10-QPeriod: Q1 FY2020

Hilton Worldwide Holdings Inc. Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 7, 2020For Securities:HLT

Summary

Hilton Worldwide Holdings Inc. reported a significant decline in financial performance for the first quarter of 2020, primarily driven by the unprecedented impact of the COVID-19 pandemic. Total revenues decreased by 12.9% year-over-year to $1.92 billion. Net income attributable to Hilton stockholders plummeted to $18 million from $158 million in the prior year period, resulting in diluted earnings per share of $0.06 compared to $0.54. The company experienced substantial drops in occupancy and RevPAR across all regions, with Asia Pacific being the first affected but showing early signs of recovery, while other regions like the U.S. and Europe saw significant declines starting in March. In response to the crisis, Hilton took proactive measures to preserve liquidity, including fully drawing down its revolving credit facility, suspending dividends and share repurchases, and implementing cost-saving initiatives. Despite the severe downturn, the company emphasized its focus on maintaining financial flexibility and liquidity to navigate the uncertain environment.

Financial Highlights

49 data points
Beta

Revenue

$1.92B

Net Income

$18.00M

0.9% Net Margin

EPS (Diluted)

$0.06

Total Assets

$15.79B

Cash & Equivalents

$1.80B

Free Cash Flow

$117.00M

Financial Statements
Beta
Revenue$1.92B
Operating Expenses$1.85B
Operating Income$68.00M
Interest Expense$94.00M
Net Income$18.00M
EPS (Basic)$0.06
EPS (Diluted)$0.06
Shares Outstanding (Basic)277.00M
Shares Outstanding (Diluted)280.00M

Key Highlights

  • 1Total revenues for Q1 2020 decreased by 12.9% to $1.92 billion compared to $2.20 billion in Q1 2019.
  • 2Net income attributable to Hilton stockholders significantly decreased to $18 million ($0.06 per diluted share) from $158 million ($0.54 per diluted share) in the prior year, largely due to the COVID-19 pandemic's impact.
  • 3System-wide RevPAR (Revenue per Available Room) for comparable hotels declined by 22.6% due to a 14.3 percentage point decrease in occupancy.
  • 4The company reported impairment losses of $112 million primarily related to hotel properties under operating and finance leases due to the pandemic's impact.
  • 5Hilton drew down its entire $1.69 billion revolving credit facility as a precautionary measure to enhance liquidity.
  • 6Share repurchases were suspended in March 2020, and dividend payments were temporarily halted to conserve cash.
  • 7The company's development pipeline remained robust with nearly 2,670 hotels in development, though openings may be delayed due to the economic environment.

Frequently Asked Questions

The primary driver was the unprecedented impact of the COVID-19 pandemic, which led to significant reductions in global travel, cancellations, and temporary suspensions of hotel operations, severely affecting occupancy and revenue.

Hilton has taken several proactive measures, including fully drawing down its revolving credit facility, temporarily suspending dividend payments and share repurchases, implementing strict cost management measures (like reducing non-essential expenses and payroll costs), and completing a pre-sale of Hilton Honors points and issuing new senior notes.

The pandemic impacted all regions, with Asia Pacific experiencing effects earlier. However, all regions saw significant declines in RevPAR, occupancy, and ADR starting in March. While Asia Pacific (particularly China) showed early signs of recovery in occupancy, other regions were still heavily impacted.

The company expects the COVID-19 pandemic to continue to have a material adverse impact on its results in future periods. While they cannot precisely estimate the full impact, they have taken steps to ensure their cash position is adequate to meet obligations for at least the next 24 months, even if current low occupancy levels persist.