Park Hotels & Resorts Inc. (PK) Q4 2021 Earnings Call Transcript

Park Hotels & Resorts Inc. (PK 0.03%)
Q4 2021 Earnings Call
Feb 18, 2022, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Park Hotels & Resorts fourth quarter 2021 earnings conference call. [Operator instructions] Please note that this conference is being recorded. I will now turn the conference over to our host, Ian Weissman, senior vice president, corporate strategy. Thank you.

You may begin.

Ian Weissman -- Senior Vice President of Corporate Strategy and Investor Relations

Thank you, operator, and welcome, everyone, to the Park Hotels & Resorts fourth quarter and full year 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 and adjusted FFO.

You can find this information together with reconciliations to the most recently comparable GAAP financial measure in yesterday's earnings release, as well as in our 8-K, filed with the SEC and the supplemental information available on our website at pkhotelsandresorts.com. This morning, Tom Baltimore, our chairman and chief executive officer, will provide a review of Park's major milestones an overview of our fourth quarter performance and thoughts on Park's priorities as we head into the recovery. Sean Dell'Orto, our chief financial officer, will provide additional color on fourth quarter results, 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.

Tom Baltimore -- Chairman and Chief Executive Officer

Thank you, Ian, and welcome, everyone. Six weeks ago, we celebrated the fifth anniversary of Park Hotels & Resorts. Over the past five years, the Park team has worked tirelessly and with laser focus and discipline to transform the company. We have sold or disposed of 31 assets of $1.7 billion, including all 14 of the international assets that were part of the spin, vastly simplifying Park's operating profile.

We added 18 high-quality assets through the $2.5 billion Chesapeake Lodging Trust acquisition, improving portfolio metrics and diversifying our geographic brand and operating profile. We facilitated the exit of both Blackstone and HNA from Park stock, eliminating the perceived equity overhang and taking out HNA in a highly successful secondary offering that allowed us to buy back Park stock at a significant discount to NAV. We also shut down operations at the three freestanding laundry facilities and turned over management of Park's four select hotels to third-party management freeing up our internal resources and simplifying our employee base. And as we pass the five-year anniversary on January 3, 2022, we removed significant built-in gain tax restrictions on the sale of legacy Park assets, giving us increased flexibility and optionality as we expect to enter the growth phase of a launching recovery.

The past two years have been growing for all of us. When I think about Park's efforts, I'm especially proud of how our experienced team has navigated this environment. We did not panic, we acted swiftly and decisively to stabilize the business, temporarily suspending operations at several hotels to reduce monthly cash burn. Thanks to the exceptional efforts of our asset management team to reimagine the operating model and reopen hotels only when it was financially beneficial to do so.

We reduced our monthly cash burn from a high of $85 million to portfolio breakeven by March of 2021. We also worked proactively to maximize our financial flexibility. We were one of the first lodging REITs to enter the bond market in 2020, orchestrating three successful bond offerings between May 2020 and September 2021. We and raising $2.1 billion in senior secured notes.

In combination with the proceeds from Park's strategic capital recycling program, the bond issuances allowed us to push out debt maturities and pay off 97% of our bank debt and perhaps most importantly, avoid the need to issue dilutive equity, which we communicated as a key priority. Looking at 2021, in particular, I'd like to call out four key achievements. First, we successfully reopened six hotels during the year, including the newly 1,900-room New York Hilton Midtown with the portfolio now 96% open and only two of our hotels still suspended. Second, we achieved positive FFO or the last two consecutive quarters due to the stellar efforts of our asset management team and operating partners to drive top-line growth are working toward reimagining the operating model to permanently cut an estimated $85 million in expenses through the elimination of approximately 1,200 full-time positions across the portfolio, translating into an estimated 300 basis points of margin upside.

Third, we increased our financial flexibility through our strategic capital allocation priorities, opportunistically selling five hotels for nearly $480 million to reduce leverage and issuing $750 million of attractively priced corporate debt. And finally, we restarted work on several key ROI projects, including the Bonnet Creek meeting space platform expansion in Orlando, which we expect will drive outsized growth for our portfolio going forward. In sum, we finished 2021 well poised to capitalize on the expected recovery and return to normalcy. Turning briefly to fourth quarter performance.

Results came in ahead of our expectations, driven by strong performance from several core markets. Consolidated pro forma RevPAR of $110 was above expectations, fueled by outsized ADR growth, with 37 of our 46 open consolidated hotels generating positive EBITDA for the quarter. Similar to the third quarter, leisure strength in Hawaii, Southern California, and South Florida helped drive portfolio performance, generating an average leisure transient ADR that was 5.2% ahead of the fourth quarter of 2019. We saw a healthy performance at two hotels in Hawaii during the fourth quarter with minimal impact from the omicron variant over the holidays.

Hilton Hawaiian Village ran over 96% average occupancy during the last week of the year. And in Waikoloa, we continue to see strong rates in comparison to 2019, with ADR up 27% or $63 for the fourth quarter of 2019. On the mainland, our Florida properties continue to post incredible rate growth, increasing by nearly 30% over 2019 levels during the fourth quarter and by 18% for the full year. In particular, our two Key West hotels saw a 76% increase in RevPAR compared to 2019 levels during the fourth quarter and a 44% increase for the entire year.

We continue to see meaningful sequential improvement to group and business transient demand as well. Business transient revenues increased by over $10 million from the third quarter to account for 30% of the total quarterly revenue mix in the fourth quarter, and group revenues increased by over $19 million from the third quarter to account for nearly 20% of the total mix during the fourth quarter, up from just 7% in the first half of the year. All pockets of group strength in New Orleans, Orlando, and New York and short-term group demand in Hawaii throughout the quarter, an encouraging sign of the pent-up demand that is present as groups increased meeting in person. Looking ahead to 2022, Park remains laser-focused on key priorities as we move from the pandemic to the endemic phase of the crisis.

Park owns among the highest quality hotel portfolio in the sector, with incredible optionality and significant embedded value, which we plan to unlock over the next several years. Our focus over the balance of this year and beyond remains to aggressively asset manage our hotel portfolio and adhere to our principle of relentless pursuit of operational excellence. I mentioned earlier, we have eliminated an estimated $85 million in expenses through our tireless efforts to reimagine the operating model, translating into an estimated 300 basis points in margin upside. As our portfolio recovers, we seek to demonstrate to the market that the operational efficiencies we achieved over the last two years are permanent while unlocking the embedded growth opportunities across the portfolio.

