![]() For one, US has already lifted any covid restrictions on travelers from China, which is a good first step to travel recovery. In my opinion, unless we go to a full out war, I believe small steps would be taken by both sides to ensure their economy yield positive results. Now, what could steer this catalyst farther away from FY23 is the geopolitical tension between the US and China. But this tells me that there are still plenty of room to recover, and this phase of recovery could provide an acceleration to earnings in the short-term. Additionally, the ADR and occupancy were still down by 8% and 39.5%, respectively. During 1Q23, the comparable RevPAR in the market was still 50% lower than that of the first quarter in 2019. When considering the numbers directly, the operational measurements are still significantly lower compared to the levels seen in FY19. Of course, PK benefited as well with all four of its San Francisco hotels generated positive EBITDA in the in 1Q23 for the first time since the pandemic. While China is still a laggard in participating in the recovery, travel and tourism industry has been recovering at a healthy pace with 2022 seeing a 211% increase in international visitation. ![]() I view the San Francisco travel situation as an upcoming catalyst for possible earnings/guidance revision. In addition to leisure travelers, the management anticipates a recovery in business transient travel, which has shown consistent improvement and is expected to fully rebound by the middle of 2023. However, the reopening of the Asia Pacific region is still taking form, making San Francisco and Hawaii the focal points of attention (near-term catalyst). There are already observable enhancements in New York as a result of the increasing number of European travelers visiting the city. I anticipate that Park Hotels & Resorts will benefit from the current wave of travel recovery in fiscal year 2023 and potentially in fiscal year 2024 as well. ![]() International tourism should also continue to surge back to pre-covid levels, which I believe we are nearing. Based on April's preliminary results, management claims that RevPAR has continued to show healthy growth rates, indicating a sequential monthly increase. I have confidence in the demand outlook, and I don't see any reason why PK can't ride this wave of recovery. Another notable highlight was AFFO per share, which stood at $0.42. Furthermore, PK experienced significant growth in RevPAR, with a remarkable increase of 36.4% to reach $158.84. The company also demonstrated strong EBITDA margins, reported at 22.5%. Similarly, the adjusted EBITDA of $146 million exceeded market expectations, which were set at $133.6 million. PK's first-quarter 2023 results showcased impressive performance, with revenues reaching $648 million, surpassing the consensus estimate of $617 million. Additionally, I foresee potential positive developments in the near term through international travel to San Francisco and Hawaii. In conclusion, I recommend buying PK stock as I anticipate the company to maintain its high level of performance and achieve its guidance. As a result of the 1Q EBITDA performance, management increased their guidance for the full fiscal year 2023, especially the midpoint. The quarterly results were better than expected, and the commentary that accompanied them shed light on the company's long-term prospects, suggesting that the recovery is continuing. Revenue per available room was down 10% from 2019 levels, but up 1.4% sequentially if we exclude San Francisco assets. The business posted an EBITDA of $146 million in 1Q23. Park Hotels & Resorts ( NYSE: PK) is a hotel and resort chain that primarily operates in the United States. PixelsEffect/E+ via Getty Images Overview
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