kind of where we were achieving EBITDA levels in 2023. Those are the things that we think organically get the growth to help kind of bring us towards that 5x target.

The next question comes from the line of Cooper Clark with Wells Fargo.

Curious if you could speak to the RevPAR uplift from the World Cup and America 250 celebration that's currently embedded in guide? And if on the World Cup, that uplift is mainly just coming from the Hilton Midtown asset?

Yes. I think for the full year, for the portfolio, the impact -- we estimate somewhere in that 30 to 35 basis points, probably about 20 of that or so come from New York, another call it 10 from Boston and 5 from kind of other markets that aren't as big for us, but ultimately, obviously, have games going on or matches going on there.

Great. And then I appreciate some of the earlier color on individual projects and puts and takes. But curious if you could talk about the total RevPAR disruption and EBITDA disruption from renovations this year. How that compares to '25 and then maybe how we should be thinking about potential tailwinds from renovation in '27 as you look out?

Yes, certainly. I mean, obviously, Royal Palm is a big one. It's certainly a big -- it certainly helps the portfolio in the back half of the year after it opens up. But in the first part of the year, you're talking about 300 basis points of RevPAR impact within the quarters. Altogether, though, if you kind of remove -- your Miami just has about 30 basis point impact to full year guide. So it's a little bit of first half, second half there. Other projects aren't net disruptive to the portfolio, maybe to the tune of 20, 30 basis points of impact. Certainly, going forward, clearly, Miami will continue to have an outsized impact to the portfolio. We certainly expected to see that in kind of 100-plus basis point positive impact to the portfolio going forward as it ramps back up. And I think, certainly, we expect to see some -- certainly expect to see some nice recovery in the Hawaiian assets from the investments we made in New Orleans, which already is getting good reception from meeting planners winning business based on the product we have there. We certainly expect that to kind of be a nice tailwind for us over the next year or two.

Your next question comes from the line of Robin Farley with UBS.

Great. Just wanted to get a little more color around the new project in Hawaii, the renovation. You mentioned $1 million to $2 million of disruption in '26. So I think that starts midyear. So is it -- I guess if we think about what that tower specifically generates in EBITDA, would that mean sort of $3 million to $4 million? And where do you think that goes after renovation? And then just to tack on to that, if I remember at Hilton Hawaiian Village, there's a, I guess, underdeveloped parcel there, right? I don't know if there were stores or something on it that I think you've talked about being like a site for potential future development. I know you're really focused on delevering right now, but does the additional renovation here in Hawaii, is that a sign that you're thinking about kind of more investment going forward in Hawaii?

Yes, Robin, a lot to unpack there. Listen, I think the big message is we are absolutely committed to Hawaii, particularly Hilton Hawaiian Village, 23 acres, fee simple, iconic. We've obviously renovated the Tapa Tower 1,100 keys. We've just finished Rainbow Tower north of 800 keys, plus or minus, Ali'i Tower, as Sean mentioned, 351 keys. We think we can add another 3 keys there. It's self-contained. So it's sort of the higher-end product on the campus at the village there. And so we really think that this is the window to renovate that.

Obviously, there's a gym, self-contained restaurant. So we really believe that the window that we've identified that the disruption will be minor, the couple of million dollars that we mentioned and that this is the window to get it done. So excited about it, thrilled about it. It's really separate from the AMB Tower. The AMB Tower was more opportunistic. We wanted to grab that last site. We are still finishing up the final entitlements. We have no intention of proceeding with that project at any time soon until obviously, demand has fully recovered. We think that's a long term, and I emphasize long-term play at a future date. We have no intention of proceeding with that at this point. But Ali'i Tower, we think, is prudent. We think that's going to continue to really give now a tailwind but significant lift in a way to distinguish the property even further from its competitive set. So we're excited about getting that done. And as Sean noted in his prepared remarks, north of 80% of the rooms at what's already a 2,900 room campus in Village would be completed and fully renovated, which we think really helps us as we look to '27 and beyond. So hopefully, that gives you a good framework.

That's very helpful. Just one quick follow-up on the Ali'i Tower. If I remember, it has its own entrance and sort of like pool area maybe even. Is there a thought that -- or potential for you to -- for that to be a different brand or like a different price point after the renovation that it could be like a hotel within a hotel or anything along those lines?

Yes, it's certainly something that we've looked at from time to time. No doubt it will have an elevated price point, whether or not it's a hotel within a hotel with something that the asset management team here at Park and the operators and our operating partners at Hilton will look at. We've studied that from time to time. It clearly is the most elevated product, and we're obviously going to take it to the next level and are really, really excited about the work that's going to commence there and get done, obviously, as we've said and certainly by the middle of 2027.

The next question comes from the line of Jay Kornreich with Cantor Fitzgerald.

Obviously, a lot of ground already covered here, but just curious on the out-of-room F&B spend has been quite strong as of late. So just wondering what you're seeing from customers and groups there on that front and how much revenue growth there could be from the out-of-room spend this year.

Yes, sure. I mean you're right, it has been very strong. I'd say on total, it's probably about 40, 50 basis points above kind of where our RevPAR is translating to total RevPAR. And we think it's the same this year as we think about the guide as well. Big drivers, in-house group as well as even Smurf will, I think, help to drive banquet and catering even to a decent amount this year. Outlet spend in the resorts has been strong, headlined by our Dorado Restaurant, for example, in Casa Marina, which we opened up last year and drove outlet spend up 40% in that property. We expect that to actually be -- it's now open, obviously, for the high season this year. So we expect to see continued growth in those areas.

Other things, I think, are just more -- a little more in line, kind of single-digit, low single-digit type growth, whether it's parking and other fees generated in that respect. But for the most part, banquet and catering, the group continue to spend. We don't see much pressure from that as well as get in the resorts, certainly, the higher-end properties you certainly see the benefits of the higher income guests who are spending in the outlets.

Thank you. This concludes the question-and-answer session. I'd like to turn the call back over to Tom Baltimore for closing remarks.

I appreciate all of you taking time today. Look forward to seeing many of you at the Citi Conference in another week or so. And I also just want to take a moment to congratulate my partner, Sean Dell'Orto, on his promotion well deserved. Sean has been just an extraordinary CFO, a great business partner, a great leader. I know that I speak for the Board and myself, we are thrilled that Sean is taking on the CEO title -- COO title in addition to the CFO title, and I look forward to working with him for many years to come. So congratulations, Sean, and look forward to seeing all of you in the near future.

