Greetings, welcome to Park Hotels & Resorts Inc., fourth quarter 2020 earnings conference call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ian Weissman, Senior Vice President, Corporate Strategy. Thank you. You may begin. Thank you, operator, and welcome everyone to the Park Hotels & Resorts fourth quarter and full year 2020 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 this morning's release, as well as in our 8-K filed with the SEC, and in 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 fourth quarter performance. He will also provide the company's views on 2021 as the industry recovers from the devastating effects of the global pandemic. Although we will not be providing full year guidance at this time. Sean Dell'Orto, our Chief Financial Officer, will provide a brief review of our fourth quarter and full year results, as well as a more detailed view 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 want to start by expressing my profound sadness that my friend, Arne Sorenson, is no longer with us. Arne was a giant in our industry. More importantly, we've lost a genuinely kind and compassionate human being, who was a loving father and husband, and a true friend to many. For those of us who were lucky enough to cross paths with Arne, our lives are a lot richer because of it. Arne will be greatly missed. I send my sincere condolences to his wife, Ruth, and their children. As I reflect back on 2020, there is no doubt that the last year was the most difficult period our industry has ever faced, and I could not be prouder of how the Park team managed through the adversity and met the challenges head-on. As the pandemic began to take hold, we quickly took steps to protect our team members, preserve our liquidity position, and plan for the long road ahead. Our efforts to significantly reduce operating costs by suspending operations at 38 of our 60 hotels, cutting our CapEx budget by 75%, and suspending our dividend helped to meaningfully reduce our monthly cash burn rate to just $42 million during the fourth quarter. In addition, we made great strides to strengthen our balance sheet and liquidity position, with the highly successful launch of two corporate bond offerings in 2020, raising nearly $1.4 billion of capital and amending our bank credit facilities. Finally, with the business stabilized and demand trends showing signs of improvement, we began to prudently and responsibly reopen hotels while identifying additional operating efficiencies, including the permanent removal of $70 million of cost across the portfolio. We continue to actively pursue other potential cost savings as we ramp up operations at our hotels. Today, 50 of our 60 hotels are open, accounting for approximately 75% of our total room count. Despite some challenges across some of our core markets, we are optimistic that we will not need to resuspend operations at any hotels based on our current outlook. Regarding our liquidity position, we currently have $1.4 billion of liquidity available to us, with just $100 million of debt maturing through 2022. Turning to our fourth quarter results, as expected, we saw little performance improvement during the quarter, with RevPAR down 85% as both group and business transient remained impaired by the effects of the pandemic. While leisure business was down 78% overall for the quarter, drive-to leisure continued to outperform on a relative basis. Occupancy at our drive-to leisure portfolio averaged over 33% during the quarter, a 120 basis point improvement over the third quarter. We witnessed relatively solid results at several of our resort properties, especially across South Florida. Key West remains one of our stronger markets. Our two hotels, Casa Marina and The Reach, continue to outperform the sub-market, with hotel occupancy averaging 70% during the quarter. I'm also pleased to share that Casa Marina celebrated its 100th anniversary this past December, an important milestone for this iconic property. Looking ahead to 2021, we expect performance at our Key West properties to remain strong, aided by increased airlift capacity, which should help to support the pent-up leisure demand for the region. The year is off to a good start, with January occupancy averaging 68% across the two properties, and February expected to be well above 80%, while the average daily rate is relatively in line with pre-pandemic levels. In Miami, we witnessed solid results at our Royal Palm hotel, as South Beach has enjoyed sustained positive leisure momentum, aided by Miami-Dade's decision to lift restrictions in October. Royal Palm's occupancy for the fourth quarter was 56% and increased to 69% in January, with February on pace to hit 85%. Turning to Hawaii. The islands officially reopened for business on October the 15th, and visitors can now bypass the state's mandatory 10-day quarantine with proof of a negative COVID test within 72 hours of departure. We reopened our first hotel, the 647-room Hilton Waikoloa Village, in mid-November, followed by the partial reopening of our 2,860-room Hilton Hawaiian Village hotel on December the 15th. At Hilton Hawaiian Village, results were encouraging during the initial two weeks that the hotel was open in December, with Christmas week occupancy in the high 20% range and New Year's topping 31%. This level of demand was enough to warrant opening two of the five towers during the holiday season. In addition, despite being nearly double the size of the nearest comp set property, Hilton Hawaiian Village materially outperformed its comp set properties on both occupancy and RevPAR throughout the holiday season by 33% and 19%, respectively. Throughout the pandemic, Hawaii has been one of the most restrictive states in the nation, although the situation seems to be turning a corner. With the rollout of the COVID-19 vaccines and the drop in case count, state officials are close to easing travel restrictions, allowing for unrestricted inter-island travel for those individuals that have been fully vaccinated as of March the 1st, while the potential for transpacific travel by May the 1st. This is very good news for demand trends over the back half of the year, with the continental United States making up 67% of inbound travel to Hawaii. We expect the first quarter of 2021 to remain challenging for Hawaii, given the continuation of global travel restrictions. We are already starting to see signs of increased demand in that market, with a noticeable pickup in February, with the Hilton Hawaiian Village achieving 900 rooms occupied over the Valentine's and Presidents' Day weekend combo, while Waikoloa hosted over 500 occupied rooms. Rates are improving as more bookings are funneling through the higher-rated channels with a reduced reliance on OTAs. The back half of the year, group bookings continue to hold while transient bookings have increased, a consistent theme we've heard from several of the main airline carriers to the islands. Overall, it looks like demand trends, cost efficiencies, airlift, and travel restrictions are all moving in the right direction and setting a much more positive tone for 2021. We look out over the next 12 months. We have several key priorities we intend to focus on, which we believe will help position Park for long-term success. First and foremost, we remain laser-focused on de-leveraging the balance sheet with a long-term goal to get back to our stated range of 3x- 5x net debt to adjusted EBITDA. While organic growth will be the primary driver, we will initiate the marketing process for several hotels as the bid-ask spread continues to narrow with the improvement in operating fundamentals. Overall, we hope to sell upwards of $300 million-$400 million in non-core hotels during 2021. We will provide further details on asset sales as they occur. Second, we