Park Hotels & Resorts Inc. (PK): A Bull Case Theory

We came across a bullish thesis on Park Hotels & Resorts Inc. (PK) on Substack by Value Investigator. In this article, we will summarize the bulls’ thesis on PK. Park Hotels & Resorts Inc. (PK)’s share was trading at $10.04 as of May 1^st. PK’s trailing and forward P/E were 9.94 and 13.21 respectively according to Yahoo Finance.

Park Hotels & Resorts (PK) stands out as a deeply undervalued owner of premium hotel real estate, offering investors exposure to high-quality assets at a fraction of their replacement cost. At today’s share price, a $76.8k investment gives you claim to one of the company’s 25,000 rooms, each of which would cost approximately $792k to replace—highlighting a significant mispricing by the market. PK’s operational performance is strong: in 2024, average daily rates reached $256, with revenue per available room (RevPAR) at $179, generating $64k in annual revenue and $16.6k in net income per room. This translates to an impressive 21.6% funds from operations (FFO) yield, with shareholders receiving about half through dividends—amounting to a 10.5% yield, which rises to 14.7% when factoring in the 2024 special dividend.

The remaining free cash flow has been deployed efficiently, including an 8 million share buyback that equates to a 3.7% yield, and capital expenditures aimed at value-enhancing renovations, which management claims offer internal rates of return exceeding 25%. Park is positioning itself not just as a dividend play, but as a well-capitalized real estate investment trust (REIT) capable of compounding value through asset reinvestment and capital returns. While macroeconomic concerns linger, including the risk of a recession, Park’s resilient FFO yield offers downside protection. Moreover, inflation and interest rate pressures appear to be easing, setting the stage for hotel real estate to benefit from the same supply-constrained tailwinds that drove strong returns following both the 1980s inflation cycle and the 2008 financial crisis.

Park’s existing portfolio is uniquely positioned to capitalize on the current environment. With construction costs still high, new hotel supply remains limited, giving existing properties a strategic advantage. The company is also poised to benefit from demographic and behavioral shifts: the retirement of the affluent baby boomer generation is expected to drive long-term demand for leisure travel, and short-term positives like lower oil prices and a weaker U.S. dollar favor domestic tourism. Insider buying activity and a 14% short interest add potential for a rerating, particularly if fundamentals continue to strengthen. Park Hotels & Resorts combines hard-asset value, capital return discipline, and secular growth trends in a way that presents a compelling case for investors looking to own high-quality hotel real estate at a steep discount, with substantial upside potential and a limited-risk profile.

Park Hotels & Resorts Inc. (PK) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 26 hedge fund portfolios held PK at the end of the fourth quarter which was 24 in the previous quarter. While we acknowledge the risk and potential of PK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PK but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.