Hilton Reports Fourth Quarter and Full Year 2019 Results

Hilton Worldwide Holdings Inc. (NYSE: HLT) today reported its fourth quarter and full year 2019 results. Highlights include:

  • Diluted EPS was $0.61 for the fourth quarter and $3.04 for the full year, and diluted EPS, adjusted for special items, was $1.00 for the fourth quarter and $3.90 for the full year
  • Net income was $176 million for the fourth quarter and $886 million for the full year
  • Adjusted EBITDA was $586 million for the fourth quarter and $2,308 million for the full year
  • System-wide comparable RevPAR decreased 1.0 percent and increased 0.8 percent on a currency neutral basis for the fourth quarter and full year, respectively, from the same periods in 2018
  • Approved 33,700 new rooms for development during the fourth quarter, growing Hilton’s development pipeline to 387,000 rooms as of December 31, 2019, representing 6 percent growth from December 31, 2018
  • Opened 18,500 rooms in the fourth quarter, contributing to 58,300 net additional rooms for the full year, which represented approximately 6.6 percent net unit growth from December 31, 2018
  • Repurchased 16.9 million shares of Hilton common stock during 2019, bringing total capital return, including dividends, to more than $1.7 billion for the full year
  • Launched new lifestyle brand, Tempo by Hilton, in January 2020

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, “We delivered strong bottom-line results for the fourth quarter and full year. Adjusted EBITDA and diluted EPS, adjusted for special items, exceeded the high end of our guidance as a result of our resilient business model and strong net unit growth. We carry positive momentum into 2020 with expectations of continued strong net unit growth. We are also thrilled with the introduction of Tempo by Hilton, our new lifestyle brand that will provide another platform for growth in the future.”

For the three months ended December 31, 2019, system-wide comparable RevPAR decreased 1.0 percent as a result of a decrease in ADR. For the year ended December 31, 2019, system-wide comparable RevPAR grew 0.8 percent primarily driven by an increase in occupancy. Management and franchise fee revenues increased 5 percent and 8 percent during the three months and year ended December 31, 2019, respectively, primarily as a result of the addition of new properties to Hilton’s management and franchise segment and an increase in licensing and other fees. Additionally, management and franchise fees increased for the year ended December 31, 2019 as a result of an increase in RevPAR at comparable managed and franchised hotels.

For the three months ended December 31, 2019, diluted EPS was $0.61 and diluted EPS, adjusted for special items, was $1.00 compared to $0.75 and $0.94, respectively, for the three months ended December 31, 2018. Net income and Adjusted EBITDA were $176 million and $586 million, respectively, for the three months ended December 31, 2019, compared to $225 million and $544 million, respectively, for the three months ended December 31, 2018.

For the year ended December 31, 2019, diluted EPS was $3.04 and diluted EPS, adjusted for special items, was $3.90 compared to $2.50 and $3.42, respectively, for the year ended December 31, 2018. Net income and Adjusted EBITDA were $886 million and $2,308 million, respectively, for the year ended December 31, 2019, compared to $769 million and $2,101 million, respectively, for the year ended December 31, 2018. During the year ended December 31, 2019, the Company completed the sale of the Hilton Odawara Resort & Spa (the “Hilton Odawara”) and subsequently entered into a 30-year management contract with the purchaser of the hotel. As a result of the sale, the Company recognized a pre-tax gain of $81 million.

Development

In the fourth quarter of 2019, Hilton opened 143 new hotels totaling 18,500 rooms and achieved net unit growth of nearly 17,000 rooms. During the quarter, Hilton added several notable properties to its system, including the Conrad Hangzhou Tonglu, China and the Zemi Beach House, LXR in Anguilla. During the full year 2019, Hilton opened nearly 470 new hotels totaling 65,100 rooms and achieved net unit growth of 58,300 rooms, which was a 6.6 percent increase from December 31, 2018. During the year, Hilton expanded to six new countries and territories and opened its 6,000th hotel.

