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Hilton Reports Fourth Quarter and Full Year Results

Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE: HLT) today reported its fourth quarter and full year 2022 results. Highlights include:

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230209005067/en/

  • Diluted EPS was $1.21 for the fourth quarter and $4.53 for the full year, exceeding the high end of guidance
  • Diluted EPS, adjusted for special items, was $1.59 for the fourth quarter and $4.89 for the full year, exceeding the high end of guidance
  • Net income was $333 million for the fourth quarter and $1,257 million for the full year, exceeding the high end of guidance
  • Adjusted EBITDA was $740 million for the fourth quarter and $2,599 million for the full year, exceeding the high end of guidance
  • System-wide comparable RevPAR increased 24.8 percent and 42.5 percent, on a currency neutral basis, for the fourth quarter and full year, respectively, compared to the same periods in 2021
  • System-wide comparable RevPAR increased 7.5 percent and decreased 1.3 percent, on a currency neutral basis, for the fourth quarter and full year, respectively, compared to the same periods in 2019
  • Approved 24,400 new rooms for development during the fourth quarter, bringing Hilton's development pipeline to 416,400 rooms as of December 31, 2022
  • Added 17,700 rooms to Hilton's system in the fourth quarter, resulting in 48,300 net additional rooms in Hilton's system for the full year, contributing to net unit growth of 4.7 percent, with fourth quarter hotel openings modestly lagging prior expectations due to the ongoing COVID-19 environment in China
  • Full year 2023 net unit growth is expected to be between 5.0 percent and 5.5 percent
  • Repurchased 3.8 million shares of Hilton common stock during the fourth quarter, bringing total capital return, including dividends, to $542 million for the quarter and more than $1.7 billion for the full year
  • Launched a new premium economy brand, Spark by Hilton, in January 2023
  • Full year 2023 system-wide RevPAR is expected to increase between 4 percent and 8 percent on a comparable and currency neutral basis compared to 2022; full year net income is projected to be between $1,382 million and $1,454 million; full year Adjusted EBITDA is projected to be between $2,800 million and $2,900 million
  • Full year 2023 capital return is projected to be between $1.7 billion and $2.1 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "Our fourth quarter and full year results surpassed our expectations, with fourth quarter system-wide RevPAR meaningfully exceeding the same period in 2019 driven by growth across all segments. This marked the second consecutive quarter that RevPAR exceeded pre-pandemic levels. Positive momentum has continued into the new year with exciting growth opportunities ahead, including the continued expansion of our brand portfolio with the recent launch of our newest brand, Spark by Hilton."

For the three months and year ended December 31, 2022, system-wide comparable RevPAR increased 24.8 percent and 42.5 percent, respectively, compared to the same periods in 2021, due to increases in both occupancy and ADR. For the three months and year ended December 31, 2022 compared to the same periods in 2021, fee revenues increased 30 percent and 45 percent, respectively. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months and year ended December 31, 2022 increased 7.5 percent and decreased 1.3 percent, respectively, compared to the same periods in 2019, and fee revenues for both the three months and year ended December 31, 2022 exceeded the same periods in 2019.

For the three months ended December 31, 2022, diluted EPS was $1.21 and diluted EPS, adjusted for special items, was $1.59 compared to $0.52 and $0.72, respectively, for the three months ended December 31, 2021. Net income and Adjusted EBITDA were $333 million and $740 million, respectively, for the three months ended December 31, 2022, compared to $148 million and $512 million, respectively, for the three months ended December 31, 2021.

For the year ended December 31, 2022, diluted EPS was $4.53 and diluted EPS, adjusted for special items, was $4.89 compared to $1.46 and $2.08, respectively, for the year ended December 31, 2021. Net income and Adjusted EBITDA were $1,257 million and $2,599 million, respectively, for the year ended December 31, 2022, compared to $407 million and $1,629 million, respectively, for the year ended December 31, 2021.

Development

In the fourth quarter of 2022, Hilton opened 108 new hotels contributing 17,700 additional rooms to Hilton's system and achieved net unit growth of 15,100 rooms. During the full year 2022, Hilton opened 355 new hotels totaling 58,200 rooms and achieved net unit growth of 48,300 rooms. Hilton continued to achieve growth milestones during the fourth quarter, opening the 60,000th room under the Home2 Suites by Hilton brand and the 150,000th room under the DoubleTree by Hilton brand. Further, during the fourth quarter, Hilton opened the Waldorf Astoria Cancun, marking the Company's 200th hotel in the Caribbean and Latin America region.

As of December 31, 2022, Hilton's development pipeline totaled more than 2,820 hotels representing 416,400 rooms throughout 118 countries and territories, including 30 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, 205,400 of the rooms were under construction and 243,500 of the rooms were located outside the U.S.

In January 2023, Hilton launched Spark by Hilton, a premium economy brand that is dedicated to delivering thoughtful simplicity, reliable service, unexpected touches and consistent quality. Spark by Hilton leverages a conversion model approach to growth and had more than 200 hotels in various stages of negotiation as of February 3, 2023.

Balance Sheet and Liquidity

As of December 31, 2022, Hilton had $8.8 billion of long-term debt outstanding, excluding the deduction for deferred financing costs and discount, with a weighted average interest rate of 4.45 percent. Excluding all finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $8.6 billion of long-term debt outstanding with a weighted average interest rate of 4.44 percent and no scheduled maturities until May 2025. No debt amounts were outstanding under Hilton's $1.75 billion senior secured revolving credit facility (the "Revolving Credit Facility") as of December 31, 2022, which had an available borrowing capacity of $1.69 billion after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $1,286 million as of December 31, 2022, including $77 million of restricted cash and cash equivalents.

