Hilton Worldwide Holdings Inc. ("Hilton," or the "Company")
(NYSE: HLT) today reported its third quarter 2016 results.
Highlights include:
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- EPS for the third quarter was $0.19
and EPS, adjusted for special items, was $0.23; net income for the
third quarter was $192 million
- Adjusted EBITDA for the third
quarter was $765 million and Adjusted EBITDA margin was 41.6
percent
- System-wide comparable RevPAR
increased 1.3 percent for the third quarter on a currency neutral
basis from the same period in 2015
- Management and franchise fees for
the third quarter increased 7 percent from the same period in 2015
to $470 million
- Approved 27,000 new rooms for
development during the third quarter, bringing year-to-date
approvals to 77,000 rooms
- Grew development pipeline 15 percent
from 2015 to 1,898 hotels, consisting of 300,000 rooms
- Net unit growth was 13,100 rooms in
the third quarter, representing a 7 percent growth in managed and
franchised rooms from 2015
- Opportunistically entered the
capital markets to enhance Hilton's balance sheet by issuing $1
billion aggregate principal amount of 4.25% senior notes due 2024
and amending and extending $3,225 million of the Term Loans; repaid
$991 million of long-term debt
- On track to complete the spin-off
transactions of Park Hotels & Resorts and Hilton Grand
Vacations around year end
- Hilton plans to host an investor day
on December 8, 2016 at the Conrad New York
Overview
For the three months ended September 30, 2016, EPS was $0.19
compared to $0.28 for the three months ended September 30, 2015,
and EPS, adjusted for special items, was $0.23 for both the three
months ended September 30, 2016 and 2015. Net income was $192
million for the three months ended September 30, 2016 compared to
$283 million for the three months ended September 30, 2015, and
Adjusted EBITDA was $765 million for the three months ended
September 30, 2016 compared to $758 million for the three months
ended September 30, 2015.
For the nine months ended September 30, 2016, EPS was $0.74
compared to $0.60 for the nine months ended September 30, 2015, and
EPS, adjusted for special items, was $0.66 for the nine months
ended September 30, 2016 compared to $0.60 for the nine months
ended September 30, 2015. Net income was $746 million for the nine
months ended September 30, 2016 compared to $600 million for the
nine months ended September 30, 2015, and Adjusted EBITDA was
$2,224 million for the nine months ended September 30, 2016
compared to $2,134 million for the nine months ended September 30,
2015.
Christopher J. Nassetta, President & Chief Executive Officer
of Hilton, said, "Even with a macroeconomic environment that
continues to underperform expectations, we delivered Adjusted
EBITDA and EPS, adjusted for special items, within our guidance
ranges and continued to increase our global share of development
activity this quarter. We approved deals for 27,000 new rooms
in 22 different countries on 5 continents and opened over 14,300
rooms this quarter. Our accelerating, capital-light growth is
driven by all of our clearly defined brands, with each of our brand
segments at record pipelines. Our brands currently represent 22
percent of all rooms under construction globally, or nearly 5
times their current share of room supply."
Segment Highlights
Management and Franchise
Management and franchise fees were $470 million in the third
quarter of 2016, an increase of 7 percent compared to the same
period in 2015. RevPAR at comparable managed and franchised hotels
in the third quarter of 2016 increased 1.5 percent on a currency
neutral basis (a 0.9 percent increase in actual dollars) compared
to the same period in 2015. The addition of new units, the increase
in RevPAR at comparable managed and franchised hotels and rising
effective franchise fee rates have yielded continued fee growth
during the third quarter of 2016.
Ownership
Revenues from the ownership segment were $1,040 million in the
third quarter of 2016 and ownership segment Adjusted EBITDA was
$264 million. RevPAR at comparable hotels in the ownership segment
was flat on a currency neutral basis (a 1.3 percent decrease in
actual dollars) in the third quarter of 2016 compared to the same
period in 2015. The lack of growth in ownership segment RevPAR in
the third quarter of 2016 was primarily attributable to weaker
performance in New York and Chicago, which was partially offset by
relative strength at properties in Hawaii.
Timeshare
Timeshare segment revenues for the third quarter of 2016 were
$358 million and timeshare Adjusted EBITDA was $85 million. Overall
timeshare sales volume increased 15 percent in the third quarter of
2016, compared to the same period in 2015, as a result of increased
tour flow and net volume per guest of 5 percent and 9 percent,
respectively. Commissions from the sale of third-party developed
timeshare intervals increased $11 million during the third quarter
of 2016 from the same period in 2015, while sales revenue on owned
inventory increased $6 million. Revenue from resort operations
increased 12 percent during the third quarter of 2016 from the same
period in 2015. These increases were offset by an increase in
timeshare expenses due to higher selling and marketing
expenses.
