Greetings and welcome to the Park Hotels & Resorts Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host Ian Weissman, Senior Vice President, Corporate Strategy. Thank you. You may begin.

Thank you, operator, and welcome, everyone to the Park Hotels & Resorts second quarter 2023 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 future 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 Form 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. In addition, on today's call, we will discuss certain non-GAAP financial information, such as FFO and adjusted EBITDA. You can find this information together with reconciliations to the most directly comparable GAAP financial measure in yesterday's earnings release as well as in our 8-K filed with the SEC and the supplemental financial information available on our website at pkhotelsandresorts.com. Additionally, unless otherwise stated, all operating results were presented on a current basis and include all 41 consolidated hotels. In some instances, however, we will be discussing results on a comparable hotel basis with comparable view excluding the two Hilton San Francisco hotels that we anticipate will be removed from our portfolio as previously announced in early June. This morning, Tom Baltimore, our Chairman and Chief Executive Officer, will provide a review of Park's second quarter performance and highlight our strategic initiatives. Sean Dell'Orto, our Chief Financial Officer, will provide additional color on second quarter results and forward-looking guidance as well as an update on our balance sheet and liquidity. Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom.

Thank you, Ian, and welcome, everyone. I am pleased to report another solid quarter for Park as we continue to benefit from ongoing improvements across our portfolio while executing on important strategic initiatives which strengthened our balance sheet, and better position the company for long-term growth. On the operations front, our portfolio generated solid RevPAR gains versus last year, fueled by a nearly 400 basis point increase in occupancy during the quarter. In particular, we were very encouraged by exceptional results from our two resorts in Hawaii, the ongoing recovery across our comparable urban portfolio and the continuation of accelerating group fundamentals. Additionally, as we have previously disclosed in June, we made the difficult but necessary decision to cease making debt service payments on our $725 million nonrecourse San Francisco CMBS loan secured by the Hilton San Francisco Union Square and the Park 55 San Francisco. In our view, the city of San Francisco faces an elongated recovery with an eventual return to 2019 peak levels that is uncertain for the two hotels. Accordingly, we strongly believe this decision greatly improves our optionality and is in the best interest of shareholders as it will significantly reduce our exposure to the city and strengthen our balance sheet considerably. Following the removal of these two assets from our portfolio, San Francisco will account for just 3% of 2019 adjusted hotel EBITDA on a comparable basis, while our net leverage ratio will be reduced by almost a full turn and help further by freeing up nearly $200 million of capital earmarked for future renovations at both hotels. I do want to emphasize that this decision is not intended to be a negotiating tactic, and we continue to work with the servicer to divest these assets and the loan as quickly as possible. Q2…

Thanks, Tom. Overall, we were pleased with our second quarter performance. Q2 RevPAR for the portfolio was approximately $183, representing year-over-year growth of 5.3%, with occupancy at 74.4% and ADR at $246 or 8% above 2019 levels. Hotel revenue was $692 million during the quarter, while hotel adjusted EBITDA was $191 million, resulting in a nearly 28% hotel adjusted EBITDA margin. Margins were natively impacted by renovation disruption at our Casa Marina Resort, which suspended operations in mid-May for a full-scale renovation, accounting for nearly 40 basis point drag on portfolio performance. Q2 adjusted EBITDA was $187 million, and adjusted FFO per share was $0.60. Turning to the balance sheet. Our current liquidity is over $1.7 billion, including over $840 million in cash. Net debt at the end of Q2 was $3.8 billion and net leverage on a trailing 12-month basis was 6x. When accounting for the eventual removal of the two San Francisco Hilton hotels from our portfolio, balance sheet metrics materially improve with net leverage decreasing by nearly a full turn to 5.2x and interest coverage improving by 0.5 a turn to 3.7x. Also, as a reminder, in June, we fully repaid the $75 million mortgage allowance secured by the W Chicago City Center, which was set to mature in August, adding another property to our unencumbered portfolio. Turning to guidance. As Tom noted earlier, we are making adjustments to reflect weaker-than-expected results in San Francisco and softer transient demand, both of which are negatively impacting both top line and margins in the near term. Accordingly, RevPAR has been lowered slightly to a full year range of $168 to $177, representing impressive year-over-year growth of between 7% and 13% while hotel-adjusted EBITDA margin has been decreased by approximately 80 basis points at the midpoint to a range of…

Thank you. [Operator Instructions] Our first question today comes from Floris Van Dijkum with Compass Point. Please state your question.

