03:52 PM EDT, 05/24/2024 (MT Newswires) -- Park Hotels & Resorts ( PK ) is renovating properties to stay competitive calling it the "perpetual arms race" among large group hotel operators, UBS Securities said in a note emailed Friday.

The company, which expects to generate $20 million of incremental earnings before interest, taxes, depreciation and amortization over time, recently completed a $220 million renovation and expansion of their Bonnett Creek complex in Orlando, Florida, with $106 million on maintenance and room upgrades to stay competitive, and the rest on expanding with a fancy new ballroom and meeting space, the note said.

Park Hotels & Resorts ( PK ) realizes that meeting planners prefer venues with completed renovations before booking. Since group events are scheduled years ahead, it expects it will take a few years to reach the incremental $20 million, UBS said.

The company expects double-digit growth year-over-year as it recovers from construction disruptions, aiming to return to 2019 levels this year, UBS added.

"PK sees a long pipeline of [return on investment] projects in their portfolio which they see as higher returning than any acquisition opportunities," UBS said, adding that the company intends to renovate 300 rooms in Hawaii next year, indicating an ongoing annual maintenance capex to stay competitive in the region, which contributed 36% of 2023 EBITDA.

UBS has a neutral rating on Park Hotels & Resorts ( PK ) with a 12-month price target of $18.

Price: 16.10, Change: +0.20, Percent Change: +1.26