Park Hotels & Resorts : First Quarter 2021 Earnings Press Release

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Park Hotels & Resorts Inc. Reports First Quarter 2021 Results

TYSONS, VA (May 6, 2021) - Park Hotels & Resorts Inc. ("Park" or the "Company") (NYSE: PK) today announced results for the first quarter ended March 31, 2021 and an operational update on COVID-19.

First quarter financial highlights include:

• Pro-formaRevPAR was $40.79, a decrease of 70.0% from the same period in 2020;
• Pro-formaOccupancy for Park's 42 consolidated hotels open during the entirety of the first quarter was 37.4%;
• Net loss and net loss attributable to stockholders were $(191) million and $(190) million, respectively;
• Adjusted EBITDA was $(49) million;
• Pro-formaHotel Adjusted EBITDA improved 34.7% compared to the fourth quarter of 2020 due to a sequential quarterly improvement in Pro-forma RevPAR of 48.8%;
• Adjusted FFO attributable to stockholders was $(113) million;
• Diluted loss per share was $(0.81); and
• Diluted Adjusted FFO per share was $(0.48).

Additional highlights include:

• Completed the sale of the W New Orleans - French Quarter in April 2021 for total gross proceeds of $24.1 million;
• Increased the total number of open hotels to 52 of 59 hotels (88%), or 78% of total room count;
• Reduced burn rate to $26 million for the month of March and generated positive Hotel Adjusted EBITDA for the month; and
• Currently expects to reach break-even at the corporate level during the second half of 2021.

Thomas J. Baltimore, Jr., Chairman and Chief Executive Officer, stated, "I am very encouraged by the momentum of improvement in our portfolio during the first quarter. Our hotels in drive-to markets continue to outperform and now our fly-to leisure hotels in Hawaii and Puerto Rico are exceeding our expectations, helping to drive consecutive monthly increases in occupancy through the first quarter and positive Hotel Adjusted EBITDA in March. Looking forward, we are confident that the continued distribution of the COVID-19 vaccines, forecasts for robust economic growth and fiscal stimulus, and significant pent-up traveler demand will translate into a strong recovery for our portfolio over the back half of the year and into 2022 and beyond. Additionally, as evidenced by the recent sale of the W New Orleans - French Quarter in April 2021, our team continues to execute on our near-term priorities to return to profitability in 2021 and to de-leverage our balance sheet, push out maturities and improve financial flexibility to position Park for long-term success. We are excited about our outlook for the balance of the year, and we look forward to welcoming more of our guests back to our hotels and resorts."

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Selected Statistical and Financial Information

(unaudited, amounts in millions, except RevPAR, ADR and per share data)

		Three Months Ended March 31,
		2021				2020		Change(1)
Pro-forma RevPAR	$	40.79			$	136.16		(70.0	)%
Pro-forma Occupancy		26.4%			61.7%	(35.3)% pts
Pro-forma ADR	$	154.63		$	220.73		(29.9)%
Pro-forma Total RevPAR	$	59.99		$	218.05		(72.5)%
Net loss	$	(191)	$	(689)	NM(2)
Net loss attributable to stockholders	$	(190)	$	(688)	NM(2)
Adjusted EBITDA	$	(49)	$	82		NM(2)
Pro-forma Hotel Adjusted EBITDA	$	(35)	$	90		NM(2)
Pro-forma Hotel Adjusted EBITDA margin		(22.6)%			15.6%	NM(2)
Adjusted FFO attributable to stockholders	$	(113)	$	57		NM(2)
(Loss) earnings per share - Diluted(1)	$	(0.81)	$	(2.89)	NM(2)
Adjusted FFO per share - Diluted(1)	$	(0.48)	$	0.24		NM(2)
Weighted average shares outstanding - Diluted		236				238		(2)