Thanks for taking my question guys.

Good morning, Floris. How are you?

Good morning, Tom. So I know that you guys have been - I'm sure this debt CMBS return is weighing on all of you guys, but it's also weighing on your results, clearly still. Maybe if you can touch upon - it sounds like things have deteriorated significantly in San Francisco, where you've actually lowered your guidance because EBITDA is going to leave the system there. I guess it shouldn't really matter this year. I'm more interested in hearing about what's happening at your other hotels in San Francisco? And maybe if you can give a little bit of impact on why the situation there might be a little different? And also, should we be penciling in a $0.14 increase in earnings next year based on losing these two hotels with the associated debt?

Yes. There's a lot to unpack there, Floris. I guess the important thing is, look, we - as we said in the prepared remarks, we made the difficult but necessary decision. We continue to work with the servicer to give back the keys as quickly as we can. We're certainly - discussions are constructive. And we're cautiously optimistic that we'll have more to report here in the coming months. Our hope would be to get this done as quickly as possible. But as you know, we don't control the process. So we want to be careful and I probably shouldn't say more than that. We thought long and hard about this decision in San Francisco. And I think you know and I think many of the listeners know that in terms of the REIT CEOs and I would respectfully submit even this, the C-Corp CEOs, I spend as much time in San Francisco as anybody and the key takeaways were that the recovery period there would be extended. We thought one to three years. I can tell you being on the ground as early as 10 days ago, it's probably five to seven years. Office vacancy continues to rise. It's north of 30% now, an all-time high. The convention calendars, again, continues to weaken. You're 40% below the pre-pandemic level, and that's probably 875,000 room nights now down to 530,000 and perhaps dropping. If you think about '23, there's about 675,000 room nights in city-wides and most of that is backloaded in the second half of this year. Next year, the current outlook is about 450,000. San Francisco travel, the critical marketing organization is going through a leadership change. And that leader - that new leader has not been identified, and he or she has not been able to build…

And Sean, maybe you want to touch on the earnings impact of that potentially next year? Or is that too early in your view?

Well, obviously, it kind of speaks to the timing that Tom spoke to. We're certainly doing what we can to ultimately remove - I mean if you were to assume that it was, I mean, clearly, you would think that you're looking at properties that are basically earning nothing this year essentially, and ultimately carrying just at the stated rate of interest of $30 million a year. So yes, we're certainly expecting a pretty decent uptick in earnings FFO per share.

Thanks.

Our next question comes from Smedes Rose with Citi. Please state your question.

Hi. Thank you. Just to quickly follow up on San Francisco. To follow up on San Francisco, is the lower kind of outlook through the back half of the year? Does it reflect actual group fallout that was on the books that is now not coming? Or are you just seeing less transient business than maybe you had initially anticipated?

I think it's a combination of both, Smedes. I mean you're clearly seeing some washout in some of the groups. Obviously, again, the narrative doesn't help. There is the APEC conference, which is terribly important because you're - they expect 21 world leaders or up to 21 world leaders. So I have to believe that the city with support from other local municipalities and perhaps even the federal government and others will ensure that the appropriate safety measures are in place. So I would expect that, that hopefully will be well received and be productive and outperform. But the reality in the numbers that I gave you are real, and I could give you more it's just going to be an elongated recovery, hence, the reason of the decision that we made. Again, we were only expecting a $15 million contribution, as Sean noted in his remarks and today, we would see that being flat to slightly negative. So we've washed - we've removed that. We've essentially derisked San Francisco. And look, we've far prefer to talk about all of the other exciting things that are happening, particularly, again, the extraordinary performance that we're seeing in Hawaii and other parts of the portfolio.

Okay. Yes. And I just wanted to follow up on Hawaii. As you noted, the RevPAR was up pretty healthy across those properties but EBITDA was down at both properties. And I was just wondering if you could comment on kind of what you're seeing on the expense side and maybe how you're thinking about expense growth going forward or maybe there was something kind of onetime in the quarter that weighed on margins, but just maybe some commentary around that.

Yes, Smedes, this is Sean. For Q2, specifically for Hawaiian Village, we had some accruals baked through early first half of last year and ultimately carried over from '21 related to kind of the extensions we're doing with the union contract. So those were ultimately released in Q2 and certainly ultimately helped out reduced kind of reduced expenses for that property. So it's a onetime thing.

