Park Hotels & Resorts Inc. (PK) Q3 2026 Earnings Call Transcript

Operator: Greetings, and welcome to the Park Hotels and Resorts Third Quarter 26 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Ian C. Weissman, Senior Vice President, Corporate Strategy. Please go ahead.

Ian C. Weissman: Thank you, operator, and welcome, everyone, to the Park Hotels and Resorts Third Quarter 26 Earnings Call. Before we begin, I would like to remind everyone that many of the comments made today are considered forward looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed and we are not obligated to publicly update or revise these forward looking statements. Actual performance, outcomes and results may differ materially from those expressed in forward looking statements. Please refer to the documents filed by Park with the SEC specifically the most recent reports on Forms 10 ks and 10 Q, which identify from those contained in the forward looking statements. In addition, on today's call, we will discuss certain non GAAP financial information such as adjusted FFO, and adjusted EBITDA. You can find this information together with reconciliations to the most directly comparable GAAP financial measure in yesterday's earnings call as well in our 8 ks filed with the SEC the supplemental financial information available on our website at pkhotelsandresorts.com. Additionally, unless otherwise stated, all operating results will be presented on a comparable hotel basis. This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will provide an update on our strategic initiatives and review Park's third quarter performance and outlook for the year. While Sean Dell'Orto, our Chief Financial Officer, and Chief Operating Officer will provide updates on our capital investments and additional color on guidance. Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom.