In addition, we will seek to take advantage of the strong demand for hotel real estate in the private markets by continuing to sell an estimated $200 million to $300 million of noncore assets at or near 2019 valuations while evaluating opportunities to buy back upwards of $250 million of stock at a meaningful discount to NAV. We believe that there is no better capital allocation decision than to invest in Park, either through share repurchases or investment in ROI projects. Thanks to the great work of Sean and his team -- we recently amended some of our debt covenants to our credit facility to allow for more flexibility going forward. As the recovery broadens over the back half of 2022, we plan to reinstate a modest dividend subject to board approval and plan to selectively pursue attractive acquisitions in our target markets that are immediately accretive to both earnings and NAV with a continued focus on upper upscale and luxury hotels in top 25 markets and premium resort destinations.

And finally, we expect to prioritize portfolio-enhancing ROI projects that are targeted to drive outsized growth and unlock the embedded value in our portfolio. Significant work is underway on our $110 million Bonnet Creek meeting space expansion project as we seek to repeat the incredibly successful brand conversions at the Hilton Santa Barbara and the Reach Resort in Key West. We plan to launch two additional brand conversions, DoubleTree San Jose to a Hilton and the Waldorf Casa Marina to a curio branded hotel. Overall, we expect to invest at least $200 million in value-enhancing ROI projects over the next few years with projected attractive returns.

Before I hand the call over to Sean, I want to emphasize the strength of Park's current position as we head into a more broad-based recovery. We remain committed to maximizing shareholder value and working aggressively to narrow the current valuation gap, which currently stands at over a 25% discount to consensus estimates and an even wider gap based upon our own internal view of value. Our balance sheet is in excellent shape with over $1.6 billion of liquidity, and we believe we have several levers to pull to generate outsized earnings growth over the next few years as we unlock the enormous embedded value within our portfolio, while also taking advantage of our streamlined operating model and the impending return of the business and international traveler. We expect our strong leisure base of business in markets like Hawaii, Florida, and Southern California to continue to fuel results and the recovery of business in group-related demand in markets like New York and San Francisco should translate into a strong second half of the year with overall group pace approximately 62% of the 2019 pace as of December 2018.

Despite the near-term challenges presented by the omicron variant, we believe we will remain on track to return to prior peak operating results by 2023. With that, I'd like to turn the call over to Sean, who will provide some more color on our results and updates on our balance sheet and liquidity. 

Sean Dell'Orto -- Chief Financial Officer

Thanks, Tom. Overall, we are very pleased with our fourth quarter performance, with pro forma RevPAR improving sequentially to $110, driven by a 120-basis-point increase in occupancy to 52.5% and while rate averaged $210 during the quarter were just 4% below the same period in 2019. Overall, total operating revenue was $435 million during the quarter. while hotel adjusted EBITDA was $85 million, resulting in hotel adjusted EBITDA margin of nearly 20%.

Q4 adjusted EBITDA was $81 million, and adjusted FFO per share was $0.05, marking the second quarter in a row of positive FFO since the start of the pandemic. We witnessed widespread strength across the portfolio with all four location types, resort, urban, airport, and suburban, reporting flat to positive hotel adjusted EBITDA for the quarter. Among the highlights for Q4, we were very impressed with the overall performance of the Hilton New York Midtown, which averaged nearly 60% occupancy during the months of November and December, while rates surpassed 2019 levels as the hotel was able to host groups, international travelers and leisure guests looking to take advantage of all that the city had to offer during the holiday season. Looking to the first quarter of 2022, performance has been negatively impacted by the omicron variant, particularly in markets like San Francisco, New York, and Chicago, which saw major citywide events cancel, coupled with the delayed return to office which negatively impacted business transient demand in an otherwise seasonally weaker quarter for leisure travel in these markets.

Overall, the portfolio has taken $30 million in group cancellations due to omicron, although the vast majority of the fallout appears to be contained to just the first quarter. Therefore, we anticipate Q1 RevPAR to dip slightly from Q4 of last year, while margins are expected to be negatively impacted by a projected year-over-year increase in real estate taxes. Despite the Q1 challenges, we are very encouraged by the end of the year for the year pickup with nearly $25 million in new group bookings generated just last month for Q2 through Q4, beginning a trend of positive net group booking activity over the past few weeks, especially in the Hilton managed portfolio, which has seen 2022 corporate group lead volume doubled versus same time last year and increased nearly fourfold in January versus December. On the transient side, demand has increased from roughly 59% of 2019 levels in early January to around 77% over the past several weeks, while rates have averaged a 3% to 4% premium over 2019.

By the end of January, transient booking pace for the weekends was 26% higher than 2019, while weekday pace was down just 8%, improving from down 19% at the beginning of the month. Turning to the balance sheet. Our liquidity currently stands at $1.6 billion, including over $900 million available on our revolver and approximately $650 million of cash on hand, while net debt sits at $4.2 billion. Overall, the balance sheet remains in very solid shape with only 2% of total outstanding debt maturing through 2022, and with 99% of our debt obligations currently fixed.

Despite recent volatility, the debt markets remain active and becoming more constructive toward lodging, which should put Park in a solid position to refinance the $725 million CMBS loan on our two San Francisco assets, which comes due in late 2023. We also expect to refinance the $650 million, 7.5% senior secured notes that we issued in May 2020, calling them on or prior to the June 1 call date to realize meaningful interest savings going forward. Finally, as Tom noted, I'm very pleased to report that we successfully amended our revolving credit facility and term loan, which we finalized earlier this week. With this effort, we accomplished three key objectives: First, we extended our financial covenant waiver period by two quarters, with the first test period pushed out to the end of the third quarter of 2022, with the exception of a one-time fixed charge coverage ratio test based on Q2 results, and further modify the covenant thresholds beyond the wafer period.

Second, we gain more flexibility to run the business by increasing the amount of investments permitted, eliminating restrictions on asset sales and capital expenditures within the portfolio while also giving us the flexibility to prepay outstanding secured debt, among other adjustments. And third, we secured the ability to buy back upwards of $250 million of stock, which is permitted so long as there are no outstanding amounts on the revolver and the repurchases are funded solely from cash on hand, cash from operations, or proceeds from asset sales. I would like to personally thank the members of our bank group for their continued support of the company. They have been incredible partners throughout these unprecedented times.

This concludes our prepared remarks. We will now open the line for Q&A. [Operator instructions] Operator, do we have the first question, please? 

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question comes from David Katz with Jefferies. Please state your question.

David Katz -- Jefferies -- Analyst

Hi. Good morning, everyone. Thanks for taking my question. 

Tom Baltimore -- Chairman and Chief Executive Officer

Good morning, David. 

