$Hilton Worldwide Holdings Inc.(HLT)$
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Hilton Worldwide Holdings Inc. (NYSE:HLT) Q4 2023 Results Conference Call February 7, 2024 9:00 AM ET
Company Participants
Jill Chapman - Senior Vice President, Investor Relations and Corporate Development
Chris Nassetta - President and Chief Executive Officer
Kevin Jacobs - Chief Financial Officer and President of Global Development
Conference Call Participants
Joe Greff - JP Morgan
Carlo Santarelli - Deutsche Bank
Shaun Kelley - Bank of America
David Katz - Jefferies
Smedes Rose - Citi
Brandt Montour - Barclays
Robin Farley - UBS
Chad Beynon - Macquarie
Patrick Scholes - Truist Securities
Duane Pfennigwerth - Evercore ISI
Michael Bellisario - Baird
Richard Clarke - Bernstein
Bill Crow - Raymond James
Kevin Kopelman - TD Cowen
Operator
Good morning. And welcome to the Hilton Fourth Quarter 2023 Earnings Conference call. All participants will be in a listen-only mode [Operator Instructions]. After today's prepared remarks, there will be a question-and-answer session [Operator Instructions]. Please note this event is being recorded.
I would now like to turn the conference over to Jill Chapman, Senior Vice President, Investor Relations and Corporate Development. You may begin.
Jill Chapman
Thank you, M. J. Welcome to Hilton's fourth quarter and full year 2023 earnings call. Before we begin, we would like to remind you that our discussion this morning will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements. And forward-looking statements made today speak only to our expectations as of today. We undertake no obligation to update or revise these statements. For a discussion of some of the factors that could cause actual results to differ, please see the Risk Factors section of our most recently filed Form 10-K. In addition, we will refer to certain non-GAAP financial measures on this call. You can find reconciliations of non-GAAP to GAAP financial measures discussed in today's call, in our earnings press release and on our website at ir.hilton.com.
This morning, Chris Nassetta, our President and Chief Executive Officer, will provide an overview of the current operating environment and the company's outlook. Kevin Jacobs, our Chief Financial Officer and President of Global Development, will then review our fourth quarter and full year results and discuss our expectations for the year. Following their remarks, we will be happy to take your questions.
With that, I'm pleased to turn the call over to Chris.
Chris Nassetta
Thank you, Jill. Good morning, everyone, and thanks for joining us today. We are happy to report a great end to what was another really strong year for Hilton. For the year, system-wide RevPAR grew 12.6% versus 2022 with solid growth across every major region and chain scale compared to 2019, RevPAR increased 10.7%. Strong top line performance drove record adjusted EBITDA of nearly $3.1 billion, up roughly 20% year-over-year to the highest level in our company's history. During the year, we launched two new brands, introduced new innovations, expanded our partnerships and opened a near record number of rooms, all of which further strengthened our network and enabled us to welcome more guests than ever before. Our strong top and bottom line performance drove significant free cash flow, enabling us to return $2.5 billion to shareholders.
Turning to results for the quarter. System wide RevPAR increased 5.7% year-over-year, exceeding our expectations, driven by strong international and group trends. Group RevPAR rose 6% year-over-year due to an uptick in small company meetings and convention demand. Business transient recovery continued in the quarter with RevPAR up more than 4% [visited] by gains in both rate and occupancy. As expected, leisure transient RevPAR increased 3%, decelerating modestly versus the third quarter, largely due to seasonality. Compared to 2019, system wide RevPAR grew 13.5% in the quarter, up more than 200 basis points sequentially compared to the third quarter. Demand continued to improve with December system wide occupancy reaching 2019 peak levels. Group RevPAR outperformed expectations, increasing 8% versus 2019 and up more than 700 basis points sequentially versus the third quarter. Business transient continued to recover growing 5% versus 2019. As expected, leisure RevPAR remained strong growing 25% versus 2019 and decelerating sequentially due to calendar shifts. As we look to the year ahead, we expect system wide top line growth of 2% to 4% versus 2023. We expect performance to be driven by continued growth across all major regions with international markets modestly outpacing the US. We also expect positive RevPAR growth across all segments, driven by continued recovery in business transient and group coupled with steady leisure demand. We expect continued recovery in small company meetings and large association and convention business to drive strong group performance. For 2024, group positions is up 16% year-over-year with small companies meetings increasing as a percentage of mix, further demonstrating the value of small and medium sized businesses given higher rates and greater resiliency.