In January 2023, Hilton amended its credit agreement governing its Revolving Credit Facility to increase the borrowing capacity to $2.0 billion, $250 million of which is available in the form of letters of credit, and, based on the terms of the agreement, Hilton expects the extended maturity date to be January 2028. As of February 3, 2023, after considering the $60 million of letters of credit outstanding and no borrowings outstanding, Hilton had an available borrowing capacity on the Revolving Credit Facility of $1,940 million.

During the fourth quarter of 2022, Hilton repurchased 3.8 million shares of its common stock for a cost of $501 million and an average price per share of $131.36. During the year ended December 31, 2022, Hilton repurchased 12.3 million shares of its common stock for a cost of $1,608 million and an average price per share of $130.75. In November 2022, Hilton's board of directors authorized an additional $2.5 billion for share repurchases under its share repurchase program. Through February 3, 2023, since the inception of Hilton's stock repurchase program in March 2017, Hilton has repurchased approximately 53.8 million shares of its common stock for approximately $5.1 billion at an average price per share of $94.19. The amount remaining under Hilton's stock repurchase program is approximately $2,933 million.

In December 2022, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, for a total of $41 million, bringing cash dividends for the full year to $123 million. In February 2023, Hilton's board of directors authorized a regular quarterly cash dividend of $0.15 per share of common stock to be paid on or before March 31, 2023 to holders of record of its common stock as of the close of business on February 28, 2023.

Outlook

Share-based metrics in Hilton's outlook include actual share repurchases to date, but do not include the effect of potential share repurchases hereafter.

Full Year 2023

  • System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 4 percent and 8 percent compared to 2022.
  • Diluted EPS is projected to be between $5.10 and $5.36.
  • Diluted EPS, adjusted for special items, is projected to be between $5.42 and $5.68.
  • Net income is projected to be between $1,382 million and $1,454 million.
  • Adjusted EBITDA is projected to be between $2,800 million and $2,900 million.
  • Contract acquisition costs and capital expenditures, excluding amounts indirectly reimbursed by third parties, are expected to be approximately $300 million.
  • Capital return is projected to be between $1.7 billion and $2.1 billion.
  • General and administrative expenses are projected to be between $390 million and $410 million.
  • Net unit growth is expected to be between 5.0 percent and 5.5 percent.

First Quarter 2023

  • System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 23 percent and 27 percent compared to the first quarter of 2022.
  • Diluted EPS is projected to be between $1.00 and $1.06.
  • Diluted EPS, adjusted for special items, is projected to be between $1.08 and $1.14.
  • Net income is projected to be between $271 million and $287 million.
  • Adjusted EBITDA is projected to be between $590 million and $610 million.

Conference Call

Hilton will host a conference call to discuss fourth quarter and full year 2022 results on February 9, 2023 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.

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 2954222. 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 9082885.

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 recovery of the travel and hospitality industry from the coronavirus ("COVID-19") pandemic (the "pandemic"), the performance of Hilton's business, future 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 inherent to the hospitality industry, macroeconomic factors beyond Hilton's control, such as inflation, changes in interest rates and challenges due to labor shortages and supply chain disruptions, risks related to the impact of the pandemic, including as a result of new strains or variants of the virus and uncertainty of the acceptance and continued effectiveness of the COVID-19 vaccines, 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., risks associated with the Russian invasion of Ukraine 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 sections entitled "Part I—Item 1A. Risk Factors" of Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and "Part II —Item 1A. Risk Factors" of Hilton's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, both of which are filed with the Securities and Exchange Commission (the "SEC") and are accessible on the SEC's website at www.sec.gov. Such factors may be updated from time to time in Hilton's periodic filings with the SEC, including Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which is expected to be filed with the SEC on or about the date of this press release. 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.

Definitions

See the "Definitions" section for the definition of certain terms used within this press release, including within the schedules.

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; EBITDA; 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, as well as the most comparable GAAP financial measure.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 19 world-class brands comprising more than 7,100 properties and more than 1.1 million rooms, in 123 countries and territories. Dedicated to fulfilling its founding vision to fill the earth with the light and warmth of hospitality, Hilton has welcomed more than 3 billion guests in its more than 100-year history, earned a top spot on Fortune's 100 Best Companies to Work For list and been recognized as a global leader on the Dow Jones Sustainability Indices for six consecutive years. Hilton has introduced several industry-leading technology enhancements to improve the guest experience, including Digital Key Share, automated complimentary room upgrades and the ability to book confirmed connecting rooms. Through the award-winning guest loyalty program Hilton Honors, the more than 150 million members who book directly with Hilton can earn Points for hotel stays and experiences money can't buy. With the free Hilton Honors app, guests can book their stay, select their room, check in, unlock their door with a Digital Key and check out, all from their smartphone. Visit stories.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.

 

HILTON WORLDWIDE HOLDINGS INC.

EARNINGS RELEASE SCHEDULES

TABLE OF CONTENTS

 

 

 

 

Condensed Consolidated Statements of Operations

 

Comparable and Currency Neutral System-Wide Hotel Operating Statistics

 

Property Summary

 

Capital Expenditures and Contract Acquisition Costs

 

Reconciliations of Non-GAAP Financial Measures

 

Definitions

 

 

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

 

 

 

 

 

 

Franchise and licensing fees

$

537

 

 

$

431

 

 

$

2,068

 

 

$

1,493

 

Base and other management fees

 

88

 

 

 

60

 

 

 

294

 

 

 

176

 

Incentive management fees

 

64

 

 

 

38

 

 

 

196

 

 

 

98

 

Owned and leased hotels

 

349

 

 

 

222

 

 

 

1,076

 

 

 

598

 

Other revenues

 

31

 

 

 