Thomas Jeremiah Baltimore Jr.: Thank you, Ian and welcome, everyone. I am pleased to report that Park delivered another outstanding quarter with results meaningfully exceeding our expectations. RevPAR increased 8.4% year over year with growth accelerating from 9% in July to more than 13% in September. Despite weather related disruptions in Hawaii during August, and September. Results reflected broad based strength across the portfolio, supported by continued momentum in group, leisure, and higher rated business transient demand. RevPAR increased nearly 7% across both our resort and urban hotels. While our airport and suburban hotels grew approximately 20%, 14%, respectively. Turning to our major markets. Hawaii continues to be 1 of the most compelling growth opportunities in our portfolio. RevPAR across our 2 resorts increased an impressive 7% despite the temporary disruption from 3 hurricanes which we estimate reduced combined RevPAR growth for the 2 resorts by nearly 280-basis-points during the quarter. Demand rebounded as conditions improved with September representing the strongest month of the quarter and RevPAR across our Hawaii resorts increased nearly 14%. Group was the primary driver of performance at both hotels in the third quarter with group rooms revenue more than doubling year over year. Which helped to drive a 110% increase in banquet and catering revenue. At Hilton Hawaiian Village, RevPAR increased 5% during the quarter. With occupancy reaching nearly 90% allowing for compression to drive stronger rates. Particularly in September when average daily rate increased approximately 9% compared to last year. The resort also continued to gain market share achieving a RevPAR index of 105% for the quarter up 4 points from last year with gains across both occupancy and rate. Importantly, the index remains nearly 14 points below its 2021. The resort's renovated outlets and enhanced programming also helped drive record third quarter food and beverage performance with banquet and catering outlet revenue each growing 14% year-over-year. Orlando also delivered another strong quarter. With RevPAR increasing more than 5% led by continued outperformance at Bonnet Creek. The complex delivered another record breaking quarter generating its highest third quarter revenue ever. Transient revenue increased nearly 19% year-over-year supported by premium rated luxury demand at the Waldorf. Further underscoring the exceptional quality of these properties Signia by Hilton, Orlando Bonnet Creek, and Waldorf Astoria Orlando, were recently ranked the number 2 and number 3 resorts in Orlando respectively, and Conde Nast Travelers 2026 Reader's Choice Awards. Bonnet Creek's continued strength following our significant investment demonstrates how targeted capital can elevate an asset strengthen its competitive positioning, and drive sustained earnings growth. EBITDA of the complex has grown from approximately $60 million to a level we expect to exceed $108 million this year. And we believe there is further upside as the complex continues to gain market share. Our urban portfolio was another important source of strength. Led by Washington DC, Chicago, and Boston. Across our 2 DC Metro hotels, RevPAR increased by nearly 33% year-over-year. Supported by a 9-point increase in occupancy, and ADR growth of 16%. Group room nights increased 139% creating meaningful compression and supporting transient ADR growth of more than 17%. At our Hilton Chicago hotel, RevPAR increased more than 15% benefiting from a particularly strong citywide and event calendar and excellent transient pricing. Boston also delivered strong results. With portfolio RevPAR increasing approximately 13% supported by meaningful ADR growth, strong citywide demand, and high occupancy. Finally, we are very excited about the early progress at Royal Palm South Beach following its approximately $110 million transformational renovation. The hotel welcomed its first guest in late July, making the third quarter very much a ramp up period. Even at this early stage, rate performance has been very encouraging with third quarter ADR of approximately $244, up nearly $60, and more than 30% above the comparable period in 2024, with September increasing to $264 or over 40% better than pre renovation results. The team has also been focused on building awareness of the reimagined hotel posting leading travel media, Marriott sales leaders from around the world, and key industry groups, while benefiting from broad support from Marriott and our operating partners. Looking ahead, the demand backdrop is encouraging with 8 citywide events scheduled for Miami Beach in the fourth quarter. Expected to generate approximately 56 thousand room nights, up 70% compared to last year. We are also seeing strong early validation of the hotel's repositioning across both group and food and beverage. At the end of the third quarter, 2027 group revenue on the books totaled approximately $3.9 million already matching the comparable pace for 2024 the hotel's best year. With an average daily rate, that is a $136 higher, or up nearly 40%. During the third quarter alone, the hotel booked more than 8 thousand future group room nights at $461 average daily rate, representing approximately $3.7 million of rooms revenue more than triple the amount booked during the same period in 2024. Banquet and catering has also been particularly strong. Booking nearly $1.7 million during the third quarter versus less than $200 thousand booked during the same period in 2024. Together, these early results demonstrate the opportunity to drive significantly higher rates and meaningfully higher total revenue across the property. These results also reinforce our confidence that Royal Palm will become a meaningful contributor to Park's earnings growth over the next couple of years. On the capital allocation front, we continue to make meaningful progress executing on our noncore disposition strategy. In October, we completed the sale of the W Chicago – City Center, a 520-room hotel in Chicago for $19 million. The hotel was expected to generate an operating loss of approximately $1.3 million in 2026, with a forecasted loss of approximately $1.3 million in the fourth quarter. Making the sale immediately accretive to earnings while further enhancing the quality of our portfolio. Our remaining noncore hotels now represent 3% to 4% of total portfolio value, and we remain committed to further reducing that exposure by year end. With active work streams on a number of assets underway. We are extremely pleased with our progress since launching the strategy late last year Of the 19 hotels originally identified as noncore, we have sold or otherwise disposed of 11 hotels, generating approximately $220 million in gross proceeds at an average multiple of more than 16x EBITDA. These transactions have reduced our exposure to lower growth assets and enabled us to focus our capital and resources on our highest quality hotels and markets. The result is a higher quality portfolio with stronger margins, a better growth profile, and greater long term earnings potential. We believe this transformation has positioned Park to deliver sustained earnings growth and create long term shareholder value. As we look at the balance of the year, and into 2027, I remain encouraged by the strength across our portfolio. Despite continued geopolitical and macroeconomic uncertainty, The US economy and consumer remain resilient, healthy business activity and investment, including significant spending related to AI, should continue to support lodging demand, while historically low levels of new hotel supply provide a favorable backdrop for continued pricing power. Against this backdrop, we expect to finish the year strong and enter 2027 with considerable momentum. Core group revenue pace is up nearly 6% and we have several distinct growth drivers. Including our recently completed capital investments, which are expected to provide meaningful embedded earnings growth. In Miami, 2027 will mark its first full year of operations at the Transformed Royal Palm South Beach. Early performance continues to reinforce our high confidence in the hotel's ramp toward approximately $28 million of stabilized hotel adjusted EBITDA by 2028 compared with approximately $3 million expected this year. For 2027, we currently expect earnings to at least return to pre levels of approximately $14 million of EBITDA with Royal Palm alone expected to contribute approximately 200 basis points to total portfolio RevPAR growth. Hawaii represents another substantial opportunity. But the Ali'i Tower renovation expected to be completed in early 27, We will have invested approximately $350 million to strengthen the competitive positioning of our 2 resorts. With the major renovation activity behind us, solid group pace already on the books, and significant upside from recovering market share we believe our Hawaii portfolio is well positioned to continue closing the approximately $60 million EBITDA gap to its 2023 peak earnings over the next few years. As a result, I believe Park is uniquely positioned to deliver outsized earnings growth over the next several years We have strengthened the portfolio through disciplined capital allocation, and active capital recycling, invested substantially in our highest return opportunities, and enhanced our financial flexibility through proactive balance sheet management. We are now positioned to realize the earnings benefits of that work creating a compelling path to higher EBITDA and meaningful long term value creation for our shareholders. And with that, I will turn the call over to Sean.

