Hilton's Profit Climbs, But it Lowers Projections

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)

Hilton Worldwide Holdings Inc. (NYSE:HLT.WI)
Historical Stock Chart
From Mar 2024 to Apr 2024