Sign in

    Hilton Worldwide Holdings (HLT)

    Q4 2024 Earnings Summary

    Reported on Feb 7, 2025 (Before Market Open)
    Pre-Earnings Price$257.85Last close (Feb 5, 2025)
    Post-Earnings Price$257.68Open (Feb 6, 2025)
    Price Change
    $-0.17(-0.07%)
    • Hilton is making significant traction in the luxury segment, with many deals being capital-light, such as the SLH partnership which was "completely capital light, right? Like zero contribution on our part." This efficient expansion into high-margin segments supports future growth.
    • Strong brand performance leads Hilton to capture a disproportionate share of new development and conversion opportunities, with Hilton getting "a very disproportionate share" and "over the last 12 months, we're not quite 50% of all conversion opportunities are moving into our system." This drives growth in their development pipeline even in challenging market conditions.
    • Increasing corporate travel and willingness to pay higher rates are expected to boost Hilton's Business Transient and Group segments, as companies "are broadly saying that they're going to travel more," and "they broadly understand that they're going to pay more for their travel." This bodes well for revenue growth in these segments.
    • Adjusted EBITDA growth is expected to be lower in Q1 2025 (4%-5%) compared to the full-year guidance of 8.5%, due to challenging comparisons, one-time items, and FX impacts, suggesting underlying growth may be slowing.
    • Increased debt levels and higher borrowing costs from re-leveraging the balance sheet to fund share buybacks are impacting EPS growth, with the company borrowing at higher rates than before, which could pressure future earnings.
    • The percentage of conversions contributing to unit growth is expected to decrease in 2025 compared to 2024 (from 45% to about one-third), which may lead to slower net unit growth.
    MetricYoY ChangeReason

    Total Revenue

    +7%

    The increase was primarily driven by higher franchise and licensing fees and continued RevPAR growth from strong leisure and business travel demand compared to the prior period. Additional net unit growth in managed and franchised properties also contributed to the year-over-year uptick.

    Ownership Revenue

    +938%

    This unusually large jump stems from low revenue in the prior period due to temporary closures and renovations, as well as disposal of underperforming assets. In the current period, significantly higher occupancy and better ADR (Average Daily Rate), along with the reopening of renovated properties, drove a substantial improvement.

    Base & Other Management Fees

    -34%

    Despite overall system-wide RevPAR gains, fewer incentive fee earn-outs and the exit of certain managed properties dampened these fee streams. The decrease also reflects shifts in contract terms compared to the previous period, which reduced cost-recovery fees.

    Operating Income

    >12,000%

    Last year’s operating income was disproportionately low at $4 million in Q4 2023 due to one-time costs, including asset impairments and restructuring activities. The current period’s $489 million operating income benefited from strong revenue growth, cost containment measures, and normalization of operations, leading to the significant year-over-year increase.

    Net Income

    +243%

    Improved profitability was supported by robust revenue from franchised and managed properties, as well as the absence of prior-period one-time costs. Additionally, lower interest expense and higher operating margins compared to the prior year boosted net income, despite some increase in corporate-level expenses.

    Diluted EPS

    +249%

    The substantial jump in EPS aligns with the surge in net income. Share repurchases during the period further amplified earnings per share by reducing the share base, while healthy RevPAR growth lifted operating results. This led to a notable improvement in profitability relative to the prior period.

    MetricPeriodPrevious GuidanceCurrent GuidanceChange

    System-wide RevPAR Growth

    Q4 2024

    1% to 2%

    no current guidance

    no current guidance

    Adjusted EBITDA

    Q4 2024

    $804M to $834M

    no current guidance

    no current guidance

    Diluted EPS (adj)

    Q4 2024

    $1.57 to $1.67

    no current guidance

    no current guidance

    System-wide RevPAR Growth

    FY 2024

    2% to 2.5%

    no current guidance

    no current guidance

    Adjusted EBITDA

    FY 2024

    $3.375B to $3.405B

    no current guidance

    no current guidance

    Diluted EPS (adj)

    FY 2024

    $6.93 to $7.03

    no current guidance

    no current guidance

    Net Unit Growth

    FY 2024

    7% to 7.5%

    no current guidance

    no current guidance

    System-wide RevPAR Growth

    Q1 2025

    no prior guidance

    2.5% to 3.5%

    no prior guidance

    Adjusted EBITDA

    Q1 2025

    no prior guidance

    $770M to $790M

    no prior guidance

    Diluted EPS (adj)

    Q1 2025

    no prior guidance

    $1.57 to $1.63

    no prior guidance

    RevPAR Growth

    FY 2025

    no prior guidance

    2% to 3%

    no prior guidance

    Adjusted EBITDA

    FY 2025

    no prior guidance

    $3.7B to $3.74B

    no prior guidance

    Diluted EPS (adj)

    FY 2025

    no prior guidance

    $7.71 to $7.82

    no prior guidance

    Capital Return

    FY 2025

    no prior guidance

    $3.3B

    no prior guidance

    Net Unit Growth

    FY 2025

    6% to 7%

    no current guidance

    no current guidance

    MetricPeriodGuidanceActualPerformance
    Diluted EPS (adjusted for special items)
    Q4 2024
    $1.57 to $1.67
    2.05
    Beat
    TopicPrevious MentionsCurrent PeriodTrend

    Consistent focus on net unit growth and brand performance

    In prior calls, Hilton reported net unit growth (e.g., 7.8% in one quarter), record high pipeline, and robust brand expansions.

