Park Hotels & Resorts (NYSE:PK) held its first-quarter earnings conference call on Friday. Below is the complete transcript from the call.
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Summary
Park Hotels & Resorts announced a $96 million renovation project for the Ali' I Tower at Hilton Hawaiian Village, which will impact 2026 financials slightly.
The company has strengthened its balance sheet with $2 billion liquidity and significant progress on refinancing 2026 maturities, including a new $700 million loan.
RevPAR growth guidance for 2026 increased by 50 basis points to a range of 0.5% to 2.5%, with adjusted EBITDA guidance raised by $7 million.
Royal Palm is set to reopen in June, with expectations for substantial operational improvements and potential benefits from the World Cup.
Management is actively working to dispose of 12 non-core assets and expressed confidence in progress by year-end.
Hawaii market is expected to perform well, with potential benefits from global travel shifts and investment in property upgrades.
Group demand is strong, particularly for June, with significant growth in key markets like New York, Orlando, and Hawaii.
Operational focus includes managing labor costs, insurance reductions, and real estate tax appeals to optimize expenses.
Full Transcript
OPERATOR
Palm and the launch of the Ali' I Tower renovation at Hilton Hawaiian Village. This project will encompass all 351 guest rooms, the tower lobby, its private pool and the addition of three new keys. Total investment for the project is expected to be approximately $96 million. We expect renovation related disruption at Hilton Hawaiian Village to have a modest impact in 2026 with the towers closure expected to have less than a $2 million impact on 2026 Hotel Adjusted EBITDA and representing just a 10 basis point impact to portfolio RevPAR. Once complete, nearly 80% of the resort's rooms will be newly renovated, significantly enhancing the iconic hotel's long term competitive positioning. Turning to the balance sheet, our liquidity at the end of the first quarter was approximately $2 billion including $156 million of cash plus $1.8 billion of available capacity under our $1 billion revolving credit facility and $800 million delayed draw term loan. With respect to our 2026 maturities, we have made significant progress over the past two months to raise a $700 million floating rate delayed draw mortgage on Bonnet Creek which is expected to close this week. The loan, which was upsized $50 million based on the complex strong results, will bear interest at SOFR 225 basis points. When combined with the $800 million delayed draw term loan, this $1.5 billion of new debt capital commitments provide us with certainty while also allowing for the flexibility to fund within par prepayment windows and closer to the maturities. Accordingly, we expect to execute a partial draw under the delayed draw term loan and in June to fully repay the $121 million Hyatt Regency Boston mortgage which matures in July. We then expect to draw the remaining capacity in September along with fully drawing proceeds from the Bonnet Creek mortgage financing, to fully repay the $1.275 billion CMBS loan on the Hilton Wine Village which matures in early November with additional proceeds to be used for corporate purposes. We are grateful for the continued support of our bank group whose confidence in Park's credit profile and strength of our portfolio has been instrumental in executing these transactions. Their commitment is a clear validation of our balance sheet strategy and underscores our ability to address all 2026 debt maturities in a comprehensive and highly effective manner. Upon completion of these transactions, we will have meaningfully enhanced our financial flexibility unencumbering the Hilton Hawaiian Village, extending our weighted average debt maturity to nearly four years and eliminating any significant maturities for approximately two years on an annualized basis. These refinancings are expected to increase interest expense by approximately $28 million, with roughly $13 million reflected in our 2026 AFFO guidance,. Based on the timing of these transactions with respect to our dividend, on April 15th, we paid our first quarter cash dividend of $0.25 per share. On April 24th, our board of directors approved a second quarter cash dividend of $.25 per share to be paid on July 15th to stockholders of record as of June 30th. The dividend currently translates to an annualized yield of approximately 9% based on recent trading levels. Turning to Guidance While we remain mindful of the geopolitical uncertainties and the potential impact of higher oil prices on both business and leisure travel, we were very encouraged by the strength observed in Q1. With solid demand trends continuing into the second quarter April, RevPAR is expected to be flat but up 3% excluding Miami, with performance led by continued strength in Hawaii, Bonnet Creek and Key west, as well as solid Spring Break leisure transient demand in Santa Barbara. And while we expect performance to modestly soften in May, June looks very strong, driven by strong group demand up nearly 10% and favorable year over year comparisons across several key markets including Hawaii, Orlando, Key west and New York. Overall, we expect Q2 RevPAR to come in around the midpoint of our guidance range with roughly a 100 basis point drag from Miami for the year. With Q1's outperformance, we are increasing our RevPAR growth guidance by 50 basis points at the midpoint to a new range of 0.5% to 2.5% and Adjusted EBITDA guidance by $7 million at the midpoint to a new range of $587 million to $617 million. While AFFO increases by a penny at the midpoint to a new range of $1.74 to $1.90 per share. It is also worth noting that the recently sold Hilton Seattle Airport Hotel was expected to contribute approximately $3 million in EBITDA for the remainder of the year. This 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? We'll now be conducting a question and answer session. If you'd like to ask a question, please press Star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question is from Flores Van Dykem with Ladenburg Thalman.
