Hilton(HLT)2023-02-08 16:00Hilton's Global Operations and Brand Portfolio - Hilton operates 7,165 properties with 1,127,430 rooms across 123 countries and territories as of December 31, 2022[14] - Hilton's luxury brands (Waldorf Astoria, LXR, Conrad) represent 2.4% of total rooms, with 45 properties and 16,210 rooms[22] - Upper Midscale brands (e.g., Hampton by Hilton) account for 27.7% of total rooms, with 2,863 properties and 312,043 rooms[22] - Hampton by Hilton is the largest brand with properties on four continents and has been ranked the 1 lodging brand to franchise by Entrepreneur for 14 consecutive years[33] - As of December 31, 2022, Hilton's system included 246 Hilton Hotels & Resorts properties in the U.S. with 102,766 rooms[42] - Hilton's Europe region has 127 Hilton Hotels & Resorts properties with 38,122 rooms[42] - Asia Pacific region has 129 Hilton Hotels & Resorts properties with 47,166 rooms[42] - DoubleTree by Hilton has 379 properties in the U.S. with 89,519 rooms[42] - Conrad Hotels & Resorts has 24 properties in the Asia Pacific region with 7,901 rooms[42] - Canopy by Hilton has 26 properties in the U.S. with 4,490 rooms[42] - Curio Collection by Hilton has 74 properties in the U.S. with 18,003 rooms[42] - Total system includes 7,165 hotels with 1,127,430 rooms, comprising 52 owned/leased hotels (17,612 rooms), 778 managed hotels (244,037 rooms), and 6,335 franchised hotels (865,781 rooms)[44] - Managed and franchise segment includes 778 managed hotels and 6,255 franchised hotels with 1,096,115 total rooms as of December 31, 2022[45] Hilton Honors Loyalty Program - Hilton Honors loyalty program membership reached 152 million, a 19% increase from December 31, 2021[14] - Hilton Honors loyalty program has 152 million members and generates significant repeat business through points redemption and strategic partnerships[39] - The Hilton Honors guest loyalty program is a key aspect of the company's business, and any material alteration, curtailment, or taxation of program benefits could adversely affect the company[160] Financial Performance and Recovery Post-Pandemic - Comparable system-wide RevPAR in Q3 and Q4 2022 exceeded 2019 levels, indicating strong recovery post-pandemic[15] - In 2021 and 2022, travel levels recovered substantially compared to 2020, with performance in Q3 and Q4 2022 exceeding the same periods in 2019[104] - The COVID-19 pandemic significantly impacted the company's business in 2020 and early 2021, with recovery beginning in 2021 and 2022[104][118] Development Pipeline and Growth - Hilton's development pipeline includes 2,821 hotels with 416,400 rooms, of which 205,400 rooms are under construction[19][20] - Net unit growth for 2022 was 4.7%, with 355 net hotel additions and 58,200 net room additions[19][20] - 243,500 rooms in the development pipeline are located outside the U.S., supporting global expansion[20] - Tru by Hilton had over 230 hotels in the pipeline as of December 31, 2022[34] - Hilton launched Spark by Hilton, a new premium economy brand, in January 2023[14] - The company has 2,821 hotels in its development pipeline as of December 31, 2022, with risks including financing and regulatory approvals that may prevent some from being developed[137] - The company has launched 10 new brands since 2011, including Spark by Hilton, with potential risks if new brands or expansions are not successful[139] Management and Franchise Operations - Hilton's management and franchise segment generates revenue from fees, licensing, and strategic partnerships, including co-branded credit cards[17] - Management contracts typically have initial terms of 20 to 30 years, with extension options for 5 or 10 years[48] - Franchise contracts have initial terms of approximately 20 years for new hotels and 10 to 20 years for converted hotels, with relicensing options for 10 to 15 years[52] - Franchisees pay royalty fees based on a percentage of monthly gross room revenue and may include food and beverage revenues, with additional program fees for marketing and technology[51] - Franchisees are responsible for property improvement plans to maintain brand standards and compliance with Hilton's system[50] Environmental, Social, and Governance (ESG) Initiatives - Hilton's ESG strategy, Travel with Purpose, focuses on environmental, social, and governance pillars, with updated 2030 Goals aligned with UN Sustainable Development Goals[57] - Hilton was named to the Dow Jones Sustainability Indices for the sixth consecutive year in 2022, scoring in the 100th percentile in the industry[56] - ESG governance includes quarterly updates to the executive committee and