David Katz -- Jefferies -- Analyst

Good morning. And I will apologize as I was on just a couple of minutes late, but I wanted to just make sure I get a clear take on your views on New York and San Francisco. And how those qualitatively speaking, are going to roll through this year, right? There are still in much earlier stages of recovery. I think that's probably a fair statement.

How do you expect those to evolve as we roll through '22?

Tom Baltimore -- Chairman and Chief Executive Officer

It's a great question, David, and thank you for joining us today. First, if we look at the New York Hilton as an example, we reopened the asset, I believe, October 4. And we studied quite carefully whether or not it made sense to open at that point. We debated whether or not it would make sense to open perhaps even earlier or spring of '22.

We were pleasantly surprised that we made the decision to open in October. If you think back, as Sean pointed out in some of his remarks. But we opened, I think, in December -- in November, we were running about 55% to 60% occupancy at close to $300 rates. I believe just 7% or 8% below 2019 levels.

December, we were running occupancy there at about 63% at a rate of about $345 and we were about 7% plus or minus over 2019 levels. So it performed much better. And I think, again, to the issue of pent-up demand, you also saw the resurgence in of international travel there as well. Obviously, that has been impacted, obviously, by omicron and the variant there that sort of disrupted.

But we remain very, very bullish and constructive on New York. You really have only three boxes that have really significant meeting platforms. I think, two, in our view, that Hilton has the best meeting platform. And as we look out in the booking pace and what we're seeing just in group pace and in 2022, about 60% of 2019 levels there, about 100,000 room nights, and we're encouraged as we sort of move forward.

So I think as you think about New York and San Francisco, I'd certainly say that New York is really poised as you also think about the return-to-office. And I think we're all seeing and all recognizing that there are really encouraging signs out there. And I think this also applies to San Francisco, and I'll jump -- I'll respond to your question on San Francisco as well. But COVID cases are really declining globally.

I think we're all learning and getting and coming to the conclusion that we've got to accept COVID and then we're really moving from this pandemic phase to the endemic phase, and return-to-office is really accelerating. So when you think about pent-up demand and really, it's in all segments. It's not only in leisure, but it's in business and even group, the need to be together is more important than ever and also the resumption of international travel. If you think about just visitation into the U.S., so there was about 79 visitors in 2019.

Obviously, that's going to, we believe, begin to ramp up. That's also going to be a strong source of demand, not only for the U.S. but particularly for the urban environments, both from a business and a leisure standpoint as we move forward. So very encouraged about what we're seeing in New York.

And San Francisco is one that many people are quite down on. I would say that it's important to remove some of the emotional cladder and negative energy that's out there and just step back for a second and think about the city. It's one of the great cities of the world, innovation, creativity, the number of universities that are located there. The venture capital is anchored there.

So I think the demise of San Francisco is a bit premature. Obviously, safety and security is an issue. I personally was out there in late December with another REIT CEO, meeting not only with the mayor, the chief of police, their chief of staff, her chief of staff and really stressing the need for the safety security issue. And I know that those meetings and other meetings were a positive catalyst.

As we look out in San Francisco in our own portfolio there, citywides there're about 34 events for this year at about 525,000 room nights, I believe, plus or minus. When you think back to the high watermark, it was 2019. I think it had been reported of about 1.2 million room nights in citywides. It really was closer to about $1 million.

The mayor is even now attending sales calls in driving home. Her commitment to safety, security and really getting groups back, which I think is also positive. So as we look out in San Francisco, we're encouraged. There was recall -- there was some activity this week with three school board members that were recalled.

There's talk of the DA, the District Attorney, unfavorable views on many issues of him possibly also being recalled. So I do think there's some positive things that are happening there. No doubt the safety and security issues have got to be addressed, but we certainly remain constructive on San Francisco over the intermediate and long term.

David Katz -- Jefferies -- Analyst

Understood. Perfect. Thank you very much.

Operator

Our next question comes from Smedes Rose with Citi. Please state your question.

Smedes Rose -- Citi -- Analyst

Hi. Thanks. 

Tom Baltimore -- Chairman and Chief Executive Officer

Good morning.

Smedes Rose -- Citi -- Analyst

Good morning. I just wanted to ask you, you guys have talked a little bit on your calls about selling noncore properties and have emphasized a lot -- most of your EBITDA comes from kind of your core assets. Is now the time to -- would you expect in '22 to kind of formalize a disposition program, given your confidence in a broad-based recovery is now the time to kind of I guess, move maybe more quickly on that? Or how are you thinking about that?

Tom Baltimore -- Chairman and Chief Executive Officer

Yes. It's a great question, Smedes. I would tell you that if you think back over the five-year history, we were aggressive and proactive. We've sold now 31 assets for $1.7 billion, and that includes 14 international assets in South Africa, two in Germany, seven in the U.K., an asset in Brazil, an asset in South Africa, all complicated with lots of legal and tax issues.

It was really prudent of us to do that. Just think had we not done that heading into COVID and the complexity of issues that we would have faced otherwise. So we're proud of all the great work that the team did there. We are going to continue to aggressively recycle.

To your point, our top 27 assets really account for about 90% of the value of the company. And so we've identified another batch of noncore assets that we're going to aggressively move. Keep in mind, we also had to built-in gain tax requirements that have now expired. So that also gives us even more optionality with the portfolio.

And we also had the self-op. We had four assets that we were self-operating given some of the tax restrictions, it was punitive for us to sell those sooner. Those are now easier for us to sell here in 2022. That -- those sales activities are already underway.

So it's a core priority for us in 2022. You'll see us accelerate those noncore asset sales. We also have a number of joint ventures. There are nine of those remaining, three of those are consolidated.

We'll also look to where possible some of those have legal and tax issues as well. But we will continue to work hard to reshape the portfolio, improve the portfolio metrics and then use those proceeds for share buybacks. We trade at a significant discount to not only NAV but also to replacement cost. And we're not happy about that, and we want to work hard to address that immediately.

We use those proceeds for share buybacks, also for ROI projects, and then also for opportunistic acquisitions that fit our profile.

Smedes Rose -- Citi -- Analyst

OK. Thank you. And then just as a follow-up, I wanted just to ask you on the dividend. If you reinstate, I guess, in the back half, obviously, it's sort of starting out at a pretty modest level.

But is it driven by taxable concerns? Or is it just your -- are you sort of messaging that you have increased confidence in the recovery kind of outlook? Or how are you kind of thinking about that in terms of a targeted payout ratio, I guess, initially?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah, yeah. Certainly, we expect that we'll have taxable income. We do have some net operating losses, obviously, coming out of the pandemic that gives us additional optionality. But also having a modest dividend makes us more attractive to some of the income investors that we couldn't consider us otherwise.

