Greetings. Welcome to Park Hotels & Resorts Inc. First Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to your host Ian Weissman, Senior Vice President of Corporate Strategy. You may begin.

Thank you, operator, and welcome everyone to the Park Hotels & Resorts first quarter 2021 earnings call. Before we begin, I would like to remind everyone that many of the comments made today are considered forward-looking statements under federal securities laws. As described in our filings with the SEC, these statements are subject to numerous risks and uncertainties that could cause future results to differ from those expressed and we are not obligated to publicly update or revise these forward-looking statements. In addition, on today's call, we may discuss certain non-GAAP financial information, such as adjusted EBITDA. You can find this information together with reconciliations to the most directly comparable GAAP financial measure in last night's earnings release, as well as in our 8-K filed with the SEC and the supplemental financial information available on our website at pkhotelsandresorts.com. This morning Tom Baltimore, our Chairman and Chief Executive Officer, will provide an overview of the industry, as well as a review of Park's first quarter performance. He will also provide color on recent demand trends and their impact on Park's portfolio. Sean Dell'Orto, our Chief Financial Officer, will provide a brief view of performance across several of our key markets, as well as more detail on our balance sheet and liquidity. Following our prepared remarks, we will open the call for questions. With that, I would like to turn the call over to Tom.

Thank you, Ian, and welcome, everyone. I hope that everyone is safe, healthy and well as we surpass one full year of living through an unprecedented pandemic. I believe I speak for many of us when I say that there is finally a light at the end of the tunnel. I'm pleased to report significant improvements across our portfolio in recent weeks including meaningful sequential occupancy growth, as well as achieving portfolio breakeven EBITDA in March. Overall, I'm very optimistic about our outlook going forward. To start, I've been encouraged by the pace of vaccinations across the U.S., which has helped to drive a dramatic increase in consumer confidence and greater mobility. On the economic front, there are several tailwinds that are fueling increased economic activity. State and local jurisdictions have begun lifting restrictions on travel and public gatherings, paving the way for increased mobility. Ongoing government stimulus, including President Biden's $1.9 trillion stimulus plan passed by Congress in March, has continued to provide relief for those most economically impacted by the pandemic, while also fueling increased savings for others. The U.S. savings rate now sits at approximately 28%, the second highest rate on record, while personal savings exceeded $2.5 trillion in March, up from $2.4 trillion recorded in February. Personal consumption expenditures are currently forecasted to reach 7% this year, which would be the strongest PCE growth since 1955 and business investment spending is expected to be close to 8%. Both forecasts materially higher than at the end of 2020. And if approved, proposed government infrastructure investments will be another major boost to the economy. As a result of these factors 2021 forecast the GDP is now averaging 6.4%, which is the highest projected level since 1984. All of this bodes incredibly well for our industry. Against this backdrop,…

Thanks, Tom. Overall, we were pleased with the first quarter performance with RevPAR increasing 49% over Q4 2020 driven by a 600 basis point sequential improvement in occupancy, while average daily rate neared $155 for a 15% quarter-over-quarter increase. As for the bottom-line, operating losses tapered with negative adjusted EBITDA of $49 million, exceeding our internal estimates as solid performance across several of our resort properties; and enhanced operating efficiencies across the portfolio helped to support results. For example at our Costa Marina Resort in Key West both RevPAR and EBITDA exceeded prior peak up 5.1% and nearly 16%, respectively versus 2019 levels, while margins came in at roughly 51% for the quarter or nearly 600 basis points higher than Q1 2019. Looking ahead to the second quarter we expect operating losses to narrow further as occupancy for our consolidated hotels is expected to increase another eight to 10 percentage points sequentially to the upper 30% range, while hotel occupancy for open consolidated hotels is forecast to exceed 40% for the quarter. Leisure demand is expected to continue to drive results across both drive two and FLY two markets in Hawaii Florida Puerto Rico and Southern California. Turning to the balance sheet. As of quarter end our liquidity stood at $1.3 billion including $474 million available on our revolver while our net debt totaled $4.5 billion. Our monthly burn rate continues to shrink down from averaging $42 million during the fourth quarter to $38 million in the first quarter with March coming in at just $26 million. As we noted last quarter, we anticipate achieving breakeven over the second half of the year. And given the positive momentum we witnessed in March and April along with the improving macro trends Tom discussed earlier, we see a path to reach breakeven…

[Operator Instructions] Our first question is from David Katz with Jefferies. Please proceed with your question.

