Investor Presentation Nareit 2018: San Francisco Waldorf Astoria - - PowerPoint PPT Presentation

Investor Presentation

Waldorf Astoria Orlando Hilton Chicago Hilton Hawaiian Village Waikiki Beach Resort

Nareit 2018: San Francisco

To be the preeminent lodging REIT, focused on consistently delivering superior, risk-adjusted returns for stockholders through active asset management and a thoughtful external growth strategy, while maintaining a strong and flexible balance sheet

Mission

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⚫ Preserve a strong and flexible balance sheet, with a targeted net leverage ratio

• f 3x to 5x

⚫ Maintain strong liquidity across lodging cycle and access to multiple types of financing ⚫ Aspire to achieve investment grade rating

Strong and Flexible Balance Sheet

⚫ Continually improve property level operating performance ⚫ Consistently implement revenue management initiatives to optimize market pricing / segment mix

Pillars of our Corporate Strategy

Operational Excellence

⚫ Allocate capital effectively by leveraging scale, liquidity and M&A expertise to create value through all phases of the lodging cycle ⚫ Employ an active capital recycling program—expanding our presence in target markets with a focus on brand and operator diversification, while reducing exposure to lower quality assets and slower growth markets ⚫ Target value enhancements projects with strong unlevered ROI yields

Prudent Capital Allocation

Hilton Chicago Hilton Waikoloa Village Parc 55 San Francisco, a Hilton Hotel

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Park’s Investment Thesis

• High Quality Portfolio – Has yielded solid total stockholder

return performance YTD, but still trading at a discount

• Solid Fundamentals – Supported by improving macro trends

and limited new supply; 2019 Group pace +12%

• Significant Growth Profile – Through aggressive asset

management, ROI initiatives and single asset opportunities

• Capital Recycling – Improving the portfolio through prudent

capital allocation

• Strong Balance Sheet – With ample liquidity available to

execute on strategic plan

• Well covered, Above Average Dividend Yield
• Developing a Track Record of Near-Term Success:

1 2 3 5 4 6 7

• 13 non-core assets sold for nearly $520M in 2018
• Repurchased 14M shares at a significant discount to NAV
• Special Dividend of $0.45/share from sale of Hilton Berlin

Prudent Capital Allocation

• Park’s comparable Hotel Adjusted EBITDA margin has improved

60bps over the last 12 months vs. relatively flat margin improvement for our full-service hotel REIT peers

Asset Mgmt Initiatives

• Successfully transitioned off Hilton systems and implemented

proprietary Park systems and software

Infrastructure

  

Following a 13.7% total stockholder return in 2017, Park has continued its strong performance, with the stock up over 9% YTD , which has helped to narrow the valuation gap with our peers

(1) Year-to-date 2018 Total Returns as of 11/1/18 (2) EBITDA multiples are based upon 2019 Consensus estimates

14.9x 13.8x 13.4x 11.9x 11.8x 11.8x 11.6x 10.8x 10.6x 10.1x

• Wtd. Peer Average: 12.1x

7.0x 8.0x 9.0x 10.0x 11.0x 12.0x 13.0x 14.0x 15.0x 16.0x LHO PEB CHSP RHP SHO HST PK DRH BHR XHR

'19 EBITDA Multiples(2) 21.5% 17.6% 13.7% 9.8% 9.4% 0.3%

• 0.7%
• 2.3%
• 5.1% -5.6%
• 11.0%
• Wtd. Avg. Peer Avg.: 2.8%
• 15.0%
• 10.0%
• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% LHO BHR RHP CHSP PK HST RMZ XHR DRH PEB SHO

YTD Total Returns

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Operational Excellence: 3Q18 Performance and ’18 Outlook

2018 Outlook 3Q18 Operating Results

2.6%

Comp RevPAR

10bps

Comp Hotel Adj EBITDA Margin

+$5.4M +5% +12%

’19 Group Pace ’18 Group Pace Asset Mgmt Initiatives

Metric Guidance Change from Prior Comp RevPAR Growth:

+2.4% to +2.9%

+15bps Comp EBITDA Margins:

+25bps to +55bps

+10bps Adjusted EBITDA:

$735M to $755M

$0

Note: Guidance as of 11/1/18. Not being updated or reconfirmed via this presentation.

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Company Highlights

Park Hotels & Resorts is a leading lodging real estate investment trust with a diverse portfolio of iconic and market-leading hotels and resorts with significant underlying real estate value in top U.S. markets

Leading Properties(1) 54 premium-branded hotels and iconic resorts with over 32,000 well-maintained rooms 87%+ of rooms in luxury and upper-upscale segments 28 properties with 25k+ sq. ft. of meeting space and 10 properties with 125k+ sq. ft. of

meeting space

TTM Performance(2)(3) 82%

Total Occupancy

$211

Total ADR

$173

Room RevPAR

$206

• Avg. Room

RevPAR

• f Top 10

Assets(4)

(1) As of 9/30/18 (2) Total consolidated Hotel Occupancy, ADR and RevPAR; excludes unconsolidated joint ventures and non-comparable hotels, unless otherwise noted (3) Trailing twelve months (“TTM”) data is for the twelve months ended 9/30/18 (4) Top 10 TTM RevPAR includes Hilton Waikoloa Village, which is non-comparable