Sean Dell'Orto: Thanks, Tom. Overall, we were very pleased with our third quarter results. Which once again exceeded expectations with RevPAR increasing 8.4% to $201 and hotel adjusted EBITDA increasing 8% year-over-year, with hotel adjusted EBITDA margin expanding by 50 basis points to 25.7%. Adjusted EBITDA was $135 million for the quarter while adjusted FFO per share was $0.39, an increase of over 11%. We were also pleased to see broad based strength across the portfolio. Group rooms revenue increased more than 18%, while transient revenue grew over 5%, reflecting healthy demand across multiple customer segments. RevPAR growth was also well balanced, with occupancy increasing 2.4 percentage points and ADR up 5%. Expenses increased 5% during the quarter compared with just under 4% in the first half of the year. With the reopening of the Royal Palm adding roughly 85 basis points of operating expense growth versus prior year. Excluding Royal Palm, cost per occupied room increased 3.7% in the quarter including an approximately 80-basis point impact from increased utility cost pressures. Which combined with higher occupancy and along with revenue based variable costs drove the expense growth for the quarter. But partially offset by a reduction in fixed costs mostly due to lower property insurance premiums from our annual policy renewal this past June. Turning to capital investments, During the third quarter, we invested a total of $57 million in capital improvements, with full year CapEx expected to range between $270 million to $280 million In Hawaii, we commenced a comprehensive renovation of a 348-room Ali'i Tower Hilton Hawaiian Village in August. A $100 million project that includes a complete renovation of all guest rooms plus the addition of 3 guest rooms within the premium oceanfront tower. And enhancements to food and beverage outlets including the Tropics Bar and Grill, and 80% of the guest rooms across to nearly 3 thousand-room resort have been fully renovated. And finally, in New Orleans, we commenced third and final phase of the main tower guest room renovation in May. Encompassing the remaining 489 guest rooms and expect the project to be completed by mid November. Upon completion, all 1.6 thousand-plus guest rooms then fully renovated, significantly enhancing the quality and competitiveness of 1 of our most important convention oriented assets. Turning to the balance sheet, we ended the third quarter with net debt of approximately $3.7 billion, translating to a trailing 12 month net debt to EBITDA ratio of just under 6x. A reduction of 0.2 of a turn since the beginning of the year. Liquidity was $1.3 billion, including $295 million in cash and $1 billion of available capacity under our revolver. In September, we fully repaid the $1.275 billion CMBS loans secured by the Hilton Hawaiian Village Resort. Using the remaining $600 million of capacity under our delayed draw term loan together with proceeds from the $700 million delayed draw mortgage loan, secured by the Bonnet Creek complex. This transaction meaningfully extended our debt maturities by roughly 1.5 years. And we now have no significant maturities until Q4 of 28. We also finalized terms on a $205 million refinancing of Hilton Santa Barbara resort. Which will be used to repay the existing $150 million mortgage maturing in December. And provide for future funding advances towards the property's comprehensive renovation currently planned for late 28. We expect to close this refinancing by the end of this month. With respect to our dividend, on October 15, we paid our third quarter cash dividend of $0.25 per share and on October 29, the Board approved a fourth quarter cash dividend of $0.25 per share to be paid on January 15, to stockholders of record as of December 31. The dividend currently translates to an annualized yield of approximately 6% based on recent trading levels. Turning to guidance, following another stronger than expected quarter, we are increasing both our RevPAR and earnings guidance ranges to reflect our third quarter results and our updated expectations for the fourth quarter. Accordingly, we are raising our full year RevPAR outlook by 200 basis points at the midpoint to a new range of 5.5% to 6%. Which implies a fourth quarter growth rate between 5.5% to 7.5%. This updated outlook reflects the nearly 400 basis points of outperformance delivered during the third quarter as well as stronger than anticipated results at the start of the fourth quarter with preliminary October RevPAR increasing nearly 11%. Driven by a 120-basis-point lift from Miami, coupled with double digit gains at Bonnet Creek, Key West, and Washington DC. From an earnings perspective, we are increasing adjusted EBITDA guidance by approximately $13 million at the midpoint to a new range of $635 million to $645 million while adjusted FFO guidance increases by approximately $0.08 per share at the midpoint to a new range of $2.00 to $2.05 per share. This increase to guidance also reflects an assumed annual increase in expenses of approximately 4.5% year-over-year, and 5.5% to 6.5% for the fourth quarter. With an approximate 150-basis-point impact from the reopening of Royal Palm. Expenses are being driven by the stronger demand environment and higher occupancy expectations across the portfolio driving increases in variable costs such as labor and utilities. In addition, with respect to Royal Palm, expect fourth quarter hotel adjusted EBITDA at the property to be approximately $4 million, with full year EBITDA of approximately $3 million We very much look forward to welcoming many of you to the property next week when we host an investor tour and showcase the exceptional transformation firsthand.

Operator: This concludes our prepared remarks. We will now open the line for Q and A. To address each of your questions, we ask that you limit yourself to 1 question and 1 follow-up. Operator, may we have the first question, please? Thank you. Our first question is from Floris Van Dijkum with Ladenburg Thalmann.

Floris Van Dijkum: Hey, guys. Thanks. Look forward to seeing your Miami Beach asset next week with you guys. Just wanted to talk about Hawaiian Village, which is the most valuable hotel I believe, in the world. You have invested $350 million in that. Presumably, you are going to get your 15% stabilized returns on that. In your view, when can we expect that asset could get to $200 million of EBITDA? Obviously, not forecasting for next year at. Etcetera because the latest renovation will not be finished or fully stabilized yet. But you should see some pretty, you know, heady growth in Hawaii based on the capital you spent plus the markets recovering. If you can walk us through some of that, please.

