Greetings, and welcome to the Park Hotels & Resorts, Inc. Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Ian Weissman, Senior Vice President of Corporate Strategy. Thank you. You may begin.

Thank you, operator, and welcome, everyone, to the Park Hotels & Resorts fourth quarter and full year 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 will be presented on a comparable hotel basis with a comparable view excluding the two Hilton San Francisco hotel. This morning, Tom Baltimore, our Chairman and Chief Executive Officer; will provide a review of Park's fourth quarter performance and the outlook for 2024. Sean Dell'Orto, our Chief Financial Officer, will provide additional color on fourth quarter results, an update on our balance sheet and liquidity and further details 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.

Thank you and welcome, everyone. 2023 was a year of outstanding accomplishments for Park as we executed on our strategic objectives, exceeded our operational goals, and meaningfully strengthened our balance sheet while delivering sector-leading total returns for shareholders. Our strong operational performance was broad-based as we witnessed ongoing strength in Hawaii as well as an acceleration in group demand across several of our core markets, including New York, Boston, Denver and Chicago, which helped to drive RevPAR growth of nearly 16% versus 2022 in our urban hotel portfolio. On the capital allocation front, we remain laser focused on targeting the highest returns on our invested capital, having strategically invested nearly $300 million across our iconic portfolio at expected returns well above acquisition yields. We also took advantage of the spread between public and private market valuations, buying back nearly 15 million shares for $180 million in 2023 at a significant discount to net asset value. In addition, we returned over $450 million of capital to shareholders in the form of dividends with dividends from operations totaling $1.38 per share or an attractive 8.5% yield based on our most recent share price. I'm also incredibly excited about our relative position in 2024. The investments we made in our portfolio over the last two years, along with the repositioning achieved by the effective exit from the two San Francisco hotels combined with the current backdrop of a healthier than expected U.S. economy, strong convention and group activity in our key markets, and the ongoing resilience of leisure travel create a favorable setup for Park. Prudent capital allocation remains a top priority as we anticipate continuing our initiative to sell more non-core hotels with net proceeds used to reduce debt and reinvest in our core portfolio with an expected disposition target of $100…

Thanks, Tom. Overall, we were very pleased with our fourth quarter performance. Q4 RevPAR was $178, with occupancy up 150 basis points to 71% and with ADR increasing nearly 2% to $251 or 15% above 2019. Q4 comparable hotel revenue was $619 million, while comparable hotel adjusted EBITDA was $171 million, resulting in comparable hotel adjusted EBITDA margin of 27.5%. Q4 adjusted EBITDA was $163 million and adjusted FFO per share was $0.52. Turning to the balance sheet. Our current liquidity is over $1.3 billion, including approximately $350 million of cash, while net debt currently stands at $3.4 billion, or down over $500 million versus where we stood over a year ago. With net debt to adjusted EBITDA lower by 1.5 turns to under 5.2x following our effective exit from the two Hilton San Francisco hotels. Overall, our balance sheet is in great shape with just over $700 million of debt maturing through 2025 or less than 20%, including our $650 million 7.5% corporate bonds that come due in June 2025. With respect to balance sheet priorities, we continue to evaluate options to push out in pending maturities while using proceeds from potential asset sales to delever and provide further financial flexibility. Furthermore, I'm delighted to announce that S&P Global recently upgraded Park Hotel's corporate credit rating by two notches, elevating it from a single B rating to BB minus. This marks a significant advancement for the company and reflects the agency's acknowledgment of our dedicated efforts over the past four years to strengthen our balance sheet and credit metrics. Turning to capital expenditures. We substantially completed several strategic projects in 2023, including the $220 million full-scale renovation and meeting space expansion at our 1,500-room Cigna and Waldorf Astoria Bonnet Creek Resort Complex in Orlando as well as the $80…

[Operator Instructions] Our first question is from Floris Van Dijkum with Compass Point.

Pretty, pretty impressive. As I look at this, I still see a $47 million hotel EBITDA gap in your results. Just curious as to when you think that the portfolio is going to exceed 2019 levels. And the $47 million, obviously, your hotel EBITDA relative to 2019 levels. And maybe if you could touch on specifically Hawaii Village because that asset is just -- it keeps -- it's a gift, I guess, that keeps giving because it's within touching distance of getting to $200 million of EBITDA. And despite the disruption that you expect in '24, I mean, 6% EBITDA growth essentially puts you over the $200 million mark. Is it possible within the next calendar year to be able to achieve something like that?

