10-QPeriod: Q1 FY2021

Hilton Worldwide Holdings Inc. Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 5, 2021For Securities:HLT

Summary

Hilton Worldwide Holdings Inc. reported a net loss of $109 million ($0.39 per diluted share) for the first quarter of 2021, a significant decline from a net income of $18 million ($0.06 per diluted share) in the same period of 2020. This downturn is largely attributable to the ongoing impact of the COVID-19 pandemic, which continued to suppress travel demand and led to temporary suspensions of operations at a notable number of hotels. Despite the loss, the company highlighted signs of recovery, with system-wide RevPAR showing sequential monthly improvement from December 2020 to March 2021, and March 2021 RevPAR improving year-over-year. The company's balance sheet reflects a decrease in cash and cash equivalents to $2.4 billion from $3.2 billion at the end of 2020, alongside a reduction in total debt to $9.9 billion from $10.4 billion. This debt reduction was primarily driven by the issuance of new senior notes and the subsequent repayment of existing ones. Hilton maintained a strong development pipeline, adding over 100 hotels and 16,500 rooms in the first quarter, signaling confidence in future growth despite the current challenging environment.

Financial Statements
Beta
Revenue$874.00M
Operating Expenses$853.00M
Operating Income$21.00M
Interest Expense$103.00M
Net Income-$108.00M
EPS (Basic)$-0.39
EPS (Diluted)$-0.39
Shares Outstanding (Basic)278.00M
Shares Outstanding (Diluted)278.00M

Key Highlights

  • 1Hilton reported a net loss of $109 million for Q1 2021, compared to a net income of $18 million in Q1 2020, primarily due to the COVID-19 pandemic's impact on travel and hotel operations.
  • 2System-wide RevPAR declined by 38.4% in Q1 2021 compared to Q1 2020, with significant drops across all regions, though sequential monthly improvements were observed from December 2020 to March 2021.
  • 3Total revenues decreased to $874 million in Q1 2021 from $1,920 million in Q1 2020, heavily impacted by reduced franchise, licensing, management, and owned/leased hotel revenues.
  • 4The company reduced its long-term debt by approximately $523 million during the quarter, ending with $9.9 billion, largely through refinancing activities including issuing new notes and repaying existing ones.
  • 5Cash and cash equivalents decreased to $2.4 billion as of March 31, 2021, from $3.2 billion as of December 31, 2020, with operating activities showing a net cash used of $171 million.
  • 6Hilton added over 100 hotels (16,500 rooms) to its system in Q1 2021, maintaining a robust development pipeline of over 2,570 hotels (399,000 rooms), indicating a positive long-term growth outlook.
  • 7Adjusted EBITDA for Q1 2021 was $198 million, a decrease from $363 million in Q1 2020, reflecting the challenging operating environment but showing resilience in core business performance adjustments.

Frequently Asked Questions

Hilton experienced a significant downturn in the first quarter of 2021, reporting a net loss of $109 million ($0.39 per diluted share) compared to a net income of $18 million ($0.06 per diluted share) in the same period of 2020. This was primarily due to the continued adverse impacts of the COVID-19 pandemic on global travel and hospitality operations, leading to reduced revenues across all segments.

The pandemic continued to severely impact Hilton's operations in Q1 2021. While many hotels reopened, approximately 275 properties experienced temporary suspensions of operations. System-wide RevPAR (Revenue Per Available Room) declined by 38.4% year-over-year, reflecting lower occupancy and average daily rates (ADR) due to travel restrictions and reduced demand. Despite these challenges, the company noted sequential monthly improvements in RevPAR from December 2020 through March 2021, and March 2021 showed a year-over-year improvement.

Hilton actively managed its debt in Q1 2021. The company reduced its total long-term debt to $9.9 billion from $10.4 billion at the end of 2020. This was achieved through strategic refinancing, including the issuance of $1.5 billion in 3.625% Senior Notes due 2032 and using the proceeds to redeem the $1.5 billion outstanding 5.125% Senior Notes due 2026. They also repaid $500 million from their senior secured revolving credit facility.

Hilton's management acknowledges the ongoing uncertainty related to the pandemic's duration and impact. However, they are seeing signs of recovery and maintaining a strong confidence in future growth, as evidenced by their substantial development pipeline. As of March 31, 2021, Hilton had over 2,570 hotels in its development pipeline, representing nearly 399,000 rooms, with many of these expected to open in international markets. They also anticipate all global hotel properties to be open by the end of 2021.