Thomas Jeremiah Baltimore Jr.: First of all, Floris, thank you for the question, and thank you for taking time, and look forward to seeing you and many others next week. I think if you step back and just think about Hawaii really over the last 20 years or more, Oahu in particular has really outpaced The US by about 120 basis points. So I think you really start with that embedded, tailwind. If you look at Hawaii, I think their RevPAR CAGR has been about 4.5%, 3.3% for the broader US. So I certainly think that is going to be a real benefit to us as we look to the future. The other thing, which not only applies to Hawaii, but even broader, really limited supply growth through 2030. Near impossible to add new supply in Hawaii and having 2 iconic resorts there, Hilton Hawaiian Village. We are really excited as Sean noted in his remarks, completing the Ali'i Tower, we will have north of 80% of really the core rooms renovated. We certainly think that is going to continue to be a real tailwind for us. If you think about HHV, I mean, we are. We are running an index RevPAR index of about 105%. When we get the Ali'i Tower done, as we sort of look out, we would certainly expect here in the next couple of years that we have bridged that gap that we talk about that recapturing that $60 million-plus or minus in EBITDA in Hawaii that really gets us back to the 2023, peak levels. So very encouraged. If you think about the success that we have had with our transformational renovations, whether it is Bonnet Creek or Key West, and I certainly put, Royal Palm in that category that we are very, confident and very, very optimistic. We certainly think that Hawaii is going to continue that track record, and we are really excited about the future. At both assets and particularly, Hilton Hawaiian Village. Thanks, Tom. Maybe a follow-up. Something that people do not or tend to forget about, but ancillary revenue, is obviously a big driver of trying to maximize value at each of your assets. I think the, you know, investors are probably somewhat familiar and certainly travelers with resort fees as well as paid parking. And presumably on a. I do not know if there is an asset in your portfolio that does not have resort fees today. But maybe talk about some of the other, things that you can do to drive revenue and EBITDA in hotels, including things like billboards, etcetera? Yeah. Listen, we are as you can imagine, Floris's looking all issues are on the table to drive incremental revenue. You captured many of them clearly resort fees, Keep in mind, we have got a 150 thousand square feet of retail space there, provides incremental. We have got an. Incremental parking there. At any 1 time, you have probably got 15 thousand people. You got 1 thousand-room, 1 thousand timeshare rooms. So all of that provides for a unique experience but it also provides for really broad sources of revenue for us. it is at Hilton Hawaiian Village. And to your earlier comment, it is also owned off fee simple. There are many ground leases in Hawaii for both of our properties, they are fee simple, with huge optionality. That gives us tremendous confidence not only in the interim, but certainly over the long term. in terms of the great upside that we have at those assets.

Operator: Our next question is from Duane Pfennigwerth with Evercore ISI.

Peter: Yeah. Hi. This is Peter on for Duane. Thanks for taking the question. Just on Miami for the $4 million EBITDA outlook, in the fourth quarter, if you can share just what level of occupancy is assumed within that outlook and remind us is the hotel 100% open across all the amenities and outlets, and just love to hear any, you know, highlights that you can share now that it is up and running.

Sean Dell'Orto: Yes, sure. This is Sean. I will take that. I mean, for Q4. I would say Royal Palm is probably going to be somewhere in that kind of critical 60% occupancy, plus or minus, set up for Q4. Certainly trailing what it did in 2024, an occupancy standpoint, but we certainly-- our thesis is to not necessarily drive as much occupancy as we did. And more so driving the rate. So we will see, certainly see better rate projected for Q4 relative to 2024, lower occupancy, you know, getting pretty close to what we would have achieved from a bottom line, in 2024, so pre-renovation. So feel good about that. You know, from an overall operation standpoint, everything's open. We do have a. We did have a third party leased restaurant that we will be working to bring online over the coming months. But for the most part, the, you know, the outlets that we have, you know, baked into our underwriting, And, obviously, all rooms are all open and operational.

Peter: Gotcha. And then just quickly oh, go ahead, Tom.

Thomas Jeremiah Baltimore Jr.: No. I was just gonna just build on Sean's point. On the renovation, all guest rooms, all public space, reimagine lobby, breezeway, pool, 4 food and beverage outlets, upgraded meeting space, all of that is done. And most importantly-- you will-- those of you that are with us next week will see really integrating 3 separate buildings so that they look and feel as 1. Just, we could not be prouder, and Conde Nast obviously did a feature that perhaps many of you have seen, and I think it really speaks to the quality of design work and the finishes and that we are-- we are terribly excited about it. We have incredibly excited about it and cannot wait to show it, next week and cannot wait, most importantly, for its performance in the coming months and years.

Peter: Gotcha. Appreciate the color. 1 quick follow-up. On the 11% RevPAR growth in October, what level of total revs did you see for the month? And what do you kinda expect between, you know, the balance between rev growth and RevPAR growth in Q4? Thanks for taking the questions.

Sean Dell'Orto: Well, I would say from a-- for the quarter, specifically, we would expect to see TrevPAR be a little more aligned with RevPAR. Certainly, more aligned than what we saw for Q3. So if you think about our implied guidance range for the quarter for RevPAR, kind of 5.5 to 7.5, I would certainly see that we would expect total RevPAR, RevPAR to kind of be. Maybe it is more towards the lower end of that range, but certainly kind of closer to RevPAR.

Operator: Our next question is from Smedes Rose with Citi.

