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Thomas Baltimore

Thank you, Ian, and welcome, everyone.
Let me begin by saying how proud I am of our performance in 2024, the year in which we achieved sector leading results while advancing multiple strategic objectives, building a strong foundation for the company's sustained growth and long-term success.
Operationally, our portfolio exceeded our expectations for both top line and bottom line performance, showcasing the exceptional quality of our portfolio, further enhanced by the strategic capital investments we've made and our team's steadfast commitment to operational excellence.
On the capital allocation front, we continue to reshape our portfolio by strategically divesting of non-core hotels. Accordingly, we disposed of three hotels during the year including two hotels and joint ventures that were sold for a combined $200 million in addition to the early termination of a ground lease and closure of the Hilton Oakland Airport, which incurred an EBITDA loss of nearly $4 million over the prior 12 months.
Exiting these hotels improved 2024 RevPAR by $3 while increasing EBITDA margin by over 30 basis points. As we enter this year, we intend to be more aggressive with our disposition efforts, targeting between $300 million to $400 million of non-core asset sales as we seek to further improve the overall quality of our portfolio, enhance our long term growth profile and pay down debt.
As a reminder, since 2017, we have sold or disposed of 45 hotels for over $3 billion while meaningfully upgraded the quality of our portfolio. As we execute our strategy to sell non-core assets, we remain laser focused on allocating capital to maximize shareholder returns including the reinvestment of proceeds into our core portfolio of iconic hotels.
I'm incredibly proud of the value we have created through recent redevelopments at our Bonnet Creek resort in Orlando and Casa Marina resort in Key West. Each property has delivered exceptional performance in their first year post improvement with RevPAR increasing 17% at Bonnet Creek in 2024 over the prior year and EBITDA for the complex exceeding $82 million which is nearly $22 million or 36% above last year.
At Casa Marina, RevPAR increased almost 29% since 2019, and EBITDA for the resort finished the year at $30 million or over $96,000 per key and up over 31% since 2019.
Looking ahead to 2025, we expect continued growth at both resorts with group revenue pace at the Bonnet Creek complex of 15%. Additionally, we expect tailwinds from the opening of Universal's new $6 billion Epic theme park, which is anticipated to accelerate leisure transient demand into the market after its expected opening this May.
The Waldorf Astoria is also poised for a further lift, benefiting from the Condé Nast recognition as a top 10 global resort destination in 2024. For Casa Marina, we expect continued market share gains as the resort recaptures its place as the top resort in Key West, while benefiting more this year from an enhanced guest experience with the new Dorada Beach front bar and restaurant.
We expect each resort to produce RevPAR growth in the upper single digits, translating to double digit EBITDA growth this year, exceeding our underwriting for each of these ROI projects and further demonstrating our ability to unlock embedded value in our core portfolio, which remains one of our key strategic priorities.
With our proven track record of value creation through major ROI projects, I'm excited to announce plans to reposition our Royal Palm resort in South Beach, ideally situated along the prestigious Collins Avenue corridor. This transformational $100 million investment is designed to significantly elevate the property's quality and overall guest experience, allowing it to better compete with other premium lifestyle resorts in the market and command a substantial ADR increase.
The comprehensive renovation will encompass a full refurbishment of all 393 guest rooms along with the addition of 11 new rooms. We will also reimagine all public spaces, including a new lobby bar, reconcepted food and beverage outlets, and expanded meeting spaces designed to enhance the overall group experience.
Construction is expected to begin after peak season in May and will require us to suspend operations into Q2 of 2026 with the expectation to reopen well ahead of the World Cup matches scheduled to begin in June of 2026.
Based on our underwriting, we expect the project to generate an IRR of 15% to 20% while potentially doubling the EBITDA of the hotel once stabilized. We continue to actively explore additional development opportunities in key markets such as Hawaii, Key West, and Santa Barbara.
Our ROI pipeline now exceeds $1 billion with an estimated incremental value creation potential of over $300 million. We remain disciplined and strategic in which projects we pursue as we invest our capital to unlock long term value for our shareholders.
Turning to operations. We ended Q4 on a solid note following a strong pick up in demand across most segments following the presidential election, with the quarter supported by double digit RevPAR gains in Orlando and Key West coupled with solid group and business transient demand in several key urban markets, including Chicago, Boston, and New York.
In Orlando, RevPAR increased nearly 30% during the quarter across our three hotels driven by strong group production and solid gains in the leisure transient segment. I am particularly pleased with the outstanding performance of the Waldorf Astoria Bonnet Creek.