    Achieved 7.3% growth for 2024, opened 171 hotels in Q4, and expects 6–7% for 2025; continued brand expansion (e.g., Tapestry, Curio).

    Remains central

    Ongoing emphasis on conversions

    Conversions accounted for 30%–60% of openings in previous periods, driven by brands like Spark, DoubleTree, and SLH properties.

    45% of 2024 openings were conversions, expected to be about one-third of growth in 2025, reflecting consistent strategy.

    Stable emphasis

    Luxury segment expansion and capital-light partnerships

    Prior calls highlighted growing luxury pipeline (e.g., LXR, Conrad, Waldorf), plus capital-light deals (SLH partnership, Graduate Hotels acquisition).

    Luxury and lifestyle openings made up about half of 2024 total; pipeline nearly double existing supply; SLH remains a fully capital-light driver.

    Strengthening

    Debt levels and balance sheet re-leveraging

    Not previously discussed as a major concern in earlier calls.

    Management raised $2B in financing to re-lever the balance sheet, affecting EPS but expected to stabilize year-over-year.

    New concern

    Shifts in sentiment around RevPAR growth and macroeconomic impacts

    Previous discussions noted moderate RevPAR growth (1.4%–2%), cautious macro outlook, but resilient business model.

    RevPAR grew 3.5% in Q4; 2%–3% guidance for 2025; improved sentiment tied to reduced uncertainty and macro trends.

    Slightly more positive

    Increasing corporate travel demand and willingness to pay higher rates

    Previous periods saw steady business transient RevPAR increases (2%–3%), with corporates resuming travel at a measured pace.

    Corporate travel shows post-election improvement, bolstered by greater certainty; willingness to accept higher rates.

    Continuing rebound

    China’s performance fluctuations

    Earlier calls noted domestic softness and outbound demand shift; e.g., RevPAR down 9% in one quarter, flat in another.

    Q4 RevPAR down 4%; macro softness persists, but outbound Chinese travel aids other APAC markets; development in China remains robust.

    Continued volatility

    Normalizing leisure travel and potential downward rate pressures

    Leisure trends moved off pandemic peaks but stayed above 2019 levels; modest declines in occupancy offset by pricing power.

    Focus on managing inventory: maintain higher leisure rates while business travel recovers; still above pre-pandemic levels.

    Gradual normalization

    Decreased discussion of loyalty program growth

    Previous calls emphasized Hilton Honors milestones (e.g., surpassing 200M members) and high Honors occupancy (64%).

    No explicit mention of loyalty program growth or goals in this period.

    Not mentioned

    1. Development Pipeline Outlook
      Q: How is Hilton's development pipeline performing amid industry skepticism?
      A: Despite industry caution due to high costs and interest rates, Hilton's development pipeline remains strong. This is because their brands are the best performing, making them more financeable and attractive for conversion opportunities. Chris Nassetta senses increasing optimism in new development due to expectations of economic growth, stabilization of building costs, potential decrease in interest rates over the next 12–24 months, and more availability of capital. ( )

    2. Macro Sentiment and Business Demand
      Q: How does the recent election affect business demand outlook?
      A: The completed election reduced uncertainty, leading business leaders across industries to believe there's potential for better economic growth in the short to intermediate term. This optimism may positively impact segments of the lodging business. Though there's initial noise, the general sentiment is that the environment will be good for the U.S. economy with possible benefits globally. ( )

    3. Conversions in Unit Growth
      Q: What is the proportion of conversions in Hilton's unit growth?
      A: In 2024, conversions accounted for about 45% of unit growth when including acquisitions and partnerships, and about one-third when excluding them. For 2025, conversions are expected to be about one-third of unit growth. ( )

    4. Adjusted EBITDA Guidance in Q1
      Q: Why is adjusted EBITDA growth lower in Q1 '24 despite positive RevPAR?
      A: The first quarter faces a tough comparison due to a couple of one-time items and foreign exchange impacts from the previous year. Adjusting for these factors, the adjusted EBITDA growth is in line with expectations. ( )

    Research analysts covering Hilton Worldwide Holdings.