Hilton Miami Airport Hilton Boston Logan Airport Conrad Dublin Waldorf Astoria Orlando

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Park Team

Chairman, President & CEO

Tom Baltimore EVP, GC

Tom Morey

EVP, HR

Jill Olander

EVP, CIO

Matt Sparks EVP, Asset Management Rob Tanenbaum EVP, CFO & Treasurer Sean Dell’Orto

➢ 25 years average experience among senior leadership ➢ Total of ~90 employees at Park Headquarters

Park Management

SVP, CAO

Darren Robb

SVP, FP&A

Diem Larsen

SVP, Strategy

Ian Weissman

SVP, Tax

Scott Winer

Executive Management Senior Management Board of Directors

➢ Best-in-class board including former CEOs and CFOs of Fortune 500 Companies ➢ Significant REIT experience across industries

EVP, D&C

Carl Mayfield

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$1.2 $1.6 $2.3 $2.4 $2.5 $2.9 $3.2 $4.0 $4.7 $5.1 $5.5 $6.0 $7.7 $8.7 $18.4 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 $16.0 $18.0 $20.0

BHR CLDT INN HT CHSP DRH XHR SHO AHT APLE RHP RLJ PEB/LHO(2) PK HST

Enterprise Value (B)

Full Service Mixed & Limited Service

Park is the second largest publicly traded Lodging REIT

Size and Scale: Park ~2.5x the Size of Most Lodging REITs(1)

Source: Public company filings as of 9/30/18 and S&P Global. Market data as of 11/1/18 (1) Assumption excludes HST from calculation

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New York Hilton Midtown 1,878 rooms Hilton San Francisco Union Square 1,921 rooms Hilton Chicago 1,544 rooms Hilton New Orleans Riverside 1,622 rooms Hilton Hawaiian Village Waikiki Beach Resort 2,860 rooms Hilton Waikoloa Village 1,110 rooms(1) Casa Marina, a Waldorf Astoria Resort 311 rooms

Waldorf Astoria Orlando/ Hilton Orlando Bonnet Creek 1,511 rooms

Hilton Short Hills 314 Rooms Hilton Boston Logan Airport 599 rooms Hilton Miami Airport 508 rooms Hilton McLean Tysons Corner 458 rooms

Diversified Asset Types & Markets

High Barrier to Entry Urban and Convention Hotels Landmark Resorts Select Suburban and Strategic Airport Hotels

Note: room count as of 9/30/18 (1) Includes approximately 470 rooms that became part of HGV as part of the spin-off and that we reserved exclusive rights to occupy and operate. On various dates until December 2019, we are required to release these rooms back to HGV for its renovation and use

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Portfolio Diversification(1)

Location Type(2):

(1) Calculated using results for the year ended 12/31/17 for the hotels we currently own or have an ownership interest in; pro forma to exclude 2018 dispositions (2) Calculated using total Hotel EBITDA, which includes pro rata share of Hotel EBITDA from JVs. See Appendix for definitions and reconciliations of these measures to comparable U.S. GAAP measures

Revenue Segmentation:

⚫ 80% Urban / Resort exposure ⚫ Reducing Airport / Suburban exposure via capital recycling initiatives ⚫ Nearly 50% exposure to Hawaii, Orlando, New Orleans and Key West – all with less than 2% projected supply growth ⚫ 12% exposure to San Francisco, which is projected to see a 74% increase in convention center room nights in 2019, totaling over1.2M room nights ⚫ Target markets include DC, Boston, Miami and SoCal ⚫ International exposure at just 1%, down from 5% prior to 2018 dispositions

Markets(2):

⚫ Park’s “Grouping Up” strategy targets 400 bps shift in Group demand among Top 25 hotels ⚫ Transient strategy of 50/50 split between Leisure and Corporate demand

Resort, 45% Urban, 37% Airport, 12% Suburban, 5%

Honolulu, 21% Orlando, 13% San Francisco, 12% New Orleans, 8% New York, 7% Chicago, 4% Waikoloa, 5% DC Metro, 4% Key West, 3% San Diego, 3% Int'l, 1% Other, 20%

Transient, 64% Group, 30% Contract , 4% Other, 2%

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7.7% 6.2% 5.9% 5.2% 4.9% 4.5% 3.7% 3.7% 3.2% 2.7% 2.5% 2.2% 2.1% 2.0% 1.8% 1.7% 1.7% 0.9% 0.0% 5.0% 10.0% 15.0% 20.0% Supply Growth PK 2017 Adjusted EBITDA (%) National Supply Growth 3.0% 3.0% 2.9% 2.8% 2.8% 2.8% 2.6% 2.3% CHSP XHR PEB/LHO DRH SHO HST BHR PK Weighted Avg Supply Growth '18 - '20

Full-service REIT Supply Exposure - STR Top 25 Markets

Park Portfolio: Well Insulated from Supply

⚫ Against a backdrop of increased US supply growth in Top 25 Markets, Park is well positioned relative to its peers ⚫ With outsized exposure to Orlando, Oahu, San Francisco and New Orleans, Park anticipates just 2.3% average annual supply growth through 2020, or 50bps lower than its peer group average

Favorable Supply Picture for Park through 2020(2)