And also it's confidence. It's confidence that we do believe that as we move from this pandemic phase to the endemic phase that having a return of capital including not only buybacks, but a modest dividend is a prudent move and certainly will benefit shareholders.

Smedes Rose -- Citi -- Analyst

Thank you.

Operator

Our next question comes from Rich Hightower with Evercore. Please state your question.

Rich Hightower -- Evercore ISI -- Analyst

Hi. Good morning, guys. Tom, 

Tom Baltimore -- Chairman and Chief Executive Officer

Good morning, Rich. 

Rich Hightower -- Evercore ISI -- Analyst

I think you intercepted the question I had on the built-in gains implication, so I can move to kind of a different angle here. But just from where we sit today, not knowing anything about the future in terms of potential acquisitions, that you guys are considering. How do you weigh specifically between prepaying some of the higher-cost secured debt that remains on the balance sheet later this year versus share repurchases, kind of competing IRR profiles with one decision versus the other, but also in terms of overall flexibility? How do we think about those two priorities?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. It's a fair question, Rich. I would -- I just want to back up for a second and just reemphasize what our priorities are going to be for this year. First and foremost, operational excellence.

We are laser-focused on the operational front and reimagining the operating model. As we've said repeatedly, we're confident that we've been able to take $85 million in cost out of the business, and we estimate about 300 basis points in margin benefit there. And those are 1,200 jobs, part management, part management really eliminating redundancies. And for us, first and foremost, by doing that, demonstrating that, candidly, earning credibility there, we're hoping, obviously, we'll continue to see the stock price improve that also gives us optionality for growth and certainly close the valuation gap that is frustrating, and we are laser-focused on achieving that.

Again, selling those noncore assets and continuing to reshape the portfolio, those proceeds, again, being used for share buyback. And if we can address the first on the operational excellence and selling noncore assets and close or approximate to 2019 pricing, it gives us the opportunity for buybacks, reinvesting back into our portfolio and ROI projects and then using that for acquisitions. Sean and his team have just done an extraordinary job as we think about how we've managed the balance sheet and the moves that we've made. As Sean pointed out, we've got the $650 million bonds that we can take out, and we're looking probably late spring, early summer to transact there.

That clearly will get us interest savings. But by selling the noncore and really closing this valuation gap and using strategically on the buyback side when you're trading at a 25%, 30%, and that's obviously below what we think our internal valuation, our internal NAV is. We see that as a real priority. We want to show that we've got confidence.

And so there's no better investment we can make than really investing back into this portfolio. We're trading 10, 11 times if not probably inside of that, buying assets at 13, 14, 15, 16 times multiples and what people are paying is really we don't think the prudent move for Park to make at this time. We don't see that really being accretive given where our cost of capital is right now.

Rich Hightower -- Evercore ISI -- Analyst

OK. That makes perfect sense. And then just a quick follow-up, if you don't mind. I think if I go back to one quarter ago on this call, I believe you said you were planning at that point to open Parc 55 in December.

Obviously, omicron had happened -- has happened since then, but was that the only change that really sort of affected that decision? Or was there anything else that sort of has led to sort of further delay versus, I think, the target as of 90 days ago?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. As we said, and again, a lot of credit to Sean, to the asset management team, to men and women there. What we've always said is that we will reopen hotels when it's financially viable to do so. It was certainly our intent to open that in that window.

Obviously, the new variant certainly delayed that. But given as we look out now and encouraging signs in San Francisco, as I mentioned, having citywides north of $500,000, about 34 events, plus or minus, plus the in-house group and the leads that we're seeing we think it's going to be probably in that April, May time frame will make the most sense to maximize and to reopen Parc 55 at that time.

Rich Hightower -- Evercore ISI -- Analyst

OK, great. Thank you, Tom. 

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. Thank you, Rich. 

Operator

Our next question comes from Floris Van Dijkum with Compass Point. Please state your question.

Floris Van Dijkum -- Compass Point Research and Trading -- Analyst

Thanks. Tom, I wanted to see if I can get you to say something a little bit more in terms of your own view of value. I know one of your peers is out there very publicly talking about his view of his shares. And will you be doing something similar to that and particularly when we look at your stock and we think there's significant value.

But the street, while it's obviously higher -- much higher than where your current share price is appears to be somewhat lagging, and there still seems to be a fair amount of skepticism, particularly regarding neo perhaps to your urban exposure. Can you say anything more in terms of your replacement cost of views? Have they changed since we spoke last? And maybe about -- your thoughts about being a little bit more explicit with the investment community?

Tom Baltimore -- Chairman and Chief Executive Officer

Yes. It's a fair question. We intend to put out a more detailed summary of NAV. We clearly believe that, and I believe consensus NAV is somewhere in the $27 a share.

We would certainly be in a range higher than that in a $28 to $32 range. But we certainly plan to put out more detail and back that up. And I think that's appropriate. Again, we've got to make sure that we're jumping through the appropriate legal and disclosure hoops, but it is our intent to provide more detail there.

So that's point one. Point two, given obviously inflation, given the barriers to entry that exists within our portfolio. I think it's important to remind listeners, there are many assets in this portfolio that would be impossible to replicate. Think about Hilton Hawaiian Village, 22 acres, nearly 3,000 rooms.

We are in the process of working on an outparcel to add a sixth tower there, as an example, think about San Francisco with 3,000 rooms over two city blocks or the New York Hilton there with just south of 1,900 rooms, would be impossible to replicate. And so when you think about a replacement cost and given rising inflation and certainly rising cost, we clearly think we're trading at some discount probably in the 55% range, the discount-to-replacement cost. So clearly, we're undervalued. And when you think about how the recovery is going to unfold and the reopening of offices and people moving in mobility, we are seeing, obviously, significant growth in RevPAR and take Key West as an example, north of 70%.

I know everyone's focused on the leisure markets as are we, we're also encouraged. Hawaii, we think, obviously, will continue to benefit significantly. We're not running. We're running in the 60% occupancy there and on a more annualized basis.

But keep in mind, that hotel in particular, ran 97% or more pretty consistently. My point being, when you think about growth and where it's going to be, the urban markets, both from a business group and from a leisure standpoint are going to be participants in this growth. We're confident in that. We believe that.

And I think over time, we're certainly all going to see that. So those that are writing off those markets, I would respectfully submit that their conclusions are a bit premature. So hopefully, that answers your question, Floris. We will be providing more detail, I've given you a little bit of summary, but no doubt we trade at significant discounts.