23

 

 

 

102

 

 

 

79

 

 

 

1,069

 

 

 

774

 

 

 

3,736

 

 

 

2,444

 

Other revenues from managed and franchised properties

 

1,375

 

 

 

1,062

 

 

 

5,037

 

 

 

3,344

 

Total revenues

 

2,444

 

 

 

1,836

 

 

 

8,773

 

 

 

5,788

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Owned and leased hotels

 

294

 

 

 

227

 

 

 

999

 

 

 

679

 

Depreciation and amortization

 

39

 

 

 

45

 

 

 

162

 

 

 

188

 

General and administrative

 

95

 

 

 

103

 

 

 

382

 

 

 

405

 

Other expenses

 

25

 

 

 

14

 

 

 

60

 

 

 

45

 

 

 

453

 

 

 

389

 

 

 

1,603

 

 

 

1,317

 

Other expenses from managed and franchised properties

 

1,487

 

 

 

1,115

 

 

 

5,076

 

 

 

3,454

 

Total expenses

 

1,940

 

 

 

1,504

 

 

 

6,679

 

 

 

4,771

 

 

 

 

 

 

 

 

 

Gain (loss) on sales of assets, net

 

 

 

 

1

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

 

 

Operating income

 

504

 

 

 

333

 

 

 

2,094

 

 

 

1,010

 

 

 

 

 

 

 

 

 

Interest expense

 

(120

)

 

 

(95

)

 

 

(415

)

 

 

(397

)

Gain (loss) on foreign currency transactions

 

1

 

 

 

(8

)

 

 

5

 

 

 

(7

)

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

(69

)

Other non-operating income, net

 

18

 

 

 

7

 

 

 

50

 

 

 

23

 

 

 

 

 

 

 

 

 

Income before income taxes

 

403

 

 

 

237

 

 

 

1,734

 

 

 

560

 

 

 

 

 

 

 

 

 

Income tax expense

 

(70

)

 

 

(89

)

 

 

(477

)

 

 

(153

)

 

 

 

 

 

 

 

 

Net income

 

333

 

 

 

148

 

 

 

1,257

 

 

 

407

 

Net loss (income) attributable to noncontrolling interests

 

(5

)

 

 

(1

)

 

 

(2

)

 

 

3

 

Net income attributable to Hilton stockholders

$

328

 

 

$

147

 

 

$

1,255

 

 

$

410

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

270

 

 

 

279

 

 

 

275

 

 

 

279

 

Diluted

 

272

 

 

 

282

 

 

 

277

 

 

 

281

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.22

 

 

$

0.53

 

 

$

4.56

 

 

$

1.47

 

Diluted

$

1.21

 

 

$

0.52

 

 

$

4.53

 

 

$

1.46

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.15

 

 

$

 

 

$

0.45

 

 

$

 

 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION, BRAND AND SEGMENT

(unaudited)

 

 

Three Months Ended December 31,

 

Occupancy

 

ADR

 

RevPAR

 

2022

 

vs. 2021

 

2022

 

vs. 2021

 

2022

 

vs. 2021

Region

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

68.1

%

 

4.4

%

pts.

 

$

157.20

 

11.9

%

 

$

106.99

 

19.6

%

Americas (excluding U.S.)

66.1

 

 

13.1

 

 

 

 

139.75

 

22.6

 

 

 

92.33

 

52.8

 

Europe

70.3

 

 

14.2

 

 

 

 

149.53

 

32.8

 

 

 

105.15

 

66.5

 

Middle East & Africa

74.2

 

 

7.1

 

 

 

 

174.24

 

13.9

 

 

 

129.27

 

25.9

 

Asia Pacific

55.8

 

 

2.5

 

 

 

 

109.21

 

23.0

 

 

 

60.97

 

28.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand

 

 

 

 

 

 

 

 

 

 

 

 

Waldorf Astoria Hotels & Resorts

60.6

%

 

7.0

%

pts.

 

$

495.99

 

(0.7

)%

 

$

300.74

 

12.2

%

Conrad Hotels & Resorts

64.0

 

 

8.2

 

 

 

 

300.96

 

38.5

 

 

 

192.52

 

58.9

 

Canopy by Hilton

66.2

 

 

6.5

 

 

 

 

199.22

 

15.8

 

 

 

131.86

 

28.5

 

Hilton Hotels & Resorts

64.5

 

 

11.3

 

 

 

 

184.30

 

20.3

 

 

 

118.79

 

45.9

 

Curio Collection by Hilton

65.3

 

 

7.7

 

 

 

 

227.96

 

10.1

 

 

 

148.92

 

24.9

 

DoubleTree by Hilton

62.9

 

 

6.9

 

 

 

 

136.88

 

13.4

 

 

 

86.13

 

27.3

 

Tapestry Collection by Hilton

63.9

 

 

5.1

 

 

 

 

170.73

 

13.9

 

 

 

109.11

 

23.8

 

Embassy Suites by Hilton

68.2

 

 

6.7

 

 

 

 

172.55

 

11.4

 

 

 

117.66

 

23.6

 

Hilton Garden Inn

67.2

 

 

5.6

 

 

 

 

138.43

 

13.4

 

 

 

93.01

 

23.6

 

Hampton by Hilton

67.4

 

 

2.5

 

 

 

 

126.88

 

10.1

 

 

 

85.56

 

14.3

 

Tru by Hilton

67.0

 

 

3.1

 

 

 

 

120.65

 

8.6

 

 

 

80.89

 

13.8

 

Homewood Suites by Hilton

75.8

 

 

1.5

 

 

 

 

148.70

 

11.9

 

 

 

112.75

 

14.1

 

Home2 Suites by Hilton

75.0

 

 

0.5

 

 

 

 

132.80

 

10.7

 

 

 

99.57

 

11.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment

 

 

 

 

 

 

 

 

 

 

 

 

Management and franchise

66.9

%

 

5.2

%

pts.