So it's great. It's always good to talk with you. As you know, there was a lot to unpack there. On the Hawaii piece, I think as Sean put, as he noted in his prepared remarks, Hawaii has been a phenomenal and really strong performer. And despite the fact that the Japanese traveler isn't back, it's -- depending on I think last year, about 600,000 visitors versus -- so if you look over the last 30 years, I think about $1.5 million. So you're still 50%, 60% plus or minus below normalized levels. We do think, as we noted, that we'll get back to 1.5 million visitors probably in that 2026 time frame. So it continues to provide, I think, incredible tailwinds for us. There's nothing like Hilton Hawaiian Village. When you think about 22 acres, five towers, you've had generations that continue to go there. It's not ultra luxury. And so it appeals to the masses. It's got, obviously, the long history with Hawaii 5.0. So it is special. To answer your question as to whether or not we eclipse 6% or $200 million. I don't know whether it's this year or next year, but I certainly think it's in our future. As we said in our prepared remarks, we're probably looking at low single-digits this year, given the fact that we're going to try to complete half of the renovation of Rainbow Tower this year. If you look at Tapa and huge credit to Carl Mayfield and his team the design and construction side. I mean we were picking up $75 an additional ADR from that renovation. We expect we'll do something comparable, if not more, what we're planning, obviously at Rainbow Tower. So we are very, very bullish as we look out in Hawaii, Hilton Hawaiian Village.…

Our next question is from Dany Asad with Bank of America.

Tom, I just wanted to unpack a little bit your -- like the RevPAR guide, especially in your prepared remarks, you guys mentioned that the renovations will be adding 150 basis points to RevPAR. So it just feels like the two to four that you're kind of implying, compared it to the 6% to 7% that we're going to do in the first quarter. Is there a touch of conservatism into the rest of the year? Or kind of what's driving that -- like how do we think about that decel relative to the first quarter?

A couple of points of clarification, Dany. We're 3.5% to 5.5% in guidance RevPAR. So obviously, a midpoint of about 4.5 and they were looking at about 150 basis points of tailwind coming out of Casa and then obviously coming out of Bonnet Creek. Admittedly, obviously, January and February, very, very strong based on the trends that we're seeing. There will be a decel in March for all the reasons that we pointed out. Group is going to be down. And of course, you've got the Easter shift will clearly impact. So yes, there's -- January and February don't make a year. So there's certainly conservatism built into that. But look, we are very pleased. I think you are seeing, as I said previously, you're seeing now -- we had, obviously, the pent-up demand from leisure coming out of the pandemic. You're seeing, obviously, group urban really beginning to gain momentum. And that shouldn't surprise anyone. Also keep in mind when you look at our portfolio and take New York, I think, is a great example. You've got a 9% reduction in supply there. You've got a lot of people that we're selling and sort of writing off the city. We were not in that camp. You've only got three large hotels that can handle large groups. We look at New York and see more upside, not less. So we see real tailwind in that market in particular as we look out. And obviously, we think we're incredibly well positioned there.

Dany, real fast. Just I'd also add, there is a headwind of a 50 basis point renovation impact to RevPAR this year, most of it will be in Hawaii, which we pointed out. And I would also say that's concentrated in the back part of the year. So as you think about -- as you go through the rest of the year and maybe some of the conservatism and thinking around that, clearly, we’re going to have a little more impact, disproportionate impact in the back part of the year.

Got it. Got it. And then if I could just follow-up. Your outlook for like total RevPAR, let's call it, like the hotel revenues outside of the HGV portion of it, is about 50 basis points ahead of your RevPAR outlook. How should we think about the incremental growth that flows through from that to the bottom line?

Yes. I would say that on the whole, you probably have, from a total revenue standpoint -- well, let me just back up and say, from an out-of-room spend or additional to RevPAR about 30 to 50 basis points, I would say. I would say it's balanced. You've got more kind of outlet revenue coming through than banquet and catering, certainly in the first part of this year. That's a little bit lower flow-through than you might see in the banquet and catering. We have -- we're not counting on as much cancellation, which is obviously a full flow through. So on the balance, I would say that wouldn't count a lot more incremental flow through from that incremental 30 to 50 basis point add to RevPAR.

Our next question is from Smedes Rose with Citi.

