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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
(Mark One)
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to
Commission File Number 001-37795
___________________________________
Park Hotels & Resorts Inc.
(Exact name of Registrant as specified in its Charter)
___________________________________
Delaware36-2058176
(State or other jurisdiction of
incorporation or organization)		(I.R.S Employer
Identification No.)
1775 Tysons Boulevard, 7th Floor, Tysons, VA
22102
(Address of principal executive offices)(Zip Code)
(Registrant’s telephone number, including area code): (571) 302-5757
Securities registered pursuant to Section 12(b) of the Act.
Title of each classTrading SymbolName of exchange on which registered
Common Stock, $0.01 par value per sharePKNew York Stock Exchange
___________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
xAccelerated filero
Non-accelerated fileroSmaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares of common stock outstanding on July 26, 2024 was 208,917,256.

Table of Contents
Page
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
PARK HOTELS & RESORTS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
June 30, 2024December 31, 2023
(unaudited)
ASSETS
Property and equipment, net$7,422 $7,459 
Contract asset789 760 
Intangibles, net42 42 
Cash and cash equivalents449 717 
Restricted cash35 33 
Accounts receivable, net of allowance for doubtful accounts of $4 and $3
133 112 
Prepaid expenses75 59 
Other assets40 40 
Operating lease right-of-use assets181 197 
TOTAL ASSETS (variable interest entities – $237 and $236)
$9,166 $9,419 
LIABILITIES AND EQUITY
Liabilities
Debt$3,856 $3,765 
Debt associated with hotels in receivership725 725 
Accrued interest associated with hotels in receivership64 35 
Accounts payable and accrued expenses230 210 
Dividends payable58 362 
Due to hotel managers111 131 
Other liabilities171 200 
Operating lease liabilities215 223 
Total liabilities (variable interest entities – $217 and $218)
5,430 5,651 
Commitments and contingencies – refer to Note 12
Stockholders' Equity
Common stock, par value $0.01 per share, 6,000,000,000 shares authorized, 209,770,362 shares issued and 208,917,170 shares outstanding as of June 30, 2024 and 210,676,264 shares issued and 209,987,581 shares outstanding as of December 31, 2023
2 2 
Additional paid-in capital4,133 4,156 
Accumulated deficit(355)(344)
Total stockholders' equity3,780 3,814 
Noncontrolling interests(44)(46)
Total equity3,736 3,768 
TOTAL LIABILITIES AND EQUITY$9,166 $9,419 
Refer to the notes to the unaudited condensed consolidated financial statements.
3
PARK HOTELS & RESORTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except per share data)
Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Revenues
Rooms$416 $442 $790 $824 
Food and beverage182 178 364 359 
Ancillary hotel66 72 128 137 
Other22 22 43 42 
Total revenues686 714 1,325 1,362 
Operating expenses
Rooms105 117 207 224 
Food and beverage121 128 244 255 
Other departmental and support155 165 300 323 
Other property57 63 109 123 
Management fees33 34 63 64 
Impairment and casualty loss7 203 13 204 
Depreciation and amortization64 64 129 128 
Corporate general and administrative18 16 35 32 
Other20 22 41 42 
Total expenses580 812 1,141 1,395 
Gain on sale of assets, net— — — 15 
Gain on derecognition of assets15 — 29 — 
Operating income (loss)121 (98)213 (18)
Interest income5 10 10 20 
Interest expense(54)(52)(107)(104)
Interest expense associated with hotels in receivership(15)(9)(29)(17)
Equity in earnings from investments in affiliates1 3 1 7 
Other (loss) gain, net(3)3 (3)4 
Income (loss) before income taxes55 (143)85 (108)
Income tax benefit (expense)12 (3)11 (5)
Net income (loss)67 (146)96 (113)
Net income attributable to noncontrolling interests(3)(4)(4)(4)
Net income (loss) attributable to stockholders$64 $(150)$92 $(117)
Earnings (loss) per share:
Earnings (loss) per share – Basic$0.31 $(0.70)$0.44 $(0.54)
Earnings (loss) per share – Diluted$0.30 $(0.70)$0.44 $(0.54)
Weighted average shares outstanding – Basic209215209217
Weighted average shares outstanding – Diluted211215211218
Refer to the notes to the unaudited condensed consolidated financial statements.
4
PARK HOTELS & RESORTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
Six Months Ended
June 30,
20242023
Operating Activities:
Net income (loss)$96 $(113)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization129 128 
Gain on sales of assets, net— (15)
Gain on derecognition of assets(29)— 
Impairment and casualty loss12 204 
Equity in earnings from investments in affiliates(1)(7)
Other loss, net3 — 
Share-based compensation expense9 9 
Amortization of deferred financing costs4 4 
Distributions from unconsolidated affiliates— 7 
Deferred income taxes(13)— 
Changes in operating assets and liabilities(1)33 
Net cash provided by operating activities209 250 
Investing Activities:
Capital expenditures for property and equipment(121)(124)
Acquisitions, net— (11)
Proceeds from asset dispositions, net— 116 
Proceeds from the sale of investments in affiliates, net— 3 
Contributions to unconsolidated affiliates— (4)
Net cash used in investing activities(121)(20)
Financing Activities:
Proceeds from issuance of Senior Notes550 — 
Repurchase or redemption of Senior Notes(650)— 
Borrowings from credit facilities200 — 
Repayments of credit facilities— (50)
Repayments of mortgage debt(4)(80)
Debt issuance costs(11)(1)
Dividends paid(407)(88)
Distributions to noncontrolling interests, net(2)(1)
Tax withholdings on share-based compensation(5)(2)
Repurchase of common stock(25)(105)
Net cash used in financing activities(354)(327)
Net decrease in cash and cash equivalents and restricted cash(266)(97)
Cash and cash equivalents and restricted cash, beginning of period750 939 
Cash and cash equivalents and restricted cash, end of period$484 $842 
Supplemental Disclosures
Non-cash financing activities:
Dividends declared but unpaid$52 $32 
Refer to the notes to the unaudited condensed consolidated financial statements.
5
PARK HOTELS & RESORTS INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited, in millions)
Common StockAdditional
Paid-in
Capital 		Accumulated
Deficit		Non-
controlling
Interests 		Total
Shares Amount
Balance as of December 31, 2023210$2 $4,156 $(344)$(46)$3,768 
Share-based compensation, net1— (2)2 — — 
Net income—— — 28 1 29 
Dividends and dividend equivalents(1)
—— — (53)— (53)
Distributions to noncontrolling interests—— — — (2)(2)
Balance as of March 31, 20242112 4,154 (367)(47)3,742 
Share-based compensation, net—— 4 — — 4 
Net income—— — 64 3 67 
Dividends and dividend equivalents(1)
—— — (52)— (52)
Repurchase of common stock(2)—(25)— — (25)
Balance as of June 30, 2024209$2 $4,133 $(355)$(44)$3,736 
Common StockAdditional
Paid-in
Capital 		Retained
Earnings (Accumulated Deficit)		Non-
controlling
Interests 		Total
Shares Amount
Balance as of December 31, 2022224$2 $4,321 $16 $(48)$4,291 
Share-based compensation, net1— — 2 — 2 
Net income—— — 33 — 33 
Dividends and dividend equivalents(1)
—— — (32)— (32)
Distributions to noncontrolling interests—— — — (1)(1)
Repurchase of common stock(9)— (105)— — (105)
Balance as of March 31, 20232162 4,216 19 (49)4,188 
Share-based compensation, net—— 5 — — 5 
Net (loss) income—— — (150)4 (146)
Dividends and dividend equivalents(1)
—— — (34)— (34)
Balance as of June 30, 2023216$2 $4,221 $(165)$(45)$4,013 
___________________________________
(1)Dividends declared per common share were $0.25 for each of the three months ended March 31, 2024 and June 30, 2024. Dividends declared per common share were $0.15 for each of the three months ended March 31, 2023 and June 30, 2023.