 

$

150.82

 

14.0

%

 

$

100.94

 

23.6

%

Ownership(1)

71.2

 

 

27.7

 

 

 

 

208.10

 

29.2

 

 

 

148.27

 

111.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide

67.0

%

 

5.5

%

pts.

 

$

151.81

 

14.5

%

 

$

101.72

 

24.8

%

 
 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS (continued)

BY REGION, BRAND AND SEGMENT

(unaudited)

 

 

Year Ended December 31,

 

Occupancy

 

ADR

 

RevPAR

 

2022

 

vs. 2021

 

2022

 

vs. 2021

 

2022

 

vs. 2021

Region

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

69.9

%

 

8.8

%

pts.

 

$

157.44

 

19.3

%

 

$

110.09

 

36.5

%

Americas (excluding U.S.)

63.8

 

 

20.6

 

 

 

 

138.55

 

28.5

 

 

 

88.44

 

89.8

 

Europe

67.0

 

 

25.6

 

 

 

 

147.00

 

43.8

 

 

 

98.51

 

132.5

 

Middle East & Africa

66.6

 

 

14.6

 

 

 

 

154.57

 

21.7

 

 

 

102.99

 

56.0

 

Asia Pacific

53.2

 

 

2.4

 

 

 

 

103.73

 

13.8

 

 

 

55.17

 

19.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand

 

 

 

 

 

 

 

 

 

 

 

 

Waldorf Astoria Hotels & Resorts

55.3

%

 

14.3

%

pts.

 

$

491.14

 

7.3

%

 

$

271.69

 

44.6

%

Conrad Hotels & Resorts

57.7

 

 

14.7

 

 

 

 

272.35

 

39.1

 

 

 

157.02

 

86.5

 

Canopy by Hilton

62.9

 

 

15.0

 

 

 

 

195.37

 

20.9

 

 

 

122.92

 

58.7

 

Hilton Hotels & Resorts

62.2

 

 

17.9

 

 

 

 

181.69

 

24.5

 

 

 

112.93

 

74.6

 

Curio Collection by Hilton

63.2

 

 

14.0

 

 

 

 

229.00

 

17.6

 

 

 

144.66

 

51.0

 

DoubleTree by Hilton

63.3

 

 

13.1

 

 

 

 

136.98

 

19.1

 

 

 

86.67

 

50.2

 

Tapestry Collection by Hilton

64.5

 

 

12.8

 

 

 

 

167.74

 

17.2

 

 

 

108.21

 

46.3

 

Embassy Suites by Hilton

68.7

 

 

12.1

 

 

 

 

173.74

 

19.0

 

 

 

119.37

 

44.6

 

Hilton Garden Inn

68.0

 

 

9.7

 

 

 

 

138.62

 

19.4

 

 

 

94.30

 

39.2

 

Hampton by Hilton

69.2

 

 

6.0

 

 

 

 

129.22

 

15.7

 

 

 

89.44

 

26.7

 

Tru by Hilton

70.0

 

 

6.4

 

 

 

 

123.72

 

15.5

 

 

 

86.62

 

27.2

 

Homewood Suites by Hilton

78.5

 

 

4.8

 

 

 

 

149.26

 

19.4

 

 

 

117.16

 

27.1

 

Home2 Suites by Hilton

77.9

 

 

3.5

 

 

 

 

134.04

 

16.7

 

 

 

104.47

 

22.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment

 

 

 

 

 

 

 

 

 

 

 

 

Management and franchise

67.6

%

 

10.0

%

pts.

 

$

150.28

 

20.3

%

 

$

101.57

 

41.2

%

Ownership(1)

60.9

 

 

30.6

 

 

 

 

200.19

 

30.9

 

 

 

121.90

 

162.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide

67.5

%

 

10.3

%

pts.

 

$

151.01

 

20.6

%

 

$

101.90

 

42.5

%

____________

(1)

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

 

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of December 31, 2022

 

 

Owned / Leased(1)

 

Managed

 

Franchised

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Waldorf Astoria Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

12

 

4,489

 

 

 

12

 

4,489

Americas (excluding U.S.)

 

 

3

 

425

 

 

 

3

 

425

Europe

2

 

463

 

4

 

898

 

 

 

6

 

1,361

Middle East & Africa

 

 

7

 

1,867

 

 

 

7

 

1,867

Asia Pacific

 

 

6

 

1,259

 

 

 

6

 

1,259

LXR Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

3

 

522

 

3

 

522

Americas (excluding U.S.)

 

 

 

 

1

 

76

 

1

 

76

Europe

 

 

1

 

70

 

1

 

307

 

2

 

377

Middle East & Africa

 

 

1

 

41

 

3

 

282

 

4

 

323

Asia Pacific

 

 

 

 

1

 

114

 

1

 

114

Conrad Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

6

 

2,227

 

2

 

1,730

 

8

 

3,957

Americas (excluding U.S.)

 

 

3

 

787

 

 

 

3

 

787

Europe

 

 

4

 

1,155

 

1

 

107

 

5

 

1,262

Middle East & Africa

1

 

614

 

4

 

1,689

 

 

 

5

 

2,303

Asia Pacific

1

 

164

 

22

 

7,078

 

1

 

659

 

24

 

7,901

Canopy by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

26

 

4,490

 

26

 

4,490

Americas (excluding U.S.)

