Hilton Reports Third Quarter Results
MCLEAN, Va.----October 25, 2023--
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.