Hi good everyone. Thanks for all the detail. Look I wanted to just talk about the -- and get the sort of negative out of the way first right? There's still a handful of hotels and they're among the larger ones that are closed. When they do come back do they necessarily have to ramp more slowly than smaller hotels? And I ask it in the context that things have just continued to progress positively seemingly on a weekly basis of late.

It's a fair question David. Let me try to put it in perspective for you. And let's use Hawaii as an example. We opened one tower then a second tower now 3. But if you just look at the performance and how quickly things are snapping back Hilton Hawaiian Village we were about 13% occupancy in January, moved that to 34% in March. We're expecting to be close to 60% in the second quarter, and again as we've said probably high 70s in the third quarter and continuing that into the fourth quarter. We could not have predicted that. I mean, this is a fly to market, you've got testing requirements that are still in place. But again, the pent-up demand the revenge spending that we're seeing, it's really snapping back is – and certainly quicker than we could have anticipated. So let's then fast forward and look at San Francisco. We did not expect candidly to reopen the Hilton San Francisco till probably later in the year. And what we're finding much to our surprise here as we sort of look out is that, we're going to open before Memorial weekend. The state of California obviously is set to open everything around June 15. As of May 6, they've started to relax reopening for bars and meetings and receptions. And we look at our group pace. And we also look, what's happening, whether it's going to be both on the leisure front maybe its small groups, maybe it's on the business transient side. But we're seeing our hotels there, if you take the JB Marriott and our Fisherman's Wharf are Hyatt there, again, began the year at 16%, already ramping up to Q1 in the mid-20s, and we expect to be in the high 30s and in one probably…

I would agree. And if I can just follow-up quickly on sort of the above property expense interactions, because I think you touched on that a bit in your answer. But progress that you've made with your operators the brands on – and how much of that is permanent?

Yeah. It's another great question. And obviously, being in someone that's been in the business a long, long time, and I know there are going to be skeptics out there that look and say, we've been to the movie before. We take cost out in a recessionary environment. And then as soon as things come back, we have the arms race, the brands start adding all of their amenities. And then the cost creep starts. Here's the difference. And for the listeners remember, I worked for multiple Marriott companies, and I worked for Hilton twice, so obviously before launching my first company, and of course taken this assignment, which by the way this is the fifth week – fifth year anniversary that I rejoined Hilton to spin out Park and have enjoyed every bit of this extraordinary team we put together. Obviously, the last year has certainly been testing for all of us. But the difference is Hilton and Marriott given how paternalistic, given how careful they are with their workforces. But think about, how they have retooled and taken out 20%, 30%, 40% of their cost at the corporate level. I have never seen that before over a long career. So I use that as sort of evidence number one. And then number two, we've all had to think about the business differently. We never could have imagined that we could have gotten to breakeven in March at 32% occupancy across this entire portfolio given the carrying cost, we're still carrying Chicago, New York, San Francisco that are closed. So it's just phenomenal work by this team by really digging in and looking at every line item how we can take cost out of the business. The challenge for all of us is as we pivot and move forward that we make it permanent that we think about the business and that we respond to the changing customer preferences that are out there. So we're confident, we're going to have to continue to be disciplined about it and really push and partner with our operators. But I hear different tone and a different level of communication coming from those brands and our operating partners as well, saying, we've always got to think about the business differently. We've got to make these 300 basis points of margin benefit, the $85 million that we've taken out. We've got to make that permanent, so that we can have a more viable business and candidly more attractive to investors as we move forward.

I appreciate it. Thank you very much.

Thank you for the questions.

And our next question is from Smedes Rose with Citi. Please proceed with your question.

Hi, thanks.

Hi Smedes.

Hi. I just wanted to follow-up a little bit on that with the larger hotels that I think have a larger group component and it sounds like you're leads are accelerating and sounds very positive. But just in general, are you hearing any feedback or hesitancy from -- on the group side or even the corporate transient side that companies are looking to reduce their overall travel budgets having enjoyed a year without having spent any money on that front? And any updated thoughts you have on this idea that business travel will be permanently impaired?

