Hilton Reports Strong First-Quarter Results; Companywide EBITDA Increases 11 Percent; RevPAR From Comparable Owned Hotels Improves 4.7 Percent; Total EPS up 45 Percent
BEVERLY HILLS, Calif.--(BUSINESS WIRE)--May 2, 2000--Hilton Hotels
Corp. (NYSE:HLT) today reported results for the first quarter ended
March 31, 2000, highlighted by significant increases in earnings
before interest, taxes, depreciation, amortization and non-cash items
(EBITDA) and revenue per available room (RevPAR) at the company's
owned hotels.
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 first quarter of $58 million,
compared with $42 million for the same period a year ago, an increase
of 38 percent. Diluted net income per share increased 45 percent to
$.16 per share from $.11 last year. The $.16 includes $.04 related to
a net gain on asset dispositions, specifically the sale of certain
securities.
The first-quarter 1999 results include non-recurring charges
totaling $.02 per share and exclude a $.01 per share charge due to an
accounting change. On a recurring basis, Hilton's net income per share
for the first-quarter 2000 was $.12, compared with pro forma $.13 in
the 1999 period.
First-quarter EBITDA improved 11 percent to $280 million, a result
of strong performances and RevPAR gains at most major-market Hilton
owned hotels as well as the benefit of 1999 acquisitions and new hotel
openings. The comparable 1999 period included the aforementioned
non-recurring charges totaling $7 million, and includes EBITDA from
owned Homewood Suites and Hampton Inn hotels that were subsequently
sold later in the year.
Across all brands, EBITDA from owned properties in the first
quarter totaled $183 million, with comparable EBITDA up 6.8 percent.
RevPAR from comparable owned properties improved 4.7 percent, with
occupancy flat at 71.1 percent and average daily rate (ADR) up
4.8 percent to $154.95. Owned hotel leverage was 1.5 times for the
quarter across all brands, in line with the company's target. EBITDA
margins across the company's owned hotel system were strong at
34 percent.
Comparable owned hotels in the Hilton portfolio showed a first-
quarter EBITDA increase of 8.9 percent. RevPAR rose 5.3 percent on
flat occupancy of 73.0 percent but a significant ADR gain of
5.7 percent to $169.23. RevPAR-to-EBITDA flow-through was strong at
1.7 times, as were operating margins of 34.5 percent.
Demonstrating the continued high demand in major metropolitan
markets, as well as the locations and unique competitive positions of
Hilton's owned hotels, particularly strong RevPAR and EBITDA results
were reported at the Hilton Hawaiian Village, Hilton New Orleans,
Hilton New York, Hilton San Francisco, Waldorf-Astoria, Hilton
Washington, Hilton at Short Hills and Hilton Minneapolis.
Impacting first-quarter results was sluggishness at the company's
Chicago and Phoenix owned hotels, owing to new competitive supply in
those markets and low citywide convention demand in Chicago.
Additionally, Hilton's Chicago properties had a difficult
quarter-over-quarter comparison as each of its three owned hotels in
that market had a record first quarter 1999.
Based on good advance group bookings, however, the company
anticipates a strong remainder of 2000 for its Chicago hotels.
Contributing to first-quarter EBITDA, though on a non-comparable
basis, was Hilton's new hotel at Logan Airport in Boston, which opened
in September 1999 and continues to exceed the company's forecasts.
RevPAR at comparable Doubletree owned hotels improved 2.5 percent
in the first quarter -- occupancy down 1.6 points to 67.6 percent and
ADR up 4.9 percent to $111.12 -- as a result of gains at properties in
San Jose and Santa Barbara, Calif., and Bellevue, Wash., while EBITDA
at this group of properties declined in the quarter.
Fee income from franchising and managing hotels (across all
brands) increased 6 percent to $82 million in the first-quarter 2000.
The increase was attributable mainly to growth in the Hilton Garden
Inn and Hampton Inn brands.
