Strong revenue growth and progress in long-term efforts to reshape the company's portfolio were the key features of the second quarter for Park Hotels & Resorts.
During the company's second-quarter earnings call, Chairman and CEO Thomas Baltimore Jr. said Park recently reopened the Royal Palm South Beach Miami, a Tribute Portfolio Resort following a $100 million renovation, which started in early 2025. That work enhanced and added guestrooms, expanded meetings and event capacity, reworked public spaces, and added new food and beverage outlets.
"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," he said. "Upon stabilization, which we expect could occur over the next two years, we believe this investment has the potential to double the hotel's" earnings.
Park is in an ongoing, yearslong effort to invest in the hotel-focused real estate investment trust's strongest-performing assets while selling off hotels executives have deemed "noncore." To that end, the company sold or exited its interests in four hotels in recent months for a combined $65 million.
Those properties include:
- The 396-room Hilton Seattle Airport & Conference Center, which sold in April for $18 million.
- The company's joint venture interest in the Hilton Alexandria Old Town, which sold for $29 million but also required Park to pay down $25 million in mortgage debt.
- The 314-room Hilton Short Hills for gross proceeds of $12 million.
Park also terminated its short-term ground lease for the 262-room Embassy Suites by Hilton Austin Downtown South Congress, and ownership of that property reverted to the ground lessor. Park received a $6 million early termination fee for that property.
Park officials say their focus is shifting now to a $100 million full-scale renovation of the Ali’i Tower at Hilton Hawaiian Village Waikiki Beach Resort.
Baltimore has noted multiple times during earnings calls that he believes Park has a larger opportunity in investing in its existing portfolio than in going out to the market to buy new hotels, and that's reinforced by what he believes are tailwinds in the major markets it's investing in such as Hawaii, Orlando and Miami.
"I think we 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 [the second half of 2026] really through 2028," he said.
Sean Dell'Orto, Park's executive vice president, chief operating officer, chief financial officer and treasurer, said the company did significant work to rework its debt in the quarter including a new $700 million delayed draw mortgage loan on its Bonnet Creek complex in Orlando. Total debt for the company now sits at roughly $3.7 billion.
"During the quarter, we drew $200 million under our 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," he said. "Looking ahead, we intend to use the remaining delayed draw term loan capacity [of $600 million], 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 further enhance our financial flexibility."
Second-quarter performance
Park executives they saw strong performance among the REIT's core portfolio in the quarter, with revenue per available room up 6% year over year for those hotels, or 7.1% if excluding the impact of the Royal Palm, which only reopened in late July. RevPAR growth for their full portfolio was 5.8%.
The company recorded net income in the quarter of $50 million, with adjusted earnings before interest, taxes, depreciation and amortization of $198 million, an 8.6% year-over-year increase.
As of press time, Park stock was trading at $14.76 a share, up 37.1% year to date. The NYSE composite was up 10.5% during the same period.