Park Hotels Earnings: Results In Line With Expectations; San Francisco Hotel Debt Payments Stopped

Park Hotels and Resorts reported second-quarter results that were relatively in line with our expectations, leading us to reaffirm our $26.50 fair value estimate for the no-moat company. Occupancy increased to 74.4% in the second quarter, up 390 basis points from 70.5% in the second quarter of 2022. However, the average daily rate slightly declined in the quarter, down 0.2% year over year. As a result, revenue per available room was up 5.3%, relatively in line with our estimate of 4.5% growth. Hotel EBITDA margins fell 310 basis points to 27.7% in the second quarter, though that was slightly better than our estimate of 27.2% hotel EBITDA margins, leading to a hotel EBITDA decline of 5.7% that was better than our estimate of a 9.5% decline. Park reported adjusted funds from operations of $0.60 per share in the second quarter, and while that is a penny below the $0.61 figure the company reported in the second quarter of 2022 it was 2 cents better than our $0.58 estimate.