Yeah Smedes, it's a great question and let me parse it a couple of ways. The honest answer is, I don't think we're going to really know until we have cities completely opened. We have schools opened. We have offices opened and people are back to figure out what that new rhythm is going to be. There's no doubt that business transient one can assume that it's going to be impacted on the margin. Is that permanent impairment 10%, 15%, 20%, 30%? I certainly am not in that camp. But will people be more selective about some of the trips that they make? I think the answer is yes. But I also think that if we're going to allow people to work remotely and work in different locations than in some respects that whatever we may have lost, you can make a case that some of that gets picked up as they will travel more coming back to the corporate headquarters, coming back for training activities. And if anything I think on the group side, I think the need for companies to bring their people together in a safe environment for training, for team building, for continuing to recognize you're never going to do away with that need to be together. So we'll have to wait and see what that impact is on the business transition. I don't think it's going to be as significant as some say, I think the sales and marketing people and the people who say, well, I don't -- I can just zoom in as I make that presentation. I don't need to be there. I think that's going to work for them until they lose that piece of business and their competitor has all of their men and women on site. And they're making that pitch and they've shown that effort to be together. I sit like many of you on many organizations and boards and industries and we're all doing Zoom in these different applications because we really have to, but they're painful. They don't have the same intensity, the same engagement you're not seeing the same collaboration and communication. We're not seeing it here in our office. And we've got a small swat team that's still been here since the pandemic and we've got a lot of people that are working remotely. They're working hard. We're getting the work done. But we all miss that time together. And so I'm confident that you'll see like we're seeing on the leisure and like we're seeing in some of the markets that we thought would be slower to ramp. There we're seeing green shoots out there that people want to be back in the office, they want to be back on the road and they want to be back connecting.

Okay, all right. Appreciate it. Thank you.

Thank you.

Our next question is from Rich Hightower with Evercore. Please proceed with your question.

Hi, Rich.

All right. Hi, everybody.

Good morning.

Tom, I want to go back to the $85 million annualized expense target, the 300 basis points of margin improvement. Remind us, if we go back maybe six months ago or sometime last year. How has that target? Are those targets? How they have evolved over that period of time? And then how does the current sort of labor bottleneck constraints? How does that factor into that target as well?

Yeah. Let me start Rich and then I'll let my partner Sean jump in here, because it's a lot of the great work by Sean and the men and women on our asset management team and then our FP&A team as well. Originally, it was $70 million in cost non-union About 1,100 employees, about 375 of those management and about 600 approximately hourly and then really about 100 jobs plus or minus that we weren’t replacing. And what happens just overtime is you get a little chunky. You get a little complacent and you have layers and we have really worked with our operating partners to sort of take cost out think about what was really need to operate the business. Sean and team went back recently and have now filed another $15 million. And we’re confident as I said, we -- it's going to be requirement; it's going to be on us to continue to work and push. As I mentioned earlier, just think about how the brands had to respond, as they had to retool, they were affected as well. Other models don’t work so well when their franchises and owners have no revenue, they pay no fees. So while the capitalize business is a better business model, some would say, it's not a perfect business model, if your constituent have no revenue. So that also was a wakeup call for them to also think about we permanently take cost out of the business. So let me pause there and let Sean add some additional color.

Yeah. I think we started out that it was really just kind of base line each of these properties in the staffing levels and managerial type levels or system managers whether it's fun tax or F&B and just trying to obviously take this opportunity to zero base and ultimately push. And so we ultimately came at $70 million, since then have looked at as we have looked at F&B operations are bring thought through and living with the skeleton kind of environment that we're in, labor environment that we're in here recognize that there's some redundancies still that we could ultimately take one manager on F&B operation. That was a situation where I had an F&B manager over each restaurant. Now you combine that multiple restaurants under one manager and things like that. Some vacant positions that you know in the end we thought -- I thought again about not need to fill. So just another kind of crack at it, again with some of the experience and some of the things we garnered over the next -- over the last nine months or so. So, just continuing evolution of rethinking the model there, and finding those -- and working with our partners here to kind of be creative. So we do think these are permanent. I'd say another $5 million is really complexing where a sales team in an area we've looked at a little differently or one example is we had our General Manager of Hilton Hawaiian Village who is outstanding and we had our General manager at the Waikoloa resort to take up a different position. And we use opportunity to have her assume the role of kind of a lead manager Managing Director over two hotels and save about $500,000 by not replacing a general manager position at the Waikoloa resort, but ultimately using hotel managers that are certainly qualified to work under this main Regional Director or Managing Director for Hawaii. So again, just kind of rethinking things somewhat opportunistic, but we think that's kind of the right model for us to go forward.

