Hilton Worldwide Holdings Inc. ("Hilton" or the "Company")
(NYSE: HLT) today reported its third quarter 2023 results.
Highlights include:
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- Diluted EPS was $1.44 for the third quarter, and diluted
EPS, adjusted for special items, was $1.67
- Net income was $379 million for the third quarter
- Adjusted EBITDA was $834 million for the third
quarter
- System-wide comparable RevPAR increased 6.8 percent, on a
currency neutral basis, for the third quarter compared to the same
period in 2022
- System-wide comparable RevPAR increased 11.4 percent, on a
currency neutral basis, for the third quarter compared to the same
period in 2019
- Approved 35,500 new rooms for development during the third
quarter, bringing Hilton's development pipeline to a record 457,300
rooms as of September 30, 2023, representing growth of 4 percent
from June 30, 2023 and 10 percent from September 30, 2022
- Added 15,700 rooms to Hilton's system in the third quarter,
resulting in 14,300 net additional rooms in Hilton's system during
the period
- Repurchased 4.5 million shares of Hilton common stock during
the third quarter, bringing total capital return, including
dividends, to $723 million for the quarter and $1,938 million year
to date through October
- Expanded its brand portfolio of open hotels, with the
openings of the first Spark by Hilton and the first Tempo by Hilton
during the third quarter
- Full year 2023 system-wide RevPAR is expected to increase
between 12.0 percent and 12.5 percent on a comparable and currency
neutral basis compared to 2022; full year net income is projected
to be between $1,375 million and $1,389 million; full year Adjusted
EBITDA is projected to be between $3,025 million and $3,045
million
- Full year 2023 capital return is projected to be between
$2.4 billion and $2.6 billion
Overview
Christopher J. Nassetta, President & Chief Executive Officer
of Hilton, said, "We continued to see strong results during the
third quarter, exceeding our expectations for system-wide RevPAR
growth, with growth across all customer segments. We also continue
to leverage our industry-leading portfolio of brands to drive
further growth of our global network. We believe we have hit an
inflection point and expect a meaningful uptick in openings in the
fourth quarter with continued positive momentum into next year.
With a record number of approvals year-to-date driving the largest
pipeline in our history, we are confident in our ability to
accelerate net unit growth to 5.5 percent to 6.0 percent next
year."
For the three months ended September 30, 2023, system-wide
comparable RevPAR increased 6.8 percent compared to the same period
in 2022 due to increases in both occupancy and ADR, and management
and franchise fee revenues increased 12.3 percent compared to the
same period in 2022. For comparison to pre-pandemic results,
system-wide comparable RevPAR for the three months ended September
30, 2023 increased 11.4 percent compared to the same period in
2019, and management and franchise fee revenues increased 36.4
percent from the same period in 2019.
For the nine months ended September 30, 2023, system-wide
comparable RevPAR increased 14.9 percent compared to the same
period in 2022 due to increases in both occupancy and ADR, and
management and franchise fee revenues increased 18.4 percent
compared to the same period in 2022. For comparison to pre-pandemic
results, system-wide comparable RevPAR for the nine months ended
September 30, 2023 increased 9.7 percent compared to the same
period in 2019, and management and franchise fee revenues increased
31.3 percent from the same period in 2019.
For the three months ended September 30, 2023, diluted EPS was
$1.44 and diluted EPS, adjusted for special items, was $1.67
compared to $1.26 and $1.31, respectively, for the three months
ended September 30, 2022. Net income and Adjusted EBITDA were $379
million and $834 million, respectively, for the three months ended
September 30, 2023, compared to $346 million and $732 million,
respectively, for the three months ended September 30, 2022.
For the nine months ended September 30, 2023, diluted EPS was
$3.74 and diluted EPS, adjusted for special items, was $4.53
compared to $3.32 and $3.31, respectively, for the nine months
ended September 30, 2022. Net income and Adjusted EBITDA were
$1,001 million and $2,286 million, respectively, for the nine
months ended September 30, 2023, compared to $924 million and
$1,859 million, respectively, for the nine months ended September
30, 2022.
Development
In the third quarter of 2023, Hilton opened 107 new hotels
totaling 15,700 rooms and achieved net unit growth of 14,300 rooms.
During the quarter, Hilton had two noteworthy brand debuts,
celebrating the first Spark by Hilton which opened in Mystic,
Connecticut, and the first Tempo by Hilton, which opened in New
York Times Square. This momentum of firsts continued into October
2023 with the announcement of the Waldorf Astoria Residences
Pompano Beach, the brand's first standalone residential
project.
Hilton added 35,500 rooms to the development pipeline during the
third quarter, and, as of September 30, 2023, Hilton's development
pipeline totaled approximately 3,190 hotels representing 457,300
rooms throughout 119 countries and territories, including 29
countries and territories where Hilton did not have any existing
hotels. Additionally, of the rooms in the development pipeline,
223,000 of the rooms were under construction and 257,200 of the
rooms were located outside of the U.S.
Balance Sheet and
Liquidity
As of September 30, 2023, Hilton had $8.8 billion of long-term
debt outstanding, excluding the deduction for deferred financing
costs and discount, with a weighted average interest rate of 4.57
percent. Excluding all finance lease liabilities and other debt of
Hilton's consolidated variable interest entities, Hilton had $8.6
billion of long-term debt outstanding with a weighted average
interest rate of 4.56 percent and no scheduled maturities until May
2025. As of September 30, 2023, no debt amounts were outstanding
under Hilton's $2.0 billion senior secured revolving credit
facility, which had an available borrowing capacity of $1,940
million after considering $60 million of outstanding letters of
credit. Total cash and cash equivalents were $779 million as of
September 30, 2023, including $81 million of restricted cash and
cash equivalents.