1. Amounts are calculated based on unrounded numbers.
2. Percentage change is not meaningful.

		Three Months Ended March 31,
		2021				2019		Change(1)
Pro-forma RevPAR	$	40.79			$	175.84		(76.8	)%
Pro-forma Occupancy		26.4%			77.7%	(51.3)% pts
Pro-forma ADR	$	154.63		$	226.36		(31.7)%
Pro-forma Total RevPAR	$	59.99		$	273.13		(78.0)%
Net (loss) income	$	(191)	$	97		NM(2)
Net (loss) income attributable to stockholders	$	(190)	$	96		NM(2)
Adjusted EBITDA	$	(49)	$	176		NM(2)
Pro-forma Hotel Adjusted EBITDA	$	(35)	$	205		NM(2)
Pro-forma Hotel Adjusted EBITDA margin		(22.6)%			28.5%	NM(2)
Adjusted FFO attributable to stockholders	$	(113)	$	136		NM(2)
(Loss) earnings per share - Diluted(1)	$	(0.81)	$	0.48		NM(2)
Adjusted FFO per share - Diluted(1)	$	(0.48)	$	0.67		NM(2)
Weighted average shares outstanding - Diluted		236				202		34

1. Amounts are calculated based on unrounded numbers.
2. Percentage change is not meaningful.

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COVID-19 Action Plan Update

The following is an update on the actions Park and its hotel managers have taken during the first quarter and expect to take to mitigate the effects of COVID-19 on its business:

• Reduced budgeted capital expenditures for 2021 to approximately $40 million for maintenance projects;
• Reopened three hotels thus far in 2021, increasing total rooms by 1,381 rooms; currently expects to reopen the remaining seven suspended hotels over the next couple of quarters as travel restrictions ease and demand recovers; and
• Continued to refine the hotel operating model by identifying an additional $10 to $15 million of savings from permanent property-levelfull-time staff reductions, increasing total expected future annual savings to up to $85 million throughout the portfolio compared to 2019 operations.

The current status of Park's hotels as of May 6, 2021 is as follows (for a list of status by hotel please see Park's financial supplement):

Status		Number of Hotels			Total Rooms
Consolidated Open		45			21,622
Consolidated Suspended	7	7,212
Total Consolidated		52			28,834
Unconsolidated Open		7			4,297
Total Hotels		59			33,131

Operational Update

Beginning in March 2020, Park experienced a significant decline in ADR, occupancy, and RevPAR associated with COVID-19 throughout its portfolio, which has resulted in a decline in Park's operating cash flow. As distribution of the COVID-19 vaccine has accelerated, Park has seen improvement in leisure traveler sentiment, and as a result, an improvement in occupancy, ADR and RevPAR in recent months. Changes in Pro-forma ADR, Occupancy and RevPAR compared to the same periods in the prior years and Pro-forma Occupancy for Park's 52 consolidated hotels were as follows:

				Change in			Change in
	Change in	Pro-forma			Pro-forma	Pro-forma
	Pro-forma ADR	Occupancy			RevPAR	Occupancy
Q1 2020	(2.5		)%		(16.0	) pts	(22.6	)%		61.7	%
Q2 2020	(43.2)		(79.7)	(95.9)		6.2
Q3 2020	(38.3)		(65.5)	(86.1)		19.1
October 2020	(43.5)		(61.6)	(84.5)		23.3
November 2020	(41.6)		(61.8)	(86.0)		19.5
December 2020	(30.1)		(57.8)	(83.2)		18.3
Q4 2020	(38.9	)		(60.4	)	(84.6	)		20.4
January 2021	(40.8)		(52.4)	(82.8)		21.4
February 2021	(30.6)		(54.1)	(78.0)		25.1
March 2021	(17.1)		(0.7)	(18.8)		32.5
Q1 2021	(29.9	)		(35.3	)	(70.0	)		26.4

Changes in Pro-forma ADR, Occupancy and RevPAR for each month in 2021 compared to the same period in 2020 and Pro- forma Occupancy for 2021 for only the consolidated hotels open during the entirety of each month were as follows:

	Number of				Change in	Change in
	Consolidated		Change in	Pro-Forma	Pro-Forma		Pro-forma
	Hotels Open		Pro-forma ADR		Occupancy		RevPAR			Occupancy
January 2021	42	(37.6)%	(45.6)%pts	(75.0)%		30.5%
February 2021	42	(30.9)	(45.8)	(69.7)		35.7
March 2021	42	(17.5)	9.1		2.9			45.9
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As expected, strong demand trends continued in April 2021. Changes in Pro-Forma ADR, Occupancy and RevPAR for April 2021 compared to April 2020 for the 45 consolidated hotels open during the entirety of the month are preliminarily estimated to be 51.7%, 44.5% pts and 1,405.0%, respectively. Total Pro-forma occupancy for April 2021 for the 45 consolidated hotels open during the entirety of the month is preliminarily estimated to be 49.5%.