Following last year's renovation with the hotel reporting an 85% surge in transient revenues, our group revenues increased over 55% during the quarter. Additionally, the hotel generated a 40% increase in ancillary revenues as guests took advantage of the upgraded outlet facilities and enhancements to our championship golf course.
In Key West, Casa Marina continued to exceed expectations with the hotel reporting a 77% increase in RevPAR during the quarter following the 2023 renovation with the hotel's RevPAR index improving to $108.
December was particularly strong ending with nearly $120 ADR premium over the competitive set and a RevPAR index of $126. Marking the highest quarterly performance since 2019, the hotel saw wins across the entire operation including a total banquet contribution of $543 per group room night and a notable increase in ancillary spend per occupied room, up over 25% versus the prior year period.
At the New York Hilton, RevPAR increased 3.5% during the fourth quarter. Driven by a 17% increase in group room nights, ADR growth was approximately 3% during the quarter, with the expanded group base enabling the hotel to push transient rates up nearly 4%.
Notably, rate gains in December were up nearly 6%, further reinforcing the hotel's strong pricing power and demand momentum. At the Hilton Chicago, RevPAR growth was nearly 15%, which combined with operational efficiencies, contributed to a 53 basis point improvement in EBITDA margin over the prior year period.
Heading into 2025, the Hilton Chicago is seeing healthy demand across all segments, driving expectations for RevPAR growth this year above a very strong 2024 performance.
Turning to Hawaii. As previously disclosed, results at our Hilton Hawaiian Village hotel were negatively impacted by a 45 day labor strike coupled with disruption from the renovation of 404 guest rooms at the iconic Rainbow Tower collectively accounting for a nearly 540 basis point headwind, the total portfolio RevPAR during the fourth quarter.
Looking ahead, we anticipate a solid rebound for the resort in 2025. Despite a modest start with very challenging year over year comparisons during the first quarter, we expect solid growth for the rest of the year with fourth quarter growth aided by lapping last year's strike disruption.
While we continue to see improvements in demand from Japan, most of the gains are expected to be driven by inbound domestic travelers along with increased citywide activity with a nearly 85% increase in convention room nights this year.
At our Hilton Waikoloa hotel where full year RevPAR was down 16% on lower group demand due to tough comparisons and renovation disruption in the second half of the year, we expect a sharp rebound in group production in 2025, with group revenue pace up nearly 70%, leading to anticipated positive RevPAR growth in 2025.
Turning the focus to our outlook for 2025. We continue to see positive demand trends across all segments which accelerated following the presidential election in November and I feel cautiously optimistic about how the year will unfold.
From a macro standpoint, US economy remains on firm footing supported by healthy employment, strong corporate profit growth, and a resilient US consumer, all backed by an administration that is pro-growth with more rational regulation which we believe will continue to drive demand for hotels.
That said, some uncertainty remains, and it's hard to predict how the new administration's policies will impact this business momentum. For Park specifically, we remain laser focused on what we can control and believe our portfolio is well-positioned for long term growth based on the strategic investments we've made as well as our presence in markets with limited supply growth.
More specifically, we expect 2025 to be a tale of two halves for the portfolio beginning with a first quarter that is lapping a tough comparison to last year in which the total portfolio outperformed in just about every market with RevPAR growth of 8%.
Therefore, we expect RevPAR to be slightly negative in the first quarter, followed by positive growth in the second quarter and then rounding out the year with a strong second half aided by easier comparisons as we lap the strike disruption from last year.
The group segment is expected to remain one of the strongest segments with revenue pace of 6%, complemented by improving corporate business transient and low single digit leisure transient growth.
For the year, we are expecting top line comparable RevPAR growth of 0% to 3%, reflecting several key factors, including a slower first quarter, 110 basis points of disruption from the planned closure of the Royal Palm resort beginning in May and our cautious optimism about the US economy as we monitor developments under the new administration.
Excluding Miami, however, growth improves by 110 basis points, at the midpoint to 2.6% for the year, reflecting the overall strength of the broader portfolio.
Sean will provide more details about guidance in his prepared remarks.
In summary, I wanted to emphasize that 2024 was another transformative year in which we achieved key objectives that have positioned our company for accelerated growth over time. Our strategic ROI investments continue to yield strong returns and our return of over $400 million of capital to shareholders last year between dividends and stock repurchases which totaled 8 million shares at values well below net asset value underscores our commitment to maximizing shareholder value.
We are optimistic about our long-term growth prospects as we unlock the significant embedded value within our portfolio with renovation projects such as the Royal Palm repositioning in Miami while we further enhance the overall quality of our core portfolio through our ongoing capital recycling efforts.
And with that, I'd like to turn the call over to Sean.

