Hilton reports first quarter results

Overview

Christopher J. Nassetta, president & CEO of Hilton, says, "We are pleased to report a strong first quarter with bottom line results meaningfully exceeding our expectations, further demonstrating the power of our resilient, fee-based business model and strong development story. During the first quarter, system-wide RevPAR increased 2.0 per cent as renovations, inclement weather and unfavourable holiday shifts weighed on performance more than anticipated. On the development side, we continued to see great momentum across signings, starts and openings. As a result of our record pipeline and the growth pace we've seen to-date, we expect net unit growth of 6.0 per cent to 6.5 per cent for the full year, excluding the planned acquisition of the Graduate Hotels brand."

For the three months ended March 31, 2024, system-wide comparable RevPAR increased 2.0 per cent compared to the same period in 2023 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 14.4 per cent compared to the same period in 2023.

For the three months ended March 31, 2024, diluted EPS was $1.04 and diluted EPS, adjusted for special items, was $1.53 compared to $0.77 and $1.24, respectively, for the three months ended March 31, 2023. Net income and Adjusted EBITDA were $268 million and $750 million, respectively, for the three months ended March 31, 2024, compared to $209 million and $641 million, respectively, for the three months ended March 31, 2023.

Development

In the first quarter of 2024, Hilton opened 106 hotels, totaling 16,800 rooms, resulting in 14,200 net room additions. During the quarter, Hilton celebrated a number of significant luxury and lifestyle openings including: the grand opening of the Conrad Orlando in Florida, the debut of LXR Hotels & Resorts in Hawaii and the introduction of the Waldorf Astoria and Canopy by Hilton brands to the Seychelles. Furthermore, Hilton debuted the Curio Collection by Hilton brand in Kenya and Motto by Hilton brand in Peru and entered into partnerships with AutoCamp and Small Luxury Hotels of the World ("SLH"), which will provide new elevated lodging experiences to Hilton guests. Hilton also announced the Waldorf Astoria Residences Dubai Downtown, which will be the Company's first standalone residential property outside of the United States. Additionally, during the quarter, Hampton by Hilton celebrated the opening of its 3,000th hotel globally, had its 40th anniversary, entry into its 40th country and its expected entry into its fifth continent, Africa, later this year.

Hilton added 29,800 rooms to the development pipeline during the first quarter, and, as of March 31, 2024, Hilton's development pipeline totaled approximately 3,380 hotels representing 472,300 rooms throughout 119 countries and territories, including 31 countries and territories where Hilton had no existing hotels. Additionally, of the rooms in the development pipeline, 229,700 were under construction and 267,900 were located outside of the U.S.

Balance Sheet and Liquidity

As of March 31, 2024, Hilton had $10.3 billion of long-term debt outstanding, excluding the deduction for deferred financing costs and discounts, with a weighted average interest rate of 4.89 percent. Excluding all finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $10.1 billion of long-term debt outstanding with a weighted average interest rate of 4.88 per cent and no scheduled maturities until May 2025. As of March 31, 2024, no debt amounts were outstanding under Hilton's $2.0 billion senior secured revolving credit facility (the "Revolving Credit Facility"), which had an available borrowing capacity of $1,913 million after considering $87 million of outstanding letters of credit. Total cash and cash equivalents were $1,420 million as of March 31, 2024, including $74 million of restricted cash and cash equivalents.

In March 2024, Hilton issued $550 million aggregate principal amount of 5.875 per cent Senior Notes due 2029 and $450 million aggregate principal amount of 6.125 per cent Senior Notes due 2032 and used a portion of the net proceeds from the issuances to repay $200 million borrowed under the Revolving Credit Facility earlier in the first quarter. The remaining proceeds will be used for general corporate purposes, which may include investments and acquisitions.

In March 2024, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, bringing total dividend payments for the quarter to $39 million. In April 2024, Hilton's board of directors authorized a regular quarterly cash dividend of $0.15 per share of common stock to be paid on June 28, 2024, to holders of record of its common stock as of the close of business on May 17, 2024.

During the three months ended March 31, 2024, Hilton repurchased 3.4 million shares of its common stock at an average price per share of $196.17, for a total of $662 million, returning $701 million of capital to shareholders during the quarter including dividends. The number of shares outstanding as of April 19, 2024 was 250.0 million.

Outlook

Share-based metrics in Hilton's outlook include actual share repurchases through the first quarter, but do not include the effect of potential share repurchases thereafter. Additionally, Hilton's outlook does not include the effect of the planned acquisition of Graduate Hotels.

Full Year 2024

• System-wide comparable RevPAR, on a currency neutral basis, is projected to increase between 2.0 per cent and 4.0 per cent compared to 2023.

• Diluted EPS is projected to be between $6.21 and $6.35.

• Diluted EPS, adjusted for special items, is projected to be between $6.89 and $7.03.

• Net income is projected to be between $1,586 million and $1,621 million.

• Adjusted EBITDA is projected to be between $3,375 million and $3,425 million.

• Contract acquisition costs and capital expenditures, excluding amounts reimbursed by third parties, are projected to be between $250 million and $300 million.

• Capital return is projected to be approximately $3.0 billion.

• General and administrative expenses are projected to be between $415 million and $430 million.

• Net unit growth, excluding the effect of the planned acquisition of the Graduate Hotels brand, is projected to be between 6.0 per cent and 6.5 per cent.

Second quarter 2024

• System-wide comparable RevPAR, on a currency neutral basis, is projected to increase between 2.0 per cent and 4.0 per cent compared to the second quarter of 2023.

• Diluted EPS is projected to be between $1.74 and $1.80.

• Diluted EPS, adjusted for special items, is projected to be between $1.80 and $1.86.

• Net income is projected to be between $443 million and $457 million.

• Adjusted EBITDA is projected to be between $890 million and $910 million.