Refer to the notes to the unaudited condensed consolidated financial statements.
6
PARK HOTELS & RESORTS INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1: Organization
Park Hotels & Resorts Inc. (“we,” “us,” “our” or the “Company” and, exclusive of any subsidiaries, "Park Parent") is a Delaware corporation that owns a portfolio of premium-branded hotels and resorts primarily located in prime city center and resort locations. On January 3, 2017, Hilton Worldwide Holdings Inc. (“Hilton”) completed the spin-off of a portfolio of hotels and resorts that established Park Hotels & Resorts Inc. as an independent, publicly traded company.
On May 5, 2019, the Company, PK Domestic Property LLC, an indirect subsidiary of the Company (“PK Domestic”), and PK Domestic Sub LLC, a wholly-owned subsidiary of PK Domestic (“Merger Sub”) entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with Chesapeake Lodging Trust (“Chesapeake”). On September 18, 2019, pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Chesapeake merged with and into Merger Sub (the “Merger”) and each of Chesapeake’s common shares of beneficial interest, $0.01 par value per share, was converted into $11.00 in cash and 0.628 of a share of our common stock. No fractional shares of our common stock were issued in the Merger. The value of any fractional interests to which a Chesapeake shareholder would otherwise have been entitled was paid in cash.
We are a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes. We have been organized and operated, and we expect to continue to be organized and operate, in a manner to qualify as a REIT. To qualify as a REIT, we must satisfy requirements related to, among other things, the real estate qualification of sources of our income, the real estate composition and values of our assets, the amounts we distribute to our stockholders annually and the diversity of ownership of our stock. From the date of our spin-off from Hilton, Park Intermediate Holdings LLC (our “Operating Company”), directly or indirectly, has held all our assets and has conducted all of our operations. Park Parent owned 100% of the interests of our Operating Company until December 31, 2021 when the business undertook an internal reorganization transitioning our structure to a traditional umbrella partnership REIT ("UPREIT") structure. Effective January 1, 2022, Park Parent became the managing member of our Operating Company and PK Domestic REIT Inc., a direct subsidiary of Park Parent, became a member of our Operating Company. We may, in the future, issue interests in (or from) our Operating Company in connection with acquiring hotels, financings, issuance of equity compensation or other purposes.
Note 2: Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
Principles of Consolidation
The unaudited condensed consolidated financial statements reflect our financial position, results of operations and cash flows, in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with U.S. GAAP. In our opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, including normal recurring items, considered necessary for a fair presentation of the interim periods. All significant intercompany transactions and balances within the financial statements have been eliminated.
These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on February 28, 2024.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Interim results are not necessarily indicative of full year performance.
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Reclassifications
Certain line items on the condensed consolidated statements of operations for the three and six months ended June 30, 2023 have been reclassified to conform to the current period presentation.
Summary of Significant Accounting Policies
Our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024, contains a discussion of significant accounting policies. There have been no significant changes to our significant accounting policies since December 31, 2023.
Note 3: Acquisitions and Dispositions
Acquisitions
During the six months ended June 30, 2023, we acquired two parcels of land, adjacent to the Hilton Hawaiian Village Waikiki Beach Resort, for a purchase price of approximately $18 million, including transaction costs. We accounted for the purchase as an acquisition of an asset, and the entire purchase price was allocated to land.
Dispositions
In June 2024, we made the decision to permanently close the Hilton Oakland Airport, which we anticipate will occur during the third quarter of 2024. In connection with that decision, we notified the ground lessor of the hotel of our termination of the ground lease on or about the date on which the hotel closes.
During the six months ended June 30, 2023, we sold the Hilton Miami Airport hotel for gross proceeds of $118.25 million. We recognized a net gain of approximately $15 million, which is included in gain on sale of assets, net in our condensed consolidated statements of operations.
Additionally, in June 2023, the ground lessor terminated the ground lease for the Embassy Suites Phoenix Airport hotel and, pursuant to an agreement, we received an early termination fee of approximately $4 million, which is included in other (loss) gain, net in our condensed consolidated statements of operations.
Note 4: Property and Equipment
Property and equipment were:
June 30, 2024December 31, 2023
(in millions)
Land$2,987 $2,990 
Buildings and leasehold improvements5,900 5,814 
Furniture and equipment1,009 947 
Construction-in-progress240 341 
10,136 10,092 
Accumulated depreciation(2,714)(2,633)
$7,422 $7,459 
Depreciation of property and equipment was $63 million and $64 million during the three months ended June 30, 2024 and 2023, respectively, and $128 million for both the six months ended June 30, 2024 and 2023.
During the three and six months ended June 30, 2024, we recognized impairment losses of approximately $7 million and $12 million, respectively, related to two of our hotels subject to ground leases and our inability to recover the carrying value of the assets over the remaining lease term. Refer to Note 7: "Fair Value Measurements" for additional information.
8
For the three months ended June 30, 2023, we recognized an approximately $202 million impairment loss related to one of the hotels securing our $725 million non-recourse CMBS loan ("SF Mortgage Loan") as a result of a decision to cease making debt service payments. In October 2023, the two San Francisco Hotels – the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco – a Hilton Hotel (collectively, the "Hilton San Francisco Hotels") that secure the SF Mortgage Loan were placed into receivership. Refer to Note 6: "Debt" and Note 7: "Fair Value Measurements" for additional information.
Note 5: Consolidated Variable Interest Entities ("VIEs") and Investments in Affiliates
Consolidated VIEs
We consolidate VIEs that own three hotels in the U.S. We are the primary beneficiary of these VIEs as we have the power to direct the activities that most significantly affect their economic performance. Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them. The assets of our VIEs are only available to settle the obligations of these entities. Our condensed consolidated balance sheets include the following assets and liabilities of these entities:
June 30, 2024December 31, 2023
(in millions)
Property and equipment, net$206 $209 
Cash and cash equivalents21 17 
Restricted cash3 2 
Accounts receivable, net5 5 
Prepaid expenses2 3 
Debt201 202 
Accounts payable and accrued expenses12 11 
Due to hotel manager1 2 
Other liabilities3 3 
Unconsolidated Entities
Four of our hotels are owned by unconsolidated joint ventures in which we hold an interest. These hotels are accounted for using the equity method and had total debt of approximately $752 million and $702 million as of June 30, 2024 and December 31, 2023, respectively. Substantially all the debt is secured solely by the affiliates’ assets or is guaranteed by other partners without recourse to us.
