Hilton reports Q3 net income of $240M - Hotel Business

Hilton, for the third quarter ended Sept. 30, reported net income of $240 million. The company’s results were aided by the continued strength of leisure travel, as well as an uptick in business travel.

Third-quarter highlights:

• Diluted EPS was $0.86, and diluted EPS, adjusted for special items, was $0.78
• Adjusted EBITDA was $519 million
• System-wide comparable RevPAR increased 98.7% on a currency neutral basis from the same period in 2020
• System-wide comparable RevPAR decreased 18.8% on a currency neutral basis from the same period in 2019
• Approved 23,600 new rooms for development, bringing Hilton’s development pipeline to 404,000 rooms as of Sept. 30
• Added 14,700 rooms to Hilton’s system, contributing to 11,200 net additional rooms during the period and approximately 6.6% annualized net unit growth from Sept. 30, 2020
• Full-year 2021 net unit growth is expected to be between 5.0% and 5.5%.

“We are pleased with our third-quarter results, which continue to reflect recovery from the adverse impact of the COVID-19 pandemic,” said Christopher J. Nassetta, president/CEO, Hilton. “Leisure travel remained strong and business travel continued to pick up during the quarter. We continue to expand our global footprint driven by the power of our industry-leading brand portfolio. Overall, we remain confident in a strong recovery in global tourism in the months and years ahead, as well as our positioning within the industry, which will enable us to continue to differentiate ourselves and deliver exceptional performance for all of our stakeholders.”

During the three and nine months ended Sept. 30, the COVID-19 pandemic continued to negatively impact Hilton’s business and hotel operating statistics; however, Hilton experienced significant improvement in its results as compared to the same periods in 2020, due to an upward trend in travel and tourism. As a result of the pandemic, certain hotels suspended operations at various times throughout 2020, but the majority of those hotels were reopened by 2021. In line with the recovery, although some hotels did suspend operations during the nine months ended Sept. 30, reopenings significantly outpaced suspensions. As such, the operations of only approximately 335 hotels, or 5%, of Hilton’s system-wide properties as of Sept. 30, which were primarily located in the U.S. and Europe, were suspended for some period of time during the nine months ended Sept. 30, as compared to approximately 1,270 hotels during the nine months ended Sept. 30, 2020. As of Sept. 30, all but 88, or approximately 1%, of Hilton’s system-wide hotels were open and Hilton expects nearly all of its system-wide hotels to be open by the end of the year.

For the three and nine months ended Sept. 30, system-wide comparable RevPAR increased 98.7% and 47.6%, respectively, compared to the same periods in 2020, due to increases in both occupancy and ADR, and the three months ended Sept. 30 was down 18.8% compared to the three months ended Sept. 30, 2019. Fee revenues increased 93% and 49%, respectively, compared to the same periods in 2020.

For the three months ended Sept. 30, diluted EPS was $0.86 and diluted EPS, adjusted for special items, was $0.78. compared to -$0.29 and $0.06, respectively, for the three months ended Sept. 30, 2020. Net income and adjusted EBITDA were $240 million and $519 million, respectively, for the third quarter, compared to a loss of $81 million and a gain of $224 million, respectively, for the same period in 2020.

For the nine months ended Sept. 30, diluted EPS was $0.94 and diluted EPS, adjusted for special items, was $1.36 compared to -$1.77 and $0.20, respectively, for the same period in 2020. Net income and adjusted EBITDA were $259 million and $1.117 billion, respectively, for the nine months ended Sept. 30, compared to a loss of $495 million and a gain of $638 million, respectively, for the same period in 2020.

Development
In the third quarter of 2021, Hilton opened 96 new hotels totaling approximately 14,700 rooms and achieved net unit growth of 11,200 rooms. During the quarter, Hilton opened three new hotels under LXR Hotels & Resorts, including the brand’s first property in the Asia-Pacific region. Additionally, the company celebrated the opening of the 500th hotel under its Home2 Suites by Hilton brand only 10 years after it was introduced, making it one of the fastest growing hotel brands in industry history.

As of Sept. 30, Hilton’s development pipeline totaled more than 2,620 hotels representing 404,000 rooms throughout 114 countries and territories, including 27 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, 249,000 rooms were located outside the U.S., and 204,000 rooms were under construction.

Balance sheet and liquidity
As of Sept. 30, Hilton had $8.9 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 3.99%. 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. No amounts were outstanding under Hilton’s $1.75 billion senior secured revolving credit facility as of Sept. 30, which had an available borrowing capacity of $1.690 billion after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $1.387 billion as of Sept. 30, including $99 million of restricted cash and cash equivalents.

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Hilton reports Q3 net income of $240M - Hotel Business
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