That’s helpful. Yeah.

Rich the second part of your question where you asked about some of the labor challenges. Look there are people who are unable to go back to work whether they have school aged children at home the schools haven't opened. And that's certainly part of it. As we look at some of the gaps today, but the other part is and that's -- the elephant in the room is that they are very generous unemployment benefits. And you hear numbers to the tune of $20 to $23 an hour in full benefits. So there are some that have that bridge if you will at a -- and it's very accommodating bridge through September. So again, we would fully expect as vaccinations continue to accelerate. People are more and more confident, as we get to the fall, you expect people back in their offices for some significant period of time plus kids in schools. And then I think we're going to get a much better sense of really where the labor picture is. And we fully expect. In our case, given the fact that we do have union properties with recall rights, we fully expect that many of those many women are going to be excited to come back and we're going to welcome them back as we expect that demand will continue to accelerate and grow.

Great. I appreciate all the detail there. And maybe just a quick follow-up on Hawaii. If we look at the fact that Key West for instance is essentially at least for the first quarter back to a 2019 run rate and given some of the comments you mentioned earlier just on the ramp-up in Hawaii, acknowledging that there are some differences in terms of inbound demand and all that sort of stuff. But what do you think the path to prior peak might be timing-wise for Hawaii?

It's a great question, Rich. And if you look at Hilton like lower village, and I was spending some time on this yesterday, because it was so astonishing and I think really a great example. We were January, about 24% occupancy, finished the first quarter up 41% and we expect the second, third and fourth quarter, as I said during the prepared remarks to be well into 80% if not above for the balance of the year. Now remember, we shrunk half the hotel made it a 600-room property as part of the deal of the spin with Hilton Grand vacations. And so if you think about rates, so our average rate in that second quarter will be about 7% higher than 2019. The third quarter will be slightly below that we had a couple of big buyouts in 2019. Insurance buyout. So it was a little skewed. But in the fourth quarter of this year, we expect [indiscernible] ADR to be 15% higher in that fourth quarter. So it's not inconceivable that we're back next year. And part of the earlier question just trying to show that is a far greater snapback than any of us could have projected. I think the thing that people with all due respect are missing is that this is a global health crisis. It's not a typical normal cycle. And we're solving the crisis, demand is going to snap back faster and we're seeing evidence of that. I also think that people thought there was going to be all of this distress, there's not. We're going to see some they'll be in the pockets. There'll be conversions and there'll be people that are undercapitalized and will have a tough time, but it's not going to be this SNL crisis that we – that some of us saw 30 years ago. I just don't think that's the scenario. And there is a need and a desire to be connected. People want to get out of the bunker. And I think we're going to see it across all the demand segmentations. Yes business transient will lag, but it will lag until people are back in the office and people want to get on the road. I've been traveling. I've been fully vaccinated for several months and I have been traveling and eagerly and excited to. And I think you're seeing more and more people that have that desire.

Okay. Thanks, Tom.

Thank you.

Our next question is from Neil Malkin with Capital One Securities. Please proceed with your question.

Hey, everyone. Good morning.

Good morning, Neil.

Hey, hi. First question just kind of on the I guess staffing and margins if – can you give a sense for what the EBITDA or margin benefit was from the difficulty in finding labor and just kind of thinking about what fixed costs kind of look like, as those people come back from there, as you called it very generous unemployment benefits and as your – additionally as your kind of core business traveler comes back and expect certain things. What kind of snapback in costs or fixed costs should we expect, or how should we kind of think about that?

