Hilton Reports Second Quarter Results; Exceeds Expectations and Raises Full Year Outlook

MCLEAN, Va.--()--Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE: HLT) today reported its second quarter 2022 results. Highlights include:

  • Diluted EPS was $1.32 for the second quarter, and diluted EPS, adjusted for special items, was $1.29
  • Net income was $367 million for the second quarter, exceeding the high end of guidance
  • Adjusted EBITDA was $679 million for the second quarter, exceeding the high end of guidance
  • System-wide comparable RevPAR increased 54.3 percent, on a currency neutral basis, for the second quarter compared to the same period in 2021
  • System-wide comparable RevPAR was down 2.1 percent, on a currency neutral basis, for the second quarter compared to the same period in 2019
  • Approved 23,400 new rooms for development during the second quarter, bringing Hilton's development pipeline to 413,000 rooms as of June 30, 2022
  • Added 14,400 rooms to Hilton's system in the second quarter, contributing to 13,300 net additional rooms in Hilton's system during the period
  • Repurchased 3.6 million shares of Hilton common stock during the second quarter, bringing total capital return, including dividends, to $521 million for the quarter and $812 million year to date through July
  • Full year 2022 system-wide comparable RevPAR is expected to increase between 37.0 percent and 43.0 percent, on a currency neutral basis, compared to 2021; full year net income is projected to be between $1,146 million and $1,216 million; full year Adjusted EBITDA is projected to be between $2,400 million and $2,500 million
  • Full year 2022 capital return is projected to be between $1.5 billion and $1.9 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "Our second quarter results exceeded the high end of our guidance for system-wide comparable RevPAR, diluted EPS, adjusted for special items and Adjusted EBITDA. Given our strong results in the quarter, coupled with our confidence in continued recovery throughout the year, we are raising our full year guidance, including our outlook for capital return. With a capital-light business model, a strong portfolio of brands and dynamic, industry-leading platforms, we are well-positioned for the opportunities that lie ahead."

For the three months ended June 30, 2022, system-wide comparable RevPAR increased 54.3 percent compared to the same period in 2021, due to increases in both occupancy and ADR, and fee revenues increased 54 percent compared to the same period in 2021. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months ended June 30, 2022 was down 2.1 percent compared to the three months ended June 30, 2019.

For the six months ended June 30, 2022, system-wide comparable RevPAR increased 64.4 percent compared to the same period in 2021, due to increases in both occupancy and ADR, and fee revenues increased 64 percent compared to the same period in 2021. For comparison to pre-pandemic results, system-wide comparable RevPAR for the six months ended June 30, 2022 was down 9.0 percent compared to the six months ended June 30, 2019.

For the three months ended June 30, 2022, diluted EPS was $1.32 and diluted EPS, adjusted for special items, was $1.29 compared to $0.46 and $0.56, respectively, for the three months ended June 30, 2021. Net income and Adjusted EBITDA were $367 million and $679 million, respectively, for the three months ended June 30, 2022, compared to $128 million and $400 million, respectively, for the three months ended June 30, 2021.

For the six months ended June 30, 2022, diluted EPS was $2.07 and diluted EPS, adjusted for special items, was $2.00 compared to $0.08 and $0.58, respectively, for the six months ended June 30, 2021. Net income and Adjusted EBITDA were $578 million and $1,127 million, respectively, for the six months ended June 30, 2022, compared to $19 million and $598 million, respectively, for the six months ended June 30, 2021.

Development

In the second quarter of 2022, Hilton opened 91 new hotels contributing to 14,400 additional rooms and achieved net unit growth of 13,300 rooms. Hilton celebrated notable openings during the quarter, including the Waldorf Astoria Washington, D.C. and the Hotel Marcel New Haven, Tapestry Collection by Hilton, which is anticipated to be the first net-zero hotel in the U.S. Additionally, in July, Hilton celebrated the opening of its 7,000th property, following the recent openings of the Hilton Maldives Amingiri, the Conrad Los Angeles and the Lost Property St. Paul's London, a Curio Collection hotel.

As of June 30, 2022, Hilton's development pipeline totaled nearly 2,780 hotels representing more than 413,000 rooms throughout 114 countries and territories, including 29 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, more than 195,000 of the rooms were under construction and over 246,000 of the rooms were located outside the U.S.

Balance Sheet and Liquidity

As of June 30, 2022, Hilton had $8.8 billion of long-term debt outstanding, excluding the deduction for deferred financing costs and discount, with a weighted average interest rate of 4.12 percent. Further excluding finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $8.6 billion of long-term debt outstanding with a weighted average interest rate of 4.10 percent and no scheduled maturities until 2025. No debt amounts were outstanding under Hilton's $1.75 billion senior secured revolving credit facility as of June 30, 2022, which had an available borrowing capacity of $1,690 million after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $1,254 million as of June 30, 2022, including $79 million of restricted cash and cash equivalents.

During the second quarter of 2022, Hilton repurchased 3.6 million shares of its common stock at a cost of $480 million and an average price per share of $133.32. During the six months ended June 30, 2022, Hilton repurchased 4.5 million shares of its common stock at a cost of $610 million and an average price per share of $135.45. The amount remaining under Hilton's stock repurchase program is $1.5 billion.

In June 2022, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, for a total of $41 million. In July 2022, Hilton's board of directors authorized a regular quarterly cash dividend of $0.15 per share of common stock to be paid on or before September 23, 2022 to holders of record of its common stock as of the close of business on August 26, 2022.

Outlook

Share-based metrics in Hilton's outlook include actual share repurchases to date, but do not include the effect of potential share repurchases hereafter.

