Hilton(US:HLT)2023-04-26 17:06Financial Data and Key Metrics Changes - System-wide RevPAR grew 30% year-over-year and 8% compared to 2019, driven by strong demand in Asia Pacific and leisure travel [6][15] - Adjusted EBITDA was $641 million in Q1 2023, up 43% year-over-year, exceeding guidance [15] - Diluted earnings per share adjusted for special items was $1.24, increasing 75% year-over-year [15] Business Line Data and Key Metrics Changes - Leisure segment RevPAR surpassed 2019 levels by approximately 15%, with strong demand driving rates up in the mid-teens [7] - Business transient RevPAR increased 4% from 2019, indicating resilience in business travel [7] - Group demand showed robust recovery, with RevPAR finishing in line with 2019 and future bookings up 28% year-over-year [7] Market Data and Key Metrics Changes - U.S. RevPAR grew 21% year-over-year, with both business transient and group segments above 2019 levels [16] - In the Americas outside the U.S., RevPAR increased 56% year-over-year and 35% compared to 2019 [16] - Asia Pacific region saw a 91% year-over-year increase in RevPAR, with significant recovery in demand following the lifting of COVID restrictions [17] Company Strategy and Development Direction - The company is optimistic about growth due to strong fundamentals and a capital-light business model, expecting to return increasing capital to shareholders [5] - Development pipeline grew to a record 428,000 rooms, with nearly 60% located outside the U.S. and over half under construction [10][17] - The launch of the new brand, Spark by Hilton, aims to capture a significant market share in the economy segment, with over 300 deals in negotiation [10][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the economy and the strength of demand across all segments, despite macroeconomic uncertainties [22][26] - There is an expectation of some slowdown in the second half of the year, but the overall outlook remains positive due to pent-up demand and a shift in consumer spending towards experiences [24][28] - The company anticipates continued growth in RevPAR and adjusted EBITDA for the full year, raising guidance based on strong Q1 results [8][18] Other Important Information - Hilton Honors membership grew to over 158 million, with members accounting for 62% of occupancy [12] - The company published its 2022 Travel with Purpose Report, outlining progress towards environmental and social governance goals [13] - Hilton was ranked the 2 workplace in the U.S. by Great Place to Work and Fortune, highlighting its strong workplace culture [14] Q&A Session Summary Question: How has the outlook for the second half of the year changed? - Management noted that while there is macroeconomic uncertainty, demand patterns remain strong across segments, and they feel more confident about the economy's resilience [22][26] Question: What are developers feeling regarding changes in credit markets? - Management indicated a range of experiences among developers, with some still securing financing while others face challenges, but overall, they expect pipeline growth to continue [34][36] Question: Can fee growth exceed RevPAR growth? - Management affirmed that fee growth should mathematically exceed RevPAR growth due to unit growth, even in a no-growth same-store environment [40][42] Question: What is the strategy for the new extended-stay brand? - Management explained that the new brand targets workforce housing needs and aims to capture a different demand base, with plans for significant growth in the future [55][56] Question: How does the revenue intensity of Spark compare to other brands? - Management stated that while the fee structure for Spark is lower, it serves as a customer acquisition tool, with potential for significant long-term growth [68][70]