Hilton(US:HLT)2019-05-02 04:23Financial Data and Key Metrics Changes - System-wide RevPAR grew 1.8% year-over-year, outperforming industry data due to strong market share gains [8][16] - Adjusted EBITDA reached $499 million, a 12% increase year-over-year, exceeding guidance [16] - Diluted earnings per share adjusted for special items grew 16% to $0.80, also exceeding expectations [16] Business Line Data and Key Metrics Changes - System-wide group business RevPAR increased by 3.7%, while transient RevPAR grew approximately 1% [8][16] - Management franchise fees increased 12% to $517 million, surpassing the 7% to 9% guidance range [16] Market Data and Key Metrics Changes - U.S. RevPAR grew 1.8%, driven by strong group business and market share gains [17] - RevPAR in the Americas outside the U.S. grew 4.4%, with Puerto Rico showing double-digit rate gains [18] - European RevPAR increased by 3.2%, benefiting from strong international travel [18] - RevPAR in the Middle East and Africa fell 5.7%, pressured by new supply in the UAE [19] - Asia Pacific RevPAR increased by 1%, with expectations for growth in the 3% to 5% range for the full year [19] Company Strategy and Development Direction - The company aims for approximately 6.5% net unit growth for the year, with a pipeline of 371,000 rooms [10][20] - The strategy focuses on capital-light development, with over 90% of the pipeline requiring no capital contribution from the company [11] - The launch of the new brand Signia Hilton aims to set a new standard for meetings and events [13] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the business model's resilience and expects continued growth in free cash flow and shareholder returns [15][22] - The outlook for the U.S. economy supports steady demand and solid pricing gains [9] - Management noted that the business model's sensitivity to macroeconomic changes is lower than in the past [21] Other Important Information - The company celebrated its 100th anniversary, highlighting its historical impact and future growth potential [7] - The loyalty program, Hilton Honors, saw membership increase by 20% year-over-year, reaching nearly 90 million members [13] Q&A Session Summary Question: Demand environment outlook since the last call - Management indicated that the U.S. demand environment remains consistent, with group business performing better than expected and transient demand slightly weaker due to seasonal shifts [24][25] Question: Sensitivity to capital returns with higher stock prices - Management confirmed that they intend to maintain their capital return range regardless of stock price fluctuations, emphasizing the strength of their business model [32][33] Question: Market share gains and brand renovations - Management acknowledged that while renovations contributed to market share gains, the overall increase was driven by multiple factors, including strong brand performance [63][64] Question: Continued robust new build growth despite rising costs - Management noted that high market share allows for continued development even in a challenging economic environment, with expectations for rooms under construction to increase [67][70] Question: Future investments and areas of focus - Management highlighted three primary areas for investment: the Hilton Honors loyalty program, technology enhancements, and marketing strategies to drive market share [58][61]