Full Year 2022

  • System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 37.0 percent and 43.0 percent compared to 2021, and to be down between 1.0 percent and 5.0 percent from 2019.
  • Diluted EPS is projected to be between $4.11 and $4.36.
  • Diluted EPS, adjusted for special items, is projected to be between $4.21 and $4.46.
  • Net income is projected to be between $1,146 million and $1,216 million.
  • Adjusted EBITDA is projected to be between $2,400 million and $2,500 million.
  • Contract acquisition costs and capital expenditures, excluding amounts indirectly reimbursed by hotel owners, are expected to be between $250 million and $275 million.
  • Capital return is projected to be between $1.5 billion and $1.9 billion.
  • General and administrative expenses are projected to be between $400 million and $420 million.
  • Net unit growth is expected to be approximately 5.0 percent.

Third Quarter 2022

  • System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 25.0 percent and 30.0 percent compared to the third quarter of 2021, and to increase between 1.0 percent and 5.0 percent from the third quarter of 2019.
  • Diluted EPS is projected to be between $1.09 and $1.16.
  • Diluted EPS, adjusted for special items, is projected to be between $1.16 and $1.24.
  • Net income is projected to be between $303 million and $324 million.
  • Adjusted EBITDA is projected to be between $660 million and $690 million.

Conference Call

Hilton will host a conference call to discuss second quarter 2022 results on July 27, 2022 at 10:30 a.m. Eastern Time. Participants may listen to the live webcast by logging on to the Hilton Investor Relations website at https://ir.hilton.com/events-and-presentations. A replay and transcript of the webcast will be available within 24 hours after the live event at https://ir.hilton.com/financial-reporting.

Alternatively, participants may listen to the live call by dialing 1-888-317-6003 in the United States ("U.S.") or 1-412-317-6061 internationally using the conference ID 6643240. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. A telephone replay will be available for seven days following the call. To access the telephone replay, dial 1-877-344-7529 in the U.S. or 1-412-317-0088 internationally using the conference ID 6537064.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to the expectations regarding the impact of and recovery from the coronavirus ("COVID-19") pandemic (the "pandemic"), the performance of Hilton's business, financial results, liquidity and capital resources and other non-historical statements. In some cases, these forward-looking statements can be identified by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties including, among others, risks inherent to the hospitality industry, macroeconomic factors beyond Hilton's control, such as inflation, changes in interest rates and challenges due to labor shortages and supply chain disruptions, risks related to the impact of the pandemic, including as a result of new strains or variants of the virus and uncertainty of the acceptance and continued effectiveness of the COVID-19 vaccines, competition for hotel guests and management and franchise contracts, risks related to doing business with third-party hotel owners, performance of Hilton's information technology systems, growth of reservation channels outside of Hilton's system, risks of doing business outside of the U.S., risks associated with the Russian invasion of Ukraine and Hilton's indebtedness. Additional factors that could cause Hilton's results to differ materially from those described in the forward-looking statements can be found under the section entitled "Part I—Item 1A. Risk Factors" of Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and "Part II —Item 1A. Risk Factors" of Hilton's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022, filed with the Securities and Exchange Commission (the "SEC"), as such factors may be updated from time to time in Hilton's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in Hilton's filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Definitions

See the "Definitions" section for the definition of certain terms used within this press release, including within the schedules.

Non-GAAP Financial Measures

The Company refers to certain financial measures that are not recognized under U.S. generally accepted accounting principles ("GAAP") in this press release, including: net income (loss), adjusted for special items; diluted EPS, adjusted for special items; EBITDA; Adjusted EBITDA; Adjusted EBITDA margin; net debt; and net debt to Adjusted EBITDA ratio. See the schedules to this press release, including the "Definitions" section, for additional information and reconciliations of such non-GAAP financial measures.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 18 world-class brands comprising 7,000 properties and 1.1 million rooms, in 122 countries and territories. Dedicated to fulfilling its founding vision to fill the earth with the light and warmth of hospitality, Hilton has welcomed more than 3 billion guests in its more than 100-year history, earned a top spot on Fortune's 100 Best Companies to Work For list and been recognized as a global leader on the Dow Jones Sustainability Indices for five consecutive years. Hilton has introduced several industry-leading technology enhancements to improve the guest experience, including Digital Key Share, automated complimentary room upgrades and the ability to book confirmed connecting rooms. Through the award-winning guest loyalty program Hilton Honors, the 139 million members who book directly with Hilton can earn Points for hotel stays and experiences money can't buy. With the free Hilton Honors app, guests can book their stay, select their room, check in, unlock their door with a Digital Key and check out, all from their smartphone. Visit stories.hilton.com for more information, and connect with Hilton on facebook.com/hiltonnewsroom, twitter.com/hiltonnewsroom, linkedin.com/company/hilton, instagram.com/hiltonnewsroom and youtube.com/hiltonnewsroom.

HILTON WORLDWIDE HOLDINGS INC.
EARNINGS RELEASE SCHEDULES
TABLE OF CONTENTS

Condensed Consolidated Statements of Operations

Comparable and Currency Neutral System-Wide Hotel Operating Statistics

Property Summary

Capital Expenditures and Contract Acquisition Costs

Reconciliations of Non-GAAP Financial Measures

Definitions

HILTON WORLDWIDE HOLDINGS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except per share data)

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

Franchise and licensing fees

$

545

 

 

$

369

 

 

$

958

 

 

$

611

 

Base and other management fees

 

75

 

 

 

42

 

 

 

130

 

 

 

67

 

Incentive management fees

 

46

 

 

 

21

 

 

 

80

 

 

 

34

 

Owned and leased hotels

 

282

 

 

 

121

 

 

 

432

 

 

 

177

 

Other revenues

 

25

 

 

 

21

 

 

 

43

 

 

 

38

 

 

 

973

 

 

 

574

 

 

 

1,643

 

 

 

927

 

Other revenues from managed and franchised properties

 

1,267

 

 

 

755

 

 

 

2,318

 

 

 

1,276

 

Total revenues

 

2,240

 

 

 

1,329

 

 

 

3,961

 

 

 

2,203

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Owned and leased hotels

 

257

 

 

 

142

 

 

 

442

 

 

 

252

 

Depreciation and amortization

 

40

 

 

 

46

 

 

 

84

 

 

 

97

 