During the three months ended September 30, 2016, 63 percent of
timeshare intervals sold were developed by third parties. Hilton's
overall supply of timeshare intervals as of September 30, 2016
was approximately 127,000 intervals, or nearly six years of sales
at current pace, of which 103,000, or 81 percent, were third-party
developed.
Development
Hilton opened 106 hotels consisting of 14,300 rooms, of which
over 20 percent were conversions from non-Hilton brands, and
achieved net unit growth of 13,100 rooms during the third quarter
of 2016. In July 2016, the first Canopy by Hilton opened in
Reykjavik, Iceland. Additionally, Tru by Hilton had continued
success in its initial year of development, with approvals for 51
hotels in the third quarter for a total of 144 hotels in the
pipeline as of September 30, 2016.
As of September 30, 2016, Hilton's rooms pipeline totaled
approximately 300,000 rooms at 1,898 hotels throughout 91 countries
and territories, including 31 countries and territories where
Hilton does not currently have any open hotels. Over 148,000 rooms,
or approximately half of the pipeline, were located outside of the
United States. Additionally, approximately 149,000 rooms were under
construction. Including all agreements approved but not signed,
Hilton's pipeline totaled nearly 310,000 rooms, which will be
almost entirely funded by third-party owner investment.
Balance Sheet and
Liquidity
During the third quarter of 2016, Hilton entered into the
following financing transactions (the "Financing
Transactions"):
- issued $1 billion aggregate principal
amount of 4.25% senior notes due 2024 and used the net proceeds and
available cash to repay $991 million of long-term debt;
- amended $3,225 million of its
outstanding senior secured term loan facility (the "Term Loans") to
remove the LIBOR floor, provide for a reduced interest rate spread
and extend the maturity date by three years to 2023; and
- amended and extended its revolving
non-recourse timeshare financing receivables credit facility to
increase the maximum borrowings from $300 million to $450
million.
Additionally, during October 2016, Hilton made prepayments of
$1,967 million on its existing commercial mortgage-backed
securities ("CMBS") loan and issued two new CMBS loans, including a
$725 million loan that matures in 2023 and is secured by two of its
U.S. owned real estate assets and a $1,275 million loan that
matures in 2026 and is secured by one of its U.S. owned real estate
assets.
As of September 30, 2016, Hilton had $10.0 billion of
long-term debt outstanding with a weighted average interest rate of
4.3 percent.
Total cash and cash equivalents were $1,131 million as of
September 30, 2016, including $272 million of restricted cash
and cash equivalents. No borrowings were outstanding under the $1.0
billion revolving credit facility as of September 30,
2016.
In September 2016, Hilton paid a quarterly cash dividend of
$0.07 per share on shares of its common stock, for a total of $69
million, bringing total cash dividends paid in 2016 to $207
million. In October 2016, Hilton's board of directors authorized a
regular quarterly cash dividend of $0.07 per share of common stock
to be paid on or before December 2, 2016 to holders of record
of its common stock as of the close of business on
November 10, 2016.
In October 2016, Hilton announced that HNA Group agreed to
acquire an approximate 25 percent equity interest in Hilton from
affiliates of The Blackstone Group L.P., establishing a long-term
strategic investment in Hilton and Hilton’s planned spin-offs of
Park Hotels & Resorts Inc. ("Park") and Hilton Grand Vacations
Inc. ("HGV"). The transaction is valued at approximately $6.5
billion, or $26.25 per share, and is expected to close in the first
quarter of 2017, subject to regulatory approval.
Outlook
Hilton has disclosed financial and other details of the planned
spin-offs of Park and HGV in filings with the Securities and
Exchange Commission ("SEC"). The transactions are subject to
execution of intercompany agreements, arrangement of adequate
financing facilities, the effectiveness of the registration
statements, final approval by Hilton's board of directors and other
customary conditions. The spin-off transactions will not require a
stockholder vote. The spin-offs are expected to be completed around
year end, but there can be no assurance regarding the ultimate
timing of the spin-offs or that either or both of the spin-offs
will ultimately occur. The Full Year 2016, Fourth Quarter 2016 and
Full Year 2017 outlooks do not include the effects of the
spin-offs, including potential transaction costs.
Full Year 2016
- System-wide RevPAR is expected to
increase between 1.5 percent and 2.0 percent on a comparable and
currency neutral basis compared to 2015.