Flores Van Dykem (Equity Analyst)
Hey, Dr. Flores. Thanks. Morning, Tom. Glad to be on these calls again with you guys. If you can give us a little bit more of an update on the disposition. One of the key things I think the market is having some trouble understanding is the quality of the portfolio that's being shielded by the lower 10% of your assets. If you can talk a little bit about where I know that you have pretty much all of those presumably in the market, what's the status on that? Are you having some detailed discussions? What's the pushback that you're getting from the market and are you going to hold out for the last dollar on those assets?
Tom Baltimore
Well, Flores, it's great to have you back and appreciate the question. If I could sort of frame it for a second. Keep in mind, if you think about the remaining 12 assets that we have, we currently have 33 assets in the portfolio. We have sold or disposed of 52 assets. As I said in the prepared remarks for over $3 billion, we have 12 assets that we're defining as sort of non core. Three of those assets obviously rest with the dispute with Safehold, which will resolve itself, if not this year, certainly next year. The EBITDA from those assets is about $16 million plus or minus the remaining nine assets account for about $41 million in EBITDA and candidly, probably 45% of that relates to one asset in Florida. So, you know, we're generally dealing with eight assets that are small. Some have short term ground leases, some are joint venture, some have various challenges. And I would say obviously the last mile is often the most difficult. I would hope the market would give us credit for the perseverance, the discipline, our ability to reshape, the portfolio over the last nine years. We are very confident we're going to make substantial progress this year on those non core assets. And our collective team are working their tails off. We have work streams underway on all of them and it's going to be a little lumpy and choppy. I think you'll see more reported as the year unfolds. And believe me, no shortage of effort and focus. We realize it's while a small overhang. It's an overhang. It clearly is less if you look at the 41 million, certainly less than 5, 6% of overall EBITDA. But it is a drain when you think about operating metrics. And so we're working hard to get the assets sold as quickly as we can. We're not holding out for, the last dollar, but we certainly want to have counter parties who can execute and who can move through the process. And we certainly are always focused on creating value for shareholders.
Flores Van Dykem (Equity Analyst)
Thanks. Maybe a follow up question on the World Cup. I know that your Royal Palm asset I think is opening up in June. Is that. And that is a market potentially that could get impacted by the demand for the World Cup. If you can talk broadly about what the impact is going to be or are you seeing so far, I think it's everybody's sort of muted on the World cup impact, but if you can give us a little bit more color on that, that would be great.