board of directors, with the Chief ESG Officer reporting directly to the CEO[58] - Hilton's ESG materiality assessment in 2020 identified key focus areas: climate action, employee development, DE&I, health and safety, human rights, and ethical business practices[60] - Hilton's LightStay ESG management system tracks environmental and social metrics, including carbon emissions, energy, water, waste, and volunteer hours[62] - Hilton aims to reduce carbon emissions intensity by 75% for managed hotels and 56% for franchised hotels by 2030, with 2008 as the baseline[66] - In 2022, Hilton achieved a 33% reduction in water consumption, 65% reduction in landfilled waste, and 47% reduction in CO2 emissions per square meter since 2008[71] - Total energy consumption in 2022 was 24.5 million gigajoules, with 56.7% sourced from grid electricity[73][75] - Hilton's Foundation awarded over 8 million since 2019 to more than 130 organizations[65] - Hilton's social impact goals for 2030 include providing 5 million learning opportunities, impacting 20 million community members, and promoting inclusive conduct across 100% of its value chain[76] - Over 22,000 youth and employees accessed Hilton's Passport to Success Concierge program since its launch in 2021[77] - In 2022, one-third of Hilton's EMEA hotels and corporate offices were supplied with 100% renewable energy[67] - Hilton's managed hotels in the U.S. and EMEA piloted food waste reduction and donation programs, with over 5,500 hotels participating in soap recycling initiatives[68] - Hilton committed 8.8 billion, with contractual debt maturities of 33 million, and $526 million for the years ending December 31, 2023, 2024, and 2025, respectively[194] - The company amended its credit agreement in December 2022 to reference SOFR as the primary benchmark rate for variable-rate indebtedness, replacing LIBOR, which may lead to more volatile interest payments[195] - The company's credit agreement requires maintaining a consolidated secured net leverage ratio not exceeding 5.0 to 1.0 as of the last day of any four consecutive quarters[200] - The company resumed quarterly cash dividend payments in June 2022 after suspending them in 2020 due to the COVID-19 pandemic[205] - The company's subsidiaries may face restrictions on making distributions to the parent company, potentially impairing its ability to meet debt service obligations or fund operations[196] - The company's debt agreements impose significant restrictions, including limitations on incurring additional debt, paying dividends, and making certain investments[199] - The company may incur substantial tax liabilities if the spin-offs of Park and HGV are determined to be taxable, adversely affecting its financial condition and cash flows[191] - The company's environmental compliance costs may increase due to increasingly stringent environmental, health, and safety regulations[189] - The company's ability to generate sufficient cash flow to service its debt and meet other commitments depends on factors beyond its control, including economic and regulatory conditions[198] - The company's anti-takeover provisions in its organizational documents and Delaware law may discourage or delay acquisition attempts deemed favorable by stockholders[206] Joint Ventures and Leased Properties - The company holds minority or noncontrolling financial interests in 5 joint venture hotels, totaling 2,244 rooms as of December 31, 2022[209] - Ownership percentages in joint venture hotels include 10% in Conrad Cairo, 24% in Hilton Tokyo Bay and Hilton Nagoya, 20% in Hilton Mauritius Resort & Spa, and 18% in Hilton Imperial Dubrovnik[210] - The company leased 47 hotels with a total of 15,368 rooms as of December 31, 2022[211] - Notable leased properties include Hilton Tokyo with 830 rooms, Ramses Hilton with 811 rooms, and Hilton Vienna with 663 rooms[212] - Other significant leased properties include Hilton London Kensington with 601 rooms, Hilton Osaka with 562 rooms, and Hilton Tel Aviv with 560 rooms[212] - The company manages leased hotels in major cities such as London, Munich, Barcelona, and Istanbul, with room counts ranging from 298 to 500[212] - Leased properties in Europe include Hilton Vienna Danube Waterfront with 367 rooms and Hilton Frankfurt with 342 rooms[212] - In the UK, leased hotels include Hilton London Heathrow Airport with 398 rooms and Hilton Glasgow with 322 rooms[212] - The company also leases hotels in Africa, such as Hilton Addis Ababa with 372 rooms and Hilton Sandton with 329 rooms[212] - Leased properties in Asia include Hilton Osaka with 562 rooms and Hilton Tokyo with 830 rooms[212]