Smedes Rose: Hi. I wanted to ask you a little more about the group booking pace that you mentioned for 2027. It looks like, you know, very healthy plus 6%. And I was just curious if you could talk a little bit about kind of what you are seeing on the composition of that in terms of corporate versus sort of larger maybe association type business or anything you can just kind of share in terms of the patterns you are seeing?

Thomas Jeremiah Baltimore Jr.: Well, as we as we mentioned, the approximately 6%, obviously, that is largely core, which again, is about 97% of the value. And I think represents also EBITDA for the portfolio. Hilton Hawaiian Village, obviously, is just coming back on. And still ramping up from, and lapping obviously favorable comps there. think up about 12%. Bonnet Creek, as you know, has been a tremendous success for us. We are looking at about another 10% in the group pace for next year. Obviously, Miami, very high number, you know, 900% in fact, really, because it was closed the last 15 months, but it is going to be significant. Key West, looking at about 22%, Casa in particular at about up about 25%, Chicago, around 8%. New Orleans in that 7% to 8% range. San Francisco, 10%. So broad based. We do have a good citywide calendar as well that I certainly think is going to benefit. As we sort of look out and creating some compression. So it. it is set up, I think, for a very strong group year. And, obviously, coming on as we finish 2026, up about 6% is what we expect to finish the year. Obviously, at 18% in third quarter, slightly negative in fourth quarter. But really making up with that with really strong transient as we look out, Smedes.

Smedes Rose: Thanks. I appreciate that. I wanted to ask you just 1 question on the New York Hilton during the third quarter. Just curious. I mean, it looks like the EBITDA declined pretty significantly with some margin compression there. Just wondering if you could talk about, was it just ascribed to maybe the way that booking patterns worked over the quarter, or is that to do with the higher expenses at the property level? Or maybe just talk about what is going on there.

Sean Dell'Orto: Yeah. I would say, no. I think we kinda generally contemplate it for Q3. And I would not say it holds. You had some. You know, we have 1 kind of big group that has come through a repeating group in Q3. That it ultimately did not spend as much kind of outside the room. So I do not necessarily think it is kind of a pattern in any sense. it is probably a little bit of anomaly. But in the end, I think that is kind of contributing more to kind of a common theme across the quarter in a way is in terms of TrevPar being less than RevPar in terms of growth. Still solid, still some good growth. But in the end, I think we are. New York's concerned. I think you did not have the F&B kind of out-of-room production to, you know, offset some of the cost. structure that quarter.

Operator: Our next question is from Jamie Feldman with Wells Fargo.

Connor: Hi. Thank you. This is Connor on with Jamie. Maybe on New Orleans with the last-- hi. Thank you. Thank you for taking my question. New Orleans with the last phase of rooms wrapping up this quarter, how should we think about 4Q displacement and then the ramp in 2027? And any color on the citywide calendar, how it looks there next year?

Thomas Jeremiah Baltimore Jr.: Yeah. As we-- 1, we are really excited to bring those. So this is the last phase of the main tower. So about 489 rooms, scheduled to return to service. I believe, on the November 13, plus or minus. As we think about 2027, we are very encouraged. Group pace up about 6.5 percent plus or minus, and citywides are, I think, 26 events in little over 500 thousand. Room nights expected. So a solid year in New Orleans. Very, very encouraged. Obviously, it is a tough Q3, but a lot of that has to do with the lack of citywides in the city. And, also, for us in particular, we obviously have been under renovation. So, certainly an impact there. For Q4, we are looking probably low-single-digits, 1% to 2% RevPAR as we sort of look out. Transient revenue growing some, so couple million dollars there. But we in terms of disruption, do not think it is gonna be significant as we look out in Q4.

Connor: Thank you. Really appreciate the color. And maybe a separate follow-up. Group rooms revenue was up over around 18%, but F and B kind of only up around 2%. With banquet flat. Should we think of that as seasonality or mostly mix? And for 2027 group on the book, how should we think about out of room spend versus this year?

Sean Dell'Orto: Yeah. I would say Q3 is not necessarily the norm here. What we had in Q3, and again, as expected, was a few kind of room only blocks that were, you know, pretty sizable. And so I think that kind of ultimately helped drive, you know, the good group pace and group production in the quarter. It did not translate, obviously, to higher banquet and catering. Since, obviously, that was not linked to the to the block. So I think it is just kind of-- I do not think these are kind of repeating elements either for next year. So I think it is gonna be more, I think, more of a return to normal when you think about the banquet and catering production from a group standpoint going forward?

Operator: Thank you.

Michael Hirsch: Our next question is from Michael Hirsch with JPMorgan. Hi, and thank you for taking my question. With 5 noncore hotels left to sell, could you speak to the current state of the transaction market and timing, pricing, and, how is buyer financing shaping up for the remaining sales?