As of December 31, 2019, Hilton’s development pipeline totaled more than 2,570 hotels consisting of over 387,000 rooms throughout 116 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, 215,000 rooms were located outside the U.S., and 193,000 rooms were under construction.

In January 2020, Hilton launched Tempo by Hilton, an approachable lifestyle hotel brand dedicated to exceeding the expectations of an emerging, and discerning, class of traveler: the modern achiever.

Balance Sheet and Liquidity

As of December 31, 2019, Hilton had $8.1 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 4.40 percent. Excluding finance lease liabilities and other debt of Hilton’s consolidated variable interest entities, Hilton had $7.8 billion of long-term debt outstanding with a weighted average interest rate of 4.36 percent.

Total cash and cash equivalents were $630 million as of December 31, 2019, including $92 million of restricted cash and cash equivalents. As of December 31, 2019, Hilton had $195 million outstanding under its $1.75 billion senior secured revolving credit facility and a borrowing capacity of $1.50 billion.

During the fourth quarter of 2019, Hilton repurchased 4.3 million shares of its common stock at a cost of approximately $443 million and an average price per share of $101.01. During 2019, Hilton repurchased 16.9 million shares of its common stock at a cost of approximately $1.5 billion and an average price per share of $91.47. Since the inception of Hilton’s stock repurchase program in March 2017, Hilton has repurchased approximately 55.5 million shares of its common stock for approximately $4.3 billion at an average price per share of $77.91. The amount remaining under Hilton’s current stock repurchase program is approximately $346 million.

In December 2019, Hilton paid a quarterly cash dividend of $0.15 per share on shares of its common stock, for a total of $42 million, bringing full year dividends to $172 million. In February 2020, 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 March 31, 2020 to holders of record of its common stock as of the close of business on February 28, 2020.

Adoption of New Accounting Standard

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). As permitted, the Company has applied this ASU at the adoption date; therefore, the presentation of financial information for all periods prior to January 1, 2019 remains unchanged and in accordance with Leases (Topic 840). For additional information on the effect of this ASU, refer to Hilton’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which is expected to be filed on or about the date of this press release.

Outlook

Hilton’s outlook excludes any potential impact of the coronavirus; additional information will be provided on Hilton’s conference call referenced below. Share-based metrics in Hilton’s outlook include actual share repurchases to date, but do not include the effect of potential share repurchases hereafter.

Full Year 2020

  • System-wide comparable RevPAR is expected to be flat to 1.0 percent growth on a currency neutral basis compared to 2019.
  • Diluted EPS, before special items, is projected to be between $3.45 and $3.58.
  • Diluted EPS, adjusted for special items, is projected to be between $4.08 and $4.21.
  • Net income is projected to be between $979 million and $1,015 million.
  • Adjusted EBITDA is projected to be between $2,420 million and $2,470 million.
  • Management and franchise fee revenue is projected to increase between 5 percent and 7 percent compared to 2019.
  • Contract acquisition costs and capital expenditures, excluding amounts indirectly reimbursed by hotel owners, are expected to be between $175 million and $200 million.
  • Capital return is projected to be between $1.6 billion and $2.0 billion.
  • General and administrative expenses are projected to be between $390 million and $410 million.
  • Net unit growth is expected to be between 6.0 percent and 7.0 percent.

First Quarter 2020

  • System-wide comparable RevPAR is expected to be roughly flat on a currency neutral basis compared to the first quarter of 2019.
  • Diluted EPS, before special items, is projected to be between $0.67 and $0.73.
  • Diluted EPS, adjusted for special items, is projected to be between $0.85 and $0.91.
  • Net income is projected to be between $192 million and $207 million.
  • Adjusted EBITDA is projected to be between $520 million and $540 million.
  • Management and franchise fee revenue is projected to increase between 3 percent and 5 percent compared to the first quarter of 2019.

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION

(unaudited)

 

 

Three Months Ended December 31,

 

Occupancy

 

ADR

 

RevPAR

 

2019

 

vs. 2018

 

2019

 

vs. 2018

 

2019

 

vs. 2018

U.S.

71.9%

 

(0.1)% pts.