 

 

2

 

272

 

 

 

2

 

272

Europe

 

 

1

 

123

 

4

 

917

 

5

 

1,040

Middle East & Africa

 

 

1

 

200

 

 

 

1

 

200

Asia Pacific

 

 

4

 

614

 

 

 

4

 

614

Signia by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2

 

1,814

 

 

 

2

 

1,814

Hilton Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

60

 

44,578

 

186

 

58,188

 

246

 

102,766

Americas (excluding U.S.)

1

 

405

 

30

 

11,559

 

24

 

7,241

 

55

 

19,205

Europe

38

 

11,262

 

46

 

15,580

 

43

 

11,280

 

127

 

38,122

Middle East & Africa

4

 

1,705

 

39

 

13,668

 

4

 

1,738

 

47

 

17,111

Asia Pacific

5

 

2,999

 

115

 

40,610

 

9

 

3,557

 

129

 

47,166

Curio Collection by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

10

 

4,000

 

64

 

14,003

 

74

 

18,003

Americas (excluding U.S.)

 

 

2

 

99

 

17

 

2,196

 

19

 

2,295

Europe

 

 

6

 

516

 

27

 

3,534

 

33

 

4,050

Middle East & Africa

 

 

4

 

741

 

2

 

557

 

6

 

1,298

Asia Pacific

 

 

4

 

773

 

2

 

248

 

6

 

1,021

DoubleTree by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

31

 

10,397

 

348

 

79,122

 

379

 

89,519

Americas (excluding U.S.)

 

 

3

 

587

 

39

 

7,822

 

42

 

8,409

Europe

 

 

14

 

3,580

 

109

 

18,610

 

123

 

22,190

Middle East & Africa

 

 

19

 

4,939

 

6

 

825

 

25

 

5,764

Asia Pacific

 

 

83

 

22,174

 

8

 

2,101

 

91

 

24,275

 
 

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY (continued)

As of December 31, 2022

 

 

Owned / Leased(1)

 

Managed

 

Franchised

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Tapestry Collection by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

78

 

9,382

 

78

 

9,382

Americas (excluding U.S.)

 

 

1

 

138

 

7

 

740

 

8

 

878

Europe

 

 

 

 

6

 

360

 

6

 

360

Middle East & Africa

 

 

1

 

50

 

 

 

1

 

50

Asia Pacific

 

 

1

 

266

 

1

 

175

 

2

 

441

Embassy Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

38

 

10,121

 

216

 

48,653

 

254

 

58,774

Americas (excluding U.S.)

 

 

2

 

354

 

6

 

1,649

 

8

 

2,003

Middle East & Africa

 

 

 

 

1

 

151

 

1

 

151

Motto by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

3

 

871

 

3

 

871

Americas (excluding U.S.)

 

 

 

 

1

 

115

 

1

 

115

Europe

 

 

 

 

1

 

108

 

1

 

108

Hilton Garden Inn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

6

 

689

 

737

 

101,796

 

743

 

102,485

Americas (excluding U.S.)

 

 

13

 

1,992

 

51

 

7,664

 

64

 

9,656

Europe

 

 

18

 

3,486

 

61

 

9,849

 

79

 

13,335

Middle East & Africa

 

 

17

 

3,555

 

3

 

474

 

20

 

4,029

Asia Pacific

 

 

58

 

12,688

 

7

 

1,149

 

65

 

13,837

Hampton by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

23

 

2,986

 

2,309

 

228,576

 

2,332

 

231,562

Americas (excluding U.S.)

 

 

12

 

1,537

 

115

 

13,931

 

127

 

15,468

Europe

 

 

16

 

2,697

 

109

 

16,965

 

125

 

19,662

Middle East & Africa

 

 

5

 

1,459

 

 

 

5

 

1,459

Asia Pacific

 

 

 

 

274

 

43,892

 

274

 

43,892

Tru by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

231

 

22,569

 

231

 

22,569

Americas (excluding U.S.)

 

 

 

 

4

 

453

 

4

 

453

Homewood Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

9

 

1,131

 

499

 

57,064

 

508

 

58,195

Americas (excluding U.S.)

 

 

3

 

406

 

24

 

2,688

 

27

 

3,094

Home2 Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2

 

210

 

545

 

57,080

 

547

 

57,290

Americas (excluding U.S.)

 

 

 

 

7

 

753

 

7

 

753

Asia Pacific

 

 

 

 

22

 

3,309

 

22

 

3,309

Other

 

 

4

 

1,463

 

6

 

1,436

 

10

 

2,899

Total hotels

52

 

17,612

 

778

 

244,037

 

6,255

 

852,078

 

7,085

 

1,113,727

Hilton Grand Vacations

 

 

 

 

80

 

13,703

 

80

 

13,703

Total system

52

 

17,612

 

778

 

244,037

 

6,335

 

865,781

 

7,165

 

1,127,430

____________

(1)

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

 

HILTON WORLDWIDE HOLDINGS INC.

CAPITAL EXPENDITURES AND CONTRACT ACQUISITION COSTS

(dollars in millions)

(unaudited)

 

 

Three Months Ended

 

 

 

December 31,

 

Increase / (Decrease)

 

2022

 

2021

 

$

 

%

Capital expenditures for property and equipment(1)

$

20

 

$

18

 

2

 

 

11.1

 

Capitalized software costs(2)

 

20

 

 

16

 

4

 

 

25.0

 

Total capital expenditures

 

40

 

 

34

 

6

 

 

17.6

 

Contract acquisition costs

 

20

 

 

40

 

(20

)

 

(50.0

)

Total capital expenditures and contract acquisition costs

$

60

 

$

74

 

(14

)

 

(18.9

)

 

Year Ended

 

 

 

December 31,

 

Increase / (Decrease)

 

2022

 

2021

 

$

 

%

Capital expenditures for property and equipment(1)