Thomas Jeremiah Baltimore Jr.: Well, first of all, I could not be prouder of the team. How hard we have worked. If you step back and just remind listeners, we have sold or disposed of 56 assets and suspend now for about $3.132 billion dollars. including 14 international. So we have seen a little bit of everything. There are 8 remaining assets, as you pointed out, EBITDA of about $50 million. 3 of those are in this Safehold portfolio as part of our dispute with them. Obviously, those are not being marketed at this time. it is about $16 million of EBITDA Remaining 5 assets are about $34 million of EBITDA. And 1 of those, Lake Buena Vista in Orlando, is about $20 million of that. So you have really got 4 assets that have about $14 million. These are small assets, small contributors. All of them are complicated like many of the others. With tax, legal, some joint venture. So we are working through. We have got work streams underway. We have dealt with this for, many years. We have made significant progress. The remaining assets, with the exception of Lake Buena Vista, candidly, are insignificant in terms of their contribution to overall EBITDA. We are evaluating just given the strength of Orlando, does it make sense for us to fold that back in and renovate that given the extraordinary success that we have had with Bonnet Creek. The remaining other 4 assets all have work streams Many of them are at various stages of that. And we are confident that we will make, significant progress before year end. It could spill a little bit into early 2027 but we expect to have that really behind us in the very near future.

Michael Hirsch: Thank you. And then for my follow-up, I appreciate it is early, but how should we think about CapEx in 2027 compared with the $275 million plan for this year, which I believe you raised your CapEx guide a bit. You know, from your prior guidance.

Sean Dell'Orto: Yeah. We are certainly in a position where we are bringing that CapEx number down. Clearly, this year with Royal Palm finishing up and bringing Aliyi, Britton Aliyi Tower project, which, as we mentioned, is $100 million You had some kind of day-2 work on Royal Palm, went back and kind of did a few other things. So added a little scope there and also, kind of as we have started with the Ali'i Tower, I think a little bit of scope addition there and ultimately some timing of bringing, starting on some projects for 2027 that are identified for 2027 earlier to kind of get the ball rolling as we head into 2027. So there is a little bit of timing, a little bit of scope for some of the big projects there that kind of resulted in the increase in the guidance range. But I would say going forward into next year, yeah, we are kind of bringing the annual spend down to a more normalized level of call it $185 million or so, plus or minus, $175 million to $185 million. So that is the ultimate. So you will see that, kind of-- you know, we will have a little bit of carrying in and layering over from 2026 the 2027 as we go through, but ultimately getting down to that more normalized approach going forward.

Operator: Our next question is from Richard Hightower with Barclays.

Rich Hightower: Just 1 for me. I was covered a lot. Hey Tom. How are you? I was wondering. I know you have quantified the interest expense headwind within the 2026 guidance. But as I think about 2027, you have got $1.7 billion of floating rate. Obviously, you have had a lot of refinancing activity. What does that kind of year on year headwind look like for 2027 as you think about modeling?

Sean Dell'Orto: Yes. I mean, I think the easiest way, Richard, looking at it is we obviously took-- you know, we replaced about $1.5 billion of debt this year between the 2 mortgages we took out that were kind of at the low 4% and, you know, replaced it with debt that is kind of trading more so in the, you know, 6% to low 6% right now. So kind of 200 basis points on that. So it is a $30 million type of headwind annually. I would say that, you know, we. As we kinda bring leverage down, we will see reductions in the, you know, the spread grid in our term loan So some. Get some relief there, we would expect. We certainly. If you look at our guide, you know, hold net debt to where it is, you get to, I mean, below 6, closer to 5.8x. That will bring us a notch down. And as we go through the year, bringing Royal Palm back online, getting recovery from Hawaii, of course, and the like, and certainly expect some continued growth in the portfolio. We should start to continue to bring that down to the next layer So there will be a little bit of a tailwind too to that, offset you know, offsetting some of the headwind next year. We would expect.

Rich Hightower: Sean, how does the how does the pricing grid on the floating rate change?

Sean Dell'Orto: If you go down below 6. It goes down about 25 bps.

Rich Hightower: Okay. Great. Thank you.

Operator: Our next question is from David Katz with Jefferies.

David Katz: Hey, good morning. Thank you for taking my question. You have talked a decent amount in part in different parts and so forth. With respect to 2027. Just looking at the portfolio, you know, this year, I think each 1 has sort of its own story. But if we were to pile up some of the headwinds or calendar issues or whatever the case may be, you know, from this year and what we are seeing in this quarter, and roll them into next year, I think Ian obviously does a copious job with us offline about it. But I wanted to get a sense for what 2027 could be when we start to walk across the opportunity set and some of the internal headwinds that you have had here. And just be a little clear about what the upside could totally be to the degree that you can. I know you are not maybe guiding today. But any help we will take.

