Hilton reports Q1 net loss, but sees momentum shift
Hilton has reported a net loss of $109 million for the first quarter ended March 31. System-wide RevPAR was $46.23, a decrease of 38.4% from the same period last year. Occupancy came in at 43.9%, an 11% drop from Q1 2020, and ADR was $105.38, a decline of 23% from the same quarter last year.
“We are pleased with our first quarter results,” said Christopher J. Nassetta, president/CEO, Hilton. “While rising COVID-19 cases and tightened travel restrictions, particularly across Europe and our Asia-Pacific region, weighed on demand in January and February, we saw meaningful improvement in March and April. We expect this positive momentum to continue as vaccines are more widely distributed and our customers feel safe traveling again. We continue to grow our portfolio of hotels in exciting destinations throughout the world, giving our guests more options than ever before to make a Hilton hotel a part of their plans as travel resumes.”
- Diluted earnings per share (EPS) was -$0.39, and diluted EPS, adjusted for special items, was $0.02
- Adjusted EBITDA was $198 million
- Approved 21,900 new rooms for development, bringing Hilton’s development pipeline to 399,000 rooms as of March 31
- Added 16,500 rooms to Hilton’s system, contributing to 13,100 net additional rooms during the period and approximately 5.8% annualized net unit growth from March 31
- As of April 28, 97% of Hilton’s system-wide hotels were open
- In March, the company repaid $250 million of the outstanding debt balance under the revolving credit facility, for a total of $500 million repaid in the first quarter
The COVID-19 pandemic adversely 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 three months ended March 31, 2021, are not comparable to the results for the three months ended March 31, 2020. The operations of approximately 275 properties, which are primarily located in the U.S. and Europe, were suspended for some period of time during the three months ended March 31, 2021, as compared to approximately 730 properties during the three months ended March 31, 2020.
For the first quarter, system-wide comparable RevPAR decreased 38.4% compared to the same period in 2020 due to both occupancy and ADR decreases. Additionally, as a result of the pandemic, fee revenues decreased 34% during Q1 compared to the same period in 2020.
For the first quarter, diluted EPS was -$0.39 and diluted EPS, adjusted for special items, was $0.02 compared to $0.06 and $0.74, respectively, for the same period last year. Net income and Adjusted EBITDA were -$109 million and $198 million, respectively, for the first quarter, compared to $18 million and $363 million, respectively, for the first quarter of 2020.
In the first quarter of 2021, Hilton opened 105 new hotels totaling 16,500 rooms and achieved net unit growth of 13,100 rooms. Since the beginning of the year, Hilton has opened its 100th Curio Collection by Hilton, the 1,500-room Virgin Hotels Las Vegas and its 50th Tapestry Collection by Hilton, demonstrating the strength of its newer, conversion-friendly brands, and executed a management agreement for the first Signia by Hilton, a 975-room new-construction project in Atlanta. Additionally, during the quarter, Hilton added more than 5,000 rooms to its development pipeline in connection with the exclusive management license agreement with Country Garden to introduce and develop Home2 Suites by Hilton branded properties in China.
As of March 31, Hilton’s development pipeline totaled more than 2,570 hotels consisting of nearly 399,000 rooms throughout 114 countries and territories, including 31 countries and territories where Hilton does not currently have any existing hotels. Of the rooms in the development pipeline, 241,000 rooms were located outside the U.S., and 204,000 rooms were under construction.
Balance sheet and liquidity
As of March 31, Hilton had $10.1 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 3.66%. Excluding finance lease liabilities and other debt of Hilton’s consolidated variable interest entities, Hilton had $9.8 billion of long-term debt outstanding with a weighted average interest rate of 3.61% and no scheduled maturities until 2024. During the first quarter, Hilton repaid $500 million of the outstanding debt balance under its $1.75 billion senior secured revolving credit facility, resulting in an available borrowing capacity of $500 million. Total cash and cash equivalents were $2,447 million as of March 31, including $45 million of restricted cash and cash equivalents.