For March 2021, Park's portfolio generated positive Hotel Adjusted EBITDA with nearly half of Park's open consolidated hotels achieving break-even levels. Park currently expects its portfolio to generate positive Hotel Adjusted EBITDA during the second quarter of 2021 and expects to reach break-even at the corporate level during the second half of 2021.

The Pro-forma Rooms Revenue mix for each of the quarters ended March 31, 2021, 2020 and 2019 for the 42 consolidated hotels open during the entirety of the first quarter of 2021 were as follows:

Three Months Ended March 31,

	2021			2020			2019
Group		7.2%		31.2%	31.9%
Transient	81.3			61.5		62.8
Contract	9.9			5.0		3.3
Other	1.6			2.3		2.0

Park is seeing group demand recovering with lead volume continuing to increase, up from 50% of 2019 levels in January to 80% of 2019 levels in April. In the quarter for the quarter bookings through March were better than expected, driven by smaller groups (up to 300 peak room nights) holding events in locations with fewer restrictions. Given the reopening momentum across the U.S., Park expects to see a return of larger groups late in the third quarter in select markets. Looking further out, group bookings for 2022 have increased each of the past two quarters, growing by over 110,000 room nights, or nearly 13%, since September 30, 2020 with acceleration following the approval of COVID-19 vaccines for emergency use in November 2020.

Domestic leisure transient demand grew significantly during the first quarter of 2021 as the distribution of the COVID-19 vaccines accelerated and restrictions on international travel continued. The transient mix between business and leisure travelers for each of the quarters ended March 31, 2021, 2020 and 2019 for the 42 consolidated hotels open during the entirety of the first quarter of 2021 were as follows:

Three Months Ended March 31,

2021	2020			2019
Business transient		27.6	%		44.4	%	44.5	%
Leisure transient	72.4			55.6		55.5

The current operating status for each of the Company's key markets, segmented between leisure and other markets, is as follows:

Leisure Markets

• Hawaii: Both Hawaii hotels are open, and although the market continues to be subject to global travel restrictions, both hotels generated positive Hotel Adjusted EBITDA during March 2021 as demand trends accelerated. Hilton Waikoloa Village and Hilton Hawaiian Village achieved occupancy of 41% and 21%, respectively, for the first quarter, benefiting from an increase in domestic leisure demand, with the Hilton Waikoloa Village and Hilton Hawaiian Village achieving occupancy of 60% and 33% in March 2021, respectively. In April 2021, occupancy at the Hilton Waikoloa Village and Hilton Hawaiian Village are estimated to be 72% and 44%, respectively. As vaccine rollouts accelerate and travel restrictions ease, Park anticipates Hawaii will continue to benefit from significant pent-up leisure demand;
• Orlando: All of Park's Orlando hotels are open, with all hotels in the market benefiting from strong leisure demand in March during the spring-break holiday, resulting in combined occupancy of 40% in March 2021 and 26% for the quarter;
• New Orleans: The Hilton New Orleans Riverside continued to benefit from its contract to house college students, and with an increase in leisure demand associated with loosening of state and local restrictions prior to the spring-break holiday, the hotel achieved occupancy of over 50% for the quarter;

