Optimistic for Centennial, Hilton Sees Revenue Spike in Q4

MCLEAN, VA—Hilton Worldwide Holdings Inc. has reported its fourth quarter and full year 2018 results. Earnings increased for the brand while the pipeline slowed a bit in Q4.

Among the highlights:

  • Net income was $225 million for the fourth quarter and $769 million for the full year
  • System-wide comparable RevPAR increased 2% and 3%, respectively, for the fourth quarter and full year on a currency neutral basis from the same periods in 2017
  • Diluted EPS was $0.75 for the fourth quarter and $2.50 for the full year, and diluted EPS, adjusted for special items, was $0.79 for the fourth quarter and $2.79 for the full year
  • Adjusted EBITDA was $544 million for the fourth quarter and $2,101 million for the full year, exceeding the high end of guidance
  • Full year 2019 system-wide RevPAR is expected to increase between 1% and 3% on a comparable and currency neutral basis compared to 2018; full year net income is projected to be between $895 million and $931 million; full year Adjusted EBITDA is projected to be between $2,240 million and $2,290 million
  • Capital return is projected to be between $1.3 billion and $1.8 billion
  • Repurchased 23.5 million shares of Hilton common stock during 2018, bringing total capital return, including dividends, to approximately $1.9 billion for the full year

Christopher J. Nassetta, president/CEO of Hilton, said, “We are pleased with our fourth quarter and full year results, exceeding the high end of our guidance for Adjusted EBITDA and diluted EPS, adjusted for special items, driven in part by better than expected net unit growth, up roughly 7% versus the prior year. In particular, we continued to expand our luxury portfolio with several exciting openings and the launch of our luxury collection brand, LXR Hotels & Resorts. We expect continued strength in room growth, combined with RevPAR growth, to provide a good setup for the year ahead.”

  • Approved 24,900 new rooms for development during the fourth quarter, growing Hilton’s development pipeline to more than 364,000 rooms as of Dec. 31, 2018, representing 6% growth from Dec. 31, 2017
  • Opened 22,500 rooms in the fourth quarter, contributing to 57,000 net additional rooms for the full year, which represented approximately 7% net unit growth
  • Launched luxury collection brand, LXR Hotels & Resorts

Nassetta expects Hilton’s global footprint to grow with more than half its pipeline located outside the United States and with 35 new countries represented. “Roughly 30% of our pipeline is located in Asia-Pacific, a region that continues to benefit from powerful long-term secular trends supported by a growing middle class in China,” he said.

However, Hilton’s pipeline decreased in the fourth quarter, particularly. “We came in much harder on deliveries, which was great, which was why net unit growth instead of being in the mid sixes ended up basically at seven,” he said. “And then we always throughout the year in this case, at the end of the year, sort of look at everything…it’s under construction and things that we don’t think are going to really happen over reasonable period of time…we clean those up.”

Nassetta remains hopeful for this year, however, saying he expects sequential improvement year-over-year through 2019. “As we prepare to celebrate our centennial, we are optimistic about what the future holds for Hilton and believe we are well positioned to continue driving growth ahead of industry trends,” he said. “For 2019, we expect RevPAR growth together with strong net unit growth to drive significant free cash flow generation, enabling us to execute on our disciplined capital allocation strategy and to continue delivering returns for shareholders.”

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