Park Hotels PK Q3 2025 Earnings Call Transcript

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Date

Friday, October 31, 2025 at 11 a.m. ET

Call participants

Chairman and Chief Executive Officer — Thomas Jeremiah Baltimore

Chief Financial Officer — Sean M. Dell'Orto

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Risks

Full-year 2025 RevPAR growth guidance was lowered to a range of negative 2.5% to negative 1.75%, reflecting weaker third-quarter results, ongoing softness in leisure demand, and additional impacts from the government shutdown.

Thomas Jeremiah Baltimore reported, "October RevPAR is now expected to be relatively flat year over year for the total portfolio," indicating persistent demand headwinds in key segments.

Management stated the government shutdown reduced October room revenue expectations by approximately $2.5 million, causing an approximately 180 basis point drag on RevPAR for October 2025.

Chicago market performance was significantly affected by National Guard deployment and soft transient demand, contributing a 50 basis point drag on Q4 projections.

Takeaways

Total Hotel Revenues -- $585 million in total hotel revenues for Q3 2025, as disclosed by Sean M. Dell'Orto.

RevPAR -- $181 in Q3 2025, down 6% (or 5% excluding Royal Palm South Beach), due to lower group and leisure demand as well as ongoing renovation disruption.

Hotel Adjusted EBITDA -- $141 million in Q3 2025, representing a hotel adjusted EBITDA margin of 24.1%, with cost controls underpinning the margin performance.

Adjusted EBITDA -- Adjusted EBITDA was $130 million for Q3 2025, demonstrating continued expense discipline despite revenue challenges.

Adjusted FFO Per Share -- $0.35 for the third quarter, with revised full-year adjusted FFO per share guidance of $1.85 to $1.97 (midpoint $1.91).

Expense Growth -- Management achieved expense growth of 1% or less for three consecutive quarters through Q3 2025. Expense growth is expected to decline by approximately 50 basis points in the fourth quarter.

Liquidity -- Total liquidity increased to $2.1 billion after the extension and upsizing of the corporate credit facility in September 2025, now consisting of a $1 billion senior unsecured revolver (maturing 2030), a new $800 million senior unsecured delayed draw term loan (2031), and a $200 million term loan (2027).

Strategic Dispositions -- The exit of three non-core hotels (Embassy Suites Kansas City, Doubletree Seattle Airport, Doubletree Sonoma), expected to generate just $300,000 in combined EBITDA this year, will increase portfolio nominal RevPAR by nearly $6 and expand margins by about 70 basis points.

Royal Palm South Beach Project -- $103 million renovation expected to double EBITDA from $14 million to nearly $28 million at stabilization, with a 15%-20% IRR; reopening is targeted ahead of the 2026 World Cup.

Dividend Policy -- Fourth-quarter cash dividend set at $0.25 per share, with no additional top-off dividend expected for 2025, preserving over $50 million in capital.

Portfolio Strategy -- Goal to divest remaining 15 non-core consolidated hotels and concentrate ownership on 20 high-quality assets representing 90% of portfolio value; two assets are under letter of intent and several others in active discussions.

Outlook for Q4 -- RevPAR growth for Q4 2025 is guided to a range of negative 1% to plus 2% (or positive 1% to 4% excluding Royal Palm), reflecting softer leisure demand and the impact of the government shutdown.

2026 Group Revenue Pace -- Excluding Hawaii and Royal Palm, group pace is up 4.1% for 2026, with notable double-digit increases in several core markets driven by large events in key cities.

Hawaii Operations -- Sequential RevPAR improvements were observed in Hawaii, but Japanese and Canadian visitation remained below historical levels as of Q3 2025; management anticipates continued recovery but expects pre-pandemic EBITDA levels not to be reached until 2027.

Summary

Park Hotels & Resorts (NYSE:PK) management reported substantial progress on non-core asset dispositions, credit facility expansion, and portfolio reinvestment, while lowering key financial guidance for full-year 2025 due to softer-than-anticipated demand and external disruptions. The company emphasized enhanced liquidity with a $2.1 billion capital cushion as of September 2025 and detailed the impact of ongoing and planned high-return renovations, including milestone projects in Miami and Hawaii, stating that these investments will strengthen future results. Management highlighted disciplined expense management, evidenced by three consecutive quarters of minimal expense growth (1% or less per quarter), which enabled resilience against top-line pressures. The dividend policy was further clarified, with a 9% annualized yield maintained for 2025 and the full-year top-off dividend withheld to support strategic investments and debt reduction. Near-term outlooks account for government shutdown drag, persistent softness in select transient and international channels, and operational disruptions in specific markets, yet group revenue bookings for 2026 already show upward momentum supported by a robust event calendar and targeted asset upgrades.

Sean M. Dell'Orto provided, "we are adjusting our full-year outlook. We now expect full-year RevPAR growth to be down about 2% at the midpoint of a range between negative 2.5% and negative 1.75%, or down 1% at the midpoint excluding Royal Palm South Beach for the full year," marking a quantified negative revision since the previous quarter.

Chairman and CEO Thomas Jeremiah Baltimore said, "This was just a conscious effort that we thought a 9% to 10% dividend yield far in excess of any of our peers was really the right threshold," confirming the intent behind the dividend approach and strategic capital retention.

The company expects to execute approximately $220 million in strategic renovation projects this year, with major projects at key Orlando, Key West, Miami, and Hawaii assets on or ahead of schedule.

Portfolio repositioning is expected to increase nominal RevPAR by nearly $6 and margin by about 70 basis points, with continued pursuit of value-transferring assets sales and two non-core hotel deals under letter of intent.

Industry glossary

RevPAR: Revenue per available room, a core hotel industry metric representing total room revenue divided by the number of available rooms and days in a period.

FFO: Funds From Operations, a REIT-specific measure of operating performance defined as net income plus real estate-related depreciation and amortization, minus gains on property sales.

IRR: Internal Rate of Return, the annualized effective compounded return rate leveraged for evaluating investment profitability.

Full Conference Call Transcript

This morning, Thomas Jeremiah Baltimore, our Chairman and Chief Executive Officer, will provide an update on Park's strategic initiatives, third-quarter performance, and outlook for the remainder of the year. Sean M. Dell'Orto, our Chief Financial Officer, will provide additional color on third-quarter results and 2025 guidance as well as an update on our balance sheet and dividends. Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom.

Thomas Jeremiah Baltimore: Thank you, Ian. And welcome everyone. Park remained laser-focused on our strategic priorities during the third quarter. Fortifying our strong and flexible balance sheet, recycling capital to enhance the quality and growth potential of our core portfolio, and driving operational excellence by minimizing cost in a challenging operating environment. Through disciplined execution, we continue to transform Park into an owner of high-quality iconic hotels with compelling growth profiles. We believe this ongoing portfolio refinement combined with unlocking embedded value across our assets positions us to deliver stronger performance in the years ahead.

