10-QPeriod: Q3 FY2019

Hilton Worldwide Holdings Inc. Quarterly Report for Q3 Ended Sep 30, 2019

Filed October 23, 2019For Securities:HLT

Summary

Hilton Worldwide Holdings Inc. (HLT) reported its third-quarter 2019 financial results, demonstrating solid performance and continued growth. Total revenues increased by 6.3% to $2.4 billion for the quarter, driven by a 8.8% rise in franchise and licensing fees and a 9.5% increase in other revenues from managed and franchised properties. The company also reported a significant increase in net income attributable to stockholders, rising to $288 million from $162 million in the prior year's quarter, translating to diluted EPS of $1.00 compared to $0.54. Key drivers of this performance include system-wide RevPAR growth of 0.4%, supported by strength in Europe and the U.S., despite some headwinds in Asia Pacific due to economic slowdowns and geopolitical factors. The company's strategic focus on expanding its management and franchise segment continues to yield positive results, with a robust development pipeline indicating future growth potential. Hilton also continued its capital return strategy, actively repurchasing shares and maintaining a strong liquidity position.

Financial Statements
Beta
Revenue$2.40B
Operating Expenses$1.96B
Operating Income$519.00M
Interest Expense$105.00M
Net Income$288.00M
EPS (Basic)$1.01
EPS (Diluted)$1.00
Shares Outstanding (Basic)285.00M
Shares Outstanding (Diluted)288.00M

Key Highlights

  • 1Total revenues increased 6.3% to $2.4 billion for the three months ended September 30, 2019, compared to $2.25 billion for the same period in 2018.
  • 2Net income attributable to Hilton stockholders significantly increased to $288 million, up from $162 million in the prior year's quarter.
  • 3Diluted earnings per share (EPS) rose to $1.00, a substantial increase from $0.54 in the third quarter of 2018.
  • 4System-wide RevPAR (Revenue per Available Room) grew by 0.4% for comparable hotels, indicating modest top-line improvement.
  • 5The company repurchased approximately 4.46 million shares of common stock for an average price of $94.72 per share during the quarter.
  • 6Hilton's development pipeline remained strong with over 2,530 hotels representing nearly 379,000 rooms in development or under construction.
  • 7The adoption of new lease accounting standards (ASC 842) resulted in the recognition of significant operating lease right-of-use assets ($839 million) and liabilities ($1,004 million) on the balance sheet as of September 30, 2019.

Frequently Asked Questions

Hilton's total revenues increased by 6.3% to $2.4 billion in the third quarter of 2019. This growth was primarily driven by an 8.8% increase in franchise and licensing fees and a 9.5% increase in other revenues from managed and franchised properties, reflecting the addition of new properties and continued demand.

Net income attributable to Hilton stockholders more than doubled, rising to $288 million from $162 million in the same period last year. Diluted earnings per share (EPS) also saw a significant increase, reaching $1.00 compared to $0.54 in the third quarter of 2018.

Hilton maintained a strong development pipeline, with over 2,530 hotels and nearly 379,000 rooms in development or under construction as of September 30, 2019. This indicates a continued strategic focus on expanding its global footprint through management and franchise agreements, which typically require minimal capital investment from Hilton.

Effective January 1, 2019, Hilton adopted ASU 2016-02, Leases (Topic 842). This resulted in the recognition of substantial operating lease right-of-use (ROU) assets ($839 million) and operating lease liabilities ($1,004 million) on the condensed consolidated balance sheet as of September 30, 2019, reflecting leases for properties and equipment previously accounted for as operating leases.