look to safely and efficiently reopen the balance of our portfolio and continue to chip away at our monthly cash burn rate with a goal of returning to break even over the back half of the year. Finally, as we have noted on several past calls, we continue to work with our operating partners to enhance the hotel operating model. Overall, we believe that the efficiencies that we have already implemented over the past year and will continue to focus on as the sector recovers, are sustainable and have the potential to realize incremental margin improvement over time. With respect to the broader lodging recovery, we remain encouraged by the progress that has been made on the vaccine front, with nearly 70 million doses already administered in the U.S. At the current pace of daily vaccinations, it is estimated that by late summer or early fall, upwards of 75% of the U.S. population could be fully vaccinated. We expect that lodging recovery will be further bolstered by a healthy U.S. economy as massive amounts of fiscal stimulus and an accommodative Fed continue to support the economy, including the $900 billion plan Congress passed in December and an additional $1.9 trillion recently put forth by the President, with the possibility of a significant infrastructure spending bill to follow as well. Additionally, the U.S. personal savings rate has soared to almost 14%, equating to over $1 trillion saved over the last 12 months, while GDP growth is forecasted to be near 6% for 2021. Against this backdrop, we believe there is significant pent-up demand, which should lead to accelerated growth beginning in the second half of 2021, as both business and leisure travelers seek to reclaim all that was lost in 2020. As more of the population is vaccinated, travel restrictions ease, corporate offices reopen, demand trends will undoubtedly improve. We believe Park is incredibly well-positioned to successfully lead our industry through this expected recovery phase. By and large, demand recovery is projected to follow recent trends, with drive-to leisure continuing to lead during the early phases of the recovery. With over 45% of our rooms located in drive-to markets, we believe Park remains very well-positioned for this early phase of the recovery. We've been very encouraged with the improvement in demand since the beginning of the year, with portfolio-wide occupancies improving sequentially over the last several weeks. We have witnessed particularly strong results at several of our drive-to and leisure markets, including Key West, Miami, New Orleans, Seattle, and Southern California. The next phase of the recovery, which we anticipate may begin to take shape during the third and fourth quarter of 2021, is expected to be fly-to leisure. The disproportionately high U.S. savings rate and pent-up desire for travel should help to support demand trends across several of our key markets, including Hawaii, Orlando, Miami, Southern California, and even San Francisco, as restaurants and local attractions reopen. On the corporate side, however, there remains very limited visibility, with many companies remaining more focused on when to bring workers back to the office full time and less focused on booking travel at this point. The group side is expected to be similarly impacted by the lack of corporate travel in the near term. However, we are encouraged by the lead volume and group booking activity seen since November, shortly after news of the vaccines were announced, with leads for 2021 doubling and definite bookings for the year increasing fivefold in January. In addition, looking out to 2022, group pace is largely holding firm at this point, with rates up 3% over the 2019 levels. While the industry still has a long road ahead, I'm very optimistic about the lodging recovery and Park's relative position. I'm incredibly proud of the entire Park team, which worked tirelessly all year. Thanks to their hard work and dedication, I am confident that we will emerge from this crisis stronger and more resilient than ever. With that, I'd like to turn the call over to Sean, who will provide some more color on our results and an update on our balance sheet and liquidity. Thanks, Tom. Overall, fourth quarter and full-year operating results were in line with our expectations, with RevPAR down 85% and 73%, respectively. While we recognized a $65 million adjusted EBITDA loss for the fourth quarter and a loss of $194 million for the full year. Operating losses in the fourth quarter were offset by a positive $5 million property tax adjustment associated with successful tax appeals for our hotels in Chicago, in addition to approximately $5 million in cancellation and attrition income during the quarter. As Tom noted, we expect first quarter 2021 performance to largely mirror fourth quarter 2020 results, given ongoing challenges on the corporate demand side, while travel restrictions continue to negatively impact demand. We do anticipate some positive exceptions to this trend, such as in leisure markets like Key West and Miami. Also in D.C., where two of our D.C. market hotels, the DoubleTree Crystal City and Hilton McLean, benefited from business from the more than 25,000 National Guard troops that were called in to provide backup support to the local authorities. Occupancy exceeded 63% in January at Crystal City and reached over 82% at our Hilton McLean hotel, accounting for an incremental $2.4 million of revenues for the month. Turning to the 10 hotels that remain suspended within our portfolio. As a reminder, almost all the hotels are located in the metropolitan areas of New York, San Francisco, and Chicago. While demand trends across all three cities remain muted, there are some positive data points worth noting. In San Francisco, for example, JPMorgan's Healthcare Conference, which occurs in January, is shaping up to return to pre-pandemic strength for 2022. For Park's portfolio of San Francisco hotels, the vast majority of group contracts for 2021 have successfully been transferred to 2022 at flat rates to this year. Our Hilton complex in Union Square has already moved over 40 groups worth $4 million into next year, and the JW Marriott has contracted 75% of its 2021 commitments into next year's dates. In New York, we are starting to see the benefit of some of the hotel closures around the city, especially from larger group boxes, including the Roosevelt, Grand Hyatt, and the Hilton Times Square, which all permanently shut their doors last year. With the New York Hilton booking groups that had a long-standing relationship with the Roosevelt, while the pipeline of corporate clients displaced from the other two hotels is significant. We will continue to monitor the situation in these urban markets and hope to have most of these hotels open before the summer. Overall, we are encouraged by the pickup in demand across several of our key markets and anticipate achieving breakeven for the hotel portfolio in the back half of this year. Turning to the balance sheet. As of quarter end, our liquidity stood at just over $1.4 billion, including $474 million available on our revolver. Our net debt totaled $4.4 billion, with less than $100 million or less than 2% of total debt outstanding maturing through 2022, with a weighted average maturity of nearly five years. While the focus last year was to strengthen the balance sheet and our liquidity with strategic capital raises along with covenant relief, our plans for 2021 and beyond include reducing leverage via asset sales and cash on hand, reducing corporate-level bank debt exposure. Further extending maturities while maintaining financial flexibility to capitalize on potential growth opportunities. The public debt markets remain open and constructive. We will evaluate the potential for additional capital raises to further enhance the overall quality of our balance sheet as needed. Finally, with respect to CapEx, we expect to slowly ramp up our maintenance CapEx program and restart select ROI projects, including the meeting platform at Bonnet Creek. Overall, in 2021, we plan to spend approximately $40 million on maintenance CapEx and an additional $20 million at Bonnet Creek, a $90 million project which we expect to fully complete by late 2023. As always, we will keep you updated on our progress. That concludes our prepared remarks. We will now open the line for Q&A. To address each of your questions, we ask that you limit yourself to one question and one follow-up. Operator, may we have the first question, please? Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. If you'd like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from this queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from the line of David Katz with Jefferies. Please proceed with your question. Hi, good morning, everyone. Hi. Morning. Morning, or afternoon. I wanted to talk specifically about two markets, and I know you've given us some commentary around Hawaii and San Francisco. With respect to Hawaii, the notion is that access by air travel is going to just continue to progress. How far out are you taking bookings? Presumably those are entirely leisure bookings, and with all the commentary we're getting from a number of different directions this week about leisure endeavors and consumer activities, help us be balanced and not get too far ahead of ourselves with what Hawaii could be in, say, 2022. David, it's a great question. Talk me off the ledge, yeah. Okay. Yeah, if I could just frame Hawaii for you a little bit. Let's keep in mind that Hawaii has had really fewer cases other than Vermont and Alaska, they've had fewer cases and fewer deaths. Let's level set. About 27,000 cases as of this morning, about 435 deaths. Any loss of life is certainly horrible, as we all know. When you think about the restrictions they put in place, how onerous they were, from the 10-day quarantine to obviously now the 72-hour negative test before arriving. The state is moving to Tier 3. Tier 4 is completely unrestricted. Again, that's encouraging. Inter-island travel is going to start here as of March 1st for those that have been fully vaccinated. When you think about vaccinations in Hawaii, 12% of the population has already been vaccinated, including most of the vulnerable people. All the concerns that the governor, his administration, and the stress that it may put, one, on the facilities there, I think are being mitigated. That's a really encouraging backdrop as we think about that. There is significant pent-up demand in Hawaii. One, you've got really historical short booking patterns. You've got the airlines, Hawaiian Airlines, United and Southwest, all ramping up. I believe Hawaiian Airlines for the fourth quarter, they were running at about 35%-40% of 2019 levels, and I think as high as 50% in December. If you just look at what we're seeing on the last six weeks alone in Hawaii, we've gone from January the 3rd occupancy of 21%, and then to mid-February, up to 36%. Again, really setting a backdrop, and let's not underestimate the need that we all have to reclaim, recapture our lives. As the vaccinations continue to accelerate here in the mainland, and given the fact that really 67% historically have traveled to the Hawaiian Islands are out of the continental U.S., we are very bullish on Hawaii. We think that the second half of the year could surprise to the upside. We are very bullish on 2022 and beyond as we move forward. Got it. San Francisco, I think is a bit more complicated. The business travel aspect of this in general, and San Francisco in particular, is a bit more complex. Can you just go a little bit farther? I heard the JPMorgan data point, but what range of strategies do you have to generate demand, assuming that business travel does come around a little bit slower? Yeah. It's another fair question. Let's again level set. You've got a mayor and a governor that essentially adopted, as of December the 4th, pretty aggressive stay-at-home orders. Hotels were generally restricted to essential travelers only. We've had, if you think about the CBD, six hotels, four of them remain closed. Obviously, you've had a 10-day quarantine for anybody traveling to or returning Turning to San Francisco, those probably aren't going to be relaxed, we believe, until probably late February. If you look at the two hotels that are open, even through Q4, we were running about 24% occupancy. If you think even there ramping up January and February, both properties were about 16%, 17% occupancy, about 26%, 25%, 26% in February. We expect Q1 to probably continue in that low 20% range. There's very little citywide business here in the first half. As you look at the second half of the year, the Game Developers Conference in July is still slated to continue. The Dreamforce Conference in September is still slated to continue, and there are 18 events for about 363,000 room nights for the second half of the book. That doesn't compare favorably to what was the record in 2018-2019 of about 1.2 million room nights. We know San Francisco's a challenging environment. It is still one of the great cities of our great nation, out of the world. We're not prepared to write it off. There are some challenging issues with the Healthy Buildings Ordinance, that we continue, and I've written two op-eds about it, that we don't think that's a health bill or a safety bill. It's just a jobs bill. We are encouraged by some recent discussions recognizing that tourism is such an important part of the local economy there. We are optimistic over the intermediate and long term. We certainly think that 2021's going to continue to be a little softer and clearly going to be a little slower ramp up there, certainly within our portfolio and within the industry. Over the intermediate and long term, very bullish on San Francisco and the opportunities that certainly remain there. Thank you for those. Appreciate it. My pleasure. Our next question comes from the line of Smedes Rose with Citi. Please proceed with your question. Hey, Smedes. Hi, thanks. Hi. You mentioned in New York that you're starting to benefit from some of the permanent closures. I just wondered, are you starting to see that in any other markets, or are there markets where you think you could see supply contract? Yeah, it's a great question, and Sean gave color on New York. Look, if you think about New York today, 129,000 rooms, plus or minus, and certainly depending on who you believe, as many as half of those sort of remain closed, and some of those are permanent shutdowns. We think there's a great opportunity here to rightsize that. One part of the problem in New York has really been the onslaught of supply that had happened over the last five to seven years and candidly brought on by limited-service hotels. There are really only three hotels that have a large meeting platform. We would respectfully submit that the Hilton New York that we own has the best. As we see hotels that are either going to be converting or permanently closing, that naturally, we believe that more than our fair share of that business will accrue to us, and that will help as we rightsize the business. We've always believed that we've got to play to our natural strength. It is a group house. You anchor with group, and then you layer in contract, and obviously, we can then yield in the transient. Still, again, New York is another one of those great cities of the world, taking it a bit on the chin right now, and obviously the epicenter of what we all saw in the beginning of the pandemic. There's no doubt that New York is going to come back. We are seeing some green shoots and some evidence of that. I