Hilton posts strong Q2

Hilton Worldwide Holdings Inc. reported net income of $128 million for the second quarter ending June 30 vs. a net loss of $430 million in the same period last year. System-wide RevPAR was $73.03 ($82.32 in the U.S.), a $233.8% increase vs. the same period last year. Occupancy was 58.5% for Q2 (63.7% in the U.S.), while ADR was $124.75 ($129.30 in the U.S.

“We are excited about our strong second-quarter performance, which reflects our ongoing recovery from the negative effects of the COVID-19 pandemic,” said Chris Nassetta, president/CEO. “The broader distribution of vaccinations and the easing of travel and other restrictions have allowed for renewed interest in travel and tourism, with families embarking on long-delayed trips, and businesses scheduling in-person meetings again. While the pace of recovery varies by region, particularly with the uncertainty surrounding coronavirus variants, we expect continued strength in leisure demand and further upticks in business travel to drive continued resurgence in the back half of the year. We are also increasingly optimistic on our development, with net unit growth for the full year expected to be between 5% and 5.5%.”

Second-quarter highlights:

  • Diluted EPS was $0.46 for the quarter, and diluted EPS, adjusted for special items, was $0.56
  • Adjusted EBITDA was $400 million
  • Approved 25,900 new rooms for development during the quarter, bringing Hilton’s development pipeline to 401,000 rooms as of June 30
  • Added 19,800 rooms to Hilton’s system, contributing to 17,800 net additional rooms during the period and approximately 7% annualized net unit growth from June 30, 2020
  • Fully repaid the $1,190 million outstanding debt balance on the revolving credit facility during the quarter
  • As of July 21, 99% of Hilton’s system-wide hotels were open
  • Full-year 2021 net unit growth is expected to be between 5% and 5.5%

Overview
The negative impact of the COVID-19 pandemic affected the Asia-Pacific region beginning in January 2020, before spanning to the Americas and Europe, Middle East and Africa regions in mid-March 2020. Therefore, the results for the six months ended June 30, 2021 and 2020 for these regions are less comparable than the Asia-Pacific region and reflect less improvement, if any, in RevPAR between the two periods, as those regions were not affected for the entirety of the six months ended June 30, 2020. The operations of approximately 300 hotels, primarily located in the U.S. and Europe, were suspended for some period of time during the six months ended June 30, 2021, as compared to approximately 1,205 hotels during the six months ended June 30, 2020. As of June 30, 2021, all but approximately 100 of Hilton’s system-wide hotels were open.

For the quarter, system-wide comparable RevPAR increased 233.8%, compared to the same period in 2020, due to increases in both occupancy and ADR, and fee revenues increased 220%. System-wide comparable RevPAR increased 23.2%t, compared to the same period in 2020, due to an increase in occupancy, partially offset by a decrease in ADR, and fee revenues increased 28%. These increases reflect the global recovery from the COVID-19 pandemic and the related upward trend in travel and tourism during 2021, particularly during the three months ended June 30, 2021.

For the quarter, diluted EPS was $0.46 and diluted EPS, adjusted for special items, was $0.56 compared to losses of $1.55 and $0.61, respectively, for the three months ended June 30, 2020. Net income and adjusted EBITDA were $128 million and $400 million, respectively, for the quarter, compared to -$432 million and $51 million, respectively, for the same period last year.

For the six months ended June 30, diluted EPS was $0.08 and diluted EPS, adjusted for special items, was $0.58 compared to -$1.49 and $0.13, respectively, for the six months ended June 30, 2020. Net income and adjusted EBITDA were $19 million and $598 million, respectively, for the six months ended June 30, compared to -$414 million and $414 million, respectively, for the six months ended June 30, 2020.

Development
In the quarter. Hilton opened 119 new hotels totaling more than 19,800 rooms and achieved net unit growth of 17,800 rooms. In June, the Resorts World Las Vegas opened, Hilton’s largest multi-brand property, which includes three premium brands, Hilton Hotels & Resorts, Conrad Hotels & Resorts and LXR Hotels & Resorts. Also during the quarter, Hilton celebrated Tru by Hilton’s five-year anniversary with the opening of the brand’s 200th hotel, Tru by Hilton Atlanta Galleria Ballpark. Hilton had a record amount of conversion signings during the quarter and, this month, opened its first hotel under the Signia by Hilton brand, the Signia by Hilton Orlando Bonnet Creek, rebranded from a Hilton Hotels & Resorts property.

As of June 30, Hilton’s development pipeline totaled nearly 2,590 hotels representing 401,000 rooms throughout 115 countries and territories, including 30 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, 247,000 rooms were located outside the U.S., and 203,000 rooms were under construction.

Balance sheet and liquidity
As of June 30, Hilton had $8.9 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 4%. Excluding finance lease liabilities and other debt of Hilton’s consolidated variable interest entities, Hilton had $8.6 billion of long-term debt outstanding with a weighted average interest rate of 3.95% and no scheduled maturities until 2025. During the three months ended June 30, Hilton fully repaid the $1,190 million outstanding debt balance on its $1.75 billion senior secured revolving credit facility, resulting in an available borrowing capacity of $1,690 million as of June 30, after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $1,127 million as of June 30, including $83 million of restricted cash and cash equivalents.

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