I think the private -- yeah, the private market transactions that we've done over the last year or two, I think, only reinforce that. We've sold two assets in San Francisco last year. both of which were trading at 19 valuations. So the underlying value of the portfolio, we're confident is there.

And again, the ability, you can build select-service hotels on every corner. Building full-service hotels of this scale and scope is -- are very, very difficult near impossible in many communities to be able to replicate.

Floris Van Dijkum -- Compass Point Research and Trading -- Analyst

Thanks, Tom. If I can have one more question and maybe this is perhaps more for Sean as well. But as some of your peers are exiting covenant waivers or getting close to exiting covenant waivers. As you consider, obviously, share repurchases with the fact that you want to exit your covenant waivers as well.

And you've got some -- ideally, you want to be able to refinance the bonds, hopefully, with proceeds from asset sales as well perhaps. How do you weigh all of those things? And what is going to be priority one? Is it repurchasing some stock? Or is it first fixing the balance sheet and then repurchasing some stock or maybe think about -- lay out how you think about that, Sean and Tom?

Sean Dell'Orto -- Chief Financial Officer

Sure, Floris. This is Sean. I mean, I think we think about it in terms of some balance here. As you think about -- as Tom alluded to, kind of where valuation stands today, I think we're going to be more certainly proactive in looking at addressing the cost of equity side of the equation.

But we're going to be prudent. We're certainly -- at the beginning of the year, we feel confident how it's going to transpire. But certainly, we're going to be very balanced and continue to be prudent about how we allocate toward stock repurchases, knowing that we do have substantial uses here as we think through refinancing through the latter part of the year. With the bonds, we certainly think that we can refinance those at certainly much lower rates, even the market today, it's open, it's working.

Certainly, it's not as voluminous as it was prior to the fed taking a little more [Inaudible] stance, but I think the fact that it remains constructive on top of the fact that we should expect to see if things hold as we think it's going to hold improved operations, I think we'll have a nice tailwind for us as we look to kind of take those out again, as Tom mentioned in the springtime. So it's finding the right balance. The savings certainly drive power to allow us to execute on the plan for the rest of the year. But I think certainly, as we sit here today, I think certainly the focus right now is thinking through the stock and then kind of layering in the rest of the balance sheet plans as we go forward through the year.

Floris Van Dijkum -- Compass Point Research and Trading -- Analyst

And, Sean, if you were to quantify today, if you were to -- be able to refinance those bonds today, what kind of savings would you be looking at on an annual basis?

Sean Dell'Orto -- Chief Financial Officer

You're probably looking at on the fact that you're probably in the neighborhood of, I would say, $8 million to $12 million on the $650 million.

Floris Van Dijkum -- Compass Point Research and Trading -- Analyst

That's attractive.

Sean Dell'Orto -- Chief Financial Officer

Well starts with an unattractive coupon, which one -- we want to get rid of as soon as we can. But it's well worth it in the pandemic.

Floris Van Dijkum -- Compass Point Research and Trading -- Analyst

Thanks, guys. That's it for me.

Sean Dell'Orto -- Chief Financial Officer

Thank you. 

Operator

Our next question comes from Anthony Powell with Barclays. Please go ahead.

Anthony Powell -- Barclays -- Analyst

Hi. Good morning, everyone. 

Tom Baltimore -- Chairman and Chief Executive Officer

Good morning, Anthony. 

Anthony Powell -- Barclays -- Analyst

Morning. Question on ROI projects. I think Tom, you said you would spend $200 million over the next few years on those projects. why not do more? I mean when you look at some of your other peers, they're spending a bit more as a percentage of their total sizes on ROI projects.

You've done well with your Santa Barbara in Key West. It seems like right now is a good opportunity to maybe lean in on capex, so curious on your thoughts on that.

Tom Baltimore -- Chairman and Chief Executive Officer

Yes. It's a great question, Anthony. We want to strike the right balance. And there's no doubt when you think about our portfolio, obviously, the DoubleTree San Jose low-hanging fruit, the Curio and converting that -- the Casa Marina at Curio makes all the sense.

The Reach has just been a grand slam. Obviously, we've got the DoubleTree Crystal City, and we've got -- we sit at the front door of the Amazon campus there. We are evaluating what our options are there and study. And there also are other assets within the portfolio.

And obviously, we're making a huge investment in the resort in Bonnet Creek and what we're doing there with the expanded meeting platform, both for the Signia Hilton addition to the Waldorf there. And there are others that we are also studying. New Orleans Riverside, we've got eight acres there along the river and over 5 million square feet of additional FAR. That's obviously a major project that we would plan that, master plan that, and certainly execute that most likely with a partner over time.

And of course, we're looking, as you know, on the -- adding the sixth tower at Hilton Hawaiian Village, which is a major undertaking and -- we've got that entitlement of work underway. We do have the site under control. And so we're really excited about that, but that, too, is going to be an intermediate to longer term. So you'll hear more and more about some of the other embedded ROI projects that we have within the portfolio and are really, really proud of the team Tom Morey, our chief investment officer; and Carl Mayfield, head of design and construction and the men and women on our team that are working so hard on these initiatives. 

Anthony Powell -- Barclays -- Analyst

Got it. OK. And then maybe just one more on pricing. You mentioned New York had pretty strong ADR.

Some of the other urban markets maybe trailed a bit. I guess what differentiated the ability for you to drive price in New York? And when do you think that comes back to some of the other urban markets like Chicago, for example?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. We have a really talented team in New York, and I think across the industry, I think we've all learned that the race to the bottom doesn't help any of us. So I think you're seeing rates hold up better. The other thing is we had demand.

And when you've got anchored business and you've got group and having it layered -- have it anchored with group having some contract allows you, obviously, to continue to push and price the transient accordingly. So very encouraged as we sort of look out. You're also -- there's a little bit of confusion in New York, right? You've got near-term talk of new supply, but the reality is given some of the legislation that's being talked about and some of the conversions, perhaps over time, New York does get to a better balance and certainly a more economic model as we move forward. But keep in mind, there are only three big hotels that really have the meeting platforms to be able to handle the big group.

And we would argue that Hilton New York has got the best platform.

Anthony Powell -- Barclays -- Analyst

 Great. Thank you. 

Tom Baltimore -- Chairman and Chief Executive Officer

Thank you. 

Operator

Our next question comes from Neil Malkin with Capital One Securities. Please go ahead. 

Tom Baltimore -- Chairman and Chief Executive Officer

Hey, Neil. 

Neil Malkin -- Capital One Securities -- Analyst

Hey, Tom. Hey, everyone. Thanks. Bigger-picture question, Tom.

