Beyond reporting $1.15 billion profit for 2023, Hilton also announced a new partnership with Small Luxury Hotels of the World in its fourth-quarter and full-year earnings call with investors. The SLH partnership will let Hilton customers to book stays at participating properties in the SLH portfolio of 560 luxury boutique hotels in 90 countries. During the call, President and CEO Christopher Nassetta said the SLH deal is not the luxury lifestyle brand that they have been teasing for the past several months.
"This is not in lieu of that [luxury announcement]" he said. "We are still hard at work. I have made pretty clear for a long time, but much clearer lately, that we intend this year to enter that space, one way or another. And we're hard at work and I think you should expect sometime this year. Hopefully sooner than later to see us enter that space."
SLH previously had formed a similar partnership with Hyatt in 2018. According to Hilton, more details of this new relationship will be announced soon.
Development
In the fourth quarter of 2023, Hilton opened a record 24,000 guestrooms across its portfolio and achieved net unit growth of 22,300 rooms. During the quarter, Hilton achieved several growth milestones, opening the 150th Curio Collection by Hilton, the 250th Tru by Hilton and the 1,000th Hilton Garden Inn. Additionally, Hilton celebrated the openings of its 600th hotel in Greater China, as well as the Signia by Hilton Atlanta, which marked the brand's first new-build property.
Hilton added 33,800 rooms to the development pipeline during the fourth quarter, contributing to 130,200 rooms added for the full year, which was approximately a 45 percent increase from the prior year. As of Dec. 31, Hilton's development pipeline totaled approximately 3,270 hotels representing 462,400 rooms throughout 118 countries and territories, including 30 countries and territories where Hilton had no existing hotels. Additionally, of the rooms in the development pipeline, 216,600 were under construction and 259,800 were located outside of the U.S.
During the earnings call, Nassetta was asked a question regarding market rumors of potential brand acquisition, such as the Graduate Hotels brand, noting the company's stance on mergers and acquisitions has been consistent: It's better to build, not buy brands. But he didn’t outright deny the rumor. In 2023, the company launched Spark by Hilton and LivSmart Studios by Hilton — but Nassetta said “never say never” in regards to an acquisition.
"Our attitude on M&A has been the same as it's always been," he said. "We haven't done any [M&A] but every time I've ever been asked for the last, you know 10 years of being public, I've said never say never that we have a very tough filtration system. . . and nothing has passed through that filter."
For the quarter ending Dec. 31, system-wide comparable RevPAR increased 5.7 percent compared to the same period in 2022 due to increases in both occupancy and average daily rate, and management and franchise fee revenues increased 12.2 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months increased 13.5 percent compared to the same period in 2019, and management and franchise fee revenues increased 38.5 percent from the same period in 2019.
For the year, system-wide comparable revenue per available room increased 12.6 percent compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 16.7 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the year increased 10.7 percent compared to the same period in 2019, and management and franchise fee revenues increased 33.1 percent from the same period in 2019.
SLH Partnership
“Hilton guests are among the most sophisticated travelers in the world, and we are always looking for amazing new experiences to share with them,” Chris Silcock, president, global brands and commercial services, Hilton, said in a statement. “This relationship with Small Luxury Hotels of the World will grant Hilton customers and Hilton Honors members access to a community of high-end boutique hotels in exciting new luxury travel destinations, giving them more ways to dream, book, and earn and redeem points with Hilton.”
Of the partnership, Nassetta said on the earnings call that a "majority" of the more than 500 SLH hotels will opt into the Hilton network and highlighted SLH's resort locations as a win for the partnership.
Participating SLH hotels will be bookable on all Hilton channels, giving the hotels exposure to a wider audience while letting them retain their independence, according to Hilton.
“We’re thrilled to begin this win-win relationship with Hilton as it brings exciting possibilities for both brands,” said Shaun Leleu, chairman, Small Luxury Hotels of the World. “Hilton customers, including Hilton Honors members, gain access to our unrivalled collection of exceptional boutique hotels, while our properties enjoy amplified reach to a loyal and discerning audience. It's a game changer for independently owned hotels on a global scale.”
Outlook
Full year 2024
- System-wide comparable RevPAR, on a currency neutral basis, is projected to increase between 2.0 percent and 4.0 percent compared to 2023.
- Net income is projected to be between $1,694 million and $1,729 million.
- Adjusted earnings before interest, taxes, deprecation and amortization is projected to be between $3,330 million and $3,380 million.
- Contract acquisition costs and capital expenditures, excluding amounts reimbursed by third parties, are projected to be between $250 million and $300 million.
- General and administrative expenses are projected to be between $415 million and $430 million.
- Net unit growth is projected to be between 5.5 percent and 6.0 percent.
First quarter 2024
- System-wide comparable RevPAR, on a currency neutral basis, is projected to increase between 2.0 percent and 4.0 percent compared to the first quarter of 2023.
- Net income is projected to be between $340 million and $359 million.
- Adjusted EBITDA is projected to be between $690 million and $710 million.