Hilton Worldwide Reports Fourth Quarter and Full Year 2013 Results
February 27, 2014 10:12am
February 27, 2014 - MCLEAN, Va.--Hilton Worldwide Holdings Inc. ("Hilton," "Hilton Worldwide" or the "Company") (NYSE: HLT) today reported its fourth quarter and full year 2013 results, including the following highlights:
For the full year 2013, EPS was $0.45 compared to $0.38 for the year ended December 31, 2012 and EPS, adjusted for special items, was $0.53 for the full year 2013 compared to $0.45 in the prior year, an increase of 18 percent. Adjusted EBITDA increased 13 percent to $2,210 million for the full year 2013, compared to $1,956 million in 2012 and net income attributable to Hilton stockholders was $415 million for the full year 2013 compared to $352 million for the year ended December 31, 2012.
EPS was $0.03 in the fourth quarter of 2013. EPS, adjusted for special items, was $0.11 for the fourth quarter of 2013 compared to $0.10 for the same period in 2012. Adjusted EBITDA for the fourth quarter of 2013 was $603 million, an increase of 16 percent from the same period in 2012, and net income attributable to Hilton stockholders was $26 million.
Special items in both the 2013 fourth quarter and full year resulted in a net positive effect on net income attributable to Hilton stockholders of $75 million on an after-tax basis. These special items included $306 million of pre-tax general, administrative and other expense as a result of the conversion of private company share-based compensation into stock in connection with the initial public offering and $23 million of pre-tax interest expense resulting from the release of unamortized deferred financing costs and original issue discount resulting from the voluntary prepayment of debt, offset by a pre-tax gain on debt extinguishment of $229 million from the October 2013 debt refinancing and an $87 million income tax benefit resulting from the release of valuation allowances on deferred tax assets.
Special items in the 2012 fourth quarter and full year resulted in a net positive effect on net income attributable to Hilton stockholders of $31 million and $60 million on an after-tax basis, respectively. These special items included pre-tax impairment losses on property and equipment and investments in affiliates of $36 million and $73 million, respectively.
Christopher J. Nassetta, President & Chief Executive Officer of Hilton Worldwide, said, "We are very pleased with our fourth quarter and full year results in 2013, concluding the year with a successful initial public offering in December. We delivered strong RevPAR, margin and net unit growth during the year that led to Adjusted EBITDA growth of 13 percent on a year over year basis.
"Our distinct, world-class brands continue to deliver global growth, with nearly 34,000 new rooms opening during 2013, expanding the rooms in our system by 4 percent on a net basis. Even with openings increasing, we continue to expand our industry-leading global pipeline, which consists of 195,000 rooms, the majority of which are located outside the United States. Our development team continues to execute on our growth strategy, where our 102,000 rooms under construction globally ranks us #1 in all major regions of the world. We also continued to grow our capital light timeshare business, with 54 percent of all interval sales in 2013 representing inventory developed by third parties.
"Looking ahead, we are optimistic that 2014 will bring some acceleration in growth and continued outperformance, with global RevPAR expected to increase 5 to 7 percent. Given our strong development pipeline, unit growth should accelerate in 2014 as our number of managed and franchised rooms is expected to expand by 5.5 to 6.5 percent on a net basis."
Management and Franchise
Management and franchise fees were $333 million in the fourth quarter of 2013, an increase of 9.9 percent compared to the same period in 2012. RevPAR at comparable managed and franchised hotels in the fourth quarter increased 4.7 percent on a currency neutral basis (a 4.2 percent increase using actual dollars) compared to the same period in 2012.
During the full year 2013, management and franchise fees were $1,271 million, an increase of 7.7 percent compared to the full year 2012. RevPAR at comparable managed and franchised hotels for the full year 2013 increased 5.3 percent on a currency neutral basis (a 5.0 percent increase using actual dollars) compared to the full year 2012.
Revenues from the ownership segment were $1,072 million in the fourth quarter of 2013, an increase of 1.6 percent from the same period in 2012. Ownership segment Adjusted EBITDA for the fourth quarter of 2013 increased 11.9 percent to $254 million compared to the same period in 2012. RevPAR at comparable hotels in the ownership segment increased 4.6 percent, on a currency neutral basis (a 3.8 percent increase using actual dollars), in the fourth quarter of 2013 compared to the same period in 2012, led by a 1.9 percentage point increase in occupancy at comparable hotels in the ownership segment in the United States and a currency neutral 4.5 percent increase in ADR at comparable ownership segment hotels outside of the United States.
For the full year 2013, revenues from the ownership segment were $4,075 million, an increase of 1.7 percent from 2012. Ownership segment Adjusted EBITDA for the full year 2013 increased 16.8 percent to $926 million compared to the prior year. RevPAR at comparable hotels in the ownership segment increased 4.7 percent, on a currency neutral basis (a 3.7 percent increase using actual dollars), for the full year 2013 compared to 2012, led by a 6.1 percent increase in RevPAR at comparable hotels in the ownership segment located in the United States.