Turning to development. We continue to see positive momentum throughout the year opening 24,000 rooms in the fourth quarter, marking the largest quarter of openings in our history. We achieved several milestones in the quarter, including the openings of our 250th Tru Hotel and our 1000th Hilton Garden Inn. We also reached 70,000 rooms globally for Home2. Additionally, we celebrated the opening of Signia by Hilton Atlanta, the city's largest ground up development in over 40 years. The property strategically located next to the Georgia World Congress Center and Mercedes-Benz Stadium features nearly a thousand rooms and over a hundred thousand square feet of meeting space, including the largest hotel ballroom in Georgia. For the full year, we opened 395 hotels, totaling approximately 63,000 rooms and achieved net unit growth of 4.9%. Conversion activity remains strong, accounting for 30% of openings and demonstrating the strong value proposition our system continues to deliver for owners. Full service and collection brands represented the large majority of conversions and continue to gain traction with owners. Both Curio and Tapestry open more hotels in 2023 than in any other year. Even with robust openings, our pipeline reached the highest level in our history, driven by record signings of 130,000 rooms, up 45% year-over-year and up 12% compared to pre-pandemic levels. At year end, our pipeline totaled over 462,000 rooms with roughly half under construction following a strong year in construction starts. For the full year, starts increased 15%, driven by the US. We continue to have more rooms under construction than any other hotel company with approximately one in every five hotel rooms under construction globally slated to join our system.
As we look to the year ahead, we expect continued positive momentum in signing starts and conversions to drive even stronger openings, boosted by our two newest brands, Spark and LivSmart Studios. For the full year, we continue to expect net unit growth to accelerate to the higher end of our 5.5% to 6% guidance range with the opportunity for further upside of 25 to 50 basis points from our exclusive partnership with Small Luxury Hotels of the World that we announced this morning. This partnership will meaningfully expand our luxury distribution as we expect to add the majority of their over 500 hotels to our system. Adding this extraordinary portfolio with a heavy orientation to resort locations to our already strong and growing luxury portfolio will further enhance a powerful network effect and give our guests even more opportunities to dream, book, earn and burn points, and we're doing so in a capital light way. The royalty rate will be in line with our existing brands, but fees will be paid only on the business driven through our channels. We expect over time to drive a meaningful portion of system revenues for SLH, and we'll start to integrate hotels into our system later this spring. Last quarter, we announced Hilton for Business, our multifaceted program designed to transform the travel experience for small and medium sized businesses by providing a new booking Web site along with targeted benefits designed specifically for SMBs. The program launched in January with thousands of companies registering in just the first few weeks. SMBs account for approximately 85% of our business transient mix and comprising meaningful and growing percentage of our group mix. Given its greater resiliency and higher rates, we think this important customer base provides significant opportunities to drive further growth.
Overall, we remain focused on creating unique experiences in our hotels, including through innovative food and beverage offerings. We recently announced the launch of StiR Creative Collective, an in-house consulting and development arm that gives us the ability to work with our owners, operators and hotel teams to elevate food and beverage offerings to meet the evolving needs of our guests. Several noteworthy StiR projects have already launched at the Conrad Orlando, the Canopy by Hilton in Toronto and the new Signia in Atlanta. In a business of people serving people, our team members are at the heart of absolutely everything we do. We recently celebrated the remarkable achievement of being named the number one world's best workplace by Fortune and Great Place to Work. This recognition follows eight consecutive appearances on the world's best list and marks the first time a hospitality company has achieved the top honor in this best in class program. Additionally, for the seventh consecutive year, we were honored to be included on both the world and North America Dow Jones sustainability indices, the most prestigious ranking for corporate sustainability performance. Overall, we're extremely pleased with our performance with our world class brands and powerful commercial engines driving a record pipeline and accelerating net unit growth. We're confident in our ability to continue delivering value for all of our stakeholders in 2024 and beyond.