Sean Dell'Orto

Thanks, Tom.
As Tom noted, we were very pleased with our fourth quarter performance. Q4 RevPAR was $179, a decline of 1.4%. However, if you were to exclude the impact from strike activity in the quarter at the four affected hotels, Q4 RevPAR increased 3.1% year over year.
Occupancy for the quarter was 69.9% and ADR was $256. Q4 hotel revenue was $600 million while hotel adjusted EBITDA was $147 million, resulting in hotel adjusted EBITDA margin of 24.6% or 28.1% if you were to exclude the $28 million of EBITDA disruption from strike activity during the quarter, resulting in margin expansion of nearly 20 basis points.
Q4 adjusted EBITDA was $138 million and adjusted FFO per share was $0.39. For the full year, RevPAR was up 2.9% versus 2024, and hotel adjusted EBITDA margin was 27.5%, or down 70 basis points versus last year.
When adjusting for the strike disruption, full year RevPAR increased 4.2% while hotel adjusted EBITDA margin improved by approximately 30 basis points. Adjusted EBITDA for the year was $652 million inclusive of $32 million of strike impact, and adjusted FFO per share was $2.06.
In terms of CapEx, during 2024, we reinvested approximately $230 million into our portfolio, prioritizing upgrades and resiliency work aimed at elevating the guests' experience and strengthening our assets. This included the first phase of a two-phased comprehensive guest room renovation at the famed Rainbow Tower in Waikiki and the Palace tower at the Hilton Waikoloa resort on the Big Island as well as the first of a three-phased guest room renovation of the 1,167 room Main Tower at the Hilton New Orleans Riverside.
In 2025, we will execute the second and final phase of guest room renovations at both towers in Hawaii with a total investment of $75 million. Both renovations are scheduled to start in Q3 of this year and extend through early 2026.
Additionally, in New Orleans, we plan to launch phase two of the guest room renovation, a $31 million investment covering 428 rooms. This project, which has nearly double the rooms covered last year in phase one, is scheduled to begin in the second quarter of this year and continue through year-end.
With respect to operational excellence, we have proactively transitioned operating partners at six of our hotels over the past six months, three of which were converted to franchise models with impacted hotels, including the Royal Palm in Miami, Hilton, Denver, Hyatt Centric at Fisherman's Wharf in San Francisco, Marriott Newton in Boston, and both of our Chicago W hotels, which have also been rebranded as part of this strategic shift.
Overall, we are very excited about the upside potential at each of these hotels, further underscoring cost savings.
Turning to guidance. As Tom noted, we are establishing full-year 2025 RevPAR guidance of $187 to $192 or year to year growth of 0% to 3% while hotel adjusting EBITDA margin is expected to be between 26.1% and 27.7%, or a 60 basis point decrease to 2024 at the midpoint.
With respect to earnings, we are forecasting adjusted EBITDA to be in the range of $610 million to $670 million and adjusted FFO per share guidance is forecast to be between $1.90 to $2.20.
Assumed in our 2025 guidance is approximately $17 million of expected EBITDA displacement associated with our Royal Palm renovation for the remainder of the year. Excluding the Miami renovation, RevPAR guidance would improve by 110 basis points at the midpoint to approximately 1% to 4% for the full year of 2025.
With respect to expense growth, our guidance implies comparable hotel operating expenses increase by 3% to 4% over the prior year period. Looking closer at the first quarter, as previously disclosed, Q1 faces tough year over year comparisons with Q1 2024 results benefiting from exceptionally strong group performance, leading to an 8% increase in RevPAR while earnings were positively impacted by nearly $10 million of grants and state employment tax refunds received during the quarter last year, resulting in approximately 150 basis points of EBITDA margin tailwind.
January 2025 RevPAR finished 2.7% lower than the prior year period, driven by tougher comparisons in Hawaii, Chicago, Boston, and Silicon Valley, partially offset by ongoing strength at Bonnet Creek and Casa Marina.
However, portfolio performance compared to last year is expected to improve throughout the quarter, and with February outperforming prior forecasts, we currently anticipate the first quarter to be down slightly to last year.
To address each of your questions, we ask that you limit yourself to one question and one follow-up.
Operator, may we have the first question, please?

Question and Answer Session

Operator

Floris van Dijkum, Compass Point.

Floris van Dijkum

So the disposition target that you've laid out, the $300 million to $400 million, that only covers, as far as I can tell, a portion of your non-core assets. You've got another, probably at least half of your non-core EBITDA that's probably left for sale.
Can you talk -- walk us through how you plan to deploy that capital? What percentage could we expect is going to be spent on ROI projects versus potential share buybacks?

Thomas Baltimore

Yeah. Thank you for the question, Floris. I think that it's important to sort of level set. I think we've consistently shown as a team our ability to recycle capital. If you think back from the spin now, we have sold or disposed of 45 hotels for about $3 billion.
We've been very thoughtful about it. Even under difficult circumstances, we've been able to achieve that and at least some portion of that objective each year. Last year, obviously selling about $200 million. Tom Morey, our Chief Investment Officer and his team are diligently working and we've set an aggressive target in this environment of about $300 million to $400 million.
We will use. We'll wait and look for how best to reallocate that capital, but you can expect obviously, we're going to continue to invest in our core portfolio. We believe passionately that we can generate really higher yields from development projects than we can from acquisition projects at this point.
So that's sort of point one.
Point two, we will continue to use proceeds to pay down debt. I want to make sure that the balance sheet remains in great shape and that we've got liquidity. And then opportunistically, we will look from time to time in buying back shares where it makes sense.
Obviously, we continue to trade at a really significant discount to NAV and the team is laser focused on doing everything we can to close that gap as quickly as possible.

Floris van Dijkum

Maybe my follow up is and maybe this is more pointed towards Sean. I know it's early, but how are you thinking about the $1.2 billion CMBS debt on Hawaiian Village? And you have flexibility obviously with cash on the balance sheet, potential more non-core sales. How do you think your balance sheet is going to look or how will you address that refinancing in '26?