think opening this year is probably going to be middle of the year, probably at the earliest, as we sort of look out and we look at demand patterns. We will continue to track that carefully as we've done across our portfolio. I remind listeners that once we closed 85% of our hotels, and then we gradually reopened, in almost every situation, once we reopened, we have not had to resuspend operations. Limit reduced slightly, but not resuspend. It's a real credit to Sean and the asset management team in how we address the challenges in front of us. There are some green shoots there in New York, and I suspect as we start looking out for group business in 2022, given what we expect to be contraction there in supply, we think that's going to bode well for New York over the intermediate and long term. Thanks. Then I guess, just maybe a little bigger picture as the recovery kind of gets underway at some point, hopefully later this year. Are you thinking at all differently about Park's strategy in terms of initially the sort of expectations to group up? Do you think maybe there could be more of a focus on leisure and resort to sort of, quote-unquote, "drive to," given its resilience? How are you just thinking about the portfolio, I guess, over the next two years? Yeah. Smedes, it's a great question. Look, we are confident, and I repeat, very confident that our strategy of focusing on assembling a portfolio of upper upscale and luxury assets in Top 25 markets or premium resort destinations is really the right positioning. Having said that, we will follow the demand patterns. We will follow the population growth. You can certainly expect that we will continue to evaluate opportunities in the natural markets that make sense. Phoenix. Obviously, we've got a presence in Denver, but looking to expand that over time. Austin. It's a market that I certainly know well from my past life. What we're seeing in Nashville and what we're seeing, obviously, in the Southeast, and particularly in South Florida. We think that those areas are just going to continue to grow and explode. We are not prepared to begin to look for what we would call non-Top 25 markets that may have a more suburban bent to it and don't have the multiple sources of demand. We believe in that three legs of a stool, having strong leisure, strong business transient, in addition to strong group as well. If you look at our portfolio, keep in mind that we would respectfully submit that it's 35%-40% leisure today, but we have a really strong leisure footprint when you think about Hawaii, you think about San Diego, Southern California, even parts of Northern California, fairly South Florida, fairly New Orleans. You think about our drive to or fly to leisure, it's about 61% of our hotels, about 35% or 36% of our hotels. We believe that we're really well-positioned today, and we will continue to alter that and adjust that, but we're not going to make any rash sort of decisions to sort of abandon those strong markets where you have huge barriers to entry, really high replacement costs. Even today, we're probably trading at 50% of replacement costs. It would be near impossible to replicate most of this portfolio as you think about our geographic footprint. Thank you. Appreciate it. Our next question comes from the line of Dany Asad with Bank of America. Please proceed with your question. Hey, good afternoon, everybody. Good afternoon, Dany. How are you? I'm doing great. Thanks. You guys have done a pretty commendable job at being as nimble as you've been with your CapEx deployment. Just looking ahead to this year and possibly 2022, are there any major ROI projects we should be thinking about that are kind of coming up? Looking on the maintenance front, is there anything that's been either delayed or deferred in the last, call it, 12 months or so that we'll need to either think about or that needs to be addressed? Dany, it's a great question, and thank you for the compliment. I, again, want to commend the Park team. When you think about what we were faced with nearly a year ago, we made clear and decisive actions. We suspended operations, we suspended our dividend, we reduced CapEx by 75%. We immediately focused on liquidity and our cash burn rate, and I would submit that this is a very experienced team, not our first crisis. Obviously, this was the worst crisis that any of us had seen, but we were steady. We didn't panic. We knew exactly what to do. A lot of credit to Sean and our finance team as we went out and did two bond deals to push out maturities and secure our liquidity. Candidly, I think there were some out there that sort of wrote us off for dead, and I think we've shown just how experienced and capable the men and women of Park are. I want to state that because I think it's really important. As we think about CapEx, as Sean mentioned, we are going to restart, obviously, Bonnet Creek, world-class resort. We think the positioning for that over the intermediate and long term is to expand the facility and upgrade the brand to the Signia brand by Hilton. We're really excited about that. You'll see that ramp up. When you look at really all of the embedded opportunities within our portfolio, I'll just mention a few, Hilton Hawaiian Village, we're working on getting an out parcel, which would allow us to do a sixth tower. Hilton New Orleans Riverside, the Whale Lot there that's eight acres adjacent to our hotel and the convention center that has probably the equivalent of 5 million square feet of FAR. If you think about the Waldorf Casa Marina, we have two adjacent sites there in Key West. Gives us also continued optionality. The DoubleTree that we have in San Jose, we're slating that for an upgrade to a Hilton brand. The Hilton Santa Barbara that we converted from a DoubleTree has had huge success, and of course, The Reach that we completed last year and making that a Curio Collection has been a huge home run as well. We'll continue to comb through. We'll have more information as to our ROI. There is significant upside in this portfolio embedded within our existing footprint that we really want to continue to focus on here in the next few years to realize some of that great upside. Got it. Thank you very much. Thank you. Our next question comes from the line of Rich Hightower with Evercore. Please proceed with your question. Hey, good afternoon, everybody. Thanks for taking the questions here. Hey, Rich. Hey, Tom. I'd like to follow up on the New York Hilton really quickly. We all sort of know that the issues perhaps with that asset pre-COVID never really surrounded occupancy. It was more of a rate and an overall profitability a hurdle that we had to sort of get over for various reasons. Maybe take us through the future in that regard. As you steal share from hotels that are closing down permanently, would that be higher-rated business? Help us understand maybe the cost structure given the union presence and some of the other moving parts there going forward. Yeah. A lot in that one question there, Rich. Let me just cut to the chase, because I think you would appreciate that. Look, the operating environment there, just given the current CBA, is onerous. I think we all know that, and I think anybody who owns hotels in New York, and it clearly is on the lower end of our EBITDA margin for the portfolio. We do think that given the crisis, and you don't want to let any crisis go to waste, we have been working hard and working with our operating partners and also talking with the union about opportunities to rightsize that model. Nothing is easy, nothing is guaranteed. I do think given the fact that you're looking at 25%-50% of the supply, that's a natural benefit. 