Hilton Worldwide Holdings Inc. (NYSE:HLT) Q4 2023 Results Conference Call February 7, 2024 9:00 AM ET
Company Participants
程家乐 - 高级副总裁，投资者关系与企业发展
赵磊 - 总裁兼首席执行官
凯文·雅各布斯 - 首席财务官和全球发展总裁
Conference Call Participants
Joe Greff - JP Morgan 乔·格雷夫 - 摩根大通
卡洛·圣塔雷利 - 德意志银行
肖恩·凯利 - 美国银行
David Katz - Jefferies 大卫·卡茨 - 杰富瑞
Smedes Rose - 花旗银行
Brandt Montour - 巴克莱
Robin Farley - 瑞银 UBS
Chad Beynon - 麦格理
Patrick Scholes - 真信证券
Duane Pfennigwerth - Evercore ISI
Michael Bellisario - 百德
理查德·克拉克 - 伯恩斯坦
Bill Crow - ???????
Kevin Kopelman - TD Cowen 凯文克普曼 - TD Cowen
Operator
早上好。欢迎参加希尔顿2023年第四季度收益电话会议。所有参与者将进入听取模式【操作员指示】。在今天的预备发言之后，将有问答环节【操作员指示】。请注意，本次活动正在录音。
我现在想把会议交给负责投资者关系和公司发展的高级副总裁吉尔·查普曼。您可以开始了。
Jill Chapman
感谢你，M. J. 欢迎参加希尔顿第四季度和2023年全年收益电话会议。在我们开始之前，我们想提醒您，今天上午的讨论将包括前瞻性声明。实际结果可能会与前瞻性声明中所示有实质性差异。今天所作的前瞻性声明仅代表我们今天的期望。我们不承担更新或修订这些声明的义务。有关可能导致实际结果出现差异的一些因素，请参阅我们最近提交的Form 10-K的风险因素部分。此外，我们将在本次通话中提到特定的非通用会计方法财务指标。你可以在我们的收益新闻稿以及我们的网站ir.hilton.com上找到今天通话中讨论的非通用会计方法到通用会计方法的对账。
今天上午，我们的总裁兼首席执行官克里斯·纳塞塔将就当前的运营环境和公司展望进行概述。我们的首席财务官兼全球发展总裁凯文·雅各布斯随后将回顾我们的第四季度和全年业绩，并讨论我们对本年度的预期。在他们讲话结束后，我们很乐意回答您的问题。
With that, 我很高兴把电话转给克里斯。
Chris Nassetta
谢谢您，吉尔。大家早上好，感谢今天大家的参与。我们很高兴地报告，希尔顿度假村今年取得了非常强劲的业绩，为了结束另一个非常强劲的一年，对比2022年，全系统 RevPAR 达到了12.6%的增长，在2019年的情况下，RevPAR 增长了10.7%。强劲的营收表现推动了近 31 亿美元的历史最高水平调整后 EBITDA，同比增长约20%。在今年，我们推出了两个新品牌，引入了新的创新，扩大了我们的合作伙伴关系，并开设了近历史最高水平的客房数量，所有这些都进一步增强了我们的网络，并使我们能以前所未有的方式欢迎更多的客人。我们强劲的营收和利润表现创造了显著的自由现金流，使我们得以向股东返还了25亿美元。
转向本季度的结果。系统范围内的每间可用客房平均收入（RevPAR）同比增长5.7%，超出我们的预期，这是因为强劲的国际和团体趋势的推动。团体RevPAR同比增长6%，这是由于小型企业会议和会展需求的增加。本季度，商务临时居住的复苏继续，RevPAR比去年同期增长了超过4%，这主要是因为房价和入住率的增长。与预期一样，休闲临时住宿RevPAR增长了3%，与第三季度相比略有放缓，主要是由于季节性因素。与2019年相比，本季度系统范围内的RevPAR增长了13.5%，与第三季度相比，基点较去年同期增长了超过200个。需求持续改善，12月份系统范围内的入住率达到了2019年的峰值。团体RevPAR表现优于预期，较2019年增长8%，与第三季度相比，增长了超过700个基点。商务临时住宿继续复苏，较2019年增长了5%。与预期一样，休闲临时住宿的RevPAR保持了稳健增长，较2019年增长25%，由于日历变化，同比显著放缓。展望未来一年，我们预计全系统的总体营收将比2023年增长2%至4%。我们预计绩效将受到所有主要地区持续增长的推动，而国际市场的增长将略高于美国。我们还预计所有细分市场的RevPAR都将呈现正增长，其中商务临时住宿和团体市场的持续复苏以及稳定的休闲需求将推动增长。我们预计小型企业会议和大型协会和会展业务的持续复苏将推动团体业绩的强劲增长。到2024年，团体业务将同比增长16%，小型企业会议的比例将增加，进一步证明了小型和中型企业的价值，这些企业拥有更高的房价和更大的韧性。