During the third quarter of 2023, Hilton repurchased 4.5 million
shares of its common stock at a cost of $684 million and an average
price per share of $151.22. During the nine months ended September
30, 2023, Hilton repurchased 11.0 million shares of its common
stock at an average price per share of $145.16, returning $1.6
billion of capital to shareholders.
In September 2023, Hilton paid a quarterly cash dividend of
$0.15 per share of common stock, for a total of $39 million,
bringing total dividend payments for the year to $120 million. In
October 2023, Hilton's board of directors authorized a regular
quarterly cash dividend of $0.15 per share of common stock to be
paid on or before December 29, 2023 to holders of record of its
common stock as of the close of business on November 17, 2023.
Outlook
Share-based metrics in Hilton's outlook include actual share
repurchases through the third quarter, but do not include the
effect of potential share repurchases thereafter.
Full Year 2023
- System-wide comparable RevPAR, on a currency neutral basis, is
expected to increase between 12.0 percent and 12.5 percent compared
to 2022.
- Diluted EPS is projected to be between $5.17 and $5.22.
- Diluted EPS, adjusted for special items, is projected to be
between $6.04 and $6.09.
- Net income is projected to be between $1,375 million and $1,389
million.
- Adjusted EBITDA is projected to be between $3,025 million and
$3,045 million.
- Contract acquisition costs and capital expenditures, excluding
amounts reimbursed by third parties, are expected to be
approximately $350 million.
- Capital return is projected to be between $2.4 billion and $2.6
billion.
- General and administrative expenses are projected to be between
$390 million and $410 million.
- Net unit growth is expected to be approximately 5.0
percent.
Fourth Quarter 2023
- System-wide comparable RevPAR, on a currency neutral basis, is
expected to increase between 4.5 percent and 5.5 percent compared
to the fourth quarter of 2022.
- Diluted EPS is projected to be between $1.43 and $1.48.
- Diluted EPS, adjusted for special items, is projected to be
between $1.51 and $1.56.
- Net income is projected to be between $374 million and $388
million.
- Adjusted EBITDA is projected to be between $739 million and
$759 million.
Conference Call
Hilton will host a conference call to discuss third quarter of
2023 results on October 25, 2023 at 9:00 a.m. Eastern Time.
Participants may listen to the live webcast by logging on to the
Hilton Investor Relations website at https://ir.hilton.com/events-and-presentations. A
replay and transcript of the webcast will be available within 24
hours after the live event at https://ir.hilton.com/financial-reporting.
Alternatively, participants may listen to the live call by
dialing 1-888-317-6003 in the United States ("U.S.") or
1-412-317-6061 internationally using the conference ID 4158785.
Participants are encouraged to dial into the call or link to the
webcast at least fifteen minutes prior to the scheduled start time.
A telephone replay will be available for seven days following the
call. To access the telephone replay, dial 1-877-344-7529 in the
U.S. or 1-412-317-0088 internationally using the conference ID
5996329.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include, but are not limited to,
statements related to the expectations regarding the performance of
Hilton's business, future financial results, liquidity and capital
resources and other non-historical statements. In some cases, you
can identify these forward-looking statements by the use of words
such as "outlook," "believes," "expects," "forecasts," "potential,"
"continues," "may," "will," "should," "could," "seeks," "projects,"
"predicts," "intends," "plans," "estimates," "anticipates" or the
negative version of these words or other comparable words. Such
forward-looking statements are subject to various risks and
uncertainties including, among others, risks inherent to the
hospitality industry; macroeconomic factors beyond Hilton's
control, such as inflation, changes in interest rates, challenges
due to labor shortages or disputes and supply chain disruptions and
recent events affecting the financial services industry; risks
related to the impact of the COVID-19 pandemic; competition for
hotel guests and management and franchise contracts; risks related
to doing business with third-party hotel owners; performance of
Hilton's information technology systems; growth of reservation
channels outside of Hilton's system; risks of doing business
outside of the U.S.; risks associated with conflicts in Eastern
Europe and the Middle East and other geopolitical events; and
Hilton's indebtedness. Additional factors that could cause Hilton's
results to differ materially from those described in the
forward-looking statements can be found under the section entitled
"Part I—Item 1A. Risk Factors" of Hilton's Annual Report on Form
10-K for the fiscal year ended December 31, 2022, which is filed
with the Securities and Exchange Commission (the "SEC") and is
accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be
important factors that could cause actual outcomes or results to
differ materially from those indicated in these statements. These
factors should not be construed as exhaustive and should be read in
conjunction with the other cautionary statements that are included
in this press release and in Hilton's filings with the SEC. The
Company undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law.
Definitions
See the "Definitions" section for the definition of certain
terms used within this press release, including within the
schedules.
Non-GAAP Financial
Measures
The Company refers to certain financial measures that are not
recognized under U.S. generally accepted accounting principles
("GAAP") in this press release, including: net income, adjusted for
special items; diluted EPS, adjusted for special items; EBITDA;
Adjusted EBITDA; Adjusted EBITDA margin; net debt; and net debt to
Adjusted EBITDA ratio. See the schedules to this press release,
including the "Definitions" section, for additional information and
reconciliations of such non-GAAP financial measures, as well as the
most comparable GAAP financial measures.
