Leisure Demand Driving High Revenue Growth for Park Hotels in Third Quarter

Third-quarter results for Park Hotels and Resorts were relatively in line with our expectations, leading us to reaffirm our $28 fair value estimate for the no-moat company. Occupancy improved to 71.7%, better than the 50.8% figure reported in the third quarter of 2021 but still below the 84.2% level reported in 2019. Average daily rate was up 14.6% year over year and up 7.2% compared with the third quarter of 2019. As a result, revenue per available room, or revPAR, was up 61.7% in the third quarter, in line with our estimate of 63.4% growth, and is now only 8.8% below the figure reported in 2019. Hotel EBITDA margins also improved in the third quarter, up to 25.9% compared with 20.5% in the third quarter of 2021 and slightly better than our estimate of 25.4% hotel EBITDA margins, though that is still below the 28.5% level reported in the third quarter of 2019. Park reported adjusted funds from operations of $0.42 per share in the third quarter, 2 cents better than our $0.40 estimate, 40 cents better than the $0.02 number reported in 2021, but still below the $0.68 figure reported in 2019.