Tom Baltimore
Yeah, it's a lot to unpack there, Flores, but I'm happy to take it. I think most importantly, if we step back and think about the Royal Royal Palm at 15th and Collins 393 Keys, we're expanding to 404, putting in approximately $112 million. We could not be more excited. We could not be prouder. We had obviously a group there. We can't wait to get more analysts and more investors in. I couldn't be more grateful to Carl Mayfield, who heads our design and construction team, who is literally spending three or four days of his week in Miami leading. And we also have the operator, lead operator from Davidson who's been on site since we launched construction in last May. As of this morning, we had 417 men and women on site. And that includes from owners reps to general contractor to subs to owners teams to operations folks. And we are currently targeting that construction will be substantially complete by early June. And what we would call the stocking and training TCO would begin and target sort of in mid May. You've got a few weeks of testing all the fire alarm and life safety issues that have got to work through. And we're probably looking at a target public occupancy TCO and hoping for sort of mid June. So when you think about where that all unfolds as it relates to the World Cup, we have included in our guidance that Shawn outlined in his prepared remarks. We have no contribution coming from Miami in that process at this time. So if we are able to get open, I think the two prominent games in Miami will be July 11 and July 18. We are cautiously optimistic that we should be open in time for those. And that's what we're all working our tails off to make sure that that occurs again. We don't have anything in the current guidance. So we've been quite conservative in that intentionally, just given all of the geopolitical, but also the complexity of the inspection and regulatory process as we close out the job. But you may recall other projects and the months and in some cases years, I think that this, again speaks to the core competency, the leadership that we have at park, our experience, the extraordinary success that we're having obviously at Bonnet Creek, and also what we're seeing also in Key West. And we feel the same way about Royal Palm as we look out. So we're very, very bullish and excited about this project and think we're going to have a tremendous success there over time. Thanks to. Thank you.
OPERATOR
Our next question is from Smedes Rose with Citi.
Smedes Rose (Equity Analyst)
Hi. Thank you. I just wanted to ask you. Hi. I wanted to ask you, in your guidance, it looks like the expense expectations moved up around 40 basis points versus your prior guidance. And I was just kind of wondering what was behind that.
Shawn
Yes, Mead. Shawn, we obviously in Q1, we had some outperformance top line. A lot of that was occupancy based. So we certainly naturally see while cost per room solid in terms of, you know, basically 50 basis points or so growth, you know, with the extra occupancy expense growth was a little more than expected as well. So we're kind of carrying that through much like we're doing with the top line into the expense. Certainly expected the rest of the year. Expenses kind of operate as we expect, just like we're thinking about the top line, kind of expecting that to perform as we expected for Q2 and through Q4.
Smedes Rose (Equity Analyst)
Okay, yes, thanks. That's helpful. And then, Tom, you mentioned that you think the Hawaii assets this year can trend towards the upper end of your expected ranges. Can you just remind us what that range was for this year?
Tom Baltimore
Well, ultimately you're talking about the, you know, the upper end of our guidance range,. So certainly. Okay, yeah. So 2.5%. So somewhere in that zone are a little better. You know, as we said, you didn't, provide an EBITDA outlook. Okay. Yes. Means the other part is we do have obviously some, you know, favorable comps coming up the heels of renovations and certainly some softening activity that we saw last year in Hawaii. So to Shawn's point, we feel good about that. If anything, it's conservative, but that's intentional given all the uncertainty right now.
Smedes Rose (Equity Analyst)
Okay, thank you. Appreciate it. All right. Thank you.
OPERATOR
Our next question is from Dwayne Fenningworth with Evercore isi.
Peter
Yeah, hi. This is Peter ON for Duane, thanks for taking the question. I think I'd like to maybe just piggyback off Smead's last question on Hawaii and bigger picture, Tom, if you could just kind of lay out the building blocks of, you know, the recovery in Hawaii, getting back to kind of pre strike levels, what do you need to see happen and what kind of kind of the cadence of that recovery look like?