$

39

 

$

35

 

4

 

 

11.4

 

Capitalized software costs(2)

 

63

 

 

44

 

19

 

 

43.2

 

Total capital expenditures

 

102

 

 

79

 

23

 

 

29.1

 

Contract acquisition costs

 

81

 

 

200

 

(119

)

 

(59.5

)

Total capital expenditures and contract acquisition costs

$

183

 

$

279

 

(96

)

 

(34.4

)

____________

(1)

Represents expenditures for hotels, corporate and other property and equipment, which include amounts indirectly reimbursed by hotel owners of $6 million and $3 million for the three months ended December 31, 2022 and 2021, respectively, and $8 million and $6 million for the years ended December 31, 2022 and 2021, respectively. Excludes expenditures for FF&E replacement reserves of $14 million and $18 million for the three months ended December 31, 2022 and 2021, respectively, and $54 million and $48 million for the years ended December 31, 2022 and 2021, respectively.

(2)

Amounts include $19 million and $12 million of expenditures that were indirectly reimbursed by hotel owners for the three months ended December 31, 2022 and 2021, respectively, and $59 million and $37 million for the years ended December 31, 2022 and 2021, respectively.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net income attributable to Hilton stockholders, as reported

$

328

 

 

$

147

 

 

$

1,255

 

 

$

410

 

Diluted EPS, as reported

$

1.21

 

 

$

0.52

 

 

$

4.53

 

 

$

1.46

 

Special items:

 

 

 

 

 

 

 

Net other expenses from managed and franchised properties

$

112

 

 

$

53

 

 

$

39

 

 

$

110

 

Purchase accounting amortization(1)

 

11

 

 

 

12

 

 

 

45

 

 

 

47

 

FF&E replacement reserves

 

14

 

 

 

18

 

 

 

54

 

 

 

48

 

Loss on debt extinguishment(2)

 

 

 

 

 

 

 

 

 

 

69

 

Tax-related adjustment(3)

 

 

 

 

(5

)

 

 

 

 

 

(43

)

Other adjustments(4)

 

5

 

 

 

(3

)

 

 

(4

)

 

 

15

 

Total special items before taxes

 

142

 

 

 

75

 

 

 

134

 

 

 

246

 

Income tax expense on special items

 

(36

)

 

 

(20

)

 

 

(32

)

 

 

(72

)

Total special items after taxes

$

106

 

 

$

55

 

 

$

102

 

 

$

174

 

 

 

 

 

 

 

 

 

Net income, adjusted for special items

$

434

 

 

$

202

 

 

$

1,357

 

 

$

584

 

Diluted EPS, adjusted for special items

$

1.59

 

 

$

0.72

 

 

$

4.89

 

 

$

2.08

 

____________

(1)

Amounts represent the amortization expense related to finite-lived intangible assets that were recorded at fair value in 2007 when the Company became a wholly owned subsidiary of affiliates of Blackstone Inc. The majority of the related assets that were remaining as of December 31, 2022 will be fully amortized during 2023.

(2)

The amount relates to the redemption of senior unsecured notes and includes a redemption premium of $55 million and the accelerated recognition of unamortized deferred financing costs related to those senior unsecured notes of $14 million.

(3)

Amounts include income tax benefits recognized related to changes in effective tax rates, which did not have an effect on cash paid for taxes in the periods.

(4)

Amounts for the three months and year ended December 31, 2022 include net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates, which were recognized in other non-operating income, net. Amount for the year ended December 31, 2021 includes costs recognized for certain legal settlements, which were recognized in general and administrative expenses. All periods include net losses (gains) on asset dispositions.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME MARGIN AND

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(dollars in millions)

(unaudited)

 

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

Net income

$

333

 

 

$

148

 

 

$

1,257

 

 

$

407

Interest expense

 

120

 

 

 

95

 

 

 

415

 

 

 

397

Income tax expense

 

70

 

 

 

89

 

 

 

477

 

 

 

153

Depreciation and amortization expenses

 

39

 

 

 

45

 

 

 

162

 

 

 

188

EBITDA

 

562

 

 

 

377

 

 

 

2,311

 

 

 

1,145

Loss (gain) on sales of assets, net

 

 

 

 

(1

)

 

 

 

 

 

7

Loss (gain) on foreign currency transactions

 

(1

)

 

 

8

 

 

 

(5

)

 

 

7

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

69

FF&E replacement reserves

 

14

 

 

 

18

 

 

 

54

 

 

 

48

Share-based compensation expense

 

36

 

 

 

49

 

 

 

162

 

 

 

193

Amortization of contract acquisition costs

 

10

 

 

 

9

 

 

 

38

 

 

 

32

Net other expenses from managed and franchised properties

 

112

 

 

 

53

 

 

 

39

 

 

 

110

Other adjustments(1)

 

7

 

 

 

(1

)

 

 

 

 

 

18

Adjusted EBITDA

$

740

 

 

$

512

 

 

$

2,599

 

 

$

1,629

____________

(1)

Amount for the year ended December 31, 2022 was less than $1 million. Amounts for the three months and year ended December 31, 2022 include the net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates. Amounts for the three months and year ended December 31, 2021 include costs recognized for certain legal settlements. All periods include severance and other items.