You guys commented that that markets are improving. You guys, in the lodging region in general, have lower leverage than the private market players. And then just given the large disconnect in valuation that has been well documented, and you highlighted several times. Do you think that in 2022, given all those things kind of coalescing that sort of take privates will start to happen and potentially act as a catalyst for valuations?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. It's a great question, Neil. You would think a few -- I mean I've been around a long time, as many of you know. And think back to the kind of early 2000s through 2006, 2007, obviously, there was a lot of take private activity then.

Given the fact that there has been a grueling 2-year period, with COVID, there's been scarring. I think management teams themselves have got to decide what they want to do. And given the fact that you've got tremendous liquidity, the world is awash with capital I think you would need the debt markets to improve and I think improved visibility on the demand front. And I think we're all getting that.

We're all cautiously optimistic, and we are seeing some real rays of sunshine out there. I do think it's important to keep in mind the fact that we're all crossing the bridge and realizing that we've got to learn to live with COVID, moving from this pandemic to the endemic phase. But I would certainly expect that there would be some take private. And I think even some groups might even look at some M&A and some combinations.

I've been saying this for north of a decade. But I certainly don't expect that you'll have 15 public lodging REITs plus or minus here in another year or so.

Neil Malkin -- Capital One Securities -- Analyst

Super helpful. Thanks. And maybe a little early on, but can you just maybe walk through how your customer service or guest satisfaction is going as you started to see more of the core traveler, be it group or be it larger business travel kind of start to come back? Obviously, the brand standards mean revised outlets, amenities, and obviously, things being harder to staff, maybe things are not open as long and not as many days. Are you hearing from some of your core guests and people who are heavy users that they're not -- you're not exactly happy or frustrated with the new sort of level of service or business model or potential lack of amenities, just given the labor and brand standards sort of environment we're in today?

Sean Dell'Orto -- Chief Financial Officer

Hey, Neil. It's Sean. We have not heard that and certainly talking with our partners and especially Hilton being our largest, just not seeing the scores diminished relative to where they were prior to pandemic. Actually, in a lot of cases, up a little bit.

So I think in the end -- I think people want our understanding to -- and some of them has gotten used to it to a degree. But clearly, the brands are very focused on that. We want to make sure that we're maintaining market share. We're obviously partnering with them and discuss it and having the right balance.

But in the end, I expect certain services to be coming back and guests to fundamentally appreciate that incremental service level. So I think we'll naturally keep our scores at stable levels and positive levels going forward. So again, the short answer is we haven't heard anything negative really on the whole.

Neil Malkin -- Capital One Securities -- Analyst

OK. Yes, appreciate that. If I could just sneak one more in. I just wondered, Tom, do you think that again, given the discount in valuations to private market and kind of I would call your portfolio like chunky in terms of its exposure? Would you think of sort of proving the value by selling some of your larger market exposures into a joint venture of sorts and then using that cost of capital to execute on some of your strategic priorities?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. Neil, It's a fair question. We're looking at all options. All options are on the table to make sure that we close this valuation gap.

And again, we believe it begins, first and foremost, with the operational excellence, proving out that thesis, building cash flow, getting that momentum, selling noncore assets. Given the fact that we're out of the building gain, tax requirement is a huge benefit to us given the fact that we've got net operating losses. The one thing I want to make sure that listeners understand is that not only do you have a great portfolio. We have a very seasoned team here, and we have a lot of optionality.

We are going to create shareholder value. We are steadfast in that commitment and working our tails off to make sure that's going to happen.

Neil Malkin -- Capital One Securities -- Analyst

Thank you again. 

Tom Baltimore -- Chairman and Chief Executive Officer

Thank you. 

Operator

Our next question comes from Aryeh Klein with BMO Capital Markets. Please go ahead.

Tom Baltimore -- Chairman and Chief Executive Officer

 Hey, Aryeh. 

Aryeh Klein -- BMO Capital Markets -- Analyst

Thank you. Hi. Good morning. You've previously highlighted a number of hotels with potential alternative uses, including, I think, the New York Hilton.

Where does that rank on the priority list for you? And is that something we start to see this year?

Tom Baltimore -- Chairman and Chief Executive Officer

It's a fair question, as I said, to Neil. I mean all options are on the table. Look, the beauty is when you think about the quality of the portfolio, the location, the huge barriers to entry be near impossible to replicate all of those, whether they're encumbered by debt, long-term agreements with Hilton, some have a little bit of timeshare. So those types of opportunities just need to be studied carefully, but there's no doubt that all options are on the table to close the valuation gap and create value for shareholders.

Aryeh Klein -- BMO Capital Markets -- Analyst

Thanks. And then maybe just on wages. What kind of wage growth have you been seeing? And what are your expectations in '22? And then from a staffing standpoint, where are you versus maybe where you'd like to get to ideally?

Sean Dell'Orto -- Chief Financial Officer

Hey, Aryeh. This is Sean. I think from a labor standpoint, as we kind of look forward. We're certainly seeing some increases in markets, Orlando being one of them, but in other markets generally stable.

And clearly, we've got a portfolio that's -- it's heavily 60%, call it, Union that you kind of have obviously contracted wage levels. And so we think we're certainly feel pretty good about our position about year-over-year increases as we go into '22. That said, I'd say from a room labor standpoint, we're probably roughly, call it, around flat and ultimately, that's a combination of the fact that we have fully staffed labor in certain hotels in the resort markets, but we're understaffed in certain markets as well. So we'll have to kind of see the things stabilize.

Secondarily, as you think about more so the F&B side, we're certainly seeing a lot more reduction in kind of year-over-year levels or certainly relative to '19 levels, I should say, on F&B. So that one's going to also be a little bit choppy as we kind of bring that business back as well. So as a percentage of revenue, generally, it's about -- holding about steady. And again, we've gotten certain instances to depressed revenue levels, so we'll have to see as the portfolio ramps back.

But overall, I think, again, I think what comes down to is for us is from the Union side, too, we've got contracted labor wage increases, we also have the ability to bring the labor in versus having to kind of having issues, trying to source the labor. So I think that's certainly a big benefit for us.

Aryeh Klein -- BMO Capital Markets -- Analyst

And maybe just a follow-up on that for the union contracts. Any of them coming up in the near future?

Sean Dell'Orto -- Chief Financial Officer

Yes. We do a few that come up through the end of this year. We'll look to negotiate a few and, I think, San Francisco and Hawaii to name a couple of markets.

Aryeh Klein -- BMO Capital Markets -- Analyst

Thank you.

Operator

Our next question comes from Bill Crow with Raymond James. Please go ahead.