General and administrative

 

103

 

 

 

98

 

 

 

194

 

 

 

195

 

Other expenses

 

11

 

 

 

9

 

 

 

22

 

 

 

19

 

 

 

411

 

 

 

295

 

 

 

742

 

 

 

563

 

Other expenses from managed and franchised properties

 

1,231

 

 

 

810

 

 

 

2,252

 

 

 

1,395

 

Total expenses

 

1,642

 

 

 

1,105

 

 

 

2,994

 

 

 

1,958

 

 

 

 

 

 

 

 

 

Operating income

 

598

 

 

 

224

 

 

 

967

 

 

 

245

 

 

 

 

 

 

 

 

 

Interest expense

 

(99

)

 

 

(101

)

 

 

(189

)

 

 

(204

)

Gain (loss) on foreign currency transactions

 

8

 

 

 

(1

)

 

 

4

 

 

 

1

 

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

(69

)

Other non-operating income, net

 

6

 

 

 

5

 

 

 

22

 

 

 

10

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

513

 

 

 

127

 

 

 

804

 

 

 

(17

)

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

(146

)

 

 

1

 

 

 

(226

)

 

 

36

 

 

 

 

 

 

 

 

 

Net income

 

367

 

 

 

128

 

 

 

578

 

 

 

19

 

Net loss attributable to noncontrolling interests

 

1

 

 

 

2

 

 

 

2

 

 

 

3

 

Net income attributable to Hilton stockholders

$

368

 

 

$

130

 

 

$

580

 

 

$

22

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

278

 

 

 

279

 

 

 

278

 

 

 

278

 

Diluted

 

280

 

 

 

281

 

 

 

281

 

 

 

281

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.33

 

 

$

0.47

 

 

$

2.09

 

 

$

0.08

 

Diluted

$

1.32

 

 

$

0.46

 

 

$

2.07

 

 

$

0.08

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.15

 

 

$

 

 

$

0.15

 

 

$

 

HILTON WORLDWIDE HOLDINGS INC.
COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS
BY REGION, BRAND AND SEGMENT
(unaudited)

 

Three Months Ended June 30,

 

Occupancy

 

ADR

 

RevPAR

 

2022

 

vs. 2021

 

2022

 

vs. 2021

 

2022

 

vs. 2021

By Region

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

74.3

%

 

10.4

%

pts.

 

$

162.16

 

26.8

%

 

$

120.52

 

47.3

%

Americas (excluding U.S.)

66.4

 

 

30.1

 

 

 

 

135.85

 

31.4

 

 

 

90.17

 

140.3

 

Europe

72.0

 

 

40.7

 

 

 

 

151.58

 

66.2

 

 

 

109.09

 

282.8

 

Middle East & Africa

60.7

 

 

13.8

 

 

 

 

152.94

 

29.8

 

 

 

92.89

 

67.9

 

Asia Pacific

49.7

 

 

(6.2

)

 

 

 

97.52

 

6.5

 

 

 

48.51

 

(5.3

)

 

 

 

 

 

 

 

 

 

 

 

 

 

By Brand

 

 

 

 

 

 

 

 

 

 

 

 

Waldorf Astoria Hotels & Resorts

57.4

%

 

17.0

%

pts.

 

$

464.07

 

13.4

%

 

$

266.46

 

61.1

%

Conrad Hotels & Resorts

57.2

 

 

17.9

 

 

 

 

273.10

 

46.5

 

 

 

156.16

 

113.2

 

Canopy by Hilton

65.6

 

 

20.7

 

 

 

 

200.88

 

27.0

 

 

 

131.86

 

85.4

 

Hilton Hotels & Resorts

64.8

 

 

22.1

 

 

 

 

186.11

 

32.0

 

 

 

120.67

 

100.1

 

Curio Collection by Hilton

64.9

 

 

17.2

 

 

 

 

230.02

 

24.2

 

 

 

149.34

 

68.9

 

DoubleTree by Hilton

66.2

 

 

15.9

 

 

 

 

139.89

 

25.3

 

 

 

92.55

 

64.9

 

Tapestry Collection by Hilton

68.0

 

 

17.5

 

 

 

 

173.40

 

27.1

 

 

 

117.86

 

71.2

 

Embassy Suites by Hilton

73.2

 

 

14.9

 

 

 

 

178.27

 

26.3

 

 

 

130.52

 

58.5

 

Hilton Garden Inn

71.7

 

 

11.7

 

 

 

 

143.48

 

26.4

 

 

 

102.91

 

51.2

 

Hampton by Hilton

72.8

 

 

6.3

 

 

 

 

133.46

 

21.1

 

 

 

97.19

 

32.6

 

Tru by Hilton

74.7

 

 

7.5

 

 

 

 

128.33

 

21.9

 

 

 

95.81

 

35.5

 

Homewood Suites by Hilton

81.8

 

 

5.4

 

 

 

 

153.96

 

26.4

 

 

 

125.89

 

35.3

 

Home2 Suites by Hilton

81.5

 

 

3.2

 

 

 

 

138.64

 

22.1

 

 

 

112.93

 

27.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By Segment

 

 

 

 

 

 

 

 

 

 

 

 

Management and franchise

70.9

%

 

11.8

%

pts.

 

$

154.07

 

26.9

%

 

$

109.19

 

52.2

%

Ownership(1)

64.4

 

 

41.7

 

 

 

 

210.22

 

52.8

 

 

 

135.33

 

334.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide

70.8

%

 

12.3

%

pts.

 

$

154.92

 

27.5

%

 

$

109.62

 

54.3

%

HILTON WORLDWIDE HOLDINGS INC.
COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS (continued)
BY REGION, BRAND AND SEGMENT
(unaudited)

 

Six Months Ended June 30,

 

Occupancy

 

ADR

 

RevPAR

 

2022

 

vs. 2021

 

2022

 

vs. 2021

 

2022

 

vs. 2021

By Region

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

68.2

%

 

12.3

%

pts.