Tom Baltimore
Yeah, Peter, it's a fair question. I would just again kind of frame it a little bit. If you look historically, you know, Waikoloa,'s RevPAR growth has always outpaced the US pretty consistently by about 120 basis points. And I think Key west and Hawaii both are around a CAGR of about 4.5% versus certainly 3.3%. Obviously you got very limited supply growth in Hawaii through 2030. And again the investment that we're making, that we continue to make and after we finish the Alihi tower, at least 80% of the rooms at Hilton Hawaiian Village in particular will be renovated. And we've been looking to sort of reposition. If you think about the Japanese traveler, you know, we're about 750,000 visitation versus about 1.5 million historically. So we've been seeing that shift away and we've been really repositioning the business to account for that. So Japanese traveler really accounting for about 3% of our business, approximately which it was probably high teens, 18 to 20% kind of pre pandemic. So as we look out, we're still very encouraged. Obviously right now you do have current headwinds. Obviously given what's happening on the with the conflict and the impact that's going to have on fuel and fuel surcharges and obviously the strong dollar versus the yen and you know, candidly some cheaper alternatives. Having said that, when you look at the investment we've made, if you think about the favorable comps that we have, we think there's an opportunity for certainly Hawaii to be to perform on the higher end of our guidance, if not exceed that. Don't want to get ahead of ourselves, but we're certainly very, very bullish over the intermediate and long term. We still last year generated north of 140 million in EBITDA plus or minus. You think about the highs about 185 million-plus or minus coming out of the pandemic. So with that backdrop and some of those headwinds, we're really not that far. We continue to think about repositioning and get back some of the higher end business and certainly as the convention center is Also done. We also see that as another tailwind for us as we look out in the outer years. So remain very, very encouraged for Hawaii over the intermediate and long term. And as it relates to Waikoloa,, we are just very, very bullish, obviously completing the Palace Tower renovation. If you look at the second half of this year and what we're lapping, we had 20,000 out of order rooms last year. That also is going to, I think, be a favorable dynamic, for us as we finish 26 and look to 27 and beyond.
Peter
Great. Thanks for the detail. And then my follow up. You know, you mentioned group pace improving from the beginning of the year. Group pace X, Hawaii and Miami. Could you highlight maybe some markets that you saw some sequential improvement and the flavor of those bookings, Is it corporate groups in the year, for the year, is it convention blocks? Booking up some details there would be helpful.
Shawn
Thanks for the time. Yeah. Sir, jumping in on this, I would say from what we saw for Q1, we saw some help in New York on group where we had a nurses strike there and ultimately we're at a table to take in some of the temporary labor as a group block there for a few weeks. So that was really helpful. We've seen some of the disruptive forces in Mexico and the Middle east allow some groups to transition or change out and come into markets like Hawaii. So we've seen some benefit there and some of that will be in future periods. So I think those are kind of the bigger things. I think. I think we've seen revaluations across the portfolio for group be stronger where groups have outperformed, their blocks. And so we've seen a little bit of that across the board in both in house group and ultimately convention.
OPERATOR
Thank you. Our next question is from Ari Klein with BMO Capital Markets.
Ari Klein (Equity Analyst)
Thanks. Good morning. Maybe following up on Hawaii first, I guess is that market benefiting from some rotation from Mexico? Maybe it's also benefit Puerto Rico. And then Tom, you kind of touched on this. But if oil prices do materially impact airline prices, do you think that disproportionately impacts Hawaii relative to the rest of your portfolio? Thanks.
Tom Baltimore
Yeah. I mean, look, you have to believe, Ari, I think it's, a fair question. If we get a prolonged supply shock and the conflict continues indefinitely, you certainly have to believe that it's going to have an impact not only on long air travel, but certainly on air travel broadly and certainly affect the sector. So certainly not going to argue that point. I would think as you think about sort of rerouting you know, one of the things that I think would be important to point out is if you think about inbound traffic into the U.S. you know, we still haven't gotten back to pre pandemic. We were about 79 million. I think today we're, you know, somewhere in the 67, 68 million. We're about 86%. And if you think about outbound from the U.S. i mean that had gotten up to about one hundred and ten to one hundred and twelve percent. I think given the conflict, if anything you might see some of that reroute and people start to onshore themselves, if you will, to the US And I think Hawaii could certainly benefit from that as well as certainly the Caribbean and seeing Puerto Rico, benefit from that. So obviously in Mexico I think we are already as an industry seeing sort of rerouting and seeing certainly Florida, the Caribbean, certainly we're seeing that in Puerto Rico,. Puerto Rico's off had a great first quarter. We're very encouraged about second quarter as well and certainly seeing that and those benefits also in California and other parts of the US So to me those are sort of natural and I think we're seeing certainly some evidence of that. If you think about all the various cycles over the last 30 plus years, Hawaii has always been a fan favorite generations families, both domestic and international. We certainly think that there's no risk of that changing materially. The mix may change and we're certainly spending our time as we make these big investments. And you think about Alihi is a great example, a hotel within a hotel and the amount of investment that we're going to make and that really flagship with its own check in its own pool, an elevated experience. We think that just continues to help us as we continue to reposition Hilton Hawaiian Village over the future. We also have the opportunity in Waikoloa just by way of right to certainly continue not only as we renovate it, but certainly add additional keys when market dynamics certainly makes sense for us. So very remain bullish on Hawaii. And as I said, if you look historically from a CAGR, standpoint, it certainly has been among if not one of the top performers certainly over the last 20 plus years. And I think the evidence would support that.