Note: Charts presented above based on CBRE and Park estimates (1) Comparable full-service lodging REIT peers selected based on similar portfolio composition; includes data from CBRE’s Hotel Horizons forecasts (2) Supply Growth data from CBRE’s September - November 2018 Hotel Horizons forecasts for Upper Priced hotels; represents average of 2018, 2019 and 2020 supply forecasts. Park’s Adjusted EBITDA represents 2017 data and includes pro rata share of unconsolidated JVs

National Supply Growth Average: 1.9%

Peer Avg. 2.8%

2

Park Portfolio: Well Insulated from Supply

Supply Growth Exposure for Lodging REITs(1) ~2.3% Supply Growth for Park

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Grouping Up Strategy

Current vs. Peak Group Mix Group Up to 35%

• Strategic goal is to drive group mix higher

by another 400bps to an optimal mix of ~35% for Park’s Top 25 hotels

• Why Group Up:

1) Build a base in large, big box hotels to effectively shrink the hotels for less rooms to sell each night 2) Drive overall ADRs by yielding up on transient rates 3) Benefit from highly profitable catering/F&B from higher rated groups 4) Drive margins higher

* Denotes prior annual peak group revenue mix from 2005 - 2018

34% 22% 31% 40% 30% 38% 20% 25% 30% 35% 40% 45% Top 10 Portfolio Hotels 11-25 Top 25 Hotels

Group Mix

Current Group Mix Peak Group Mix*

2019 Group Pace(2): Park’s Portfolio + Primary Park Markets

11.8% 9.3% 26.4% 21.3% 11.2% 4.2% 1.9% 1.6%

• 26.3%
• 35.0%
• 25.0%
• 15.0%
• 5.0%

5.0% 15.0% 25.0% PK Comp. PK Comp. No SF Hawaii(1) San Fran Orlando Chicago New Orleans New York Key West

2019 Group Pace

(1) Only includes Hilton Hawaiian Village, as Hilton Waikoloa Village is non-comparable (2) Group pace as of 9/30/18

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Closing the Margin Gap: Narrowed by ~60 Basis Points

• Over the last 12 months (3Q18 TTM vs. 3Q17 TTM), Park’s Comparable Hotel Adjusted EBITDA margin has improved

60bps to 28.7% vs. generally flat performance for our full-service Hotel REIT peers—accounting for ~60bps of relative improvement

• For every 50bps of margin improvement, EBITDA increases by ~$14 million, accounting for approximately $170

million of value creation(2)

• Comp. Hotel Adj. EBITDA Margins(1): 3Q18 TTM vs. 3Q17 TTM

As of 3Q17, the TTM margin gap between Park and our Full Service REIT peers was 340bps; Today it is 280bps

(1) Peer comparable Hotel Adjusted EBITDA margin calculated based on most recently available / restated financial statements from their respective quarterly earnings

• releases. See Appendix for our definitions and for reconciliations to comparable U.S. GAAP measures. Our definition of Hotel Adjusted EBITDA margin may not be

comparable to similarly titled measures of our peers (2) Assumes a 12.0x valuation multiple

130 bps 60 bps 50 bps 50 bps bps bps

• 40 bps
• 70 bps
• 90 bps

Peer Average: 4 bps

• 150 bps
• 100 bps
• 50 bps

bps 50 bps 100 bps 150 bps RHP PK CHSP HST XHR PEB SHO DRH LHO Margin Improvement Last 12 Months

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Case Study: Bonnet Creek Complex

Asset Management partnered with property team to further drive awareness of the resort given the unique attributes of the 1,009-room Hilton and 502-room Waldorf Astoria (WA)

• WA Orlando Focus on Luxury: Hired 2 luxury sales managers & instituted cross-selling with Casa Marina
• Implemented lead-sharing platform with other hotels owned by Park in Orlando
• Opportunity to upbrand Hilton to a more upscale brand upon introduction of new brand by Hilton –

similar to a JW Marriott or Marriott Marquis

Revenue Mgmt

• Created 250 “Fireworks View” room types with premium rates

Oper. Analysis

• Created 12 additional keys – 8 at the Hilton and 4 at the Waldorf in early 2017: $400K incremental EBITDA
• Created 5 new Jr. Suites at the Hilton by splitting Parlor Rooms: $150K incremental EBITDA
• LED Lighting: estimated $600K savings per year and 40% IRR
• Laundry: estimated $150K of annual savings
• Re-bid parking contract: estimated incremental $700K annually

Sales/ Mktg

Waldorf Astoria Orlando Hilton Orlando Bonnet Creek

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ROI Projects

How We Evaluate ROI Projects

• Asset management teams work with property management and Design & Construction to identify
• pportunities
• Projects underwritten based on expected risk adjusted returns that range from a minimum of 15-20%

IRRs for larger projects and expected paybacks within 1-2 years for smaller projects

• Consultants may be engaged for larger projects ahead of approving the project

Near Term Projects

Completed/Committed HLT Santa Barbara converted and repositioned from DoubleTree (completed April 2018) WA/HLT Bonnet Creek Addition of ~70k sq. ft. of meeting space

Mid Term Projects

Under Review

Asset Repositions

HLT Bonnet Creek Repositioning Up-brand to Hilton+ concept WA Reach Resort Conversion Renovate and reposition to a Curio DT San Jose Conversion Renovate and reposition as a Hilton