Thomas Jeremiah Baltimore Jr.: Yeah. David, I appreciate the question. it is always good to get your thoughtful and insightful perspective. I would make a couple observations for you and for the broader listeners. 1, I think Park is incredibly well-positioned for 2027. If you start with Miami and Royal Palm, hopefully, you are able to join us next week, and you will see for yourself Yep. As we said in our remarks, there is about 200 basis points, again, to total RevPAR growth rate. So I think, candidly, we start with a stronger position than perhaps many of our peers there. We really did not get the benefit from the World Cup. We were about 26 to 30 bps plus or minus. Pretty insignificant. And candidly, America 250 is not significant for us as well. A little bit of activity in DC, in 1 particular situation, but that is it. So start with a real strong tailwind there. You also, if you look across our portfolio, we have got over the next, really, 4 years, not only does the industry benefit, but I think Park in particular benefits from really muted supply growth. cannot stress enough the importance of that. We have not had a situation like that over the last 10 years or so where we are looking 3, 4, perhaps 5 years where you are sub-1%. I think for Park, we are at probably 0.7% to 0.8%. Also, keep in mind, if you look at the long term average, obviously, I have been around for a minute or 2, David, as you know. Probably historically been 22.2% over the last 20, 30 years. So that and across our portfolio, I think, gives us a benefit. 1 of the things that we cannot lose sight of is just the AI trade and the investment cycle non residential fixed investment spending, a really high correlation of about 90%-plus or minus in hotel room demand, that is probably been as high as ever. The recent print was 12.7% and that is lapping in the second quarter about 9%. That is significant. So if you have anything even remotely like that, we think that is going to continue to be a tailwind for the sector and certainly for Park as well. Group pace, as we. You know, 1 of the earlier questions I got group pace of about 6%. A solid citywide calendar in the Park portfolio And, again, the Hawaii ramp up, having renovated now 80% of the rooms when Ali'i is done, coupled with the fact that we are at about 105% in Hilton Hawaiian Village in RevPAR index, but we are only at going to be at about 90% for Hilton Waikoloa. So getting back to fair share and getting back to where we were historically with Hilton Hawaiian Village, really, again, provides us with a tailwind and really momentum as well. And then continued growth at Bonnet Creek. Sean, we have taken Bonnet Creek from $60 million to where, as we said in our remarks, probably at $108 million if not more this year. We can all do the math. it is been a phenomenal success but we are still barely at fair share. The Signia is about a 99.5% index, and the Waldorf is about 94% to 95%. So you still have growth opportunity. I think when you add all of that up, and we do not have the tough comps that perhaps some of our peers will have, I think it really positions Park to be in a strong position in 2027 as we look out. So tired. Sorry for the long but I think it is important that I frame that and that people understand that there are a lot of optionality and significant tailwinds for Park as we look out over 2027 and beyond.

David Katz: Noted. And, you know, to the same end on my follow-up maybe Sean could just touch on what the cost landscape is going to look like for you. That would help. Thanks.

Sean Dell'Orto: Yeah. I mean, I still think we are gonna be in a situation where cost per occupied room is kind of in that low to mid-3s range. So it is gonna be kind of, you know, dependent on the growth, dependent on mix of occupancy and ADR, of course. I certainly expect, and as Tom noted on group pace as maybe a proxy, you are certainly seeing more pricing power and rate in that segment and then certainly expect it in other segments as well going forward. So a little more of a rate side than an occupancy growth side. So that could ultimately keep expenses a little bit more you know, not growing as much as they have this year. You know, Royal Palm does add about 100 basis points to expenses for the first half of the year. it is lapping being closed. Last. for the first half of this year. So you are gonna have that element that kind of you know, bleeds into what we are seeing out now and bleeding into the first half of next year, and then it will come back down a lap. it is, you know, open. Reopening and ramp up, in the back half of the year. So, again, probably, plus or minus 25 to 30 basis points of CPOR, cost per occupied room impact, by Royal Palm. But I think in the end, you know, from a net standpoint, you are probably looking across the portfolio in that kind of 3% to 3.5% range come as a base cost expense. And then from there, you know, depending on occupancy, and staffing labor and everything else, you will have that, and then you will have offsets in the first half of the year, 20% down on insurance. We will continue to find. You know, fight the fight on appeals with property tax keep fixed costs in check as an offset. And then, ultimately, variable costs based on revenues are what they are as we think about growth next year.

Operator: Thank you. Super. Our next question is from Chris Woronka with Deutsche Bank.

Chris Woronka: Hey, good morning, guys. Thanks for taking the question. Good morning. Just had Good morning. Good morning. Morning. You guys have. there is been a lot of talk about RevPAR versus RevPAR this year, and you guys and others have explained some very legitimate reasons why. So the question is, if you think about next year, do you think-- do you think the composition of the groups changes to the point where maybe TRevPAR goes back above RevPAR. And, also, on the transient side, on the BT side, you guys seen any guess we could include leisure if you want. But have you seen any changes in customer behavior in terms of utilization of the you know, the primary F and B outlets or other ancillary? Thanks.