In July 2024, the joint ventures that own and operate the Hilton La Jolla Torrey Pines sold the hotel for gross proceeds of approximately $165 million, and our pro-rata share of the gross proceeds was approximately $41 million, which was reduced by our portion of debt of approximately $17 million.
9
Note 6: Debt
Debt balances and associated interest rates as of June 30, 2024 were:
Principal balance as of
Interest Rate
at June 30, 2024		Maturity DateJune 30, 2024December 31, 2023
(in millions)
HHV Mortgage Loan(1)
4.20%November 2026$1,275 $1,275 
Other mortgage loans
Average rate of 4.37%
2024 to 2027(2)
382 385 
Revolver(3)
SOFR + 1.80%(4)
December 2026— — 
2024 Term Loan
SOFR + 1.75%(4)
May 2027200 — 
2025 Senior Notes(5)
7.50%June 2025— 650 
2028 Senior Notes(5)
5.88%October 2028725 725 
2029 Senior Notes(5)
4.88%May 2029750 750 
2030 Senior Notes(5)
7.00%February 2030550 — 
Finance lease obligations
7.66%2024 to 20281 1 
3,883 3,786 
Add: unamortized premium— 1 
Less: unamortized deferred financing costs and discount(27)(22)
$3,856 $3,765 
_____________________________________
(1)In October 2016, we entered into a $1.275 billion CMBS loan secured by the Hilton Hawaiian Village Waikiki Beach Resort (“HHV Mortgage Loan”).
(2)Assumes the exercise of all extensions that are exercisable solely at our option. The mortgage loan for Hilton Denver City Center matures in 2042 but became callable by the lender in August 2022 with six months of notice. As of June 30, 2024, Park had not received notice from the lender.
(3)Our revolving credit facility ("Revolver") permits one or more standby letters of credit, up to a maximum aggregate outstanding balance of $50 million, to be issued on behalf of us. As of June 30, 2024, we had approximately $4 million outstanding on a standby letter of credit and $946 million of available capacity under our Revolver.
(4)The secured overnight financing rate ("SOFR") includes a credit spread adjustment of 0.1%.
(5)In May 2020, our Operating Company, PK Domestic and PK Finance Co-Issuer Inc. ("PK Finance") issued an aggregate of $650 million senior notes due 2025 ("2025 Senior Notes"), all of which were repurchased or redeemed during the second quarter of 2024. Our Operating Company, PK Domestic, and PK Finance also issued an aggregate of $725 million of senior notes due 2028 (“2028 Senior Notes”) in September 2020, an aggregate of $750 million of senior notes due 2029 (“2029 Senior Notes”) in May 2021 and an aggregate of $550 million of senior notes due 2030 ("2030 Senior Notes") in May 2024.
Credit Facilities
2024 Term Loan
In May 2024, the Company, our Operating Company and PK Domestic amended our existing credit agreement to include a new $200 million senior unsecured term loan facility ("2024 Term Loan") with a scheduled maturity date of May 14, 2027. Borrowings under the 2024 Term Loan bear interest based upon SOFR plus a credit spread adjustment of 0.1%, plus an applicable margin based on our leverage ratio. We capitalized $2 million of financing fees incurred during the three months ended June 30, 2024.
The amendment did not amend or modify existing financial maintenance covenants or other terms and provisions under our existing credit agreement, except to provide that income, value and debt of the Hilton San Francisco Hotels be excluded from the calculations of our leverage ratio, the fixed charge coverage ratio and the secured leverage ratio under the existing credit agreement.
10
Senior Notes
2030 Senior Notes
In May 2024, our Operating Company, PK Domestic and PK Finance issued an aggregate of $550 million of 2030 Senior Notes. Net proceeds from the 2030 Senior Notes and the 2024 Term Loan were used to repurchase or redeem all of the 2025 Senior Notes, and the remainder was used for general corporate purposes. The 2030 Senior Notes bear interest at a rate of 7.000% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning February 1, 2025. The 2030 Senior Notes will mature on February 1, 2030. We capitalized approximately $9 million of issuance costs during the three months ended June 30, 2024.
We may redeem the 2030 Senior Notes at any time prior to August 1, 2026, in whole or in part, at a redemption price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a make-whole premium. On or after August 1, 2026, we may redeem the 2030 Senior Notes at (i) 103.500% of the principal amount on or prior to August 1, 2027, (ii) 101.750% of the principal amount prior to August 1, 2028 and (iii) 100.000% of the principal amount on or after August 1, 2028, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date. In addition, at any time prior to August 1, 2026, we may redeem up to 40% of the 2030 Senior Notes with net cash proceeds from certain equity offerings at a redemption price of 107.000% of the principal amount redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
Indenture
The 2030 Senior Notes are guaranteed by Park Parent, PK Domestic REIT Inc., and by the subsidiaries of our Operating Company that also guarantee indebtedness under our credit facility, the 2028 Senior Notes and 2029 Senior Notes. The guarantees are full and unconditional and joint and several. The indenture governing the 2030 Senior Notes contains customary covenants that limit the issuers' ability and, in certain instances, the ability of the issuers' subsidiaries, to borrow money, create liens on assets, make distributions and pay dividends on or redeem or repurchase stock, make certain types of investments, sell stock in certain subsidiaries, enter into agreements that restrict dividends or other payments from subsidiaries, enter into transactions with affiliates, issue guarantees of indebtedness, and sell assets or merge with other companies. These limitations are subject to a number of exceptions and qualifications, including exceptions and qualifications related to the declaration and payment of dividends and the making of distributions in order to maintain our status as a REIT. In addition, the indenture requires our Operating Company to maintain total unencumbered assets as of each fiscal quarter of at least 150% of total unsecured indebtedness, in each case calculated on a consolidated basis.
Debt Maturities
The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of June 30, 2024 were:
Year(in millions)
2024(1)
$58 
20257 
20261,563 
2027230 
2028725 
Thereafter1,300 
$3,883 
_____________________________________
(1)Excludes the SF Mortgage Loan secured by the Hilton San Francisco Hotels.
Debt Associated with Hotels in Receivership
In June 2023, we ceased making debt service payments towards the SF Mortgage Loan secured by the Hilton San Francisco Hotels, which was due November 2023, and we received a notice of default from the servicer. The stated rate on the loan is 4.11%; however, beginning June 1, 2023, the default interest rate on the loan is 7.11%. Additionally, beginning June 1, 2023, the loan accrues a monthly late payment administrative fee of 3% of the monthly amount due. In October
11
2023, the trustee for the SF Mortgage Loan filed a lawsuit against the borrowers under the SF Mortgage Loan. In connection with the lawsuit, the court appointed a receiver to take control of the Hilton San Francisco Hotels, which serve as security for the SF Mortgage Loan, and their operations, and thus, we have no further economic interest in the operations of the hotels. The receiver will operate and has authority over the hotels and, until no later than March 31, 2025, has the ability to sell the hotels. The court order contemplates that the receivership will end with a non-judicial foreclosure by July 15, 2025, if the hotels are not sold within the predetermined sale period.