Let me try to unpack, if there's a lot embedded in there. A few things. If you think about some of our union operations, we are we're providing wages and benefits really above any of those thresholds. So, really not a factor there. And as you also -- as you think about the business, customer preferences are also changing. They want digital key or the equivalent for the front desk to be able to bypass. They want that privacy in their rooms. And not all are going to once stay over cleaning. And so, we've got to find that right balance. So, there are -- in the food and beverage offerings as you think about room service, that it will be probably in most situations obviously not in some luxury hotels, but it will be limited. It'll be sort of not going to drop. Again, people aren't going to want people in their rooms. So, there's a real opportunity to continue to re-imagine the business and how -- and forget about how we did it historically, but really those changing preferences. So, as we've said, we're confident and the $85 million, we have to continue to work hard to deliver that and to partner with our operating partners, but we don't see any retreat of that. We really don't see any other way. And I think, as I said earlier, I think the brands, they understand that. It doesn't mean there won't be some amenity creep in the perpetual arms race, but I really think there'll be less of that coming out of this crisis than what we've seen in past cycles.

Sure. I think I was kind of looking at it from -- do you expect to see just like -- even incorporating your savings, I guess step-wise increase in, let's say, the third quarter. When you start to see people come back and just trying to think about -- I think everyone has been impressed with how expenses have been just relative to the sort of sequential increase in demand and revenues. But, I think that -- is it fair to say that there's sort of a lag effect there, and you'd expect to see a pretty substantial bump in fixed cost as we get to that part of the year. That's kind of more what I was looking at it or ask?

Yes. Yes, you could have on some margins. But on the other side of that you would insurance costs we thought there would be a huge spike. We think those could be flat to slightly negative. We'll see how that ultimately prices. Property taxes in many environments where there's been some sort of impairment, and at least in the short run we haven't -- we've got an income approach and operators and owners haven't had income so there could be some relief there. You're right. There could be some inducements that are necessary in some markets depending on some of the labor challenges. We'll look at that on a case-by-case. I don't have any data to share today. We're not seeing that. And already in many cases, we're seeing a lot of people eager to get back and some are waiting obviously, there's a little bit of a health concern, but some of that is the inability to deal with some of the child care issues. So, it all fits together. And I think we'll all have to take a wait and see and see how that unfolds. But, we're confident insulated too, and we've got enough to absorb given the $85 million that we're confident we're taking out of the business.

Great. And my other question is you guys are seeing good progress right in 2022. Just maybe as you sit here today, could you give us a sense of what you think the sort of run rate relative to 2019 will be for the large association, citywide group performance in, let's just call it, the first half of 2022, I guess compared to 2019, would you kind of think, as you sit here today, and you kind of see what the booking trends look like and rebooking from cancellations look like?

Yes. I mean the rebooking trends I think, we have about $500 million that have been canceled through Q1 in total for the pandemic. We continue to rebook about roughly about 25%, 26% of that. And I think we've still got some in the pipeline, we're looking to place here. So, we'll continue to layer that on. And a lot of that's getting rebooked into 2021, 2022 and 2023. From an overall citywide perspective, I would say as we look at our markets, for sure, we have some pretty strong, strong pacing, if you want to call it that for room nights in certain cities. Hawaii being one of them is exceptional, well over 200%, relative to kind of, I would say, prior pandemic levels. Chicago also pretty strong and over -- kind of over indexed, over 100% indexed against pre-pandemic levels. I'd say on park, it would be kind of D.C., San Diego, Seattle, Boston and Denver. As we look at those, kind of direct right in the vicinity. And then, we've got a couple of markets that are lagging somewhat. I think it's probably more a function they’ve been -- you're doing better and picking up things earlier than later in something like Orlando or Miami. And I think Miami is a little bit a unique case, given it -- I think, had the Super Bowl. So I think overall, 2022 from a citywide look to be pretty strong on top of the fact that we're pacing pretty well there and feel really good about what we've seen in pick up here. The last -- pretty much since the vaccines were announced in November. We talked about in our release. We've seen about 110,000 rooms picked up. And I think we're ultimately in April pacing 80% of 2019 levels and that's up from 50%. So I think it's all trending in the right direction. And I think, as some of these other markets like New York and Chicago open up and have already announced that, you'll start to see a lot more conversion activity, I believe, as you -- we've seen plenty of lead volume for these markets. People haven't been able to pull the trigger, because they're just looking at capacity restrictions so. So I think as those kind of open up, as we've seen in other cases, especially in places like Orlando, as they've opened up, we've seen a lot more activity come through on the group side.

Thank you.

Thank you.

And our next question is from Anthony Powell with Barclays. Please proceed with your question.