Longer Term Projects

In Planning/Concepting HLT Hawaiian Village Master planning (branding; retail; amenities) including development of ½-acre Al Moana parcel HLT New Orleans Development and/or sale of 7-acre ‘Whale’ lot and other parcel and 2-acre surface lot parking area

Other smaller projects evaluated within the portfolio over time:

• Energy Initiatives: Co-generation plants; LED lighting
• Labor / Productivity: Union buyouts; labor management systems; digital key
• F&B: Installation of Grab ‘N Go market concepts

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Completed ROI Project: Hilton Santa Barbara Beachfront Resort

Conversion from a DoubleTree to a Hilton

⚫ 360-room beachfront resort situated across 24 acres in Santa Barbara, CA

⚫ Resort benefits from its prime location in Santa Ynez wine country and in-house

winery

⚫ Upbranding to a Hilton expected to allow the hotel to attract higher-rated group

business and better yield transient business

⚫ $14M renovation cost(1) ($38,000/key) completed in April 2018

Scope

⚫ Guestrooms: case goods; soft goods ⚫ Guest bathrooms: conversion of 160 bathtubs to walk-in showers; case

goods, soft goods

⚫ Public space: lobby; meeting space (mainly soft goods); and repositioning of

F&B to include new Grab ‘N Go

Old lobby: Renovated lobby:

(1) Park owns a 50% interest in the Hilton Santa Barbara Beachfront Resort; as such its pro-rata investment in the renovation was $7M

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Future ROI Project: Bonnet Creek Meeting Space Addition

⚫ Group meeting business is a key demand source for the 1,009-room

Hilton and 502-room WA Bonnet Creek, although both properties offer less meeting space per guestroom than their key competitors

Opportunity: Additional Meeting Space

⚫ Current plans call for the construction of ~70,000 sq. ft. of meeting

space across 2 new meeting space platforms including:

⚫ ~35,000 sq. ft. ballroom adjacent to existing Hilton meeting

space complex

⚫ ~9,000 sq. ft. ballroom adjacent to the Waldorf Astoria ⚫ Approximately $70M investment in ’19 -’20 expected to generate

approximately $13.5M of additional EBITDA/year once stabilized, yielding a 5-yr unlevered IRR of 20%+

⚫ Potential to upbrand the Hilton Bonnet as part of HLT’s broader

strategy of expanding its luxury offerings

⚫ Reconfigure golf course – holes 17 and 18, without negatively

impacting the quality or integrity of the course

Proposed Hilton Ballroom and meeting space Proposed Waldorf Ballroom

Bonnet Creek: Development Rights

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Future ROI Projects: New Orleans

Hilton New Orleans Riverside

⚫ 1,622 room hotel with 130,000 sq. ft. of meeting space ⚫ Adjacent to the 3 million sq. ft. New Orleans Ernest N. Morial Convention Center (NOCC) – 6th largest in the US

Opportunity: Excess Land

⚫ Whale Lot: 7-acre parking lot separates Hilton Riverside and NOCC (square yellow box) ⚫ Sale of Plot: Potential future expansion of the NOCC providing doorstep access to our hotel ⚫ Development: Land would need to be entitled, but there is a wide range of potential development opportunities on the site

with the building height set by FAR. Total buildable square footage could be well in excess of 1 million sq. ft.

⚫ WTC surface parking (rectangular yellow box): aggregate ~2 acres of developable land

WTC Garage

‘Whale’ Lot

Hilton New Orleans Riverside: Development Rights/Land Sale

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Capital Recycling Efforts Improve Portfolio Quality

2017 Phase I Asset Sales 2017 Pro- Forma(1)

Hotels

67 13 54

Rooms

~35,300 ~3,200 ~32,100

Consol. Comparable RevPAR

$163 $110 $169

RevPAR: +$6 International : ~1% Top 25: +500bps

Portfolio Transformation Following Phase I Asset Sales(1)

Phase I Asset Sales: Closed

• YTD, Park has sold 13 non-core hotels ($40M of EBITDA) for

nearly $520M, or 13x 2017 EBITDA

• Improvement to portfolio quality with 2017 Pro-forma

RevPAR +$6 (to $169)(1), while international exposure decreased to 1.5% (from 5.5%)

Phase II Asset Sales: Marketing for Sale

• Park expects to market for sale additional non-core hotels
• Average RevPAR is 30% below portfolio average
• Projected capex savings of $90 - $100M
• Further reduce Park’s ground lease and international

exposure

Portfolio Metrics Following Phase I Asset Sales

(1) 2017 Pro-Forma view excludes the 13 assets Park sold in 2018; note that Consolidated Comparable RevPAR improved to $173 on a TTM basis as of 9/30/18

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Strong and Flexible Balance Sheet

Debt Capital Structure Overview(1)

⚫ $236 million of unconsolidated JV debt (pro rata)

Debt Maturity Schedule(1) Liquidity Profile

⚫ Ample liquidity with $399 million of cash available as of 9/30/18 ⚫ 42 unencumbered hotels, or 63% of Adjusted EBITDA(3) ⚫ In addition to cash, Park has access to an undrawn $1 billion revolving credit facility