 

$

144.72

 

(0.7)%

 

$

104.07

 

(0.8)%

Americas (excluding U.S.)

67.0

 

(0.9)

 

 

116.48

 

(2.0)

 

 

78.01

 

(3.2)

Europe

76.3

 

1.3

 

 

137.34

 

(0.3)

 

 

104.82

 

1.4

Middle East & Africa

75.7

 

1.1

 

 

140.51

 

(5.7)

 

 

106.41

 

(4.3)

Asia Pacific

72.8

 

 

 

122.87

 

(3.9)

 

 

89.51

 

(3.8)

System-wide

72.2

 

 

 

140.98

 

(1.0)

 

 

101.86

 

(1.0)

 

 

Year Ended December 31,

 

Occupancy

 

ADR

 

RevPAR

 

2019

 

vs. 2018

 

2019

 

vs. 2018

 

2019

 

vs. 2018

U.S.

76.2%

 

0.3% pts.

 

$

148.70

 

0.3%

 

$

113.36

 

0.7%

Americas (excluding U.S.)

70.5

 

0.3

 

 

122.13

 

0.6

 

 

86.15

 

1.0

Europe

77.5

 

1.2

 

 

139.97

 

1.4

 

 

108.46

 

3.0

Middle East & Africa

73.8

 

1.9

 

 

144.66

 

(5.5)

 

 

106.70

 

(3.0)

Asia Pacific

72.4

 

0.6

 

 

123.72

 

(1.8)

 

 

89.58

 

(0.9)

System-wide

75.7

 

0.5

 

 

144.79

 

0.1

 

 

109.65

 

0.8

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY BRAND

(unaudited)

 

 

Three Months Ended December 31,

 

Occupancy

 

ADR

 

RevPAR

 

2019

 

vs. 2018

 

2019

 

vs. 2018

 

2019

 

vs. 2018

Waldorf Astoria Hotels & Resorts

72.6%

 

1.1% pts.

 

$

366.03

 

2.2%

 

$

265.81

 

3.8%

Conrad Hotels & Resorts

74.1

 

(1.3)

 

 

264.15

 

(5.0)

 

 

195.86

 

(6.7)

Hilton Hotels & Resorts

74.3

 

0.1

 

 

168.37

 

(0.7)

 

 

125.06

 

(0.5)

Curio Collection by Hilton

70.1

 

(0.2)

 

 

200.97

 

(1.1)

 

 

140.87

 

(1.4)

DoubleTree by Hilton

71.4

 

(0.1)

 

 

128.76

 

(1.4)

 

 

91.98

 

(1.5)

Embassy Suites by Hilton

74.3

 

(0.3)

 

 

157.23

 

(0.2)

 

 

116.86

 

(0.5)

Hilton Garden Inn

71.9

 

0.2

 

 

128.27

 

(1.6)

 

 

92.24

 

(1.4)

Hampton by Hilton

69.7

 

(0.1)

 

 

116.82

 

(1.2)

 

 

81.40

 

(1.4)

Tru by Hilton

69.1

 

4.5

 

 

99.19

 

1.6

 

 

68.59

 

8.7

Homewood Suites by Hilton

76.4

 

0.2

 

 

135.32

 

(1.2)

 

 

103.32

 

(0.9)

Home2 Suites by Hilton

73.5

 

1.5

 

 

113.13

 

(0.8)

 

 

83.10

 

1.2

System-wide

72.2

 

 

 

140.98

 

(1.0)

 

 

101.86

 

(1.0)

 

 

Year Ended December 31,

 

Occupancy

 

ADR

 

RevPAR

 

2019

 

vs. 2018

 

2019

 

vs. 2018

 

2019

 

vs. 2018

Waldorf Astoria Hotels & Resorts

71.6%

 

0.9% pts.