Hi. Good morning. Just a question on New York. So I'm sitting in my office and I'm looking outside and I see tourists on the double Decker buses, restaurants reopening, museums are reopening. It could be a pretty leisure travel season in New York in the summer. So why not open the hotel there now as opposed to waiting until the fall, where there may or may not be corporate travel coming back?

Well, Anthony, great to hear from you and I hope you're doing well. And thanks for the question. The New York situation is certainly the most complicated. We are hearing and seeing some evidence now. It looks like the mayor and the governor are aligned with the city reopening. Subway is going to reopen. I think that's a start. Keep in mind that based on the work that we've done, 16% of the office workers in the New York region went into the office kind of the last week of April. So that's also a pretty good sign. UN General Assembly, we understand, will have their conference in September. Broadway is going to open probably in September as well. And keep in mind, New York was probably the most broken, given the epicenter of COVID and what happened. You've got 30% to 40% I think of the city's inventory of hotels, I guess, remain closed. Our belief is, some portion of those will not open, or will be converted. There's some proposed legislation to restrict future hotel development, needing sort of a special permit, so we're studying the market in the situation carefully. Like we've done with the others, when we open, we don't want to shut down again. And so we want to make sure candidly that it's viable and that we will lose less money and then quickly begin to ramp up to make money and not lose more money by reopening. And just given the complexity of that operation, as the one of two largest hotels and given the staffing requirements there, we just want to make sure that it makes economic sense. We've I think demonstrated time and time again, given the complexity of our portfolio and our distribution, and given where we were last year at $85 million a month and the great work that the team has done to get it down into the mid-20s, and New York is candidly the highest part of that burn. So it's one that we want to continue to study. And I would not bet against New York long term. We are big believers that that great city will come back. But it's certainly a tough environment right now that we want to stay a little bit.

All right. And I guess, moving to Puerto Rico, you mentioned a few times in the prepared remarks, it seems like that market has gained some mind share among travelers during the pandemic. Have you seen that in your numbers? And has that changed your view of the potential of that asset and how it fits into your portfolio long term?

Yes. I think in the prepared remarks we said north of 70%. And I think it's the comment that we made. If you think about international travel, right, inbound to the U.S. historically about $79 million in 2019, outbound from the U.S. about $100 million. And the reality is, given the options we think fewer Americans are going to be traveling abroad and they're going to be focused more domestic, more Caribbean or to the Hawaiis of the world. And we think that bodes really well for the Park portfolio. And so, given the fact that we’ve suffered through obviously the Hurricane Maria a couple of years ago, it's been a $200 million complete redo. It's a fabulous asset in Puerto Rico when you've got plenty of airlift that we -- and it's obviously given the tie with the US, it's an easy trip and economic trip to make. So we are encouraged and we'll continue to watch that and enjoy that benefit. And we've always believed that that asset is one that it's a core holding and one that we think has potential certainly from a leisure standpoint.

All right. Thank you.

Thank you.

And our next question is from Robin Farley with UBS. Please proceed with your question.

Good morning, Robin. How are you?

Hi. Good morning. How are you? Most of my questions have been asked. I just wanted to follow-up with a quick one on group. You're giving a lot of step. Is there sort of an overall 2022 room nights on the books in terms of group compared to 2019 or the same time that year?

I mean right now we have about 956,000 room nights on the books and that compares again around kind of the -- if you compare kind of the same pace or kind of what it was on the books this time in 2019 for prior year, it's about 83%. If you look at kind of what it is relative to just what ends up on the books for the year against what 2019 finished up, it's probably about 40%.

Okay. Great. Thanks.

And our next question is from Chris Woronka with Deutsche Bank. Please proceed with your question.

Hey. Good morning, guys.

Good morning, Chris.

Good morning.

Good morning, guys. Thanks for all detail again. Tom, you did mention the word offense in your prepared remarks. I was hoping maybe we could spend a minute on that. And kind of my question there is obviously, you have some terrific properties in these big markets that were significantly impacted by COVID, but some of them had some kind of structural issues right whether fly or labor or other expenses before COVID. So when you do go back on offense, I mean are you willing to go deeper in some of these same markets, or do we see you go into smaller markets and this more broad-based focused on resorts. And we did see you sell New Orleans French quarter which is a small hotel. So it sounds like they're carrying costs, you're not necessarily going to look at small hotels. So just a few words maybe on where you go from here? Thanks.

