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Hilton Reports 2017 Earnings and Gives 2018 Outlook

Hilton Reports 2017 Earnings and Gives 2018 Outlook

MCLEAN, Va.—Hilton today reported its fourth quarter and full year 2017 earnings as well as the company’s outlook for the year ahead. Last year, Hilton hit a record pipeline of 345,000 rooms and opened about 400 properties. On top of that, system-wide comparable RevPAR grew 2.5 percent from 2016 to 2017 and increased 3.8 percent from Q4 2016 to Q4 2017.

Hilton’s international hotels recorded strong results in particular. Management and franchise fee revenues increased in both periods as a result of increases in RevPAR of 3.7 percent and 2.4 percent, respectively, at comparable managed and franchised hotels, as well as from the addition of new properties to Hilton’s portfolio.

The company reported net income of $841 million in the fourth quarter and $1,264 million for the full year including a $665 million provisional tax benefit for tax reform that occurred in the fourth quarter. The adjusted EBITDA for Q4 2017 was $498 million and $1,965 million for the full year. In 2017, Hilton returned a total of $1.1 billion in capital to shareholders.

“Our performance for the fourth quarter and full year exceeded the high end of our guidance for Adjusted EBITDA and diluted EPS, adjusted for special items,” said Hilton President and CEO Christopher J. Nassetta. “Given the strength of our brand portfolio, we continue to build momentum in both unit and pipeline growth and now have the largest number of rooms under construction in the industry. We feel great about our set up for 2018 and our ability to continue delivering record-setting results.”

Other highlights from Hilton’s 2017 earnings announcement include:

  • Diluted EPS was $2.61 for the fourth quarter and $3.85 for the full year, including, in each case, the provisional effect of tax reform; diluted EPS, adjusted for special items, was $0.54 for the fourth quarter and $2.00 for the full year; on a pro forma basis, diluted EPS, adjusted for special items, increased six percent from the fourth quarter of 2016 and 27 percent from full year 2016
  • Adjusted EBITDA was $498 million for the fourth quarter, an increase of 10 percent from pro forma Adjusted EBITDA for the fourth quarter of 2016;
  • Adjusted EBITDA was $1,965 million for the full year, an increase of 11 percent from pro forma Adjusted EBITDA for full year 2016
  • Adjusted EBITDA margin was 56.2 percent for the full year, an increase of 260 basis points from pro forma Adjusted EBITDA margin for full year 2016
  • Added 18,400 net rooms in the fourth quarter, totaling 51,600 net rooms for the full year, representing 6.5 percent net unit growth
  • Approved 31,000 new rooms for development during the fourth quarter, growing Hilton’s development pipeline to 345,000 rooms, representing 11 percent growth from December 31, 2016
  • Repurchased 3.5 million shares of Hilton common stock for an aggregate cost of $266 million during the fourth quarter, bringing total capital return for the full year, including dividends, to approximately $1.1 billion
  • Full year 2018 net income is projected to be between $802 million and $837 million; Adjusted EBITDA, excluding the application of the new revenue recognition standard, is projected to be between $2,090 million and $2,140 million; Adjusted EBITDA, reflecting the application of the new revenue recognition standard, is projected to be between $2,030 million and $2,080 million, growing 6 percent to 9 percent
  • Cash available for capital return is projected to be between $1.2 billion and $1.6 billion; net unit growth is expected to be 6.5 percent

The company also shared the following outlook for its performance in 2018:

  • System-wide RevPAR is expected to increase between 1.0 percent and 3.0 percent on a comparable and currency neutral basis compared to 2017.
    Diluted EPS, before special items, is projected to be between $2.49 and $2.60.
    Diluted EPS, adjusted for special items, is projected to be between $2.49 and $2.60.
  • Net income is projected to be between $802 million and $837 million.
    Adjusted EBITDA is projected to be between $2,030 million and $2,080 million, growing 6 percent to 9 percent.
  • Management and franchise fee revenue is projected to increase between 8 percent and 10 percent compared to 2017.
  • Capital expenditures, excluding amounts reimbursed by hotel owners, are expected to be between $175 million and $200 million.
  • Cash available for capital return is projected to be between $1.2 billion and $1.6 billion.
  • General and administrative expenses are projected to be between $400 million and $425 million.
  • Net unit growth is expected to be approximately 6.5 percent.

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