- Net income is projected to be between
$948 million and $981 million.
- Adjusted EBITDA is projected to be
between $2,960 million and $2,990 million.
- Management and franchise fees are
projected to increase between 5 percent and 7 percent.
- Timeshare segment Adjusted EBITDA is
projected to be between $370 million and $390 million.
- Corporate expense and other is
projected to be between $240 million and $250 million.
- Diluted EPS, before special items, is
projected to be between $0.94 and $0.97.
- Diluted EPS, adjusted for special
items, is projected to be between $0.86 and $0.89.
- Capital expenditures, excluding
timeshare inventory, are expected to be between $400 million and
$450 million.
- Net unit growth is expected to be
approximately 45,000 rooms to 50,000 rooms.
Fourth Quarter 2016
- System-wide RevPAR is expected to be
flat to up 1.0 percent on a comparable and currency neutral basis
compared to the fourth quarter of 2015.
- Net income is projected to be between
$202 million and $235 million.
- Adjusted EBITDA is projected to be
between $736 million and $766 million.
- Management and franchise fees are
projected to increase between 2 percent and 4 percent.
- Diluted EPS, before special items, is
projected to be between $0.20 and $0.23.
- Diluted EPS, adjusted for special
items, is projected to be between $0.20 and $0.23.
Full Year 2017
For 2017, system-wide RevPAR is expected to increase between 1.0
percent and 3.0 percent on a comparable and currency neutral basis
compared to 2016. Given Hilton's strong development pipeline, unit
growth should continue to accelerate in 2017 as its global system
of rooms is expected to expand by between 50,000 rooms and 55,000
rooms on a net basis.
Outlook for Post-Spin Companies
Upon the completion of the proposed spin-off transactions,
Hilton will be separated into three independent, publicly traded
companies: Hilton Worldwide Holdings Inc., Park Hotels &
Resorts Inc. and Hilton Grand Vacations Inc. Full year 2016 outlook
on a pro forma(1) basis for these companies is as follows:
- Hilton's pro forma Adjusted EBITDA is
expected to be between $1,745 million and $1,775 million.
- Park's pro forma Adjusted EBITDA is
expected to be between $750 million and $780 million.
- HGV's pro forma Adjusted EBITDA is
expected to be between $370 million and $390 million.
____________ (1) Pro forma information gives effect to the
spin-off transactions as if they occurred on January 1, 2016. Refer
to the respective Form 10 Registration Statements of Park and HGV
and the press release on these filings for additional information.
Investor Day
Hilton plans to host an investor day on Thursday, December 8,
2016 at the Conrad New York. More details will be available closer
to the date at http://ir.hiltonworldwide.com.
Conference Call
Hilton will host a conference call to discuss third quarter 2016
results on October 26, 2016 at 10:00 a.m. Eastern Time.
Participants may listen to the live webcast by logging onto the
Hilton Investor Relations website at
http://ir.hiltonworldwide.com/events-and-presentations. A replay
and transcript of the webcast will be available within 24 hours
after the live event at
http://ir.hiltonworldwide.com/financial-reporting/quarterly-results/2016.
Alternatively, participants may listen to the live call by
dialing 1-888-317-6003 in the United States or 1-412-317-6061
internationally. Please use the conference ID 2605045. 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
United States or 1-412-317-0088 internationally using the
conference ID 10093919.
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 performance of
Hilton's business, financial results, liquidity and capital
resources, the planned spin-offs and other non-historical
statements, including the statements in the "Outlook" section of
this press release. You can identify these forward-looking
statements by the use of words such as "outlook," "believes,"
"expects," "potential," "continues," "may," "will," "should,"
"could," "seeks," "approximately," "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, competition for hotel guests, management and franchise
agreements and timeshare sales, risks related to doing business
with third-party hotel owners, Hilton's significant investments in
owned and leased real estate, performance of Hilton's information
technology systems, growth of reservation channels outside of
Hilton's system, risks of doing business outside of the United
States, risks related to Hilton's proposed spin-offs 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 the Annual Report on Form 10-K for the fiscal year
ended December 31, 2015, filed with 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 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.
Non-GAAP Financial
Measures
The Company refers to certain non-GAAP financial measures in
this press release, including net income and EPS, adjusted for
special items, Adjusted EBITDA, Adjusted EBITDA margin, Net debt
and Net debt to Adjusted EBITDA ratio. Please see the schedules to
this press release including the "Definitions" section for
additional information and reconciliations of such non-GAAP
financial measures.
