Hilton Hits High Notes In Q4 With Solid Room Growth; Unveils Luxury Hotel Integrations

Hilton Worldwide Holdings Inc HLT reported fourth-quarter fiscal 2023 sales growth of 6.8% year-on-year to $2.61 billion, in line with consensus.

Franchise and licensing fees revenue rose 11.9% Y/Y, and the owned and leased hotels revenue declined 8.3% Y/Y.

Adjusted EPS was $1.68, above the consensus of $1.57. 

The occupancy rate for the quarter was 69% system-wide, with 68.2% in the U.S., 72.7% in Europe, and 76.3% in Middle East & Africa. On a currency-neutral basis, System-wide comparable RevPAR increased 5.7% Y/Y.

Hilton approved 33,800 new rooms for development during the fourth quarter, bringing its development pipeline to 462,400 rooms as of December 31, 2023, representing growth of 11% from December 31, 2022.

HLT added 24,000 rooms to its system in the quarter, resulting in 22,300 net additional rooms.

Total expenses for the quarter rose 13.9% Y/Y. The operating margin was 15.33%, and operating income for the quarter decreased 20.6% to $400 million.

Adjusted EBITDA of $803 million increased 8.5% Y/Y, and the adjusted EBITDA margin expanded by 50 bps to 30.8%.

As of December 31, 2023, Hilton had $9.3 billion of long-term debt outstanding. During the quarter, Hilton repurchased 4.6 million shares at $746 million and an average price per share of $163.45.

Additionally, Hilton has formed a strategic partnership with Small Luxury Hotels of the World to integrate hundreds of unique luxury hotels into its offerings, significantly enhancing its luxury experiences alongside the Waldorf Astoria, Conrad, and LXR brands.

Q1 Outlook: Hilton Worldwide expects Adjusted EPS of $1.36-$1.44 versus consensus of $1.42 and GAAP EPS of $1.32-$1.40. The company sees adjusted EBITDA of $690 million-$710 million.

2024 Outlook: Hilton expects Adjusted EPS of $6.80-$6.94 versus consensus of $7.07 estimate and GAAP EPS of $6.57-$6.71.

HLT expects system-wide comparable RevPAR, on a currency-neutral basis, to increase 2%-4% YoY, Adjusted EBITDA of $3.330 billion-$3.380 billion.

Price Action: HLT shares are up 1.74% at $198.00 on the last check Wednesday.

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