(1) As of 9/30/18. Figures exclude pro rata share of Unconsolidated JVs, unamortized deferred financing costs, discounts and capital lease obligations (2) Term Loan A (L + 1.45%) and Revolver (L + 1.50%) as of 9/30/18 (3) For the TTM ended 9/30/18 (4) Calculations are based upon the latest Consensus estimates. See Appendix for definitions and reconciliations of these measures to comparable U.S. GAAP measures

Fixed vs. Floating Net Debt to EBITDA(4)

Fixed, 74%

Floating 26%

Debt $ Amount % of Total Weighted Avg. Cost of Debt

CMBS (secured) $2,000 68% 4.2% Term Loan A (Unsecured) (2) 750 25% 3.7% Consolidated JV Debt (secured) 207 7% 4.2% Revolver(2) 3.8% Total Debt $2,957 100% 4.1%

Source: FactSet

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5.8% 5.8% 5.6% 5.4% 5.0% 4.8% 4.5% 4.5% 4.1% 2.7%

2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% PK BHR CHSP XHR SHO DRH PEB RHP HST LHO

Annualized Dividend Yield

Attractive, Well Covered Dividend

(1) 4Q 2017 dividend includes a $0.12 per share ‘top-off’, which translated into an AFFO payout ratio of 67.5%. Estimated 4Q 2018 dividend, which is subject to board approval, includes a $0.27 per share (midpoint of $0.22 - $0.32 expected range) ‘top-off’ amount and a $0.30 per share component related to additional gains from 2018 asset sales. Yield excludes both the $0.45 per share special dividend announced on 5/18/18 and the projected $0.30 per share component included in the expected 4Q 2018 dividend (2) Based on 11/1/18 closing prices; For PK, the 5.8% yield assumes a quarterly dividend run-rate of $0.43/share, or $1.72 on an annualized basis, while the 6.8% yield includes the 4Q 2018 incremental top-off dividend of $0.27/share at the midpoint of our guidance range, or $1.99/share on an annualized basis (3) Based on 12/31/17 closing price of $28.75

Park’s Quarterly Dividends and Respective Yield(1)

⚫ On July 26th, Park declared a quarterly cash dividend of $0.43/share paid on October 15th to stockholders of record as of September 28th ⚫ Park announced a special dividend following the sale of the Hilton Berlin on May 18th of $0.45/share which was paid on July 16th (to stockholders of record as of June 29th) in addition to the quarterly cash dividend ⚫ In 2017, Park paid a total of $1.84 in regular cash dividends, equating to a 6.4% dividend yield(3) ⚫ Expect to distribute between $0.95 - $1.05 for our Q4 dividend, which includes our normal top off fourth quarter payment

($0.65 - $0.75), plus an additional $0.30 related to excess gains from the assets sold earlier this year Dividend and Payout Ratio Analysis Peer REITs: Current Dividend Yield(2)

6.8% Source: FactSet Source: FactSet $0.43 $0.43 $0.43 $0.43 $0.43 $0.43 $0.43 $0.43 $0.12 $0.45 $0.57 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% $0.00 $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18E

Dividend Yield Quarterly Dividend

Regular Common Stock Dividend Yield

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Brand Strategy Maximizes Revenue and Profitability

Brands Matter: Park will focus on owning hotels and resorts in the luxury and upper upscale segments Benefits of Partnering with Brands

Consistent quality through a branded product should allow Park to achieve higher RevPAR and margins as a result of: ⚫ Recognizable product compared to independent hotels struggling to differentiate their offerings ⚫ Worldwide reservation systems ⚫ Loyalty programs help to drive recurring sales, while lowering new customer acquisition costs ⚫ Hilton (~82M members) and Marriott, including Starwood (~110M members), have over 50%

• f

sales stemming from customers within loyalty programs ⚫ Ability to achieve increased direct-to-consumer sales minimizing OTA / wholesale commissions and increasing revenue to Park ⚫ Significantly lower distribution costs for OTA business given negotiating power of brands ⚫ More effective competition against Airbnb, particularly with respect to frequent travelers who appreciate the reliability and security of branded hotels

Worldwide Group Sales Strong Loyalty Programs Worldwide Reservation Systems Effective Brand Segmentation RevPAR Premiums

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Appendix

Hilton Sao Paulo

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Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

Included in other (loss) gain, net.

(unaudited, in millions) 2018 2017

Net income 55 $ 105 $ Depreciation and amortization expense 69 74 Interest income (2) (1) Interest expense 32 32 Income tax benefit — (44) Interest expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates 8 6 EBITDA 162 172 Gain on sales of assets, net (2) — Loss on sale of investments in affiliates(1) 1 — Loss on foreign currency transactions 1 1 Transition expense 1 3 Severance expense 1 — Share-based compensation expense 4 3 Casualty (gain) loss and impairment loss, net (1) 2 Other items 1 2 Adjusted EBITDA 168 $ 183 $

September 30, Three Months Ended

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Non-GAAP Financial Measures (cont’d)

Comparable Hotel Adjusted EBITDA and Comparable Hotel Adjusted EBITDA Margin

(unaudited, dollars in millions) 2018 2017

Adjusted EBITDA 168 $ 183 $ Less: Adjusted EBITDA from investments in affiliates 10 11 Less: All other(1) (13) (11) Hotel Adjusted EBITDA 171 183 Less: Adjusted EBITDA from non-comparable hotels 5 21 Comparable Hotel Adjusted EBITDA 166 $ 162 $

2018 2017

Total Revenues 652 $ 688 $ Less: Other revenue 19 18 Less: Revenues from non-comparable hotels(1) 35 81 Comparable Hotel Revenues 598 $ 589 $

(1) Includes revenues from Park's non-comparable hotels and rental revenues from office space and antenna rent leases located at our hotels.