Timeshare revenues increased 14.1 percent to $300 million in the fourth quarter of 2013 compared to the same period in 2012, led by a $29 million increase in timeshare sales revenue, as a result of an $11 million increase in revenue from sales commissions earned from the sale of timeshare units developed by third parties and an $18 million increase in revenue earned from the sale of timeshare units from owned inventory.
For the full year 2013, timeshare revenues increased by $24 million, or 2.2 percent, to $1,109 million compared to 2012. The increase in revenues was primarily attributable to a $63 million, or 87.5 percent, increase in commissions earned from the sale of timeshare units developed by third parties and a $9 million increase in revenue from resort operations. These increases were offset by a $57 million, or 7.7 percent, reduction in revenue earned from the sale of timeshare units from inventory. During 2013, 54 percent of intervals sold were developed by third parties. Hilton expects revenue earned from the sale of timeshare units from owned inventory will continue to decrease and commissions earned will continue to increase, as the sale of timeshare intervals developed by third parties increases.
Hilton Worldwide continues to expand its capital light timeshare business through fee-for-service arrangements with third-party timeshare developers and is excited to announce a recent agreement to sell land and entitlements at the Hilton Hawaiian Village to an affiliate of Blackstone, which intends to develop a 37-story, 418-unit timeshare tower. Hilton expects to provide sales and marketing and other timeshare related services to the developer, with sales of these new units expected to commence in the fourth quarter of 2014.
Hilton Worldwide opened 53 hotels with over 9,600 rooms in the fourth quarter, including 7 hotels in China with nearly 2,500 rooms, and achieved net unit growth of over 6,500 rooms. During the year ended December 31, 2013, Hilton opened 207 hotels with nearly 34,000 rooms, or 6 percent of managed and franchised rooms, in 24 countries. Of the new rooms added, 35 percent of new rooms were conversions from non-Hilton Worldwide brands. On a net basis, over 25,000 rooms, or over 4 percent of managed and franchised rooms, were added to the system during 2013.
As of December 31, 2013, Hilton Worldwide had the largest rooms pipeline in the lodging industry, according to Smith Travel Research, Inc. ("STR"), with nearly 195,000 rooms at over 1,100 hotels throughout 76 countries and territories, of which 60 percent, or over 117,000 rooms, were located outside of the United States. More than half of the development pipeline, or nearly 102,000 rooms, were under construction. According to STR, Hilton Worldwide has the largest supply of rooms under construction in every major region of the world, as illustrated in the table below:
Source: STR Global New Development Pipeline (December 2013)
As of December 31, 2013, Hilton had $11.8 billion of outstanding indebtedness with a weighted average interest rate of 4.2 percent, excluding $968 million of non-recourse debt.
Total cash and cash equivalents was $860 million as of December 31, 2013, including $266 million of restricted cash and cash equivalents. No borrowings were outstanding under the $1.0 billion revolving credit facility.
During the fourth quarter of 2013, Hilton repaid $13.5 billion in borrowings outstanding using the proceeds from $1.5 billion of 5.625% senior notes due 2021, a new senior secured credit facility consisting of a $7.6 billion term loan facility and a $1.0 billion revolving credit facility, a new $3.5 billion commercial mortgage-backed securities loan, a new $525 million mortgage loan, increased capacity on its non-recourse timeshare financing receivables credit facility and available cash. Subsequent to this refinancing, $350 million of voluntary prepayments were made on the term loan facility.
Additionally, in the fourth quarter of 2013, Hilton completed the initial public offering of its common stock, resulting in net proceeds of $1,243 million that were used with available cash to further reduce the borrowings outstanding on the term loan facility by $1,250 million.
Full Year 2014
Hilton Worldwide will host a conference call to discuss fourth quarter and full year 2013 results on February 27, 2014 at 10:00 a.m. Eastern Standard Time. Participants may listen to the live webcast by logging onto the Hilton Worldwide Investor Relations website at http://ir.hilton.com/investors/news-and-events/events-and-presentations/default.aspx. A replay and transcript of the webcast will be available within 24 hours after the live event at http://ir.hilton.com/investors/financial-reporting/quarterly-results/default.aspx.
Alternatively, participants may listen to the live call by dialing 1-877-201-0168 in the United States or 1-647-788-4901 internationally. Please use the conference ID 35933720. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. A telephone replay will be available for seven days following the call. To access the telephone replay, dial 1-855-859-2056 using the Conference ID 35933720.
To view all corresponding table and supplemental data please visit: http://news.hiltonworldwide.com/assets/HWW/docs/2014/Q42013EarningsReleaseFINAL.pdf
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q4 2013 results
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