Bill Crow -- Raymond James -- Analyst

Hey. Good morning, guys. 

Tom Baltimore -- Chairman and Chief Executive Officer

Good morning, Bill. 

Bill Crow -- Raymond James -- Analyst

Tom, I appreciate your optimistic view -- I appreciate your view on San Francisco, and I'm certainly hopeful the reopening pace picks up and local government improves. But this market really began to struggle with groups before COVID, right? And complaints were set are not high cost of holding meetings and homelessness and crime. And so does the market need to adjust pricing in order to be more attractive to groups and maybe offset some of the other challenges? I guess more broadly speaking, is there a risk that markets like Portland, San Francisco, even Chicago start to get red lined by meeting planners and instead see like everything else, more of a shift to the Sunbelt markets?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. It's a fair point, Bill. And obviously, one of the things that I admire about you, given our long history together in this industry as you call it the way you see it. I think a couple of things to keep in mind, even this year, when you think about San Francisco, and again, the high watermark was about 1 million room nights, as I said, I think this year, citywides are looking at just north of $500,000 and about 34 events.

You look at certain high-end groups, whether they're farmer, education, whether they're tech or whether that's the healthcare conference, there is a benefit to them being near the capital sources. And given the fact that you've got great airlift, you've got great cities that have got other amenities. No doubt San Francisco is a tougher operating environment. I went out and spent a few days there, Bill, walking, talking with employees, meeting with the mayor, meeting with her chief of staff, meeting with the chief of police.

I and another REIT CEO, in addition to no other CEOs and other C-suite leaders, and driving home that you've got to have a safe environment, first and foremost. I think the phrase was what we've heard from meeting planners you can be expensive and safe, but you can't be expensive and unsafe. So I believe that the mayor understands that. I believe that there are initiatives and good work underway.

As I mentioned, she's actually on sales calls as groups are trying to plug away. And I think what you're seeing their threats aren't so much. Orlando is always a threat, the bigger markets, Atlanta, to some extent. Some of the other markets, I think, are less of a real competitive threat for them.

Vegas is a threat, but it's a very different experience. So there's a natural audience for San Francisco. I think they've got to work on the safety security. I think they've also got to make sure that they've got to work on pricing.

And you're not wrong that it may be that it's at a slightly lower price point as they're rebuilding credibility and rebuilding demand as we move forward. Where I disagree is I think when people sort of red line and write these cities off. I'm in these cities. I'm talking and watching as are many others, and you still look at capital flows, you look at California, you look at the Bay Area.

And I am not happy with some of the things that we saw. But I am cautiously optimistic that they're beginning to move in the right direction, understanding that they're going to kill the golden goose here because tourism is an important part and visitation is an important part. You think about also the entree coming from the Far East as well and given the great airlift that you have. So San Francisco is still one of the great cities of the world, challenged a little now, but cautiously optimistic that we certainly come out of it.

Do I think New York comes out of it sooner? I do. And I think we saw evidence of that given the fourth quarter, how strong it was. It would be interesting to see as we come out here in both getting into the spring and summer and you're getting more meetings and people engaging. Zoom worked.

It worked as a fill. Zoom is not going to replace the need to be together. And I can't stress that enough. And you will see a return-to-office.

You will see people gathering. I have been traveling extensively. And what I find is people can go to the baseball games, the basketball games, the football games, the Super Bowl, the college football. We can do everything but return to work.

I think it's time for leaders to provide the kind of encouragement, return-to-office is a good thing. And I think you're going to see that just accelerate. That also will help and be a catalyst here on the demand front.

Bill Crow -- Raymond James -- Analyst

I ask you these questions because I always appreciate your answer. So thanks, Tom. That's all.

Tom Baltimore -- Chairman and Chief Executive Officer

Thank you, Bill. 

Operator

Our next question comes from Jay Kornreich with SMBC. Please go ahead. 

Jay Kornreich -- SMBC Nikko Securities -- Analyst

Hey, good morning. Thanks for taking the call. As one of the amendments to your credit facility was increasing your acquisition ability to $1 billion. I guess, what would you need to see in order to feel more comfortable turning the acquisition pipeline back on?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. Listen, we are continuing to underwrite and look in like many of our peers, I mean, we're focused on top 25 markets and upper upscale and certainly luxury assets in top 25 markets and premium resort destinations. It's got to be immediately accretive or near-term accretive. And when we look at where we sit today, again, the focus, again, on the operational side, really improving the cash flows, buying back stock opportunistically to get the value so that we can get clearly a cost of capital that's -- it's more reasonable for us to buy assets.

We don't think it makes sense for us to be buying where some of the assets are trading. And if you look at some of the leisure markets as an example, you're getting inflated cash flows and at higher multiples. And in some cases, those cash flows are going to balance out and are going to have a reversion back to the mean. So I think it makes it difficult for those to be economically viable over time.

So we're being disciplined and careful. We continue to underwrite you will see Park buying assets. We bought a company. We -- this team is very experienced in buying assets, portfolios, companies, but we'll be thought we'll be thoughtful about it in the context of our near-term priorities.

Priority number one is on the operational front. Priority number two is selling noncore using those proceeds to buy back shares, ROI projects, looking for acquisitions. We will continue to be thoughtful and disciplined about our capital allocation decisions.

Jay Kornreich -- SMBC Nikko Securities -- Analyst

OK. That's a fair perspective and kind of leads me to a little bit to the next question, a follow-up, which is with the return of office finally seemingly underway, which should lead to a strong recovery in corporate travel. Are you expecting the LT outperformance in business travel and group underperformance to kind of converge as we go throughout the year? And do you see the business travel and group demand returning at a similar pace? Or do you start to want to outperform the other?

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. It's a great question and a bit of an unknown for all of us. I will say that we're -- there's no doubt as you get the return to office and we're hearing it broadly across industries leaders, and I think many of you are as well. I think we've all recognized enough at staying home, and there's a benefit.

We're all stronger together when you're in your offices, whether it's through two days, three days, four days, whatever that company culture is. And so we certainly expect that you're going to see that is the anchor. And then you'll from that see business transient, you'll see group. What I've heard from a lot of C-suite leaders is because they're allowing people to work more remotely and then having them come to the office that you're going to see more business transient as a result of them coming back to the office more frequently.

And the other thing is -- for those that are allowing their people to work a little more remotely in that balance for that particular company, they need to get people together in more central locations for more group meetings. Either way, portfolios like Park will really benefit from that given the fact that where we're located, the New Yorks, the Chicagos, the San Franciscos, the New Orleans, the Miamis, etc., Boston, D.C. And so we feel good about that. The other thing to keep in mind is this concept of leisure travel, which I think is another growth and another opportunity for the industry as well, where people began on the road and obviously, for what begins as a business or perhaps a leisure trip and then ends into a blurring of the lines for a business and/or a leisure trip as well for an extended trip.