Okay. Thank you.

Smedes, certainly, despite that, please keep in mind in Hawaii where Hilton Hawaiian Village, again, as we reported, is running a 24% RevPAR premium, Hilton Waikoloa is running at 15% RevPAR premium. So despite the fact where I think many in our sector seeing a slowdown in leisure. We continue to see strong outperformance in Hawaii, and we still don't have the Japanese traveler, which again had been historically 20% of our business. And it's down about 90%, we expect it'll be down 60% to 70% by the end of '23 and hope that that's reduced to probably down to about 30% by the end of 2024. So, we remain very, very bullish in Hawaii. And look, we had a record year of EBITDA last year and we certainly expect that we're trending towards another very strong year this year as well.

Great. Thanks.

Our next question comes from Ari Klein with BMO Capital Markets. Please state your question.

Thanks, and good morning.

Good morning.

Maybe just following - thanks. Maybe just following up on that last point, you meant - Tom you mentioned earlier the slight uplift in the back half of the year from Japan to Hawaii. Are you starting to see that translate into better booking trends that kind of gives you the confidence that you'll see that improvement or is it still too early there?

We're seeing some green shoots. It's still a little early. But as we pointed out just given the flights alone going from 100 a week to 175. And look, we're very encouraged. You probably also saw that the Japanese government and officials had meetings with Hawaiin tourism officials as well. So, they have connected - they have connected. There have been accelerated discussions and so we remain very optimistic. And if you look historically over the last 30 years, visitation from Japan has averaged about 1.5 million. So, that's been down for three, three and a half years and that's been among our most loyal customer. They stay longer they spend more. And historically, we - average about 150 sort of high-end weddings. I think last year we were down to four or five. So, we're very encouraged as we look out. And just given the dynamics and certainly given the iconic nature of Hilton Hawaiian Village, I mean it is one that generations of families have been visiting for 60 years. So, we fully expect that it's not only going to continue to recover, but really continue to grow and really outperform.

Thanks. And then on the demand mix, the group seems pretty positive while leisure is weaker than as it normalizes. What are you seeing on the business transient side, as we're now kind of halfway through the year? And even as urban markets have performed well, have you been somewhat underwhelmed on the business recovery and what are your expectations moving forward there?

Ari, this is Sean. We - certainly, I think we could see a little bit more out of business transient, but I think ultimately, as we kind of went through the quarter, we saw pretty strong in April and then kind of lined up through May and June, but it's still kind of in the mid-single digits year-over-year as we kind of ended the quarter, and we certainly expect to see that continue in the back part of the year. So, I mean obviously as we kind of look at business transient, the rack rate can be part of that and that's kind of the one where you're seeing the pressure from year-over-year, the compression leading elsewhere. And I would say it's more of a leisure element that plays into the rack rate. So, would you kind of really look at the pure business transient. I think we continue to see local and government performed well and even the corporate negotiating, well. It's still, was 40% below its kind of grind it up to 35% of '19 levels in Q3 and certainly have expectations of that grinding forward to ultimately be positive year-over-year in the back half of the year.

I appreciate the color.

Our next question comes from Anthony Powell with Barclays. Please state your question.

Hi, good morning, everyone.

Good morning.

Good morning. Following, up on that question on transient, I mean you called out transient softness in the third quarter. Was that - is there any specific markets or segments, maybe expand on that comment in the guidance would be helpful?

Sure. I mean I think what you'll see continued - clearly San Francisco, which in Q3 while you've got some group activity and better than you had in Q2, I think just reliance to that market of needing transient, it's just not been coming together. So, I'd say there, and then I think particular weakness in terms of some markets are Chicago, New Orleans. Chicago and New Orleans had some good group and citywide activity in the first half of the year, but we're seeing the back half of the year far less citywides there. So when we kind of have known that, we've got some good in-house group pace for in Chicago in Q4, up 20%. But in Q3, both markets are neutral to down year-over-year. So, I think that's where we're kind of aligned on the transient. We looked in the forecast, originally. And again just see that, seen some softness across the board we're - derisking that a little bit as well in those markets.

