Hilton banks on strong pipeline in 2016
 
Hilton banks on strong pipeline in 2016
27 FEBRUARY 2016 12:46 PM

In addition to detailing the company’s proposed spinoffs of its owned assets and timeshare segment, Hilton Worldwide Holdings’ President and CEO Chris Nassetta shared details on unit growth and regional performance in the company’s latest earnings call with analysts. 

McLean, Virginia—While much of Hilton Worldwide Holdings’ Friday earnings call with analysts was spent fielding questions about the company’s proposed spin offs of its owned assets and timeshare business, company executives also tackled plenty of questions about operating performance, future growth strategies, its newest brand and industry disruptors.

Hilton Worldwide President and CEO Chris Nassetta highlighted the company’s unit growth for the year as well as its development pipeline. Net unit growth for the year was 43,000 guestrooms, a 6.6% growth of managed and franchised rooms, and that number included more than 13,000 guestrooms added in the fourth quarter.

For the full year, the company’s development pipeline stood at a record 266,000 guestrooms globally. “More than half are already in construction,” he said.

As of press time, Hilton Worldwide’s stock price was down 3.2% year-to-date. By comparison, the Baird/STR Hotel Stock Index was down 1.7% over the same period.

On the topic of growth, Nassetta shared additional details about the company’s newest brand, Tru by Hilton, which launched in January. He has been vocal since the brand’s launch about its potential to reach company highs in terms of unit growth.

“To date, we have more than 160 deals in the process and more than one of every four commitments in January was for a Tru franchise,” Nassetta said. “We have very high expectations for the growth potential.”

He said the first Tru should open by late this year or early next.

When pressed to comment on whether he thinks Tru will compete too closely with the Hampton brand, Nassetta pointed out that the price point for Tru is 25% lower than Hampton’s.

“The most positive reception on Tru we’ve had has been from our Hampton owners,” he said. “Of the 163 deals we’ve (signed), it’s 100% existing owners and the very large majority of those people are Hampton owners. They love it. They realize it’s a different product, a different price point. They’re very, very supportive of it.”

Regional performance
Kevin Jacobs, EVP and CFO, shared regional and segment performance highlights for the quarter and the full year.

In the Americas, comparable RevPAR grew 3.8% in the fourth quarter over the same period in 2014, softened by performance in Houston, New Orleans and New York City, he said.

RevPAR in Europe grew 5% in the quarter, attributed largely to strong group business across the region, Jacobs said.

In Asia Pacific, he said the region’s quarterly RevPAR growth of 6.7% was driven largely by group business acceleration in Japan, and softened by decelerated RevPAR growth in China.

Outlook
“We do realize that shorter-term macroeconomics are weighing on (investor) sentiment,” Nassetta said. “But we remain optimistic that 2016 fundamentals will continue to support topline growth.”

To that end, the company projects systemwide RevPAR to increase between 3% and 5% in 2016, and adjusted earnings before interest, taxes, depreciation and amortization is forecast to be between $3 billion and $3.1 billion for the year.

1 Comment

  • Frank Norton March 5, 2016 3:19 PM Reply

    This is exactly what the world needs, more hotels and more lawyers.

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