Hilton Worldwide Holdings Inc., for the second quarter ended June 30, reported net income of $367 million, exceeding the high end of guidance. Systemwide comparable RevPAR increased 54.3%, on a currency-neutral basis compared to the same period last year, but was down 2.1% compared to the same period in 2019.
“Our second-quarter results exceeded the high end of our guidance for systemwide comparable RevPAR, diluted EPS, adjusted for special items, and Adjusted EBITDA,” said Christopher J. Nassetta, president/CEO, Hilton. “Given our strong results in the quarter, coupled with our confidence in continued recovery throughout the year, we are raising our full-year guidance, including our outlook for capital return. With a capital-light business model, a strong portfolio of brands and dynamic, industry-leading platforms, we are well-positioned for the opportunities that lie ahead.”
Among the highlights:
- Diluted EPS was $1.32 for the second quarter, and diluted EPS, adjusted for special items, was $1.29
- Adjusted EBITDA was $679 million for the second quarter, exceeding the high end of guidance
- Approved 23,400 new rooms for development during the second quarter, bringing Hilton’s development pipeline to 413,000 rooms as of June 30
- Added 14,400 rooms to Hilton’s system in the second quarter, contributing to 13,300 net additional rooms in Hilton’s system during the period
- Repurchased 3.6 million shares of Hilton common stock during the second quarter, bringing total capital return, including dividends, to $521 million for the quarter and $812 million year to date through July
- Full-year 2022 system-wide comparable RevPAR is expected to increase between 37% and 43%, on a currency neutral basis, compared to 2021; full-year net income is projected to be between $1.146 billion and $1.216 billion; full-year
- Adjusted EBITDA is projected to be between $2.4 billion and $2.5 billion
- Full-year 2022 capital return is projected to be between $1.5 billion and $1.9 billion
For the three months ended June 30, system-wide comparable RevPAR increased 54.3% compared to the same period in 2021, due to increases in both occupancy and ADR, and fee revenues increased 54% compared to the same period in 2021.
For the six months ended June 30, systemwide comparable RevPAR increased 64.4% compared to the same period in 2021, due to increases in both occupancy and ADR, and fee revenues increased 64% compared to the same period in 2021. For comparison to pre-pandemic results, systemwide comparable RevPAR for the six months ended June 30, was down 9% compared to the six months ended June 30, 2019.
For the three months ended June 30, diluted EPS was $1.32 and diluted EPS, adjusted for special items, was $1.29 compared to $0.46 and $0.56, respectively, for the same period a year ago. Net income and adjusted EBITDA were $367 million and $679 million, respectively, for the quarter, compared to $128 million and $400 million, respectively, for the same quarter last year.
For the six months ended June 30, diluted EPS was $2.07 and diluted EPS, adjusted for special items, was $2.00 compared to $0.08 and $0.58, respectively, for the same period last year. Net income and adjusted EBITDA were $578 million and $1.127 billion, respectively, for the six months ended June 30, compared to $19 million and $598 million, respectively, for the six months ended June 30, 2021.
Development
In the second quarter, Hilton opened 91 new hotels contributing to 14,400 additional rooms and achieved net unit growth of 13,300 rooms. Notable openings during the quarter include the Waldorf Astoria Washington DC and the Hotel Marcel New Haven, Tapestry Collection by Hilton, which is anticipated to be the first net-zero hotel in the U.S. Additionally, in July, Hilton celebrated the opening of its 7,000th property, following the recent openings of the Hilton Maldives Amingiri, the Conrad Los Angeles and the Lost Property St. Paul’s London, a Curio Collection hotel.
As of June 30, Hilton’s development pipeline totaled nearly 2,780 hotels representing more than 413,000 rooms throughout 114 countries and territories, including 29 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, more than 195,000 of them were under construction and more than 246,000 were located outside the U.S.
Balance sheet and liquidity
As of June 30, 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 4.12%. Further excluding finance lease liabilities and other debt of Hilton’s consolidated variable interest entities, the company had $8.6 billion of long-term debt outstanding with a weighted average interest rate of 4.10% and no scheduled maturities until 2025. No debt amounts were outstanding under Hilton’s $1.75 billion senior secured revolving credit facility as of June 30, which had an available borrowing capacity of $1.69 billion after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $1.254 billion as of June 30, including $79 million of restricted cash and cash equivalents.
Full-year outlook:
- Systemwide comparable RevPAR, on a currency-neutral basis, is expected to increase between 37% and 43% compared to 2021, and to be down between 1% and 5% from 2019.
- Diluted EPS is projected to be between $4.11 and $4.36.
- Diluted EPS, adjusted for special items, is projected to be between $4.21 and $4.46.
- Net income is projected to be between $1.146 billion and $1.216 billion.
- Adjusted EBITDA is projected to be between $2.4 billion and $2.5 billion.
- Contract acquisition costs and capital expenditures, excluding amounts indirectly reimbursed by hotel owners, are expected to be between $250 million and $275 million.
- Capital return is projected to be between $1.5 billion and $1.9 billion.
- General and administrative expenses are projected to be between $400 million and $420 million.
- Net unit growth is expected to be approximately 5%.
Third-quarter outlook:
- Systemwide comparable RevPAR, on a currency-neutral basis, is expected to increase between 25% and 30% compared to the third quarter of 2021, and to increase between 1% and 5% from the third quarter of 2019.
- Diluted EPS is projected to be between $1.09 and $1.16.
- Diluted EPS, adjusted for special items, is projected to be between $1.16 and $1.24.
- Net income is projected to be between $303 million and $324 million.
- Adjusted EBITDA is projected to be between $660 million and $690 million.