Because we continue to be proactive with respect to our balance sheet, we successfully extended and upsized our corporate credit facility in September to provide us with committed debt capital that increases our total liquidity to $2.1 billion to address our 2026 debt maturities. I want to thank our bank partners for their continued support and confidence in Park and for giving us the flexible capital to execute our business plan. Turning to our capital allocation initiatives. Our strategy over the past several years has been and continues to be focused on unlocking significant embedded value within our core portfolio to maximize returns for our shareholders.

With development returns far exceeding acquisition yields, we continued to lean into high ROI reinvestments, deploying over $325 million across our best-performing assets at returns approaching 20%. Including the meeting space expansion and renovations at our Signia and Waldorf Astoria Bonnet Creek complex in Orlando, the renovation and repositionings at our Casa Marina and Reach Resorts in Key West, and the renovation and up branding of our Santa Barbara resort. In May, we launched our sixth major hotel redevelopment in seven years. A $103 million renovation and reposition of the Royal Palm located in the heart of South Beach Miami.

This transformational project is expected to generate a 15% to 20% IRR and more than double the hotel's EBITDA from $14 million to nearly $28 million upon stabilization. Importantly, construction remains on schedule and on budget, and we are targeting a reopening ahead of the 2026 World Cup matches in Miami next June. We also have several other major renovation projects underway, including the final phases of guest room tower renovations at both of our Hawaii hotels, expected to be completed in early Q1 2026, as well as the second phase of guest room renovations at our Hilton, New Orleans Riverside Hotel, upgrading another 428 guest rooms in the 1,167-room main tower.

The remaining 489 guest rooms at New Orleans are expected to be completed over the next one to two years. In total, we expect to execute approximately $220 million in strategic renovation projects this year, further enhancing the quality of our core portfolio. We remain confident that reinvesting in our assets represents the highest and best use of capital. Since 2018, we have invested approximately $1.4 billion in our core hotels, upgrading nearly 8,000 guest rooms, and fully repositioning several of our most strategic assets. We continue to be disciplined and deliberate with our capital recycling efforts, particularly as the transaction market remains episodic. Our goal remains crystal clear.

To divest our remaining 15 non-core consolidated hotels and concentrate ownership across 20 high-quality assets in markets with strong growth fundamentals and limited new supply and that account for 90% of the value of our portfolio. Successful execution of this strategy will position us with one of the highest quality portfolios in the sector and among the strongest same-store growth profiles. In line with this plan, we recently closed the 166-room Embassy Suites Kansas City, a property on an expiring ground lease that generated minimal EBITDA, and by year-end, we will exit two additional non-core hotels on expiring ground leases. The Doubletree Seattle Airport, the Doubletree Sonoma, which are expected to generate a combined EBITDA of just $300,000 this year.

Exiting these three lower quality assets will meaningfully enhance our portfolio metrics, increasing nominal RevPAR by nearly $6 and expanding margins by approximately 70 basis points. Despite a challenging environment, we remain laser-focused on executing our strategic objectives, with several non-core assets currently being marketed and active discussions underway on multiple transactions, including two potential deals under letter of intent. Turning to operations. As we disclosed on our second-quarter call, third-quarter results were impacted by a meaningful decline in group demand, driven by tough year-over-year comparisons following last year's strong citywide calendars across several of our markets.

Incremental disruption from the second phase of our Hawaii renovations, which began in August, a month earlier than last year, and further challenged by softer leisure government demand. Overall, RevPAR declined 6% or approximately 5% when excluding Royal Palm South Beach. Despite these headwinds, some of our core markets performed exceptionally well, further demonstrating our ability to unlock value at our hotels. In Orlando, the Bonnet Creek Complex delivered nearly 3% RevPAR growth with both the Signia and Waldorf Astoria hotels achieving their highest third-quarter RevPAR and GOP in the complex's history.

Looking ahead to Q4, the complex is set to benefit from multiple group buyouts, with group revenue pace up 28% and RevPAR growth expected in the mid to upper single digits. In Key West, RevPAR growth outperformed the broader portfolio, increasing 1% for the quarter, while Casa Marina's RevPAR index reached 110, up nearly 800 basis points year over year, driven by very strong group demand. Overall, group room nights increased 28%, driving higher occupancy and stronger overall results. For Q4, we expect continued outperformance supported by ongoing leisure transient strength as we head into peak season, translating to mid-single-digit RevPAR growth. In New York, RevPAR rose nearly 4% with meaningful share gains across all segments.

Meanwhile, in San Francisco, the JW Marriott Union Square delivered RevPAR growth of nearly 14%, supported by strong group and transient demand. Both hotels are expected to maintain strong momentum through year-end, driven by very strong group trends, with group revenue pace up 14% in New York and 160% in San Francisco. Finally, at the Caribe Hilton in Puerto Rico, Q3 RevPAR increased nearly 12% with incremental leisure demand driven by the Bad Bunny residency, which added roughly 1,300 basis points of lift to the quarter.

Looking ahead to the fourth quarter, we expect a significant rebound led by a broad-based recovery in group demand, coupled with easier year-over-year comparisons in Hawaii as we lap the 45-day labor strike which began late September last year, the impact of which was endured throughout the fourth quarter last year. Group revenue pace for the fourth quarter is currently up over 12% year over year, with double-digit increases for several of our largest group houses, including our Bonnet Creek complex in Orlando, our JW Marriott in San Francisco, our Hilton's in New York, New Orleans, Chicago, and Denver, our two Hawaii resorts, and the Caribe Hilton resort in Puerto Rico.

That said, the extended government shutdown has impacted both group and transient demand in several of our core markets, more pronounced in Hawaii, DC, and San Diego, placing additional pressure on fourth-quarter results. Through October, we estimate that the shutdown has reduced expectations for room revenue by approximately $2.5 million, resulting in a roughly 180 basis point drag on this month's RevPAR performance. October RevPAR is now expected to be relatively flat year over year for the total portfolio or up approximately 1.5% when excluding the Royal Palm in Miami.

Based on our current forecast, which reflects the impact of the shutdown through October only, we expect fourth-quarter RevPAR growth to range between negative 1% and plus 2%, or positive 1% to positive 4% when you exclude Royal Palm. Sean will provide more detail on our updated full-year guidance in just a moment. Finally, as we turn our attention to 2026, I am confident that the strategic investments we have made will position Park to outperform during the reacceleration of the lodging cycle. While some macro uncertainty persists, particularly for the lower-end consumer facing economic pressure from higher rates, we see the foundation forming for the next cycle of expansion.