This concludes today's conference. You may disconnect your lines at this time. We thank you for your participation.

Greetings, and welcome to the Park Hotels & Resorts Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

It is now my pleasure to introduce your host, Ian Weissman, Senior Vice President, Corporate Strategy. Thank you. You may begin.

Thank you, operator, and welcome, everyone, to the Park Hotels & Resorts Third 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 securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed and we are not obligated to publicly update or revise these forward-looking statements.

Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements. Please refer to the documents filed by Park with the SEC, specifically the most recent reports on Form 10-K and 10-Q which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. 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 an update on Park's strategic initiatives, third quarter performance and outlook for the remainder of the year. Sean Dell'Orto, our Chief Financial Officer, will provide additional color on third quarter results and 2025 guidance as well as an update on our balance sheet and dividends. Following our prepared remarks, we will open the call for questions.

With that, I would like to turn the call over to Tom.

Thank you, Ian, and welcome, everyone. Park remained laser-focused on our strategic priorities during the third quarter, fortifying our strong and flexible balance sheet, recycling capital to enhance the quality and growth potential of our core portfolio and driving operational excellence by minimizing cost in a challenging operating environment. Through disciplined execution, we continue to transform Park into an owner of high-quality iconic hotels with compelling growth profiles. We believe this ongoing portfolio refinement combined with unlocking embedded value across our assets, positions us to deliver stronger performance in the years ahead. Because we continue to be proactive with respect to our balance sheet, we successfully extended and upsized our corporate credit facility in September to provide us with committed debt capital that increases our total liquidity to $2.1 billion, to address our 2026 debt maturities.

I want to thank our bank partners for their continued support and confidence in Park and for giving us the flexible capital to execute our business plan.

Turning to our capital allocation initiatives. Our strategy over the past several years has been and continues to be focused on unlocking significant embedded value within our core portfolio to maximize returns for our shareholders. With development returns, far exceeding acquisition yields, we continued to lean into high ROI reinvestments deploying over $325 million across our best performing assets and returns approaching 20%, including the meeting space expansion, and renovations at our Signia and Waldorf Astoria Bonnet Creek complex in Orlando, the renovation and repositionings at our Casa Marina and Reach Resort in Key West and the renovation and up-branding of our Santa Barbara resort.

In May, we launched our sixth major hotel redevelopment in 7 years. A $103 million renovation and repositioning of the Royal Palm located in the heart of South Beach, Miami. This transformational project is expected to generate a 15% to 20% IRR. And more than double the hotel's EBITDA from $14 million to nearly $28 million stabilization. Importantly, construction remains on schedule and on budget we are targeting a reopening ahead of the 2026 World Cup matches in Miami next June. We also have several other major renovation projects underway including the final phases of guest room, tower renovations at both of our Hawaii hotels expected to be completed in early Q1 2026 as well as the second phase of guest room renovations at our Hilton New Orleans Riverside Hotel, upgrading another 428 guestrooms in the 1,167 room main tower. The remaining 489 guestrooms at New Orleans are expected to be completed over the next 1 to 2 years. In total, we expect to execute approximately $220 million in strategic renovation projects this year, further enhancing the quality of our core portfolio.

We remain confident that reinvesting in our assets represents the highest and best use of capital. Since 2018, we have invested approximately $1.4 billion in our core hotels, upgrading nearly 8,000 guestrooms and fully repositioning several of our most strategic assets. We continue to be disciplined and deliberate with our capital recycling efforts, particularly as the transaction market remains episodic. Our goal remains crystal clear to divest our remaining 15 noncore consolidated hotels and concentrate ownership across 20 high-quality assets in markets with strong growth fundamentals and limited new supply and that account for 90% of the value of our portfolio. Successful execution of this strategy will position us with one of the highest quality portfolios in the sector and among the strongest same-store growth profiles.

In line with this plan, we recently closed the 266-room Embassy Suites Kansas City, a property on an expiring ground lease that generated minimal EBITDA. And by year-end, we will exit 2 additional noncore hotels on expiring ground leases, the DoubleTree Seattle Airport and the Double Tree Sonoma, which are expected to generate a combined EBITDA of just $300,000 this year. Exiting these 3 lower-quality assets will meaningfully enhance our portfolio metrics, increasing nominal RevPAR by nearly $6 and expanding margins by approximately 70 basis points. Despite a challenging environment, we remain laser-focused on executing our strategic objectives with several noncore assets currently being marketed and active discussions underway on multiple transactions including 2 potential deals under letter of intent.

Turning to operations. As we disclosed on our second quarter call, third quarter results were impacted by a meaningful decline in group demand driven by tough year-over-year comparisons, following last year's strong citywide calendars across several of our markets, incremental disruption from the second phase of our Hawaii renovations, which began in August, a month earlier than last year and further challenged by softer leisure and government demand. Overall, RevPAR declined 6% or approximately 5% when excluding Royal Palm South Beach. Despite these headwinds, some of our core markets performed exceptionally well further demonstrating our ability to unlock value at our hotels. In Orlando, the Bonnet Creek complex delivered nearly 3% RevPAR growth with both the Signia and Walter Astoria hotels achieving their highest third quarter RevPAR and GOP in the complexes history. Looking ahead to Q4, the complex is set to benefit from multiple group buyouts. The group revenue pace up 28% and RevPAR growth expected in the mid- to upper single digits.

In Key West, RevPAR growth outperformed the broader portfolio, increasing 1% for the quarter, while Casa Marina RevPAR index reached 110, up nearly 800 basis points year-over-year driven by very strong group demand. Overall, group room nights increased 28%, driving higher occupancy and stronger overall results. For Q4, we expect continued outperformance supported by ongoing leisure transient strength as we head into peak season translating to mid-single-digit RevPAR growth. In New York, RevPAR rose nearly 4% with meaningful share gains across all segments. Meanwhile, in San Francisco, the JW Marriott Union Square delivered RevPAR growth of nearly 14%, supported by a strong group in transient demand. Both hotels are expected to maintain strong momentum through year-end, driven by very strong group trends with group revenue pace up 14% in New York and 160% in San Francisco.

