Hilton Worldwide Beats On Q2, Boosts FY23 Forecast

Hilton Worldwide Holdings Inc HLT reported second-quarter FY23 sales growth of 18.7% year-on-year to $2.66 billion, beating the analyst consensus of $2.58 billion.

Franchise and licensing fees revenue rose 13.4% Y/Y, and the owned and leased hotels revenue jumped 20.9%.

The occupancy rate for the quarter was 75.9% in the U.S., 75.4% in Europe, and 67.5% in Middle East & Africa. 

On a currency-neutral basis, System-wide comparable RevPAR increased 12.1% Y/Y and 9.3% versus the same period in 2019.

In Q2, Hilton approved 36,000 rooms to its system, bringing Hilton's development pipeline to 440,900 rooms as of June 30, 2023, representing growth of 7% Y/Y.

HLT added 14,000 rooms to its system in Q2, resulting in 11,200 net additional rooms during the period.

Total expenses for the quarter rose 20.9%. The operating margin was 25.3%, and operating income for the quarter increased 12.7% to $674 million.

Adjusted EBITDA of $811 million increased 19.4% Y/Y. Adjusted EBITDA margin expanded 20 basis points to 69.3%.

Adjusted EPS of $1.63 beat the analyst consensus of $1.58.

Outlook: Hilton expects FY23 adjusted EPS of $5.93-$6.06 (prior $5.68-$5.88) versus the Street view of $5.90.

HLT expects system-wide comparable RevPAR, on a currency-neutral basis, to increase 10%-12% (prior 8%-11%) for FY23.

The company expects an FY23 capital return of $2.4 billion-$2.6 billion (prior $1.8 billion-$2.2 billion).

HLT sees Q3 Adj. EPS of $1.60-$1.65 versus an estimate of $1.59.

Price Action: HLT shares are down 0.75% at $149.99 premarket Wednesday.