Park Hotels Earnings: Total Revenue Growth Solid as Group and Business Travel Improve

Park Hotels & Resorts reported second-quarter results that were relatively in line with our expectations, leading us to reaffirm our $25 fair value estimate for the no-moat company. Occupancy was only up 0.1% to 77.1%, while the average daily rate increased 1.8% in the second quarter. Combined, revenue per available room increased 2.0%, which was in line with our estimate of 2.1% revPAR growth. However, total revenue growth, which includes food and beverage revenue and other hotel revenues, was up 3.2% in the second quarter. Hotel operating expenses were up 3.1%, so hotel EBITDA margins increased 10 basis points to 29.9% and hotel EBITDA increased 3.4% in the quarter. Park reported adjusted funds from operations of $0.65 per share in the second quarter, which was a penny better than our $0.64 estimate for the quarter and 8.3% higher than the $0.60 figure reported in the second quarter of 2023.