10 years ago, New York was the best hotel market, or among the best hotel markets in the land, as we all know. I've got a long history with this asset. My first tour of duty working with Hilton 25+ years ago, I know the history well. Clearly, with the onslaught of limited- service supply, there was rate erosion. We still believe that there are only three hotels that have that meeting footprint for that group business. We think we've got the best meeting footprint, and we do think that if we can anchor it with group business as that comes back, that again, layer in contract that allows us to then yield into transient. We are optimistic over the intermediate and long term. I mean, today it's closed. It's been closed for a year. Remember that we're dealing with travel restrictions, indoor dining limitations. Gatherings are limited to 50 people. Again, we're dealing with government mandates by no fault of the management team or anybody else there in the city. We also know that there's capital flight, and people are looking at how New York will perform in the future. I think it would be a huge mistake to write New York off. People have tried that before, and I think lost, and I think that would be a wrong bet again as we sort of move forward. When you think about 2011, a year I remember well in New York, you had about 140 super compression days where the market was over 95%, and you had significant pricing power. If you fast-forward to probably 2019, 2020, you were probably less than 20 super compression days in 2019, and I can't imagine you were greater than zero as you think about 2020. There is the opportunity for a reset and to rightsize operations, and whether that's job combinations, whether that's partnering with other owners as we think about ways to manage cost there. All of those topics are on the table, and we continue to explore. No doubt, given the iconic nature of that asset, there is significant embedded value. That doesn't mean that we also won't look. We do have a timeshare component there today. We have lots of optionality with the asset, and we'll continue to explore that to create value for shareholders. Okay. I appreciate those thoughts, Tom. How do we think about the trade-off in terms of equity issuance, so to speak, via asset sales or equity issuance in the normal manner with increasing the share count? I mean, we can obviously see where Park as a whole is trading versus pre-COVID, and maybe compare that to the implied discount if there is one on the $300 million or so of non-core asset sales. Help us think through maybe the cost and the benefit of the trade-offs between those two forms of equity in the context of the ultimate goal of de-leveraging. Yeah, I think it's pretty simple and pretty clear, Rich. I think you know I've been steadfast for many, many months that the last thing you'll see this management team do is a dilutive equity trade. We see no benefit of that. If you think about where we're trading today, we're still trading at a 50%-55% discount to replacement cost. We're still trading at a significant discount to our own internal NAV. We don't see that being a smart move for shareholders for us to go out and do an equity offering today. We think the more prudent capital allocation decision is to continue to sell non-core assets. We intentionally weren't a seller at the beginning of last year, the middle of last year, as the COVID-19 discount was at 20%, 30%, 40%. We didn't have to do anything based on the other prudent and wise moves that we made. We've decided, and we believe that conditions will improve and be more favorable, particularly as the vaccines get more shots in the arms and confidence is restored and people begin to travel. We believe that it'll make more sense to move those assets in 2021, and we're saying publicly that these are our targets, and we've got activities already underway, and we're cautiously optimistic. We will largely take those proceeds to use them to de-lever, and we will continue to de-lever organically. We will use equity again as the stock continues to recover. We'll use that for growth opportunities to perhaps over-equitize a little at that time. We see no need to go and do an equity offering at this time. We've gotten more than a fair share of calls from bankers about when we were trading at $13 or $14 or $15, particularly right after the vaccine. It didn't make sense then. It certainly doesn't make sense now. We've also gotten a lot of calls about ATM programs. I'd say we prudently passed on all of those. We hadn't done any of it. We certainly would have regretted based on how the stock has performed. The stock is still undervalued. We're still trading significant discount to NAV. Got it. Thank you. Thank you. Our next question comes from the line of Anthony Powell with Barclays. Please proceed with your question. Hi. Good afternoon, everyone. Hey, Anthony. How's it going? Just a question on CapEx, I guess. I guess competitive CapEx. One of your large peers is spending a lot on various hotels in your markets, and they're saying they expect to gain market share as business comes back over the next several years. Do you buy that argument, and do any of your hotels or markets like New York, San Francisco, Orlando, Boston, need any kind of just regular way maintenance CapEx in order to compete with those refreshed properties that are going to be competing with you? Yeah, it's a fair question, Anthony. I would make a couple comments. One, our run rate of maintenance CapEx spend about 6% of revenue. We've been pretty consistent with that. Prior to the spin, which we're in our fifth year now, Hilton, Blackstone had spent significant dollars on the portfolio. At our 6% level, we were continuing to maintain. Obviously, we wish we could have proceeded with Bonnet Creek, but we thought the wiser decision was batten down the hatches and made sure that we had liquidity for the overall enterprise. We will ramp that up, and as I mentioned, we have a lot of embedded ROI opportunities. You'll continue to see us evaluate, study, and we'll prioritize those in the near future as we move forward. There is not a lot of deferred maintenance in this portfolio, so we're confident where we are, and we'll be thoughtful and careful as we look to invest in the future. Got it. I guess on market concentration, you're selling some non-core assets. I'm guessing those aren't in Hawaii or San Francisco. How do you view earning over 20% of your EBITDA on those two markets, 25% or higher in Hawaii, and just how you look at the risk of having that much exposure to any one market as you evolve the portfolio? It's a fair question. Look, we are confident, as I said earlier, in the overall strategy. We were also very confident and remain confident in the strategic rationale for the Chesapeake acquisition. It upgraded our portfolio. It gave us brand and operator diversification. It gave us improved geographic diversification. We picked up San Diego and Denver, additional footprint in Miami and Los Angeles. We obviously expanded some more in San Francisco and Boston and D.C. Really pleased with that, and we think it's really improved our growth profile. Look, I would, in a pure sense, really not like to have any one market over 15%-18%, but if you're going to have a market over, I think having a truly iconic portfolio, particularly what we have in Hawaii, you could never replicate that when we get back to a more normalized time, just given the generations that have been there, the generations that want to go back, certainly believe that that is one that we keep, and it's one that we can reduce the exposure over time by continuing to grow in other markets as we see opportunities. It wouldn't be inconceivable for us to lighten our loads slightly in San Francisco from a weighting standpoint, but that should be no indication of our confidence and belief in the market over the long term. As we think about growth markets, as