About Hilton
Hilton (NYSE: HLT) is a leading global hospitality company with
a portfolio of 22 world-class brands comprising nearly 7,400
properties and more than 1.1 million rooms, in 124 countries and
territories. Dedicated to fulfilling its founding vision to fill
the earth with the light and warmth of hospitality, Hilton has
welcomed more than 3 billion guests in its more than 100-year
history, earned a top spot on Fortune's 100 Best Companies to Work
For list and been recognized as a global leader on the Dow Jones
Sustainability Indices for six consecutive years. Hilton has
introduced several industry-leading technology enhancements to
improve the guest experience, including Digital Key Share,
automated complimentary room upgrades and the ability to book
confirmed connecting rooms. Through the award-winning guest loyalty
program Hilton Honors, the more than 173 million members who book
directly with Hilton can earn Points for hotel stays and
experiences money can't buy. With the free Hilton Honors app,
guests can book their stay, select their room, check in, unlock
their door with a Digital Key and check out, all from their
smartphone. Visit stories.hilton.com
for more information, and connect with Hilton on facebook.com/hiltonnewsroom, twitter.com/hiltonnewsroom, linkedin.com/company/hilton, instagram.com/hiltonnewsroom and youtube.com/hiltonnewsroom.
HILTON WORLDWIDE HOLDINGS
INC.
EARNINGS RELEASE
SCHEDULES
TABLE OF CONTENTS
Condensed Consolidated Statements of
Operations
Comparable and Currency Neutral
System-Wide Hotel Operating Statistics
Property Summary
Capital Expenditures and Contract
Acquisition Costs
Reconciliations of Non-GAAP Financial
Measures
Definitions
HILTON WORLDWIDE HOLDINGS
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in millions, except per share
data)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Revenues
Franchise and licensing fees
$
643
$
573
$
1,769
$
1,531
Base and other management fees
81
76
247
206
Incentive management fees
63
52
197
132
Owned and leased hotels
335
295
924
727
Other revenues
45
28
126
71
1,167
1,024
3,263
2,667
Other revenues from managed and franchised
properties
1,506
1,344
4,363
3,662
Total revenues
2,673
2,368
7,626
6,329
Expenses
Owned and leased hotels
301
263
849
705
Depreciation and amortization
40
39
114
123
General and administrative
96
93
298
287
Other expenses
26
13
80
35
463
408
1,341
1,150
Other expenses from managed and franchised
properties
1,557
1,337
4,460
3,589
Total expenses
2,020
1,745
5,801
4,739
Operating income
653
623
1,825
1,590
Interest expense
(113
)
(106
)
(340
)
(295
)
Gain (loss) on foreign currency
transactions
(7
)
—
(13
)
4
Loss on investments in unconsolidated
affiliate
—
—
(92
)
—
Other non-operating income, net
15
10
38
32
Income before income taxes
548
527
1,418
1,331
Income tax expense
(169
)
(181
)
(417
)
(407
)
Net income
379
346
1,001
924
Net loss (income) attributable to
noncontrolling interests
(2
)
1
(7
)
3
Net income attributable to Hilton
stockholders
$
377
$
347
$
994
$
927
Weighted average shares
outstanding:
Basic
260
273
264
277
Diluted
262
275
266
279
Earnings per share:
Basic
$
1.45
$
1.27
$
3.77
$
3.35
Diluted
$
1.44
$
1.26
$
3.74
$
3.32
Cash dividends declared per
share
$
0.15
$
0.15
$
0.45
$
0.30
HILTON WORLDWIDE HOLDINGS
INC.
COMPARABLE AND CURRENCY
NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS
BY REGION, BRAND AND
SEGMENT
(unaudited)
Three Months Ended September
30, 2023
Occupancy
ADR
RevPAR
2023
vs. 2022
2023
vs. 2022
2023
vs. 2022
Region
U.S.
75.3
%
0.6
%
pts.
$
167.73
2.2
%
$
126.37
3.0
%
Americas (excluding U.S.)
73.2
1.7
158.53
8.0
116.06
10.6
Europe
79.0
1.4
179.00
8.8
141.44
10.8
Middle East & Africa
70.0
5.3
143.00
9.9
100.07
19.0
Asia Pacific
74.4
11.7
112.54
17.4
83.76
39.3
Brand
Waldorf Astoria Hotels & Resorts
65.0
%
8.1
%
pts.
$
461.09
(4.0
)%
$
299.65
9.7
%
LXR Hotels & Resorts
48.0
(2.8
)
556.93
21.9
267.55
15.1
Conrad Hotels & Resorts
76.2
11.6
279.26
8.7
212.82
28.3
Canopy by Hilton
72.4
5.4
216.08
1.5
156.38
9.7
Hilton Hotels & Resorts
73.3
4.6
190.30
4.6
139.42
11.6
Curio Collection by Hilton
71.4
4.1
222.24
1.4
158.57
7.5
DoubleTree by Hilton
72.2
2.5
144.65
3.5
104.48
7.2
Tapestry Collection by Hilton
72.9
2.8
182.52
4.0
133.06
8.2
Embassy Suites by Hilton
75.4
1.9
184.67
2.4
139.28
5.1
Hilton Garden Inn
74.4
1.0
149.96
2.6
111.53
4.0
Hampton by Hilton
76.5
1.3
136.74
2.5
104.54
4.2
Tru by Hilton
74.6
(0.2
)
133.64
1.9
99.64
1.6
Homewood Suites by Hilton
82.1
(0.3
)
162.74
3.0
133.67
2.7
Home2 Suites by Hilton
81.5
0.4
143.42
2.9
116.87
3.5
Segment
Management and franchise
75.3
%
2.1
%
pts.
$
159.99
3.4
%
$
120.39
6.4
%
Ownership(1)
78.1
7.9
237.54
10.2
185.49
22.6
System-wide
75.3
%
2.2
%
pts.
$
161.20
3.6
%
$
121.37
6.8
%
HILTON WORLDWIDE HOLDINGS
INC.
COMPARABLE AND CURRENCY
NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS
BY REGION, BRAND AND
SEGMENT
(unaudited)
Nine Months Ended September
30,
Occupancy
ADR
RevPAR
2023
vs. 2022
2023
vs. 2022
2023
vs. 2022
Region
U.S.
73.4
%
2.9
%
pts.
$
165.90
4.7
%
$
121.83
9.0
%
Americas (excluding U.S.)