We derecognized the Hilton San Francisco Hotels from our consolidated balance sheet in October 2023 when the receiver took control of the hotels. For the three and six months ended June 30, 2024, we recognized a gain of $15 million and $29 million, respectively, which is included in gain on derecognition of assets in our condensed consolidated statements of operations. The gain represents the accrued interest expense associated with the default of the SF Mortgage Loan, which results in a corresponding increase of the contract asset on our condensed consolidated balance sheets as we expect to be released from this obligation upon final resolution with the lender on the SF Mortgage Loan, in exchange for the transfer of ownership of the Hilton San Francisco Hotels. As of June 30, 2024 and December 31, 2023, the contract asset on our condensed consolidated balance sheets was $789 million and $760 million, respectively. The SF Mortgage Loan will remain a liability until final resolution with the lender is concluded and is included in debt associated with hotels in receivership on our condensed consolidated balance sheets.
Note 7: Fair Value Measurements
We did not elect the fair value measurement option for our financial assets or liabilities. The fair values of our other financial instruments not included in the table below are estimated to be equal to their carrying amounts.
The fair value of our debt and the hierarchy level we used to estimate fair values are shown below:
June 30, 2024December 31, 2023
Hierarchy
Level		Carrying
Amount		Fair ValueCarrying
Amount		Fair Value
(in millions)
Liabilities:
HHV Mortgage Loan3$1,275 $1,192 $1,275 $1,195 
Other mortgage loans3382 362 385 365 
2024 Term Loan3200 198 — — 
2025 Senior Notes1— — 650 652 
2028 Senior Notes1725 716 725 713 
2029 Senior Notes1750 703 750 702 
2030 Senior Notes1550 556 — — 
The fair value of the SF Mortgage Loan, which has a carrying value of $725 million as of both June 30, 2024 and December 31, 2023 and categorized as Level 3 of the fair value hierarchy, was $718 million as of both June 30, 2024 and December 31, 2023. Refer to Note 6: "Debt" for additional information.
During the three and six months ended June 30, 2024, we recognized impairment losses related to two of our hotels due to our inability to recover the carrying value of the assets. During the three and six months ended June 30, 2023, we recognized an impairment loss related to one of our hotels and in October 2023, that hotel, along with the other hotel securing our SF Mortgage Loan, were placed into receivership. Refer to Note 6: "Debt" for additional information. The
12
estimated fair value of the assets that were measured on a nonrecurring basis were:
June 30, 2024June 30, 2023
Fair ValueImpairment LossFair ValueImpairment Loss
(in millions)
Property and equipment(1)
$2 $12 $234 $202 
Total$2 $12 $234 $202 
____________________________________________________________________________________
(1)We estimated fair value of the assets during the six months ended June 30, 2024, using a discounted cash flow analysis, with an estimated stabilized growth rate range of 2% to 3%, a discounted cash flow term of 10 years and a discount rate ranging from 17.0% to 20.0%. We estimated fair value of the asset during the six months ended June 30, 2023, using a discounted cash flow analysis, with an estimated stabilized growth rate of 3%, a discounted cash flow term of 10 years, terminal capitalization rate of 6.3% and discount rate of 9.5%. The discount and terminal capitalization rates used for the fair values of the assets reflected the risk profile of the markets where the properties are located. Fair value as of both June 30, 2024 and June 30, 2023 were measured using significant unobservable inputs (Level 3).
Note 8: Income Taxes
We are a REIT for U.S. federal income tax purposes. We have been organized and operated, and we expect to continue to be organized and operate in a manner to qualify as a REIT. To qualify as a REIT, we must satisfy requirements related to, among other things, the real estate qualification of sources of our income, the real estate composition and values of our assets, the amounts we distribute to our stockholders annually and the diversity of ownership of our stock. To the extent we continue to remain qualified as a REIT, we generally will not be subject to U.S. federal (and state) income tax on taxable income generated by our REIT activities that we distribute annually to our stockholders. Accordingly, no provision for U.S. federal income taxes has been included in our accompanying condensed consolidated financial statements for the three or six months ended June 30, 2024 and 2023 related to our REIT activities. Our taxable REIT subsidiaries (“TRSs”) are generally subject to U.S. federal, state and local, and foreign income taxes (as applicable).
During the three and six months ended June 30, 2024, we recognized an income tax benefit of $12 million and $11 million, respectively, which is primarily associated with the effective exit from the Hilton San Francisco Hotels and the reversal of $14 million of tax expense that is no longer expected to be incurred.
During the three and six months ended June 30, 2023, we recognized income tax expense of $3 million and $5 million, respectively, which is primarily related to taxable income from our TRSs.
Note 9: Share-Based Compensation
We issue equity-based awards to our employees pursuant to the 2017 Omnibus Incentive Plan (the “2017 Employee Plan”) and our non-employee directors pursuant to the 2017 Stock Plan for Non-Employee Directors (the “2017 Director Plan”), both of which are amended and restated from time to time. The 2017 Employee Plan provides that a maximum of 14,070,000 shares of our common stock may be issued, and as of June 30, 2024, 6,434,577 shares of common stock remain available for future issuance. The 2017 Director Plan provides that a maximum of 950,000 shares of our common stock may be issued, and as of June 30, 2024, 164,499 shares of common stock remain available for future issuance. For both the three months ended June 30, 2024 and 2023, we recognized $5 million of share-based compensation expense and $9 million for both the six months ended June 30, 2024 and 2023. As of June 30, 2024, unrecognized compensation expense was $29 million, which is expected to be recognized over a weighted-average period of 1.7 years. The total fair value of shares vested (calculated as the number of shares multiplied by the vesting date share price) for the six months ended June 30, 2024 and 2023 was $13 million and $7 million, respectively.
13
Restricted Stock Awards
Restricted Stock Awards (“RSAs”) generally vest in annual installments between one and three years from each grant date. The following table provides a summary of RSAs for the six months ended June 30, 2024:
Number of Shares Weighted-Average
Grant Date
Fair Value
Unvested at January 1, 2024982,585$15.40 
Granted601,84216.23 
Vested(525,248)15.83 
Forfeited(48,864)15.54 
Unvested at June 30, 20241,010,315$15.66 
Performance Stock Units
Performance Stock Units (“PSUs”) generally vest at the end of a three-year performance period and are subject to the achievement of a market condition based on a measure of our total shareholder return relative to the total shareholder return of the companies that comprise the FTSE Nareit Lodging Resorts Index (that have a market capitalization in excess of $1 billion as of the first day of the applicable performance period). The number of PSUs that may become vested ranges from zero to 200% of the number of PSUs granted to an employee, based on the level of achievement of the foregoing performance measure.
