Hilton Worldwide Holdings Inc. (HLT) shares took a tumble in pre-market trading on Wednesday after the company unveiled its third-quarter earnings report. While the results weren’t entirely disappointing, a combination of factors, including missed revenue targets and a lowered full-year outlook, contributed to the decline.
The company reported adjusted earnings per share of $1.92, exceeding the analyst consensus estimate of $1.85. However, quarterly revenues of $2.867 billion fell short of the expected $2.905 billion. Despite this, Hilton did highlight several positive developments. For the three months ending September 30, 2024, RevPAR (revenue per available room) across the system rose 1.4% year-over-year, driven by increased occupancy and average daily rate (ADR).
Management and franchise fee revenues experienced a robust 8.3% growth. Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) came in at $904 million, topping the $834 million recorded for the same period in 2023. Although quarterly net income dipped to $344 million, down from $379 million a year ago, the company remains optimistic about its future trajectory.
“We continued to demonstrate the strength of our model, opening more rooms than any other quarter in our history, surpassing 8,000 hotels and achieving net unit growth of 7.8 percent,” remarked Christopher J. Nassetta, President & Chief Executive Officer of Hilton Worldwide.
During the third quarter, Hilton Worldwide opened 531 hotels, adding a total of 36,600 rooms, resulting in 33,600 net room additions. The company also continued to expand its footprint in the Asia Pacific market, surpassing 900 hotels in the region and opening its 700th hotel in China.
Looking ahead, Hilton Worldwide has adjusted its full-year outlook. The company now expects FY24 GAAP EPS (generally accepted accounting principles earnings per share) to be between $5.58 and $5.68, down from the previous forecast of $6.06 to $6.15. However, it has maintained its FY24 adjusted EPS outlook of $6.93 to $7.03.
Full-year system-wide comparable RevPAR, on a currency-neutral basis, is projected to increase between 2.0% and 2.5%. Hilton Worldwide forecasts fourth-quarter adjusted EPS to be in the range of $1.57 to $1.67.
Despite the lowered EPS outlook, Hilton remains committed to its growth strategy. The company expects net unit growth for 2025 to be between 6% and 7%, signaling continued expansion and a focus on adding new hotels and rooms to its portfolio.