A more accommodative Fed and easing financial conditions resulting in lower rates and taxes should support a rebound in business investment. At the same time, sustained public sector and private sector spending, particularly around AI infrastructure and the anticipated productivity gains from AI adoption, together with a modest pickup in inbound international travel, particularly from Japan, should further strengthen lodging fundamentals. Looking ahead, we remain optimistic about 2026 and beyond, supported by expectations for lower interest rates, a more favorable regulatory environment, and a renewed investment cycle, all of which should drive stronger economic and travel growth.

Along with a meaningful boost from major events including World Cup events in multiple cities, the Super Bowl in San Francisco Bay Area, and New York and Boston's 250th anniversary celebrations. With industry supply growth remaining at historic lows, we see a clear path for RevPAR acceleration and sustainable long-term growth, particularly across the segments and markets where our portfolio is concentrated and additional growth from the capital investments we are making in the core portfolio. And with that, I'll turn it over to Sean.

Sean M. Dell'Orto: Thanks, Tom. For the third quarter, RevPAR was $181, representing a 6% decline over the prior year, or down 5% excluding the Royal Palm South Beach, which suspended operations in May for its full-scale renovation. Total hotel revenues were $585 million and hotel adjusted EBITDA came in at $141 million, translating into a hotel adjusted EBITDA margin of 24.1%. Despite the softer top-line results, continued cost discipline by our team and hotel partners held expense growth relatively flat for the quarter, marking the third consecutive quarter with expense growth of 1% or less. Adjusted EBITDA was $130 million and adjusted FFO per share was $0.35.

Turning to the balance sheet, as Tom mentioned, we made significant progress toward addressing our 2026 maturities by amending and upsizing our corporate credit facility. The facility now includes a $1 billion senior unsecured revolver with a fully extended maturity in 2030, a new $800 million senior unsecured delayed draw term loan facility with a fully extended maturity in 2031, and the $200 million senior unsecured term loan maturing in 2027 that was entered into in May. We expect to draw on the new term loan next year to fully repay the $122 million mortgage on the Hyatt Regency Boston.

And together with a subsequent financing transaction expected in 2026, fully repay the $1.275 billion mortgage on the Hilton Hawaiian Village by the middle of next year when the par prepayment window opens. With respect to the Hilton San Francisco and Park 55 hotels, which were placed into receivership in November 2023, we now expect the hotels to be sold by the receiver on or before the 21st of next month, as the purchaser has exercised its one-time extension right outlined in the executed purchase and sale agreement. Turning to dividends, on October 23, we declared a fourth-quarter cash dividend of $0.25 per share to stockholders of record as of December 31, translating to an annualized yield of approximately 9%.

To preserve liquidity for our strategic initiatives, to reinvest in the portfolio, and deleverage the balance sheet, we do not expect to declare a top-off dividend for 2025, preserving over $50 million based on the midpoint of our updated FFO guidance. And finally on guidance, based on third-quarter results and known impacts from the government shutdown, we are adjusting our full-year outlook. We now expect full-year RevPAR growth to be down around 2% at the midpoint of a range between negative 2.5% to negative 1.75%, or down 1% at the midpoint excluding the Royal Palm South Beach.

Our revised guidance reflects weaker than expected third-quarter results and continued softness in leisure demand expected for the fourth quarter, further compounded by the impact of the government shutdown in October. Accordingly, we are also lowering our full-year adjusted EBITDA forecast by $12.5 million at the midpoint to $608 million within a tightened range of $595 million to $620 million, resulting in a hotel adjusted EBITDA margin range of 26.3% to 26.9%, a 20 basis point change versus prior guidance. Adjusted FFO per share is now expected to be $1.1 at the midpoint within a range of $1.85 to $1.97 per share. This concludes our prepared remarks. We will now open the line for Q&A.

To address each of your questions, I ask that you limit yourself to one question and one follow-up. Operator, may we have the first question please?

Operator: Thank you. Ladies and gentlemen, the floor is now open for questions. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. First question today is coming from Duane Pfennigwerth of Evercore ISI. Please go ahead.

Duane Pfennigwerth: Thank you. Hey, Duane. Wanted to ask you about the expense performance given kind of the lower outlook on 4Q RevPAR? It feels like you're pulling expenses down to a surprising degree to offset that. Can you just talk specifically about where that's coming from? And what the planning cycle for those expense pull downs looks like? How much lead time do you need to do that? Just continues to be a bit surprising given the variance in RevPAR and the lesser variance in EBITDA? Thank you.

Sean M. Dell'Orto: Sure, Duane. This is Sean. I'll take the first stab at that. We talked about this last quarter. Clearly aggressive asset management is a key pillar of ours. And we're working with our hotel partners. We're looking to reduce costs in this environment that we're experiencing. We talked about deep dives last quarter. We did that in over a dozen properties, definitely some key properties of ours. Looking at both revenue and cost opportunities. On the cost side, it's been anywhere from productivity elements, staffing, full FTE type staffing, procurement, think about how you might look at certain brand standards and certain assets that don't necessarily fit or make sense in challenging those.

So a number of initiatives experimenting on a few ideas to ultimately drive costs out of the operating model. So this is something that we've been working on throughout the year and we've noted that some of the deep dives we did in a batch of properties started Q1 and Q2, and we're expecting to see the benefits of that as the year went on. So some of that is there embedded in kind of what we see in Q4. I think on the other side too, we continue to benefit from the renewal we did in the insurance side with a 25% reduction in premiums.

We continue to fight on tax appeals in certain markets, especially where real estate valuations are lower than they were pre-COVID and seeing effects of that as well. So that's all kind of getting layered in. Clearly, there's a focus even more intently as you see some of the expectations of Q4 come through. And that's, I think, more kind of real-time adjustments that you make in terms of staffing levels to what you might see in occupancy drops. I think in the end, it's yielded results here.

I mean, you adjust out Royal Palm, which obviously is closed, you adjust out Hawaiian Village, which had some anomalies in other things related to with the strike on the cost side, we've seen and other anomalies that we've had lapping over year over year, we've seen expense growth decline each quarter from the start of the year. We were up 2.7% in Q1. And we're down ultimately just below flat, about 50 basis points down expected for Q4. So I think it's just a lot of hard work being done, a lot of good work being done to execute against this.

Duane Pfennigwerth: Okay. Keep it there, Sean. Thank you.

Operator: Thank you. The next question is coming from Smedes Rose of Citi. Please go ahead.

Smedes Rose: Hey, Smedes. Hi, thanks. Hi. I just wanted to ask you a little bit on the dividend side. Do you noted that you don't have to pay or you won't be paying the dividend in the fourth quarter. And is the remaining quarterly 25¢, is that really just to reflect the required sort of payout from a tax perspective, or is there anything you could do there on the dividend side to sort of as you think about sort of cash retention going forward?