I said, they are natural and obviously markets that I think a lot of people are also interested in, the Phoenixes of the world, the Austins, clearly the Nashvilles of South Florida, even Central Florida should think about opportunities. That area is just going to continue to explode, and other markets in the Southeast, I think, will also continue to have population growth. We will follow the demand. We will follow the population. Historically, being anchored in those markets that have multiple sources of demand is the most prudent decision. Got it. Thank you. Thank you. Our next question comes from the line of Bill Crow with Raymond James. Please proceed with your question. Good morning. Hey, Tom. You all stopped making debt service payments on the W Chicago, and I know that's a market that you have written an editorial about as well with the labor issues. What's the future of your footprint in Chicago? Should you have sold? Those were assets that the Street kind of knew from Chesapeake and didn't particularly like them to begin with. Is that something you should have gotten out of sooner, maybe? Yeah, it's always easy to look back, Bill. If you think about when we closed in September of 2019, and then of course, getting hit by the asteroid, or all of us got hit by the asteroid called COVID. Look, I would put Chicago in the same bucket of New York and San Francisco. Clearly challenged right now for all the reasons you understand as well as anybody, because you've written about it. I would also say, I would not write off Chicago, another one of the great cities. It will come back. The issue related to that asset is really unique, and that is, we'd like to have a discussion with the special servicer. You can't have a discussion while you're paying. We have significant liquidity in more than two and a half years. We have tremendous optionality. As you know the moves that we made. I wouldn't read anything more than that. That's just to have a dialogue to look. We're also working with Marriott to combine operations at the two W's. We think in both cases, excellent real estate. There's a lot of optionality there. Tom, just to challenge you a little bit. You talk about the markets coming back, and I think you're right. In New York, for example, the Hilton, was it NOI positive in 2019 or 2018? It feels like some of these markets were already spiraling down before everything happened, and now we've got companies relocating into other markets, and we've got dispersed workforce. Even if they come back, do they reach profitability? Yeah. If you think back historically, Bill, you know I've got a long relationship given how long I've been in the business, so dating myself a little bit. I can remember when that asset was generating higher margins and significant cash flow. Even when I rejoined Hilton to spin out, it was still a Top 5, Top 7 asset within this portfolio in terms of the amount of EBITDA. It's always been NOI positive. Lower margins due to the other assets in the portfolio. It was not last year because obviously it was closed, and you still have the underlying costs that exist there. There's no doubt that this is an opportunity for a reset. We're not fooling ourselves. We're veterans here. We're working through. We think that there are opportunities to continue to take cost out of it. You saw we've taken $70 million in costs, about 200 basis points out of the whole portfolio. We continue to work our tails off to find more opportunities. New York is a big challenge, and we're up to it, and we're working through. It's the only asset that we have, obviously, in Manhattan. You couldn't replicate that asset, and there's also optionality of things that we can do over time as we look for other sources of revenue. The greater question, everybody's down on New York, and there's capital flight, and yes, people are relocating. I think that's part because we're in the middle of the pandemic. There's some deficits that exist. There are some concerns about security and safety, and look, leaders, whoever the new mayor is going to be, the governor, business, and leaders, people have got to step up. Again, one of the great cities of the world. We all, I think, yearn to get back. I know I want to enjoy the great restaurants, the theater scene, the shopping. Those that are just writing off New York as an abyss, I'd say I'd be a little more careful. I think that's a risky bet. I think New York will come back. Do I think it will be in 2021? I do not. All right. I appreciate the time. Thank you. No, thank you. Our next question comes from the line of Neil Malkin with Capital One Securities. Please proceed with your question. Hello, everyone. Good afternoon. Hey, Neil. How are you? Hey. Pretty good. End of earnings. It's never a bad thing. I'm sure you feel the same way. Just kind of piggybacking off of Bill's comments. I just want to be clear because it kind of seems like you're maybe a little bit mixed messaging in terms of you don't want to get away from the sort of core markets. At the same time, you're following demand. Again, with your commentary about sort of the great American cities. I don't doubt that from, I guess, a top-line standpoint, those things are true. Again, with labor being the way it is, you mentioned safety legislation. In California, it's only a matter of time before legislation around Proposition 13 continues to push forward ridiculous taxes. People may want to go there maybe to travel, I suppose the same, but from an operating or EBITDA standpoint, you're confident that you're going to get back to a pre-COVID sort of paradigm in those major markets? Is that fair to say? Yes, it is fair to say, and I hope I'm not giving sort of mixed messages. Look, we understand that in the near term, you can cite those three markets of obviously New York or Chicago or San Francisco, which they're largely closed by government mandate. Given the fact that we're still here in a pandemic, and we will be coming out of that. There are significant investments across this great nation that have been invested in those cities. To completely write them off, I think, is a bit premature, and to think now that we're all going to relocate. You're going to see some capital flight, and you're going to see certainly some migration, probably more coming out of New York right now, and part of that's going into Florida for all the reasons that we know. I also think that that creates an opportunity to sort of rightsize. Remember, we have a completely diversified portfolio, from incredible iconic real estate in other parts, whether it's Hawaii, whether it's in Boston, whether it's in D.C., San Diego, New Orleans, South Florida. Look, this is not dependent on just those three markets. Those markets may lag a little, but I think it would be premature to sort of write them off and say we should abandon them at this point. I also think it's probably not reasonable to think that we would abandon our Top 25 market strategy, and then pivot so that we're chasing more suburban assets in our Top 30, Top 40. You're not going to have the barriers to entry. You're not going to have the sources of demand. We certainly want to add more resorts to it, as would everybody, given the opportunities that exist. That will also be a very competitive footprint, and you've got to be careful. We think there are really prudent investment ideas within our existing footprint, given the amount of ROI opportunities that also exist. Okay. I always appreciate that. Thank you. Last one from me, I think is actually more for Sean, who's been relatively quiet. Just in terms of how you think about balance sheet progression versus growth. I guess maybe Tom could take this as well. You guys have done a good job getting ahead of sort of liquidity maturity issues. At the same time, you also have