Sean Dell'Orto

Yeah. Thanks for the comment or question, Floris.
Yeah, to just reiterate what you're thinking, and I would say it's $1.4 billion of CMBS debt comes due matures in the second half of '26 when you include the Hyatt Regency, Boston asset as well with Hawaiian Village. I think in the end, we have access to a number of debt capital markets.
We continue to monitor them, talk with our bankers about some of the strategies and thinking about doing this, but we're certainly weighing the cost, tenure, looking at our maturity table, flexibility of the capital, as well as timing of the asset sales as you noted as Tom talked through.
So kind of putting all that together, it is early. We continue to monitor to the extent market conditions change. We feel like it compels us to go earlier. Certainly, you'll see that activity as we at least take a look to take maybe a portion of that CMBS off of the table.
So I think as we go further into the year, I think you'll see us address at least a portion of that. All that said, I would say even one scenario out there is the Hawaiian Village obviously continues to perform really well and certainly a lot better. It's produced a lot more EBITDA and cash flow than it did when we put this CMBS debt in place back in 2016.
So it certainly supports even a higher level of debt on it at this point. So that's an option. I wouldn't say it's our first option, but again, it goes back to saying we have a lot of scenarios we can look at with all the access that we have to the debt markets.
Again, proving that we did that last year when we access both term loan A, bank capital as well as bond capital. And again, we'll look at some of those markets as well as as we look to this solution.

Thomas Baltimore

Floris, the other thing that I would add, just I agree with everything that Sean has said is, and Sean and the team have done just a fabulous job. And when you think about it even coming out of the pandemic, we paid all the banks back. The credibility that we have with the street gives us optionality as strong as anybody in our peer set.
And so Sean and team are already out in front of this, looking at different options. Obviously, it doesn't mature late until the second half of '26. But you can expect us to be proactive, to be disciplined and really under Sean's leadership, we'll find the right balance.

Operator

Duane Pfennigwerth, Evercore ISI.

Duane Pfennigwerth

I wonder if you can walk us through the expectation for Hawaii in total over the course of the year. Maybe what growth or a lack of growth look like in Q1, Q3 is all the growth kind of Q4 weighted in that market in total.
And then one of the questions we get from clients is how to convert the pacing stats you give to EBITDA. So for example, Waikoloa Group pays up 70%. How does that translate to EBITDA growth for that asset?

Thomas Baltimore

Yeah. Let me grab the first part of it. Sean can talk a little about the EBITDA side.
I think it's important to kind of again level set. If you look historically, demand into the Islands, north of $10 million -- $8.5 million to $9.5 million plus or minus. Japan has always been about -- Japanese have been about $1.5 million of that.
If you look back to 2023, it was around $600,000. We expected last year to be probably in that $800,000 range. Ended about $720,000 plus or minus, still 22% above the prior year. And then still about 54% beneath 2019.
This year, the current estimate is about 930,000 visitors right now, down from closer to 1 million. So you're still about 41% beneath 2019. So as you think about what we're seeing right now, international arrivals are up about 5.5%, but arrivals from Japan are up about 14% same time last year, including up about -- and it includes up about 22% plus or minus in January.
And even the domestic arrivals into O'ahu are up about 3.7% over last year. And there are 21% plus or minus ahead of 2019, partially covering some of that international deficit. So just look, we have no doubt that Hawaii is going to ramp up.
We certainly, as Sean outlined, expect that the first quarter is going to be soft. We know that. We expect obviously the second half of the year to a tale of two halves as Sean outlined. And we expect significant increase obviously in Q3, Q4.
And we expect both properties to be in the low to mid single digit at the end of the year in RevPAR growth. So I feel very confident. Seeing very good trends. Southwest has also announced obviously 33 red-eye flights that they're going to be adding. Alaskan Airlines and their acquisition of Hawaiian Airlines, we expect that that's obviously going to be adding more capacity.
So clearly, the domestic traveler continues to really penetrate Hawaii, which we think is going to be good long term. And we have no doubt that as as the dollar and yen settle and some of the surcharges go away, you're going to see the Japanese travelers sort of back.
Will it be back to the levels that we had historically seen? Certainly remains to see over time. But we're currently forecasting in that '27, '28 window to get back to that sort of 1.5 million visitors into the Hawaiian Islands.
So with that, let me hand it off to Sean and he'll provide some additional color on it.

Sean Dell'Orto

Yeah. I mean the -- I would say it's not an easy formula to think through how you translate kind of group pace into EBITDA conversion. A couple of components that go into it, not to get down to in too much detail. But if you think about that group pace, it's certainly very strong. Speaks to strength of that market with I think groups kind of cycling back into the Big Island, we had a number of hotels, including ours, under renovation in the comp set there.
And so I think you're seeing the benefits of people seeing better product coming online here and looking to go there for their group activity. That said, I mean you are displacing transient. And group is well a meaningful component. It's about 20%, I would say kind of max on peak of the demand of that asset.
So it's good. It's obviously great. You get better banqueting -- catering contribution. I think we're looking to be up on 20%-plus this year for Waikoloa given that group pace is in demand. But you are offsetting transient customers.
And so when you think about the net net impact of RevPAR with that, again 20% of being group, 80% being transient, I think what you get to is somewhat of a growth, still growth. I would say it's kind of on the higher end of our range, kind of growth for Waikoloa year over year on the RevPAR side.
But certainly, contributes to what we see in terms of a better total RevPAR profile for not only that asset, but the portfolio overall where we think it's about, call it, 100 basis points in addition to the room RevPAR growth for the portfolio.
So those kinds of things contribute to it. I think it's a better mix. And certainly, you want to establish that foundation to help drive, and yield to that transient. And as that kind of comes back and we think the market, that's kind of what factors in the wider range. It's a little bit of uncertainty as to how that demand comes back, but certainly could be some upside that you could garner with that strong foundation.
So that all, it's a lot to say to say how does it translate to EBITDA. I think in the end, you've got positive RevPAR growth, positive revenue growth. We have to manage some of the expense assumptions as well to what -- as you think about the overall algorithm of converting group pace down to EBITDA.

