Hilton Releases Q2 2024 Results

MCLEAN, Virginia—Hilton Worldwide Holdings Inc. reported its second quarter 2024 results. Highlights include:

• Adjusted EBITDA is projected to be between $875 million and $890 million.
• Diluted EPS was $1.67 for the second quarter, and diluted EPS, adjusted for special items, was $1.91
• Net income was $422 million for the second quarter
• Adjusted EBITDA was $917 million for the second quarter
• System-wide comparable RevPAR increased 3.5 percent, on a currency neutral basis, for the second quarter compared to the same period in 2023
• Approved 62,700 new rooms for development during the second quarter, bringing our development pipeline to a record 508,300 rooms as of June 30, 2024, representing growth of 15 percent from June 30, 2023
• Added 22,400 rooms to our system in the second quarter, resulting in 18,000 net additional rooms for the second quarter, contributing to net unit growth of 6.2 percent from June 30, 2023
• Completed the acquisition of the Graduate Hotels brand in May, which expands the lifestyle portfolio
• Announced that nearly 400 hotels have agreed to join our system under our strategic partnership with Small Luxury Hotels of the World (SLH), beginning in July, adding an expected 18,000 rooms to our portfolio
• Repurchased 3.5 million shares of Hilton common stock during the second quarter; bringing total capital return, including dividends, to $761 million for the quarter and $1,774 million year to date through August
• Full year 2024 system-wide RevPAR is projected to increase between 2.0 percent and 3.0 percent on a comparable and currency neutral basis compared to 2023; full year net income is projected to be between $1,532 million and $1,555 million; full year Adjusted EBITDA is projected to be between $3,375 million and $3,405 million
• Full year 2024 capital return is projected to be approximately $3.0 billion

Overview

Christopher J. Nassetta, president and CEO of Hilton, said, “We are pleased to report a solid second quarter, with an increase in RevPAR of 3.5 percent, driven by growth in all segments, with particularly strong group performance. On the development side, we ended the quarter with a record development pipeline, up 15 percent from the prior year and up 8 percent sequentially from the first quarter, including strategic partner hotels. Looking forward to the rest of the year, with the continued growth of our existing brands, as well as the addition of our new brands and strategic partner hotels, we expect net unit growth of 7.0 percent to 7.5 percent for the full year.”

For the three months ended June 30, 2024, system-wide comparable RevPAR increased 3.5 percent compared to the same period in 2023 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 10.0 percent compared to the same period in 2023.

For the six months ended June 30, 2024, system-wide comparable RevPAR increased 2.8 percent compared to the same period in 2023 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 12.0 percent compared to the same period in 2023.

For the three months ended June 30, 2024, diluted EPS was $1.67 and diluted EPS, adjusted for special items, was $1.91 compared to $1.55 and $1.63, respectively, for the three months ended June 30, 2023. Net income and Adjusted EBITDA were $422 million and $917 million, respectively, for the three months ended June 30, 2024, compared to $413 million and $811 million, respectively, for the three months ended June 30, 2023.

For the six months ended June 30, 2024, diluted EPS was $2.71 and diluted EPS, adjusted for special items, was $3.44 compared to $2.31 and $2.86, respectively, for the six months ended June 30, 2023. Net income and Adjusted EBITDA were $690 million and $1,667 million, respectively, for the six months ended June 30, 2024, compared to $622 million and $1,452 million, respectively, for the six months ended June 30, 2023.

Development

In the second quarter of 2024, Hilton opened 165 hotels, totaling 22,400 rooms, resulting in 18,000 net room additions. During the quarter, the company continued to expand its lifestyle portfolio through our acquisition of the Graduate brand and added 32 hotels to its system with another four hotels added to its pipeline. The first NoMad hotel joined the Hilton portfolio in the quarter, the NoMad London. The company debuted three stunning properties: the DUO Hotel Lisbon, Curio Collection by Hilton; the DoubleTree by Hilton Lagoa Azores; and the Legacy Hotel Cascais, Curio Collection by Hilton. The company opened 27 Spark by Hilton hotels during the quarter, including the first Spark hotel in the United Kingdom, and expects this momentum will continue into the second half of the year.