70.1
7.0
153.78
13.3
107.74
25.9
Europe
72.3
6.9
169.79
14.8
122.75
27.0
Middle East & Africa
70.8
7.1
165.24
15.4
117.04
28.2
Asia Pacific
70.1
18.9
113.56
21.0
79.59
65.5
Brand
Waldorf Astoria Hotels & Resorts
65.1
%
11.6
%
pts.
$
513.06
(3.7
)%
$
333.78
17.3
%
LXR Hotels & Resorts
47.6
1.4
511.92
10.3
243.66
13.7
Conrad Hotels & Resorts
72.8
15.5
287.20
14.3
209.04
45.2
Canopy by Hilton
70.1
9.9
218.60
6.1
153.27
23.5
Hilton Hotels & Resorts
70.0
9.5
190.71
7.6
133.50
24.5
Curio Collection by Hilton
70.0
8.2
228.70
2.2
160.20
15.8
DoubleTree by Hilton
69.2
5.7
143.10
6.2
99.05
15.7
Tapestry Collection by Hilton
69.3
4.5
178.82
6.9
123.94
14.2
Embassy Suites by Hilton
73.6
4.7
183.42
4.8
134.98
11.9
Hilton Garden Inn
72.0
4.0
147.30
5.4
106.09
11.6
Hampton by Hilton
73.7
4.5
132.84
3.9
97.84
10.5
Tru by Hilton
72.7
2.3
129.76
3.7
94.36
7.0
Homewood Suites by Hilton
80.4
0.8
158.78
5.9
127.59
7.0
Home2 Suites by Hilton
80.1
1.7
142.07
5.5
113.84
7.8
Segment
Management and franchise
72.7
%
5.3
%
pts.
$
158.49
6.0
%
$
115.22
14.4
%
Ownership(1)
72.4
15.2
231.99
15.4
168.05
46.1
System-wide
72.7
%
5.5
%
pts.
$
159.59
6.3
%
$
116.01
14.9
%
____________
(1)
Includes hotels owned or leased
by entities in which Hilton owns a noncontrolling financial
interest.
HILTON WORLDWIDE HOLDINGS
INC.
PROPERTY SUMMARY
As of September 30,
2023
Owned / Leased(1)
Managed
Franchised
Total
Properties
Rooms
Properties
Rooms
Properties
Rooms
Properties
Rooms
Waldorf Astoria Hotels &
Resorts
U.S.
—
—
12
4,598
—
—
12
4,598
Americas (excluding U.S.)
—
—
3
422
—
—
3
422
Europe
2
463
4
898
—
—
6
1,361
Middle East & Africa
—
—
7
1,867
—
—
7
1,867
Asia Pacific
—
—
6
1,259
—
—
6
1,259
LXR Hotels & Resorts
U.S.
—
—
—
—
3
522
3
522
Americas (excluding U.S.)
—
—
—
—
1
76
1
76
Europe
—
—
1
70
1
307
2
377
Middle East & Africa
—
—
2
331
3
282
5
613
Asia Pacific
—
—
—
—
1
114
1
114
Conrad Hotels & Resorts
U.S.
—
—
6
2,227
2
1,730
8
3,957
Americas (excluding U.S.)
—
—
3
787
—
—
3
787
Europe
—
—
4
1,155
1
107
5
1,262
Middle East & Africa
1
614
4
1,689
—
—
5
2,303
Asia Pacific
1
164
24
7,388
1
659
26
8,211
Canopy by Hilton
U.S.
—
—
—
—
26
4,490
26
4,490
Americas (excluding U.S.)
—
—
2
272
1
184
3
456
Europe
—
—
1
123
5
1,058
6
1,181
Middle East & Africa
—
—
1
200
—
—
1
200
Asia Pacific
—
—
4
613
—
—
4
613
Signia by Hilton
U.S.
—
—
2
1,814
—
—
2
1,814
Hilton Hotels & Resorts
U.S.
—
—
58
43,910
188
58,973
246
102,883
Americas (excluding U.S.)
1
405
30
11,218
23
6,788
54
18,411
Europe
37
11,140
43
14,792
44
11,508
124
37,440
Middle East & Africa
4
1,705
39
13,387
5
1,916
48
17,008
Asia Pacific
5
2,999
116
39,790
10
3,897
131
46,686
Curio Collection by Hilton
U.S.
—
—
11
4,979
67
13,405
78
18,384
Americas (excluding U.S.)
—
—
2
99
19
2,431
21
2,530
Europe
—
—
6
516
30
4,024
36
4,540
Middle East & Africa
—
—
4
741
2
557
6
1,298
Asia Pacific
—
—
4
773
2
248
6
1,021
DoubleTree by Hilton
U.S.
—
—
31
10,092
349
79,228
380
89,320
Americas (excluding U.S.)
—
—
3
587
38
7,695
41
8,282
Europe
—
—
17
4,211
110
19,247
127
23,458
Middle East & Africa
—
—
19
5,242
6
1,118
25
6,360
Asia Pacific
—
—
87
23,043
9
2,245
96
25,288
HILTON WORLDWIDE HOLDINGS
INC.
PROPERTY SUMMARY
(continued)
As of September 30,
2023
Owned / Leased(1)
Managed
Franchised
Total
Properties
Rooms
Properties
Rooms
Properties
Rooms
Properties
Rooms
Tapestry Collection by Hilton
U.S.
—
—
1
124
92
10,922
93
11,046
Americas (excluding U.S.)
—
—
1
138
9
1,122
10
1,260
Europe
—
—
—
—
10
606
10
606
Middle East & Africa
—
—
1
50
—
—
1
50
Asia Pacific
—
—
2
382
1
175
3
557
Embassy Suites by Hilton
U.S.