Shawn
Thanks. And then I just had two clarifications on Group 8 for the fourth quarter. I think previously was down 8% and it was going to be a headwind. Just curious with the improvement what that now looks like. And then on 2027 the 5.5% growth in taste, does that also exclude Hawaii and Royal Palm. It does not, I mean, yeah, it includes, it includes Hawaii and Royal Palm. So if you think about 20, 27 just for a second, I mean it's as Sean said in his prepared remarks, I think the core was up, 5.5%. But I mean, you've got New York up mid teens, you've got New Orleans up mid teens, you got Hilton Waikoloa up 17%, Bonnet Creek up mid single digits, Key west up significant north of 20%. So Hilton Hawaiian Village is down in part slightly there. And you also keep in mind that you've got the Convention Center that will be under renovation at that point. But it's broad based and we're very, very bullish as we look out to 27. And I'd just add on Q4, we were thinking about, pace down 8% last time around. We're about down 4% now.
Ari Klein (Equity Analyst)
Thank you.
OPERATOR
Our next question is from Chris Voranka with Deutsche Bank.
Tom Baltimore
Hey, good morning guys. Thanks for taking the question. Morning. So first question, I was hoping maybe we could spend a minute going back to the transactional market and you know, good, good progress so far. The question would kind of be are you seeing a difference in the, in the buyer pool in terms of it broadening out or being more institutional as opposed to local or owner operator? Yeah, Chris, it's a great question. I would say candidly, for these types of assets. And again, as I try to frame for listeners, I mean, we're dealing as you think about the eight for a second. These are smaller assets, not big EBITDA contributors, more attractive, I would say generally to owner operators, entrepreneurial,, could be small PE firms clearly experienced and see value and see the opportunity to reposition in some cases. So no shortage of interested parties, Some markets are more attractive, no secret, Louisiana certainly wouldn't be at the top of anybody's list given some of the challenges there. And I would say Chicago generally a more tougher market. But certainly as you look across in the assets that we're marketing, we've got a healthy buyer pool and interested parties, It's just really working through the process which the last mile is always the toughest. You know, many of these assets were assets that had been in the old Hilton portfolio and they weren't a high priority for obvious reasons. And then after, when Hilton was sold, it wasn't a high priority to that buyer. And you know, the park team has the challenge, we accept the challenge, no excuses, we own it and we've got to make it happen and we're going to do that. And I think we've demonstrated that. Keep in mind, again, the long track record. We've sold assets before the pandemic, during the pandemic, after the pandemic that also included 14 international, you know, all of all of those assets and all of these assets have, you know, some are legal issues, some are joint ventures, some are tax related issues. Whatever it is, we're up to the challenge and we're going to get it solved and you're going to see significant progress this year. Okay, thanks, Tom. As a follow up. Sure. As follow up on Miami on the Royal Palm, I think you guys outlined kind of, you know, EBITDA expectations fully ramped and timing of opening. So my question is when that thing opens and inserts the ramp, how much does the composition of the earnings change to get to your EBITDA target in terms of, you know, this has been a heads and beds strategy. Miami is a high market. But in terms of ancillary and getting the higher rate and maybe some if you're doing a beach club there, things like that. So just maybe how does the composition look versus what it did pre renovation? Thanks. Yeah, I don't have all of that with me other than to just tell you how excited if you think about the ADR pre-renovation,, I think we were $265. I think we've underwritten this at around, I think in the prepared remarks I talked about business that we're already getting at $460 plus or minus. And when you see it and you see the second floor which had had a pool and now it's got outdoor really entertainment space, plus as we're bringing all three of the buildings together, all of the opportunities for an elevated guest experience and we're planning to really tuck underneath. When you think about the Auberge, Rosewood, Amman and Andaz and the Delano and all of those and where they're going to be priced at $600, $700, $800 or