more leverage and now higher coupon parts in your capital stack. A lot of companies talk about sort of being opportunistic, having the capacity or ability to sort of acquire. It seems like you guys maybe have a little bit other things to work on before you start being acquisitive. Maybe, can you just talk about your thinking on that? I understand it's very early in a sort of recovery, but how you kind of weigh those things, just given the time, your outspoken nature about being an industry consolidator. Thanks. You first? Yeah. I'll take the comment here about sort of industry consolidation. Look, I've been saying it now for certainly north of a decade or more, that it makes sense. The fact that we've got, I can't remember how many lodging REITs we have, and some baby REITs along the way. We're at 10, 11, 12, 13, 14. It'd be a more efficient use of capital to have fewer players. Look, I also acknowledge that when you think about us buying Chesapeake or the other two deals with RLJ and FelCor, or Pebblebrook and LaSalle, not one of them have been incredibly well received by investors, so that clearly is something that we'll continue to monitor. Look, we don't see consolidation here in the near term. We are focused, as we articulated on continuing to reopen hotels, sell non-core assets, reduce debt. Use those proceeds plus excess cash to continue to reduce debt. I would disagree with your point of, given our leverage, we don't have optionality. We have plenty of optionality within the covenant framework. We also have the ability, as Sean noted, we'll continue to look at the balance sheet and continue to push out maturities. I also don't think you're going to see a lot of transactions, what I would say bigger, with those more strategic, I don't see those occurring this year. I think those, as we work through the recovery and continue to get better visibility, I think those will be in 2022 and beyond, and you can rest assured that Park will be in position to be able to compete at the appropriate time. Can I just add real quick too, just thinking about the balance sheet and some of the kind of things that we've accessed is, just for us too, in our scale, we do have access to a lot of different markets. We'll continue to monitor those and obviously address, as Tom said, our maturities as well. I think certainly cost of debt depends on what you go after, and certainly the bank debt has been one that I think the entire sector kind of took advantage of in the last cycle, and I think it's been overexposed to it. Certainly, our drive is to kind of reduce that exposure and have far more flexibility with some of the things like bonds going forward. Okay. Appreciate your guys' thoughts. Thank you. Our next question comes from the line of Brandt Montour with JPMorgan. Please proceed with your question. Good afternoon, everyone. Thanks for taking my question. Thanks. Just on the operating model enhancements and the $70 million of permanent labor expense removal you guys are initiating soon, just curious what types of jobs are being cut? Is it mostly redundancy related or is it more of a tactical removal of certain services? I guess on a follow-up would be, is it uniform across the portfolio or is it heavier in your larger assets? Yeah. I would say it's pretty well across the portfolio. It's a lot of kind of management positions where you might have a banquet manager or front desk manager type of position throughout, captain or something like that. Clearly you're going to see some more bigger cuts in some of the bigger properties just from a number of employees. We had about 1,100 property-level folks that were unfortunately let go through this process. In the end, it adds up, and I wouldn't say we're reducing services by any means. Just ultimately giving a chance to where when you can basically you're in a situation where you've reduced your revenues to zero and you're building the business back from square one, you have that opportunity to rethink things and take some extreme measures. We're pretty confident about these cuts being permanent as we recover here. Just have more efficient operations over time. Okay. Thanks for that, Sean. Maybe another one for you. Maybe you can't answer this, but are you able to maybe give us a measure of EBITDA sensitivity or flow-through to RevPAR top line growth as you sort of build back demand, as many of your peers were able to measure that in a certain range. I don't know if you could give us anything that can help us understand how that could play out. I think, as you build back occupancy, certainly your flow-through is going to be hard through that. We're going to be bringing back some amenities over time, food and beverage. You're certainly going to see as that dollar comes back, it's going to be anywhere from 50%-60% flow-through. You don't have the rate profile, right? With the pure rate profile, you're going to be more than 89% flow-through, depending. For us, as we kind of go through here, I think generally that's what it's been in the past. I think it's probably a little bit better than that, certainly on the occupancy side, as that builds back, just given some of the things that have been put in place, like CleanStay, which we've seen is generally slightly positive on the cost side. It's certainly overcoming the embedded costs or the additional cost of the PP&E and the materials being used, the extra labor, we noticed. It is slightly incremental positive. As that kind of comes back and these lengths of stays get a little bit longer across the portfolio, I think we'll see some benefit from that early on to offset some of the kind of gradual costs that come online when you bring back other services like F&B. Excellent. Thanks for the comments, guys. Yep. Our next question comes from the line of Stephen Grambling with Goldman Sachs. Please proceed with your question. Hey, thanks. I guess a few follow-ups, and starting with the margins and Brandt's questions there. Does the $70 million consider any benefits from changes to distribution that could be permanent as you think of I think you mentioned less OTA mix. Are there any offsets we should think about in our models, whether it's labor insurance or taxes, or is that in that $70 million number? The $70 million, I mean, it's strictly just a reduction in force type of exercise. Some comments are following with related to insurance or taxes and the like. Yeah, I guess, on the I guess it's just considering any other permanent cost outs that we should be thinking about as you think the business in a recut. I mean, you gave the sensitivity in a recovery, like OTAs, is that something that should be permanently lower based on what you've seen now, or could that also creep back? I think OTAs right now is obviously, I think a bigger portion right now versus where it has been historically. We'll certainly see that come back, brand.com and other sources being a little more bigger drivers over time. We're certainly seeing the discount leisure come to the OTAs a lot more in those channels today than we expect as we ramp back up. I do think in the near term, we'll see some savings on property taxes. Certainly jurisdictions where you have an income-based approach for assessments, we're starting to see some actually happen already, where we're seeing drops in assessments, and also the bills themselves. Not just waiting for them to kind of jack the rate up to make it equivalent, but we're actually seeing reductions in certain jurisdictions for the bills. We had a one-time appeal and decrease in Chicago, which we expect will get another decrease, I think, this year for its triennial assessment. I think we'll see some benefits, some tailwinds on property taxes going forward. On insurance, it still remains a pretty challenged market, I do think it's softening up