Finally, at the Cree Bay Hilton in Puerto Rico, Q3 RevPAR increased nearly 12% with incremental leisure demand driven by the Bad Bunny residency, which added roughly 1,300 basis points of lift to the quarter. Looking ahead to the fourth quarter, we expect a significant rebound led by a broad-based recovery in group demand, coupled with easier year-over-year comparisons in Hawaii as we lap the 45-day labor strike which began late September last year, the impact of which was endured throughout the fourth quarter last year.

Group revenue pace for the fourth quarter is currently up over 12% year-over-year with double-digit increases for several of our largest group houses, including our Bonnet Creek complex in Orlando, our JW Marriott in San Francisco, our Hiltons in New York, New Orleans, Chicago and Denver, our 2 Hawaii resorts and the Cree Bay Hilton Resort in Puerto Rico. That said, the extended government shutdown has impacted both group and transient demand in several of our core markets and more pronounced in Hawaii, D.C. and San Diego, placing additional pressure on fourth quarter results. Through the end of October, we estimate that the shutdown has reduced expectations for room revenue by approximately $2.5 million, resulting in a roughly 180 basis point drag on this month's RevPAR performance.

October RevPAR is now expected to be relatively flat year-over-year for the total portfolio were up approximately 1.5% when excluding the Royal Palm in Miami, -- based on our current forecast, which reflect the impact of the shutdown through October only, we expect fourth quarter RevPAR growth to range between negative 1% and plus 2% or positive 1% to positive 4% when you exclude Royal Palm. Sean will provide more detail on our updated full year guidance in just a moment.

Finally, as we turn our attention to 2026, I am confident that the strategic investments we have made will position Park to outperform during reacceleration of the lodging cycle. While some macro uncertainty persists, particularly for the lower-end consumer facing economic pressure from higher rates, we see the foundation forming for the next cycle of expansion, a more accommodative Fed and easing financial conditions, resulting in lower rates and taxes should support a rebound in business investment. At the same time, sustained public sector and private sector spending particularly around AI infrastructure and the anticipated productivity gains from AI adoption, together with a modest pickup in inbound international travel, particularly from Japan, should further strengthen lodging fundamentals.

Looking ahead, we remain optimistic about 2026 and beyond, supported by expectations for lower interest rates, a more favorable regulatory environment and a renewed investment cycle, all of which should drive stronger economic and travel growth, along with a meaningful boost from major events, including World Cup events in multiple cities the Super Bowl in San Francisco Bay Area and New York and Boston's 250th anniversary celebrations.

With industry supply growth remaining at historic lows. We see a clear path for RevPAR acceleration and sustainable long-term growth, particularly across the segments and markets where our portfolio is concentrated and additional growth from the capital investments we are making in the core portfolio.

And with that, I'll turn it over to Sean.

Thanks, Tom. For the third quarter, RevPAR was $181, representing a 6% decline over the prior year or down 5% excluding the Royal Palm South Beach. -- which suspended operations in May for its full-scale renovation. Total hotel revenues were $585 million and hotel adjusted EBITDA came in at $141 million translating into hotel adjusted EBITDA margin of 24.1%. Despite the softer top line results, continued cost discipline by our team and hotel partners held expense growth relatively flat for the quarter marking the third consecutive quarter with expense growth of 1% or less. Adjusted EBITDA was $130 million and adjusted FFO per share was $0.35.

Turning to the balance sheet. As Tom mentioned, we made significant progress toward addressing our 2026 maturities by amending and upsizing our corporate credit facility. The facility now includes a $1 billion senior unsecured revolver with a fully extended maturity in 2030, a new $800 million senior unsecured delayed draw term loan facility with a fully extended maturity in 2031 and the $200 million senior unsecured term loan maturing in 2027 that was entered into in May of last year. We expect to draw on the new term loan next year to fully repay the $122 million mortgage on the Hyatt Regency Boston and together with a subsequent financing transaction expected in the first half of 2026 fully repay the $1.275 billion mortgage on the Hilton Hawaiian Village by the middle of next year when the par prepayment window opens.

With respect to the Hilton San Francisco and Park 55 hotels, which were placed into receivership in November 2023. We now expect the hotels to be sold by the receiver on or before the 21st of next month. As the purchaser has exercised its onetime extension right outlined in the executed purchase and sale agreement.

Turning to dividends. On October 23, we declared a fourth quarter cash dividend of $0.25 per share to stockholders of record as of December 31, translating to an annualized yield of approximately 9%. To preserve liquidity for our strategic initiatives to reinvest in the portfolio and deleverage the balance sheet, we do not expect to declare a top-off dividend for 2025. Reserving over $50 million based on the midpoint of our updated FFO guidance.

And finally, on guidance. Based on third quarter results and known impacts from the government shutdown, we are adjusting our full year outlook. We now expect full year RevPAR growth to be down around 2% at the midpoint of a range between negative 2.5% to negative 1.75% or down 1% at the midpoint, excluding the Royal Palm South Beach. Our revised guidance reflects weaker-than-expected third quarter results and continued softness in leisure demand expected for the fourth quarter, further compounded by the impact of the government shutdown in October. Accordingly, we are also lowering our full year adjusted EBITDA forecast by $12.5 million at the midpoint to $608 million, within a tightened range of $595 million to $620 million resulting in a hotel adjusted EBITDA margin range of 26.3% to 26.9%, a 20 basis point change versus prior guidance.

Adjusted FFO per share is now expected to be $1.91 at the midpoint within a range of $1.85 to $1.97 per share.

This concludes our prepared remarks. We will now in the line for Q&A. To address each of your questions, we ask you limit yourself to 1 question and 1 follow-up. Operator, may we have the first question, please.

[Operator Instructions] Our first question today is coming from Duane Finningworth of Evercore ISI.

I wanted to ask you about the expense performance, given kind of the lower outlook on 4Q RevPAR it feels like you're pulling expenses down to a surprising degree to offset that. Can you just talk specifically about where that's coming from? And what the planning cycle for those expense pulldowns looks like? How much lead time do you need to do that? It just continues to be a bit surprising given...

Sure, Duane. It's Sean. I'll take the first step at that. We talked about this last quarter. Clearly, aggressive asset manager is a key pillar of ours, and we work with our hotel partners -- we're looking to reduce costs in this environment that we're experiencing. We talked about deep dives last quarter. We did that in over a dozen properties, definitely some key properties of ours looking at both revenue and cost opportunities on the cost side. It's been anywhere from productivity elements, staffing, full FTE-type staffing, procurement. Think about how you might look at certain brand standards and certain assets that don't necessarily fit or make sense and challenging though.