 

$

154.12

 

30.1

%

 

$

105.13

 

58.7

%

Americas (excluding U.S.)

58.6

 

 

25.9

 

 

 

 

131.78

 

33.4

 

 

 

77.26

 

139.2

 

Europe

60.0

 

 

34.9

 

 

 

 

139.10

 

67.8

 

 

 

83.52

 

300.7

 

Middle East & Africa

63.8

 

 

20.0

 

 

 

 

156.12

 

32.0

 

 

 

99.57

 

92.4

 

Asia Pacific

46.1

 

 

(3.3

)

 

 

 

100.63

 

9.1

 

 

 

46.41

 

1.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By Brand

 

 

 

 

 

 

 

 

 

 

 

 

Waldorf Astoria Hotels & Resorts

52.6

%

 

20.3

%

pts.

 

$

524.96

 

13.0

%

 

$

276.33

 

83.8

%

Conrad Hotels & Resorts

51.5

 

 

16.7

 

 

 

 

253.90

 

40.9

 

 

 

130.82

 

108.6

 

Canopy by Hilton

59.6

 

 

21.9

 

 

 

 

194.64

 

29.4

 

 

 

115.96

 

104.5

 

Hilton Hotels & Resorts

57.3

 

 

21.1

 

 

 

 

178.85

 

34.1

 

 

 

102.46

 

112.5

 

Curio Collection by Hilton

59.1

 

 

18.4

 

 

 

 

223.15

 

25.0

 

 

 

131.83

 

81.7

 

DoubleTree by Hilton

59.7

 

 

16.7

 

 

 

 

134.28

 

27.8

 

 

 

80.20

 

77.4

 

Tapestry Collection by Hilton

60.7

 

 

17.9

 

 

 

 

160.80

 

27.2

 

 

 

97.67

 

80.5

 

Embassy Suites by Hilton

66.5

 

 

15.6

 

 

 

 

171.10

 

30.0

 

 

 

113.75

 

69.7

 

Hilton Garden Inn

65.6

 

 

12.8

 

 

 

 

134.98

 

29.2

 

 

 

88.50

 

60.7

 

Hampton by Hilton

66.8

 

 

8.6

 

 

 

 

126.93

 

24.3

 

 

 

84.79

 

42.5

 

Tru by Hilton

68.9

 

 

9.9

 

 

 

 

121.03

 

26.5

 

 

 

83.40

 

47.6

 

Homewood Suites by Hilton

77.8

 

 

7.6

 

 

 

 

145.47

 

27.1

 

 

 

113.17

 

40.8

 

Home2 Suites by Hilton

77.7

 

 

6.7

 

 

 

 

131.57

 

23.8

 

 

 

102.18

 

35.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By Segment

 

 

 

 

 

 

 

 

 

 

 

 

Management and franchise

64.8

%

 

13.1

%

pts.

 

$

147.20

 

29.7

%

 

$

95.38

 

62.7

%

Ownership(1)

51.2

 

 

33.4

 

 

 

 

197.63

 

44.9

 

 

 

101.26

 

316.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide

64.6

%

 

13.5

%

pts.

 

$

147.87

 

30.1

%

 

$

95.47

 

64.4

%

____________
(1)

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

HILTON WORLDWIDE HOLDINGS INC.
PROPERTY SUMMARY
As of June 30, 2022

 

Owned / Leased(1)

 

Managed

 

Franchised

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Waldorf Astoria Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

12

 

4,488

 

 

 

12

 

4,488

Americas (excluding U.S.)

 

 

2

 

252

 

 

 

2

 

252

Europe

2

 

463

 

4

 

898

 

 

 

6

 

1,361

Middle East & Africa

 

 

5

 

1,232

 

 

 

5

 

1,232

Asia Pacific

 

 

6

 

1,259

 

 

 

6

 

1,259

LXR Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

3

 

426

 

3

 

426

Americas (excluding U.S.)

 

 

 

 

1

 

76

 

1

 

76

Europe

 

 

1

 

70

 

1

 

307

 

2

 

377

Middle East & Africa

 

 

1

 

41

 

1

 

234

 

2

 

275

Asia Pacific

 

 

 

 

1

 

114

 

1

 

114

Conrad Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

5

 

1,922

 

2

 

1,730

 

7

 

3,652

Americas (excluding U.S.)

 

 

3

 

787

 

 

 

3

 

787

Europe

 

 

4

 

1,155

 

1

 

107

 

5

 

1,262

Middle East & Africa

1

 

614

 

3

 

1,569

 

 

 

4

 

2,183

Asia Pacific

1

 

164

 

22

 

7,074

 

1

 

659

 

24

 

7,897

Canopy by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

25

 

4,296

 

25

 

4,296

Americas (excluding U.S.)

 

 

2

 

272

 

 

 

2

 

272

Europe

 

 

1

 

123

 

4

 

917

 

5

 

1,040

Middle East & Africa

 

 

1

 

200

 

 

 

1

 

200

Asia Pacific

 

 

4

 

614

 

 

 

4

 

614

Signia by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2

 

1,814

 

 

 

2

 

1,814

Hilton Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

58

 

43,443

 

186

 

58,595

 

244

 

102,038

Americas (excluding U.S.)

1

 

405

 

29

 

11,298

 

26

 

7,826

 

56

 

19,529

Europe

39

 

11,514

 

44

 

14,927

 

43

 

11,268

 

126

 

37,709

Middle East & Africa

5

 

1,992

 

36

 

12,555

 

3

 

1,565

 

44

 

16,112

Asia Pacific

5

 

2,999

 

113

 

39,555

 

8

 

3,247

 

126

 

45,801

Curio Collection by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

8

 

3,595

 

61

 

13,381

 

69

 

16,976

Americas (excluding U.S.)