业务转向发展。我们在整个年度持续看到积极的势头，在第四季度开业了24,000间客房，标志着我们历史上最大规模的开业季。我们在该季度取得了几项重要里程碑，包括开设了我们的第250家Tru酒店和第1000家希尔顿花园酒店。此外，我们全球的Home2客房数量也达到了70,000间。此外，我们还庆祝了希尔顿亚特兰大Signia酒店的开业，这是该市40多年来最大的新开发项目。该酒店地理位置优越，毗邻乔治亚世界会议中心和奔驰奔驰体育场，拥有近一千间客房和超过十万平方英尺的会议空间，包括乔治亚州最大的酒店宴会厅。全年，我们共开业了395家酒店，共计约63,000间客房，并实现了4.9%的净单位增长。转型活动仍然强劲，占总开业数的30%，表明我们的体系继续为业主提供强大的价值主张。全服务和精选品牌占据了绝大多数转型开业，并继续吸引业主。Curio和Tapestry酒店的开业数量超过了其他任何一年。即使在开业数量庞大的情况下，我们的项目储备也达到了历史最高水平，创纪录地开设了13万间客房，同比增长45%，较疫情前增长12%。年底时，我们的项目储备总量达到了462,000间客房，其中约一半处于建设中，这是由于我们在建设方面度过了一个强劲的一年。全年，建设数量增长了15%，主要是由美国推动的。我们继续拥有全球规模最大的建设中客房量，约每五间酒店客房中就有一间计划加入我们的体系。
随着我们展望未来一年，我们预计签约开始和转化持续为更强大的开业势头提供推动力，这将得益于我们两个最新的品牌Spark和LivSmart Studios。在整个年度，我们预计净单位增长率将加快至我们5.5%至6%的指导范围的较高端，同时因我们今天早上宣布的与Small Luxury Hotels of the World的独家合作伙伴关系，还存在25至50个基点的进一步上行机会。这一合作将有意义地扩大我们的豪华酒店分销，我们预计将在系统中增加他们500多家酒店的大部分。将这个非凡的组合与重度度假区域为主导的我们已经强大且不断成长的豪华酒店组合相结合，将进一步增强强大的网络效应，并为我们的客人提供更多的梦想、预订、赚取和使用积分的机会，这是我们以低资本投入的方式在做的。特许权费率将与我们现有品牌保持一致，但费用将只在通过我们渠道产生的业务上支付。我们预计随着时间的推移，SLH的系统收入将占据重要比例，并且我们将在今年春天后期开始将酒店整合到我们的系统中。上个季度，我们宣布了面向企业的希尔顿商旅计划，这是我们旨在通过提供新的预订网站以及为中小型企业量身定制的有针对性的福利来改变商务旅行体验的多方面计划。该计划于1月份推出，仅在最初几周就有数千家公司注册。中小型企业占我们商务客源的约85％，并且占我们团队客源的有意义且不断增长的比例。考虑到它更强的抗风险性和更高的价格，我们认为这一重要的客户群体提供了显著的增长机会。
总的来说，我们一直致力于在我们的酒店中打造独特的体验，包括通过创新的餐饮服务。我们最近宣布推出StiR Creative Collective，这是一个内部咨询和开发机构，使我们能够与业主、经营者和酒店团队合作，提升餐饮服务，以满足我们客人不断发展的需求。几个值得注意的StiR项目已经在康拉德奥兰多、金喜庭多伦多和新建的亚特兰大赛尼亚酒店上线。在这个以人为本的行业中，我们的团队成员是我们所有工作的核心。最近，我们庆祝了被《财富》杂志和《Great Place to Work》评选为全球最佳职场之一的非凡成就。这个荣誉是我们第八次登上全球最佳榜单，也是酒店公司首次获得这一最佳类别的最高荣誉。此外，连续第七年，我们荣幸地入选道琼斯可持续发展指数，这是企业可持续发展绩效的最高殊荣。总的来说，我们对我们世界一流品牌和强大商业引擎的表现非常满意，创下了纪录的洽谈管道和加速的净增长。我们有信心，我们将能够在2024年甚至更久的将来，为我们所有的利益相关者提供价值。
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