 

$

373.01

 

2.3%

 

$

266.90

 

3.6%

Conrad Hotels & Resorts

75.3

 

2.0

 

 

267.26

 

(1.5)

 

 

201.13

 

1.2

Hilton Hotels & Resorts

76.5

 

0.4

 

 

172.01

 

0.6

 

 

131.67

 

1.1

Curio Collection by Hilton

72.1

 

(0.7)

 

 

208.19

 

1.7

 

 

150.03

 

0.6

DoubleTree by Hilton

74.4

 

0.2

 

 

131.32

 

(0.5)

 

 

97.73

 

(0.2)

Embassy Suites by Hilton

78.3

 

0.4

 

 

163.57

 

0.6

 

 

128.13

 

1.2

Hilton Garden Inn

75.8

 

0.5

 

 

131.76

 

(0.3)

 

 

99.89

 

0.4

Hampton by Hilton

74.0

 

0.4

 

 

121.82

 

(0.1)

 

 

90.21

 

0.4

Tru by Hilton

70.9

 

3.7

 

 

106.29

 

2.7

 

 

75.35

 

8.3

Homewood Suites by Hilton

80.5

 

0.4

 

 

140.29

 

 

 

112.87

 

0.5

Home2 Suites by Hilton

78.6

 

2.7

 

 

117.08

 

0.4

 

 

92.03

 

3.9

System-wide

75.7

 

0.5

 

 

144.79

 

0.1

 

 

109.65

 

0.8

HILTON WORLDWIDE HOLDINGS INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

2019

 

2018

 

2019

 

2018

Revenues

 

 

 

 

 

 

 

Franchise and licensing fees

$

412

 

$

388

 

$

1,681

 

$

1,530

Base and other management fees

 

83

 

 

80

 

 

332

 

 

321

Incentive management fees

 

63

 

 

64

 

 

230

 

 

235

Owned and leased hotels

 

362

 

 

385

 

 

1,422

 

 

1,484

Other revenues

 

26

 

 

26

 

 

101

 

 

98

 

 

946

 

 

943

 

 

3,766

 

 

3,668

Other revenues from managed and franchised properties

 

1,423

 

 

1,345

 

 

5,686

 

 

5,238

Total revenues

 

2,369

 

 

2,288

 

 

9,452

 

 

8,906

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Owned and leased hotels

 

312

 

 

329

 

 

1,254

 

 

1,332

Depreciation and amortization

 

90

 

 

83

 

 

346

 

 

325

General and administrative

 

114

 

 

115

 

 

441

 

 

443

Other expenses

 

26

 

 

15

 

 

72

 

 

51

 

 

542

 

 

542

 

 

2,113

 

 

2,151

Other expenses from managed and franchised properties

 

1,479

 

 

1,384

 

 

5,763

 

 

5,323

Total expenses

 

2,021

 

 

1,926

 

 

7,876

 

 

7,474

 

 

 

 

 

 

 

 

Gain on sale of assets, net

 

 

 

81

 

 

 

 

 

 

 

 

 

Operating income

 

348

 

 

362

 

 

1,657

 

 

1,432

 

 

 

 

 

 

 

 

Interest expense

 

(110)

 

 

(94)

 

 

(414)

 

 

(371)

Loss on foreign currency transactions

 

(6)

 

 

(4)

 

 

(2)

 

 

(11)

Other non-operating income, net

 

11

 

 

2

 

 

3

 

 

28

 

 

 

 

 

 

 

 

Income before income taxes

 

243

 

 

266

 

 

1,244

 

 

1,078

 

 

 

 

 

 

 

 

Income tax expense

 

(67)

 

 

(41)

 

 

(358)

 

 

(309)

 

 

 

 

 

 

 

 

Net income

 

176

 

 

225

 

 

886

 

 

769

Net income attributable to noncontrolling interests

 

(1)

 

 

(1)

 

 

(5)

 

 

(5)

Net income attributable to Hilton stockholders

$

175

 

$

224

 

$

881

 

$

764

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

281

 

 

296

 

 

287

 

 

302

Diluted

 

284

 

 

298

 

 

290

 

 

305

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

0.62

 

$

0.76

 

$

3.07

 

$

2.53

Diluted

$

0.61

 

$

0.75

 

$

3.04

 

$

2.50

 

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.15

 

$

0.15

 

$

0.60

 

$

0.60