Operator

David Katz, Jefferies.

David Katz

I wanted to just circle back on the Royal Palm, having toured it not too long ago. When finished, right, it's a meaningful project. Can you just talk about its intended positioning within Miami, which obviously a big important hot market? Where does it fit in the landscape there as you've laid out?

Thomas Baltimore

Yeah. It's a great question, David.
Like you have spent a lot of time down in Miami, I walked it recently with the team. A huge credit to Carl Mayfield who heads our Design and Construction. A team who, by the way, David, is best in class. There isn't anybody in the lodging sector, certainly the REIT sector that has his experience and knowledge.
And I think his track record really demonstrates that. And you think about our success in Bonnet Creek, you think about obviously our success down in Casa Marina, we have studied Royal Palm carefully for more than a year.
And really with given the historic nature, given the three buildings and how best to really activate and take advantage of that bull's eye location. And when you also step back and think about all of the high-end, the Faena, North Miami Beach, what you have with obviously the Four Seasons and the Ritz-Carlton, not close from South Beach and obviously the St. Regis.
And you've got on deck here the all bears that's coming, Rosewood coming, the [Amman] obviously coming, the [Andas] which eventually will open. I mean all of that we see Royal Palm being tucked underneath that. We don't see taking it to that level. So certainly, an upper upscale lifestyle.
But we think we can tuck under and really raise rate significantly. And give what is a varied and diverse customer base. And just given what's happening in Miami, it's -- we don't see that slowing down. We see that just accelerating. So as we talk about the opportunity to really double EBITDA, we believe that passionately.
And we believe really changing the operation with a more activated public space, different food and beverage outlets taking the pool on the second floor and really making that the kind of views that we'll have. Obviously a renovated room product and really adding 11 keys.
So we are really, really excited about this. We hate to close a hotel, but really to do this right, it's the right business decision. And we think it's going to create really long term value for shareholders. So very excited about it, and we don't see any slowing down.
If you look over the last 20 years, what are the three markets that are certainly been among the strongest? It's really Hawaii, it's Orlando, it's Miami, it's Key West. And in all of those markets, Park is really well positioned.
I'm not sure we get the kind of credit from shareholders that we should when you carefully look at the quality of the real estate that we have in all of those markets.

Operator

Smedes Rose, Citi.

Smedes Rose

I wanted to ask you on the Bonnet Creek asset. It looks like it came in the low $80 millions. I think that's kind of around the range you would target it to kind of post investment. And it just, do you feel like that's kind of stabilized here or do you think there's sort of significant upside or just kind of sort of more normalized organic growth?

Thomas Baltimore

Yeah, we are incredibly bullish, Smedes. And think that that's, again in the first year seeing RevPAR up 17% and obviously EBITDA, as you know, going from $60 million to about $82 million, up 36% and the ability to really layer in multiple groups, we could not be more excited.
Obviously, Condé Nast given the Waldorf, a top 10 rating globally, we are incredibly excited as you sort of look at group pace at Bonnet Creek and the Waldorf up about 15% in '25 and I think up another 20% plus or minus and what we see right now in '26.
So we are very, very encouraged as we look out. The other thing that really helps us too, Smedes, is as you think about citywides are up this year in Orlando, so that's certainly going to be a tailwind for the market. And then of course, Epic Universe which is going to be opening in May plus or minus.
And the reported spend is about $6 billion and 50 experiences plus or minus. So we think that's only going to continue to benefit the overall market. And we certainly think that that's going to benefit Bonnet Creek and our assets in Orlando.

Smedes Rose

And then if I could just ask one more. And maybe I missed this. So at the risk of embarrassing myself. I'll ask it anyway. The the W hotels in Chicago look like they've been renamed. And I was just wondering, does that brand switch help you maybe on CapEx requirements or would you expect operational improvements there or maybe you just could talk about that a little bit?

Thomas Baltimore

Yeah. We think on both sides. We think obviously the -- both expected obviously to be part of the tribute family, both having that flexibility, both having new operators. And we think leaner, more nimble. So we're very excited about that decision. As Sean noted in his prepared remarks, we've changed out really six operators.
In this case, we're also changing converting to a franchise model certainly staying within the Marriott family. So really excited about these decisions. Again, credit to our asset management team and our development team that's worked very hard over the last year plus in discussions with Marriott to make that happen. And we think it's really a win-win for everybody.