In July, the company launched a partnership with SLH, enabling guests to book rooms at nearly 400 SLH hotels that are joining the system.

Hilton added 62,700 rooms to the development pipeline during the second quarter, and, as of June 30, 2024, the development pipeline totaled 3,870 hotels representing 508,300 rooms, growing 15 percent from June 30, 2023, and 8 percent from the prior quarter. These pipeline hotels were located in 136 countries and territories, including 39 countries and territories where Hilton had no existing hotels, with 251,800 rooms under construction and 298,800 rooms located outside of the United States.

Balance Sheet and Liquidity

In June 2024, Hilton amended the credit agreement governing its senior secured term loan facilities (the Term Loans) pursuant to which $1.0 billion of outstanding Term Loans due June 2028 were replaced with $1.0 billion of Term Loans due November 2030, aligning their maturity with the outstanding $2.1 billion tranche of Term Loans due November 2030. Additionally, the entire balance of the Term Loans was repriced with a reduced interest rate of the Secured Overnight Financing Rate plus 1.75 percent.

As of June 30, 2024, Hilton had $10.3 billion of debt outstanding, excluding the deduction for deferred financing costs and discounts, with a weighted average interest rate of 4.81 percent. Excluding all finance lease liabilities and other debt of its consolidated variable interest entities, it had $10.1 billion of debt outstanding with a weighted average interest rate of 4.80 percent and no scheduled maturities until May 2025. An amount of $500 million of outstanding debt is due in May 2025, and Hilton believes that it will have sufficient sources of liquidity and access to debt financing to address such debt at or before its maturity date. As of June 30, 2024, no debt amounts were outstanding under its $2.0 billion senior secured revolving credit facility (the Revolving Credit Facility), which had an available borrowing capacity of $1,913 million after considering $87 million of outstanding letters of credit. Total cash and cash equivalents were $802 million as of June 30, 2024, including $71 million of restricted cash and cash equivalents.

In June 2024, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, for a total of $37 million, bringing total dividend payments for the year to $76 million. In August 2024, the board of directors authorized a regular quarterly cash dividend of $0.15 per share of common stock to be paid on September 27, 2024, to holders of record of common stock as of the close of business on August 23, 2024.

During the three months ended June 30, 2024, the company repurchased 3.5 million shares of Hilton common stock at an average price per share of $205.68, for a total of $724 million. For the six months ended June 30, 2024, the company repurchased 6.9 million shares of Hilton common stock at an average price per share of $201.02, returning $1,462 million of capital to shareholders, including dividends. Total capital return to shareholders including dividends year-to-date through August was $1,774 million. The number of shares outstanding as of August 2, 2024 was 246.4 million.

Outlook

Share-based metrics in Hilton’s outlook include actual share repurchases through the second quarter but do not include the
effect of potential share repurchases thereafter.

Full Year 2024

• System-wide comparable RevPAR, on a currency neutral basis, is projected to increase between 2.0 percent and 3.0 percent compared to 2023.
• Diluted EPS is projected to be between $6.06 and $6.15.
• Diluted EPS, adjusted for special items, is projected to be between $6.93 and $7.03.
• Net income is projected to be between $1,532 million and $1,555 million.
• Adjusted EBITDA is projected to be between $3,375 million and $3,405 million.
• Contract acquisition costs and capital expenditures, excluding amounts reimbursed by third parties, are projected to be between $250 million and $300 million.
• Capital return is projected to be approximately $3.0 billion.
• General and administrative expenses are projected to be between $415 million and $430 million.
• Net unit growth is projected to be between 7.0 percent and 7.5 percent.

Third Quarter 2024

• System-wide comparable RevPAR, on a currency neutral basis, is projected to increase between 2.0 percent and 3.0 percent compared to the third quarter of 2023.
• Diluted EPS is projected to be between $1.74 and $1.79.
• Diluted EPS, adjusted for special items, is projected to be between $1.80 and $1.85.
• Net income is projected to be between $435 million and $448 million.