I just wanted to ask a little bit about what you're layering in for wages and benefits expectations for 2024 across the portfolio? And maybe specifically, if you talk about those assumptions in Hawaii, if they're meaningfully different from the broader portfolio?

Yes. Smedes, as you can imagine, there will be some negotiations and we certainly don't want to forecast where we think those negotiations will end. I think if you look sort of last year, wage increases were in that sort of 4% to 5% range. But to forecast anything beyond that as it would really be inappropriate at this point. Look, we have enjoyed, I think, very strong relations with our partners. We've got labor piece, if you will. And I think we had a very successful outcome in 2023, and we would expect something similar here in 2024 and beyond as we look out.

Okay. So we'll wait and see on that front. But it sounds like in your guidance that 4% to 5% is what's kind of factored in at least for right now until we have better information.

Yes. I think if you look at overall expenses, we're probably in that range. That's probably the better way, I think, to look at it right now.

Okay. And then can I just ask you, you mentioned hoping to execute on sales in the range of $100 million to $250 million. Just broadly, what sort of EBITDA would you expect to be selling in that range? I guess, either multiple or absolute dollar amount? Or how should we think about that, which I assume is not factored into guidance?

Yes. A couple of things to keep in mind. Smedes, we've got -- if you think since the spin, we have disposed of nearly 42 assets, sold or disposed of 42 assets for just south of $3 billion. Last year, obviously, one asset sale and then another small kind of leasehold interest that we ended up selling as well. So we’ve set a target of $100 million to $250 million. Tom Morey and his team have done an exceptional job every year. We’re not certainly a desperate seller. So we’ll be disciplined. We’ll be thoughtful about it. And we will look to recycle that capital. We’re confident in our ability to be able to sell assets. I think we continue to demonstrate that. But we’ll use those proceeds, obviously, and recycle that back for ROI projects. We’ll use it also for reduced leverage, could be opportunistically to buy an asset if something were priced right or to buy back shares. I mean, it’s really been the playbook that we’ve used the last several years. The other comment that I would make is, keep in mind, our top 25 assets really account for about 90% of the value of the company. So the remaining 10% to answer your question directly, that would be a small portion of that 10% as we sort of look at, if you want to kind of frame it between that $100 million to $250 million.

Our next question is from Patrick Scholes with Truist Securities.

Give a little bit more color on the strength in groups. What changes have you seen as far as the composition of these groups and related to that propensity or lack of propensity, but it sounds like it's propensity to spend outside of the room. What types of groups are sort of shipping in and what are being shifted out?

Yes, Patrick, it's Sean. I think you're continuing to see, I think, for one, groups are getting bigger as we kind of naturally thought as we came out of the pandemic, we started with the small groups and now gone to larger in-house groups. You now got to the point where convention is, I think, the leader in the clubhouse as we look at this year in terms of growth. We've talked a lot about the convention calenders being in our favor in a lot of our markets with Chicago, up strong 65%; D.C., up almost 50%; Honolulu is up 30% and so down the line between New Orleans and San Diego and other markets are also kind of either flat or slightly up to about 20% up. So again, all across the board, I think we're seeing convention being much stronger in this. So I think it's leading to larger certainly room blocks for us. I think corporate remain strong through this year. And I think that certainly leads itself to, again, just getting bigger and they're outperforming. We're seeing revals up. I think that's contributed to some of the strength we've seen in January and February. So more are showing up than we anticipated, and that's leading to better certainly F&B spend. I would say the characteristics, I think kind of leading aside from just the size of them getting larger. I think it's just more getting into more traditional, what it professional technology, the kind of the more traditional groups we've had in the past are kind of coming back. And importantly, too, is if you think about some of the success recently here as we're picking up things like Tom had just briefly mentioned, but Apple has been a big contributor now in the short-term pickup in our market out in the Bay Area. So it's been encouraging to see a place like Cupertino, and our Juniper Cupertino and then to some extent, San Jose picking up some short-term group business as I think these technology firms are coming back more and bringing people back to the office and bringing people together to kind of train and kind of ultimately get back to normal business.

Patrick, the other thing -- the one thing that I would just add, I agree with everything that Sean outlined, but just the natural need to bring your people together, whether that's for training, whether that's for celebration, you got to think this is a -- it sort of makes sense. Everybody was sort of focused initially on pent-up demand and leisure, but as you're getting back people back in the office, they need to be together. And what's really pleasing to see is that we all expected it, but we're beginning to see it accelerate and it's broad-based. And citywide is obviously being the leader in the clubhouse here, but you're also seeing it on the group side, the in-house group side. So very, very encouraging as we look out.

