Hilton Exceeds Expectations with Strong Q4 Results

Fourth Quarter Highlights Showcase Robust Growth

Hilton Worldwide Holdings Inc. (HLT) reported remarkable fourth-quarter 2024 results, with adjusted earnings and total revenues exceeding analyst expectations and showing significant year-over-year growth.

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The company’s success can be attributed to strong leisure travel demand and the continued increase in business and group travel. These trends drove a rise in occupancy rates and average daily rates (ADR), leading to an increase in revenue per available room (RevPAR). Additionally, Hilton’s strategic focus on global portfolio expansion contributed to this positive outcome.

Looking ahead, Hilton anticipates that these strong travel trends will persist into 2025, positioning the company for continued success.

After the earnings announcement, HLT shares rose by 1.4% during Thursday’s pre-market trading, reflecting investor optimism regarding the company’s promising outlook for the first quarter and 2025.

Hilton’s Price Performance, Consensus, and EPS Surprises

Hilton Worldwide Holdings Inc. price-consensus-eps-surprise-chart | Hilton Worldwide Holdings Inc. Quote

In-Depth Look at Hilton’s Q4 Performance

Hilton reported an adjusted earnings per share (EPS) of $1.76, surpassing the Zacks Consensus Estimate of $1.68 by 4.8%. This marked an increase from the adjusted EPS of $1.68 in the same quarter last year.

Total revenues reached $2.783 billion, beating the consensus estimate of $2.748 billion by 1.3%, and reflecting a year-over-year growth of 6.7%.

Franchise and licensing fees rose to $642 million from $601 million in the previous year, though this was slightly below our estimate of $645 million.

Base and other management fees fell to $82 million from $95 million year over year, while incentive management fees increased 11.7% to reach $86 million, compared to our projection of $87.6 million for base and other management fees and $64 million for incentive fees.

Revenues from owned and leased hotels were $333 million, a modest increase from $320 million reported in the year-ago quarter, though below our estimate of $344.6 million.

RevPAR and Adjusted EBITDA Insights

During the quarter, system-wide comparable RevPAR rose by 3.5% year over year (on a currency-neutral basis), fueled by increases in occupancy and ADR.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) reached $858 million, marking a year-over-year increase of 6.8%. Our forecast had anticipated adjusted EBITDA of $825.9 million.

Hilton’s 2024 Performance Overview

For the full year, Hilton reported total revenues of $11.17 billion, up from $10.24 billion in 2023. System-wide comparable RevPAR increased by 2.7%, supported by a 0.8% growth in occupancy and a 1.6% rise in ADR.

Net income rose significantly to $1.54 billion, surpassing last year’s total of $1.15 billion. Adjusted EBITDA grew by 11% year over year to $3.43 billion.

General and administrative expenses increased by 1.7% year over year to $415 million, while adjusted EPS for the full year climbed to $7.12, compared to $6.21 in 2023.

Financial Position of Hilton

As of December 31, 2024, Hilton’s cash and cash equivalents totaled $1.376 billion, an increase from $875 million at the end of 2023. The outstanding long-term debt, excluding finance lease liabilities, was $11.1 billion, up from $9.1 billion reported at the end of 2023. Hilton has no debt maturities until April 2027, aside from $500 million in senior notes due in May 2025.

In 2024, the company repurchased 13.3 million shares at an average price of $215.09 per share. Additionally, it disbursed $150 million in dividends throughout the year, totaling $3 billion in shareholder returns, which includes share repurchases.

A quarterly cash dividend of 15 cents per share was declared, scheduled to be paid on March 28, 2025, to shareholders on record as of February 21.

Recent Developments for Hilton

In the fourth quarter alone, Hilton opened 171 new hotels, adding a total of 22,600 rooms. For all of 2024, the company achieved a total of 98,400 new room openings, corresponding to a year-over-year net unit growth of 7.3%.

New hotel introductions included locations in Bonaire and Paraguay, expanding Hilton’s footprint to 140 countries and territories. The company also surpassed 1,000 hotels in the Asia Pacific region.

Looking forward, Hilton is optimistic about new openings in 2025, particularly within its luxury portfolio. This includes the re-opening of iconic properties such as the Waldorf Astoria New York and others across various regions.

As of December 31, 2024, Hilton’s development pipeline comprised 3,578 hotels, equating to 498,600 rooms across 118 countries, indicating significant growth, especially in areas where Hilton has no current presence. For 2025, Hilton aims for a net unit growth of 6-7%.

Q1 & 2025 Forecast from Hilton

For the first quarter of 2025, Hilton forecasts net income between $373-$388 million, compared to $268 million from the same quarter last year. Adjusted EBITDA is projected to fall between $770 million and $790 million, up from $750 million in the prior year. The expected adjusted EPS range is $1.57 to $1.63, higher than the $1.53 recorded in the previous year.

For Q1 2025, the company also expects system-wide RevPAR (on a currency-neutral basis) to increase by 2.5-3.5% year over year.

For the entirety of 2025, Hilton estimates net income to fall between $1.829 billion and $1.858 billion. Adjusted EBITDA is anticipated at between $3.7 billion and $3.74 billion, with general and administrative expenses projected to be in the range of $420-$430 million.

Full-year adjusted EPS is expected to land between $7.71 and $7.82, with a capital return anticipated to reach approximately $3.3 billion.

Management forecasts system-wide RevPAR (on a currency-neutral basis) to increase by 2-3% year over year for 2025.

Hilton’s Market Position and Peer Comparisons

Hilton currently holds a Zacks Rank of #3 (Hold). For additional insights on market performance, you can explore the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Adtalem Global Education Inc. (ATGE) similarly exceeded expectations in its recent earnings report, demonstrating the competitive landscape in the consumer discretionary sector.