Operator

Chris Woronka, Deutsche Bank.

Chris Woronka

So if I could follow up a little bit on the Chicago. And maybe go just a little bit deeper. Tom, can you comment on whether those are longer term franchises with the new, I think ones that attribute ones at Marriott independent because I think it's pretty well known that Lakeshore was shopped a few times?
And so does this -- this is what you've done with the change impact your ability to sell the assets, or how a buyer might view them as being long term encumbered or unencumbered by brands?

Thomas Baltimore

Yeah. We actually think it gives us more optionality, Chris, obviously having those being in a franchise situation, obviously having new operators. Again spend a lot of time with Marriott negotiating. And we didn't think either asset really were W caliber in terms of what Marriott was looking for.
And we wanted the optionality of more of those soft brands. So we've found the right balance. We'll continue to look at how we can create shareholder value. And if that means selling or monetizing assets as we've demonstrated time and time again, we will certainly do that.
But we are confident that we've arrived at the right decision, the right outcome here.

Chris Woronka

Just to follow up, if I could, and that's on similar kind of question about Miami kind of post renovation. It sounds like you stay in the Marriott -- staying with the Tribute, but does that renovation -- I mean is there a reset of the franchise contract?
I think that was one of the first Tributes in the old Starwood portfolio in 2015 if I remember. So is there like a reset on? Are you going to be kind of wedded to Tribute Portfolio for that for much longer period, or are you still going to keep some optionality there?

Thomas Baltimore

We have significant optionality there in your -- we've all been around a long time, Chris. In fact, it was the first Tribute is our understanding as well with Starwood. And really under the same term at this point doesn't mean that that can't change, but that's the current structure.
And Marriott's been a great partner and been working with us. They can certainly speak for themselves, but the feedback that we've gotten is they are thrilled with our program, with our design features, how we're going to reimagine the public space, the food and beverage offerings.
We are very excited about this. And again, a shout out to our team who have worked incredibly hard for more than a year as we've planned this out. And at the end of the peak season, we're going to hit the ground running with strong confidence that we will deliver before the World Cup of next year.

Operator

Chris Darling, Green Street.

Christopher Darling

Tom, can you walk through your expectations for New York this year? Would be curious your perspective on the overall market as well as your Hilton Midtown specifically. And then additionally, would also be curious to hear about how you're thinking about margins at your property there.

Thomas Baltimore

Yeah. I mean if you think about New York, I mean obviously, we ended fourth quarter I think up about 3.5% in RevPAR and I think for the full year, just south of 4%. Group pace in '25, I think we're looking up about 10%. There's been little supply increase in New York.
So '25, I think we're about 2% in the overall market. And continues to decline I think 0.5%, 0.6% in '26, and I think clearly just flat in 2027. And Manhattan supply has fallen, I think, 8%, 9% since 2019. So look, New York has turned out to be a stronger market.
Obviously, some of the restrictions that have been imposed and required on Airbnb have helped the market. Our hotel continues to gain market share. And there are really only two hotels that can handle large groups. So we're encouraged.
And obviously, group room nights I think we're going to be down a little bit here in the first quarter, but we still expect that we're going to finish the year '25 probably in the low single digits in terms of RevPAR. That existing contract with labor doesn't expire until '26.
I've got no comment on that as to when our operator will start to engage. But we -- I suspect that will be a 2026 execution. But we remain cautiously optimistic in New York. I think New York and when you think about return to office, you think about visitation, think about what's happening, it continues to be a solid market.

Christopher Darling

And then just one more. Shifting gears a little bit. Thinking about the transaction market, just curious your perspective. Do you see any increased appetite among private buyers to transact at scale, portfolio transactions, anything like that, or do you think it's really more of a kind of one-off deal situation still these days?

Thomas Baltimore

Yeah. It's it's a great question, Chris.
You would expect, obviously, rumors are there's some $400 billion of private equity real estate capital kind of on the sidelines. Obviously, that includes some of the large players, that also includes some small to mid-size players. You've got family officers and owner operators.
I certainly think the debt markets are open. Pricing seems to have improved slightly. I would expect obviously that you're going to see sellers perhaps, I don't want to say capitulation, but I think the gap is narrowing between buyers and sellers.
So I would expect the transaction market to continue to improve, probably more the second half of this year while I think there's optimism, certainly with the new administration, pro-growth, more rational regulation, expectation of lower taxes.
At some point, hopefully rates start to come in, but there is uncertainty. There's uncertainty obviously with inflation still coming in, still a little sticky. And obviously, the impact of some of the policy decisions that are being talked about, including tariffs. So I think there's still optimism but a little bit of wait and see.
But we fully expect that we are going to be more active and we would expect to see our peers and others in the transaction market really pick up in the second half of the year.
Chris, I think we've demonstrated again and as we said in our prepared remarks and I said earlier, look, when you've moved 45 hotels in the last five years or five years from the pandemic, I mean we have been as active and even in difficult circumstances, the pandemic, international assets, et cetera, we've been able to close deals and get deals done.
So I expect you'll continue to see that kind of execution from us.

