Hilton (HLT) Reports Solid 2023 Unit Growth, Signings Up Y/Y
Hilton Worldwide Holdings Inc. HLT reported substantial unit growth in 2023, marked by impressive signings and notable progress in construction starts. The upside can be attributed to effective commercial strategies. Also, it highlighted substantial global customer demand backed by high-quality product offerings and exceptional service levels.
As of 2023-end, HLT reported more than 7,500 properties in 126 countries and territories. The company added more than one new hotel per day to its global portfolio on average. From October to December 2023, the company opened 132 hotels (about 24,000 rooms), bringing the total count to 395 hotels (nearly 63,000 rooms) in 2023. The company’s unit growth came in at 4.9% year over year.
Construction starts during the year were up 15% from 2022 levels and are proceeding toward pre-pandemic levels. The company reported having more new rooms under construction than its competitors, constituting nearly one in every five hotel rooms globally undergoing development.
Hilton enhanced its development pipeline in 2023 by achieving record signings for approximately 1,000 hotels, totaling 130,000 rooms. The signings increased 45% from the previous year’s levels and surpassed pre-pandemic levels significantly. Currently, Hilton's pipeline comprises approximately 3,300 hotels (over 462,000 rooms).
The company's growth prospects have received an additional boost through the introduction of two new brands to its portfolio — Spark by Hilton and LivSmart Studios by Hilton. The additions are driving increased engagement with owners seeking to tap into the growing demand for hotels in the premium economy and long-stay segments.
The decision of hotel owners to cooperate with Hilton reflects the strength of its increasing brand portfolio and strong commercial performance. This not only facilitates Hilton's capital-light growth strategy but also contributes to a positive network effect. The interconnected approach enables the company to provide value to all stakeholders consistently.
Chris Nassetta, Hilton's president and CEO, expressed satisfaction with the robust results achieved by the team, attributing them to the strength of the brand and the organizational culture. The management maintains a positive outlook on the net unit growth projection for 2024, falling between 5.5% and 6.0%. The positive momentum in signings and construction starts suggests the possibility of reaching the upper end of the range.
Price Performance
Image Source: Zacks Investment Research
Hilton’s shares have gained 34.3% in the past year compared with the industry’s 18.4% growth. Notably, the company is benefiting from a focus on unit expansion, hotel conversions, strategic partnerships and loyalty programs. It expects positive development trends to continue on the back of new development and conversion opportunities. HLT aims to engage Honors members further through enhanced partnerships and points redemption offerings, seeking to restore customer engagement to pre-pandemic levels. For fourth-quarter 2023, management anticipates system-wide RevPAR to increase in the 4.5-5.5% band on a year-over-year basis.
However, uncertain economic conditions and stiff competition remain potential headwinds. Earnings estimates for 2024 have declined in the past 30 days, depicting analysts' concern regarding the stock's upside potential.
Zacks Rank & Key Picks
Hilton currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Consumer Discretionary sector are as follows:
Virco Mfg. Corporation VIRC sports a Zacks Rank #1. VIRC has a trailing four-quarter earnings surprise of 188.6% on average. VIRC’s shares have surged 164.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for VIRC’s 2024 sales and earnings per share (EPS) indicates a rise of 15.7% and 32.4%, respectively, from the year-ago period’s levels.
H World Group Limited HTHT currently sports a Zacks Rank of 1. It has a trailing four-quarter earnings surprise of 94.5%, on average. The stock has declined 36.4% in the past year.
The Zacks Consensus Estimate for HTHT’s 2024 sales and EPS indicates an improvement of 7.9% and 9.8%, respectively, from the year-ago period’s levels.
Wyndham Hotels & Resorts, Inc. WH carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 6.6%, on average. The stock has gained 4.3% in the past year.
The Zacks Consensus Estimate for WH’s fiscal 2024 sales and EPS implies a decline of 4.5% and 7.7%, respectively, from the year-ago levels.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
H World Group Limited Sponsored ADR (HTHT) : Free Stock Analysis Report
Virco Manufacturing Corporation (VIRC) : Free Stock Analysis Report
Hilton Worldwide Holdings Inc. (HLT) : Free Stock Analysis Report
Wyndham Hotels & Resorts (WH) : Free Stock Analysis Report