 

Three Months Ended

 

Year Ended

 

December 31,

 

December 31,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Total revenues, as reported

$

2,444

 

 

$

1,836

 

 

$

8,773

 

 

$

5,788

 

Add: amortization of contract acquisition costs

 

10

 

 

 

9

 

 

 

38

 

 

 

32

 

Less: other revenues from managed and franchised properties

 

(1,375

)

 

 

(1,062

)

 

 

(5,037

)

 

 

(3,344

)

Total revenues, as adjusted

$

1,079

 

 

$

783

 

 

$

3,774

 

 

$

2,476

 

 

 

 

 

 

 

 

 

Net income

$

333

 

 

$

148

 

 

$

1,257

 

 

$

407

 

Net income margin

 

13.6

%

 

 

8.1

%

 

 

14.3

%

 

 

7.0

%

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

740

 

 

$

512

 

 

$

2,599

 

 

$

1,629

 

Adjusted EBITDA margin

 

68.6

%

 

 

65.4

%

 

 

68.9

%

 

 

65.8

%

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

LONG-TERM DEBT TO NET INCOME RATIO AND

NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO

(dollars in millions)

(unaudited)

 

 

December 31,

 

 

2022

 

 

 

2021

 

Long-term debt, including current maturities

$

8,747

 

 

$

8,766

 

Add: unamortized deferred financing costs and discount

 

73

 

 

 

87

 

Long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount

 

8,820

 

 

 

8,853

 

Less: cash and cash equivalents

 

(1,209

)

 

 

(1,427

)

Less: restricted cash and cash equivalents

 

(77

)

 

 

(85

)

Net debt

$

7,534

 

 

$

7,341

 

 

 

 

 

Net income

$

1,257

 

 

$

407

 

Long-term debt to net income ratio

 

7.0

 

 

 

21.5

 

 

 

 

 

Adjusted EBITDA

$

2,599

 

 

$

1,629

 

Net debt to Adjusted EBITDA ratio

 

2.9

 

 

 

4.5

 

 

 

 

 

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

OUTLOOK: NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(in millions, except per share data)

(unaudited)

 

 

Three Months Ending

 

March 31, 2023

 

Low Case

 

High Case

Net income attributable to Hilton stockholders

$

270

 

 

$

286

 

Diluted EPS(1)

$

1.00

 

 

$

1.06

 

Special items(2):

 

 

 

Purchase accounting amortization

$

11

 

 

$

11

 

FF&E replacement reserves

 

16

 

 

 

16

 

Total special items before taxes

 

27

 

 

 

27

 

Income tax expense on special items

 

(5

)

 

 

(5

)

Total special items after taxes

$

22

 

 

$

22

 

 

 

 

 

Net income, adjusted for special items

$

292

 

 

$

308

 

Diluted EPS, adjusted for special items(1)

$

1.08

 

 

$

1.14

 

 

Year Ending

 

December 31, 2023

 

Low Case

 

High Case

Net income attributable to Hilton stockholders

$

1,378

 

 

$

1,450

 

Diluted EPS(1)

$

5.10

 

 

$

5.36

 

Special items(2):

 

 

 

Purchase accounting amortization

 

37

 

 

 

37

 

FF&E replacement reserves

 

68

 

 

 

68

 

Total special items before taxes

 

105

 

 

 

105

 

Income tax expense on special items

 

(18

)

 

 

(18

)

Total special items after taxes

$

87

 

 

$

87

 

 

 

 

 

Net income, adjusted for special items

$

1,465

 

 

$

1,537

 

Diluted EPS, adjusted for special items(1)

$

5.42

 

 

$

5.68

 

____________

(1)

Does not include the effect of potential share repurchases.

(2)

See "—Net Income and Diluted EPS, Adjusted for Special Items" for details of these special items.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

OUTLOOK: ADJUSTED EBITDA

(in millions)

(unaudited)

 

 

Three Months Ending

 

March 31, 2023

 

Low Case

 

High Case

Net income

$

271

 

$

287

Interest expense

 

116

 

 

116

Income tax expense

 

101

 

 

106

Depreciation and amortization expenses

 

38

 

 

38

EBITDA

 

526

 

 

547

FF&E replacement reserves

 

16

 

 

16

Share-based compensation expense

 

34

 

 

34

Amortization of contract acquisition costs

 

11

 

 

11

Other adjustments(1)

 

3

 

 

2

Adjusted EBITDA

$

590

 

$

610

 

Year Ending

 

December 31, 2023

 

Low Case

 

High Case

Net income

$

1,382

 

$

1,454

Interest expense

 

440

 

 

440

Income tax expense

 

541

 

 

569

Depreciation and amortization expenses

 

151

 

 

151

EBITDA

 

2,514

 

 

2,614

FF&E replacement reserves

 

68

 

 

68

Share-based compensation expense

 

159

 

 

159

Amortization of contract acquisition costs

 

46

 

 

46

Other adjustments(1)

 

13

 

 

13

Adjusted EBITDA

$

2,800

 

$

2,900

____________

(1)

Includes adjustments for severance and other items. See "—Net Income Margin and Adjusted EBITDA and Adjusted EBITDA Margin" for details of these adjustments.

HILTON WORLDWIDE HOLDINGS INC.

DEFINITIONS

Net Income (Loss), Adjusted for Special Items, and Diluted EPS, Adjusted for Special Items

Net income (loss), adjusted for special items, and diluted earnings (loss) per share ("EPS"), adjusted for special items, are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. In addition, the Company's definition of net income (loss), adjusted for special items, and diluted EPS, adjusted for special items, may not be comparable to similarly titled measures of other companies.

Net income (loss), adjusted for special items, and diluted EPS, adjusted for special items, are included to assist investors in performing meaningful comparisons of past, present and future operating results and as a means of highlighting the results of the Company's ongoing operations.

EBITDA, Adjusted EBITDA, Net Income Margin and Adjusted EBITDA Margin

EBITDA, presented herein, reflects net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses. Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) furniture, fixtures and equipment ("FF&E") replacement reserves required under certain lease agreements; (v) share-based compensation; (vi) reorganization, severance, relocation and other expenses; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) the net effect of reimbursable costs included in other revenues and other expenses from managed and franchised properties; and (x) other items.

