Hilton Worldwide Q3: ~13% Topline Increase, Inline EPS, Solid RevPAR Growth & More

Hilton Worldwide Holdings Inc HLT reported third-quarter FY23 sales growth of 12.8% year-on-year to $2.673 billion, beating the analyst consensus estimate of $2.62 billion.

Franchise and licensing fees revenue rose 12.2% Y/Y, and the owned and leased hotels revenue climbed 13.6%.

The occupancy rate for the quarter was 75.3% in the U.S., 79% in Europe, and 70% in Middle East & Africa. 

On a currency-neutral basis, System-wide comparable RevPAR increased 6.8% Y/Y and 11.4% versus the same period in 2019.

In Q3, Hilton approved 35,500 rooms to its system, bringing Hilton's development pipeline to 457,300 rooms as of September 30, 2023, representing growth of 10% Y/Y.

HLT added 15,700 rooms to its system in Q3, resulting in 14,300 net additional rooms during the period.

Total expenses for the quarter rose 15.8%. The operating margin was 24.4%, and operating income for the quarter increased 4.8% to $653 million.

Adjusted EBITDA of $834 million increased 13.9% Y/Y. Adjusted EBITDA margin remained flat at 70.8%.

Adjusted EPS of $1.67 was in line with the consensus estimate. 

As of September 30, 2023, Hilton had $8.8 billion of long-term debt outstanding.

"We believe we have hit an inflection point and expect a meaningful uptick in openings in the fourth quarter with continued positive momentum into next year," said President and CEO Christopher J. Nassetta.

Outlook: Hilton raised its FY23 adjusted EPS outlook from $5.93-$6.06 to $6.04-$6.09 versus the consensus estimate of $6.07.

HLT expects system-wide comparable RevPAR, on a currency-neutral basis, to increase 12%-12.5% (prior 10%-12%) for FY23.

The company continues to expect an FY23 capital return of $2.4 billion-$2.6 billion.

HLT sees Q4 Adj. EPS of $1.51-$1.56 versus an estimate of $1.56.

Price Action: HLT shares are down 0.47% at $148.94 premarket Wednesday.