Additionally, in November 2020, we granted special awards with vesting of these awards subject to the achievement of eight increasing levels of our average closing sales price per share, from $11.00 to $25.00, over a consecutive 20 trading day period (“Share Price Target”). One-eighth of PSUs will vest at each date a Share Price Target is achieved and any PSUs remaining after a four-year performance period will be forfeited. As of June 30, 2024, six of the eight Share Price Targets were achieved and thus 75% of the awards granted were vested.
The following table provides a summary of PSUs for the six months ended June 30, 2024:
Number of Shares Weighted-Average
Grant Date
Fair Value
Unvested at January 1, 20241,527,576$19.72 
Granted591,67217.75 
Vested(337,283)26.99 
Forfeited(22,720)16.04 
Unvested at June 30, 20241,759,245$17.72 
The grant date fair values of the awards that are subject to the achievement of market conditions based on total shareholder return were determined using a Monte Carlo simulation valuation model with the following assumptions:
Expected volatility36.0 %
Dividend yield(1)
— 
Risk-free rate4.5 %
Expected term3 years
_____________________________________
(1)Dividends are assumed to be reinvested in shares of our common stock and dividends will not be paid unless shares vest.
14
Note 10: Earnings Per Share
The following table presents the calculation of basic and diluted earnings per share (“EPS”):
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions, except per share amounts)
Numerator:
Net income (loss) attributable to stockholders, net of earnings allocated to participating securities$64 $(150)$92 $(117)
Denominator:
Weighted average shares outstanding – basic209 215 209 217 
Unvested restricted shares2 — 2 1 
Weighted average shares outstanding – diluted211 215 211 218 
Earnings (loss) per share – Basic(1)
$0.31 $(0.70)$0.44 $(0.54)
Earnings (loss) per share – Diluted(1)
$0.30 $(0.70)$0.44 $(0.54)
_____________________________________
(1)Per share amounts are calculated based on unrounded numbers and are calculated independently for each period presented.
Certain of our outstanding equity awards were excluded from the above calculation of EPS for the three and six months ended June 30, 2024 and 2023 because their effect would have been anti-dilutive.
Note 11: Business Segment Information
As of June 30, 2024, we have two operating segments, our consolidated hotels and unconsolidated hotels. Our unconsolidated hotels operating segment does not meet the definition of a reportable segment, thus our consolidated hotels is our only reportable segment. We evaluate our consolidated hotels primarily based on hotel adjusted earnings before interest expense, taxes and depreciation and amortization (“EBITDA”). Hotel Adjusted EBITDA, presented herein, is calculated as EBITDA from hotel operations, adjusted to exclude the following items that are not reflective of our ongoing operating performance or incurred in the normal course of business, and thus excluded from management's analysis in making day to day operating decisions and evaluations of our operating performance against other companies within our industry:
•Gains or losses on sales of assets for both consolidated and unconsolidated investments;
•Costs associated with hotel acquisitions or dispositions expensed during the period;
•Severance expense;
•Share-based compensation expense;
•Impairment losses and casualty gains or losses; and
•Other items that we believe are not representative of our current or future operating performance.
15
The following table presents revenues for our consolidated hotels reconciled to our consolidated amounts and net income to Hotel Adjusted EBITDA:
Three Months Ended June 30,Six Months Ended
June 30,
2024202320242023
(in millions)
Revenues:
Total consolidated hotel revenues$664 $692 $1,282 $1,320 
Other revenues22 22 43 42 
Total revenues$686 $714 $1,325 $1,362 
Net income (loss)$67 $(146)$96 $(113)
Other revenues(22)(22)(43)(42)
Depreciation and amortization expense64 64 129 128 
Corporate general and administrative expense18 16 35 32 
Impairment and casualty loss7 203 13 204 
Other operating expenses20 22 41 42 
Gain on sales of assets, net— — — (15)
Gain on derecognition of assets(15)— (29)— 
Interest income(5)(10)(10)(20)
Interest expense54 52 107 104 
Interest expense associated with hotels in receivership15 9 29 17 
Equity in earnings from investments in affiliates(1)(3)(1)(7)
Income tax (benefit) expense(12)3 (11)5 
Other loss (gain), net3 (3)3 (4)
Other items6 7 9 13 
Hotel Adjusted EBITDA$199 $192 $368 $344 
The following table presents total assets for our consolidated hotels, reconciled to total assets:
June 30, 2024December 31, 2023
(in millions)
Consolidated hotels$9,153 $9,406 
All other13 13 
Total assets$9,166 $9,419 
Note 12: Commitments and Contingencies
As of June 30, 2024, we had outstanding commitments under third-party contracts of approximately $111 million for capital expenditures at our properties, of which $34 million relates to guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort, $22 million relates to guestroom renovations at the Hilton Waikoloa Village and $11 million relates to guestroom renovations at the Hilton New Orleans Riverside. Our contracts contain clauses that allow us to cancel all or some portion of the work. If cancellation of a contract occurred, our commitment would be any costs incurred up to the cancellation date, in addition to any costs associated with the discharge of the contract.
We are involved in litigation arising from the normal course of business, some of which includes claims for substantial sums, and may make certain indemnifications or guarantees to select buyers of our hotels as part of a sale process. We are also involved in claims and litigation that is not in the ordinary course of business in connection with the spin-off from Hilton. The spin-off agreements provide that Hilton will indemnify us from certain of these claims as well as require us to indemnify Hilton for other claims. In addition, losses related to certain contingent liabilities could be apportioned to us under the spin-off agreements. In connection with our obligation to indemnify Hilton under the spin-off
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agreements, we have reserved approximately $8 million as of June 30, 2024 related to litigation with respect to an audit by the Australian Tax Office (“ATO”) of Hilton related to the sale of the Hilton Sydney in June 2015. This amount could change as the litigation of the ATO’s claim progresses.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the financial condition and results of operations of Park Hotels & Resorts Inc. (“we,” “us,” “our” or the “Company”) should be read in conjunction with the accompanying unaudited condensed consolidated financial statements, related notes included elsewhere in this Quarterly Report on Form 10-Q, and with our Annual Report on Form 10-K for the year ended December 31, 2023.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). Forward-looking statements include, but are not limited to, statements related to the effects of our decision to cease payments on the $725 million non-recourse CMBS loan ("SF Mortgage Loan") secured by two of our San Francisco hotels – the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco – a Hilton Hotel (collectively, the "Hilton San Francisco Hotels") and the lender's exercise of its remedies, including placing such hotels into receivership, as well as our current expectations regarding the performance of our business, our financial results, our liquidity and capital resources, including anticipated repayment of certain of our indebtedness, the completion of capital allocation priorities, the expected repurchase of our stock, the impact from macroeconomic factors (including inflation, elevated interest rates, potential economic slowdown or a recession and geopolitical conflicts), the effects of competition, the effects of future legislation or regulations, the expected completion of anticipated dispositions, the declaration, payment and any change in amounts of future dividends and other non-historical statements. Forward-looking statements include all statements that are not historical facts, and in some cases, can be identified by the use of forward-looking terminology such as the words “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates”, “hopes” or the negative version of these words or other comparable words. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could materially affect our results of operations, financial condition, cash flows, performance or future achievements or events.