Thomas Jeremiah Baltimore: Yes. It's a great question, Smedes. Obviously, we're a little perplexed by the number of calls that we've gotten regarding the dividend. If I could sort of frame for a second if you look over the last three years, we have returned about $1.3 billion in capital to shareholders both through dividends, obviously, and through buybacks. We've bought back about 38.5 million shares. That's about 20% of our float. If you think about that $1.3 billion, I mean, equity market cap today is somewhere around $2 billion plus or minus at obviously a depressed low and somewhat ridiculous number.

You think about that, and we're 60%, 70% of that we've already returned, and we're already paying a dividend that's 9%, 10%. So there was nothing there's no liquidity issues at Park. If anything, based on what we've just done and incredible work led by Sean and by the team, with our credit facility. We've got $2.1 billion of liquidity. So there are no issues at all. And I also remind people, if you think back to the pandemic when we virtually had no revenue, and all the discipline and the moves that we made and that we got through that. So clearly, liquidity issues at all.

This was just a conscious effort that we thought a 9% to 10% dividend yield far in excess of any of our peers was really the right threshold. We do have depreciation. We do have the ability to be able to shield. And we really thought that we could deploy that incremental quarter 25¢ plus or minus, back into strategic investments and or having it available to pay down leverage. So it was really nothing more than that. And I just want to reinforce, we are very disciplined about our capital allocation. I think we've demonstrated that time and time again. And we'll continue to have that focus and that discipline.

And we thought the incremental $0.25 and reallocating that was the right business decision at this point.

Smedes Rose: Okay. I guess, just switching gears for just a minute, I wanted to ask you just to see obviously, a lot of focus is turning to 2026. Could you just talk about kind of what you're seeing on the group side for next year for sort of the pace of bookings or revenue and, you know, any particular kind of sub-markets where you're seeing, you know, significant strength? For weakness?

Thomas Jeremiah Baltimore: Well, if we look at '26 group pace and think it's important to sort of given Hawaii is still ramping up, take if you exclude Hawaii and exclude Royal Palm, which will reopen and complete in May, '26 right now. '27 as we look out, I think we're up about 4.1% plus or minus. So we think about markets clearly strong markets, Signia, Bonnet Creek, probably 9%. Our Hyatt in Boston, double digits. Caribe probably up another 39%, Santa Barbara up significant amount, certainly north of 50%. Casa Marina up low to mid-single digits. So certainly, feel very good about that right now. As we look out.

We fully expect that we will continue to see more activities with our operating partners continue to build the group base for '26. As we think about 2026, we're pretty encouraged. I mean, there are a number of data points out there that I think are interesting. Clearly, as you think through with the Fed, we certainly expect a more accommodative Fed lower rates, clearly lower tax rates, deregulation, certainly more public and private investment. And as we all know, the kind of dollars that are being right now in AI and infrastructure and certainly the expected productivity gains there. But you've got also special events.

You've got the impact of World Cup, which we all we certainly believe is going to be significant. Obviously, the Super Bowl out in the San Francisco Bay Area. Obviously, the anniversary celebrations, 250 years. Which will be largely anchored in New York and in Boston. We expect obviously Park is going to be very well positioned to take advantage of that. So as we look out, we're certainly encouraged. It would be nice to have some of the tariffs and some of the other matters geopolitical sort of calm down less of an impact, would certainly be helpful and I think provide incremental tailwinds as well. But we're very encouraged as we look out to 2026.

We're also very encouraged by really the strategic investments that we continue to make as you think about what doing in Hawaii, both properties there, if you think about New Orleans, what we're doing, obviously, just incredibly bullish about our transformation in Miami. Think that's just going to be an extraordinary success. And really excited about the progress that we're making there. And fully expect that will open obviously in May, early June of next year.

Smedes Rose: Great. Thank you.

Thomas Jeremiah Baltimore: Thank you.

Operator: Thank you. The next question is coming from Chris Woronka of Deutsche Bank. Please go ahead.

Chris Woronka: Hey. Good morning, guys. Hey, Tom. So my first question Tom, you mentioned asset sales and yeah, you got 15 non-core assets. You may have other things with land and such. I guess the question would be, what's your conviction level? What's your confidence level? Maybe that versus a year ago or six months ago on some of these same assets? You know, what needs to happen to get some of these over the finish line? And, you know, do you think we start seeing an acceleration in that, as we move through into the new year?

Thomas Jeremiah Baltimore: Chris, it's a great question, and thank you for it. I mean, I can't tell you as a leadership team and we are laser-focused. Let me just set the stage for a second. Really our top 20 assets account for 90% of the value of the company. And if you really focus on sort of the core and the core metrics of those 20 assets, it's really as strong as any portfolio in the sector. We remain laser-focused on selling the non-core and recycling that capital. I think it's important to remind listeners, I mean, we have sold or disposed now of 47 assets for north of $3 billion since the spin.

So we have in the worst of times even during the pandemic keep in mind we had six assets in San Francisco. We now have one asset. And we sold two of those in the worst of times during the pandemic. It is challenging in this environment. It's not an issue of debt. There's plenty of debt capital. There's plenty of equity capital. I think if you can get really just better visibility and less volatility, that certainly will help. There are two additional leases. Obviously, we gave back the Kansas City asset, which is we mentioned, obviously, in our prepared remarks.

We've got two other assets that we made the decision last year that we would not extend those ground leases, short-term ground leases. We'll give those assets back at the end of this year. We've got two other assets under letter of intent, and we've got several others at various stages of the marketing process. We are very confident. We probably would lean more towards the low end of our guidance than the high end. We've said $300 to $400 million this year. It is conceivable that some of that could bleed into early next year from a closing standpoint. But please rest assured that we are laser-focused, committed, experienced, and in selling and disposing of these non-core assets.

We've done it. Done it with assets that have been even more complex. Every asset's got a story, whether it's a legal or tax or some other matter. But the team is working their tails off to make progress and get this matter behind us. The sooner we can get closer to that 20 hotels, we think that's really gonna improve our optionality but I think allow investors to really look through at the core assets and really the incredible work that we're doing within that core. That's where we're spending significant dollars. We believe passionately that we can generate higher returns on our from development yields than we can from acquisition yields.

Chris Woronka: Okay. Thanks for all that color, Tom. As a follow-up, yeah, I think we heard Hilton last week talking about lower expenses to owners and franchisees, and some of that is coming from the I guess, what you call a share. Don't know the exact term, but some of the chargebacks. Is there more that could be done there? How do you guys and you met? Is that a, you know, a material or tangible benefit to you next year? And just maybe where you'd be fit with respect to you know, maximizing what can be done with the through the franchise agreements to keep your costs down from the parent companies? Thanks.