more and US underwriting at $400, I personally believe that we'll exceed that. I think there's a significant opportunity for us in just the response that we're getting is really exceeding expectations. So we are very, very bullish and very excited about it. And again, I would draw your attention to, you know, the success we're having at Bonnet Creek. We've taken that already from 60 million in EBITDA to north to north of 100 million. And you think about obviously the success we're having at Casa. I think it really speaks, we believe passionately. And I think the track record is demonstrating that we can generate higher returns on development deals than we can on acquisition deals. And I think it's a real core competency for the team. So we're excited to finish it and then to have an event and have analysts and investors down to see it and to see what an incredible transformation really looks like. So we got to get it done. We know that as I mentioned, we've got north of 400 people on site right now working two shifts and really to get the construction completed and to get as much of the World cup as we can. But also keeping in mind we didn't plan for any benefit in the World cup as part of our guidance as it relates to Miami, Royal Palm. So anything we get we think is going to be incremental gravy. And we'll. We're pretty excited about the challenge and look forward to getting it done. Okay, very good. Thanks, Tom. Thank you.
OPERATOR
Our next question is from David Katz with Jefferies.
David Katz (Equity Analyst)
Hey David, thank you for. Hey, how are you? Thanks for taking my question. So I feel like we always cover the quarters quite well. And I wanted to ask something a little longer term. Ian always reminds us about the pipeline of longer term repositionings. Clearly Royal Palm gets done.
Tom Baltimore
Hawaii, I think you've given pretty good updates on it. Do you have or can you talk about in qualitative terms some of the ones that might be next and how we think about sort of building the portfolio, you know, for the longer term? Yeah, there are a few obviously that come to mind. Obviously Santa Barbara, we believe obviously that there is just significant upside and we have a proposal to add approximately 70 keys, plus or minus. And so we've been working through sort of the entitlement process there. Really excited. And when you think about obviously that's unencumbered and will be unencumbered. We have a great JV partner, but unencumbered in terms of its visibility and views,. So pretty excited about that as we sort of look out, as you think about obviously Hawaii Hilton, Waikoloa, you know, by way of. Right. We have the opportunity to add another 200 keys. You know, I wouldn't say that that would be on the, on the front burner until obviously we see the market recovered enough to where that makes sense. But it certainly is in the, is in the pipeline. We have the ability obviously with our doubletree in Crystal City. Not sure that the market conditions warrant that right now. But when you think about just bullseye real estate and where it sits in the location at the front of the Amazon headquarters 2. Certainly pretty excited about that over the long term. I don't think that that's something intermediate as we sort of look out right now. The one that we continue to noodle and study and we're working on obviously some of the elevator modernization and in New York. But there's no doubt as we think about New York and how to reposition that, that certainly is also a priority and one that certainly needs to be addressed within the portfolio. We know that it's just trying to figure out what's going to make the most sense for that asset over the intermediate and long term. We certainly think that there is significant value as you think about just the sheer scale of continues to certainly improve from a performance standpoint. And we certainly think that there are opportunities, different things that can certainly occur with that asset over time. So just to give you a few that are sort of on the mind and ones that we certainly think about. Okay, thank you. I appreciate it. Gotten a lot done. That's it for me. Okay, thanks David.
OPERATOR
Our next question is from dan Pollitzer with JPMorgan.
Dan Pollitzer
Hey, good afternoon everyone. Thanks for the question. I just had a quick follow up on the second quarter. I think you mentioned revpar in that range, but you know, I think you had a comment on May and how it's tracking. I was wondering if you could just kind of give a little bit more detail what was driving that because I think you kind of characterize it as mixed.
