Hilton Reports Strong Second-Quarter RevPAR, EBITDA Gains; Comparable U.S. Owned-or-Operated RevPAR Increases 9.4 Percent; Total EBITDA up 15 Percent
BEVERLY HILLS, Calif. --Hilton Hotels Corp.
Results in the second quarter were highlighted by significant increases in revenue per available room (RevPAR) at the company's U.S. owned-or-operated hotels, as well as total earnings before interest, taxes, depreciation, amortization and non-cash items (EBITDA).
Financial information for 1999 is presented on a pro forma basis as if the company's acquisition of Promus Hotel Corp. had occurred on Jan. 1, 1999.
Hilton reported net income for the second quarter of $88 million, compared to $77 million for the same period a year ago, an increase of 14 percent. Diluted net income per share increased 10 percent to $.23 per share from $.21 last year.
Comparable RevPAR at the company's U.S. owned-or-operated hotels increased 9.4 percent during the quarter. This gain was a result of a 3.3-point occupancy increase to 77.5 percent, coupled with an average daily rate (ADR) improvement of 4.6 percent to $132.48.
Comparable owned-or-operated RevPAR within the Hilton full-service brand portfolio increased 12.1 percent in the quarter. Occupancy rose to 80.0 percent from 75.4 percent a year ago, while ADR increased 5.7 percent to $167.11.
Within the Doubletree brand, comparable owned-or-operated RevPAR rose 7.5 percent in the quarter, resulting from a 2.6-point gain in occupancy to 75.3 percent, and a 3.7 percent ADR increase to $111.41.
The company reported an 11 percent increase in second-quarter revenue to $916 million, from $826 million in the corresponding 1999 quarter. Total EBITDA increased $46 million, or 15 percent, in the second quarter to $361 million.
The increases in revenue and EBITDA reflect the aforementioned strong RevPAR gains as well as the benefit of 1999 acquisitions and new hotel openings. The comparable 1999 period includes revenue and EBITDA from owned Homewood Suites and Hampton Inn hotels that were subsequently sold later in the year.
Across all brands, EBITDA from the company's owned hotels in the second quarter totaled $248 million, with comparable EBITDA up 14.2 percent. RevPAR from comparable owned properties improved 11.3 percent. Owned property comparable EBITDA margins improved 1.8 points to an industry-leading 38.3 percent.
The company's owned hotels benefited from continued strong demand for hotel rooms in major cities, as well as limited new competitive supply in markets where the company has a significant ownership presence.
Within the Hilton brand owned portfolio, strong performances -- including many double-digit RevPAR and EBITDA gains -- were reported at the company's hotels in New York, Chicago, San Francisco, San Diego and Honolulu. The latter continues a major rebound that began in the fourth-quarter 1999 following a two-year marketwide slump. Additionally, results at Hilton's new hotel at Boston's Logan Airport -- which opened in September 1999 -- have significantly exceeded forecasts.
Results at owned Doubletree hotels were driven by strong RevPAR gains at hotels in San Jose, Santa Barbara and Orange County, Calif. The April 3 introduction of Hilton's HHonors guest loyalty program to the Doubletree brand (along with other former Promus brands), and the company's aggressive cross-selling efforts, also contributed to the improvement at Doubletree.
Management and franchise fees (across all brands) increased 12 percent to $93 million in the second quarter. The increase was attributable to increased RevPAR at comparable properties and unit growth in the Hilton Garden Inn and Hampton Inn brands.
During the second quarter, Hilton added a net 48 hotels and 6,415 rooms to its portfolio as follows: Hampton Inn (27 hotels, 2,184 rooms); Hilton Garden Inn (nine hotels, 1,276 rooms); Hilton (five hotels, 1,810 rooms); Embassy Suites (three hotels, 1,054 rooms); Homewood Suites by Hilton (two hotels, 184 rooms); other brands (a net addition of three hotels and a net increase of 139 rooms).
The Doubletree brand portfolio decreased by a net of one hotel and 232 rooms in the second quarter. Among the hotels opened during the period were two in New York City -- the 444-room Hilton Times Square and 463-suite Embassy Suites in Battery Park -- making Hilton the largest hotel operator in Manhattan. At June 30, 2000, the Hilton system consisted of 1,827 hotels with 309,781 rooms, a net gain of 157 hotels and 20,195 rooms from June 30, 1999.
The company is on track to open more than 180 hotels in calendar 2000, and more than 400 in the next two years, and remains confident in its annual unit growth target of 8 to 10 percent for the next three to four years. Year-to-date, the company has approved 115 new deals, and expects to approve more than 230 for the full year.