Thomas Jeremiah Baltimore: Yeah. It's another great question, Chris. We are spending a lot of time with our partners at Hilton and our other operating partners. As Sean so eloquently pointed out, when you think about expenses and what we've done, in a row, if you look at insurance, if you look at the deep dive analysis, that you mentioned, we are as good as anybody at really in this environment where you haven't really had the top-line growth across the sector, doing everything humanly possible to take cost and really reinvent the operating model where we can. You're gonna see that continue, and you're gonna see us continue to push and encourage and partner with Hilton, with Marriott, Hyatt, etcetera.

Trying to find ways to continue to take cost out of the business. There are huge opportunities there, and I have to think candidly with the advancement of AI as that continues to expand and that we've got to believe that they're gonna be significant savings and productivity gains there as well. I don't think those occur necessarily this week, this month, but I certainly believe over the intermediate and long term, there are gonna be real opportunities there.

Chris Woronka: Okay. Appreciate all that color, Tom. Thanks.

Operator: Thank you. The question is coming from David Katz of Jefferies. Please go ahead.

David Katz: Hey, Good morning. Thanks for What I would love some help with, having, you know, gone out there earlier this year with your yourselves and your peers, you know, Hawaii is still just a confusing market for me. Can you just sort of give us as much insight on sort of what the puts and takes of the drivers, the headwinds are out of Hawaii at this point?

Thomas Jeremiah Baltimore: Yeah. It's a fair question, David. I think you've got kind of step back a little bit and just think about Hawaii. If you think about over the last twenty years, Oahu's RevPAR growth is really I think Key West in Hawaii is sort of lead a CAGR of about 4.5% versus the US average of about 3.3%. If you think back over that period of time, you've had negative supply growth I think 0.3 or less than that. Think about the next five years. We're thinking about supply growth in Hawaii at 0.3 again. So that backdrop to us very, very encouraging. Domestic airlift is also increased. 20% since 2019.

And a lot of the owners in Hawaii own their assets under ground leases. In our case, in both of our world-class resorts there, we own those obviously fee simple. And we just think that's a huge advantage. And, obviously, there's a little bit of a concentration issue. You know, ideally we wouldn't want to have 25%, 30%. But if you're gonna have it anywhere, having it in Hawaii certainly gives us comfort. Clearly, from a demand standpoint, if you look historically, it's about 10 million visitors, nine to 10 million visitors, 60% plus or minus coming out of the US. 17% historically coming out of Japan. Over the last thirty years.

And you know, to get to your point, it was about 1.5 million in Japan. I mean, we're gonna end this year probably somewhere in the 720 to 750,000. So you're clearly seeing less visitation from Japan. It's been a slower ramp-up. There are reasons for that, the stronger dollar versus the yen. There have been some fuel surcharges. There have been some cheaper alternatives. So clearly that Hawaii ramp-up or the Hawaii participation today is about you know, probably three to 4% of the international demand at our assets versus probably 19% plus or minus where it was in 2019. So we are encouraged by recent discussions. Sequentially, Hawaii has gotten better. Obviously, we had the strike.

It was a very challenging environment for forty-five days and the lingering effects of that. We were down eighteen percent first quarter, 13% second quarter, 9% plus or minus third quarter and we expect we're going to be somewhere north of 20% here in fourth quarter. Even with sort of the revised guidance. That Sean outlined. So it's certainly taking a little longer. But we are bullish, and passionate and still believe obviously the investments that we're making Tap a tower, huge benefit. Rainbow tower and what we're seeing there. We're excited obviously what we're doing Hilton Waikoloa. Hilton Waikoloa, we little more complex, the second phase of that renovation. So more rooms out of service.

That certainly is contributing to a little bit of the more disruption there. And certainly contributing to some of the softness there. But and Canadian travel. Canadians, as we all know, were account for and Mexican travelers, about half of the inbound international travel into the US. And Canadians have been frustrated. And they have been voting with their dollars and you know, their travel has been down in Hawaii, and it's certainly been down in other markets as well. So we're certainly feeling the effects of that as well.

Once some of those matters on the trade front get normalized and get resolved, we certainly expect that they will be back and certainly think that Hawaii will accelerate in terms of its ramp-up.

David Katz: Lot going on, but you still like it? Thank you.

Thomas Jeremiah Baltimore: Yep. Very much so.

Operator: Thank you. The next question is coming from Patrick Scholes of Truist Securities. Please go ahead.

Patrick Scholes: Thank you. Good morning, everyone. Sorry if I missed this in the prepared remarks. You had noted in your guidance and expectations only expecting the government shutdown through today. It doesn't look like it's gonna get resolved today. Why not continue that expectation in your guidance? Beyond today? Thank you.

Thomas Jeremiah Baltimore: Yeah. It's another excellent question. Look. At the time we were preparing the guidance and the situation has been so fluid, we wanted to include for investors and analysts and all the listeners what we knew. And what we knew as of the end of October was about $2.5 million of impact. So we've included that. But we also were conservative in our guidance and that reflects sort of the midpoint. So if this were to continue and none of us know how this is going to unfold, and everybody's probably got an opinion, the reality is that if you look at the low end of our guidance, we believe that we are adequately covered if this were to continue.

And I'll reinforce that. We've centered obviously our guidance on that midpoint and recognized that if it were to continue we believe it were covered through that guidance range. I would also tell you my own opinion growing up and living in this market for my life and talking and watching. My strong belief is that this will be resolved in the near future. I don't think either party can allow for this to continue much longer. Particularly with the impact with forty million people not having food benefits among other benefits. And so I hope that our leaders in Washington on both sides of the aisle will resolve it in short order.

But we think that we are covered for the guidance that we provided. If we get more information, if it were to extend and have more of an impact, we certainly will provide that on either side of that. But we wanted to provide and be transparent for what we knew and what we were seeing in our portfolio.

Patrick Scholes: Okay. Thank you.

Thomas Jeremiah Baltimore: Thank you.

Operator: Thank you. The next question is coming from Stephen Grambling of Morgan Stanley. Please go ahead.

Stephen Grambling: Hey, thank you. Hey, Steven. Just wanted to follow-up on the reallocation of the top-off dividend to investment. Is that something that you'll have the opportunity to do in the future? Maybe I missed this. And if you did have that opportunity, maybe any thoughts around thinking through that capital allocation? And is there other big projects that you try to pull forward that you have on your horizon? Thanks.

Thomas Jeremiah Baltimore: Yeah. It's a great question. Thank you for it. Listen. We've as I said earlier, we've been very thoughtful about capital allocation. And again, returned $1.3 billion to shareholders here over the last three years. And we really concluded Sean and I and the team that know, obviously, a nine, 10% dividend, which is where we are today, was and certainly sector leading was certainly enough and made sense. We will have the flexibility in the future. To certainly manage that dividend, and, you know, we will be thoughtful. We just didn't think we thought reallocating that $50 million for either debt reduction and or continued strategic investments in our portfolio makes a lot of sense.

