Is Park Hotels & Resorts’ San Francisco Hotel Sale Shifting the Investment Case for PK?

• Earlier this year, Park Hotels & Resorts sold two of San Francisco’s largest hotels, Hilton and Parc 55, at a very large discount for US$408 million to Newbond Holdings and Conversant Capital after defaulting on a US$725 million renovation loan amid difficult tourism conditions.
• This transaction, involving nearly 10% of the city's hotel supply, reflects both the challenges and renewed investor willingness to back a recovery in downtown San Francisco hospitality.
• We'll examine how the substantial divestment of these San Francisco hotels now alters Park Hotels & Resorts' overall investment narrative.

Find companies with promising cash flow potential yet trading below their fair value.

Park Hotels & Resorts Investment Narrative Recap

Owning Park Hotels & Resorts requires believing in a recovery in U.S. urban and resort hospitality, stronger travel demand, and the benefits of focused portfolio restructuring. The recent San Francisco hotel sale removes a troubled asset and immediately reduces leverage risk, but it also shrinks the revenue base, so the biggest catalyst remains improved performance in core gateway markets, while the greatest near-term risk is still the company’s large upcoming debt maturities. On balance, this news moderately reduces short-term financial pressures but does not materially change risk or upside drivers.

Recently, management lowered 2025 guidance to a net loss of US$60 million to US$35 million, citing slower revenue and earnings. This update aligns with ongoing risks around debt refinancing and the uncertain pace of recovery in key markets, both of which are now even more relevant following the San Francisco sale.

Yet, despite progress on reducing leverage, the company’s sizable debt maturities in 2026 remain a central issue that investors need to keep in mind if…

Read the full narrative on Park Hotels & Resorts (it's free!)

Park Hotels & Resorts is projected to reach $2.9 billion in revenue and $210.9 million in earnings by 2028. This outlook relies on a 3.6% annual revenue growth rate and a $153.9 million increase in earnings from the current $57.0 million.

Uncover how Park Hotels & Resorts' forecasts yield a $12.69 fair value, a 21% upside to its current price.

Exploring Other Perspectives

Simply Wall St Community members provided four fair value estimates, ranging from US$11.57 to US$20.56 before the recent asset sale. While opinions can differ widely, ongoing exposure to significant leverage and refinancing risk could sway sentiment and future performance. Consider reviewing these varying viewpoints before making your own assessment.

Explore 4 other fair value estimates on Park Hotels & Resorts - why the stock might be worth as much as 96% more than the current price!

Build Your Own Park Hotels & Resorts Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Park Hotels & Resorts research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Park Hotels & Resorts research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Park Hotels & Resorts' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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