Shawn
Yeah, ultimately to just talk to the second quarter. April is obviously almost finished here. Just kind of looking. You know, we probably have about a week or so of data to get in and kind of get real time. But you know, like I say, tracking flattish might be a little bit better there. Certainly better than expectations. So it kind of continues from Q1. May is. May is the weakest, I think set up right now for the quarter with group pace just down slightly transient. We ultimately need there to make the kind of numbers we're thinking which are kind of a flattish result. But there's some risk there. So we kind of hold that out as the one where we're going to monitor May. But June's really strong. So June makes the quarter. As we look at it right now, pace is up double digits for group. Obviously we've got some things related to World cup and Juneteenth and other activities going on around that month. Certainly we think it's going to be a good performer but altogether just kind of April kind of being flattish, May where we see a little bit of risk and then June strong kind of comes together to be, you know, plus or minus, kind of the midpoint ish of the guide for the year.
Dan Pollitzer
Got it, thanks. So just for my follow up, I know we spent a lot of time talking about the World cup as it relates to Miami, but I guess more broadly, as you think about, you know, where your, where your footprint is and across the portfolio, you know, have you seen kind of a change in terms of the demand, you know, for World cup maybe versus say three or six months ago?
Shawn
Nothing, I mean, nothing dramatic. I think, you know, for us, you know, you put Royal Palm aside, Miami aside. You know, Tom talked to that. You know, really the two big markets for us are New York and Boston. And these are two markets that typically have been 90% occupied during this timeframe of June and July. So it's really kind of a rate play. I think the positioning right now is good in those two markets around the matches. I think it remains to be seen. Clearly, there's a lot of uncertainty around this event, but right now we think we kind of, you know, have a good position. I wouldn't say it's, you know, we would say it's fantastic like people thought coming into the year. But we said about that impact between those two, I would say those two markets considerably make up the most of the impact for the year. For the portfolio, it's probably, you know, we probably said 35 or so plus or minus basis points might come off a little bit from that from our expectations today. But still a demand generator, still a positive, but I wouldn't say it's as dramatic as we thought necessarily as we go into it, we'll see could change. But I think there's a lot of things and a lot of unknowns around
Dan Pollitzer
this event right now. Got it. Thanks so much.
Chris Darling (Equity Analyst)
Thank you. Our next question is from Chris Darling with green. Hi. Thanks. Good morning, Chris. Hey, Tom. Quick one, circling back to Hilton Wine Village, maybe framing the trajectory there in a different way. Can you update us on where your RevPAR index share is today and where you see that metric heading over time as you sort of realize the benefit of the capital you've invest over the last few years?
Shawn
Yeah, the RevPAR Index or so is kind of tracking in that 95 to just around 100 kind of. You know, I think we've seen that last year and this year as we kind of started the year because we've had some of that, you know, work going on at the Rainbow Tower. What we've seen last year is once we got past kind of first quarter, we saw that kind of pick up a little bit more. But you know, in terms of kind of the recovery, where we see it going from there is really kind of back to that historical levels of 110 to 115 range. That's where we kind of were sitting ahead of the renovation and some of the other events like the strike. But I think that's kind of where we want to, you know, ultimately see it come back to. And certainly if we can get there more on a rate profile as well, that's going to certainly help the bottom line, given the renovation work,.
Chris Darling (Equity Analyst)
Okay, understood. And you know, you may not have a perfect answer to this, but just how are you thinking about the timing in terms of that index share is that, you know, a one year timeline, three year timeline, and maybe you can't quantify. Chris, we would hope that just if you look historically and the amount of investment that we've made, the corporate resources that we're devoting in addition to our operating partners at Hilton, we would expect that ramp up to accelerate. And again, once we get the Alihi Tower done, and again, that's somewhat isolated and self contained. So we think that's going to help. And obviously we project, obviously there's going to be minimal disruption. But when you get that done and you've got 80% of the campus done, we think that's just going to really continue to reposition and candidly give us the opportunity to change the customer mix as well. So very excited, remain committed to it. And also when we pay off the mortgage, keep in mind we'll have two marquee assets in Hawaii, completely unencumbered, very rare, you know, most of those resorts and many of the assets owned are under long term ground leases. That's not the case with Park's portfolio. So that's a, a real benefit for us too, and gives us a lot of optionality.
Shawn
All right, appreciate the thoughts.
OPERATOR
That's all from me. Yep, thank you. Our next question is from Cooper Clark with Wells Fargo.
