Hilton Reports Second Quarter Results

MCLEAN, Va.–(BUSINESS WIRE)–Hilton Worldwide Holdings Inc. (“Hilton” or the “Company”) (NYSE: HLT) today reported its second quarter 2020 results. The following results reflect the material impact that the novel coronavirus (“COVID-19”) pandemic had on Hilton’s business. Highlights include:

• Diluted EPS was $(1.55) for the second quarter, and diluted EPS, adjusted for special items, was $(0.61)
• Net loss was $432 million for the second quarter
• Adjusted EBITDA was $51 million for the second quarter
• System-wide comparable RevPAR decreased 81.0 percent on a currency neutral basis for the second quarter from the same period in 2019
• Approved 18,400 new rooms for development during the second quarter, growing Hilton’s development pipeline to 414,000 rooms as of June 30, 2020, representing 11 percent growth from June 30, 2019
• Opened 6,800 rooms in the second quarter, contributing to 5,500 net additional rooms in Hilton’s system
• As of July 31, 2020, 96 percent of Hilton’s system-wide hotels were open
• Launched Hilton CleanStay, a new program created in collaboration with RB, maker of Lysol and Dettol, and Mayo Clinic, to deliver an elevated standard of cleanliness and disinfection to properties worldwide, and Hilton EventReady, which focuses on cleanliness and customer service specific to meetings and events
• Announced a new strategic partnership with Country Garden to develop 1,000 Home2 Suites by Hilton in China, representing the first major extended stay offering for Hilton outside of North America

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, “Our second quarter results reflect the challenges that our business has experienced as a result of the pandemic. However, as restrictions are lifting and properties around the world are reopening, we are seeing improved occupancy. While we have a long journey in front of us, we are on the road to recovery and look forward to the opportunities ahead.”

On a global level, the pervasive impact of COVID-19 began in March, with its most significant adverse impact on occupancy and RevPAR in April. Since April, all major regions have experienced month over month increases in occupancy and RevPAR. Hilton experienced the most notable recoveries in the U.S. and Asia Pacific with occupancy levels up approximately 20 percentage points and 15 percentage points, respectively, from April to June. Hilton announced a corporate restructuring in June 2020 to organize its business to be best suited to operate through the pandemic and beyond. Costs relating to the reorganization were recognized in the quarter and accrued as of June 30, 2020.

For the three and six months ended June 30, 2020, system-wide comparable RevPAR decreased 81.0 percent and 53.9 percent, respectively, due to both occupancy and ADR decreases. Additionally, management fee and franchise and licensing fee revenues decreased 77 percent and 50 percent during the three and six months ended June 30, 2020, respectively. The decreases were due to the COVID-19 pandemic and the related reduction in global travel and tourism, which required the complete or partial suspensions of hotel operations at approximately 20 percent of Hilton’s properties at some point during the six months ended June 30, 2020, of which over half of the properties had reopened as of June 30, 2020.

For the three months ended June 30, 2020, diluted EPS was $(1.55) and diluted EPS, adjusted for special items, was $(0.61) compared to $0.89 and $1.06, respectively, for the three months ended June 30, 2019. Net income (loss) and Adjusted EBITDA were $(432) million and $51 million, respectively, for the three months ended June 30, 2020, compared to $261 million and $618 million, respectively, for the three months ended June 30, 2019.

For the six months ended June 30, 2020, diluted EPS was $(1.48) and diluted EPS, adjusted for special items, was $0.13 compared to $1.42 and $1.85, respectively, for the six months ended June 30, 2019. Net income (loss) and Adjusted EBITDA were $(414) million and $414 million, respectively, for the six months ended June 30, 2020, compared to $420 million and $1,117 million, respectively, for the six months ended June 30, 2019.

Development

In the second quarter of 2020, Hilton opened 60 new hotels totaling 6,800 rooms, and achieved net unit growth of over 5,500 rooms.

Additionally, during the quarter, Hilton entered into an exclusive management license agreement with Country Garden to introduce and develop Home2 Suites by Hilton branded properties in China. Hilton believes Home2 Suites, as an affordable extended stay, upper midscale offering, is well positioned to capture growth opportunities resulting from the growing spending power of consumers in China’s smaller cities.