 

 

2

 

99

 

15

 

2,004

 

17

 

2,103

Europe

 

 

4

 

360

 

22

 

2,931

 

26

 

3,291

Middle East & Africa

 

 

4

 

741

 

2

 

557

 

6

 

1,298

Asia Pacific

 

 

4

 

773

 

2

 

248

 

6

 

1,021

DoubleTree by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

32

 

10,585

 

342

 

77,829

 

374

 

88,414

Americas (excluding U.S.)

 

 

3

 

587

 

36

 

7,246

 

39

 

7,833

Europe

 

 

14

 

3,580

 

109

 

18,589

 

123

 

22,169

Middle East & Africa

 

 

18

 

4,710

 

5

 

568

 

23

 

5,278

Asia Pacific

 

 

77

 

20,593

 

6

 

1,568

 

83

 

22,161

HILTON WORLDWIDE HOLDINGS INC.
PROPERTY SUMMARY (continued)
As of June 30, 2022

 

Owned / Leased(1)

 

Managed

 

Franchised

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Tapestry Collection by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

69

 

8,444

 

69

 

8,444

Americas (excluding U.S.)

 

 

1

 

138

 

6

 

647

 

7

 

785

Europe

 

 

 

 

6

 

360

 

6

 

360

Asia Pacific

 

 

1

 

266

 

1

 

175

 

2

 

441

Embassy Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

39

 

10,371

 

215

 

48,458

 

254

 

58,829

Americas (excluding U.S.)

 

 

2

 

354

 

6

 

1,649

 

8

 

2,003

Motto by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

3

 

871

 

3

 

871

Hilton Garden Inn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

5

 

527

 

733

 

101,364

 

738

 

101,891

Americas (excluding U.S.)

 

 

13

 

1,992

 

51

 

7,664

 

64

 

9,656

Europe

 

 

18

 

3,499

 

59

 

9,515

 

77

 

13,014

Middle East & Africa

 

 

17

 

3,555

 

3

 

474

 

20

 

4,029

Asia Pacific

 

 

50

 

11,085

 

2

 

321

 

52

 

11,406

Hampton by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

26

 

3,366

 

2,293

 

226,729

 

2,319

 

230,095

Americas (excluding U.S.)

 

 

13

 

1,644

 

112

 

13,604

 

125

 

15,248

Europe

 

 

16

 

2,697

 

104

 

16,161

 

120

 

18,858

Middle East & Africa

 

 

4

 

1,238

 

 

 

4

 

1,238

Asia Pacific

 

 

 

 

248

 

39,928

 

248

 

39,928

Tru by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

219

 

21,360

 

219

 

21,360

Americas (excluding U.S.)

 

 

 

 

3

 

333

 

3

 

333

Homewood Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

9

 

1,131

 

498

 

56,998

 

507

 

58,129

Americas (excluding U.S.)

 

 

3

 

406

 

24

 

2,688

 

27

 

3,094

Home2 Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

2

 

210

 

530

 

55,660

 

532

 

55,870

Americas (excluding U.S.)

 

 

 

 

7

 

753

 

7

 

753

Asia Pacific

 

 

 

 

12

 

1,715

 

12

 

1,715

Other

 

 

3

 

1,343

 

5

 

1,217

 

8

 

2,560

Total hotels

54

 

18,151

 

746

 

234,993

 

6,115

 

833,376

 

6,915

 

1,086,520

Hilton Grand Vacations

 

 

 

 

68

 

11,801

 

68

 

11,801

Total system

54

 

18,151

 

746

 

234,993

 

6,183

 

845,177

 

6,983

 

1,098,321

____________
(1)

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

HILTON WORLDWIDE HOLDINGS INC.
CAPITAL EXPENDITURES AND CONTRACT ACQUISITION COSTS
(unaudited, dollars in millions)

 

Three Months Ended

 

 

 

June 30,

 

Increase / (Decrease)

 

2022

 

2021

 

$

 

%

Capital expenditures for property and equipment(1)

$

7

 

$

6

 

1

 

 

16.7

 

Capitalized software costs(2)

 

15

 

 

 

8

 

 

7

 

 

87.5

 

Total capital expenditures

 

22

 

 

 

14

 

 

8

 

 

57.1

 

Contract acquisition costs

 

26

 

 

 

72

 

 

(46

)

 

(63.9

)

Total capital expenditures and contract acquisition costs

$

48

 

 

$

86

 

 

(38

)

 

(44.2

)

 

Six Months Ended

 

 

 

June 30,

 

Increase / (Decrease)

 

2022

 

2021

 

$

 

%

Capital expenditures for property and equipment(1)

$

11

 

$

9

 

2

 

 

22.2

 

Capitalized software costs(2)

 

25

 

 

 

16

 

 

9

 

 

56.3

 

Total capital expenditures

 

36

 

 

 

25

 

 

11

 

 

44.0

 

Contract acquisition costs

 

41

 

 

 

115

 

 

(74

)

 

(64.3

)

Total capital expenditures and contract acquisition costs

$

77

 

 

$

140

 

 

(63

)

 

(45.0

)

____________

(1)

Represents expenditures for hotels, corporate and other property and equipment, which include amounts indirectly reimbursed by hotel owners of $1 million for both the three months ended June 30, 2022 and 2021 and $2 million and $1 million for the six months ended June 30, 2022 and 2021, respectively. Excludes expenditures for FF&E replacement reserves of $15 million and $11 million for the three months ended June 30, 2022 and 2021, respectively, and $27 million and $15 million for the six months ended June 30, 2022 and 2021, respectively.

(2)

Includes $14 million and $7 million of expenditures that were indirectly reimbursed by hotel owners for the three months ended June 30, 2022 and 2021, respectively, and $23 million and $14 million for the six months ended June 30, 2022 and 2021, respectively.