We see evidence of that. We think that's encouraging. So I think the signs for us, all living in the bunker, the days of the bunker, I think are ending. People are getting back to work.

They're getting back to the office, they're going to get back to traveling. We think that there's going to be this new age of it. We're excited about it and really believe that our portfolio is going to benefit from that.

Jay Kornreich -- SMBC Nikko Securities -- Analyst

Got it. Thanks so much for the time. 

Tom Baltimore -- Chairman and Chief Executive Officer

Yeah. Thank you. 

Operator

Our next question comes from Chris Woronka with Deutsche Bank. Please state your question.

Chris Woronka -- Deutsche Bank -- Analyst

Hey. Good morning, guys. 

Tom Baltimore -- Chairman and Chief Executive Officer

Good morning, Chris.

Chris Woronka -- Deutsche Bank -- Analyst

Hey, Tom. I wanted to ask about Chesapeake portfolio. And you guys obviously hadn't owned that for a very long time before COVID started. You sold a lot of the assets I think, and some of those were capital situations.

So the question is kind of as you look at it now, is there any way to kind of recalibrate the potential of that portfolio once you now get in and get to do -- finally get to do all the remaining things you wanted to do with the core assets of it? Just any way to measure kind of what your revised expectations for that portfolio are in terms of a return or yield or something like that?

Sean Dell'Orto -- Chief Financial Officer

I think -- well, Chris, I'll take a stab at it in terms of how we think about this kind of the synergies that we had talked when we bought the portfolio. We obviously recognized a good chunk of those through just eliminating the G&A side on the corporate side, we certainly set out to drive through additional synergies operationally through -- we thought you could ultimately drive and yield rate more. We had some various projects we knew we could do within various certain assets, which we still own today. So we're looking to -- obviously, the pandemic kind of put a stall on that.

But as we kind of get more familiar with some of these assets, I think we have also seen more opportunity as well. So as we come out of this, with the assets that remain, I still think we have kind of in that neighborhood of $10 million, $5 million to $10 million of synergies we can drive or EBITDA synergies we can drive there. And it's still a good amount of revenue-driving rate. And thankfully, through this pandemic, I think people have gotten more emboldened to really drive rate.

So I think we certainly think we can get that through these assets, as well as some of the products we have, where we're converting additional meeting space, additional parking revenue sources and the like, where we just think there's opportunities there and just need the demand to come back to take advantage of it. 

Chris Woronka -- Deutsche Bank -- Analyst

OK. Thanks, Sean. And then, Tom, I was just hoping to get a little perspective from you, if I could, on whether or not you think resort assets are going to have a permanently higher multiple or a much higher multiple than urban assets once we get a little further down the road into the recovery? And is there a way you guys might be able to take advantage of any arbitrage that's out there? Because I know you're not going to walk away from urban markets.

Tom Baltimore -- Chairman and Chief Executive Officer

It's a fair question, Chris. Look, we are -- we have always believed in the importance of having a diversified portfolio. Think about our resort collection right now. We obviously have got Bonnet Creek, which -- our basis there is about 300,000 a key, 300 acres of championship golf course, that's next to the Four Seasons that traded at $1.4 million a key.

We feel really good about that transaction and where we are. If you think about the two resorts that we have in Key West and how well they've performed, we've repositioned one, we'll reposition the other, impossible to replicate either of those two assets. Think about Hilton Waikoloa Village and Waikoloa. Waikoloa, we've shrunk the hotel.

And on a GOP basis, it's more profitable than it was nothing compares to Hilton Hawaiian Village with nearly 3,000 rooms and as we work on the sixth tower there and again, creating more value. So we don't think they're mutually exclusive. I think really part of it becomes timing, how you're going to allocate capital. Clearly, everybody wants a resort property.

Those assets are trading at premiums today. Are those premiums sustainable over the long term? I think we'll see. But I think we've all recognized that you're more focused on the leisure front now. There aren't a lot of alternatives.

So the cruise line business hasn't really returned. International travel abroad hasn't returned. Keep in mind, in 2019, we had 79 million inbound international travelers. But U.S.

citizens traveled about 100 million trips -- passengers, excuse me, going into Europe and other parts. These things will balance over time. No doubt there are world-class resorts out there that makes sense. And those trophied, but it's not unlimited.

And these things naturally ebb and flow over time.

Chris Woronka -- Deutsche Bank -- Analyst

OK, very good. Thanks, Tom. 

Tom Baltimore -- Chairman and Chief Executive Officer

Thank you. 

Operator

Thank you. Next question comes from Robin Farley with UBS. Please go ahead.

Robin Farley -- UBS -- Analyst

You know, my question is on the -- 

Tom Baltimore -- Chairman and Chief Executive Officer

Hey, Robin.

Robin Farley -- UBS -- Analyst

Hi. How are you? It was only the transaction environment, which I think, at this point, you've probably covered pretty thoroughly, so I'm all set. Thanks. 

Tom Baltimore -- Chairman and Chief Executive Officer

Thank you, Robin. 

Operator

And that's our last question we have in queue. I'll now turn the floor back over to Mr. Tom Baltimore for closing remarks. Thank you.

Tom Baltimore -- Chairman and Chief Executive Officer

We really appreciate each of you taking time today. We look forward to seeing many of you at the upcoming Citi conference and other events. Stay safe, be well, and we really look forward to seeing each of you in person.

Operator

[Operator signoff]

Duration: 71 minutes

Call participants:

Ian Weissman -- Senior Vice President of Corporate Strategy and Investor Relations

Tom Baltimore -- Chairman and Chief Executive Officer

Sean Dell'Orto -- Chief Financial Officer

David Katz -- Jefferies -- Analyst

Smedes Rose -- Citi -- Analyst

Rich Hightower -- Evercore ISI -- Analyst

Floris Van Dijkum -- Compass Point Research and Trading -- Analyst

Sean DellOrto -- Chief Financial Officer

Anthony Powell -- Barclays -- Analyst

Neil Malkin -- Capital One Securities -- Analyst

Aryeh Klein -- BMO Capital Markets -- Analyst

Bill Crow -- Raymond James -- Analyst

Jay Kornreich -- SMBC Nikko Securities -- Analyst

Chris Woronka -- Deutsche Bank -- Analyst

Robin Farley -- UBS -- Analyst

More PK analysis

All earnings call transcripts