HILTON WORLDWIDE HOLDINGS posted a net income of $268 million in the first quarter of 2024. System-wide comparable RevPAR rose by 2 percent on a currency neutral basis, compared to the first quarter of 2023. The company's fee-based business model and development efforts contributed to its performance, with steady momentum in signings, starts and openings, indicating a healthy pipeline.
The company said it can continue building momentum in the near future, based on the growth trajectory observed thus far.
“We are pleased to report a strong first quarter with bottom-line results meaningfully exceeding our expectations, further demonstrating the power of our resilient, fee-based business model and strong development story,” said Christopher Nassetta, Hilton’s president and CEO. “During the first quarter, system-wide RevPAR increased 2 percent as renovations, inclement weather and unfavorable holiday shifts weighed on performance more than anticipated.”
Hilton saw momentum across signings, starts and openings, Nassetta said.
“As a result of our record pipeline and the growth pace we’ve seen to-date, we expect net unit growth of 6 percent to 6.5 percent for the full year, excluding the planned acquisition of the Graduate Hotels brand,” he said.
First quarter highlights include:
- Diluted EPS stood at $1.04 for the first quarter, with adjusted diluted EPS at $1.53.
- First quarter net income totaled $268 million.
- Adjusted EBITDA for the first quarter reached $750 million.
- System-wide comparable RevPAR saw a 2 percent increase, currency-neutral, compared to the first quarter of 2023.
- Approved 29,800 new rooms for development in the first quarter, marking a record 472,300-room pipeline as of March 31, reflecting a 10 percent growth from March 31, 2023.
- Added 16,800 rooms to Hilton’s system in the first quarter, resulting in a net unit growth of 5.6 percent from March 31, 2023.
- Repurchased 3.4 million shares of Hilton common stock in the first quarter; total capital return, including dividends, was $701 million for the quarter and $908 million year-to-date through April.
- Announced the planned acquisition of the Graduate Hotels brand, expected to add approximately 35 franchised hotels to the portfolio in the second quarter.
- Acquired a controlling financial interest in the Sydell Group, owner of the NoMad brand, in April 2024, marking Hilton’s luxury lifestyle debut and opening further luxury expansion avenues.
- Issued $1 billion of senior notes in March 2024, comprising $550 million aggregate principal amount of 5.875 percent senior notes due 2029 and $450 million aggregate principal amount of 6.125 percent senior notes due 2032.
- Full-year 2024 system-wide RevPAR projected to increase between 2 percent and 4 percent on a comparable and currency-neutral basis compared to 2023; full-year net income estimated between $1,586 million and $1,621 million; full-year Adjusted EBITDA forecasted between $3,375 million and $3,425 million.
- Full-year 2024 capital return anticipated to be around $3 billion.
Key metrics improved
For the three months ending March 31, system-wide comparable RevPAR rose by 2 percent compared to the same period in 2023, driven by increases in both occupancy and ADR, Hilton said. Additionally, management and franchise fee revenues surged by 14.4 percent compared to the same period in 2023.
For the three months, diluted EPS stood at $1.04, with adjusted diluted EPS at $1.53, compared to $0.77 and $1.24, respectively, for the three months ending March 31, 2023.
Net income and adjusted EBITDA totaled $268 million and $750 million, respectively, for the three months ending March 31, compared to $209 million and $641 million, respectively, for the three months ending March 31, 2023.
Pipeline development
Hilton opened 106 hotels, totaling 16,800 rooms in the first quarter, resulting in 14,200 net room additions, the statement added. During this period, Hilton marked several significant luxury and lifestyle openings, including the grand unveiling of the Conrad Orlando in Florida, the inaugural launch of LXR Hotels & Resorts in Hawaii, and the introduction of the Waldorf Astoria and Canopy by Hilton brands to the Seychelles.
Additionally, Hilton debuted the Curio Collection by Hilton brand in Kenya and the Motto by Hilton brand in Peru. Moreover, Hilton entered into partnerships with AutoCamp and Small Luxury Hotels of the World, enhancing the lodging experiences available to Hilton guests.
Hilton also announced the Waldorf Astoria Residences Dubai Downtown, its first standalone residential property outside the U.S. Additionally, Hampton by Hilton marked a significant milestone with the opening of its 3,000th hotel globally during the quarter. This coincides with the brand's 40th anniversary, entry into its 40th country, and its expected debut on its fifth continent, Africa, later this year.
During the first quarter, Hilton expanded its development pipeline by 29,800 rooms. As of March 31, the company's pipeline comprised approximately 3,380 hotels, totaling 472,300 rooms across 119 countries and territories. Notably, this includes 31 countries and territories where Hilton had no existing hotels.
Additionally, among the rooms in the development pipeline, 229,700 were under construction, with 267,900 located outside of the U.S.
Positive outlook
Hilton's outlook incorporates actual share repurchases through the first quarter but excludes the impact of potential share repurchases thereafter.
Moreover, it does not account for the planned acquisition of Graduate Hotels.
2024 projections
- System-wide comparable RevPAR, on a currency-neutral basis, is forecasted to increase between 2 percent and 4 percent compared to 2023.
- Diluted EPS is expected to range between $6.21 and $6.35, with adjusted diluted EPS between $6.89 and $7.03.
- Net income is projected to range from $1.586 billion to $1.621 billion, while adjusted EBITDA is expected to be between $3.375 billion and $3.425 billion.
- Contract acquisition costs and capital expenditures, excluding amounts reimbursed by third parties, are estimated to be between $250 million and $300 million.
- Capital return is anticipated to reach approximately $3 billion.
- General and administrative expenses are forecasted to range between $415 million and $430 million.
- Net unit growth, excluding the impact of the planned acquisition of the Graduate Hotels brand, is projected to be between 6 percent and 6.5 percent.
Second-quarter forecast
- System-wide comparable RevPAR, currency-neutral, is forecasted to rise between 2 percent and 4 percent compared to the second quarter of 2023.
- Diluted EPS is expected to range between $1.74 and $1.80, with adjusted diluted EPS between $1.80 and $1.86.
- Net income is projected to range from $443 million to $457 million, while adjusted EBITDA is expected to be between $890 million and $910 million.
In March, Hilton unveiled a new North American prototype and refreshed global brand identity for Hampton Inn and Hampton Inn & Suites. The prototype's first hotel is set to open in early 2025.