—
—
37
9,942
219
49,229
256
59,171
Americas (excluding U.S.)
—
—
2
504
7
1,829
9
2,333
Middle East & Africa
—
—
—
—
1
151
1
151
Tempo by Hilton
U.S.
—
—
1
661
—
—
1
661
Motto by Hilton
U.S.
—
—
—
—
4
1,271
4
1,271
Americas (excluding U.S.)
—
—
—
—
1
115
1
115
Europe
—
—
—
—
1
108
1
108
Hilton Garden Inn
U.S.
—
—
6
689
738
101,727
744
102,416
Americas (excluding U.S.)
—
—
13
1,968
53
7,952
66
9,920
Europe
—
—
13
2,533
69
10,968
82
13,501
Middle East & Africa
—
—
17
3,555
3
474
20
4,029
Asia Pacific
—
—
67
14,334
9
1,502
76
15,836
Hampton by Hilton
U.S.
—
—
20
2,622
2,333
231,253
2,353
233,875
Americas (excluding U.S.)
—
—
11
1,442
120
14,602
131
16,044
Europe
—
—
18
3,031
114
17,951
132
20,982
Middle East & Africa
—
—
5
1,459
—
—
5
1,459
Asia Pacific
—
—
—
—
326
51,919
326
51,919
Tru by Hilton
U.S.
—
—
—
—
242
23,640
242
23,640
Americas (excluding U.S.)
—
—
—
—
5
574
5
574
Spark by Hilton
U.S.
—
—
—
—
1
120
1
120
Homewood Suites by Hilton
U.S.
—
—
8
999
504
57,722
512
58,721
Americas (excluding U.S.)
—
—
3
406
24
2,688
27
3,094
Home2 Suites by Hilton
U.S.
—
—
2
210
585
61,239
587
61,449
Americas (excluding U.S.)
—
—
—
—
9
951
9
951
Asia Pacific
—
—
—
—
39
5,791
39
5,791
Other
—
—
3
1,322
8
2,146
11
3,468
Total hotels
51
17,490
787
245,464
6,474
881,556
7,312
1,144,510
Hilton Grand Vacations(2)
—
—
—
—
87
15,275
87
15,275
Total system
51
17,490
787
245,464
6,561
896,831
7,399
1,159,785
____________
(1)
Includes hotels owned or leased
by entities in which Hilton owns a noncontrolling financial
interest.
(2)
Includes properties under our
timeshare brands including Hilton Club, Hilton Grand Vacations Club
and Hilton Vacation Club.
HILTON WORLDWIDE HOLDINGS
INC.
CAPITAL EXPENDITURES AND
CONTRACT ACQUISITION COSTS
(dollars in millions)
(unaudited)
Three Months Ended
September 30,
Increase / (Decrease)
2023
2022
$
%
Capital expenditures for property and
equipment(2)
$
35
$
8
27
NM(1)
Capitalized software costs(3)
26
18
8
44.4
Total capital expenditures
61
26
35
NM(1)
Contract acquisition costs, net of
refunds
25
20
5
25.0
Total capital expenditures and contract
acquisition costs
$
86
$
46
40
87.0
Nine Months Ended
September 30,
Increase / (Decrease)
2023
2022
$
%
Capital expenditures for property and
equipment(2)
$
109
$
19
90
NM(1)
Capitalized software costs(3)
68
43
25
58.1
Total capital expenditures
177
62
115
NM(1)
Contract acquisition costs, net of
refunds(4)
164
61
103
NM(1)
Total capital expenditures and contract
acquisition costs
$
341
$
123
218
NM(1)
____________
(1)
Fluctuation in terms of
percentage change is not meaningful.
(2)
Represents expenditures for
hotels, corporate and other property and equipment, which include
amounts reimbursed by third parties of $10 million and less than $1
million for the three months ended September 30, 2023 and 2022,
respectively, and $14 million and $2 million for the nine months
ended September 30, 2023 and 2022, respectively. Excludes
expenditures for FF&E replacement reserves of $17 million and
$13 million for the three months ended September 30, 2023 and 2022,
respectively, and $40 million for both the nine months ended
September 30, 2023 and 2022.
(3)
Includes $24 million and $17
million of expenditures that were reimbursed to us by third parties
for the three months ended September 30, 2023 and 2022,
respectively, and $63 million and $40 million for the nine months
ended September 30, 2023 and 2022, respectively.
(4)
The increases during the periods
were primarily due to the timing of certain strategic hotel
developments supporting Hilton's growth.
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
NET INCOME AND DILUTED EPS,
ADJUSTED FOR SPECIAL ITEMS
(in millions, except per share
data)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net income attributable to Hilton
stockholders, as reported
$
377
$
347
$
994
$
927
Diluted EPS, as reported
$
1.44
$
1.26
$
3.74
$
3.32
Special items:
Net other expenses (revenues) from managed
and franchised properties
$
51
$
(7
)
$
97
$
(73
)
Purchase accounting amortization(1)
12
11
34
34
Loss on investments in unconsolidated
affiliate(2)
—
—
92
—
FF&E replacement reserves
17
13
40
40
Tax-related adjustments(3)
2
—
(6
)
—
Other adjustments(4)
(3
)
1
6
(9
)
Total special items before taxes
79
18
263
(8
)
Income tax benefit (expense) on special
items
(17
)
(4
)
(53
)
4
Total special items after taxes
$
62
$
14
$
210
$
(4
)
Net income, adjusted for special items
$
439
$
361
$
1,204
$
923
Diluted EPS, adjusted for special
items
$
1.67
$
1.31
$
4.53
$
3.31
____________
(1)
Amounts represent the
amortization expense related to finite-lived intangible assets that
were recorded at fair value in 2007 when the Company became a
wholly owned subsidiary of affiliates of Blackstone Inc. The
majority of the related assets will become fully amortized during
2023.