In addition, this press release includes projected pro forma
Adjusted EBITDA for the year ending December 31, 2016 for each of
Hilton, Park and HGV. A reconciliation of projected pro forma
Adjusted EBITDA to a measure calculated in accordance with GAAP is
not available without unreasonable effort due to the unavailability
of certain information needed to calculate certain reconciling
items, including interest expense and income tax expense. For the
same reasons, we are unable to address the probable significance of
the unavailable information, which could be material to future
results.
About Hilton
Hilton (NYSE: HLT) is a leading global hospitality company,
comprising more than 4,800 managed, franchised, owned and leased
hotels and timeshare properties with nearly 789,000 rooms in 104
countries and territories. For 97 years, Hilton has been dedicated
to continuing its tradition of providing exceptional guest
experiences. The Company's portfolio of 13 world-class global
brands includes Hilton Hotels & Resorts, Waldorf Astoria Hotels
& Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio
- A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by
Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton,
Homewood Suites by Hilton, Home2 Suites by Hilton and Hilton Grand
Vacations. The Company also manages an award-winning customer
loyalty program, Hilton HHonors®. Hilton HHonors members who book
directly through preferred Hilton channels have access to benefits
including an exclusive member discount and free standard Wi-Fi, as
well as digital amenities that are available exclusively through
the industry-leading Hilton HHonors app, where Hilton HHonors
members can check-in, choose their room and access their room using
a Digital Key. Visit news.hiltonworldwide.com for more information
and connect with Hilton at facebook.com/hiltonworldwide,
twitter.com/hiltonworldwide, youtube.com/hiltonworldwide,
flickr.com/hiltonworldwide, linkedin.com/company/hilton-worldwide
and instagram.com/hiltonworldwide.
HILTON WORLDWIDE HOLDINGS INC. EARNINGS RELEASE
SCHEDULES TABLE OF CONTENTS
Condensed Consolidated Statements of
Operations
Segment Adjusted EBITDA
Comparable and Currency Neutral
System-Wide Hotel Operating Statistics
Management and Franchise Fees and Other
Revenues
Timeshare Revenues and Operating
Expenses
Hotel and Timeshare Property Summary
Capital Expenditures
Non-GAAP Financial Measures
Reconciliations
Definitions
HILTON WORLDWIDE HOLDINGS INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in
millions, except per share data) Three Months
Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Revenues Owned and leased hotels $ 1,033
$ 1,082 $ 3,105 $ 3,174 Management and franchise fees and other 446
416 1,276 1,194 Timeshare 358 334 1,020 974
1,837 1,832 5,401 5,342 Other revenues from managed and
franchised properties 1,105 1,063 3,342 3,074
Total revenues 2,942 2,895 8,743 8,416
Expenses Owned and leased hotels 771 798 2,335 2,383
Timeshare 257 219 697 673 Depreciation and amortization 169 171 509
519 Impairment loss — — 15 — General, administrative and other 147
145 392 493 1,344 1,333 3,948 4,068
Other expenses from managed and franchised properties 1,105
1,063 3,342 3,074 Total expenses 2,449 2,396
7,290 7,142 Gain on sales of assets, net — 164 2 306
Operating income 493 663 1,455 1,580 Interest income
3 3 10 11 Interest expense (148 ) (138 ) (434 ) (431 ) Equity in
earnings from unconsolidated affiliates 7 9 18 22 Loss on foreign
currency transactions (8 ) (8 ) (33 ) (21 ) Other gain (loss), net
(10 ) 1 (15 ) (6 )
Income before income taxes
337 530 1,001 1,155 Income tax expense (145 ) (247 ) (255 )
(555 )
Net income 192 283 746 600
Net income
attributable to noncontrolling interests (5 ) (4 ) (11 ) (10 )
Net income attributable to Hilton stockholders $ 187
$ 279 $ 735 $ 590
Weighted average
shares outstanding Basic 988 987 988 986
Diluted 992 989 991 989
Earnings per share Basic $ 0.19 $ 0.28 $ 0.74
$ 0.60 Diluted $ 0.19 $ 0.28 $ 0.74
$ 0.60
Cash dividends declared per
share $ 0.07 $ 0.07 $ 0.21 $ 0.07
HILTON WORLDWIDE HOLDINGS INC. SEGMENT
ADJUSTED EBITDA (unaudited, in millions) Three
Months Ended Nine Months Ended September 30,
September 30, 2016 2015 2016
2015 Management and franchise $ 470 $ 438 $ 1,350 $
1,263 Ownership(1) 264 281 770 789 Timeshare 85 99 278 259
Corporate and other (54 ) (60 ) (174 ) (177 ) Adjusted EBITDA(2)(3)
$ 765 $ 758 $ 2,224 $ 2,134
____________ (1)
Includes unconsolidated affiliate Adjusted
EBITDA.