I mean, take Bonnet Creek as an example and just the success that we're having there, we've taken the EBITDA from there approximately $55 million. We think we'll be somewhere, you know, north of $95 million this year. We're generating significant returns and higher returns through our development and strategic ROI activities and we can we generate through acquisitions. So strong believers in that, and strong believers that there's a lot of embedded upside within this portfolio.

Stephen Grambling: Got it. And just to be clear then, so I guess it's the answer in some ways depends on where the dividend yield shakes out in valuation. Is that fair?

Thomas Jeremiah Baltimore: Yeah. Yes. Yeah. That certainly plays. I mean, we've, you know, we've always targeted kind of 65% of AFFO and obviously, we've managed that a little more this year, but it's not again, it's not a liquidity issue. We've got plenty of liquidity. We've got when you we have no issues there. And we have our 2026 maturities addressed appropriately in a very thought very creative and huge credit to Sean and the team and what we've done there. So we are very thoughtful, and I think we've been as anybody on the Capital allocation front. But we also know a respectable solid dividend makes sense. And clearly, we're way in excess of all of our peers on that front.

Stephen Grambling: Fair enough. Thank you so much.

Thomas Jeremiah Baltimore: Thank you.

Operator: Thank you. The next question is coming from Chris Darling of Green Street. Please go ahead.

Chris Darling: Thanks. Good morning. Hey, Chris. So, Tom, thinking about the impact of the government shutdown, in the past when these events have been resolved, do you typically see demand come back fairly quickly, or is there historically a lagged recovery? I'm not sure if you have any experience, you know, thinking back to draw on.

Sean M. Dell'Orto: Yeah. I mean, I think there's certainly a possibility of that, Chris. I mean, clearly, it depends know, we haven't seen we've well, we've seen some group cancel related to government. It's been certainly more so on the transient and kinda seeing how that how that's the pickup of that has been more impacted. But groups know, a lot of these groups tend to have to are required to meet in a way. And so we certainly expect that those will rebook. Now the question will be, will be within the quarter or will be kind of into next year? And the kind of question. So it might be a little bit more spread out over a number of months.

It may be hard to tell really a true impact. On it. We did some looking in a way back the last long one, you know, first Trump term, and it straddled both December and January, so you certainly saw some impact in government spend and transit in January, but didn't really see true dramatic pickup in February. But it was also a good time good macro environment too there.

So it's kind of hard to look back at the past and try to draw any conclusions, but just from a standpoint of the fact that lot of people have to make these trips, have to do this travel in a way, there's probably a thought that you're going to rebound some of that. It's just a matter of.

Thomas Jeremiah Baltimore: Chris, I agree with everything that Sean said. The other point I'd make here in our portfolio, obviously, a strong fourth-quarter group pace of about 12%. Surprisingly, November and December were double-digit increases. And certainly stronger than October. So if we are all lucky and our leaders on both sides of the aisle resolve and reopen the government, we could see increased activity here based on what's on the books already in November and December. So it could be a bit of a green shoot for us there.

Chris Darling: Okay. Yeah. Those are all helpful thoughts. Realize, you know, it's a fluid situation, certainly. You know, maybe just one quick one. Going back to capital allocation. As you work to sell some of these non-core assets, in the coming quarters and you think through use of proceeds, to what extent are you thinking about share buybacks just given the frustration with where the share price has been relative to, of course, you know, needing to retain some amount of capital for the different, you know, redevelopments and expansions that talked about.

Thomas Jeremiah Baltimore: Yes. It's a great question, Chris. I would say, look, as I mentioned, I've said it a few times on the call, know, we've returned $1.3 billion. And you know, we bought back 20% of the float. So with that backdrop, it's it is important to us. You know, we've always had a guiding principle of leverage in that three to five times. We're certainly above that in obviously, a little bit of that's artificial right now because you've got major renovations underway in New Orleans that two assets in Hawaii and, of course, Royal Palm.

But we certainly would like as a team to use some of the excess proceeds to pay down debt and continue to invest back into our portfolio. There are opportunistic times when going in and buying shares will make sense. Back into the portfolio. But I'd say right now, the two priorities would be really paying down debt and reinvesting.

Chris Darling: Thank you for the time.

Thomas Jeremiah Baltimore: Thank you.

Operator: Thank you. The next question is coming from Jay Kornreich of Cantor Fitzgerald. Please go ahead.

Jay Kornreich: Hi, thanks. Good morning. I just wanted to ask a question about the 4Q outlook. RevPAR is roughly flat, which is a change from expectation last quarter where 4Q would be, I guess, up 3% to 5%. And recognizing there are some new dynamics such as the government shutdown, but are there any other points or markets that you would really to that maybe led to some of the deceleration for the 4Q expectation?

Sean M. Dell'Orto: Yes, Jay, I'll jump in on that one. In our last call, talked about a 3% to 5% up for Q4. So as you'd spoke to as you're noticing about three fifty basis point drop relative to that direct expectation, it's kind of a mix of macro trends and near-term disruption as well as a little bit of park specific sprinkled in there. But when you kind of start from just a more macro level and just some of the transient softness we've seen, whether it's through this through inbound international travel that Tom talked about, just seeing continuation of that. And kind of looking at certain markets and seeing a little bit of a trend line there.

I'd say there's about 150 basis points of impact to Q4 based on just kind of more general trends. And then mostly on transient because group remains strong. Got paces up 12% and within our largest 15 group hotels, it's up 17%. So we feel good about the group setup. It's just more the transient side. Being impacted relative to our previous expectations. Going from there, government impact, about 100 basis points, obviously continues to be a challenge since the beginning of earlier in the year with Doge and everything else. We've certainly seen the weakness there, but now more pronounced with the government shutdown, which we've talked about.

Chicago, we've seen pickup trends deteriorate materially there with the National Guard deployment into that market. It's been, again, more of a transient impact. Terms of pickup there or group position there in Hilton Chicago is up 12% for the quarter and is holding. So it's about a 50 basis point impact to Q4 there from that market. And then Waikoloa, Q4 on the renovation scope there, just kind of a little more disruption than planned to do some schedule shifting. We're doing a little bit kind of as part of phase two, we're doing a little bit of extra work, from phase one brought into phase two. So it's a little bit of an adjustment there.

It's about 50 basis points. So general softness 150 basis points. Government related, 100 and then another 100 between the Waikoloa renovation and the Chicago disruption.

Jay Kornreich: Okay. I appreciate that breakdown. That's all for me.