So a number of initiatives, experimenting with a few ideas to ultimately drive costs out of the operating model. So this is something that we've been working on throughout the year, and we've noted that some of the deep dives we did in the back of properties we started in Q1 and Q2, and we're expecting to see the benefits of that as the year went on. So some of that is there embedded in kind of what we see in Q4. I think on the other side, too, we continue to benefit from the renewal we did in the insurance side with 25% reduction in premiums. We continue to fight on tax appeals in certain markets, especially where real estate valuations are lower than they were pre-covid and seeing effects of that as well. So that's all kind of getting layered in. Clearly, there's a focus even more intently, as you see some of the expectations of Q4 come through. And that's, I think, more kind of real-time adjustments that you make in terms of staffing levels to what you might see in occupancy drops. I think in the end, it's yielded results here.

I mean when you adjust out Royal Palm, which obviously is closed and you just have Hawaiian Village, which had some anomalies and other things related to with the strike on the cost side, we've seen and other anomalies that we've had in lapping over year-over-year, we've seen expense growth decline each quarter from the start of the year. We were up 2.7% in Q1. And we're down ultimately just below flat, about 50 basis points down expected for Q4. So I think it's just -- it's a lot of hard work being done, a lot of good work being done to execute against this.

The next question is coming from Smedes Rose of Citi.

I just wanted to ask you a little bit on the dividend side. You noted that you don't have to pay or you won't be paying the special dividend in the fourth quarter. And is the remaining -- could the quarterly $0.25? Is that really just to reflect the required sort of payout from a tax perspective? Or is there anything you could do there on the dividend side as sort of as you think about sort of cash retention going forward?

Yes. It's a great question, Steve. Obviously, we're a little perplexed by the number of calls that we've gotten regarding the dividend. And if I could sort of frame for a second, if you look over the last 3 years, we've returned about $1.3 billion in capital to shareholders both through dividends, obviously, and through buybacks. We've bought back about 38.5 million shares. That's about 20% of our float. And if you think about that $1.3 billion I mean our equity market cap today is somewhere at around $2 billion, plus or minus, at obviously a depressed low and somewhat ridiculous number. When you think about that, and we're 60%, 70% of that, we've already returned, and we're already paying a dividend that's 9%, 10%. So there was nothing -- there's no liquidity issues at Park, if anything, based on what we've just done an incredible work led by Sean and by the team, with our credit facility, we've got $2.1 billion in liquidity. So there are no issues at all.

And I also remind people, if you think back to the pandemic, when we virtually had no revenue, and all the discipline and the moves that we made and that we got through that. So clearly, no liquidity issues at all. This was just a conscious effort that we thought a 9% to 10% dividend yield, far in excess of any of our peers was really the right threshold. We do have depreciation. We do have the ability to be able to shield and we really thought that we could deploy that incremental quarter, $0.25 plus or minus, back into strategic investments and/or having it available to pay down leverage. So it was really nothing more than that. And I just want to reinforce, we are very disciplined about our capital allocation. I think we've demonstrated that time and time again, and we'll continue to have that focus and that discipline and we thought the incremental $0.25 and reallocating that was the right business decision at this point.

Okay. I guess just switching gears for just a minute. I wanted to ask you, just as we -- obviously, a lot of focus is turning to 2026. Could you just talk about kind of what you're seeing on the group side for next year if the sort of pace of bookings or revenue? And any particular kind of submarkets where you're seeing significant strength or weakness?

Well, if we look at '26 group pace, and I think it's important to sort of given Hawaii you're still ramping up, take if you exclude Hawaii it excludes Royal Palm, which will reopen and complete in May, early June of next year, you're essentially flat in '26 right now. '27 as we look out, I think we're up about 4.1% plus or minus. As we think about markets, clearly strong markets, Signia, Bonnet Creek, probably 9%, our Hyatt in Boston double digits. Cree Bay probably up another 39%; Santa Barbara up a significant amount, certainly north of 50% Casimena up low to mid-single digits. So certainly, we feel very good about that right now as we look out. We fully expect that we will continue to see more activities with our operating partners continue to build the group base for '26.

As we think about 2026, we're pretty encouraged. I mean there are a number of data points out there that I think are interesting. Clearly, as you think through with the Fed, we certainly expect a more accommodative Fed, lower rates, clearly lower tax rates, deregulation, certainly more public and private investment. And as we all know, the kind of dollars that are being invested right now in AI and infrastructure, and certainly the expected productivity gains there. But you've got also special events. You've got the impact of World Cup, which we all -- we certainly believe is going to be significant. Obviously, the Super Bowl out in the San Francisco Bay Area. Obviously, the anniversary celebrations 250 years, which will be largely anchored in New York and Boston. We expect, obviously, Park is going to be very well positioned to take advantage of that. So as we look out, we're certainly encouraged. It would be nice to have some of the tariffs and some of the other matters, geopolitical sort of calm down, less of an impact would certainly be helpful and I think provide incremental tailwinds as well.

But we're very encouraged as we look out to 2026. We're also very encouraged by really the strategic investments that we continue to make as you think about what we're doing in Hawaii, both properties there. If you think about New Orleans, what we're doing, obviously, just incredibly bullish about our transformation in Miami. We think that's just going to be an extraordinary success. And really excited about the progress that we're making there and fully expect that, that will open, obviously, in May, early June of next year.

The next question is coming from Chris Woronka of Deutsche Bank.

So my first question, Tom, you mentioned asset sales and you got 15 noncore assets, you may have other things with land and such. I guess the question would be, what's your conviction level, what's your confidence level, maybe not versus a year ago or 6 months ago on some of these same assets? What's needs to happen to get some of these over the finish line? And do you think we start seeing an acceleration in that as we move through into the new year?

Chris, it's a great question, and thank you for it. I mean we -- I can't tell you, as a leadership team, we are laser focused. Let me just set the stage for a second. Really, our top 20 assets account for 90% of the value of the company. And if you really focus on sort of the core and the core metrics of those 20 assets, it's as really as strong as any portfolio in the sector. We remain laser-focused on selling the noncore and recycling that capital. I think it's important to remind listeners, I mean we have sold or disposed now of 47 assets for north of $3 billion since the spin. So we have -- in the worst of times, even during the pandemic, keep in mind, we have 6 assets in San Francisco. We now have 1 asset, and we sold 2 of those in the worst of times during the pandemic. It is challenging in this environment. It's not an issue of debt. There's plenty of debt capital, there's plenty of equity capital.

