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Hilton Q4 results reinforce RevPAR recovery trend

RevPAR recovery continues to be the story of 4Q21 earnings season with Hilton on Wednesday reporting an increase of 104.2% for Q4 versus last year (-13.5% v. 2019) and a 60.4% improvement for the full year to drive earnings forward due to increases in both occupancy and ADR.

Diluted earnings per share was US$0.52 for the fourth quarter and US$1.46 for the full year, and diluted EPS, adjusted for special items, was US$0.72 for the fourth quarter and US$2.08 for the full year.

Net income was US$148 million for the fourth quarter and US$407 million for the full year, while adjusted EBITDA was US$512 million for the fourth quarter and US$1.6 billion for the full year.

Hilton approved 26,000 new rooms for development during the fourth quarter, bringing Hilton’s development pipeline to 408,000 rooms as of December 31, 2021. It added 16,100 rooms in the fourth quarter, contributing to 55,100 net additional rooms in Hilton’s system for the full year, which represented 5.6%t net unit growth from December 31, 2020. Full year 2022 net unit growth is expected to be approximately 5%.

The Hilton Nagasaki in Japan opened in November 2021

“System-wide comparable RevPAR growth versus 2019 levels improved 530 bps sequentially and easily topped our expectation, which led to a ~3% Adjusted EBITDA beat (or a ~5% beat versus consensus),” wrote R.W. Baird analyst Michael Bellisario.

Interestingly, Asia Pacific RevPAR was -1.4% versus +109.7% in the U.S. Absolute RevPAR of US$84.14 compares with US$90.39 in 3Q, US$73.03 in 2Q, and US$101.86 in 4Q19.

Truist Securities analyst Patrick Scholes noted how absolute RevPAR for select-service brands uniquely outperformed upper upscale, citing Homewood Suites’ 4Q RevPAR of US$99 being above the core Hilton Hotels brand of US$86. He said it effectively shows 4Q strength in high-quality U.S. extended-stay over higher-rated gateway corporate and group travel.

Summarizing the quarter, Hilton President and CEO Chris Nassetta, added, “Although new variants of the virus have had some short-term impact, we are optimistic about the acceleration of recovery across all segments during 2022. We remain confident in the future of our business and our ability to continue to drive strong net unit growth and free cash flow, fueled by higher margins.”

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