Hilton (HLT) Tops on Q4 Earnings & Revenues, Unveils '24 Outlook
Hilton Worldwide Holdings Inc. HLT reported impressive fourth-quarter 2023 results, wherein earnings and total revenues topped the Zacks Consensus Estimate and increased on a year-over-year basis.
The company’s quarterly results notably benefited from solid improvement in revenue per available room (RevPAR) on the back of increased occupancy rates and average daily rate (ADR). Furthermore, during the quarter, HLT witnessed a record number of openings, which encouraged the uptrend to a great extent. The company states that it is well-positioned to continue driving innovation and growth through 2024, owing to the improving trends.
Following the results, shares of this hospitality company inched down 0.5% in the pre-market trading session on Feb 7.
Q4 in Detail
Hilton reported adjusted earnings per share (EPS) of $1.68, which beat the Zacks Consensus Estimate of $1.56 by 7.7%. The reported value grew 5.7% from the year-ago quarter’s reported adjusted EPS of $1.59.
Hilton Worldwide Holdings Inc. Price, Consensus and EPS Surprise
Hilton Worldwide Holdings Inc. price-consensus-eps-surprise-chart | Hilton Worldwide Holdings Inc. Quote
Quarterly total revenues of $2.61 billion also topped the consensus mark of $2.57 billion by 1.6% and increased 6.8% year over year.
During the quarter, franchise and licensing fees improved 11.9% to $601 million year over year. Base and other management fees and incentive management fees rose 8% to $95 million and 20.3% to $77 million year over year, respectively. On the other hand, owned and leased hotels revenues declined 8.3% to $320 million compared with the year-ago quarter.
RevPAR and Adjusted EBITDA
In the quarter under review, system-wide comparable RevPAR grew 5.7% year over year (on a currency-neutral basis), owing to an increase in occupancy and ADR. Also, RevPAR was up 13.5% from 2019 levels. Our model predicted the reported quarter’s system-wide RevPAR to increase 5.5% year over year.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the fourth quarter was $803 million, up 8.5% year over year. Our estimated adjusted EBITDA was expected to inch up 0.5% year over year to $743.8 million.
2023 Highlights
Total revenues were up 16.7% to $10.24 billion compared with $8.77 billion reported in the year-ago period. During 2023, Hilton’s adjusted earnings were $6.21 per share, up 27% from 2022 reported earnings of $4.89 per share.
In 2023, system-wide comparable RevPAR (on a currency-neutral basis) grew 12.6% compared with the 2022 reported value and 10.7% compared with 2019 levels.
Hilton reported adjusted EBITDA of $3.09 billion in 2023, up 18.9% from $2.6 billion reported in 2022.
Balance Sheet
As of Dec 31, 2023, cash and cash equivalent balance (including restricted cash) was $875 million, up from $779 million reported in the prior quarter. As of the fourth quarter of 2023-end, Hilton reported long-term debt outstanding of $9.3 billion, up from $8.8 billion reported in the previous quarter, excluding deferred financing costs and discounts, with a weighted average interest rate of 4.78%.
During the quarter, Hilton repurchased 4.6 million shares of its common stock worth approximately $746 million. In 2023, the company repurchased a total of 15.6 million shares for $150.52 of average price per share.
Management declared a quarterly cash dividend of 15 cents per share. The dividend will be payable on Mar 28 to shareholders of record as of Feb 23, 2024.
Business Updates
During fourth-quarter 2023, Hilton opened a record number of new hotels, totaling 24,000 rooms. It also achieved net unit growth of 22,300 rooms.
As of Dec 31, 2023, Hilton's development pipeline comprised nearly 3,270 hotels, with almost 462,400 rooms across 118 countries and territories, including 30 countries and territories where it currently has no running hotels.
Q1 & 2024 Outlook
For first-quarter 2024, Hilton anticipates net income in the range of $340-$359 million. Adjusted EBITDA is expected to be between $690 million and $710 million. It projects first-quarter EPS (adjusted for special items) to be between $1.36 and $1.44.
For first-quarter 2024, management forecasts system-wide RevPAR (on a currency-neutral basis) to increase in the 2-4% band on a year-over-year basis.
For 2024, the company estimates net income in the range of $1.69-$1.73 billion. Adjusted EBITDA is expected to be between $3.33 billion and $3.38 billion. It suggests general and administrative expenses for 2024 in the range of $415-$430 million.
Hilton expects 2024 EPS (adjusted for special items) in the range of $6.80-$6.94. Full-year capital return is anticipated to be approximately $3 billion.
Management anticipates 2024 system-wide RevPAR (on a currency-neutral basis) to increase 2-4% year over year. Net unit growth is estimated to be between 5.5% and 6%.
Zacks Rank & Recent Consumer Discretionary Releases
Hilton currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Royal Caribbean Cruises Ltd. RCL reported mixed fourth-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. However, the top and the bottom line increased on a year-over-year basis.
The quarterly results reflect unprecedented demand for the brands from new and loyal guests. The company reported record bookings, both in terms of rate and volume. Going forward, the management emphasized delivering long-term shareholder value through industry-leading global brands, innovative fleets and diverse destinations. The company anticipates achieving two Trifecta goals ahead of schedule.
Adtalem Global Education Inc. ATGE reported impressive results for second-quarter fiscal 2024. Earnings and revenues surpassed the respective Zacks Consensus Estimate and increased year over year.
The company’s quarterly results reflect solid enrollment growth along with the efficient execution of its Growth with Purpose strategy. The continuous focus on this growth strategy has sparked organic revenue growth, improved operational efficiencies and yielded outstanding academic outcomes. Owing to the quarter’s uptrend, ATGE has raised its fiscal 2024 guidance.
Las Vegas Sands Corp. LVS reported mixed fourth-quarter 2023 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and bottom lines increased on a year-over-year basis.
The company reported continued improvement in the operating environment in Macao and Singapore. In Macao, the company reported a sustained recovery across each of its segments. Singapore’s Marina Bay Sands demonstrated solid financial and operational performance. The introduction of new suite options and improved services is in line with the improving airlift capacity and the continuous recovery in travel and tourism spending, especially from China and the broader region.
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