The other thing, Anthony that I would point out is, as Sean noted earlier, is that we had really tough comps, both in June and July. So, if you think about last year both of those, months were about 4% below 2019 levels versus 10% for the previous month. So, we always expected that June and July obviously, they ended up coming in a little softer than we expected. And we see April, we were up 9% of RevPAR, May up 10%, June down about 1.5%. We're expecting July to probably be up around 1%, the quarter probably somewhere in the 2% to 3% plus or minus, but really looking at a strong fourth quarter and a lot of that as Sean noted is, while we lose a little bit of the group in the third quarter we picked that up in the fourth quarter. So, in addition to strong and transient expectations in markets like New York, so, we're still - very encouraged when you think about them kind of 7% to 13% up in RevPAR. I mean, we're not - this is - this is not a downer. This is not negative RevPAR growth as we look out for the balance of the year. So, still encouraged the market is still choppy. There are some issues of uncertainty out there, but it's hard to see a near-term recession, when you have that type of topline growth as we look out.

Got it. Thanks. Maybe going back to Hawaii and leisure demand there, domestic demand. You're generating very strong growth based on result in Hawaii on the back of the domestic customer and that's great, but we've seen that's a very - I guess competitive market. So, how do you make sure that these customers who are traveling to Hawaii, keep coming back? So, that's when you have the Japanese traveler coming back, can actually yield at the property generate incremental growth rather than just replacing U.S. customers with Japanese customers?

Yes, it's a great question. And the credit to Sean to our asset management team and then the extraordinary leader Debi Bishop and her team that run both Hilton Hawaiian Village and the Hilton Waikoloa. And I just think when you've got two iconic assets like that, Anthony, and generations of travelers and finding that right mix, they've just done an extraordinary job. So -- and I think the RevPAR premiums really show evidence of that. When you're looking at Hilton Hawaiian Village, up 24% and Waikoloa up 15%. They've continued to outperform, when candidly I think a lot of our peers are showing much softer performance in Hawaii and other markets of Hawaii including Oahu. So, we feel very good. But it's a daily battle and playing field as competitive every day and we don't take anything for granted.

Thank you.

Our next question comes from Chris Woronka with Deutsche Bank. Please state your question.

Hi, good morning, guys. Hi, good morning, Tom. So, San Francisco going away and that effectively for you guys as a market and that's, yes, I think what the big group boxes that's been part of your kind of ecosystem so to speak for the portfolio. You don't have really any group exposure in some of these markets where San Francisco groups are going. So, it's Las Vegas and Phoenix Scottsdale and San Diego and Denver, does that make you look any harder at potentially gaining bigger group exposure in those markets?

In terms of another play, let me make sure I understand the question, Chris, is of another asset?

Yes, it's just - in some ways - it's kind of - I hesitate to say replace the business because this is asset-specific, but this does walk away from San Francisco, changes your portfolio composition a little bit, and maybe it's better for the short-term, but longer term, you have some of these Western U.S. markets, where you don't have a lot of exposure, particularly on the group side. So does it make any more likely to take - a peek at things that might become available?

Yes, I mean obviously you never want to speculate about the future. I would say look at - our balance sheet, look at the positioning after we've unloaded these two assets, we've got much better optionality as we said in our prepared remarks. We have lot more liquidity. I would not red line San Francisco in any way, shape or form. It's just going to take time and the issues are complex and the result not only of the pandemic, but many other policy and other decisions that have been made many years ago. And so that recovery is going to be elongated. I'm very comfortable with the two remaining assets that we'll have there. As you know, we've sold two other assets in the early days of the pandemic at very attractive pricing. It is a market that only has 32,000 rooms, so it will come back. And look, we will - follow the job growth, we'll follow the opportunities and where we can generate the returns. So, we certainly wouldn't rule out San Francisco and I don't think we'll be at any disadvantage. Because I think we'll be able to - whether it's assets in San Diego or in other markets out West, we'll still - we'll continue to evaluate and look where they make sense. Right now, San Francisco is a very, very difficult set of circumstances and I think we've communicated that very well. And I think as you recall back to NAREIT, we provided investor deck with 40 pages in great detail as to why the decision was made that we made and are very confident, it was the right decision.

Yes. Yes. Understood. Thanks Tomorrow. And then second question is kind of longer term - I'm not going to ask you for any kind of multiyear guidance, but it's really on CapEx. And maybe the question is, where do you see CapEx needs for the portfolio if we just think about what percentage of your top 20, 25 assets you think you might like to or need to put capital into over the next several years?