And my follow-up question actually has to do with booking out. Any initial observations or perhaps statistics that you can give on how '25 is pacing at this point?

Yes. I would just say '25 group pace is about 97% of 2019 levels as we look out right now and with rate very strong increase in rate, near double-digit increase in rate.

I would say 10% right now.

You say pace, just to be clear, that's a revenue pace for next year versus 2024, 10%?

Yes. You look out at the same time, same kind of time frame for 2025, you’re up 10% for revenue base, yes.

Our next question is from Duane Pfennigwerth with Evercore ISI.

On group revenue pace, I just wanted to try and ask the question in a different way. What percentage of the group revenue that you expect to generate this year is on the books? And if you have it, how does that percentage compare to this time last year into 2023?

Duane, I would say the -- what we have relative to forecast, 78% is relative to what we have forecasted on the books already. That compares to 74% last year. As you think of the first half of this year right now, we're 90% booked for what we're expecting for the first half of this year.

That's super helpful. And then just Hawaii, I guess, a longer-term question. It's obviously off to a strong start. I think you've commented in the past like expectations for the year. How should we be thinking about Hawaii in its entirety for the year?

We said in our prepared remarks sort of low single-digits for Hawaii. Just given as Sean noted, obviously, we've got the -- coming off of a strong year, but we've got the renovation, obviously, in the back half of the year. Now we're up 10%. And so far, it's doing well, but we clearly would guide you more to that low single-digits as we think about for the year.

Our next question is from Dori Kesten with Wells Fargo.

I know you just laid out your '24 CapEx plans, but can you give us a sense of what's on deck for '25? And just should we be considering '25 a year still with net renovation tailwinds?

Yes. It's a great question. Obviously, we began Rainbow Tower, obviously, a key tower in Hawaii, expect to finish that next year, sort of in the queue as we're working on Royal Palm, obviously, in Miami and South Beach, Bullseye real estate, about 393 keys. So our design and construction team are working on another transformative renovation for certainly that asset. Santa Barbara is another one that we're working with our partner, adding potentially going through the entitlement process, but adding another 80 keys there as we look out and clearly, continuing the renovation on New Orleans, but also be in the queue as well. So just few of the assets, but we are really focused, Dori, laser focused on spending money where we're making money. And you can see already the benefits that we're getting and really, we think candidly better than acquisition yields and what we can get in the marketplace.

Okay. And I may have missed this, but how apprised are you kept on the plans for your two former San Francisco assets at this point?

The question again, Dori, I'm sorry, you broke up.

How apprised are you being kept on the plans for your two former San Francisco assets?

Again, we have the receivers in control. As a courtesy, I know that Sean occasionally and other members of the team are reaching out. If they have questions or anything that we can do, but the reality is that we're not involved in the day-to-day. We have no economic benefit and no economic risk moving forward. And I think given how San Francisco has played out, I think we would all agree that, that was a very wise and very prudent decision, while difficult, certainly the right decision for Park and for our shareholders.

Our next question is from Jay Kornreich with Wedbush Securities.

Just to follow-up on the strong start to the year. RevPAR growth in the fourth quarter was about 4%, January jump to 13%, February was up 8%. So I'm just curious what caused this kind of upward hockey stick level of growth to start the year? And is this something you foresaw? Or did it kind of come by surprise at all?

I see it as a pleasant surprise. As we pointed out, obviously, group was up 16%, obviously, in the fourth quarter. We saw sequential, I think, about 12% increase between third and fourth quarter. And I think we've all been talking about and expecting obviously the group in urban would really begin to accelerate. So I think it's a natural progression. We just sort of got the pickup a little sooner in terms of its acceleration in January and February. As Sean noted and I noted earlier, obviously, Apple and Cupertino is a great example of we got some short-term business there. Obviously, you had some one-time events of the sugar bowl in New Orleans. But again, New Orleans was up north of 50%. Look at San Jose, obviously, had an event, but up 35%. So you're really starting to see obviously that those business travelers really get back on the road. Again, that need to connect to be together, build those relationships that need is never going to go away. So really, this is a natural progression. And given the fact that if you think about our portfolio, we've got such small and certainly below the long-term average in terms of supply impact, that's going to continue to benefit us as we move forward. New York, again, you're taking supply out of the market. There hasn't been, I think, a permit approved since 2021. So we look at New York and are very, very bullish. And obviously, we had a great '23 and very encouraged about ‘24 as we look out, just to give another example. Chicago, again, we knew there was going to be a very strong citywide almost near record and up 65%, close to about 780,000 room nights as we look out there, but there was a strong group business in January, which also gave us an additional tailwind there. So it is broad win.