Operator: Thank you. The next question is coming from Cooper Clark of Wells Fargo. Please go ahead.

Cooper Clark: Great. Thanks for taking the question and appreciate the earlier comments on the dispositions. Curious if you could speak to the bidder pools and buyers you are actively seeing looking for product in the transaction market today. Wondering what markets, products, yield a buyer is looking for to step in today with what should be a better 2627 demand picture despite some uncertainty?

Thomas Jeremiah Baltimore: Yeah. I mean, I look. There's plenty of liquidity out there, and I think the buyer pool is mixed. I mean, you've got from owner operators, certainly family offices, you've got small private equity to larger private equity. You've really got the normal menu. And as I think about assets, we are know, we've had you great success in really finding that buyer for a particular opportunity. And we continue to comb through and have discussions. I think the hesitation with some buyers is debt markets, certainly have improved. But if you believe the rates are gonna continue to come down, you might be a little more hesitant on that front.

And then certainly just better visibility on the demand front. And probably candidly just clarity on some of the geopolitical and trade and inflation. I mean, all the things that all of us are working through right now. Uncertainty really is the enemy of decision making. So I do think that there are some buyers out there that are being a little more hesitant in some cases, certainly understand that. From my own experience, periods of dislocation really create the best opportunities to be buyers, particularly if you've got an intermediate and longer-term hold period. Obviously, we continue to work hard. Again, we've got the track record and I just I can't emphasize that enough.

And how we've been able to reshape this portfolio since the spin here. And now we're 47 assets that we've sold or disposed of in two more in the queue and several more at various stages, whether LOI or at the marketing process. So we are confident we'll get it done. And no one is gonna work harder than the men and women at Park as we continue to pursue our objectives.

Cooper Clark: Okay. That's helpful. And then appreciate it's still early and there's some uncertainty, but wondering how you're thinking about the balance of group BT and leisure into '26, just given some of your earlier comments on group pace and also a strong '26 event calendar in various markets?

Thomas Jeremiah Baltimore: Encouraged. I mean, I listen. I part of this, if you if we can obviously, the president's return and the discussions in China, if you can begin to just provide clarity both on tariffs and trade matters. And you look at the backdrop of the just inordinate amount of capital that's being invested through AI, but you start seeing and obviously on the public investment side, just the CHIPS Act. I mean, probably 30, 40% of that or more remains to be spent as well coupled with the special events that I've mentioned in mentioned as well. From, the World Cup, the Super Bowl, and obviously, the 250th anniversary.

And I think the animal the animal spirits, getting more clarity and just getting broader participation in the broader economy we know that both in the lower end and certainly parts of the middle that people are hesitant and perhaps a little more stretched. If those issues can be addressed, then I do think that the recent tax bill helps with that. You'll get a tailwind that I think '26 and certainly '27 as we look out, we see are very, very encouraging. The other thing that gives us great comfort is the fact that you've got muted supply. If you look at the Park portfolio, we're 0.7% supply growth versus long-term average of about 2%.

And that's over the next five years. So we find that very encouraging as we look out. And as you look at our portfolio, you can't replicate. You can't replicate what we have in Hawaii, what we have obviously in Bonnet Creek and what we have in Key West and those barriers to entry. So we're very, very encouraged as we look out over the near term. Wanna get through this year. Obviously, we want get beyond the government shutdown and some of the other matters of uncertainty. But I think as we look out 2627, we are very, very encouraged.

Cooper Clark: Awesome. Thank you.

Thomas Jeremiah Baltimore: Thank you.

Operator: Thank you. The next question is coming from Dan Politzer of JP JPMorgan. Please go ahead.

Dan Politzer: I wanted to go back to the capital allocation. This year, obviously, notwithstanding the dividend, was some CapEx that I think came down. As you think about preserving more capital to reinvest in the portfolio, the CapEx coming down this year, maybe there's some timing there. Directionally, is there maybe any inkling on how we should think about CapEx for next year, just given it seems like you're focused on reinvesting in the portfolio?

Thomas Jeremiah Baltimore: Yes. Think I'll let Sean give you the math. But we are not lowering CapEx. Mean, if anything, have been crystal clear and I think if you look at what we've done in Bonnet Creek, what we've done, obviously, in Key West, obviously what we're doing right now in Miami, what we're doing in Hawaii with two of the towers near complete. Think about Hilton Waikoloa, which will be done this year. If anything, we sort of if anything, we accelerated and expanded scope slightly. And part of that, some things that we needed to go back and other things we felt we needed to expand. So we are all in. We think we're making the right decisions.

And, obviously, I think the results are showing that. We're seeing the incremental lift in rates IRRs that are in the 15% to 20%. Think about what we did in Santa Barbara. So we think high better returns for us through the development side than what we're seeing on the acquisition side.

Sean M. Dell'Orto: Yes. I'd just add, it's more so timing. You know, we're probably about a $190 million or so through the third quarter. On spend, and we certainly expect it to be more ramped up with roll palm on well underway here. For the Q4. But I think in total for the year, we just felt like there's probably more appropriate range for the actual spend out the door. Projects still remain the same, just more going in into next year.

Dan Politzer: Got it. Thanks. And then just on Hawaii, maybe another one. As asked differently. I think you're pacing about 70%, 75% of the EBITDA relative to 2023. As you think about the Glidepipe and trajectory into 2026, do you think you can fully close that gap? Or do you think it's going to take a few years?

Thomas Jeremiah Baltimore: I think you're back in twenty in twenty-seven. I think you're still ramping in '26. That and you're looking at what's probably low one fifties number this year versus a 177. And keep in mind that we're you know, we're finishing the second phase of the Palace Tower and Hilton Waikoloa. And then, of course, you've got the Rainbow Tower that we're finishing up here in Hilton Waikoloa, which obviously is one of the premier towers. So we remain steadfast and very confident and certainly believe that those continue to ramp up. And we're also making a number of other operational changes.

We are spending a tremendous amount of time with our partners at Hilton looking at both from a leadership, sales and marketing, all of the commercial engines, it is terribly important to us but it also is a big fee generation for generator for our partners at Hilton as well.

Dan Politzer: Got it. Thanks so much.

Thomas Jeremiah Baltimore: Thank you.

Operator: Thank you. The question is coming from Robin Farley of UBS. Please go ahead.

Robin Farley: Great. Thank you. Hi, Robin. How are you? I just two small clarifications at this point. One is, just trying to understand your comments about the you know, because the release says your guidance includes just the strike through sort of today. I mean, sorry, the government shutdown through today. It sounded like you said that the lower end of your range includes the shutdown continuing through the quarter. But just if I heard you right about the impact in October, it seems like the range wouldn't be wide enough if it continued. Is it just that is government business less of a factor in November and December than in October?