I think if you can get really just better visibility and less volatility, that certainly will help. There are 2 additional leases obviously, we gave back the Kansas City asset, which is -- we mentioned, obviously, in our prepared remarks, we've got 2 other assets that we made the decision last year that we would not extend those ground leases, short-term ground leases. We'll give those assets back at the end of this year. We've got 2 other assets under a letter of intent and we've got several others at various stages of the marketing process. We are very confident we probably would lean more towards the low end of our guidance than the high end.

We said $300 million to $400 million this year, and it is conceivable that some of that could bleed into early next year from a closing standpoint. But please rest assured that we are laser-focused, committed, experienced in selling and disposing of these noncore assets. We've done it done it with assets that have been even more complex. Every asset's got a story, whether it's illegal or tax or some other matter, but the team is working their tails off to make progress and get this matter behind us.

The sooner we can get closer to that 20 hotels, we think that's really going to improve our optionality, but I think allow investors to really look through with the core assets -- and really the incredible work that we're doing within that quarter, that's where we're spending significant dollars. We believe passionately that we can generate higher returns on our -- from development yields than we can from acquisition yields.

Okay. Thanks for all that color, Tom. As a follow-up, I think we heard Hilton last week talking about lower expenses to owners of franchisees and some of that is coming from the, I guess, what you call the share don't know the exact term, but some of the chargebacks. Is there more that could be done there? How do you guys view -- was that a material or tangible benefit to you next year and just maybe where you sit with respect to maximizing what can be done through the franchise agreements to keep your costs down from the parent companies.

Yes. It's another great question, Chris. We are spending a lot of time with our partners at Hilton and our other operating partners. As Sean so eloquently pointed out, when you think about expenses and what we've done 3 quarters in a row. If you look at insurance, if you look at the deep dive analysis that you mentioned, we are as good as anybody at really in this environment where you haven't really had the top line growth across the sector, doing everything humanly possible to take cost and really reinvent the operating model where we can you're going to see that continue, and you're going to see us continue to push and encourage and partner with Hilton, with Marriott, Hyatt, et cetera, trying to find ways to continue to take cost out of the business.

There are huge opportunities there, and I have to thank candidly with the advancement of AI as that continues to expand, and that we've got to believe that they're going to be significant savings and productivity gains there as well. I don't think those occur necessarily this week, this month, but I certainly believe over the intermediate and long term, there are going to be real opportunities there.

The next question is coming from David Katz of Jefferies.

What I would love some help with having gone out there earlier this year with yourselves and your peers, Hawaii is still just a confusing market for me. Can you just sort of give us as much insight on sort of what the puts and takes or the drivers, the headwinds are out of Hawaii at this point.

Yes. It's a fair question, David. I think you've got to kind of step back a little bit and just think about Hawaii -- if you think about over the last 20 years, Oahu's RevPAR growth has really outpaced the U.S. by at least 120 basis points. I think Key West in Hawaii is so to lead a CAGR of about 4.5% versus the U.S. average of about 3.3%. If you think back over that period of time, you've had negative supply growth, I think 0.3% or less than that. Think about the next 5 years, we're thinking about supply growth in Hawaii at 0.3% again. So that backdrop to us is very, very encouraging. Domestic airlift has also increased 20% since 2019. And a lot of the owners in Hawaii on their assets under ground leases. In our case, in both of our world-class resorts there, we own those, obviously, fee simple. And we just think that's a huge advantage. And obviously, there's a little bit of a concentration issue.

Ideally, we wouldn't want to have 25%, 30%. But if you're going to have it anywhere, having it in Hawaii certainly gives us comfort. Clearly, from a demand standpoint, -- if you look historically, it's about 10 million visitors, 9 million to 10 million visitors, 60% plus or minus coming out of the U.S., 17% historically coming out of Japan over the last 30 years. And to get to your point, it was about $1.5 million in Japan. I mean we're going to end this year probably somewhere in the 720,000 to 750,000. So you you're clearly seeing less visitation from Japan. It's been a slower ramp-up.

There are reasons for that, the stronger dollar versus the yen and there have been some fuel surcharges. There have been some cheaper alternatives. So clearly, that Hawaii ramp-up or Hawaii participation today is about probably 3% to 4% of international demand at our assets versus probably 19% plus or minus, where it was in 2019. So we are encouraged by recent discussions sequentially, Hawaii has gotten better. Obviously, we had the strike. It was a very challenging environment for 45 days and the lingering effects of that. We were down 18% first quarter, 13% second quarter, 9% plus or minus third quarter. And we expect we're going to be somewhere north of 20% here in the fourth quarter even with sort of the revised guidance that Sean outlined. So it's certainly taking a little longer, but we are bullish and passionate and still believe obviously, the investments that we're making, TapaTower, huge benefit, Rainbow Tower and what we're seeing there. We're excited, obviously, what we're doing at Hilton White Cala it like low, we a little more complex, the second phase of that renovation.

So more rooms out of service. That certainly is contributing to a little bit of the more disruption there and certainly contributing to some of the softness there. But -- and Canadian travel, Canadians, as we all know, account for and Mexican travelers, about half of the inbound international travel into the U.S. And Canadians have been frustrated, and they have been voting with their dollars and their travel has been down in Hawaii, and it's certainly been down in other markets as well. So we're certainly feeling the effects of that as well. Once some of those matters on the trade front, get normalized and get resolved, we certainly expect that they will be back and certainly think that Hawaii will accelerate in terms of its ramp-up.

The next question is coming from Patrick Scholes of Truist Securities.

Sorry if I missed this in the prepared remarks. You had noted in your guidance and expectations, only expecting the government shutdown through today, it doesn't look like it's going to get resolved today. Why not continue that expectation in your guidance beyond today?

Yes. It's another excellent question. Look, at the time we were preparing the guidance and the situation has been so fluid. We wanted to include for investors and analysts and all the listeners what we knew. And what we knew as of the end of October was about $2.5 million of impact. So we've included that but we also were conservative in our guidance, and that reflects sort of the midpoint. So if this were to continue, and none of us know how this is going to unfold, and everybody's probably got an opinion -- the reality is that if you look at the low end of our guidance, we believe that we are adequately covered if this were to continue, and I'll reinforce that. We centered our -- obviously, our guidance on that midpoint and recognize that if it were to continue, we believe that we're covered through that guidance range.

