Hilton's Profit Climbs, But it Lowers Projections
July 27 2016 - 6:50AM
Dow Jones News
Hilton Worldwide Holdings Inc. said profit climbed 48% in the
latest period, but it lowered its earnings outlook for the year
amid lackluster performance in a key industry metric.
The company now sees full-year earnings in a range of 87 cents
to 91 cents a share, on an adjusted basis, after previously
projecting 92 cents to 98 cents a share. The company also issued a
downbeat view for earnings in the current quarter, projecting an
adjusted profit per-share between 21 cents and 23 cents. Analysts,
on average, expected 27 cents a share, according to Thomson
Reuters.
In the quarter, system wide revenue per available room—also
known as RevPar, a key industry gauge of pricing power—rose to a
currency-neutral 2.9%. Analysts polled by Consensus Metrix were
expecting 3.39%. The company expects RevPAR to increase between 2%
and 4% in the third quarter.
For hotels Hilton owns, RevPar edged up 0.2%, or 0.7% adjusting
for currency, which the company said reflected weaker performance
in New York and Chicago. RevPar at comparable managed and
franchised hotels increased 2.5%, or 3.2% on a currency neutral
basis, and management and franchise fees rose 9%.
Hilton said earlier this year it plans to spin off a chunk of
its hotels into a real-estate investment trust, popular among
companies looking to slim down and unlock the value in their
real-estate holdings. Analysts have said Hilton's 70 properties,
representing a little more than half of the company's portfolio of
owned or leased hotels, in the planned REIT could be worth more
than $10 billion.
The REIT is expected to form later this year. Hilton also plans
to separate its timeshare business, a move that follows similar
steps by rivals that would turn Hilton into three distinct
entities: Hilton Worldwide Holdings Inc., Park Hotels & Resorts
Inc. and Hilton Grand Vacations Inc.
Over all in the June quarter, Hilton earned $239 million, or 24
cents a share, compared with $161 million, or 16 cents a share, a
year ago. Excluding special items, the company earned 25 cents.
Revenue climbed 4.4% to $3.06 billion. The company had guided for
25 cents to 27 cents a share. Analysts expected $3.06 billion in
revenue.
Shares, which have fallen 9.9% in the past 12 months, were
inactive premarket.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
July 27, 2016 07:35 ET (11:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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