Hilton's stock pops after earnings beat estimates, despite the impact of bad weather

By Ciara Linnane

Renovations and unfavorable holiday shifts 'weighed on performance more than anticipated,' says CEO

Hilton Worldwide Holdings Inc.'s stock rose 4.6% Wednesday after the hotel operator's first-quarter earnings beat analysts' estimates, even as the company grappled with bad weather and other issues.

"Renovations, inclement weather and unfavorable holiday shifts weighed on performance more than anticipated," Chief Executive Christopher J. Nassetta said in a statement.

The stock has moved higher for three straight days and has added 7.5% over the period. It's down about 4% from its all-time closing high of $214.34, hit on March 27.

The company (HLT) posted net income of $265 million, or $1.04 a share, for the quarter, up from $206 million, or 77 cents a share, in the year-earlier period.

Adjusted for one-time items, per-share earnings came to $1.53, well ahead of the $1.41 FactSet consensus.

Revenue rose to $2.573 billion from $2.293 billion a year ago, also ahead of the $2.514 billion FactSet consensus.

Systemwide RevPAR, or revenue per available room, rose 2%, on a currency-neutral basis, the company said in a statement. The company added 16,800 rooms in the period and had 14,200 net additional rooms, contributing to net unit growth of 5.6% from March 2023.

On a call with analysts, Nassetta said RevPAR growth was at the low end of the company's expected range, while EPS meaningfully exceeded it.

"Leisure transient RevPAR exceeded our expectations even with tough year-over-year comparisons given continued strength in international markets and holiday shifts," he said, according to a FactSet transcript. "Business transient recovery remained steady with RevPAR across large corporates up more than 3%, driven by strong demand in consulting and government contracting."

Hilton is now expecting full-year RevPAR growth of 2% to 4% on both a comparable and currency-neutral basis. The FactSet consensus is for growth of 3.9%.

It expects full-year net income to range from $1.586 billion to $1.621 billion, below the FactSet consensus of $1.702 billion.

Nassetta was nonetheless upbeat on the call, noting the strength of the broader economy, positive employment numbers, relatively strong corporate profits and the continuing recovery in Hilton's group business.

And while leisure travel is coming back from "super high" levels, "it gives you, I think, a reasonable amount of confidence that it's still going to be relatively strong, modest growth," he said.

The stock has gained 8% in the year to date, while the S&P 500 SPX has gained 6%.

-Ciara Linnane

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04-24-24 1258ET

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