Hilton Worldwide Holdings Inc., for the second quarter ended June 30, reported net income of $413 million, exceeding the high end of guidance. The company has also raised its full-year outlook.
“System-wide comparable RevPAR continued to expand throughout the quarter, experiencing growth across all of our customer segments and regions, driven by strong preference for our brands,” said Chris Nassetta, president/CEO, Hilton. “Our top-line performance yielded meaningful bottom-line results, as we exceeded the high end of our guidance for adjusted EBITDA and diluted EPS, adjusted for special items. We continue to drive long-term growth of our global network through the launch of strategic new brands and have already added more than 60,000 rooms to our development pipeline during 2023.”
Highlights include:
- Adjusted EBITDA was $811 million for the second quarter, exceeding the high end of guidance
- System-wide comparable RevPAR increased 12.1%, on a currency-neutral basis, for the second quarter compared to the same period in 2022
- System-wide comparable RevPAR increased 9.3%, on a currency-neutral basis, for the second quarter compared to the same period in 2019
- Approved 36,000 new rooms for development during the second quarter, bringing Hilton’s development pipeline to 440,900 rooms as of June 30, 2023, representing growth of 7% from June 30, 2022
- Added 14,000 rooms to Hilton’s system in the second quarter, resulting in 11,200 net additional rooms in Hilton’s system during the period
- Launched a new extended-stay brand with the working title Project H3 in May
- Full year 2023 system-wide RevPAR is expected to increase between 10% and 12% on a comparable and currency-neutral basis compared to 2022; full-year net income is projected to be between $1.387 billion and $1.422 billion; full-year adjusted EBITDA is projected to be between $2.975 billion and $3.025 billion
- Full-year 2023 capital return is projected to be between $2.4 billion and $2.6 billion
Overview
For the three months ended June 30, system-wide comparable RevPAR increased 12.1% compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 16.1% compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months ended June 30 increased 9.3% compared to the same period in 2019, and management and franchise fee revenues increased 30.8% from the same period in 2019.
For the six months ended June 30, system-wide comparable RevPAR increased 19.7% compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 22.1% compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the six months ended June 30 increased 8.8% compared to the same period in 2019, and management and franchise fee revenues increased 28.7% from the same period in 2019.
For the three months ended June 30, diluted EPS was $1.55 and diluted EPS, adjusted for special items, was $1.63 compared to $1.32 and $1.29, respectively, for the same period in 2022. Net income and adjusted EBITDA were $413 million and $811 million, respectively, for the three months ended June 30, compared to $367 million and $679 million, respectively, for the same period in 2022.
For the six months ended June 30, 2023, diluted EPS was $2.31 and diluted EPS, adjusted for special items, was $2.86 compared to $2.07 and $2.00, respectively, for the six months ended June 30, 2022. Net income and adjusted EBITDA were $622 million and $1.452 billion, respectively, for the six months ended June 30, 2023, compared to $578 million and $1.127 billion, respectively, for the six months ended June 30, 2022.
Development
In the second quarter, Hilton opened 92 new hotels totaling 14,000 rooms and achieved net unit growth of 11,200 rooms. During the quarter, Hilton opened the Conrad Shenzhen, Hilton’s first luxury property in China’s technology hub, and surpassed 150,000 hotel rooms in the Asia-Pacific region, which included nearly 50,000 Hampton by Hilton rooms in China. Additionally, continuing to demonstrate the value of its all-suites category, the company opened the 600th Home2 Suites by Hilton, one of the fastest-growing brands in the industry.
Hilton added more than 36,000 rooms to the development pipeline during the second quarter, and, as of June 30, its development pipeline totaled approximately 3,060 hotels representing 440,900 rooms throughout 116 countries and territories, including 29 countries and territories where Hilton did not have any existing hotels. Additionally, of the rooms in the development pipeline, 217,000 were under construction and 250,100 were located outside of the U.S.
Spark by Hilton, Hilton’s new premium economy brand launched in January, had approximately 60 hotels in the development pipeline as of June 30. In May, Hilton launched a new brand in the U.S. under the working title Project H3, a new apartment-style, extended-stay brand positioned to serve the needs of the long-stay traveler, including the rapidly expanding workforce travel market.
Outlook
Full-year 2023
- System-wide comparable RevPAR, on a currency-neutral basis, is expected to increase between 10% and 12% compared to 2022.
- Diluted EPS is projected to be between $5.18 and $5.31.
- Diluted EPS, adjusted for special items, is projected to be between $5.93 and $6.06.
- Net income is projected to be between $1.387 billion and $1.422 billion.
- Adjusted EBITDA is projected to be between $2.975 billion and $3.025 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 $2.4 billion and $2.6 billion.
- General and administrative expenses are projected to be between $390 million and $410 million.
- Net unit growth is expected to be approximately 5%.
Third-quarter 2023
- System-wide comparable RevPAR, on a currency-neutral basis, is expected to increase between 4% and 6% compared to the third quarter of 2022.
- Diluted EPS is projected to be between $1.49 and $1.54.
- Diluted EPS, adjusted for special items, is projected to be between $1.60 and $1.65.
- Net income is projected to be between $395 million and $409 million.
- Adjusted EBITDA is projected to be between $790 million and $810 million.