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS
(unaudited, in millions, except per share data)

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

Net income attributable to Hilton stockholders, as reported

$

368

 

 

$

130

 

 

$

580

 

 

$

22

 

Diluted EPS, as reported

$

1.32

 

 

$

0.46

 

 

$

2.07

 

 

$

0.08

 

Special items:

 

 

 

 

 

 

 

Net other expenses (revenues) from managed and franchised properties

$

(36

)

 

$

55

 

 

$

(66

)

 

$

119

 

Purchase accounting amortization(1)

 

11

 

 

 

12

 

 

 

23

 

 

 

24

 

FF&E replacement reserves

 

15

 

 

 

11

 

 

 

27

 

 

 

15

 

Loss on debt extinguishment(2)

 

 

 

 

 

 

 

 

 

 

69

 

Tax-related adjustment(3)

 

 

 

 

(30

)

 

 

 

 

 

(30

)

Other adjustment items(4)

 

 

 

 

(2

)

 

 

(10

)

 

 

1

 

Total special items before taxes

 

(10

)

 

 

46

 

 

 

(26

)

 

 

198

 

Income tax benefit (expense) on special items

 

3

 

 

 

(19

)

 

 

8

 

 

 

(57

)

Total special items after taxes

$

(7

)

 

$

27

 

 

$

(18

)

 

$

141

 

 

 

 

 

 

 

 

 

Net income, adjusted for special items

$

361

 

 

$

157

 

 

$

562

 

 

$

163

 

Diluted EPS, adjusted for special items

$

1.29

 

 

$

0.56

 

 

$

2.00

 

 

$

0.58

 

____________

(1)

Amounts represent the amortization expenses related to finite-lived intangible assets that were recorded at fair value in 2007 when the Company became a wholly owned subsidiary of affiliates of Blackstone Inc. The majority of these assets will be fully amortized during 2023.

(2)

The amount relates to the redemption of senior unsecured notes and includes a redemption premium of $55 million and the accelerated recognition of unamortized deferred financing costs related to those senior unsecured notes of $14 million.

(3)

Amounts include income tax benefits recognized related to changes in effective tax rates, which did not have an effect on cash paid for taxes in the periods.

(4)

The amount for the six months ended June 30, 2022 primarily includes a gain related to Hilton's investments in unconsolidated affiliates, which was recognized in other non-operating income, net.

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
(unaudited, dollars in millions)

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

Net income

$

367

 

 

$

128

 

 

$

578

 

 

$

19

 

Interest expense

 

99

 

 

 

101

 

 

 

189

 

 

 

204

 

Income tax expense (benefit)

 

146

 

 

 

(1

)

 

 

226

 

 

 

(36

)

Depreciation and amortization expenses

 

40

 

 

 

46

 

 

 

84

 

 

 

97

 

EBITDA

 

652

 

 

 

274

 

 

 

1,077

 

 

 

284

 

Loss (gain) on foreign currency transactions

 

(8

)

 

 

1

 

 

 

(4

)

 

 

(1

)

Loss on debt extinguishment

 

 

 

 

 

 

 

 

 

 

69

 

FF&E replacement reserves

 

15

 

 

 

11

 

 

 

27

 

 

 

15

 

Share-based compensation expense

 

47

 

 

 

53

 

 

 

84

 

 

 

92

 

Amortization of contract acquisition costs

 

10

 

 

 

7

 

 

 

18

 

 

 

14

 

Net other expenses (revenues) from managed and franchised properties

 

(36

)

 

 

55

 

 

 

(66

)

 

 

119

 

Other adjustments(1)

 

(1

)

 

 

(1

)

 

 

(9

)

 

 

6

 

Adjusted EBITDA

$

679

 

 

$

400

 

 

$

1,127

 

 

$

598

 

____________

(1)

Amount for the six months ended June 30, 2022 primarily includes a gain related to Hilton's investments in unconsolidated affiliates. All periods include severance and other items.

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2022

 

2021

 

2022

 

2021

Total revenues, as reported

$

2,240

 

 

$

1,329

 

 

$

3,961

 

 

$

2,203

 

Add: amortization of contract acquisition costs

 

10

 

 

 

7

 

 

 

18

 

 

 

14

 

Less: other revenues from managed and franchised properties

 

(1,267

)

 

 

(755

)

 

 

(2,318

)

 

 

(1,276

)

Total revenues, as adjusted

$

983

 

 

$

581

 

 

$

1,661

 

 

$

941

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

679

 

 

$

400

 

 

$

1,127

 

 

$

598

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

69.1

%

 

 

68.8

%

 

 

67.9

%

 

 

63.5

%

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO
(unaudited, dollars in millions)

 

June 30,

 

December 31,

 

2022

 

2021

Long-term debt, including current maturities

$

8,743

 

 

$

8,766

 

Add: unamortized deferred financing costs and discount

 

80

 

 

 

87

 

Long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount

 

8,823

 

 

 

8,853

 

Less: cash and cash equivalents

 

(1,175

)

 

 

(1,427

)

Less: restricted cash and cash equivalents

 

(79

)

 

 

(85

)

Net debt

$

7,569

 

 

$

7,341

 

 

Six Months Ended

 

Year Ended

 

TTM Ended

 

June 30,

 

December 31,

 

June 30,

 

2022

 

2021

 

2021

 

2022

Net income

$

578

 

 

$

19

 

 

$

407

 

$

966

 

Interest expense

 

189

 

 

 

204

 

 

 

397

 

 

 

382

 

Income tax expense (benefit)

 

226

 

 

 

(36

)

 

 

153

 

 

 

415

 

Depreciation and amortization expenses

 

84

 

 

 

97

 

 

 

188

 

 

 

175

 

EBITDA

 

1,077

 

 

 

284

 

 

 

1,145

 

 

 

1,938

 

Loss on sale of assets, net

 

 

 

 

 

 

 

7

 

 

 

7

 

Loss (gain) on foreign currency transactions

 

(4

)

 

 

(1

)

 

 

7

 

 

 

4

 

Loss on debt extinguishment

 

 

 

 

69

 

 

 

69

 

 

 

 

FF&E replacement reserves

 

27

 

 

 

15

 

 

 

48

 

 

 

60

 

Share-based compensation expense

 

84

 

 

 

92

 

 

 

193

 

 

 

185

 