Well, thank you Chris for the question. Look, we've got clear priorities for 2021 and it's reopening our hotels profitably and as quickly as we can, continue to reduce obviously our cash burn which you're seeing evidence there, continuing to reimagine the operating model. We're making great progress there. Selling non-core assets, the W there and is the first of others that you will see and read and hear about. And as I said in the prepared remarks, we're active and we're confident we're going to be able to sell $300 million to $400 million of assets. We're going to work hard to continue to strengthen the balance sheet by pushing out maturities. Obviously, terribly important from there and really begin to pivot to offense. Bonnet Creek is just a fabulous resort. We've got the 1500 rooms there. Obviously, the 1000-room Hilton coupled with the Waldorf. We're going to expand the meeting footprint. We're going to upgrade to Hilton to Signia. We're 200 acres there with a championship golf course. So we see that as a really important offensive move. And we have so many embedded ROI opportunities within our portfolio that we're going to continue to evaluate and in activate. And then we will continue to look for single assets portfolios as well. And look it's not lost on us. As you think about what's happening and we'll follow the demand generators, we'll follow the population changes. So you would have to get to your direct question, you would certainly expect us in at the phoenixes of the world and parts of Texas that continue to grow Austin stands out in Nashville. Clearly Central and South Florida continue to boom and we don't see that changing. We're not going to redline the other markets. We certainly believe that the great cities of New York and Chicago and San Francisco while certainly a tougher operating model, we will continue to evaluate on a case-by-case. Not inconceivable for us to lighten our a little in San Francisco just given our exposure there, but there are also huge barriers to entry there, and there's still the epicenter of capital and venture capital and we don't see that changing. So there are markets there that will continue to really watch and monitor the demand patterns carefully.

Okay. Very helpful. Appreciate all your thoughts Tom.

Thank you.

[Operator Instructions] And our next question is from Lukas Hartwich with Green Street. Please proceed with your question.

Thanks. Good morning.

Hey, Lukas

Hey, Tom. So there's a debate around how the hotel industry might see a demand shift due to what's happened over the past year. And I was just hoping for Park's portfolio, can you provide maybe a sense of how ADR compares across the various segments of business transient leisure and group

Compares right now to 2019, or kind of just how they compare with to each other and kind of a normal setup?

Yes, how they compare to each other. So maybe looking back in 2019 maybe on an index basis, how do they compare to each other?

Yes. I mean, overall, I mean, clearly kind of the business transient would be kind of the highest and I would probably say, you'd probably say about $250 business transient group on average about call it $225 million and leisure about $200 million. So, kind of as you work kind of backwards from that $200 million, $225 million, $250 million between leisure, group and business transient respectively.

Great. And then my other question is just it's interesting that RevPAR performance is similar across several hotels and markets. With some doing better on rate others on occupancy, I was just hoping you could talk through how operators think about those dynamics whether to focus on holding rates or focus on gaining occupancy what are the levers that they're looking at?

I think fundamentally it's understanding and going and getting demand that's there. We're still in a very, I think, trying to kind of unpack the question there about, is RevPAR looking similar or whatnot. But in the end you have you're going to have certain elements of contract business being taken or ultimately being a bigger part of the mix, which is going to obviously impact how you report we got things like a New Orleans asset, which is as we told in multiple calls here we talked about our -- the savior students we have, which we will ultimately get through their spring semester, but that was certainly an EBITDA positive transaction for us, but really just brought in a bunch of occupancy at a low rate. And so a lot of hotels are ultimately have been working to just drive the demand that's there and available to them. And we're certainly not in any normal environment. So it is case by case. I think, obviously, the most normal looking places out there are going to be places like Key West, which have been truly leisure oriented and ultimately pushing the rate and having that pricing power there. But in other -- many other markets it's ultimately just finding discounted leisure small group business, Tom talked about Smurf coming through and just finding the demand where you can find it.

Awesome. Appreciate it. Thank you.

And we have reached the end of our question-and-answer session. I will now turn the call over to Tom Baltimore for closing remarks.

Thank you operator. We really appreciate all of you taking time today. We look forward to talking with you in the coming weeks, and we look forward to seeing you in person. We hope sometime this summer and early fall. I hope all of those stay safe and well.

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