Hilton earnings beat estimates, light on RevPAR growth

McLEAN, Virginia - Hilton reported 1Q24 earnings on Wednesday, stating systemwide RevPAR increased 2% year-over-year with renovations, inclement weather and unfavorable holiday shifts weighing on performance more than anticipated. Management and franchise fee revenues increased 14.4% compared to the same period in 2023.

First quarter earnings per share of $1.53 is $0.11 better than the analyst estimate of $1.42. Revenue for the quarter came in at $2.57 billion versus the consensus estimate of $2.53 billion.

Full year 2024 systemwide RevPAR is projected to increase between 2% and 4% on a comparable and currency neutral basis compared to 2023; full year net income is projected to be between $1.586 billion and $1.621 billion; full year Adjusted EBITDA is projected to be between $3.375 billion and $3.425 billion. Full year 2024 capital return is projected to be approximately $3 billion.

Hilton repurchased 3.4 million shares of common stock during the first quarter; total capital return, including dividends, was $701 million for the quarter and $908 million year to date through April.

For the three months ended March 31, 2024, diluted EPS was $1.04 and diluted EPS, adjusted for special items, was $1.53 compared to $0.77 and $1.24, respectively, for the three months ended March 31, 2023. Net income and Adjusted EBITDA were $268 million and $750 million, respectively, for the three months ended March 31, 2024, compared to $209 million and $641 million, respectively, for the three months ended March 31, 2023.

Development update

On the development side, President and CEO Christopher Nassetta said the company expects net unit growth of 6% to 6.5% for the full year, excluding the planned acquisition of the Graduate Hotels brand.

In the first quarter of 2024, Hilton opened 106 hotels, totaling 16,800 rooms, resulting in 14,200 net room additions.

Hilton added 29,800 rooms to the development pipeline during the first quarter, and, as of March 31, 2024, its development pipeline totaled approximately 3,380 hotels representing 472,300 rooms throughout 119 countries and territories, including 31 countries and territories where Hilton had no existing hotels. Additionally, of the rooms in the development pipeline, 229,700 were under construction and 267,900 were located outside of the U.S.

The 14,200 net rooms in 1Q24 and the net additions (as well as the gross additions) were the highest 1Q total in company history. The 29,800 signed rooms also were a 1Q record.

R.W. Baird analyst Michael Bellisario wrote that Hilton increased its net unit growth outlook, which previously was trending toward the high end of its 5.5%-6.0% range. "Hilton noted 'great momentum' across signings, starts, and openings. The increased outlook likely now includes a benefit from the Small Luxury Hotels of the World partnership; the pending Graduate Hotels acquisition is excluded from guidance (but should add ~50 bps to growth upon closing in 2Q24)," he said.