Operator

Patrick Scholes, Truist Securities.

Patrick C. Scholes

We know that amongst international travelers, Canadian inbound is the most important international travel to traveler to Florida. Have you seen any impact on the propensity to visit your Florida properties from Canadian travelers given all of the attention and whatnot with tariffs?

Thomas Baltimore

It's a great question. The answer is we have not at this point.
We continue to monitor that. And as you correctly pointed out, as you think about the inbound visitation, it's still about half of that coming from Canada and Mexico. So but at this point, we have not seen any softening or slowdown. And Florida and particularly our properties certainly remain strong and we are encouraged at this point.

Operator

Jay Kornreich, Wedbush Securities.

Jay Kornreich

Just to ask a question going back to the outlook for 2025, there's a pretty wide range for adjusted EBITDA. So I was just curious if you can give any more of the puts and takes you're considering that might lead you to the high end versus the low end of that range.

Sean Dell'Orto

Again, I think just starting with the top line of 0% to 3%, certainly, a wider range that we've typically given we kind of ultimately widen the range out there for the EBITDA as well as we think through. Again, opportunities you're starting for one, you're starting with the negative softer first quarter we talked about I think certainly puts us to the lower end from a conservative standpoint.
And from an opportunistic standpoint, you think about Hawaii and kind of seeing through Q1 that we've seen pick up really starting to get back to levels that we saw or kind of equate to pre-strike levels. And so the question will be just kind of how much that kind of recover and build through the year that helps I think drive again the opportunity in top line of the range.
So I think it's more kind of operational. I wouldn't say there's anything transactional in it in any sense. Just more kind of we think about the operational potential of Hawaii. And really the conservatism of kind of the the slower start to the quarter for Q1 -- the slow start of the year for Q1.

Jay Kornreich

And then just as we're halfway through the first quarter, naturally, as you mentioned, there's a tough comp in Hawaii. But there should be some other markets with some one-time benefits such as the Super Bowl being in New Orleans, the inauguration in DC.
Maybe is there any other just core portfolio or market comments that you would outline just in terms of as we think of performance so far in the quarter?

Thomas Baltimore

Yeah, I would say New Orleans is very strong, very encouraged.
As you think, I think January was a little softer and down 4% or 5% in New Orleans. But we were -- we had a, just given the location, a headquarter hotel, we had one of the teams. And we were up mid-teens. And RevPAR there and probably looking at a for our first quarter, probably up in the 5% to 7% range there.
So certainly very strong. And as I've pointed out, I feel very good about what we're seeing in Florida and Orlando in particular and as we look out. And as Sean pointed out, Hawaii where we had a tough comp. And Hawaii is certainly going to be a little softer in the first quarter. No surprise there.
But as we look out to the second half of the year, very, very encouraged. And I gave you some of the stats of what we're seeing already both in employments, both in arrivals, both international as well as domestic.
So certainly, expect first quarter down in that low single digit range plus or minus but very encouraged as we look out for the balance of the year.

Operator

Robin Farley, UBS.

Robin Farley

On Miami, when you talked about doubling EBITDA there, is that something that you think you would ramp up to, or would you be at that rate in -- by 2027, understanding that next year is not a full year?

Thomas Baltimore

Yeah. I mean, obviously, we would, as we've seen obviously in both Casa and Bonnet, I mean obviously, you've seen a pretty quick ramp up. But I would see that as two to three years I think would be sort of a normal ramp up and the kind of a transformation that we're talking about. And also depending on how that market's doing.
But when you're bringing in that kind of high-end product above us, we certainly think that gives us the right opportunity to sort of tuck underneath and really push rate. And given the premier location that we have in South Beach, we're very excited about the opportunity.

Robin Farley

And maybe just one more on Q1. Just given the Easter shift would be kind of helping Q1. And others are talking about leisure demand still being up in '25 versus '24. Is there something in particular at a property or two that's maybe with a large group or something in last year's Q1 that you would call out as sort of the driver of the decline?

Sean Dell'Orto

The decline this year versus last year?

Robin Farley

Yes. You're guiding to Q1 RevPAR while others are kind of calling out Q1, kind of getting from the Easter shift. And just wondering if there's something in particular for your comp. Others are talking about leisure still being up. I know you said it was obviously 8% growth last year.
But was there something else in there that, again, sort of specific to Q1 last year that isn't recurring or, while others are kind of pointing to leisure being up in Q1?

Sean Dell'Orto

Yeah. I think in the end, it was -- as we've mentioned before, Robin, it was broad based. We had some group strength. And we also had transient leisure strength across a number of our markets. I would say it was probably more centered in January, February than it was in March in terms of that strength.
So it certainly was more bigger, bigger driver of what we saw in Q1 performance relative to kind of a specific Easter shift impact of March.

Operator

Dori Kesten, Wells Fargo.

Dori Kesten

Do the two phases of renovations at Hawaiian Village, Waikoloa and Riverside effectively offset each other from a RevPAR perspective this year? And then how should we start to think about the aggregate of those tailwinds for next year?