As of June 30, 2020, Hilton’s development pipeline totaled over 2,700 hotels consisting of nearly 414,000 rooms throughout 121 countries and territories, including 35 countries and territories where Hilton does not currently have any open hotels. Additionally, of the rooms in the development pipeline, 234,000 rooms were located outside the U.S., and 222,000 rooms were under construction.

Balance Sheet and Liquidity

As of June 30, 2020, Hilton had $10.6 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 3.91 percent. Excluding finance lease liabilities and other debt of Hilton’s consolidated variable interest entities, Hilton had $10.3 billion of long-term debt outstanding with a weighted average interest rate of 3.86 percent and no maturities until 2024. Total cash and cash equivalents were $3,575 million as of June 30, 2020, including $72 million of restricted cash and cash equivalents.

In March 2020, Hilton suspended share repurchases and the payment of dividends, as a result of efforts to preserve capital and maintain liquidity. No share repurchases were made after March 5, 2020 and no dividends were declared or paid during the three months ended June 30, 2020. The stock repurchase program remains authorized by the board of directors and the amount remaining under Hilton’s stock repurchase program is approximately $2.2 billion.

Conference Call

Hilton will host a conference call to discuss second quarter 2020 results on August 6, 2020 at 10:00 a.m. Eastern Time. Participants may listen to the live webcast by logging on to the Hilton Investor Relations website at https://ir.hilton.com/events-and-presentations. A replay and transcript of the webcast will be available within 24 hours after the live event at https://ir.hilton.com/financial-reporting/quarterly-results/2020.

Alternatively, participants may listen to the live call by dialing 1-888-317-6003 in the United States (“U.S.”) or 1-412-317-6061 internationally using the conference ID 0333617. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. A telephone replay will be available for seven days following the call. To access the telephone replay, dial 1-877-344-7529 in the U.S. or 1-412-317-0088 internationally using the conference ID 10145887.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to the expectations regarding the impact of the COVID-19 pandemic, the performance of Hilton’s business, financial results, liquidity and capital resources and other non-historical statements. In some cases, these forward-looking statements can be identified by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks related to the impact of the COVID-19 outbreak, risks inherent to the hospitality industry, macroeconomic factors beyond Hilton’s control, competition for hotel guests and management and franchise contracts, risks related to doing business with third-party hotel owners, performance of Hilton’s information technology systems, growth of reservation channels outside of Hilton’s system, risks of doing business outside of the U.S. and Hilton’s indebtedness. Additional factors that could cause Hilton’s results to differ materially from those described in the forward-looking statements can be found under the section entitled “Part I—Item 1A. Risk Factors” of Hilton’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and “Part II —Item 1A. Risk Factors” of Hilton’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, filed with the Securities and Exchange Commission (the “SEC”), as supplemented in Hilton’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, which is expected to be filed on or about the date of this press release, as such factors may be further updated from time to time in Hilton’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in Hilton’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Non-GAAP Financial Measures

The Company refers to certain financial measures that are not recognized under U.S. generally accepted accounting principles (“GAAP”) in this press release, including: net income (loss), adjusted for special items; diluted EPS, adjusted for special items; Adjusted EBITDA; Adjusted EBITDA margin; net debt; and net debt to Adjusted EBITDA ratio. See the schedules to this press release, including the “Definitions” section, for additional information and reconciliations of such non-GAAP financial measures.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 18 world-class brands comprising more than 6,200 properties with more than 983,000 rooms in 118 countries and territories. Dedicated to fulfilling its mission to be the world’s most hospitable company, Hilton welcomed more than 3 billion guests in its 100-year history, earned a top spot on the 2019 World’s Best Workplaces list and was named the 2019 Global Industry Leader on the Dow Jones Sustainability Indices. In 2020, Hilton CleanStay was introduced, bringing an industry-defining standard of cleanliness and disinfection to hotels worldwide. Through the award-winning guest loyalty program Hilton Honors, the 108 million members who book directly with Hilton can earn Points for hotel stays and experiences money can’t buy, plus enjoy instant benefits, including digital check-in with room selection, Digital Key and Connected Room. Visit newsroom.hilton.com for more information, and connect with Hilton on facebook.com/hiltonnewsroom, twitter.com/hiltonnewsroom, linkedin.com/company/hilton, instagram.com/hiltonnewsroom and youtube.com/hiltonnewsroom.

Contacts

Investor Contact
Jill Slattery

+1 703 883 6043

Media Contact
Nigel Glennie

+1 703 883 5262

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