Cooper Clark
Great, thanks for taking the question. Could you just talk us through some of the building blocks for the updated OPEX guide for the full year and what you're expecting to see from a growth perspective on wages and benefits, insurance and utilities.
Shawn
Sure. Like I mentioned before, we have a range right now kind of in the mid 2s to mid 3s. Labor and wage growth should be kind of in that, you know, 5% plus or minus as you kind of go throughout the year on average we've got, you know, some of the, some of the offsets to that. Fundamentally our insurance we do have embedded in our kind of budgets. You know, favorable premium reduction certainly continues to be a good market for the insureds. As we look to renew. We renew on June 1st so we'll get the continuation of our reduction from last year through May and then ultimately pick up for the next seven months what we expect to be a favorable outcome. And we'll give more color to that when we know more in the back part of the year. Real estate taxes,. You know, once again we kind of find ourselves with, you know, probably about 5% increase right now through the budget process, but appeal processes in place and don't haven't fully factored that into any guidance because we just don't know in terms of outcomes, amounts, timing and the like. So I'd say, you know, labor and wages clearly the big driver on the growth side, but certainly some good offsets and continue to kind of work with our asset management teams and the operators to find those meaningful ways to further offsets. Great, thanks. And then a quick follow up. Just curious how much if any impact the Hilton Seattle sale had on the RevPAR guidance raise. RevPAR guidance raise was obviously a growth and it's comparable growth. So we don't see repeat that from the portfolio on a like for like basis. So no impact. Clearly from a nominal Revpar, you're seeing a significant increase.
OPERATOR
Great, thank you. Our next question is from Robin Farley with Umar.
Robin Farley (Equity Analyst)
Great, thank you. Most of my questions have been answered. I wonder if you could just on the. Oh, can you hear me? Okay, again, go ahead. Okay, great. Sir? Yeah, most of my questions have been covered just going back to the Aliyah Tower in Hawaii. I wonder if you could walk us through a little bit about what you're expecting in terms of returns and change in Revpar kind of the way you, you know, I think you've given great color on Royal Palm. Just kind of what you're expecting from that Hawaii tower.
Tom Baltimore
Thanks. Well, we would certainly think again the opportunity is to take it from 351 Keys to probably pick up three keys. Incremental budgeting approximately about $96 million. Any of these transformations we've got to be returns in the 15 to 20%. And again if you think about Bonnet Creek and Key west that we've talked about already confidently exceeding that, the opportunity here is it's really a hotel within a hotel. You've got your own separate check in You've got obviously an embedded pool given its premier location on the Village. Just really, really excited about it and it hasn't had really that sort of upgrade for some time. So we're excited about it. Again, we'll start that later this year and expect to finish that in the middle of next year, plus or minus. And given the experience that we've had, the success that we've had with the Tapa Tower there, obviously the Rainbow Tower, this is really the next in line to really reposition and again take the opportunity to change the customer mix. And we're pretty excited about it. And are there any limits on brand there in terms of do you have to stay with something Hilton branded or could you do something completely different? It would have to stay within the Hilton family. And we've looked at do you want to rename. But the reality, given the fact that Hilton Hawaiian Village is iconic, when you think about that north of 60 years, plus or minus. And Ali'i Tower obviously has its own following. So we think really just the repositioning and the upgrade is. Is really the right answer there. But we'll continue to look and continue to study it. But at this point we've concluded really just the repositioning and the upgrade and we're getting a phenomenal response not only from Tappa, but also the Rainbow Tower and the room product and the quality of the renovation and how thoughtful we were about it. So again, really excited and thank obviously to the point that Sean was making about Revpar Index getting the whole Village back into that 110 and above range we certainly think is within our eyesight and that will be accelerated once we get this final tower done.
Robin Farley (Equity Analyst)
Okay, great. Thank you. Thank you.
OPERATOR
Thank you. There are no further questions at this time. I would like to turn the floor back over to Tom Baltimore for any closing remarks.
Tom Baltimore
Appreciate everybody taking time and look forward to seeing many of you at upcoming meetings. One hosted by Wells Fargo, JP Morgan and of course naread and safe travels and look forward to seeing you all.
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