Sean Dell'Orto

Yeah. Dori, the first part I'd say it's essentially they lap each other. And I think it's maybe 10 basis points to 20 basis points or so of impact. We had a little bit of disruption in January in Hawaiian Village. Some of the phase one beginning of this year, but overall, I think it's not dramatic impact to the top line and we don't see obviously some impact on the bottom line at all.

Dori Kesten

And then just regarding your operating cost growth assumptions for this year. I think we were a little bit surprised at the low end of the range just given labor cost headwinds. So can you just walk us through does it assume fewer FTEs? Are there some relatively low growth markets that should be highlighted some lower insurance assumptions?

Sean Dell'Orto

Yeah. I mean from a cost standpoint, I would say in general, it's overall costs are kind of in that 3-ish, 3.5% range. Clearly, wages are elevated and certainly north of inflationary costs. Union negotiations certainly are on the higher end. Ultimately, in the 5% to 6% range offset by kind of non-union elements that are kind of in the 3% kind of a little bit -- a little around inflation a little bit more.
So all put together, from a wage standpoint it's probably in that mid single digits offset by things like insurance, rent, and other kinds of elements, costs and utilities. They're helping to offset that to kind of put us down to kind of that 3-ish, 3.5% range as you think about -- kind of think about our mid point of our guidance.
If you think about lower end, clearly, there's some assumptions that go into that that if it's less occupancy driving that, you'll have less expenses.

Operator

David Hargreaves, Barclays.

David Hargreaves

So I know that you're sort of guiding to a flattish top picture, but with everything that's going on spend wise, I'm wondering if you have plans to be accessing the debt market soon.

Thomas Baltimore

We don't have a need to access the debt markets at this time. Obviously, we've got the revolver. We've got about $1.4 billion in liquidity plus or minus. We obviously are going to to be working to recycle capital and sell, as we said, about $300 million to $400 million in non-core assets which gives us a lot of optionality to pay down debt and also really reinvest back into our portfolio.
We've been laser focused and pretty consistent with that strategy over the last few years and you're really not going to see that change. We will, as we think about our maturities next year, very seasoned and experienced team here.
And Sean and team are already thinking about the maturities next year. And we'll have lots of optionality and we'll think carefully about what creates the most value for shareholders, what gives us the optionality as we think about other strategic options as well for the company.

David Hargreaves

And in the past, I think you've expressed a comfort level leverage wise in the 3 times to 5 times range. I'm just wondering if that's updated at all if that's still your policy.

Thomas Baltimore

Yeah. It's still -- Sean and I from day one, really 3 times to 5 times is sort of a guiding principle. We were sort of at 4-ish pre-pandemic. Obviously, we were above that, certainly a little higher than we'd like in a normalized. But we're confident that we'll be able to get sort of inside of at 5 times.
And at some point here in the near future, whether that's a year or two, we certainly will make that happen.

Operator

Ari Klein, BMO Capital Markets.

Ari Klein

Can you -- maybe just going back to the Royal Palm renovation, I was wondering if you can help unpack the expected disruption related to it. It looks like the hotel did about $14 million in 2024 EBITDA. That be opening to May this year, but the anticipated disruption for '25 is about $17 million. Maybe you can help reconcile that.

Sean Dell'Orto

Yeah. I mean certainly, our team does a good job of kind of digging in through all that to kind of establish the disruption numbers, but certainly, shutting down the hotel, we still are carrying costs.
Not only from a fixed cost standpoint, but we still have a manager in place that we need to have maintained. Teams there as we look to kind of come back out and ramp back up. So it's just a factor of carrying costs for the rest of the year, Ari.

Ari Klein

And then maybe just from a RevPAR guidance standpoint, it looks like group pace is up 6% for the year. BT is improving. Leisure expected to grow low single digits. And but the RevPAR guide is I guess plus 1.5% at the midpoint.
Is that reflective of some conservatism on your part, or is it maybe something else?

Sean Dell'Orto

Yeah, I think if you think again as we're starting the year it's early, we want to kind of establish ourselves in a way that we think understanding the business, we've got about 80% or so of our kind of group forecast on the books right now. And certainly, there's some reach to get to on the group side and the transient side is obviously very short term in nature unpredictable.
So we want to kind of just level set there and things feel good right now. I think we've seen in the past things have somewhat not come to fruition. And so I think we're just taking I think a realistic tone here to start the year.
But I would say yes, I mean business transient has been stronger of late. Group remains solid. Leisure, I think is again -- continues to be a moderated segment which is the largest segment in our demand pattern. So right now, it's probably low single digits, maybe even kind of flattish.
So I think that's kind of as we look at the outlook, and the predictability of the business, we kind of feel comfortable with the range we've given.

Ari Klein

If I could just squeeze in one last clarification. Just on the 2025 guidance, '24 had some non-recurring tax benefits. Is there anything like that or one-timers in the '25 guide that we should be aware of?

Sean Dell'Orto

No. Nothing baked into that.

Operator

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

Thomas Baltimore

I appreciate everybody taking time today. We look forward to seeing many of you at the Citi Conference and safe travels. And we are laser focused here at Park and excited about 2025 and look forward to seeing many of you soon.

Operator

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