I would also tell you, in my own opinion, growing up and living in this market for my life and talking and watching my strong belief is that this will be resolved in the near future. I don't think either party can allow for this to continue much longer, particularly with the impact with 40 million people not having food benefits among other benefits. And so I hope that our leaders in Washington on both sides of the aisle will resolve it in short order. And -- but we think that we are covered for the guidance that we have provided. If we get more information, if it were to extend and have more of an impact, we certainly will provide that on either side of that. But we wanted to provide and be transparent for what we knew and what we were seeing in our portfolio.

The next question is coming from Stephen Grambling of Morgan Stanley.

I just wanted to follow up on the reallocation of the top-off dividend to investment. Is that something that you'll have the opportunity to do in the future? Maybe I missed this. And if you did have that opportunity, maybe -- any thoughts around thinking through that capital allocation? And is there -- are there big projects that you try to pull forward that you have on your horizon?

Yes, it's a great question. Thank you for it. Listen, we've -- as I said earlier, we've been very thoughtful about capital allocation and again, returned $1.3 billion to shareholders here over the last 3 years. And we really concluded Sean and I and the team that obviously a 9%, 10% dividend, which is where we are today was -- and certainly, sector-leading was certainly enough and made sense. We will have the flexibility in the future to certainly manage that dividend, and we will be thoughtful -- we just didn't think we thought reallocating that $50 million for either debt reduction and/or continued strategic investments in our portfolio makes a lot of sense. I mean if you take Bonnet Creek as an example and just the success that we're having there, we've taken EBITDA from there approximately $55 million.

We think we'll be somewhere north of $95 million this year. we're generating significant returns and higher returns through our development and strategic ROI activities that we can generate through acquisitions. So strong believers in that and strong believers that there's a lot of embedded upside within this portfolio.

Got it. And just to be clear then, so I guess the answer in some ways depends on where the dividend yield shakes out in valuation. Is that fair?

Yes. Yes. That certainly plays. I mean we've always targeted kind of 65% of AFFO. And obviously, we've managed that a little more this year, but it's not -- again, it's not a liquidity issue. We've got plenty of liquidity. We've got -- when you we have no issues there. And we have our 2026 maturities addressed appropriately in a very thoughtful, very creative and huge credit to Sean and the team and what we've done there. So we are very thoughtful, and I think we've been as disciplined as anybody on the capital allocation front. But we also know a respectable solid dividend makes sense. And clearly, we're way in excess of all of our peers on that front.

Next question is coming from Chris Darling of Green Street.

Tom, thinking about the impact of the government shutdown, in the past, when these events have been resolved, do you typically see demand come back fairly quickly? Or is there historically a lagged recovery. I'm not sure if you have any experience thinking back to drawn.

Yes. I mean I think there's certainly a possibility of that, Chris. I mean clearly, it depends. We haven't seen -- while we've seen some group cancel related to government, it's been certainly more so on the transient and kind of seeing how that how that's -- the pickup of that has been more impacted. But groups -- a lot of these groups tend to have to -- are required to meet in a way. And so we certainly expect that those will rebook. Now the question will be, will it be within the quarter or will be kind of into the next year. It's the kind of question. So it might be a little bit more spread out over a number of months that may be hard to tell really a true impact on it. We did some looking in a way back at the last long one, first Trump term. And it has straddled both December and January. And so you certainly saw some impact in government spend in transit in January, but then we see dramatic pickup in February, but it was also a good time, good macro environment too there.

So it's kind of hard to look back in the past and try to draw any conclusions. But just from a standpoint of the fact that a lot of people have to make these trips happy to just travel in a way. And so there's probably a thought that you're going to rebound some of that just better.

Think Chris, I agree with everything that Sean said. The other point I'd make here in our portfolio, obviously, a strong fourth quarter group pace of about 12%. Surprisingly, November and December were double-digit increases and certainly stronger than October. So if we are all lucky and our leaders on both sides of the aisle will resolve and reopen the government, we could see increased activity here based on what's on the books already in November and December. So it could be a bit of a green shoot for us there.

Okay. Yes, those are all helpful thoughts. Realize it's a fluid situation, certainly. Maybe just 1 quick one, going back to capital allocation. As you work to sell some of these noncore assets in the coming quarters and you think through use of proceeds, to what extent are you thinking about share buybacks just given the frustration with where the share price has been relative to, of course, needing to retain some amount of capital for the different redevelopments and expansions that you've talked about?

Yes, it's a great question, Chris. I would say, look, as I mentioned, I've said it a few times on the call, we've returned $1.3 billion, and we bought back 20% of the float -- so with that backdrop, it is important to us. We've always had a guiding principle of leverage in that 3x to 5x. We're certainly above that. And obviously, a little bit of that's artificial right now because you've got major renovations underway in New Orleans, the 2 assets in Hawaii and of course, Royal Palm. But we certainly would like as a team to use some of the excess proceeds to pay down debt and continue to invest back into our portfolio. There are opportunistic times when going in and buying shares will make sense. But I'd say right now, the 2 priorities would be really paying down debt and reinvesting back into the portfolio.

The next question is coming from Jay Kornreich of Counter Fitterld.

I just wanted to ask a question about the 4Q outlook. RevPAR is roughly flat, which has changed from the expectation last quarter where 4Q would be I guess up 3% to 5% and recognizing that there are some new dynamics such as the government shutdown. But are there any other points or markets that you would relate to that maybe led to some of the deceleration for the 4Q expectation?

Yes, Jay, I'll jump in on that one. In our last call, we talked about a 3% to 5% up for Q4. So as you spoke to and you're noticing about 350 basis point drop relative to that direct expectation. It's kind of a mix of macro trends and near-term disruption as well as a little bit of Park Pacific sprinkled in there. But when you kind of start from just a more macro level and just some of the transient softness we've seen, whether it's through this -- through inbound international travel that Tom talked about, just seeing a continuation of that. And looking at certain markets and seeing a little bit of a trend line there. I'd say that there's about 150 basis points of impact to Q4 based on just quarter more general trends and then mostly on transient because group remains strong pace is up 12%. And within our largest 15 group hotels, it's up 17%. So we feel good about the group setup. It's just more of the transient side being impacted relative to our previous expectations.