Yeah, it's a great question and look we also mentioned Bonnet Creek, which we can't wait to host investors' and analysts at some event next year, when we reopen the Bonnet Creek, obviously a completed, its open today. But when we, show off the expanded meeting space, both for the Waldorf as well as for the Signia, complete lobby redo, renovation of the golf course and all of the guest rooms, and again north of $200 million. I'm very encouraged by what we're seeing there. And we're trading at who knows 200 key. And so you get a 350-acre resort with 1,500 rooms and world-class amenities and pretty excited about the upside there. We've got the Casa Marina, which is closed in Key West. We had already renovated the Reach, and this is a sister property and we expect a partial reopening this fall and then a completed product at the end of this year, very, very excited about that. Obviously, the Tapa Tower renovation in Hawaii will also be completed this year. The Royal Palm Resort that we have in Miami, that will be next on the list and we certainly continue to plan and study that as well and look to put additional capital there. We think obviously that's going to yield tremendous returns for us. So, there are other assets in the portfolio where we've got really embedded growth opportunities. The Santa Barbara Resort that we have out in California is another that we're looking at adding additional keys there. We've got Hilton Hawaiian Village or adding - look to add the sixth tower and we're going through the entitlement process. Hilton Waikoloa Village, we have the opportunity to add another 160 to 200 keys there. So, all of those, Chris, would be on the list. Sometimes we hear comments of significant deferred maintenance in the Park portfolio and I would respectfully submit, it's really - it's a bit of nonsense. We're investing $350 million in this year will be somewhere in that range next year. Obviously, the big asset that did have deferred maintenance obviously was The Park 55 in San Francisco, but that's one of the two assets that we were shedding as we've already communicated.

Okay. Very helpful. Thanks, Tom.

Thank you.

Your next question comes from . Please state your question.

Hi, thank you.

Hi Duane.

Hi, how are you? Can we just play back the monthly trends over the course of 2Q, your original expectations for 2Q in the month of June, specifically? How June played out relative to your initial expectation and obviously a lot of commentary around San Francisco. I think we all understand that San Francisco was weaker, but ex-San Francisco, what else played out differently in the month of June versus your initial thinking at the outset of the quarter?

Yes, I mean it's certainly it seems had a big impact on June in the quarter in general. As you think kind of through the expectations for June going in versus where we came out in the rest of portfolio, I would say it's kind of in the neighborhood of call it a 300 basis points or so drop - in the month versus when we came into the month. So, you certainly saw that certainly saw, I think, through people probably seen that to the start data week-to-week for the good better part of the month and even probably into the first parts of July as well. We have seen things turn for the better in the back part of July. So, that's encouraging as we go into the rest of the third quarter. But I would say yes, I would say in general call it 300 to 400 basis points impact in June kind of versus expectations. So, it was definitely a little bit of a surprise in a way and disappointing, but again I think things are turning around, and I think we certainly see a better kind of tone from a macro standpoint, believes us to think we've got some more encouraging weeks ahead.

Thanks, Sean for that detail. Any specific markets you'd call out underlying that 300 to 400 basis points?

I think you certainly see where, again, you've seen the compression of last year play out, where people going elsewhere. So, the markets like South Florida where you have Miami, and Southern California like Santa Barbara, continue to see pressure and certainly on the rate side as they lapped last year. I would say - I'd say those are probably the bigger, the resort areas are the bigger contributors.

Thanks. And then just for my follow-up on New York. Why do you think New York is having such a strong recovery? And what do you view as kind of the underpinnings of that strength as we think about sustainability into next year?

I'd make a couple of observations. Look, there are - only three hotels in New York that really have large meeting footprint in this space to be able to accommodate large groups and we would respectfully submit that we've got the best Hotel in the Hilton Midtown there. The city is back and I think many people thought it would not recover until '25, '26, '27, and the reality is that will be back and we'll be back to '19 levels effectively this year. I think we expect to be within 2% of 2019 plus or minus. And as you look at sort of the group forecast - group forecast, I think Q3 is up 19%, 20%. Even transient as we look out is up 14% to 16% plus or minus. And then as you sort of look at RevPAR, up 26% in the second quarter and I think July we were up 26% of RevPAR. As we look out for the balance of the year, a very strong third quarter and very respectable fourth quarter. So I feel very good about it. International has played an important part there. It's up - I think it's about 19%, 20% and then obviously the group pace in '23 again about 187,000 room nights in New York. So I mean, all of that contributes and with hotel that size being located, having the meeting space footprint and again a talented team of men and women there. And again, not having a lot of competition for the big groups, you really have two other options and again we believe confidently we've got the best meeting footprint to be able to accommodate those large groups and take multiple groups at a time.

