With newfound confidence in completing $300 million to $400 million in hotel asset sales by year's end, executives with Park Hotels & Resorts said their primary strategy for expanding and improving their portfolio is likely to be targeted renovations and development on currently owned property.
During the company's second-quarter earnings call Friday, Chairman and CEO Tom Baltimore said the company derives 90% of its value from the assets it defines as core, including the Hilton Hawaiian Village Waikiki Beach Resort and the Signia by Hilton Orlando Bonnet Creek Resort. He added it's those properties that are most likely to see investment rather than Park chasing new hotels available on the market.
"You can see where we're investing those dollars," he said. "We really believe that we can generate higher development yields than we can through acquisition yields, at this point. I think the great work in Orlando and the extraordinary work in Key West are great examples of that."
The Bonnet Creek property has seen $220 million in renovation and expansion work, and Park's Key West properties — Casa Marina Key West, Curio Collection and The Reach Key West, Curio Collection — have had a $93 million renovation.
Earlier in the year, the company finished a $75 million guestroom renovation project at its two Hawaii properties, the Hilton Hawaiian Village and the Hilton Waikoloa Village, with a second phase of work starting in August. Baltimore said he expects to make further investments and improvements in Park's Hawaiian properties, saying it's a matter of when not if that happens.
Baltimore said the company was pleased to report neither Hawaiian property suffered damage from recently reported tsunamis in the Pacific Ocean.
Park spent roughly $45 million on capital improvements in the second quarter with a full-year projection of $310 million to $330 million. Work also started on a $103 million renovation of the Royal Palm South Beach Miami, a Tribute Portfolio Resort during the quarter.
Those investments are funded at least in part through ongoing asset sales, including the recently closed sales of the 316-room Hyatt Centric Fisherman's Wharf in San Francisco. Park officials said that property sold at a 64-times multiple based on 2024 earnings before interest, taxes, depreciation and amortization.
Among the properties for sale are two prominent hotels in Chicago, The Wade and The Midland Hotel, both former W-branded properties. The company's third Chicago hotel, the Hilton Chicago, is one of 20 hotels the REIT designates as a core asset out of its current 36-hotel portfolio.
"While the transaction market remains challenging, we are actively engaged in discussions with potential buyers for several non-core assets, and we remain laser focused on achieving our target by year end," Baltimore said.
In addition to the asset sales, Park officials announced the permanent closure of the Embassy Suites Kansas City Plaza and the termination of the property's ground lease at the end of September, noting the hotel generated "an insignificant amount of EBITDA during 2025," according to Park's second-quarter earnings news release.
Second-quarter performance
Park officials say the performance of the REIT's hotel portfolio in the quarter was hampered somewhat by continued softness in Hawaii, the company's largest and most important market due to the size of the Hilton Hawaiian Village.
The two properties saw revenue per available room down 12% year over year for the quarter.
Baltimore pointed to continued weakness in international travel — particularly from Japan — and lagging effects from strikes.
"While we continue to face some near-term headwinds, we are encouraged by the sequential improvement we are seeing, especially at Hilton Hawaiian Village, even as inbound international travel has not fully recovered," he said, adding that property is gaining market share even with revenues down.
Overall, the company saw second-quarter RevPAR come in at $195.68, a 1.6% decrease from the same period in 2024. Park recorded a net loss of $2 million in the quarter with adjusted EBITDA of $183 million.
Baltimore said the silver lining for the quarter was improved performance in urban markets, where RevPAR was up 3%.
As of press time, Park's stock was trading at $10.32 a share, down 25.1% year to date. The New York Stock Exchange composite was up 6% for the same period.