Going from there, government impact about 100 basis points, obviously, continues to be a challenge since the beginning of -- earlier in the year with DOGE and everything else. We've certainly seen the weakness there, but now more pronounced with the government shutdown, which we've talked about. Chicago, we've seen pickup trends deteriorate materially there with the National Guard deployment into that market. So it's been, again, more of a transient impact in terms of pickup there. Group position there in our Hilton Chicago is up 12% for the quarter and is holding. So -- but it's more about -- it's about a 50 basis point impact to Q4 there from that market. And then why kilometer on the renovation scope there, just kind of a little more disruption than plan to do some schedule shifting. We're doing a little bit kind of as part of Phase I were doing a little bit of extra work from Phase 1 brought into Phase a little bit of an adjustment there. It's about 50 basis points. So general softness, 100 basis points, government-related 100 and then another 10 between the White Kaloo renovation in the Chicago disruption.

The next question is coming from Cooper Clark of Wells Fargo.

I appreciate the earlier comments on the dispositions. Curious if you could speak to the bidder pools and buyers you're actively seeing looking for product in the transaction market today wondering what markets, products or yield a buyer is looking for to step in today with what should be a better '26 and '27 demand picture despite some uncertainty?

Yes. I mean look, there's plenty of liquidity out there. And I think the buyer pool is mixed. I mean, you've got from owner operators, certainly family offices, -- you've got small private equity to larger private equity. You've really got the normal menu. And as I think about assets, we are we've had -- and our team has had great success in really finding that buyer for a particular opportunity. And we continue to come through and have discussions. I think the hesitation with some buyers is debt markets certainly have improved. But if you believe that rates are going to continue to come down, you might be a little more hesitant on that front. And then certainly, just better visibility on the demand front.

And probably, candidly, just clarity on some of the geopolitical and trade and inflation, I mean, all the things that all of us are working through right now. Uncertainty really is the enemy of decision-making. So I do think that there are some buyers out there that are being a little more hesitant. And in some cases, we certainly understand that. From my own experience, periods of dislocation really create the best opportunities to be buyers, particularly if you've got an intermediate and longer-term hold period. Obviously, we continue to work hard. Again, we've got the track record. And I just -- I can't emphasize that enough and how we've been able to reshape this portfolio since the spin here, and now we're 47 assets that we've sold or disposed of and 2 more in the queue and several more at various stages, whether LOI or the marketing process. So we are confident we'll get it done, and no 1 is going to work harder than the men and women at Park as we continue to pursue our objectives.

Okay. That's helpful. And then I appreciate it's still early and there's some uncertainty, but wondering how you're thinking about the balance of group BT and leisure into 26, just given some of your earlier comments on group pace and also a strong 26 event calendar in various markets?

Encouraged. I mean listen, I -- part of this, if you -- if we can obviously, the presence return and the discussions in China, if you can begin to just provide clarity both on tariffs and trade matters, and you look at the backdrop of the just inordinate amount of capital that's being invested through AI, but you start seeing and obviously on the public investment side, just the CHIPS Act, I mean, probably 30%, 40% of that or more remains to be spend as well, coupled with the special events that I've mentioned and you mentioned as well from the World Cup to Super Bowl and obviously, the 250th anniversary -- and I think the animal spirits getting more clarity and just getting broader participation in the broader economy, we know that both in the lower end and certainly parts of the middle that people are hesitant and perhaps a little more stretched. If those issues can be addressed.

And I do think that the recent tax bill helps with that, you'll get a tailwind that I think -- and certainly, '27 as we look out, we see are very, very encouraging. The other thing that gives us great comfort is the fact that you've got muted supply. If you look at the Park portfolio, we're 0.7% supply growth versus long-term average of about 2%, and that's over the next 5 years. So we find that very encouraging as we look out. And as you look at our portfolio, you can't replicate. You can't replicate what we have in Hawaii, what we have, obviously, in Bonnet Creek and what we have in Key West and those barriers to entry. So we're very, very encouraged as we look out over the near term. I want to get through this year. Obviously, we want to get beyond the government shutdown and some of the other matters of uncertainty. But I think as we look out '26, '27, we are very, very encouraged.

Next question is coming from Dan Politzer of JPMorgan.

I wanted to go back to the capital allocation. This year, obviously, notwithstanding the dividend, there was some CapEx that I think came down. As you think about preserving more capital to reinvest in the portfolio, the CapEx coming down this year and maybe there's some timing there. Directionally, is there maybe any inkling on how we should think about CapEx for next year, just given it seems like you're focused on reinvesting in the portfolio.

Yes. I think I'll let Sean give you the math. But we are not lowering CapEx. I mean if anything, we have been crystal clear, and I think if you look at what we've done in Bonnet Creek, what we've done obviously in Key West, obviously, what we're doing right now in Miami, what we're doing in Hawaii with -- 2 of the towers near complete. Think about Hilton Waikoloa which will be done this year. If anything, we sort of -- if anything, we accelerated and expanded scope slightly -- and part of that is some things that we needed to go back and some other things we felt we needed to expand. So we are all in -- we think we're making the right decisions. And obviously, I think the results are showing that. We're seeing the incremental lift in rates, IRRs that are in the 15% to 20%. Think about what we did in Santa Barbara. So we think high better returns for us through the development side than what we're seeing on the acquisition side.

Yes. I'd just add, it's more so timing. We're probably about $190 million or so through the third quarter on spend, and we certainly expect it to be more ramped up with Royal Palm well underway here. in Q4. But I think in total for the year, which felt like there's probably more appropriate range for the actual spend of the door. -- projects still remain the same more going into next year.

Got it. And then just on Hawaii, maybe another 1 asked differently. I think you're pacing about 70%, 75% of the EBITDA relative to 2023. As you think about the glide path in trajectory into 2026, do you think you can fully close that gap? Or do you think it's going to take a few years?

I think you're back in '27. I think you're still ramping in '26 that and you're looking at what's probably low 150s number this year versus 177. And keep in mind that we're finishing the second phase of the Palace Tower in Hilton Waikoloa -- and then, of course, we've got the rainbow tower that we're finishing up here in Hilton Mikeal, which obviously is 1 of the premier towers. So we remain steadfast and very confident and certainly believe that those continue to ramp up. And we're also making a number of other operational changes. We are spending a tremendous amount of time with our partners at Hilton, looking at both from a leadership, sales and marketing, all of the commercial engines. It's terribly important to us, but it also is a big fee generation for generator for our partners at Hilton as well.

