As Hilton released its second quarter and half-year 2022 earnings report, President and CEO Chris Nassetta told investors that the company’s systemwide revenue per available room achieved 98 percent of 2019 peak levels, with all major regions except for Asia-Pacific exceeding 2019 RevPAR.
The company’s RevPAR and adjusted earnings before interest, taxes, depreciation, and amortization were above the high end of guidance for the second quarter, Nassetta said. “Systemwide RevPAR increased 54 percent year over year [during the quarter] and was just 2 percent below 2019 levels, improving each month throughout the quarter with June RevPAR surpassing prior peaks. All segments improved quarter over quarter led by business transient and group.” The company credited the improvement to increases in both occupancy and ADR. Fee revenues increased 54 percent compared to the same period in 2021.
For the first half of the year, system-wide comparable RevPAR increased 64.4 percent compared to the same period in 2021, due to increases in both occupancy and ADR, and fee revenues increased 64 percent compared to the same period in 2021. Compared to pre-pandemic numbers, systemwide comparable RevPAR for the six months ended June 30 was down 9 percent compared to the six months ended June 30, 2019.
For the quarter, net income and adjusted EBITDA were $367 million and $679 million, respectively, compared to $128 million and $400 million, respectively, for the three months ended June 30, 2021. EBITDA was 10 percent higher than the Q2 2019, Nassetta said, with margins of nearly 70 percent.
For H1, net income and adjusted EBITDA were $578 million and $1.127 billion, respectively, compared to $19 million and $598 million, respectively, for H1 2021.
Development
Hilton, Nassetta said, is driving “a disproportionate share of global development, with nearly one in every five rooms under construction around the world slated to join our system.”
CFO Kevin Jacobs said the company’s pipeline grew sequentially year over year for a total of more than 413,000 rooms at the end of the quarter. During Q2, Hilton opened 91 new hotels contributing to 14,400 additional rooms and achieved net unit growth of 13,300 rooms.
Notable openings in the quarter included the Waldorf Astoria Washington, D.C. and the Hotel Marcel New Haven, Tapestry Collection by Hilton, which is anticipated to be the first net-zero hotel in the U.S.
Perhaps most notably, Hilton opened its 7,000th property earlier this month, adding the Hilton Maldives Amingiri, the Conrad Los Angeles and the Lost Property St. Paul's London, a Curio Collection hotel, to its portfolio.
As of June 30, Hilton's development pipeline totaled nearly 2,780 hotels representing more than 413,000 rooms throughout 114 countries and territories, including 29 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, more than 195,000 of the rooms—roughly half—were under construction and more than 246,000 of the rooms—about 60 percent—were located outside the U.S, Jacobs said.
Outlook
For the remainder of the year, Hilton projects systemwide comparable RevPAR, on a currency neutral basis, will increase between 37 percent and 43 percent compared to 2021, and to be down between 1 percent and 5 percent from 2019. The company expects net income to be between $1.146 billion and $1.216 billion, and adjusted EBITDA is projected to be between $2.4 and $2.5 billion.
Contract acquisition costs and capital expenditures, excluding amounts indirectly reimbursed by hotel owners, are expected to be between $250 million and $275 million. Net unit growth is expected to be approximately 5 percent and will exceed 100,000 rooms, Jacobs said on the call, noting that the adjusted EBITDA forecast represents a year-over-year increase of more than 50 percent at the midpoint and exceeds 2019 adjusted EBITDA. “While macroeconomic uncertainty and variability across regions persist, owner and developer interest remains healthy,” Jacobs told the investors.
For the third quarter of 2022, Hilton expects system-wide comparable RevPAR, on a currency neutral basis, to increase between 25 and 30 percent compared to the third quarter of 2021, and to increase between 1 percent and 5 percent from the third quarter of 2019.
Net income is projected to be between $303 million and $324 million, while adjusted EBITDA is projected to be between $660 million and $690 million.