(2)
Amount includes losses recognized
related to equity and debt financing that Hilton had previously
provided to an unconsolidated affiliate with underlying investments
in hotels that Hilton currently or in the future will manage or
franchise.
(3)
Amounts include income tax
expenses (benefits) related to the enactment of new tax laws and
certain changes in unrecognized tax benefits.
(4)
Amounts for the three months
ended September 30, 2023 and nine months ended September 30, 2023
and 2022 include net losses (gains) related to certain of Hilton's
investments in unconsolidated affiliates, other than the loss
included separately in "loss on investments in unconsolidated
affiliate." The three and nine months ended September 30, 2023 also
include expected future credit losses related to debt guarantees
for hotels that Hilton manages. All of these amounts were included
in other non-operating income, net in Hilton's unaudited condensed
consolidated statements of operations.
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
NET INCOME MARGIN AND
ADJUSTED EBITDA AND ADJUSTED
EBITDA MARGIN
(dollars in millions)
(unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Net income
$
379
$
346
$
1,001
$
924
Interest expense
113
106
340
295
Income tax expense
169
181
417
407
Depreciation and amortization expenses
40
39
114
123
EBITDA
701
672
1,872
1,749
Loss (gain) on foreign currency
transactions
7
—
13
(4
)
Loss on investments in unconsolidated
affiliate(1)
—
—
92
—
FF&E replacement reserves
17
13
40
40
Share-based compensation expense
48
42
133
126
Amortization of contract acquisition
costs
11
10
32
28
Net other expenses (revenues) from managed
and franchised properties
51
(7
)
97
(73
)
Other adjustments(2)
(1
)
2
7
(7
)
Adjusted EBITDA
$
834
$
732
$
2,286
$
1,859
____________
(1)
Amount includes losses recognized
related to equity and debt financing that Hilton had previously
provided to an unconsolidated affiliate with underlying investments
in hotels that Hilton currently or in the future will manage or
franchise.
(2)
Amounts for the three months
ended September 30, 2023 and nine months ended September 30, 2023
and 2022 include net losses (gains) related to certain of Hilton's
investments in unconsolidated affiliates, other than the loss
included separately in "loss on investments in unconsolidated
affiliate." All periods include severance and other items.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Total revenues, as reported
$
2,673
$
2,368
$
7,626
$
6,329
Add: amortization of contract acquisition
costs
11
10
32
28
Less: other revenues from managed and
franchised properties
(1,506
)
(1,344
)
(4,363
)
(3,662
)
Total revenues, as adjusted
$
1,178
$
1,034
$
3,295
$
2,695
Net income
$
379
$
346
$
1,001
$
924
Net income margin
14.2
%
14.6
%
13.1
%
14.6
%
Adjusted EBITDA
$
834
$
732
$
2,286
$
1,859
Adjusted EBITDA margin
70.8
%
70.8
%
69.4
%
69.0
%
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
LONG-TERM DEBT TO NET INCOME
RATIO AND
NET DEBT AND NET DEBT TO
ADJUSTED EBITDA RATIO
(dollars in millions)
(unaudited)
September 30,
December 31,
2023
2022
Long-term debt, including current
maturities
$
8,719
$
8,747
Add: unamortized deferred financing costs
and discount
64
73
Long-term debt, including current
maturities and excluding the deduction for unamortized deferred
financing costs and discount
8,783
8,820
Less: cash and cash equivalents
(698
)
(1,209
)
Less: restricted cash and cash
equivalents
(81
)
(77
)
Net debt
$
8,004
$
7,534
Nine Months Ended
Year Ended
TTM Ended
September 30,
December 31,
September 30,
2023
2022
2022
2023
Net income
$
1,001
$
924
$
1,257
$
1,334
Interest expense
340
295
415
460
Income tax expense
417
407
477
487
Depreciation and amortization expenses
114
123
162
153
EBITDA
1,872
1,749
2,311
2,434
Loss (gain) on foreign currency
transactions
13
(4
)
(5
)
12
Loss on investments in unconsolidated
affiliate(1)
92
—
—
92
FF&E replacement reserves
40
40
54
54
Share-based compensation expense
133
126
162
169
Amortization of contract acquisition
costs
32
28
38
42
Net other expenses (revenues) from managed
and franchised properties
97
(73
)
39
209
Other adjustments(2)
7
(7
)
—
14
Adjusted EBITDA
$
2,286
$
1,859
$
2,599
$
3,026
Long-term debt
$
8,719
Long-term debt to net income ratio
6.5
Net debt
$
8,004
Net debt to Adjusted EBITDA ratio
2.6
____________
(1)
Amount includes losses recognized
related to equity and debt financing that Hilton had previously
provided to an unconsolidated affiliate with underlying investments
in hotels that Hilton currently or in the future will manage or
franchise.
(2)
Amount for the year ended
December 31, 2022 was less than $1 million. All periods include net
losses (gains) related to certain of Hilton's investments in
unconsolidated affiliates, other than the loss included separately
in "loss on investments in unconsolidated affiliate," severance and
other items.