Net income margin represents net income as a percentage of total revenues. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenues, adjusted to exclude the amortization of contract acquisition costs and other revenues from managed and franchised properties.

The Company believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors about the Company's financial condition and results of operations for the following reasons: (i) these measures are among the measures used by the Company's management team to evaluate its operating performance and make day-to-day operating decisions and (ii) these measures are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in the industry. Additionally, these measures exclude certain items that can vary widely across different industries and among competitors within the Company's industry. For instance, interest expense and income taxes are dependent on company specifics, including, among other things, capital structure and operating jurisdictions, respectively, and, therefore, could vary significantly across companies. Depreciation and amortization expenses, as well as amortization of contract acquisition costs, are dependent upon company policies, including the method of acquiring and depreciating assets and the useful lives that are assigned to those depreciating or amortizing assets for accounting purposes. For Adjusted EBITDA, the Company also excludes items such as: (i) FF&E replacement reserves for leased hotels to be consistent with the treatment of capital expenditures for property and equipment, where depreciation of such capitalized assets is reported within depreciation and amortization expenses; (ii) share-based compensation, as this could vary widely among companies due to the different plans in place and the usage of them; (iii) the net effect of the Company's cost reimbursement revenues and reimbursed expenses, as the Company contractually does not operate the related programs to generate a profit over the terms of the respective contracts; and (iv) other items, such as amounts related to debt restructurings and debt retirements and reorganization and related severance costs, that are not core to the Company's operations and are not reflective of the Company's operating performance.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not recognized terms under GAAP and should not be considered as alternatives, either in isolation or as a substitute, for net income (loss) or other measures of financial performance or liquidity, including cash flows, derived in accordance with GAAP. Further, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, may not be comparable to similarly titled measures of other companies and should not be considered as other methods of analyzing the Company's results as reported under GAAP.

Net Debt, Long-Term Debt to Net Income Ratio and Net Debt to Adjusted EBITDA Ratio

Long-term debt to net income ratio is calculated as the ratio of Hilton's long-term debt, including current maturities, to net income. Net debt and net debt to Adjusted EBITDA ratio, presented herein, are non-GAAP financial measures that the Company uses to evaluate its financial leverage. Net debt is calculated as: long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount; reduced by: (i) cash and cash equivalents and (ii) restricted cash and cash equivalents. Beginning as of March 31, 2022, the Company has modified its definition of net debt to no longer include Hilton's share of unconsolidated affiliate debt. Since this debt is not consolidated by the Company, the modified definition more accurately reflects how the Company and the Company's investors evaluate Hilton's financial leverage, as well as its indebtedness.

Net debt should not be considered as a substitute to debt presented in accordance with GAAP, and net debt to Adjusted EBITDA ratio should not be considered as an alternative to measures of financial condition derived in accordance with GAAP. Net debt and net debt to Adjusted EBITDA ratio may not be comparable to similarly titled measures of other companies. The Company believes net debt and net debt to Adjusted EBITDA ratio provide useful information about its indebtedness to investors as they are frequently used by securities analysts, investors and other interested parties to compare the indebtedness between companies.

Comparable Hotels

The Company defines comparable hotels as those that: (i) were active and operating in the Company's system for at least one full calendar year as of the end of the current period, and open January 1st of the previous year; (ii) have not undergone a change in brand or ownership type during the current or comparable periods reported; and (iii) have not sustained substantial property damage, business interruption, undergone large-scale capital projects or for which comparable results were not available. Of the 7,085 hotels in the Company's system as of December 31, 2022, 5,797 hotels were classified as comparable hotels. The 1,288 non-comparable hotels included 272 hotels, or less than four percent of the total hotels in the Company's system, that were removed from the comparable group during the last twelve months because they sustained substantial property damage, business interruption, underwent large-scale capital projects or comparable results were otherwise not available.

When considering business interruption in the context of the Company's definition of comparable hotels, no hotel that had completely or partially suspended operations on a temporary basis at any time as a result of the COVID-19 pandemic was excluded from the definition of comparable hotels on that basis alone. Despite these temporary suspensions of hotel operations, the Company believes that including these hotels within the hotel operating statistics of occupancy, average daily rate ("ADR") and revenue per available room ("RevPAR"), if they would have otherwise been included, reflects the underlying results of the business for the three months and years ended December 31, 2022 and 2021.

Occupancy

Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels for a given period. Occupancy measures the utilization of available capacity at a hotel or group of hotels. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help management determine achievable ADR pricing levels as demand for hotel rooms increases or decreases.

ADR

ADR represents hotel room revenue divided by the total number of room nights sold for a given period. ADR measures the average room price attained by a hotel, and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the industry, and management uses ADR to assess pricing levels that the Company is able to generate by type of customer, as changes in rates charged to customers have different effects on overall revenues and incremental profitability than changes in occupancy, as described above.

RevPAR

RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. Management considers RevPAR to be a meaningful indicator of the Company's performance as it provides a metric correlated to two primary and key drivers of operations at a hotel or group of hotels, as previously described: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods for comparable hotels.

References to occupancy, ADR and RevPAR throughout this press release are presented on a comparable basis, based on the comparable hotels as of December 31, 2022, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted. As such, comparisons of these hotel operating statistics for the three months and years ended December 31, 2022 and 2021 or 2019, use the foreign currency exchange rates used to translate the results of the Company's foreign operations within its condensed consolidated financial statements for the three months and year ended December 31, 2022.

Contacts

Investor Contact

Jill Slattery Chapman

+1 703 883 5476

Media Contact

Kent Landers

+1 703 883 3246

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