In its vacation ownership business, Hilton Grand Vacations, the company reported continued strong sales overall, particularly at its newest timeshare property, a 275-unit facility at the Hilton Hawaiian Village. The property is scheduled to open in spring 2001.
Reflecting the benefits of the introduction of the HHonors program, cross-selling and other marketing initiatives, strong second-quarter occupancy increases were reported at the former Promus brands as well as throughout the Hilton system.
These occupancy gains, coupled with increases in ADR, resulted in systemwide RevPAR improvements (including franchise units) of 7.1 percent, 4.9 percent and 3.9 percent at Embassy Suites, Homewood Suites by Hilton and Hampton Inn, respectively.
For the six-month period ended June 30, 2000, Hilton reported net income of $146 million, compared to $119 million pro forma for the same period a year ago, an increase of 23 percent. Diluted net income per share increased 22 percent to $.39 per share from $.32 pro forma last year.
RevPAR at the company's comparable owned-or-operated hotels increased 6.6 percent for the six months, with occupancy improving 2.0 points to 74.2 percent, and ADR showing a 3.7 percent gain to $132.24. Total company EBITDA rose 13 percent to $641 million, from $568 million pro forma for the six-month period in 1999.
Year-to-date (through June 30, 2000) reservations booked through the Internet more than doubled from the same period last year, and have already exceeded the total number of Internet reservations booked in calendar 1999. In the first half of 2000, there have been approximately 17 million Web site visits across all Hilton brands (including
The Hilton HHonors frequent guest program -- recognized as "Best International Program" by readers of InsideFlyer magazine -- was successfully introduced to the Hampton Inn, Doubletree, Embassy Suites and Homewood Suites by Hilton brands on April 3, 2000, a total of some 1,400 hotels.
During the second quarter, HHonors-related stays accounted for 15 percent of total stays at these four brands. The company anticipates HHonors membership will increase to nearly 11 million by year-end 2000, noting that approximately 10 percent of new members are enrolling via the
Cross-selling efforts among all of the brands in the Hilton family remained strong in the second quarter, with additional momentum expected in the second half of the year as the company completes the consolidation of its reservation system.
These initiatives, combined with Hilton's worldwide sales network actively booking business at all the brands, have resulted in estimated year-to-date incremental systemwide revenue of $78 million.
Stephen F. Bollenbach, president and chief executive officer, said: "When you combine these outstanding RevPAR results and industry-leading EBITDA margins with the significant growth in our franchise system and active development pipeline, they demonstrate the fundamental strength of the business throughout our company, and represent achievement of our dual goals of driving revenue at our owned-or-operated hotels while adding units to our system and increasing income from fees.
"Further, we are continuing to generate growing incremental revenue across our entire system from our HHonors program, group sales, cross-selling efforts and Internet-related initiatives. This, along with our achievement of cost-saving goals and having the right people in the right places, is proof-positive that the integration of Promus is complete and a success."
Note: This news release contains "forward-looking statements" within the meaning of federal securities law, including statements concerning business strategies and their intended results, and similar statements concerning anticipated future events and expectations that are not historical facts. The forward-looking statements in this news release are subject to numerous risks and uncertainties, including the effects of economic conditions; supply and demand changes for hotel rooms; competitive conditions in the lodging industry, relationships with clients and property owners; the impact of government regulations; and the availability of capital to finance growth, which could cause actual results to differ materially from those expressed in or implied by the statements herein.
HILTON HOTELS CORP.
Financial Highlights
(in millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
Pro Forma % Pro Forma %
1999(a) 2000 Change 1999(a) 2000 Change
Revenue $ 826 $ 916 11 % $1,561 $1,709 9 %
EBITDA (b)
Operations $ 335 $ 379 13 % $ 607 $ 675 11 %
Corporate expense, net (20) (18) (10) (39) (34) (13)
Total EBITDA $ 315 $ 361 15 % $ 568 $ 641 13 %
Operating income $ 218 $ 250 15 % $ 378 $ 423 12 %
Interest and dividend income 18 22 22 36 41 14
Interest expense (100) (113) 13 (197) (225) 14
Net interest from
unconsolidated affiliates (3) (4) 33 (8) (7) (13)
Net gain (loss) on
asset dispositions (1) -- -- (1) 29
Income before taxes
and minority interest 132 155 17 208 261 25
Provision for taxes (53) (65) 23 (83) (110) 33
Minority interest, net (2) (2) -- (6) (5) (17)
Net income $ 77 $ 88 14 % $ 119 $ 146 23 %
Net income per share:
Basic $ .21 $ .24 14 % $ .32 $ .40 25 %
Diluted $ .21 $ .23 10 % $ .32 $ .39 22 %
Average shares - diluted 394 391 (1)% 396 391 (1)%
Reconciliation of Operating
Income to EBITDA (b)
Operating income $ 218 $ 250 15 % $ 378 $ 423 12 %
Pre-opening expense -- 1 -- -- 2
Operating interest
and dividend income 5 9 80 10 17 70
Depreciation and
amortization (c) 92 101 10 180 199 11
EBITDA $ 315 $ 361 15 % $ 568 $ 641 13 %
(a) The 1999 financial information is presented on a pro forma basis
as if the acquisition of Promus had occurred on January 1, 1999.