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
OUTLOOK: NET INCOME AND
DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS
(in millions, except per share
data)
(unaudited)
Three Months Ending
December 31, 2023
Low Case
High Case
Net income attributable to Hilton
stockholders
$
371
$
385
Diluted EPS(1)
$
1.43
$
1.48
Special items(2):
Purchase accounting amortization
$
3
$
3
FF&E replacement reserves
21
21
Total special items before taxes
24
24
Income tax expense on special items
(3
)
(3
)
Total special items after taxes
$
21
$
21
Net income, adjusted for special items
$
392
$
406
Diluted EPS, adjusted for special
items(1)
$
1.51
$
1.56
Year Ending
December 31, 2023
Low Case
High Case
Net income attributable to Hilton
stockholders
$
1,365
$
1,379
Diluted EPS(1)
$
5.17
$
5.22
Special items(2):
Net other expenses from managed and
franchised properties
$
97
$
97
Purchase accounting amortization
37
37
Loss on investments in unconsolidated
affiliate
92
92
FF&E replacement reserves
61
61
Tax-related adjustments
(6
)
(6
)
Other adjustments
6
6
Total special items before taxes
287
287
Income tax expense on special items
(56
)
(56
)
Total special items after taxes
$
231
$
231
Net income, adjusted for special items
$
1,596
$
1,610
Diluted EPS, adjusted for special
items(1)
$
6.04
$
6.09
____________
(1)
Does not include the effect of
potential share repurchases.
(2)
See "—Net Income and Diluted EPS,
Adjusted for Special Items" for details of these special items.
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
OUTLOOK: ADJUSTED
EBITDA
(in millions)
(unaudited)
Three Months Ending
December 31, 2023
Low Case
High Case
Net income
$
374
$
388
Interest expense
118
118
Income tax expense
147
153
Depreciation and amortization expenses
32
32
EBITDA
671
691
FF&E replacement reserves
21
21
Share-based compensation expense
31
31
Amortization of contract acquisition
costs
11
11
Other adjustments
5
5
Adjusted EBITDA
$
739
$
759
Year Ending
December 31, 2023
Low Case
High Case
Net income
$
1,375
$
1,389
Interest expense
458
458
Income tax expense
564
570
Depreciation and amortization expenses
146
146
EBITDA
2,543
2,563
Loss on foreign currency transactions
13
13
Loss on investments in unconsolidated
affiliate
92
92
FF&E replacement reserves
61
61
Share-based compensation expense
164
164
Amortization of contract acquisition
costs
43
43
Net other expenses from managed and
franchised properties
97
97
Other adjustments(1)
12
12
Adjusted EBITDA
$
3,025
$
3,045
____________
(1)
Includes adjustments for net
losses (gains) related to certain of Hilton's investments in
unconsolidated affiliates, other than the loss included separately
in "loss on investments in unconsolidated affiliate," severance and
other items. See "—Net Income Margin and Adjusted EBITDA and
Adjusted EBITDA Margin" for details of these adjustments.
HILTON WORLDWIDE HOLDINGS INC.
DEFINITIONS
Trailing Twelve Month Financial
Information
This press release includes certain unaudited financial
information for the trailing twelve months ("TTM") ended September
30, 2023, which is calculated as the nine months ended September
30, 2023 plus the year ended December 31, 2022 less the nine months
ended September 30, 2022. This presentation is not in accordance
with GAAP. However, the Company believes that this presentation
provides useful information to investors regarding its recent
financial performance, and it views this presentation of the four
most recently completed fiscal quarters as a key measurement period
for investors to assess its historical results. In addition, the
Company's management uses TTM information to evaluate the Company's
financial performance for ongoing planning purposes.
Net Income (Loss), Adjusted for Special
Items, and Diluted EPS, Adjusted for Special Items
Net income (loss), adjusted for special items, and diluted
earnings (loss) per share ("EPS"), adjusted for special items, are
not recognized terms under GAAP and should not be considered as
alternatives to net income (loss), diluted EPS or other measures of
financial performance or liquidity derived in accordance with GAAP.
In addition, the Company's definition of net income (loss),
adjusted for special items, and diluted EPS, adjusted for special
items, may not be comparable to similarly titled measures of other
companies.
Net income (loss), adjusted for special items, and diluted EPS,
adjusted for special items, are included to assist investors in
performing meaningful comparisons of past, present and future
operating results and as a means of highlighting the results of the
Company's ongoing operations.
EBITDA, Adjusted EBITDA, Net Income (Loss)
Margin and Adjusted EBITDA Margin
EBITDA, presented herein, reflects net income (loss), excluding
interest expense, a provision for income tax benefit (expense) and
depreciation and amortization expenses. Adjusted EBITDA, presented
herein, is calculated as EBITDA, as previously defined, further
adjusted to exclude certain items, including gains, losses,
revenues and expenses in connection with: (i) asset dispositions
for both consolidated and unconsolidated investments; (ii) foreign
currency transactions; (iii) debt restructurings and retirements;
(iv) furniture, fixtures and equipment ("FF&E") replacement
reserves required under certain lease agreements; (v) share-based
compensation; (vi) reorganization, severance, relocation and other
expenses; (vii) non-cash impairment; (viii) amortization of
contract acquisition costs; (ix) the net effect of our cost
reimbursement revenues and expenses included in other revenues and
other expenses from managed and franchised properties; and (x)
other items.
Net income (loss) margin represents net income (loss) as a
percentage of total revenues. Adjusted EBITDA margin represents
Adjusted EBITDA as a percentage of total revenues, adjusted to
exclude the amortization of contract acquisition costs and other
revenues from managed and franchised properties.
The Company believes that EBITDA, Adjusted EBITDA and Adjusted
EBITDA margin provide useful information to investors about the
Company's financial condition and results of operations for the
following reasons: (i) these measures are among the measures used
by the Company's management team to evaluate its operating
performance and make day-to-day operating decisions and (ii) these
measures are frequently used by securities analysts, investors and
other interested parties as a common performance measure to compare
results or estimate valuations across companies in the industry.