All such forward-looking statements are based on current expectations of management and therefore involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements and we urge investors to carefully review the disclosures we make concerning risks and uncertainties in Item 1A: “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov, as well as risks, uncertainties and other factors discussed in this Quarterly Report on Form 10-Q. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
We have a diverse portfolio of iconic and market-leading hotels and resorts with significant underlying real estate value. We currently have interests in 42 hotels, consisting of premium-branded hotels and resorts with approximately 26,000 rooms, of which over 86% are luxury and upper upscale (as defined by Smith Travel Research) and are located in prime U.S. markets and its territories. Our high-quality portfolio currently includes hotels mostly in major urban and convention areas, such as New York City, Washington, D.C., Chicago, Boston, New Orleans and Denver; and premier resorts in key leisure destinations, including Hawaii, Orlando, Key West and Miami Beach; as well as hotels in select airport and suburban locations.
Our objective is to be the preeminent lodging real estate investment trust (“REIT”), focused on consistently delivering superior, risk-adjusted returns to stockholders through active asset management and a thoughtful external growth strategy while maintaining a strong and flexible balance sheet. As a pure-play real estate company with direct access to capital and independent financial resources, we believe our enhanced ability to implement compelling return on investment initiatives within our portfolio represents a significant embedded growth opportunity. Finally, given our scale and investment expertise, we believe we will be able to successfully execute single-asset and portfolio acquisitions and dispositions to further enhance the value and diversification of our assets throughout the lodging cycle, including potentially taking advantage of the economies of scale that could come from consolidation in the lodging REIT industry.
We operate our business through two operating segments, our consolidated hotels and unconsolidated hotels. Our consolidated hotels operating segment is our only reportable segment. Refer to Note 11: "Business Segment Information"
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in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information regarding our operating segments.
Outlook
Economic disruptions, including as a result of elevated interest rates and elevated rates of inflation may adversely affect our business. Inflationary concerns can affect both consumer sentiment and demand for travel, as well as increase labor or other costs to maintain or operate hotels that cannot be reduced without adversely affecting business growth or hotel value. However, we have relied on the performance of our hotels and active asset management to mitigate the effects of inflation, which is expected to continue to stabilize, and current macroeconomic uncertainty. During the second quarter of 2024, we continued to experience improvements in overall demand across our portfolio, although average daily rate ("ADR") growth has slowed as the industry recovery has stabilized and seasonal patterns have normalized. While there can be no assurances that we will not experience further fluctuations in hotel revenues or earnings at our hotels due to inflation and other macroeconomic factors, local economic factors and demand, a potential economic slowdown or a recession and geopolitical conflicts, we expect the positive momentum to continue for the remainder of 2024 based on current demand trends, expected increases in city-wide events and as demand from international travel continues to improve.
Recent Events
In May 2024, Park Intermediate Holdings LLC (our "Operating Company"), PK Domestic Property LLC, an indirect subsidiary of the Company ("PK Domestic") and PK Finance Co-Issuer Inc. ("PK Finance") issued $550 million of 7.000% senior notes due in 2030 ("2030 Senior Notes") as well as amended our existing credit agreement to include a new $200 million term loan due May 2027 ("2024 Term Loan"). Net proceeds from the 2030 Senior Notes and the 2024 Term Loan were used to repurchase or redeem all of the $650 million of 7.500% senior notes due in 2025 ("2025 Senior Notes"), and the remainder was used for general corporate purposes. Refer to Note 6: "Debt" in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.
During the three months ended June 30, 2024, we repurchased approximately 1.7 million shares of our common stock for a total purchase price of $25 million.
Additionally in July 2024, the joint ventures that own and operate the Hilton La Jolla Torrey Pines sold the hotel for gross proceeds of approximately $165 million, and our pro-rata share of the gross proceeds was approximately $41 million, which was reduced by our portion of debt of approximately $17 million.
Key Business Metrics Used by Management
Occupancy
Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help us determine achievable ADR levels as demand for rooms increases or decreases.
Average Daily Rate
ADR represents rooms revenue divided by total number of room nights sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the hotel industry, and we use ADR to assess pricing levels that we are able to generate by type of customer, as changes in rates have a more pronounced effect on overall revenues and incremental profitability than changes in occupancy, as described above.
Revenue per Available Room
Revenue per available room ("RevPAR") represents rooms revenue divided by the total number of room nights available to guests for a given period. We consider RevPAR to be a meaningful indicator of our performance as it provides a metric correlated to two primary and key factors of operations at a hotel or group of hotels: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods.
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Comparable Hotels Data
We present certain data for our hotels on a comparable hotel basis as supplemental information for investors. We present comparable hotel results to help us and our investors evaluate the ongoing performance of our comparable hotels. Our comparable hotels data includes results from hotels that were active and operating in our portfolio since January 1st of the previous year and excludes results from property dispositions that have occurred through June 30, 2024 and the Hilton San Francisco Hotels, which were placed into receivership at the end of October 2023.
Non-GAAP Financial Measures
We also evaluate the performance of our business through certain other financial measures that are not recognized under U.S. GAAP. Each of these non-GAAP financial measures should be considered by investors as supplemental measures to GAAP performance measures such as total revenues, operating profit and net income (loss).
EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA
EBITDA, presented herein, reflects net income (loss) excluding depreciation and amortization, interest income, interest expense, income taxes and also interest expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates.
Adjusted EBITDA, presented herein, is calculated as EBITDA, further adjusted to exclude the following items that are not reflective of our ongoing operating performance or incurred in the normal course of business, and thus, excluded from management's analysis in making day-to-day operating decisions and evaluations of our operating performance against other companies within our industry:
•Gains or losses on sales of assets for both consolidated and unconsolidated investments;
•Costs associated with hotel acquisitions or dispositions expensed during the period;
•Severance expense;
•Share-based compensation expense;
•Impairment losses and casualty gains or losses; and
•Other items that we believe are not representative of our current or future operating performance.
Hotel Adjusted EBITDA measures hotel-level results before debt service, depreciation and corporate expenses for our consolidated hotels, which excludes hotels owned by unconsolidated affiliates, and is a key measure of our profitability. We present Hotel Adjusted EBITDA to help us and our investors evaluate the ongoing operating performance of our consolidated hotels.
EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definitions of EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
We believe that EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA are among the measures used by our management team to make day-to-day operating decisions and evaluate our operating performance between periods and between REITs by removing the effect of our capital structure (primarily interest expense) and asset base (primarily depreciation and amortization) from our operating results; and (ii) EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.
EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss) or other methods of analyzing our operating performance and results as reported under U.S. GAAP. Some of these limitations are:
•EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect our interest expense;
•EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect our income tax expense;
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•EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations; and
•other companies in our industry may calculate EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA differently, limiting their usefulness as comparative measures.
We do not use or present EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA as measures of our liquidity or cash flow. These measures have limitations as analytical tools and should not be considered either in isolation or as a substitute for cash flow or other methods of analyzing our cash flows and liquidity as reported under U.S. GAAP. Because of these limitations, EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations. Some of these limitations are:
•EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
•EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect the cash requirements necessary to service interest or principal payments, on our indebtedness;
•EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect the cash requirements to pay our taxes;
•EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; and
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA, Adjusted EBITDA and Hotel Adjusted EBITDA do not reflect any cash requirements for such replacements.
The following table provides a reconciliation of Net income (loss) to Hotel Adjusted EBITDA:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions)
Net income (loss)$67 $(146)$96 $(113)
Depreciation and amortization expense64 64 129 128 
Interest income(5)(10)(10)(20)
Interest expense54 52 107 104 
Interest expense associated with hotels in receivership(1)
15 9 29 17 
Income tax (benefit) expense(12)3 (11)5 
Interest expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates2 2 5 5 
EBITDA185 (26)345 126 
Gain on sales of assets, net— — — (15)
Gain on derecognition of assets(1)
(15)— (29)— 
Gain on sale of investments in affiliates(2)
— (3)— (3)
Share-based compensation expense5 5 9 9 
Impairment and casualty loss7 203 13 204 
Other items11 8 17 12 
Adjusted EBITDA193 187 355 333 
Less: Adjusted EBITDA from investments in affiliates(8)(8)(16)(15)
Add: All other(3)
14 13 29 26 
Hotel Adjusted EBITDA$199 $192 $368 $344 
_____________________________________
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(1)For the three and six months ended June 30, 2024, represents accrued interest expense associated with the default of the SF Mortgage Loan, which was offset by a gain on derecognition for the corresponding increase of the contract asset on our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.
(2)Included in other (loss) gain, net.
(3)Includes other revenues and other expenses, non-income taxes on TRS leases included in other property expenses and corporate general and administrative expenses.
Nareit FFO attributable to stockholders and Adjusted FFO attributable to stockholders
We present Nareit FFO attributable to stockholders and Nareit FFO per diluted share (defined as set forth below) as non-GAAP measures of our performance. We calculate funds from (used in) operations (“FFO”) attributable to stockholders for a given operating period in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), as net income (loss) attributable to stockholders (calculated in accordance with U.S. GAAP), excluding depreciation and amortization, gains or losses on sales of assets, impairment, and the cumulative effect of changes in accounting principles, plus adjustments for unconsolidated joint ventures. Adjustments for unconsolidated joint ventures are calculated to reflect our pro rata share of the FFO of those entities on the same basis. As noted by Nareit in its December 2018 “Nareit Funds from Operations White Paper – 2018 Restatement,” since real estate values historically have risen or fallen with market conditions, many industry investors have considered presentation of operating results for real estate companies that use historical cost accounting to be insufficient by themselves. For these reasons, Nareit adopted the FFO metric in order to promote an industry-wide measure of REIT operating performance. We believe Nareit FFO provides useful information to investors regarding our operating performance and can facilitate comparisons of operating performance between periods and between REITs. Our presentation may not be comparable to FFO reported by other REITs that do not define the terms in accordance with the current Nareit definition, or that interpret the current Nareit definition differently than we do. We calculate Nareit FFO per diluted share as our Nareit FFO divided by the number of fully diluted shares outstanding during a given operating period.
We also present Adjusted FFO attributable to stockholders and Adjusted FFO per diluted share when evaluating our performance because we believe that the exclusion of certain additional items described below provides useful supplemental information to investors regarding our ongoing operating performance. Management historically has made the adjustments detailed below in evaluating our performance and in our annual budget process. We believe that the presentation of Adjusted FFO provides useful supplemental information that is beneficial to an investor’s complete understanding of our operating performance. We adjust Nareit FFO attributable to stockholders for the following items, which may occur in any period, and refer to this measure as Adjusted FFO attributable to stockholders:
•Costs associated with hotel acquisitions or dispositions expensed during the period;
•Severance expense;
•Share-based compensation expense;
•Casualty gains or losses; and
•Other items that we believe are not representative of our current or future operating performance.
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The following table provides a reconciliation of Net income (loss) attributable to stockholders to Nareit FFO attributable to stockholders and Adjusted FFO attributable to stockholders:
Three Months Ended June 30,Six Months Ended June 30,
2024202320242023
(in millions, except per share amounts)
Net income (loss) attributable to stockholders$64 $(150)$92 $(117)
Depreciation and amortization expense64 64 129 128 
Depreciation and amortization expense attributable to noncontrolling interests(1)(1)(2)(2)
Gain on sales of assets, net— — — (15)
Gain on derecognition of assets(1)
(15)— (29)— 
Gain on sale of investments in affiliates(2)
— (3)— (3)
Impairment loss7 202 12 202 
Equity investment adjustments:
Equity in earnings from investments in affiliates(1)(3)(1)(7)
Pro rata FFO of investments in affiliates4 5 5 10 
Nareit FFO attributable to stockholders122 114 206 196 
Casualty loss— 1 1 2 
Share-based compensation expense5 5 9 9 
Interest expense associated with hotels in receivership(1)
15 — 29 — 
Other items(5)9 3 14 
Adjusted FFO attributable to stockholders$137 $129 $248 $221 
Nareit FFO per share – Diluted(3)
$0.58 $0.53 $0.98 $0.90 
Adjusted FFO per share – Diluted(3)
$0.65 $0.60 $1.18 $1.01 
_____________________________________
(1)For the three and six months ended June 30, 2024, represents accrued interest expense associated with the default of the SF Mortgage Loan, which was offset by a gain on derecognition for the corresponding increase of the contract asset on our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.
(2)Included in other (loss) gain, net.
(3)Per share amounts are calculated based on unrounded numbers.
Results of Operations
Our non-comparable hotels consists of one hotel sold and one hotel returned to the lessor upon early termination of the ground lease during 2023. The results of operations of these hotels are included in our consolidated results only during our period of ownership. Additionally, our non-comparable hotels also consist of the two Hilton San Francisco Hotels, which are excluded from our consolidated results for the three and six months ended June 30, 2024, as a result of the hotels being placed into receivership in October 2023, which had a significant effect on the year-over-year comparability of our operations as further illustrated in the table of Hotel Revenues and Operating Expenses below.
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Hotel Revenues and Operating Expenses
Three Months Ended June 30,Change from Non-Comparable Hotels
20242023Change
Change from Comparable Hotels(1)
Change from the Hilton San Francisco HotelsChange from Other Non-Comparable Hotels
(in millions)
Rooms revenue$416 $442 $(26)$9 $(33)$(2)
Food and beverage revenue182 178 4 14 (9)(1)
Ancillary hotel revenue66 72 (6)(3)(3)— 
Rooms expense105 117 (12)3 (14)(1)
Food and beverage expense121 128 (7)5 (11)(1)
Other departmental and support expense155 165 (10)5 (15)— 
Other property expense57 63 (6)1 (8)1 
Management fees expense33 34 (1)2 (2)(1)
_____________________________________
(1)Change from our comparable hotels primarily relates to the market-specific conditions discussed below.