somewhat. We'll get a renewal on June 1st and hope that we're going to get not only a slight rate increase maybe, but we'll see some offsets to interval values because of BI levels being reduced given the lower levels of income. I think we'll at least kind of see maybe of a pause of some of the increases that the market's seen over the last couple of years in insurance. You get a break there. That's helpful color. As another follow-up, just on the balance sheet, I think folks have historically been looking at net debt to EBITDA ratios, but with where interest rates are and the flexibility in your covenants, how has your perspective on the right leverage for the enterprise evolved, and what are the most important metrics that you're watching from here on out? I mean, I think we still hold by the range of three to five times leverage. We've always wanted to kind of get to the lower part of that range. We've been hovering about four times pre-pandemic. We'll obviously with the burn, we'll see net leverage graduate up to about a turn or so based on kind of 2019 levels of EBITDA. We'll have some work as we've talked about at selling assets, utilizing cash flow as we go forward to reduce debt and get closer to that target. I think that's the right target, even if you think about interest rates popping up some, I think that we're fine at the lower 3x. Got it. Thanks so much. Our next question comes from the line of Chris Woronka with Deutsche Bank. Please proceed with your question. Hey, good afternoon, guys. Thanks for hanging on with us past the hour. Hope you're doing well, Chris. Yeah. Doing well, and same to you, Tom. Thanks. Question for you, Tom, is how do you think cancellation policies evolve as we kind of come out of this? There has been a lot of progress over the years, and then obviously things change pretty quickly. Yeah, how do you see it evolving coming out of this? Do you see any kind of new opportunities that might come out to further yield up or just any of your thoughts there would be great. Yeah, it's a great question, Chris, because as you know, we made a lot of progress pre-pandemic, and I would hope that as we get to the post-COVID era, that we would really kind of get back to where we were. I think it really started to minimize the impact of the HotelT tonight and the other services that were sort of a race to the bottom. I'm cautiously optimistic that that can happen. I clearly don't see that happening right now in the near term as we're still working through the pandemic and still trying to get to the other side. I would say, just as a global statement, that through this crisis, I've never seen more communication and more collaboration between owners, operators, the brand companies, and really working hard to rightsize and to take cost out. I know both Hilton and Marriott made really tough decisions to sort of reduce their workforce and to become more efficient. I think that's only going to continue to accelerate. We won't go back to the old way of doing business. I think advances in technology will force us all to think about it differently and think about ways that we can continue to get cost out of the business. Okay. Very helpful. That's all for me. Thanks, Tom. Thank you. Our next question comes from the line of Robin Farley with UBS. Please proceed with your question. Great, thanks. Hi, Robin. Hi, how are you? Just to maybe take one more try at a little bit of clarification on the comment about asset sales. I know you talked a lot about the markets that you see as still growing, and markets that over the long term may take longer to get back. Can you sort of characterize for the assets that you would sell that you see as non-core, can you kind of characterize what that means then? Right? I think we have a good idea of kind of what you value in assets. How would you characterize the non-core, when you think about that $300 million-$400 million? If you think about what we've done historically, Robin, as you may recall, we've sold 25 assets for about $1.2 billion. In every case, 14 of those were international. Clearly, we made that appropriate decision at the right time. If you think about the other assets, the other 11, plus or minus, they were lower RevPAR, they were in slower growth markets. They either were functionally obsolete or required excessive CapEx. We'll really go through the same sort of analysis here as well. It could be smaller properties that don't really fit our strategy over the intermediate and long term. It could be some markets where we just have a little bit more concentration than we want, and we use this as an opportunity to rightsize and recalibrate from that standpoint. Candidly, there are some assets that there could be a better play for an owner/operator as part of our ability to sell them unencumbered by a flag and/or management. All of that will fit into the calculus as to how we can maximize value for shareholders. We wanted to be really thoughtful. While we had discussions last year, we weren't comfortable with where the pricing was coming, obviously in the middle of the pandemic, but as we get improved visibility, we're optimistic here that we will be able to sell at reasonably attractive prices. Again, using those proceeds primarily to reduce leverage, and we think that's the right capital allocation decision right now. Okay, great. Thank you for that added color. You mentioned wanting to add resorts. Yes would you wait till your balance sheet is investment grade, or kind of what is your target for that before you'd be willing to buy something? Yeah, we certainly aren't going to wait for investment grade, and obviously, we believe investment grade would be a little ways off, and as Sean mentioned, we'd need to get into the low 3s, and clearly, we're above that today. You would expect, I think, more activity on the buy side in the latter part of this year into 2022 and beyond, and clearly as the recovery takes hold, and I don't think it's inconceivable that it could be a pretty significant snap back, particularly on the leisure side. I would also expect there's going to be a fair amount of competition also for those types of assets for the obvious reason. I think we all know that this recovery's going to be led by leisure, both drive to and fly to. Okay, great. Thank you very much. Our next question comes from the line of Lukas Hartwich with Green Street. Please proceed with your question. Hey, Lukas. Great. Thanks for letting me. Hey, Tom. Just one question left for me. In Hawaii, I'm just curious, how do you think the recovery's going to progress between Oahu and the Big Island? Do you expect a similar recovery or some divergence there? If you think of Waikoloa right now, I just think a lot of credit to Sean and the team, and all the work that was done sort of pre-spin. That hotel was always probably too large at 1,200 rooms, getting it rightsized now to just over 600 rooms and the right meeting footprint, it's very efficient. What typically happens for those that visit is it's not uncommon for you to begin in Oahu and then end up on the Big Island. That's a common trek, and there's obviously a lot of flights, and I think together, as we continue to look at ways of saving costs across the two properties, that having that synergy between them is really positive. We're very bullish on both assets. Great. Thank you. Thank you. If there are no further questions, I'd like to hand the call back to management for closing remarks. Thank you. We really appreciate everybody taking time today. We look forward to discussions with many of you over at Raymond James and the Citi conferences. Stay safe and be well. We look forward to seeing you all in person, hopefully sometime this summer or early fall. Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. Have a wonderful day.