Our next question is from Anthony Powell with Barclays.

I guess a question on your remaining, I guess, California exposure. Two hotels in San Francisco, two in Silicon Valley that Sean talked about and one Downtown L.A., the Hilton Checkers, I think all of the gap versus '19 is that those via properties. So maybe talk about what you're seeing there? And are those hotels still core to your portfolio?

Yes, Anthony, it's a great question. I would say, look, having 3% exposure in San Francisco. And look, it's important to have a diversified portfolio. I would respectfully submit that those groups that say, I'm going to be leisure only. I'm not sure that's really a sustainable or those that are going to be -- I'm going to focus on urban and group, having that diversified portfolio, I think, is really showing significant benefit to us. So as we think about San Francisco, I've said, I certainly expect that, that market is going to come back. I just think that it's going to be elongated and pushed out for the two assets that we own there, obviously, the JW Marriott and also the Hyatt Centric. Certainly, assets that, at this point, we continue to expect to hold as we think about San Jose and Cupertino again, two attractive assets. Downtown L.A., I think, is a different story. They're in a different, complex, challenging situation, not dissimilar to what's happening in San Francisco. And we'll continue to evaluate that submarket and see what we do in the future.

Got it. I think Tom, you also talked about acquisitions. If the capital markets just cooperate, can you maybe expand on that? What do you mean by capital markets? Is it equity, debt capital and remind us what your target leverage ratio is right now?

Yes. I mean, look, we've always said from the moment of the spin that we wanted to be leveraged kind of 3x to 5x and we'd certainly like to be closer to 4x. I think in the context of capital markets, it's really beginning to get rerated EBITDA multiple and getting our stock up and something close to the net asset value. I think even the worst of times, we didn't do a dilutive equity raise. We're not going to do one now. We’ve been, I think, passionate and laser-focused on recycling capital. We’ve sold assets. We’ve used that to reinvest back in the portfolio and to buy back stock and reduce leverage. I’d say that we would be anchored in those same goals and principles, but we’re always looking opportunistically. And if there are unique situations that are accretive, we certainly are going to continue to underwrite and explore. But we’ll see. We’ll see how the year unfolds, but we certainly want to be on offense at the appropriate time. Right now, and last year was a great example of that buying back 15 million shares at an average price of $12 or inside of that was a very prudent decision for shareholders in our view.

Our next question is from David Katz with Jefferies.

We've been hearing obviously, from peers and other sources, right, that there isn't a lot to buy in the market these days. And it sounds like you have what to buy. What is your assessment of the market at the moment? Is there a bid-ask spread issue? Underwriting conviction should be better, I would think, but I'd love to hear yours.

Yes. I would open. David, it's great to talk with you, first of all. But I think also, keep in mind that uncertainty is the enemy of decision-making. I think part of what we're all waiting for, we believe the Fed tightening cycle is over. I think we all expect that at some point, whether you're in three reductions this year in interest rates? Or is the Fed funds rate or is it 4, 5 or 6. I certainly think people are looking for that to rerate and certainly would expect, obviously, the debt markets to continue to open up. Banks are got their own regulatory challenges, but there's certainly plenty of private capital, private credit capital in particular out there. So deals are getting done, albeit at a slower pace. But I think in the second half of the year, you'll begin as we get better visibility, you'll begin to see that open up. There are a lot of people out there who believe that there's going to be tremendous distress. I think you'll see, in my view, probably more of that on the office side that I think you'll see on the lodging side, and there'll be some assets that need to be recapitalized. But this is not the GFC and what we saw back in that period of time. And we'll continue to be thoughtful. We'll continue to reinvest in our portfolio. Again, we think we can generate higher yields there. And if the gap remains between our share price and NAV, we'll recycle capital and buy back shares. I mean we're definitely not going to look to raise equity in this environment right now given where we're trading. And we're hoping that our continued outperformance will get noticed and that we'll see -- begin to see that rating in our stock price.

Our next question is from Bill Crow with Raymond James.