September 30, Three Months Ended September 30, Three Months Ended

(1) Includes other revenues and other expenses, non-income taxes on REIT leases included in other property-level expenses and

corporate general and administrative expenses. 2018 2017 Change(1)

Comparable Hotel Revenues 598 $ 589 $ 1.5% Comparable Hotel Adjusted EBITDA 166 $ 162 $ 2.1% Comparable Hotel Adjusted EBITDA margin 27.7% 27.6% 10 bps

(1) Percentages are calculated based on unrounded numbers.

Three Months Ended September 30,

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Non-GAAP Financial Measures (cont’d)

Net Debt and Net Debt to Pro-forma Adjusted EBITDA Ratio

disposed of in 2018.

(unaudited, in millions)

Debt 2,948 $ 2,961 $ Add: unamortized deferred financing costs 10 12 Long-term debt, including current maturities and excluding unamortized deferred financing costs 2,958 2,973 Add: Park's share of unconsolidated affiliates debt, excluding unamortized deferred financing costs 233 236 Less: cash and cash equivalents (399) (364) Less: restricted cash (16) (15) Debt, net 2,776 $ 2,830 $ Pro-forma Adjusted EBITDA(1) 735 $ 717 $ Net debt to Pro-forma Adjusted EBITDA ratio 3.8x 3.9x

September 30, 2018 December 31, 2017

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Non-GAAP Financial Measures (cont’d)

Pro-forma TTM Adjusted EBITDA

TTM September 30, 2018 is calculated as year ended December 31, 2017 plus the nine months ended September 30, 2018 less the nine months ended September 30, 2017.

Included in other (loss) gain, net.

Year Ended TTM(1) (unaudited, in millions) December 31, September 30, 2017 2018 2017 2018

Net income 2,631 $ 422 $ 2,570 $ 483 $ Depreciation and amortization expense 288 208 217 279 Interest income (2) (4) (2) (4) Interest expense 124 94 93 125 Income tax (benefit) expense (2,346) 13 (2,344) 11 Interest expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates 24 20 18 26 EBITDA 719 753 552 920 Gain on sales of assets, net (1) (98) — (99) Gain on sale of investments in affiliates(2) — (107) — (107) Loss on foreign currency transactions 4 4 4 4 Transition expense 9 3 5 7 Transaction expense 2 — — 2 Severance expense 1 2 — 3 Share-based compensation expense 14 12 10 16 Casualty and impairment loss, net 26 (1) 2 23 Other items (17) 2 4 (19) Adjusted EBITDA 757 570 577 750 Less: Adjusted EBITDA from hotels disposed of 33 2 24 11 Less: Adjusted EBITDA from investments in affiliates disposed of 7 2 5 4 Pro-forma Adjusted EBITDA 717 $ 566 $ 548 $ 735 $

Nine Months Ended September 30,

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Historical Comparable Hotel Adjusted EBITDA – 2018 TTM

Non-GAAP Financial Measures (cont’d)

The financial information below is for the 44 comparable hotels owned as of September 30, 2018.

TTM Full Year (unaudited, dollars in millions) December 31, March 31, June 30, September 30, September 30, December 31, 2017 2018 2018 2018 2018 2017

Net income 61 $ 149 $ 218 $ 55 $ 483 $ 2,631 $ Depreciation and amortization expense 71 70 69 69 279 288 Interest income — (1) (1) (2) (4) (2) Interest expense 31 31 31 32 125 124 Income tax (benefit) expense (2) — 13 — 11 (2,346) Interest expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates 6 7 5 8 26 24 EBITDA 167 256 335 162 920 719 Gain on sales of assets, net (1) (89) (7) (2) (99) (1) (Gain) loss on sale of investments in affiliates(1) — — (108) 1 (107) — (Gain) loss on foreign currency transactions — (1) 4 1 4 4 Transition expense 4 2 — 1 7 9 Transaction expense 2 — — — 2 2 Severance expense 1 — 1 1 3 1 Share-based compensation expense 4 4 4 4 16 14 Casualty loss (gain) and impairment loss, net 24 — — (1) 23 26 Other items (21) 2 (1) 1 (19) (17) Adjusted EBITDA 180 174 228 168 750 757 Less: Adjusted EBITDA from investments in affiliates 10 12 14 10 46 45 Less: All other(2) (12) (12) (14) (13) (51) (46) Hotel Adjusted EBITDA 182 174 228 171 755 758 Less: Adjusted EBITDA from non-comparable hotels 15 15 13 5 48 77 Comparable Hotel Adjusted EBITDA 167 $ 159 $ 215 $ 166 $ 707 $ 681 $

Three Months Ended

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Historical Comparable Hotel Adjusted EBITDA Margin – 2018 TTM

Non-GAAP Financial Measures (cont’d)

The financial information below is for the 44 comparable hotels owned as of September 30, 2018.

