Hilton Reports Solid Net Growth in Q3

MCLEAN, VA—Hilton Worldwide Holdings Inc. saw a strong quarter with increases in EBITDA, RevPAR and overall net growth, according to a report of its third quarter 2019 results.

Christopher J. Nassetta, president/CEO of Hilton, said, “Despite the overall slowing macro environment, we are pleased to deliver strong bottom-line results for the third quarter. Adjusted EBITDA was toward the high end of guidance and diluted EPS, adjusted for special items, exceeded our expectations, driven by strong net unit growth. Additionally, we continue to achieve market share gains across all brands and regions year to date.”

For the three months ended Sept. 30, 2019, system-wide comparable RevPAR grew, driven by increased occupancy. For the nine months ended Sept. 30, 2019, system-wide comparable RevPAR grew, driven by increases in both ADR and occupancy.

“We continue to prove the strength of our business model,” Nassetta said in an earnings call. He continued, citing solid net growth in spite of industry RevPAR performance. “Uncertainties in the macro environment make it difficult to forecast. At this point, we expect full year 2020 RevPAR growth to be flat or around 1%.”

Management and franchise fee revenues increased 6% during the three months ended Sept. 30, 2019, due to RevPAR growth of 0.3% at comparable managed and franchised hotels. During the nine months ended Sept. 30, 2019, management and franchise fee revenues increased 8% as a result of RevPAR growth at comparable managed and franchised hotels of 1.2%. Additionally, management and franchise fee revenues increased due to increased licensing and other fees and the addition of new properties to Hilton’s portfolio.

Development

In the third quarter of 2019, Hilton opened 118 new hotels totaling approximately 17,400 rooms and achieved net unit growth of 15,600 rooms, contributing to 7% net unit growth from Sept. 30, 2018.

As of Sept. 30, 2019, Hilton’s development pipeline totaled more than 2,530 hotels consisting of nearly 379,000 rooms throughout 111 countries and territories, including 35 countries and territories where Hilton does not currently have any open hotels. Additionally, of the rooms in the development pipeline, 205,000 rooms were located outside the U.S., and 198,000 rooms, or more than half, were under construction.

Hilton remains on track to grow its luxury portfolio by 17% in 2019, with the rebranding of the Conrad New York Midtown and openings in the third quarter of the Conrad Tianjin, the Conrad Shenyang, the Waldorf Astoria Los Cabos Pedregal and the Biltmore Mayfair, LXR.

Additional details:

  • Diluted EPS was $1.00 for the third quarter, an 85% increase from the same period in 2018, and diluted EPS, adjusted for special items, was $1.05, a 13% increase from the same period in 2018
  • Net income for the third quarter was $290 million, a 77% increase from the same period in 2018
  • Adjusted EBITDA for the third quarter was $605 million, a 9% increase from the same period in 2018
  • System-wide comparable RevPAR increased 0.4% on a currency neutral basis for the third quarter from the same period in 2018
  • Approved 25,200 new rooms for development during the third quarter, growing Hilton’s development pipeline to 379,000 rooms as of Sept. 30, 2019
  • Opened 17,400 rooms in the third quarter, contributing to 15,600 net additional rooms, on track to deliver approximately 6.5% net unit growth for the full year
  • Repurchased 4.5 million shares of Hilton common stock during the third quarter, bringing total capital return, including dividends, to approximately $465 million for the quarter and $1.2 billion year to date through September
  • Full year 2019 system-wide comparable RevPAR is expected to increase approximately 1% on a currency neutral basis compared to 2018; full year net income is projected to be between $923 million-$937 million; full year Adjusted EBITDA is projected to be between $2,285 million-$2,305 million
  • Full year 2019 capital return is projected to be between $1.6 million-$1.8 billion
  • For full year 2020, system-wide comparable RevPAR is expected to be flat to 1% growth on a currency neutral basis compared to 2019; net unit growth is expected to be 6-7%

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