Six Months Ended June 30,Change from Non-Comparable Hotels
20242023Change
Change from Comparable Hotels(1)
Change from the Hilton San Francisco HotelsChange from Other Non-Comparable Hotels
(in millions)
Rooms revenue$790 $824 $(34)$39 $(67)$(6)
Food and beverage revenue364 359 5 27 (20)(2)
Ancillary hotel revenue128 137 (9)(2)(7)— 
Rooms expense207 224 (17)11 (27)(1)
Food and beverage expense244 255 (11)12 (21)(2)
Other departmental and support expense300 323 (23)8 (28)(3)
Other property expense109 123 (14)(1)(12)(1)
Management fees expense63 64 (1)4 (4)(1)
_____________________________________
(1)Change from our comparable hotels primarily relates to the market-specific conditions discussed below.
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Group, transient, contract and other rooms revenue for the three and six months ended June 30, 2024, as well as the change for each segment compared to the same period in 2023 are as follows:
Three Months Ended June 30,Change from
Non-Comparable Hotels
20242023Change
Change from Comparable Hotels(1)
Change from the Hilton San Francisco HotelsChange from Other Non-Comparable Hotels
(in millions)
Group rooms revenue$128 $131 $(3)$10 $(13)$— 
Transient rooms revenue255 278 (23)(7)(14)(2)
Contract rooms revenue23 23 — 5 (5)— 
Other rooms revenue10 10 — 1 (1)— 
Rooms revenue$416 $442 $(26)$9 $(33)$(2)
_____________________________________
(1)Change from our comparable hotels primarily relates to the market-specific conditions discussed below.
Six Months Ended June 30,Change from
Non-Comparable Hotels
20242023Change
Change from Comparable Hotels(1)
Change from the Hilton San Francisco HotelsChange from Other Non-Comparable Hotels
(in millions)
Group rooms revenue$251 $256 $(5)$26 $(30)$(1)
Transient rooms revenue478 507 (29)2 (26)(5)
Contract rooms revenue44 43 1 10 (9)— 
Other rooms revenue17 18 (1)1 (2)— 
Rooms revenue$790 $824 $(34)$39 $(67)$(6)
_____________________________________
(1)Change from other factors primarily relates to the market-specific conditions discussed below.

Market-Specific Conditions
The increases in hotel revenues and operating expenses for our comparable hotels during the three and six months ended June 30, 2024, as compared to the same periods in 2023, were primarily attributable to our hotels in the Key West, Orlando, New York and Boston markets. Combined occupancy and ADR at our Key West hotels increased 34.2 percentage points and 7.5%, respectively, for the three months ended June 30, 2024 and 19.7 percentage points and 11.1%, respectively, for the six months ended June 30, 2024 compared to the same periods in 2023 due to increases in group and transient demand. The increase in the Key West market was primarily driven by Casa Marina Key West, Curio Collection, which experienced increases in both occupancy and ADR of 48.2 percentage points and 13.9%, respectively, for the three months ended June 30, 2024 and 27.3 percentage points and 17.1%, respectively, for the six months ended June 30, 2024 following a comprehensive renovation of the hotel that started in May 2023 when the hotel suspended operations, with all rooms reopened by December 2023. The Signia by Hilton Orlando Bonnet Creek benefited from increases in group demand resulting in increases in occupancy and ADR of 3.3 percentage points and 4.1%, respectively, for the three months ended June 30, 2024 and 4.3 percentage points and 6.6%, respectively, for the six months ended June 30, 2024 compared to the same periods in 2023, following completion of the ballroom expansion project in early 2024. The New York Hilton Midtown benefited from an increase in group demand resulting in increases in occupancy and ADR of 1.9 percentage points and 1.9%, respectively, for the three months ended June 30, 2024 and 3.8 percentage points and 1.9%, respectively, for the six months ended June 30, 2024 compared to the same periods in 2023. Combined occupancy and ADR at our Boston hotels increased 3.5 percentage points and 5.7%, respectively, for the three months ended June 30, 2024 and 3.6 percentage points and 4.4%, respectively, for the six months ended June 30, 2024 compared to the same periods in 2023 due to increases in group and transient demand.
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These increases were partially offset by decreases in hotel revenues and operating expenses at our two Hawaii hotels where combined occupancy decreased 6.2 percentage points and 2.1 percentage points for the three and six months ended June 30, 2024, respectively, compared to the same periods in 2023 due to decreases in transient demand, despite increases in group demand, primarily at the Hilton Hawaiian Village Waikiki Beach Resort.
Corporate general and administrative
Three Months Ended
June 30,		Six Months Ended
June 30,
20242023Percent Change20242023Percent Change
(in millions)(in millions)
General and administrative expenses$11 $10 10.0 %$24 $21 14.3 %
Share-based compensation expense5 5 — 9 9 — 
Other items2 1 100.0 2 2 — 
Total corporate general and administrative$18 $16 12.5 %$35 $32 9.4 %
Impairment and casualty loss
During the three and six months ended June 30, 2024, we recognized impairment losses of approximately $7 million and $12 million, respectively, related to two of our hotels subject to ground leases and our inability to recover the carrying value of the assets over the remaining lease term. Refer to Note 7: "Fair Value Measurements" in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.
During the three and six months ended June 30, 2023, we recognized an impairment loss of approximately $202 million. Refer to Note 7: "Fair Value Measurements" in our unaudited condensed consolidated financial statements included elsewhere within this Quarterly Report on Form 10-Q for additional information.
Gain on sale of assets, net
During the six months ended June 30, 2023, we recognized a net gain of $15 million from the sale of one consolidated hotel.
Gain on derecognition of assets
During the three and six months ended June 30, 2024, we recognized a gain of $15 million and $29 million, respectively, from the accrued interest expense associated with the default of the SF Mortgage Loan, which resulted in a corresponding increase of the contract asset in our condensed consolidated balance sheets, as we expect to be released from this obligation upon final resolution with the lender.
Non-operating Income and Expenses
Interest income
Interest income decreased $5 million and $10 million during the three and six months ended June 30, 2024, respectively, compared to the same period in 2023 primarily as a result of a decrease in average cash balances.
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Interest expense
Interest expense increased $2 million and $3 million, respectively during the three and six months ended June 30, 2024 compared to the same periods in 2023 due to the issuance of the 2030 Senior Notes and the 2024 Term Loan, partially offset by the repurchase and redemption of all the 2025 Senior Notes. Interest expense associated with our debt for the three and six months ended June 30, 2024 and 2023 were as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
20242023Percent Change20242023Percent Change
(in millions)(in millions)
HHV Mortgage Loan(1)
$14 $14 — %$27