Includes revenues from Park's non-comparable hotels and rental revenues from office space and antenna rent leases located at our hotels. TTM Full Year (unaudited, dollars in millions) December 31, March 31, June 30, September 30, September 30, December 31, 2017 2018 2018 2018 2018 2017

Total Revenues 686 $ 668 $ 731 $ 652 $ 2,737 $ 2,791 $ Less: Other revenue 17 17 17 19 70 64 Less: Revenues from non-comparable hotels(1) 68 61 41 35 205 312 Comparable Hotel Revenues 601 $ 590 $ 673 $ 598 $ 2,462 $ 2,415 $

Three Months Ended TTM Full Year December 31, March 31, June 30, September 30, September 30, December 31, 2017 2018 2018 2018 2018 2017

Comparable Hotel Revenues 601 $ 590 $ 673 $ 598 $ 2,462 $ 2,415 $ Comparable Hotel Adjusted EBITDA 167 $ 159 $ 215 $ 166 $ 707 $ 681 $ Comparable Hotel Adjusted EBITDA margin 27.8% 26.9% 31.9% 27.7% 28.7% 28.2%

Three Months Ended

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Historical Comparable Hotel Adjusted EBITDA – 2017 TTM

Non-GAAP Financial Measures (cont’d)

The financial information below is for the 44 comparable hotels owned as of September 30, 2018.

TTM Full Year (unaudited, dollars in millions) December 31, March 31, June 30, September 30, September 30, December 31, 2016 2017 2017 2017 2017 2016

Net income 17 $ 2,350 $ 115 $ 105 $ 2,587 $ 139 $ Depreciation and amortization expense 80 70 73 74 297 300 Interest income (1) — (1) (1) (3) (2) Interest expense 40 30 31 32 133 181 Income tax (benefit) expense 3 (2,281) (19) (44) (2,341) 82 Interest expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates 5 5 7 6 23 24 EBITDA 144 174 206 172 696 724 Gain on sales of assets, net — — — — — (1) (Gain) loss on foreign currency transactions (3) (1) 4 1 1 (3) Transition expense 26 1 1 3 31 26 Share-based compensation expense — 3 4 3 10 — Casualty loss (gain) and impairment loss, net — — — 2 2 15 Impairment loss included in equity in earnings from investments in affiliates 17 — — — 17 17 Other items 16 — 2 2 20 36 Adjusted EBITDA 200 177 217 183 777 814 Less: Spin-off adjustments(1) 14 — — — 14 49 Less: Adjusted EBITDA from investments in affiliates 10 9 15 11 45 44 Less: All other(2) (3) (12) (11) (11) (37) (34) Hotel Adjusted EBITDA 179 180 213 183 755 755 Less: Adjusted EBITDA from non-comparable hotels 20 21 20 21 82 83 Comparable Hotel Adjusted EBITDA 159 $ 159 $ 193 $ 162 $ 673 $ 672 $

Three Months Ended

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Historical Comparable Hotel Adjusted EBITDA Margin – 2017 TTM

Non-GAAP Financial Measures (cont’d)

The financial information below is for the 44 comparable hotels owned as of September 30, 2018.

Includes revenues from Park's non-comparable hotels and rental revenues from office space and antenna rent leases located at our hotels. TTM Full Year (unaudited, dollars in millions) December 31, March 31, June 30, September 30, September 30, December 31, 2016 2017 2017 2017 2017 2016

Total Revenues 670 $ 684 $ 733 $ 688 $ 2,775 $ 2,727 $ Less: Other revenue 6 13 16 18 53 23 Less: Revenues from non-comparable hotels(1) 80 83 83 81 327 334 Comparable Hotel Revenues 584 $ 588 $ 634 $ 589 $ 2,395 $ 2,370 $

Three Months Ended TTM Full Year December 31, March 31, June 30, September 30, September 30, December 31, 2016 2017 2017 2017 2017 2016

Comparable Hotel Revenues 584 $ 588 $ 634 $ 589 $ 2,395 $ 2,370 $ Comparable Hotel Adjusted EBITDA 159 $ 159 $ 193 $ 162 $ 673 $ 672 $ Comparable Hotel Adjusted EBITDA margin 27.2% 27.0% 30.4% 27.6% 28.1% 28.4%

Three Months Ended

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Guidance

EBITDA and Adjusted EBITDA

expected to be recognized in the fourth quarter of 2018 as a result of completing Park’s assessment for the effect of The Tax Cuts and Jobs Act of 2017 and built-in gain tax on assets sold.

Excludes gain on insurance proceeds in excess of losses incurred.

(unaudited, in millions) Low Case High Case

Net income(1)(2) 476 $ 493 $ Depreciation and amortization expense 280 280 Interest income (6) (6) Interest expense 127 127 Income tax expense(1) 10 13 Interest expense, income tax and depreciation and amortization included in equity in earnings from investments in affiliates 25 25 EBITDA(2) 912 932 Gain on sale of assets, net (98) (98) Gain on sale of investments in affiliates (107) (107) Loss on foreign currency transactions 4 4 Transition expense 4 4 Severance expense 3 3 Share-based compensation expense 16 16 Other items 1 1 Adjusted EBITDA 735 $ 755 $

December 31, 2018 Year Ending

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Definitions

EBITDA, Adjusted EBITDA, Hotel Adjusted EBITDA and Hotel Adjusted EBITDA Margin Earnings before interest expense, taxes and depreciation and amortization (“EBITDA”), presented herein, reflects net income excluding depreciation and amortization, interest income, interest expense, income taxes and 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, as previously defined, further adjusted to exclude:

• Gains or losses on sales of assets for both consolidated and unconsolidated investments;
• Gains or losses on foreign currency transactions;
• Transition expense related to the Company’s establishment as an independent, publicly traded company;
• Transaction expense associated with the potential disposition of hotels or acquisition of a business;
• Severance expense;
• Share-based compensation expense;
• Casualty and impairment losses; and
• Other items that management believes are not representative of the Company’s current or future operating performance.

