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.--(BUSINESS WIRE)--Aug. 3, 2000--Hilton
Hotels Corp. (NYSE:HLT) today reported results for the second quarter
and six months ended June 30, 2000.
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.
Brand Development
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.
Systemwide Brand Performance
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.
Six-Month Results
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.
Internet Bookings
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 Hilton.com, ranked as the No. 1 hotel Web site by Gomez
Advisors), in line with the company's expectations.
Marketing Initiatives
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 Hilton.com Web site.
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." |