Thanks for the thoughts.

All right. Thank you for the questions.

Our next question comes from Bill Crow with Raymond James. Please state your question.

Hi, good morning, Tom and Sean.

Good morning, Bill.

Good morning. I'm going to go back to - I think it was Anthony's question about Hawaii that I wanted to follow-up on. Ask if it's fair to draw parallels between the international outbound travel and domestic travel to Hawaii. In other words, there has been there's pent-up demand and later recovery in international travel and apparently long-haul domestic travel to Hawaii, but there's also some expectations that just like U.S. mainland leisure demand that we might see some normalization next year in longer-haul travel. So I guess my question is, is there anything out there in your forward bookings that give you confidence in Hawaii, that if Japan doesn't materialize to the extent you think it will, that - we're not going to be sitting here talking about tough comps and normalization in Hawaii next year?

Yes, I mean it's a fair question, Bill. I think the first data point would really be the last - couple of years. I mean you've added a lot more airlift - domestic airlift, Southwest and other carriers into Hawaii. And those have been candidly at attractive rates, which I think has also been, I think a real positive catalyst. And look you, for many people, it's a once in a lifetime trip. I think for many others, it's a repeat trip that people have become quite accustomed to. And I think Hilton Hawaiian Village is just a great example of that. And you've also got the inter-island traffic that is also accelerated and picked up. So, there's nothing that we see, it's been very encouraging. I mean you have to believe that the Japanese traveler again as the Yen continues to strengthen and being away and we're seeing it. We're seeing it obviously with a lot of U.S. traveling to Europe this summer, right. You get the pent-up demand, you want to recapture those experiences that people hadn't been to Europe in two, three years and we feel the same way and get the same signals about people wanting to go to Hawaii. So, feel strong on the domestic front. I think the airlift and the capacity is an important part of that and at reasonable prices. And the other thing to keep in mind about Hilton Hawaiian Village is - it's an upper mid-market hotel, it's not the ultra-luxury. So, it's a great experience at a great value and consistently, I think it has shown that. And we didn't get the huge spikes that perhaps some of our peers that saw 50%, 60%, 70% increase in RevPAR. We did see some of that in Key West, when the Caribbean wasn't an option and clearly cruise operators were suspended and not sailing. That's not the case here. So, it's on a steady path and then we've also been able to retool the operation. And as Sean pointed out, there were a couple of one times last year, but we're still running nearly 40% margins there and with a great management team and feel very good about the outlook as we look out today. Things can happen, we're in a business that you and I both know we've been around a long time, but we certainly see nothing on the forefront now that concerns us.

Tom, what's the booking window in Hawaii? How does that compare to a typical Mainland Hotel?

From a Mainland - certainly from a Mainland customer, it actually could be a pretty short window. A lot of people booking last minute can make those trips out there. So, you certainly would imagine that if you're looking at a Mainland kind of Hotel in general and the booking window is 30, 60 days out, you're going to be more elongated and thinking about Hawaii by a little bit. But I wouldn't say dramatically from the Mainland. Clearly more international would be longer-dated exercise, call it four to six months. So, clearly you're going to see certain elements, whether known peak times. You're going to see that booking pattern, that window be a longer length of time as people plan, whether it's around the holidays in December whatnot. But I think in general, it's maybe a few weeks more than what you might see from the Mainland, as you talk about the Mainland customer. I'll just add one thing to Tom's note too and things about looking to next year. Group pace as you think about incentive travel and other group tourist activity coming back to Hawaii is up 16%. So again another kind of layer demand, we talked about the Japanese, but there is some of that incentive travel and people winning the ability to - he sales teams were not winning - the reward travel to go to Hawaii is picking up as well.

No, that's great. Sean, what's the percentage of the group makes up in Hawaii?

It's about 20%. It's not big.

Okay, all right. That's it from me. Thank you.

Thank you.

Thank you. Your next question comes from Dori Kesten with Wells Fargo. Please state your question.

Thanks, good morning. You've talked about...

Good Morning, Dori.

Hi, Tom. You've talked about eventually reducing your exposure to Hawaii. How high is it on your list of priorities? And is there any interest from Hilton Grand in taking on more room?