Hotel Adjusted EBITDA measures hotel-level results before debt service, depreciation and corporate expenses of the Company’s consolidated hotels, including both comparable and non-comparable hotels but excluding hotels owned by unconsolidated affiliates, and is a key measure of the Company’s profitability. The Company presents Hotel Adjusted EBITDA to help the Company and its investors evaluate the ongoing operating performance of the Company’s consolidated hotels. Hotel Adjusted EBITDA margin is calculated as Hotel Adjusted EBITDA divided by total hotel revenue.

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Definitions (cont’d)

Net Debt Net debt, presented herein, is a non-GAAP financial measure that the Company uses to evaluate its financial leverage. Net debt is calculated as (i) long-term debt, including current maturities and excluding unamortized deferred financing costs; and (ii) the Company’s share of investments in affiliate debt, excluding unamortized deferred financing costs; reduced by (a) cash and cash equivalents; and (b) restricted cash and cash equivalents. The Company believes Net debt provides useful information about its indebtedness to investors as it is frequently used by securities analysts, investors and other interested parties to compare the indebtedness of companies. Net debt should not be considered as a substitute to debt presented in accordance with U.S. GAAP. Net debt may not be comparable to a similarly titled measure of other companies. Net Debt to Adjusted EBITDA Ratio Net debt to Adjusted EBITDA ratio, presented herein, is a non-GAAP financial measure and is included as it is frequently used by securities analysts, investors and

• ther interested parties to compare the financial condition of companies. Net debt to Adjusted EBITDA ratio should not be considered as an alternative to measures of

financial condition derived in accordance with U.S. GAAP and it may not be comparable to a similarly titled measure of other companies. Comparable Hotels The Company presents certain data for its consolidated hotels on a comparable hotel basis as supplemental information for investors. The Company defines its comparable hotels as those hotels that: (i) were active and operating in the Company’s portfolio since January 1st of the previous year; and (ii) have not sustained substantial property damage, business interruption, undergone large-scale capital projects or for which comparable results are not available. The Company presents comparable hotel results to help the Company and its investors evaluate the ongoing operating performance of its comparable hotels. Of the 46 hotels that are consolidated as of September 30, 2018, 44 hotels have been classified as comparable hotels. Due to the conversion, or planned conversions, of a significant number

• f rooms at the Hilton Waikoloa Village in 2017 to HGV timeshare units, and due to the effects of the hurricane at the Caribe Hilton in Puerto Rico and the expected

continued effects from business interruption in 2018, the results from these properties were excluded from comparable hotels. The Company’s comparable hotels also exclude the 12 consolidated hotels that were sold in January and February 2018. Pro-forma Certain financial measures and other information have been adjusted to reflect the effects of hotels disposed of during the periods presented. When presenting such information, the amounts are identified as “Pro-forma.” * Please see Park’s periodic filings with the SEC from additional definitions.

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About Park and Safe Harbor Disclosure

About Park Hotels & Resorts Inc. Park (NYSE: PK) is the second largest publicly traded lodging real estate company with a diverse portfolio of market-leading hotels and resorts with significant underlying real estate value. Park’s portfolio consists of 54 premium-branded hotels and resorts with over 32,000 rooms, a majority of which are located in prime U.S. markets with high barriers to entry. Visit www.pkhotelsandresorts.com for more information. Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements related to Park’s current expectations regarding the performance of its business, financial results, liquidity and capital resources, the effects of competition and the effects of future legislation or regulations, the expected completion of anticipated acquisitions and dispositions, the declaration and payment 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” or the negative version of these words or other comparable words. Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements in this presentation and Park urges investors to carefully review the disclosures Park makes concerning risk and uncertainties in Item 1A: “Risk Factors” in Park’s Annual Report

• n Form 10-K for the year ended December 31, 2017, as such factors may be updated from time to time in Park’s periodic filings with the SEC,

which are accessible on the SEC’s website at www.sec.gov. Except as required by law, Park undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Supplemental Financial Information Park refers to certain non-generally accepted accounting principles (“GAAP”) financial measures in this presentation, including Funds from Operations (“FFO”) calculated in accordance with the guidelines of the National Association of Real Estate Investment Trusts (“NAREIT”), Adjusted FFO, FFO per share, Adjusted FFO per share, Earnings before interest expense, taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA, Hotel Adjusted EBITDA, Hotel Adjusted EBITDA margin, Net debt and Net debt to Adjusted EBITDA ratio. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of its operating performance. Please see the schedules included in this presentation including the “Definitions” section for additional information and reconciliations of such non-GAAP financial measures.