Brand Development
During the first quarter, Hilton added a net 27 hotels and 3,087
rooms to its portfolio as follows: Hilton (2 hotels, 324 rooms);
Hilton Garden Inn (7 hotels, 1,093 rooms); Hampton Inn (15 hotels,
2,016 rooms); Embassy Suites (3 hotels, 904 rooms); Homewood Suites by
Hilton (3 hotels, 337 rooms); other brands (a net addition of 2
hotels, including three Red Lions, with a net decrease of 493 rooms).
The Doubletree brand portfolio decreased by a net five hotels and
1,094 rooms in the first quarter. At March 31, 2000, the Hilton system
consisted of 1,779 hotels with 303,366 rooms, a net gain of 160 hotels
and 20,353 rooms from March 31, 1999.
Illustrating its rapid growth, the 1,000th Hampton Inn was opened
in early April, marking the shortest period of time that any new hotel
brand has reached that milestone. The company replenished its strong
pipeline in the first quarter by receiving and/or approving
applications for 75 new franchised hotels (approximately 9,300 rooms).
Hilton remains on track to open more than 400 hotels and 60,000
rooms across all of its brands in the next two years, with Hilton
Garden Inn, Hampton Inn and Homewood Suites by Hilton accounting for
most of the openings.
Hilton HHonors
On April 3, 2000, Hilton's industry-leading HHonors frequent guest
program was successfully introduced to the Hampton Inn, Doubletree,
Embassy Suites and Homewood Suites by Hilton brands -- some 1,400
additional hotels around the country -- only four months after the
completion of the Promus acquisition.
The only program in the industry to offer guests "Double Dipping"
(the ability to earn both hotel points and airline miles), HHonors is
now featured in more than 2,000 hotels throughout the world and has a
total membership of approximately 7.5 million, with membership
expected to increase to 10 million by year-end 2000. Since April 3,
membership in HHonors has increased by approximately 1.5 million, in
large part due to "auto enrollment" of customers of the former Promus
brands.
It is expected that the introduction of the HHonors program will
have a particularly significant and positive impact on the performance
of the Doubletree brand in the second half of 2000.
Cross-Selling
Cross-selling among all of the brands in the Hilton portfolio
resulted in approximately $8.5 million in incremental systemwide
revenue during the first quarter, with sequential improvements from
January to March. Hilton is on schedule to complete by year-end 2000
its consolidated reservation system, thereby enhancing cross-selling
opportunities.
"The excellent results we showed in the first quarter are very
real indicators that we are achieving our goals for the two main parts
of our business -- maximizing RevPAR and EBITDA at our owned hotels,
and growing our fee income stream by adding management and franchise
agreements -- and that the underlying fundamentals of our business and
our industry are very strong," said Stephen F. Bollenbach, president
and chief executive officer.
"Our owned hotels in major markets like New York, Boston,
Washington, San Francisco and Honolulu continue to benefit from a
strong economy which is helping fuel high demand, as well as limited
construction of new hotels designed to compete directly with these
kinds of properties. We are pleased to see a significant turnaround in
Hawaii, and look for improvement in the Chicago market during the rest
of this year."
Bollenbach continued: "On the brand development side of our
company, there continues to be demand among owners for the
high-quality, well-known brands that we offer, and we are seeing big
unit growth numbers out of Hampton Inn, Hilton Garden Inn and Homewood
Suites by Hilton. Our pipeline of planned openings and committed deals
gives us the confidence we can achieve our fee income growth goals for
the next several years.
"The third priority for our company in 2000 -- successfully
integrating Promus -- for all intents and purposes, is done," he said.
"Hilton HHonors and our cross-selling initiatives are already yielding
outstanding results, we are achieving the cost-savings opportunities
we identified, and we are well on our way to not only meeting, but
exceeding, the synergies we promised our shareholders.
"From both the people and financial perspectives, our successful
integration of Promus rounded out a very good first quarter and leaves
us well-positioned for the remainder of 2000." |