The financial results include non-recurring charges totaling $.02
per share for the six months ended June 30, 1999. Non-recurring
charges did not impact earnings per share in the three months
ended June 30, 1999. The 1999 six-month results exclude a $.01 per
share charge related to the cumulative effect of an accounting
change in the first quarter of 1999.
(b) EBITDA is earnings before interest, taxes, depreciation,
amortization, pre-opening expense and non-cash items. EBITDA can
be computed by adding depreciation, amortization, pre-opening
expense, interest and dividend income from investments related to
operating activities and non-cash items to operating income.
(c) Includes proportionate share of unconsolidated affiliates.
HILTON HOTELS CORP.
U.S. Owned-or-Operated Statistics (a)
Three Months Ended Six Months Ended
June 30, June 30,
%/pt %/pt
1999 2000 Change 1999 2000 Change
Hilton
Occupancy 75.4 % 80.0 % 4.6 pts 74.5 % 77.1 % 2.6 pts
Average Rate $158.08 $167.11 5.7 % $158.27 $166.33 5.1 %
RevPAR $119.21 $133.64 12.1 % $117.97 $128.18 8.7 %
Doubletree
Occupancy 72.7 % 75.3 % 2.6 pts 70.2 % 71.5 % 1.3 pts
Average Rate $107.39 $111.41 3.7 % $108.11 $110.82 2.5 %
RevPAR $ 78.12 $ 83.94 7.5 % $ 75.89 $ 79.19 4.3 %
Embassy Suites
Occupancy 76.2 % 79.4 % 3.2 pts 74.6 % 76.8 % 2.2 pts
Average Rate $126.50 $131.77 4.2 % $128.53 $132.46 3.1 %
RevPAR $ 96.36 $104.62 8.6 % $ 95.87 $101.68 6.1 %
Other
Occupancy 71.6 % 74.1 % 2.5 pts 67.9 % 70.0 % 2.1 pts
Average Rate $ 92.06 $ 93.44 1.5 % $ 91.14 $ 91.73 0.6 %
RevPAR $ 65.94 $ 69.26 5.0 % $ 61.89 $ 64.19 3.7 %
Total U.S. Owned or Operated
Occupancy 74.2 % 77.5 % 3.3 pts 72.2 % 74.2 % 2.0 pts
Average Rate $126.61 $132.48 4.6 % $127.52 $132.24 3.7 %
RevPAR $ 93.88 $102.72 9.4 % $ 92.03 $ 98.12 6.6 %
(a) Statistics are for comparable U.S. hotels, and include only those
hotels in the system as of June 30, 2000, and owned or managed by
Hilton since Jan. 1, 1999.
HILTON HOTELS CORP.