The two W hotels in Chicago, I'm interested in because W seems like they're really trying to rebuild the brand, and it's a very different product type than the traditional Ws. Do you have any immediate plans to either kind of reinvest in those properties or divest those properties?

Yes, it's a great question, Bill. Look, we know, obviously, given the work that Marriott is doing that they're trying to reinvent, if you will, and I think to elevate the W brand, and we certainly support that. We're not sure that either of those assets are what we would call as pure Ws as we move forward. And we are actually in discussions about repositioning. And we think a soft brand play may make the most sense there. And I'll stop there. But we are carefully exploring our options and ways to create more value with those two well-located assets.

Great. And then the other one I wanted to ask you about was I look forward to your event down in Orlando. I'm wondering what the one or two things you're hoping the Street takes away from that event?

Yes, it's a great question. I could not be prouder Bill, when you see just the magnitude of the work done and the complete transformation of not only adding 100,000 square feet over suspended over water for the Signia ballroom, but then to see the event lawn and to see, obviously, the additional ballroom that we added adjacent to the Waldorf and now the ability to be able to layer in groups and accommodate multiple groups and to have a few hundred thousand square feet of meeting space there, and a renovated golf course. That complete experience and to have really a world-class resort, 350 acres. And Bill, you've heard me say this before. I mean, we're right next to the Four Seasons, which is a fabulous asset, best in the market. I'm not sure what was paid for it, $1.3 million, $1.4 million a key. We're trading at $250,000 a key, maybe slightly above that. I think we’re a pretty good value. So I think that’s something else I’d like and hope that shareholders take away, but we hope you can join us, and we look forward to seeing you.

Our next question is from Chris Darling with Green Street Advisors.

I just have one follow-up question on guidance. When I look at what's implied by the 2024 outlook, I calculate expense growth for the year between 5.5% and 6% at the low and high end, which is just a $10 million range, it looks like. Can you help me understand what gives you confidence in projecting that relatively tight range of outcomes?

I think it's a matter of, as you think through going -- just the various ins and outs that happen when you think about elevated growth on the high end with room production as well as out-of-room production versus kind of the other side of it. I think ultimately, you're going to cut expenses as well as you lower revenues. And ultimately, so I think we get generally comfortable with it. I don't not sure quite that much of a range. But I think certainly, I think feel pretty good about our guidance. I mean it is at the higher end of 5% nominally. When you think about the adjustments for the fact that we're lapping, we're adding a bunch of expenses because we're reopening Casa this year relative to last year as well as lapping some of the things that we had to our benefit in Q3, which are one-time in nature or ultimately a prior year tax appeal in Chicago, it’s about 100 basis points lower, call it, high 4s when you think about kind of -- kind of a more run rate kind of growth prospect.

And our final question is from Keegan Carl with Wolfe Research.

Just one for me. Just wondering if we could kind of dive in a little bit more to your expected contribution from Hawaii in the first quarter of the year and then full year '24. It would be really helpful.

Well, I think as Tom noted, it's kind of lower single digits for Hawaii. It's really broken out. I mean, Hawaiian Village is, I would say, is more kind of in line with the portfolio performance. If you kind of adjust for the disruption we expect in the back part of the year, it's really Waikoloa that has paces down 30-plus percent for the year. And so we expect kind of a negative growth pattern for that, like mid-single digits down. But certainly, it's a drag towards Hawaii overall as a market. That said, I think -- and I think it's probably back half of the year, it's more we see the group down for Waikoloa on top of disruption. So I think we certainly expect that it's better performance in the first half of the year. We certainly thought Waikoloa would be a little bit softer coming into the year, and it's performed really well. It's picked up short term. I think there's some benefits still from Maui displacement. We're seeing for the first half of the year, airlift is positive into that market. It's up 5% domestically and 50% up from Japan in the Big Island. And in Honolulu, while it's down a little bit domestically, it's up almost 100% for the first half as we look kind of forward bookings for airlines. So I think we feel pretty good about where we'll kind of go for the first half of the year. I think just the back half of the year that kind of softens a little bit for that market. But I think going forward, if somebody asked about '25 pace, Hawaii is up another 25%, Honolulu is up for another 25% and then Waikoloa is up 55% in '25. So I think you're going to have a rebound here as well as you get into '25 for these assets.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Tom Baltimore for closing remarks.

I appreciate all of you taking time today. Look forward to seeing many of you at the Citi Conference next week. Safe travels.

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.