Hilton Worldwide Holdings Inc. exceeded expectations in the first quarter ended March 31, with systemwide comparable RevPAR increasing 30%, on a currency-neutral basis, for the first quarter compared to the same period in 2022 and 8% compared to the same period in 2019.
“We carried strong momentum into 2023, exceeding the high end of our guidance for systemwide RevPAR, driving strong bottom-line results and delivering meaningful free cash flow available for return to our shareholders,” said Christopher J. Nassetta, president/CEO, Hilton. “As a result of our strong performance and positive outlook, we are raising our adjusted EBITDA guidance for the full year.”
Q1 highlights
- Net income was $209 million for the first quarter.
- Adjusted EBITDA was $641 million for the first quarter.
- Systemwide comparable RevPAR increased 30%, on a currency-neutral basis, for the first quarter compared to the same period in 2022.
- Systemwide comparable RevPAR increased 8%, on a currency-neutral basis, for the first quarter compared to the same period in 2019.
- Approved 24,900 new rooms for development during the first quarter, bringing Hilton’s development pipeline to 428,100 rooms as of March 31.
- Added 9,200 rooms to Hilton’s system in the first quarter, resulting in 5,300 net additional rooms in Hilton’s system during the period.
- Full-year 2023 systemwide RevPAR is expected to increase between 8% and 11% on a comparable and currency-neutral basis compared to 2022; full-year net income is projected to be between $1.33 billion and $1.38 billion; full-year adjusted
- EBITDA is projected to be between $2.87 billion and $2.95 billion.
Overview
For the three months ended March 31, systemwide comparable RevPAR increased 30% compared to the same period in 2022, due to increases in both occupancy and ADR, and management and franchise fee revenues increased 30.1% compared to the same period in 2022. For comparison to pre-pandemic results, systemwide comparable RevPAR for the three months ended March 31 increased 8% compared to the same period in 2019, and management and franchise fee revenues increased 26.3% from the same period in 2019.
For the three months ended March 31, diluted EPS was 77 cents and diluted EPS, adjusted for special items, was $1.24 compared to 75 cents and 71 cents, respectively, for the three months ended March 31. Net income and adjusted EBITDA were $209 million and $641 million, respectively, for the three months ended March 31, 2023, compared to $211 million and $448 million, respectively, for the three months ended March 31, 2022.
Development
In the first quarter of 2023, Hilton opened 64 new hotels totaling 9,200 rooms and achieved net unit growth of 5,300 rooms. Additionally, Hilton started construction on more than 19,000 hotel rooms during the first quarter, continuing the positive momentum from the end of 2022, particularly in China. Further, Hilton continued to achieve development milestones during the first quarter, opening the 100th Tapestry Collection by Hilton, as well as its 500th hotel in China.
As of March 31, Hilton’s development pipeline totaled approximately 2,930 hotels representing 428,100 rooms throughout 116 countries and territories, including 30 countries and territories where Hilton did not have any existing hotels. Additionally, of the rooms in the development pipeline, 215,700 of the rooms were under construction and 246,200 of the rooms were located outside of the U.S. In April, Hilton announced a notable addition to its development pipeline, the Waldorf Astoria Jaipur, which will mark the debut of the Waldorf Astoria Hotels & Resorts brand in India.
Balance sheet and liquidity
As of March 31, 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 4.51%. 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 4.5% and no scheduled maturities until May 2025. As of March 31, no debt amounts were outstanding under Hilton’s $2 billion senior secured revolving credit facility, which had an available borrowing capacity of $1.94 billion after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $978 million as of March 31, including $77 million of restricted cash and cash equivalents.
Full-year 2023 outlook
- System-wide comparable RevPAR, on a currency-neutral basis, is expected to increase between 8% and 11% compared to 2022.
- Diluted EPS is projected to be between $4.95 and $5.14.
- Diluted EPS, adjusted for special items, is projected to be between $5.68 and $5.88.
- Net income is projected to be between $1.33 billion and $1.38 billion.
- Adjusted EBITDA is projected to be between $2.87 billion and $2.95 billion.
- Contract acquisition costs and capital expenditures, excluding amounts reimbursed by third parties, are expected to be approximately $300 million.
- Capital return is projected to be between $1.8 billion and $2.2 billion.
- General and administrative expenses are projected to be between $390 million and $410 million.
- Net unit growth is expected to be between 5% and 5.5%.
Second-quarter 2023 outlook
- Systemwide comparable RevPAR, on a currency-neutral basis, is expected to increase between 10% and 12% compared to the second quarter of 2022.
- Diluted EPS is projected to be between $1.45 and $1.50.
- Diluted EPS, adjusted for special items, is projected to be between $1.54 and $1.59.
- Net income is projected to be between $387 million and $401 million.
- Adjusted EBITDA is projected to be between $770 million and $790 million.