Amortization of contract acquisition costs

 

18

 

 

 

14

 

 

 

32

 

 

 

36

 

Net other expenses (revenues) from managed and franchised properties

 

(66

)

 

 

119

 

 

 

110

 

 

 

(75

)

Other adjustments(1)

 

(9

)

 

 

6

 

 

 

18

 

 

 

3

 

Adjusted EBITDA

$

1,127

 

 

$

598

 

 

$

1,629

 

 

$

2,158

 

 

 

 

 

 

 

 

 

Net debt

 

 

 

 

 

 

$

7,569

 

 

 

 

 

 

 

 

 

Net debt to Adjusted EBITDA ratio

 

 

 

 

 

 

 

3.5

 

____________

(1)

Amounts for all periods include severance and other items. Amount for the six months ended June 30, 2022 also includes a gain related to Hilton's investments in unconsolidated affiliates and for the year ended December 31, 2021 also includes costs recognized for certain legal settlements.

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
OUTLOOK: NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS
(unaudited, in millions, except per share data)

 

Three Months Ending

 

September 30, 2022

 

Low Case

 

High Case

Net income attributable to Hilton stockholders

$

302

 

 

$

323

 

Diluted EPS(1)

$

1.09

 

 

$

1.16

 

Special items(2):

 

 

 

Purchase accounting amortization

$

11

 

 

$

11

 

FF&E replacement reserves

 

15

 

 

 

15

 

Total special items before tax

 

26

 

 

 

26

 

Income tax expense on special items

 

(6

)

 

 

(6

)

Total special items after tax

$

20

 

 

$

20

 

 

 

 

 

Net income, adjusted for special items

$

322

 

 

$

343

 

Diluted EPS, adjusted for special items(1)

$

1.16

 

 

$

1.24

 

 

Year Ending

 

December 31, 2022

 

Low Case

 

High Case

Net income attributable to Hilton stockholders

$

1,146

 

 

$

1,216

 

Diluted EPS(1)

$

4.11

 

 

$

4.36

 

Special items(2):

 

 

 

Net other revenues from managed and franchised properties

$

(66

)

 

$

(66

)

Purchase accounting amortization

 

46

 

 

 

46

 

FF&E replacement reserves

 

61

 

 

 

61

 

Other adjustment items

 

(10

)

 

 

(10

)

Total special items before tax

 

31

 

 

 

31

 

Income tax expense on special items

 

(4

)

 

 

(4

)

Total special items after tax

$

27

 

 

$

27

 

 

 

 

 

Net income, adjusted for special items

$

1,173

 

 

$

1,243

 

Diluted EPS, adjusted for special items(1)

$

4.21

 

 

$

4.46

 

____________

(1)

Does not include the effect of potential share repurchases.

(2)

See "—Net Income and Diluted EPS, Adjusted for Special Items" for details of these special items.

HILTON WORLDWIDE HOLDINGS INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
OUTLOOK: ADJUSTED EBITDA
(unaudited, in millions)

 

Three Months Ending

 

September 30, 2022

 

Low Case

 

High Case

Net income

$

303

 

$

324

Interest expense

 

111

 

 

 

111

 

Income tax expense

 

131

 

 

 

140

 

Depreciation and amortization expenses

 

42

 

 

 

42

 

EBITDA

 

587

 

 

 

617

 

FF&E replacement reserves

 

15

 

 

 

15

 

Share-based compensation expense

 

41

 

 

 

41

 

Amortization of contract acquisition costs

 

11

 

 

 

11

 

Other adjustments(1)

 

6

 

 

 

6

 

Adjusted EBITDA

$

660

 

 

$

690

 

 

Year Ending

 

December 31, 2022

 

Low Case

 

High Case

Net income

$

1,146

 

 

$

1,216

 

Interest expense

 

415

 

 

 

415

 

Income tax expense

 

481

 

 

 

511

 

Depreciation and amortization expenses

 

167

 

 

 

167

 

EBITDA

 

2,209

 

 

 

2,309

 

Gain on foreign currency transactions

 

(4

)

 

 

(4

)

FF&E replacement reserves

 

61

 

 

 

61

 

Share-based compensation expense

 

157

 

 

 

157

 

Amortization of contract acquisition costs

 

41

 

 

 

41

 

Net other revenues from managed and franchised properties

 

(66

)

 

 

(66

)

Other adjustments(1)

 

2

 

 

 

2

 

Adjusted EBITDA

$

2,400

 

 

$

2,500

 

____________

(1)

Includes adjustments for severance and other items. See "—Adjusted EBITDA and Adjusted EBITDA Margin" for details of these adjustments.

HILTON WORLDWIDE HOLDINGS INC.
DEFINITIONS

Trailing Twelve Month Financial Information

This press release includes certain unaudited financial information for the trailing twelve months ("TTM") ended June 30, 2022, which is calculated as the six months ended June 30, 2022 plus the year ended December 31, 2021 less the six months ended June 30, 2021. This presentation is not in accordance with GAAP. However, the Company believes that this presentation provides useful information to investors regarding its recent financial performance, and it views this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess its historical results. In addition, the Company's management uses TTM information to evaluate the Company's financial performance for ongoing planning purposes.

The pandemic had a material adverse impact on the Company's results for the TTM period ended June 30, 2022 when compared to periods prior to the onset of the pandemic. As such, this TTM period, as well as upcoming periods, are unlikely to be comparable to periods prior to the onset of the pandemic or to other periods affected by the pandemic, and are not indicative of future performance. As such, TTM information may not be useful for projecting future operating results.

Net Income (Loss), Adjusted for Special Items, and Diluted EPS, Adjusted for Special Items

Net income (loss), adjusted for special items, and diluted earnings (loss) per share ("EPS"), adjusted for special items, are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. In addition, the Company's definition of net income (loss), adjusted for special items, and diluted EPS, adjusted for special items, may not be comparable to similarly titled measures of other companies.