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• Southern California: All of Park's hotels in Southern California are open. The market was significantly affected in the first part of the quarter from the re-implementation of stay-at-home orders, although, as those orders lifted, hotels benefited from the return of leisure demand resulting in occupancy of 40% for the quarter;
• Key West: Casa Marina, A Waldorf Astoria Resort, and The Reach Key West, Curio Collection, are both open and continued to benefit from leisure transient demand, resulting in occupancy of 96% in March 2021 and 84% for the quarter. Compared to the fourth quarter of 2020, occupancy increased by 14 percentage points and rate increased by approximately 50%. Compared to the first quarter of 2019, rate increased by 13% and Hotel Adjusted EBITDA increased by 10%. Key West continued to benefit from strong leisure transient demand in April 2021 with estimated occupancy of 93%; and
• Miami: Both of Park's Miami hotels are open and benefited from strong leisure transient demand, achieving occupancy of 73% in March 2021 and 66% for the quarter. Compared to the fourth quarter of 2020, occupancy increased by 19 percentage points and rate increased by approximately 46%. Occupancy continued to increase in April 2021 to an estimated 75%.

Other Markets

• San Francisco: The Le Meridien San Francisco and the Hotel Adagio, Autograph Collection reopened at the end of March 2021 as local restrictions loosened and market demand improved. The JW Marriott San Francisco Union Square and Hyatt Centric Fisherman's Wharf, both of which remained open throughout the pandemic, increased to 35% and 45% occupancy in March 2021, respectively, from approximately 16% in January 2021 as local weekend leisure demand increased;
• Boston: All of Park's Boston hotels are open and recorded combined occupancy of 26% for the quarter with demand primarily from leisure transient and airline crew contract business;
• New York: The Hilton New York Midtown's operations remain suspended, as substantial restrictions on travel and limits on gatherings remained in place for the quarter;
• Chicago: The W Chicago - Lakeshore and Hilton Chicago/Oak Brook Suites have remained open throughout the pandemic, primarily due to demand from airline crews. Both the state of Illinois and the city of Chicago have maintained travel and event restrictions, including restrictions on large gatherings, which have delayed the reopening of Park's remaining three hotels in the market;
• Denver: The Hilton Denver is open, although the hotel was impacted during the quarter from continued COVID-19 restrictions and severe weather, which limited occupancy to 24% for the quarter;
• Washington, D.C.: All of Park's hotels are open and demand benefitted from the increased National Guard presence in Washington D.C during January. As a result, occupancy was 44% for the quarter, an increase of 21 percentage points from the fourth quarter of 2020; and
• Seattle: All of Park's Seattle hotels have now reopened, as the DoubleTree Hotel Seattle Airport reopened in March 2021. Park's hotels have benefited from demand from airline crews and weekend leisure travel with occupancy increasing at the two hotels open during the entire quarter from 51% in January 2021 to 70% in March 2021.

Balance Sheet and Liquidity

Park's Net Debt as of March 31, 2021 was $4.5 billion. With total cash and cash equivalents as of March 31, 2021 of $868 million and $32 million of restricted cash, Park is maintaining higher than historical cash levels due to the continued uncertainty surrounding COVID-19. As a result of the proactive measures taken by Park's team and its hotel managers to dramatically reduce costs, coupled with recent capital raises and proceeds from the sale of the W New Orleans - French Quarter in April 2021, Park believes it has sufficient liquidity to satisfy its short-term liquidity obligations even though the Company's opened hotels are operating at limited capacity and certain hotels continue to suspend operations.

Park's total liquidity was $1.3 billion as of March 31, 2021, including $474 million of available capacity remaining on Park's revolving credit facility (the "Revolver"). Based on Park's monthly burn rate in March 2021 of $26 million, which takes into account current operations from both open and suspended hotels and uses an accrual-based methodology, Park estimates it currently has over 50 months of liquidity available to meet its financial obligations. The estimated burn rate amount does not take into account capital expenditures, any possible alternative sources of revenue that may arise, any additional hotel property dispositions or any payment of future cash dividends, if any, or continued improvement in operations. Additionally, the estimated burn rate amount does not take into account any amount available to Park under existing or future debt facilities, or proceeds from issuance of any additional debt, equity or equity-linked securities.

Park continues to take proactive measures to reduce the burn rate from $42 million average per month in the fourth quarter of 2020 to $26 million in March of 2021. As a result of these measures, coupled with expected continued leisure demand and the

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