Let me start with the last question first. I mean - I haven't talked to the Hilton Grand Vacations. I think we've got a wonderful working relationship today at Hilton Waikoloa. It turned out, I think to be a win-win. As we've noted, I mean we are more profitable today as a 600-room hotel than we were as 1,200-room hotel and plus we get the benefit of their guests using our outlets. So it's been a win-win for both. We think really that's the optimal mix for that property. And as we look to expand it, we would focus more on adding more guest rooms and perhaps suites and other amenities there as we look to expand Hilton Waikoloa over the future. Hilton Hawaiian Village is just - it's a jewel. I'm not sure that there is any REIT asset that generates as much EBITDA or is it as valuable. So we're - we'd like to grow the company such that Hawaii is - less of a contributor, but we're certainly not looking to sell or to joint venture. Also both of those assets have a very low tax basis, so it makes it very complicated and will require a pretty big distribution. So the preference would be to grow other markets, but certainly not look to sell the joint venture either of those two properties at this time.

Got it, thanks. And then just on your intention to sell the $200 million to $300 million in assets this year. Is there any update you can give on just what's being marketed for sale? How you're thinking of that? And how close you may be to an announcement?

Constantly we're working on it. I think Dori, as we mentioned, people we've sold disposed of 40 hotels for over $2 billion since the spin and that's 14 international that's joint ventures. I mean there has been some heavy lifting, that's in addition to getting rid of some self-operated hotels as well as laundry facilities, which aren't included in that - in those 40. So really proud of the work and all the effort and continuing to reshape the portfolio. We've sold, I believe eight hotels over the last 15 months, plus or minus for about $435 million. We are constantly in discussions, but we're not a distressed seller. We're going to have to maintain price discipline. Tom Morey, our Chief Investment Officer, and his team are working hard and we've got a number of active listings right now. And as we said, we're confident that we'll get somewhere between that $200 million to $300 million. And again we'll use those proceeds to pay down debt on a leverage-neutral basis, certainly buy back stock. And obviously, the best investment we can make right now is buying back our stock at this kind of discount and you can certainly expect that we'll be looking at that in the future.

Okay. Thanks, Tom.

Okay.

Our next question comes from Robin Farley with UBS. Please state your question.

Great. Thanks. I just wanted to circle back to your group.

Hi, Robin.

Hi, how are you? Thanks. Your commentary on group. I know you gave a lot of great color sort of by region, by cities. I don't know if I heard sort of total 2024 group compared to 2019, how that - whether it's revenue pace or room night pace for '24 overall compared to '19? And then do you have that excluding San Francisco, which sounds like would look a lot better than what the total company wide is? Thanks.

Yes. So, group pace for 2024 revenue is about 93.1% and that does versus 29 and that does exclude San Francisco.

Okay. Thank you. And that was versus '19, right?

Yes. It's versus '19. Yes.

Great. That's it for me. Thanks.

Sean. Okay. Thank you.

Our next question comes from David Katz with Jefferies. Please state your question.

Appreciate you working -

Hi David.

Good day, everyone.

Good day.

I appreciate all the commentary and you talked about the amount of investment capital we should be expecting going forward? And just thinking about post the San Francisco returns, does that lead you to accelerate how that capital - the amount of capital that's being deployed and does it raise the bar or broaden the standard of where you might put some of that capital to work?

Without question, David. Look, the beauty is it gives us a lot of optionality, right? The balance sheet will be stronger. We're sitting on nearly $4 of cash per share today, whether that's buying back shares, whether that's investing back in strategic ROI, whether that's distressed opportunities that could emerge. I mean, we all know there's a lot of debt to mature between '23 and '25 across various asset classes, and we fully expect that we're going to be a participant. Today, we'd say the highest and best use is to continue to sell noncore, invest back in our portfolio and buy back our stock on a leverage-neutral basis. But we clearly will continue to be opportunistic. And we're seeing a lot of deal flow like many of our peers. And we will have a seat at the table, particularly when we're sitting with in a $1.7 billion in liquidity. So it's certainly a much brighter outlook for Park as we look forward.

Okay. That really was what I wanted to talk about. I appreciate all the detail today. Thank you.

Thank you.

Your next question comes from Gregory Miller with Truist Securities. Please state your question.