Thomas Jeremiah Baltimore Jr.: Obviously, Chris, you got a lot to unpack there. Let me take a first stab and then Sean can jump in. And I know some of the listeners are concerned about, obviously, third quarter I think it is important for people to keep in mind, We had in the third quarter 3 major storms in Hawaii. Unfortunately, none were a direct hit. But the impact that it has so we ended up with some you know, room only blocks. So you are not getting the out-of-room spend. You had some displaced, obviously, residents which obviously impacts. So you know, it is sort of a 1-time. Sean and I went back and looked, and September is more normalized. You know, we expect the same in the strong, obviously, performance that we are seeing in October. it is a daily leasing business. You are going to be impacted by weather and different events. 1-time. That clearly contributed to what we saw. You know, regarding BT and whether F&B, I mean, I also think that is sort of a case by case BT is improving. We all see that as a stronger growth segment, but the reality is you know, BT. I would say BT mix is improving. Aggregate BT is still below where we were in 2019. So there is probably been some, you know, modest impact on that. Although your mix and how you market and how you how you maximize value, I think, gives you great opportunity. So we are not at all alarmed. In fact, we are encouraged. We are encouraged by the strong demand that we are seeing and that the sector is seeing. We have obviously had a solid year. And we think 2027's only going to be stronger for what we control. There are obviously our geopolitical and macro issues we do not control. But as we look out and for the long list that I walked through in terms of the benefits in 2027, Park is very, very well positioned. 2027 and 2028 as we look out.

Sean Dell'Orto: Yeah. Go ahead. I think-- Okay. Chris, what I would add too is real fast, if I could, is that Tom kinda touched on channel mix. And I would say, you know, as we look across pretty much all the subsegments, you see it. You have seen strong ADR growth in those segments. You have seen for corporate negotiated and for leisure, you have seen the rate growth, you know, kind of sequentially increase from. You know, throughout the year thus far to the first 3 quarters. But I think more importantly, what you are seeing is you have seen, you know, moving out of things like government and leisure you know, discounted leisure and into, you know, higher rated business, corporate negotiated, higher rated leisure business. So, you know, having that ability just given with the broad based demand know, we are kinda getting that position where. And I think people-- you know, people are adapting to it at this point. Is, you know, optimizing the mix and, ultimately, you know, focusing in the right channels. I think if you think about last year, you are. You know, you had the pipeline for group drying up for in the quarter for. Or the year for the year. With tariffs and people kinda sticking their hands on making decisions. You had government reduced government spend. You had Canadians not want to travel to The US. You had a number of things And so now that you come into this year and you have got a lot, you know, broad based demand here, You know, last year, you are trying to induce demand. Now it is coming in all directions. You have got to kind of, you know, find a way to, you know, optimize it. I think you know, teams are navigating that and adjusting. And, certainly, if you think about the budgets being rolled up, our asset managers certainly you know, pushing them in their commercial strategies and telling them that, you know, kinda be confident. Be more confident how you think about pricing as you go into next year. So I think it is all, you know, revolving here through, in a good way as we go through the year here.

Chris Woronka: Okay. Super helpful. Much appreciated. Thanks, guys.

Operator: Thank you. Our next question is from Michael Herring with Green Street Capital.

Michael Herron: Hi, good morning. for taking my question. Morning. You know, maybe just going back to Hawaii and the discussion there. I am just curious about your thoughts with the strength premium travel in The US this year and putting aside the market share gains that you expect, how do you think the Honolulu market fits into that fold going forward from a domestic travel perspective, especially as international travel continues to remain depressed?

Thomas Jeremiah Baltimore Jr.: I think it fits very well as you think about well, you made the point about international. Let's sort of start there for a second. I mean, we are inbound international is at about 87% of where we were in 2019. So, obviously, given the change in leadership in government, obviously, the recent elections, maybe we start to see improvement there. That would be pretty significant if you think historically. The visitation that we have had in Hawaii, it is. We are still down as it relates to the Japanese traveler. But we are also down across many other countries as well. So to the extent that you see international improve, I certainly think that is gonna be a benefit. Airlift in Hawaii has only been growing from Southwest and Alaska Airlines and United and many others. So we are very encouraged. Obviously, you have-- as we noted, we were up 7% in the third quarter. You take out the hurricane impact, you are at 10%. As we as we think about, just even October alone, Hilton Waikoloa, I think, was up about 55% to 60%. So very, very encouraged in Hawaii. There. It is it is a special location. it is been generational. We do not expect that to be changing, and we are very encouraged as we think about the future there.

Michael Herron: I appreciate the thoughts. And maybe 1 other just on turning to the transaction market and given the health of the market generally, was curious to get your thoughts on the appetite for potentially capitalizing on selling some of your core assets. Just given, you know, the strength and pricing that we have seen in some cases?

Thomas Jeremiah Baltimore Jr.: I think I have been pretty clear This management team, leadership team is not entrenched Our board is not entrenched, and to the extent we-- compelling offers are made for assets of the entity, we certainly will do what is in shareholders' best interest. We are not actively marketing, any of those, but we do get, calls, occasionally. And we assess and evaluate whether or not they are credible or whether they are real. If something's real, we certainly have an obligation. and a responsibility to evaluate. Thank you.

Operator: There are no further questions at this time. I would like to hand the floor back over to Tom Baltimore for any closing comments.

Thomas Jeremiah Baltimore Jr.: I appreciate everybody taking time, and we look forward to seeing many of you on Monday, Tuesday, on the investor tour down in South Florida in Miami and Key West. And if we do not see you there, we hope to see many of you at NAREIT in Atlanta. Safe travels.

Operator: This concludes today's conference call. You may disconnect your lines at this time. Thank you again for your participation.