Additionally, these measures exclude certain items that can vary
widely across different industries and among competitors within the
Company's industry. For instance, interest expense and income taxes
are dependent on company specifics, including, among other things,
capital structure and operating jurisdictions, respectively, and,
therefore, could vary significantly across companies. Depreciation
and amortization expenses, as well as amortization of contract
acquisition costs, are dependent upon company policies, including
the method of acquiring and depreciating assets and the useful
lives that are assigned to those depreciating or amortizing assets
for accounting purposes. For Adjusted EBITDA, the Company also
excludes items such as: (i) FF&E replacement reserves for
leased hotels to be consistent with the treatment of capital
expenditures for property and equipment, where depreciation of such
capitalized assets is reported within depreciation and amortization
expenses; (ii) share-based compensation, as this could vary widely
among companies due to the different plans in place and the usage
of them; and (iii) other items that are not reflective of the
Company's operating performance, such as amounts related to debt
restructurings and debt retirements and reorganization and related
severance costs, to enhance period-over-period comparisons of the
Company's ongoing operations. Further, Adjusted EBITDA excludes the
net effect of the Company's cost reimbursement revenues and
expenses, as the Company contractually does not operate the related
programs to generate a profit over the terms of the respective
contracts. The direct reimbursements from hotel owners are
typically reimbursed as the costs are incurred and have no net
effect on net income (loss). The fees the Company recognizes
related to the indirect reimbursements may be recognized before or
after the related expenses are incurred, causing timing differences
between the costs incurred and the related reimbursement from hotel
owners, with the net effect impacting net income (loss) in the
reporting period. However, the expenses incurred related to the
indirect reimbursements are expected to equal the revenues earned
from the indirect reimbursements over time, such that over time
there is neither a positive nor negative impact on the Company's
results.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not
recognized terms under GAAP and should not be considered as
alternatives, either in isolation or as a substitute, for net
income (loss), net income (loss) margin or other measures of
financial performance or liquidity, including cash flows, derived
in accordance with GAAP. Further, EBITDA, Adjusted EBITDA and
Adjusted EBITDA margin have limitations as analytical tools, may
not be comparable to similarly titled measures of other companies
and should not be considered as other methods of analyzing the
Company's results as reported under GAAP.
Net Debt, Long-Term Debt to Net Income
Ratio and Net Debt to Adjusted EBITDA Ratio
Long-term debt to net income ratio is calculated as the ratio of
Hilton's long-term debt, including current maturities, to net
income. Net debt is calculated as: long-term debt, including
current maturities and excluding the deduction for unamortized
deferred financing costs and discount; reduced by: (i) cash and
cash equivalents and (ii) restricted cash and cash equivalents. Net
debt to Adjusted EBITDA ratio is calculated as the ratio of
Hilton's net debt to Adjusted EBITDA. Net debt and net debt to
Adjusted EBITDA ratio, presented herein, are non-GAAP financial
measures that the Company uses to evaluate its financial
leverage.
Net debt should not be considered as a substitute to debt
presented in accordance with GAAP, and net debt to Adjusted EBITDA
ratio should not be considered as an alternative to measures of
financial condition derived in accordance with GAAP. Net debt and
net debt to Adjusted EBITDA ratio may not be comparable to
similarly titled measures of other companies. The Company believes
net debt and net debt to Adjusted EBITDA ratio provide useful
information about its indebtedness to investors as they are
frequently used by securities analysts, investors and other
interested parties to compare the indebtedness between
companies.
Comparable Hotels
The Company defines comparable hotels as those that: (i) were
active and operating in the Company's system for at least one full
calendar year as of the end of the current period, and open January
1st of the previous year; (ii) have not undergone a change in brand
or ownership type during the current or comparable periods
reported; and (iii) have not undergone large-scale capital
projects, sustained substantial property damage, encountered
business interruption or for which comparable results were not
available. Of the 7,312 hotels in the Company's system as of
September 30, 2023, 5,964 hotels were classified as comparable
hotels. The 1,348 non-comparable hotels as of September 30, 2023
included 346 hotels, or less than five percent of the total hotels
in the Company's system, that were removed from the comparable
group during the last twelve months because they underwent
large-scale capital projects, sustained substantial property
damage, encountered business interruption or comparable results
were otherwise not available.
Occupancy
Occupancy represents the total number of room nights sold
divided by the total number of room nights available at a hotel or
group of hotels for a given period. Occupancy measures the
utilization of available capacity at a hotel or group of hotels.
Management uses occupancy to gauge demand at a specific hotel or
group of hotels in a given period. Occupancy levels also help
management determine achievable Average Daily Rate ("ADR") pricing
levels as demand for hotel rooms increases or decreases.
ADR
ADR represents hotel room revenue divided by the total number of
room nights sold for a given period. ADR measures the average room
price attained by a hotel, and ADR trends provide useful
information concerning the pricing environment and the nature of
the customer base of a hotel or group of hotels. ADR is a commonly
used performance measure in the industry, and management uses ADR
to assess pricing levels that the Company is able to generate by
type of customer, as changes in rates charged to customers have
different effects on overall revenues and incremental profitability
than changes in occupancy, as described above.
Revenue per Available Room
("RevPAR")
RevPAR is calculated by dividing hotel room revenue by the total
number of room nights available to guests for a given period.
Management considers RevPAR to be a meaningful indicator of the
Company's performance as it provides a metric correlated to two
primary and key drivers of operations at a hotel or group of
hotels, as previously described: occupancy and ADR. RevPAR is also
a useful indicator in measuring performance over comparable periods
for comparable hotels.
References to occupancy, ADR and RevPAR throughout this press
release are presented on a comparable basis, based on the
comparable hotels as of September 30, 2023, and references to ADR
and RevPAR are presented on a currency neutral basis, unless
otherwise noted. As such, comparisons of these hotel operating
statistics for the three and nine months ended September 30, 2023
and 2022 or 2019 use the foreign currency exchange rates used to
translate the results of the Company's foreign operations within
its unaudited condensed consolidated financial statements for the
three and nine months ended September 30, 2023, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025296250/en/
Investor: Jill Chapman +1 703 883 1000
Media: Kent Landers +1 703 883 3246
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