Net income (loss), adjusted for special items, and diluted EPS, adjusted for special items, are included to assist investors in performing meaningful comparisons of past, present and future operating results and as a means of highlighting the results of the Company's ongoing operations.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

EBITDA, presented herein, reflects net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses. Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) furniture, fixtures and equipment ("FF&E") replacement reserves required under certain lease agreements; (v) share-based compensation; (vi) reorganization, severance, relocation and other expenses; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) the net effect of reimbursable costs included in other revenues and other expenses from managed and franchised properties; and (x) other items.

Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenues, adjusted to exclude the amortization of contract acquisition costs and other revenues from managed and franchised properties.

The Company believes that EBITDA, Adjusted EBITDA and Adjusted EBITDA margin provide useful information to investors about the Company's financial condition and results of operations for the following reasons: (i) these measures are among the measures used by the Company's management team to evaluate its operating performance and make day-to-day operating decisions and (ii) these measures are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in the industry. Additionally, these measures exclude certain items that can vary widely across different industries and among competitors within the Company's industry. For instance, interest expense and income taxes are dependent on company specifics, including, among other things, capital structure and operating jurisdictions, respectively, and, therefore, could vary significantly across companies. Depreciation and amortization expenses, as well as amortization of contract acquisition costs, are dependent upon company policies, including the method of acquiring and depreciating assets and the useful lives that are used. For Adjusted EBITDA, the Company also excludes items such as: (i) FF&E replacement reserves for leased hotels to be consistent with the treatment of capital expenditures for property and equipment, where depreciation of such capitalized assets is reported within depreciation and amortization expenses; (ii) share-based compensation, as this could vary widely among companies due to the different plans in place and the usage of them; (iii) the net effect of the Company's cost reimbursement revenues and reimbursed expenses, as the Company contractually does not operate the related programs to generate a profit over the terms of the respective contracts; and (iv) other items, such as amounts related to debt restructurings and debt retirements and reorganization and related severance costs, that are not core to the Company's operations and are not reflective of the Company's operating performance.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not recognized terms under GAAP and should not be considered as alternatives, either in isolation or as a substitute, for net income (loss) or other measures of financial performance or liquidity, including cash flows, derived in accordance with GAAP. Further, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, may not be comparable to similarly titled measures of other companies and should not be considered as other methods of analyzing the Company's results as reported under GAAP.

Net Debt and Net Debt to Adjusted EBITDA Ratio

Net debt and net debt to Adjusted EBITDA ratio, presented herein, are non-GAAP financial measures that the Company uses to evaluate its financial leverage. Net debt is calculated as: long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount; reduced by: (i) cash and cash equivalents and (ii) restricted cash and cash equivalents. Beginning as of March 31, 2022, the Company has modified its definition of net debt to no longer include Hilton's share of unconsolidated affiliate debt. Since this debt is not consolidated by the Company, the modified definition more accurately reflects how the Company and the Company's investors evaluate Hilton's financial leverage, as well as its indebtedness.

Net debt should not be considered as a substitute to debt presented in accordance with GAAP, and net debt to Adjusted EBITDA ratio should not be considered as an alternative to measures of financial condition derived in accordance with GAAP. Net debt and net debt to Adjusted EBITDA ratio may not be comparable to similarly titled measures of other companies. The Company believes net debt and net debt to Adjusted EBITDA ratio provide useful information about its indebtedness to investors as they are frequently used by securities analysts, investors and other interested parties to compare the indebtedness between companies.

Comparable Hotels

The Company defines comparable hotels as those that: (i) were active and operating in the Company's system for at least one full calendar year as of the end of the current period, and open January 1st of the previous year; (ii) have not undergone a change in brand or ownership type during the current or comparable periods reported; and (iii) have not sustained substantial property damage, business interruption, undergone large-scale capital projects or for which comparable results were not available. Of the 6,915 hotels in the Company's system as of June 30, 2022, 5,974 hotels were classified as comparable hotels. The 941 non-comparable hotels included 174 hotels, or less than three percent of the total hotels in the Company's system, that were removed from the comparable group during the last twelve months because they have sustained substantial property damage, business interruption, undergone large-scale capital projects or comparable results were otherwise not available.

When considering business interruption in the context of the Company's definition of comparable hotels, no hotel that had completely or partially suspended operations on a temporary basis at any time as a result of the pandemic was excluded from the definition of comparable hotels on that basis alone. Despite these temporary suspensions of hotel operations, the Company believes that including these hotels within the hotel operating statistics of occupancy, average daily rate ("ADR") and revenue per available room ("RevPAR"), if they would have otherwise been included, reflects the underlying results of the business for the three and six months ended June 30, 2022 and 2021.

Occupancy

Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels for a given period. Occupancy measures the utilization of the hotels' available capacity. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help management determine achievable ADR pricing levels as demand for hotel rooms increases or decreases.

ADR

ADR represents hotel room revenue divided by the total number of room nights sold for a given period. ADR measures the average room price attained by a hotel, and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the industry, and management uses ADR to assess pricing levels that the Company is able to generate by type of customer, as changes in rates charged to customers have different effects on overall revenues and incremental profitability than changes in occupancy, as described above.

RevPAR

RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. Management considers RevPAR to be a meaningful indicator of the Company's performance as it provides a metric correlated to two primary and key drivers of operations at a hotel or group of hotels, as previously described: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods for comparable hotels.

References to occupancy, ADR and RevPAR throughout this press release are presented on a comparable basis, based on the comparable hotels as of June 30, 2022, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted. As such, comparisons of these hotel operating statistics for the three and six months ended June 30, 2022 and 2021 or 2019, use the foreign currency exchange rates used to translate the results of the Company's foreign operations within its condensed consolidated financial statements for the three and six months ended June 30, 2022, respectively.

Contacts

Investors
Jill Slattery
+1 703 883 5476

Media
Kent Landers
+1 703 883 3246

Contacts

Investors
Jill Slattery
+1 703 883 5476

Media
Kent Landers
+1 703 883 3246