Systemwide Brand Statistics (a)
Three Months Ended Six Months Ended
June 30, June 30,
%/pt %/pt
1999 2000 Change 1999 2000 Change
Hilton
Occupancy 73.4 % 76.6 % 3.2 pts 71.6 % 73.5 % 1.9 pts
Average Rate $129.08 $136.18 5.5 % $129.51 $135.53 4.6 %
RevPAR $ 94.73 $104.33 10.1 % $ 92.76 $ 99.60 7.4 %
Hilton Garden Inn
Occupancy 66.3 % 73.2 % 6.9 pts 62.1 % 69.0 % 6.9 pts
Average Rate $ 95.84 $ 97.94 2.2 % $ 95.22 $ 96.96 1.8 %
RevPAR $ 63.50 $ 71.70 12.9 % $ 59.09 $ 66.88 13.2 %
Doubletree
Occupancy 71.9 % 74.0 % 2.1 pts 69.0 % 70.2 % 1.2 pts
Average Rate $103.26 $108.29 4.9 % $103.91 $107.31 3.3 %
RevPAR $ 74.20 $ 80.17 8.0 % $ 71.72 $ 75.34 5.0 %
Embassy Suites
Occupancy 75.9 % 78.4 % 2.5 pts 74.1 % 75.4 % 1.3 pts
Average Rate $121.67 $126.17 3.7 % $122.63 $126.07 2.8 %
RevPAR $ 92.33 $ 98.93 7.1 % $ 90.88 $ 95.10 4.6 %
Homewood Suites by Hilton
Occupancy 75.6 % 77.9 % 2.3 pts 72.6 % 75.2 % 2.6 pts
Average Rate $ 95.82 $ 97.52 1.8 % $ 96.18 $ 97.44 1.3 %
RevPAR $ 72.40 $ 75.97 4.9 % $ 69.86 $ 73.31 4.9 %
Hampton
Occupancy 72.4 % 73.4 % 1.0 pts 68.0 % 67.6 % (0.4)pts
Average Rate $ 72.32 $ 74.16 2.5 % $ 71.40 $ 73.47 2.9 %
RevPAR $ 52.39 $ 54.45 3.9 % $ 48.53 $ 49.70 2.4 %
Other
Occupancy 69.8 % 73.2 % 3.4 pts 65.7 % 68.7 % 3.0 pts
Average Rate $104.10 $107.48 3.2 % $101.85 $104.04 2.2 %
RevPAR $ 72.66 $ 78.64 8.2 % $ 66.93 $ 71.47 6.8 %
(a) Statistics are for comparable hotels, and include only those
hotels in the system as of June 30, 2000, and owned, managed or
franchised by Hilton since Jan. 1, 1999.
HILTON HOTELS CORP.
Supplementary Statistical Information
June Change to
1999 2000 June 1999 Dec. 1999
Number of Number of Number of Number of
Hotels Rooms Hotels Rooms Hotels Rooms Hotels Rooms
Hilton
Owned 34 24,587 37 26,350 3 1,763 1 350
Leased -- -- 1 499 1 499 1 499
Joint Venture 2 1,453 3 1,897 1 444 1 444
Managed 16 11,657 15 10,844 (1) (813) --
Franchised 170 44,104 171 44,932 1 828 4 841
222 81,801 227 84,522 5 2,721 7 2,134
Hilton Garden Inn
Owned 1 197 2 359 1 162 1 162
Joint Venture 2 280 2 280 -- -- --
Franchised 37 4,879 75 10,566 38 5,687 15 2,207
40 5,356 79 11,205 39 5,849 16 2,369
Doubletree
Owned 18 5,463 13 4,303 (5) (1,160) (1) (454)
Leased 9 3,050 8 2,552 (1) (498) (1) (498)
Joint Venture 35 8,684 31 8,476 (4) (208) 1 569
Managed 63 17,525 61 17,027 (2) (498) (2) (314)
Franchised 50 11,801 45 10,730 (5) (1,071) (3) (629)
175 46,523 158 43,088 (17) (3,435) (6) (1,326)
Embassy Suites
Owned 6 1,299 6 1,299 -- -- --
Joint Venture 19 5,098 22 6,063 3 965 3 965
Managed 60 15,050 58 14,590 (2) (460) (2) (459)
Franchised 63 14,227 69 15,879 6 1,652 5 1,452
148 35,674 155 37,831 7 2,157 6 1,958
Homewood Suites by Hilton
Owned 22 2,605 13 1,677 (9) (928) -- 22
Leased 1 83 -- -- (1) (83) (1) (83)
Managed 4 471 17 1,895 13 1,424 2 206
Franchised 57 6,031 61 6,404 4 373 4 376
84 9,190 91 9,976 7 786 5 521
Hampton
Owned 10 1,378 1 133 (9) (1,245) --
Leased 18 2,250 18 2,250 -- -- --
Managed 10 1,337 12 1,598 2 261 2 261
Franchised 888 91,776 995 102,622 107 10,846 40 3,939
926 96,741 1,026 106,603 100 9,862 42 4,200
Other
Owned 10 1,620 13 1,975 3 355 (1) (351)
Leased 41 6,433 46 7,298 5 865 --
Joint Venture 3 1,433 3 1,433 -- -- --
Managed 20 4,681 22 4,822 2 141 -- (897)
Franchised 1 134 7 1,028 6 894 6 894
75 14,301 91 16,556 16 2,255 5 (354)
Total
Owned 101 37,149 85 36,096 (16) (1,053) -- (271)
Leased 69 11,816 73 12,599 4 783 (1) (82)
Joint Venture 61 16,948 61 18,149 -- 1,201 5 1,978
Managed 173 50,721 185 50,776 12 55 -- (1,203)
Franchised 1,266 172,952 1,423 192,161 157 19,209 71 9,080
TOTAL HOTELS 1,670 289,586 1,827 309,781 157 20,195 75 9,502