Hilton Worldwide Holdings Inc. reported net income of $333 million for the fourth quarter of 2022, ended Dec. 31, and $1.26 billion for full-year 2022. System-wide comparable RevPAR increased 7.5% and decreased 1.3%, for the fourth quarter and full year, respectively, compared to the same periods in 2019.
“Our fourth-quarter and full-year results surpassed our expectations, with fourth-quarter system-wide RevPAR meaningfully exceeding the same period in 2019 driven by growth across all segments,” said Chris Nassetta, president/CEO, Hilton. “This marked the second consecutive quarter that RevPAR exceeded pre-pandemic levels. Positive momentum has continued into the new year with exciting growth opportunities ahead, including the continued expansion of our brand portfolio with the recent launch of our newest brand, Spark by Hilton.”
Highlights:
- Diluted EPS was $1.21 for the fourth quarter and $4.53 for the full year, exceeding the high end of guidance
- Diluted EPS, adjusted for special items, was $1.59 for the fourth quarter and $4.89 for the full year, exceeding the high end of guidance
- Net income was $333 million for the fourth quarter and $1.26 billion for the full year, exceeding the high end of guidance
- Adjusted EBITDA was $740 million for the fourth quarter and $2.6 billion for the full year, exceeding the high end of guidance
- System-wide comparable RevPAR increased 24.8% and 42.5%, on a currency-neutral basis, for the fourth quarter and full year, respectively, compared to the same periods in 2021
- Approved 24,400 new rooms for development during the fourth quarter, bringing Hilton’s development pipeline to 416,400 rooms as of Dec. 31, 2022
- Added 17,700 rooms to Hilton’s system in the fourth quarter, resulting in 48,300 net additional rooms in Hilton’s system for the full year, contributing to net unit growth of 4.7%, with fourth-quarter hotel openings modestly lagging prior expectations due to the ongoing COVID-19 environment in China
Overview
For the three months and year ended Dec. 31, 2022, system-wide comparable RevPAR increased 24.8% and 42.5%, respectively, compared to the same periods in 2021, due to increases in both occupancy and ADR. For the three months and year ended Dec. 31, 2022 compared to the same periods in 2021, fee revenues increased 30% and 45%, respectively. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months and year ended Dec. 31, 2022 increased 7.5% and decreased 1.3%, respectively, compared to the same periods in 2019, and fee revenues for both the three months and year ended Dec. 31, 2022 exceeded the same periods in 2019.
For the three months ended Dec. 31, 2022, diluted EPS was $1.21 and diluted EPS, adjusted for special items, was $1.59 compared to $0.52 and $0.72, respectively, for the three months ended Dec. 31, 2021. Net income and adjusted EBITDA were $333 million and $740 million, respectively, for the three months ended Dec. 31, 2022, compared to $148 million and $512 million, respectively, for the three months ended Dec. 31, 2021.
For the year ended Dec. 31, 2022, diluted EPS was $4.53 and diluted EPS, adjusted for special items, was $4.89 compared to $1.46 and $2.08, respectively, for the year ended Dec. 31, 2021. Net income and sdjusted EBITDA were $1.26 million and $2.6 million, respectively, for the year ended Dec. 31, 2022, compared to $407 million and $1.63 million, respectively, for the year ended Dec. 31, 2021.
Development
In the fourth quarter of 2022, Hilton opened 108 new hotels contributing 17,700 additional rooms to the company’s system, and achieved net unit growth of 15,100 rooms. During the full-year 2022, Hilton opened 355 new hotels totaling 58,200 rooms and achieved net unit growth of 48,300 rooms. The company continued to achieve growth milestones during the fourth quarter, opening the 60,000th room under the Home2 Suites by Hilton brand and the 150,000th room under the DoubleTree by Hilton brand. Further, during the fourth quarter, Hilton opened the Waldorf Astoria Cancun, marking the company’s 200th hotel in the Caribbean and Latin America region.
As of Dec. 31, 2022, Hilton’s development pipeline totaled more than 2,820 hotels representing 416,400 rooms throughout 118 countries and territories, including 30 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, 205,400 of the rooms were under construction and 243,500 of the rooms were located outside the U.S.
In January 2023, Hilton launched Spark by Hilton, a premium economy brand which had more than 200 hotels in various stages of negotiation as of Feb. 3, 2023.
Balance sheet and liquidity
As of Dec. 31, 2022, Hilton had $8.8 billion of long-term debt outstanding, excluding the deduction for deferred financing costs and discounts, with a weighted average interest rate of 4.45%. 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 4.44% and no scheduled maturities until May 2025. No debt amounts were outstanding under Hilton’s $1.75 billion senior secured revolving credit facility as of Dec. 31, 2022, 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 $1,286 million as of Dec. 31, 2022, including $77 million of restricted cash and cash equivalents.
In January 2023, Hilton amended its credit agreement governing its revolving credit facility to increase the borrowing capacity to $2 billion, $250 million of which is available in the form of letters of credit, and, based on the terms of the agreement, Hilton expects the extended maturity date to be January 2028. As of February 3, 2023, after considering the $60 million of letters of credit outstanding and no borrowings outstanding, Hilton had an available borrowing capacity on the revolving credit facility of $1,940 million.
Outlook
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 2023
- System-wide comparable RevPAR, on a currency-neutral basis, is expected to increase between 4% and 8% compared to 2022.
- Diluted EPS is projected to be between $5.10 and $5.36.
- Diluted EPS, adjusted for special items, is projected to be between $5.42 and $5.68.
- Net income is projected to be between $1.38 million and $1.45 million.
- Adjusted EBITDA is projected to be between $2.8 billion and $2.9 billion.
- Contract acquisition costs and capital expenditures, excluding amounts indirectly reimbursed by third parties, are expected to be approximately $300 million.
- Capital return is projected to be between $1.7 billion and $2.1 billion.
- General and administrative expenses are projected to be between $390 million and $410 million.
- Net unit growth is expected to be between 5.0% and 5.5%.
First-quarter 2023
- System-wide comparable RevPAR, on a currency-neutral basis, is expected to increase between 23% and
- 27% compared to the first quarter of 2022.
- Diluted EPS is projected to be between $1.00 and $1.06.
- Diluted EPS, adjusted for special items, is projected to be between $1.08 and $1.14.
- Net income is projected to be between $271 million and $287 million.
- Adjusted EBITDA is projected to be between $590 million and $610 million.