Hi. Good afternoon. Thanks for taking our questions. So first question I have is on business transient following up on Sean's commentary on business transient room rates. At this point, how do you see 2024 negotiated corporate rate growth materializing. Do you think mid-single-digit growth is reasonable or perhaps above that?

Greg, it's Sean. I mean I certainly think we're too early in that process. I certainly don't have really had many discussions with our operators and certainly the big brands and any of those negotiates typically, you see a lot more - clearly a lot more activity going in the fall - late fall. But certainly, I would say the expectation is to be in the mid-single digits range. I don't think it's unreasonable.

Okay. And then second question I had is on the F&B department and on margins in particular. How is pricing for your F&B outlets and banquets progressing in the back half of the year? Or more specifically, how is F&B pricing trending relative to operating cost growth? Thanks.

Yes. I think for the quarter, I think you see a stabilization going on versus what you see between Q1 and Q2. F&B profitability will probably dip down slightly in Q3. Just again, we don't have as much group as we have in other quarters. And specifically, Q4, I think it was going to be a strong group quarter. So I think we'll get - again, with that higher rate or higher - well on higher rates as well as higher margin banquet and catering business, I think we'll see our margins kind of get more in the higher 20s versus the mid-ish 20s in Q3 for F&B profitability. So I think it's generally tracking. It certainly, I think, from a profitability standpoint, right now, below kind of the year-to-date kind of below '19 by a little bit. But I think as we kind of look at how '19 ended in the back half of the year, I think we'll kind of be more commensurate with it. So I think we're kind of catching up in a way as you think about group and just in general, the rates that they're contracting are getting higher. We've gone from really was probably this time last year, a little later kind of flat to '19 to getting upwards of higher single digits against '19. So as you kind of layer those higher-rated contracts in place over time here, I think you're obviously getting better pricing in the F&B as well to kind of catch up and kind of get the margins more in line.

Thanks. That's great.

Thank you. Our next question comes from Chris Darling with Green Street. Please state your question.

Thanks. Good morning.

Hi, Chris. Good morning.

Good morning, Tom. Related to the Embassy Suites in Phoenix, can you disclose who owns the land or whether it's a public or private entity? And then are there any other early termination options related to other ground leases that we should be aware of?

I don't have that information available. Chris will follow up with you to make sure you have it. Look, we have 45 hotels now in the portfolio. And there are seven joint venture. There are several short-term leases that we continue to monitor and to work on. Our top 25, 27 assets, as we've communicated before, account for about 90% of the value of the company. So it's back to that earlier point of just the heavy lifting that the team has done over the last six, seven years and really reshaping the portfolio. So could not be prouder of their work and their commitment. Each one has its own set of challenges. And this was an asset that wasn't obviously a significant contributor. It was noncore, and we've been working for some time to find the right solution, and we certainly got to the right outcome here, particularly with so many short years remaining on the ground lease there.

All right. Fair enough and certainly recognize the relative size of that property. Maybe switching gears just for a second. Thinking about Orlando, do you have an estimate for the disruption caused by the work going on in that market this year? Just trying to get a sense for how the comparable portfolio might start to map thinking into early '24 as you consider that market as well as what happened in U.S.?

Yes. That market has been one where certainly, we've got - you've got a couple of other factors going on. I mean clearly, people are trying to understand with Disney and that demand driver whether it's some political elements there. You're certainly seeing some groups shift out of the convention center relative to politics. And you've also seen, I think a product combination of Disney is raising its rates, maybe aggressively combined with the fact that people have - again, people have other options to go places now, whether it's Europe or in cruises, they didn't have last year. So I think you do see something that normalizes more for Orlando. I mean, for us, clearly, our story for next year is Bonnet. Tom, in the prepared remarks, spoke to the meeting space, which we're seeing a tremendous amount of interest in booking into that space in that complex. So certainly, we're really encouraged about layering in, we talked about another $22 million in that asset relative to '19 so far in terms of what we've kind of booked into the new space and renovated product. So I think we're certainly very encouraged, not certainly prepared at this point to talk about '24 kind of uplift from that market. We certainly expect a good -- to be a good contributor to the comparable portfolio next year.

I appreciate it. That's all from me.

Thanks.

Thank you. And that's all the questions we have today. I'll now hand the floor to Tom Baltimore for closing remarks.

We appreciate everyone taking time and have a great remainder of your summer, and we look forward to seeing many of you in September and the various conferences. Have a great summer.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.