The next question is coming from Robin Farley of UBS.

Just 2 small clarifications at this point. One is, just trying to understand your comments about the because the release says your guidance includes just the strike through sort of today. I mean, sorry, the government shut down through today. It sounded like you said that the lower end of your range includes the shutdown continuing through the quarter. But just if I heard you right about the impact in October, it seems like the range wouldn't be wide enough if it continued. Is it just that is government business less of a factor in November and December than in October? I mean that would makes sense if that's the case? Or do you think it will be a similar impact when we think about how the next 2 months could look?

Yes. We think it would be less of an impact, Robin, as we look out. And look, as I said, 1 person's opinion. I just don't believe that they can allow this to drag out much longer for all the reasons we all know. All of the families and kids and others that are being impacted. And we're all hearing rumors that certainly -- this should be resolved, hopefully in the very near future. But we also believe that the lower end of that guidance will largely protect us based on the guidance that we've provided.

Understood. But just even if it were solved today in Core right, there'd still be some November impact, but I totally understood. And then the other clarification was just on Hawaii. And I just wasn't sure if I caught your comments about forward group bookings, I think when you said group pace for the company overall was flat in '26, I think you were excluding Hawaii. And I just wanted to -- it seems like Hawaii, you're comping the strike. You have the benefit of some room renovations. I know the convention center in Hawaii will close at the end of '26. So I know that obviously, the '27 that would make the 27% sort of timing off. But for 2026, is your group Hawaii, the pace benefiting from those strike comps and things side?

Robin, our understanding is that the convention center will be closing at the end of '25.

So the Hawaii down is the -- is primarily just the timing of that and not so much that...

And keep in mind, group is also a small percentage of Hawaii, but -- it will be closing here in '25.

The next question is coming from Ari Klein of BMO Capital Markets.

Had a bit of a bigger picture question. I think historically, nonresidential fixed investment has been relatively highly correlated with demand. But now perhaps with AI, that relationship, assumingly not holding up the same way and maybe even distorting the relationship. Curious what you think about that. And if that continues, how does that impact your ability to forecast? And what else are you looking at in terms of helping with things.

Yes. We all spend time trying to figure out what's going to be the right correlation. If we think historically, right, it was GDP growth. And then if you think about certainly the last decade or so, it's been huge emphasis on nonresidential fixed investment spending, I have to believe, candidly, on both sides. I think that both remain important. I just think it's the level -- and if you think about just GDP, they have been disconnected here in the short term. I have to believe that, that will change and we'll continue to see as GDP gets as best in and others want to get it in that 3% range, we certainly think that's going to be a huge tailwind for our sector. That's 1 point that I would make. And if you think about just the amount of investment spending in the adjacencies, both in energy, both in data centers, both AI both in all the things that have got to be done from some of the electrification side.

I have to believe that, that will continue to benefit lodging as well as we sort of look out. And if you get nonresidential fixed investment spending in that sort of 3% to 5% range. You get GDP in that 3% range think of both the operating leverage and the benefit that we think that's going to accrue to lodging will be significant. And candidly, we'll have an industry that we hope will be certainly more attractive to investors from that standpoint where you can get the kind of operating leverage which is just more difficult to get when we -- at these lower RevPAR numbers.

And maybe just on the dividend. I understood. not came to top off. But as you think about the yield in that 9% to 10% range, when it comes to next year, is there a thought to maybe reduce that the existing yield?

Yes. Look, we obviously haven't decided that for next year. Historically, we've been in that 65% of AFFO. If anything, we -- you could see us certainly consider moderating that a little. But at this kind of run rate, dollar dividend, we think, is very healthy and certainly for anything we hear from most investors, they certainly appreciate that. This has gotten a lot more interest than we would have thought and hoped to be candid. And I know some I want to reinforce again, there are no liquidity issues 0 with Park. If anything, we've got significant liquidity. We just decided that we wanted to allocate. We thought that there was an opportunity both to pay down some debt and also reinvest back into the portfolio. So it was really a strategic decision made by the leadership team.

The next question is coming from Ken Billingsley of Compass Point.

Appreciate you sitting in here. Question is growing comparing total RevPAR to RevPAR growth on a year-to-date basis. A number of markets smaller total RevPAR growth versus its comparable RevPAR such as New York Cost and D.C. My question is -- is this all group and banquet related? And how is 2026 shaping up in the group business will bump in leisure travel to some of those cities for the 250th anniversary, I can negative impact kind of our total RevPAR expectations for those markets.

I think we certainly continue to see strong out-of-room spend. And certainly, that goes hand in hand with group here with banquet and catering -- and -- but those patterns have kind of held up even with Q3, we had certainly a weaker group quarter and a little bit weaker than expected despite that banquet amongst our urban and resort properties have held up pretty well, banquet revenue side. The outlet side was down about 6%, 7% relative to expectations, again, more so because I think as you have a bit of weaker group, you pivoted to more discount channels -- so kind of higher -- lower price point yes to is not necessarily going to spend as much in the outlook. So we certainly saw that dynamic go on there.

But I think as you look at the mainstream guests and -- it's on the group side, people continue to spend on their events, AB and the like, and guests that are kind of more on the transient side leader side, even business are spending in the outlet. So I think that's led to what we've typically seen is about, I think, predicting about a 100 basis point benefit differential between total RevPAR and RevPAR this year. We certainly expect that to continue into next year as you think about some of these -- special with some of these events. I think there's certainly a nice benefit in Papouexpect on rate in the rooms for things like the World Cup. But you see a lot of -- you expect a lot of people being around these markets as part of the -- maybe not going even go in the games as part of the separations and really being -- promoting restaurants certainly other things and outlets inside the hotels themselves.

So I think we certainly expect to see continuation of strong spending past help promote total RevPAR growth above room repour growth.

At this time, I would like to turn the floor back over to Mr. Baltimore for closing comments.

On behalf of the Park team, really appreciate everyone taking time today. We are available for follow-up questions and look forward to seeing many of you in NAREIT in Dallas. Safe travels. And please know that Park team is laser focused on continuing to create shareholder value.

Thank you. Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.