Hilton Reports Third Quarter 2023 Results

Hilton Worldwide Holdings Inc. (NYSE: HLT) today reported its third quarter 2023 results. Highlights include:

• Diluted EPS was $1.44 for the third quarter, and diluted EPS, adjusted for special items, was $1.67

• Net income was $379 million for the third quarter

• Adjusted EBITDA was $834 million for the third quarter

• System-wide comparable RevPAR increased 6.8 percent, on a currency neutral basis, for the third quarter compared to the same period in 2022

• System-wide comparable RevPAR increased 11.4 percent, on a currency neutral basis, for the third quarter compared to the same period in 2019

• Approved 35,500 new rooms for development during the third quarter, bringing Hilton's development pipeline to a record 457,300 rooms as of September 30, 2023, representing growth of 4 percent from June 30, 2023 and 10 percent from September 30, 2022

• Added 15,700 rooms to Hilton's system in the third quarter, resulting in 14,300 net additional rooms in Hilton's system during the period

• Repurchased 4.5 million shares of Hilton common stock during the third quarter, bringing total capital return, including dividends, to $723 million for the quarter and $1,938 million year to date through October

• Expanded its brand portfolio of open hotels, with the openings of the first Spark by Hilton and the first Tempo by Hilton during the third quarter

• Full year 2023 system-wide RevPAR is expected to increase between 12.0 percent and 12.5 percent on a comparable and currency neutral basis compared to 2022; full year net income is projected to be between $1,375 million and $1,389 million; full year Adjusted EBITDA is projected to be between $3,025 million and $3,045 million

• Full year 2023 capital return is projected to be between $2.4 billion and $2.6 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We continued to see strong results during the third quarter, exceeding our expectations for system-wide RevPAR growth, with growth across all customer segments. We also continue to leverage our industry-leading portfolio of brands to drive further growth of our global network. We believe we have hit an inflection point and expect a meaningful uptick in openings in the fourth quarter with continued positive momentum into next year. With a record number of approvals year-to-date driving the largest pipeline in our history, we are confident in our ability to accelerate net unit growth to 5.5 percent to 6.0 percent next year."

For the three months ended September 30, 2023, system-wide comparable RevPAR increased 6.8 percent compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 12.3 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months ended September 30, 2023 increased 11.4 percent compared to the same period in 2019, and management and franchise fee revenues increased 36.4 percent from the same period in 2019.

For the nine months ended September 30, 2023, system-wide comparable RevPAR increased 14.9 percent compared to the same period in 2022 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 18.4 percent compared to the same period in 2022. For comparison to pre-pandemic results, system-wide comparable RevPAR for the nine months ended September 30, 2023 increased 9.7 percent compared to the same period in 2019, and management and franchise fee revenues increased 31.3 percent from the same period in 2019.

For the three months ended September 30, 2023, diluted EPS was $1.44 and diluted EPS, adjusted for special items, was $1.67 compared to $1.26 and $1.31, respectively, for the three months ended September 30, 2022. Net income and Adjusted EBITDA were $379 million and $834 million, respectively, for the three months ended September 30, 2023, compared to $346 million and $732 million, respectively, for the three months ended September 30, 2022.

For the nine months ended September 30, 2023, diluted EPS was $3.74 and diluted EPS, adjusted for special items, was $4.53 compared to $3.32 and $3.31, respectively, for the nine months ended September 30, 2022. Net income and Adjusted EBITDA were $1,001 million and $2,286 million, respectively, for the nine months ended September 30, 2023, compared to $924 million and $1,859 million, respectively, for the nine months ended September 30, 2022.

Development

In the third quarter of 2023, Hilton opened 107 new hotels totaling 15,700 rooms and achieved net unit growth of 14,300 rooms. During the quarter, Hilton had two noteworthy brand debuts, celebrating the first Spark by Hilton which opened in Mystic, Connecticut, and the first Tempo by Hilton, which opened in New York Times Square. This momentum of firsts continued into October 2023 with the announcement of the Waldorf Astoria Residences Pompano Beach, the brand's first standalone residential project.

Hilton added 35,500 rooms to the development pipeline during the third quarter, and, as of September 30, 2023, Hilton's development pipeline totaled approximately 3,190 hotels representing 457,300 rooms throughout 119 countries and territories, including 29 countries and territories where Hilton did not have any existing hotels. Additionally, of the rooms in the development pipeline, 223,000 of the rooms were under construction and 257,200 of the rooms were located outside of the U.S.

Balance Sheet and Liquidity

As of September 30, 2023, 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 4.57 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 4.56 percent and no scheduled maturities until May 2025. As of September 30, 2023, no debt amounts were outstanding under Hilton's $2.0 billion senior secured revolving credit facility, which had an available borrowing capacity of $1,940 million after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $779 million as of September 30, 2023, including $81 million of restricted cash and cash equivalents.

During the third quarter of 2023, Hilton repurchased 4.5 million shares of its common stock at a cost of $684 million and an average price per share of $151.22. During the nine months ended September 30, 2023, Hilton repurchased 11.0 million shares of its common stock at an average price per share of $145.16, returning $1.6 billion of capital to shareholders.

In September 2023, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, for a total of $39 million, bringing total dividend payments for the year to $120 million. In October 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 December 29, 2023 to holders of record of its common stock as of the close of business on November 17, 2023.

Outlook

Share-based metrics in Hilton's outlook include actual share repurchases through the third quarter, but do not include the effect of potential share repurchases thereafter.

Full Year 2023

• System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 12.0 percent and 12.5 percent compared to 2022.

• Diluted EPS is projected to be between $5.17 and $5.22.

• Diluted EPS, adjusted for special items, is projected to be between $6.04 and $6.09.

• Net income is projected to be between $1,375 million and $1,389 million.

• Adjusted EBITDA is projected to be between $3,025 million and $3,045 million.

• Contract acquisition costs and capital expenditures, excluding amounts reimbursed by third parties, are expected to be approximately $350 million.

• Capital return is projected to be between $2.4 billion and $2.6 billion.

• General and administrative expenses are projected to be between $390 million and $410 million.

• Net unit growth is expected to be approximately 5.0 percent.

Fourth Quarter 2023

• System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 4.5 percent and 5.5 percent compared to the fourth quarter of 2022.

• Diluted EPS is projected to be between $1.43 and $1.48.

• Diluted EPS, adjusted for special items, is projected to be between $1.51 and $1.56.

• Net income is projected to be between $374 million and $388 million.

• Adjusted EBITDA is projected to be between $739 million and $759 million.

Conference Call

Hilton will host a conference call to discuss third quarter of 2023 results on October 25, 2023 at 9:00 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 4158785. 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 5996329.

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 performance of Hilton's business, future financial results, liquidity and capital resources and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "forecasts," "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, challenges due to labor shortages or disputes and supply chain disruptions and recent events affecting the financial services industry; risks related to the impact of the COVID-19 pandemic; 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 conflicts in Eastern Europe and the Middle East and other geopolitical events; 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, 2022, which is filed with the Securities and Exchange Commission (the "SEC") and is 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.

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, 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 measures.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 22 world-class brands comprising nearly 7,400 properties and more than 1.1 million rooms, in 124 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 173 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.