Hilton Worldwide Holdings’ first-quarter profit lifted by corporate travel boost, shares rise
NEW YORK — Hotel operator Hilton Worldwide Holdings, Inc. on Tuesday reported a betterthan-expected first-quarter profit and raised its earnings forecast for the year, helped by a boost in business travel following the US presidential election.
Shares of the owner of the Waldorf Astoria hotel chain rose 3.3% to $61.27 in morning trading.
Hilton, like its hotel industry peers, is expected to benefit from an uptick in corporate demand, as companies spend more based on improved business sentiment following Donald Trump’s election as president in November.
US business transient travel had been “quite anemic to flattish” before the election, but has since improved and stayed consistent, Hilton Chief Executive Christopher Nassetta said on a call with analysts on Tuesday.
Trump has pledged pro-business policies such as tax cuts and simpler regulations, promises that have powered Wall Street to record highs since his election.
Hilton’s bigger rival Marriott International, Inc., which reports first- quarter results next week, said in February it felt more optimistic about 2017, and that it expects “modest levels of corporate transient demand” this year.
Hilton, the owner of the Conrad and Double Tree hotel chains, said it now expects 2017 earnings of $1.73$1.81 per share, up from a prior forecast of $1.65-$1.75 per share.
More than three- quarters of Hilton’s first- quarter profit was wiped out, however, due to the spin- off of most of its real estate assets into a tax- efficient real estate investment trust and its timeshare business into a publicly traded company.
The spin-offs were completed in January.
Net income attributable to Hilton stockholders was $ 74 million, or 22 cents per share, in the quarter. The company’s net income in the year-ago quarter was $ 309 million, or 94 cents per share, reflecting $119 million from discontinued operations.
Excluding one- time items, Hilton earned 38 cents per share, beating analysts’ average expectation of 28 cents, according to Thomson Reuters I/B/E/S.
Revenue per available room (RevPAR) rose 3% in the quarter, helped mainly by higher occupancy, and was at the higher end of Hilton’s forecast for a 1%-3% increase.
RevPAR, a key measure of hotel health, is calculated by multiplying a hotel’s average daily room rate by its occupancy rate.
Hilton’s revenue jumped 25.2% to $2.16 billion. Analysts on average had expected $2.06 billion.
Hilton’s shares had risen about 36% in the 12 months to Monday, including a 3.2% gain this year. —