I mean, that would make sense if that's the case. Or do you think it would be a similar impact when you think about how the next two months could look?

Thomas Jeremiah Baltimore: Yeah. We think it would be less of an impact Robin, as we look out. And, look, as I said, one person's opinion I just don't believe that they can allow this to drag out much longer for all the reasons we all know. All of the families and kids and others that are being impacted. And, you know, we're all hearing rumors that certainly this should be resolved, hopefully, in the very near future. But we also believe that the lower end of that guidance will largely protect us based on the guidance that we've provided.

Robin Farley: No. Understood. But just, you know, even if it were solved today in theory, right, we still be still be some November impact. But I'm no. Totally understood. Thank you. Yeah. And then the other clarification was just on Hawaii, and I just wasn't sure if I when I caught your comments about forward group bookings, I think when you said group pace for the company overall was flat in '26, I think you were excluding Hawaii. And just wanted to it seems like Hawaii you're comping the strike. You have the benefit of some room renovations.

I know that convention center in Hawaii will close at the '26, so I know that obviously, the twenty-seventh, you know, that would make the '27 sort of timing off. But for 2026, is your group Hawaii the PACE benefiting from those strike comps and things?

Thomas Jeremiah Baltimore: Know, Robin, our understanding is that the convention center will be closing the '25.

Robin Farley: So the Hawaii down is primarily just the timing of that and not so much.

Sean M. Dell'Orto: Correct. Correct.

Robin Farley: Okay. Thanks. And keep in mind, group is, yeah, group is also a small percentage of Hawaii. But with the it will be closing in '25.

Robin Farley: Okay. Great. Thank you.

Thomas Jeremiah Baltimore: Thank you.

Operator: Thank you. The next question is coming from Ari Klein of BMO Capital Markets. Please go ahead.

Ari Klein: Thanks. I had a bit of a bigger picture question. Yeah. I think historically, nonresidential investment has been highly correlated with demand. Now perhaps with AI, that relationship you know, assumingly not holding up the same way. And maybe even distorting the relationship. Curious what you think about that and if that continues, how does that impact your ability to forecast? And what else are you looking at, you know, in terms of you know, helping you know, with things?

Thomas Jeremiah Baltimore: Yeah. We all spend time trying to figure out what's gonna be the correlation. If you think historically, right, it was GDP growth. And then if you think about you know, certainly the last decade or so, it's been huge emphasis on nonresidential fixed investment spending. Have to believe candidly on both sides I think that both remain important. I just think it's the level. If you think about just GDP, they have been disconnected here in the short term. I have to believe that will change and we'll continue to see as GDP gets as Bessen and others want to get it in that 3% range, we certainly think that's going to be a huge tailwind for our sector.

That's one point that I would make. And if you think about just the amount of investment spending in the adjacencies both in energy both in data centers, both AI, both in all the things that have got to be done from the some of the electrification side. I have to believe that will continue to benefit lodging as well as we sort of look out. And if you get nonresidence or fixed investment spending in that sort three to 5% range, you get GDP in that 3% range. Think of both the operating leverage and the benefit that we think that's going to accrue to lodging. Will be significant.

And candidly, we'll have an industry that we hope will be certainly more attractive to investors from that standpoint where you can get the kind of operating leverage which is just more difficult to get when we at these lower RevPAR numbers.

Ari Klein: Okay. For that. And maybe just on the dividend. I understood you're not paying the top off. But as you think about the yield in that 9% to 10% range, when it comes to next year, is there a thought to maybe reduce that stingy yield?

Thomas Jeremiah Baltimore: Yeah. I we look. We obviously haven't decided that for next year. Historically, we've been in that 65% of AFFO. If anything, you could see us certainly consider moderating that a little. But at this kind of run rate, a dollar dividend, we think, is very healthy and certainly a nine to 10% for anything we hear from most investors, certainly appreciate that. This has gotten a lot more interest than we would have thought and hoped. To be candid. And I know some, I want to reinforce again, there are no liquidity issues. Zero with Park. Anything, we've got significant liquidity. We just decided that we wanted to allocate.

We thought that there was an opportunity both to pay down some debt and also reinvest back into the portfolio. So it was really a strategic decision made by the leadership team.

Ari Klein: Thank you.

Thomas Jeremiah Baltimore: Thank you.

Operator: Thank you. The next question is coming from Ken Billingsley of Compass Point. Please go ahead.

Ken Billingsley: Oh, good afternoon. You fitting me in here. Question is regarding comparing total RevPAR to RevPAR growth on a year-to-date basis. You know, a number of markets call smaller total RevPAR growth versus its comparable RevPAR, such as New York, Boston, DC. My question is, is this all group and banquet related? And how is 2026 shaping up in the group business will a bump in leisure travel to some of those cities the 250th anniversary. Actually negative impact kind of our total RevPAR expectation for those markets?

Sean M. Dell'Orto: I think we certainly continue to see strong out of room spend. And certainly that goes hand in hand with their with group here with banquet and catering. And that but those patterns have kind of held up even with Q3. You know, we had a, you know, certainly a weaker group quarter. And a little bit weaker than expected despite that banquet you know, amongst our urban and resort properties have held up pretty well in banquet revenue side. The outlets side was down about 67% relative to expectations, again, more so because I think as you have a bit of weaker group, pivoted to more discount channels.

So, you know, kind of higher a low price point guest who's not necessarily gonna spend as much in the outlet. So he certainly saw that dynamic go on there. But I think as you look at the mainstream you know, guests, and consumer, it's know, on the group side, people continue to spend on their events, AB and the like, and guests that are kind of more on the transient side, leader side, even business are spending the outlet. So I think that's in that's led to what we've typically seen is about, I think, predicting about 100 basis point benefit differential between total RevPAR and RevPAR this year.

We'd certainly expect that to continue into next year as you think about some of these, you know, specific to some of these events. I think there's certainly a nice benefit and pop you expect on rate in the rooms for things like the World Cup. But you see a lot of you know, you expect a lot of people to be around these markets, you know, as part of the maybe not going even going to games as part of the celebrations and really being promoting, you know, restaurants and certainly other things and outlets inside there. Hotels themselves.

So I think we certainly expect to see continuation of strong spending patterns outside the room to help promote total RevPAR growth above room RevPAR growth.

Ken Billingsley: Appreciate that. Thank you.

Sean M. Dell'Orto: Yep. Thank you. At this time, I would like to turn the floor back over to Mr. Baltimore for closing comments.

Thomas Jeremiah Baltimore: On behalf of the Park team, really appreciate everyone taking time today. We are available for follow-up questions and look forward to seeing many of you in NAREIT in Dallas. Safe Travels, and please know that Park team is laser-focused on continuing to create shareholder value.

Operator: Thank you. Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.

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