Hilton Worldwide Holdings Inc. (HLT) 2024 Q2 Earnings Call Summary

Optimistic Highlights

• Strong Second Quarter Results

  Hilton reported strong second quarter results with RevPAR growth driving adjusted EBITDA and adjusted EPS above guidance.

• Development Strategy Success

  The company's development strategy led to surpassing 8000 hotels globally, with significant net unit growth and strategic brand acquisitions.

• Robust Group Performance

  Group RevPAR rose more than 10% year-over-year, driven by demand for corporate and social meetings, with full-year group position up 10% over last year.

• Positive Outlook for Full Year

  Full-year system-wide RevPAR expected to increase 2% to 3%, driven by positive growth across all major segments and regions.

• Industry Recognition

  Hilton was ranked as the most valuable hotel brand for the 9th consecutive year and named the top workplace in the U.S. for millennials by Great Place to Work and Fortune.

Pessimistic Highlights

• Softening in Certain International Markets

  The high end of RevPAR expectations was tempered due to softer trends in some international markets and normalizing leisure growth.

• China RevPAR Decline

  China RevPAR declined 5% in the quarter, affected by limited international inbound travel and domestic travel comparisons.

Company Outlook

• Continued Growth and Expansion

  Hilton expects net unit growth of 7% to 7.5% for the full year, driven by strong pipeline, acquisitions, and strategic partnerships.

• Full-Year Guidance Adjustments

  Full-year RevPAR growth forecast adjusted to 2% to 3%, with adjusted EBITDA and diluted EPS adjusted for special items reflecting slightly lower growth expectations and FX movements.

Q & A Highlights

• Q: Can you provide more detail on net rooms growth and the impact of newly acquired brands? (Joe Greff, JPMorgan)

  A: Graduate and strategic partnerships contributed to the increase in net unit growth expectations. Organic growth is slightly less due to some shifts, but momentum remains strong for future growth. (Christopher Nassetta)

• Q: How should we think about contract acquisition spend going forward? (Carlo Santarelli, Deutsche Bank)

  A: This year's spend will be lower than last year, with expectations for similar levels in the coming years. Key money percentage of deals remains low. (Christopher Nassetta)

• Q: Can you discuss the consumer environment and any changes in behavior? (Shaun Kelley, Bank of America Merrill Lynch)

  A: Group and business transient segments remain strong, while leisure transient is normalizing. Economic challenges are affecting consumer spending, particularly in the lower income segments. (Christopher Nassetta)

• Q: Could you provide more details on non-RevPAR related fees and their outlook? (Stephen Grambling, Morgan Stanley)

  A: Non-RevPAR-driven fees outperformed in the first half of the year, with expectations for continued growth at or above the company's algorithm over time. (Kevin Jacobs)

• Q: Can you discuss the impact of bundling hotel rates and resort fees on ADR growth and customer demand? (Patrick Scholes, Truist Securities)

  A: There has been no impact on ADR growth or customer demand from bundling rates and fees, as the focus is on transparency. (Kevin Jacobs)