(2)
See "Non-GAAP Financial Measures
Reconciliations—Adjusted EBITDA and Adjusted EBITDA Margin" for a
reconciliation of net income to Adjusted EBITDA.
(3)
Adjusted EBITDA includes the following
intercompany charges that were eliminated in the unaudited
condensed consolidated financial statements:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2016
2015
2016
2015
Rental and other fees(a)
$
6
$
6
$
19
$
17
Management, royalty and intellectual
property fees(b)
33
33
104
99
Licensing fee(c)
12
11
33
31
Laundry services(d)
3
3
6
6
Other(e)
1
1
4
3
Intersegment fees elimination
$
55
$
54
$
166
$
156
____________ (a)
Represents fees charged to the timeshare
segment by the ownership segment.
(b)
Represents fees charged to the ownership
segment by the management and franchise segment.
(c)
Represents fees charged to the timeshare
segment by the management and franchise segment.
(d)
Represents charges to the ownership
segment for services provided by Hilton's wholly owned laundry
business. Revenues from the laundry business are included in
corporate and other.
(e)
Represents other intercompany charges,
which are a benefit to the ownership segment and a cost to
corporate and other.
HILTON WORLDWIDE HOLDINGS INC.
COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING
STATISTICS BY REGION (unaudited) Three
Months Ended September 30, Occupancy ADR
RevPAR 2016 vs. 2015 2016
vs. 2015 2016 vs. 2015 Americas 80.3 %
(0.3 )%
pts.
$ 144.56 2.1 % $ 116.03 1.7 % Europe 79.6 (1.7 ) 148.66 1.5 118.36
(0.7 ) Middle East & Africa 65.9 (0.7 ) 164.54 (1.6 ) 108.37
(2.6 ) Asia Pacific 74.4 3.8 144.87 (4.5 ) 107.78 0.6 System-wide
79.5 (0.2 ) 145.43 1.5 115.54 1.3
Nine Months
Ended September 30, Occupancy ADR RevPAR
2016 vs. 2015 2016 vs. 2015 2016
vs. 2015 Americas 77.4 % (0.1 )%
pts.
$ 143.41 2.3 % $ 111.02 2.2 % Europe 73.7 (1.3 ) 148.38 2.7 109.29
0.9 Middle East & Africa 63.3 (3.5 ) 168.94 5.3 106.99 (0.2 )
Asia Pacific 70.7 3.9 145.33 (1.6 ) 102.74 4.1 System-wide 76.3
(0.1 ) 144.56 2.2 110.28 2.1
HILTON WORLDWIDE HOLDINGS
INC. COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL
OPERATING STATISTICS BY BRAND (unaudited)
Three Months Ended September 30, Occupancy
ADR RevPAR 2016 vs. 2015
2016 vs. 2015 2016 vs.
2015 Waldorf Astoria Hotels & Resorts 63.4 % 1.3 %
pts.
$ 267.69 10.7 % $ 169.74 13.0 % Conrad Hotels & Resorts 74.6
4.2 234.70 (7.0 ) 174.97 (1.4 ) Hilton Hotels & Resorts 78.8
(0.1 ) 167.95 0.9 132.32 0.8 Curio - A Collection by Hilton 82.0
1.9 177.85 0.7 145.78 3.1 DoubleTree by Hilton 78.2 (0.1 ) 138.00
2.4 107.94 2.3 Embassy Suites by Hilton 82.2 (0.1 ) 163.08 2.3
134.09 2.2 Hilton Garden Inn 79.8 (0.4 ) 136.25 1.3 108.74 0.8
Hampton by Hilton 79.6 (0.6 ) 124.88 1.6 99.43 0.9 Homewood Suites
by Hilton 83.4 (0.3 ) 136.44 1.3 113.80 1.0 Home2 Suites by Hilton
83.9 3.5 119.18 2.1 100.01 6.5 System-wide 79.5 (0.2 ) 145.43 1.5
115.54 1.3
Nine Months Ended September 30,
Occupancy ADR RevPAR 2016 vs.
2015 2016 vs. 2015 2016 vs. 2015
Waldorf Astoria Hotels & Resorts 65.7 % — %
pts.
$ 302.20 7.3 % $ 198.42 7.3 % Conrad Hotels & Resorts 69.8 1.5
250.19 (3.5 ) 174.63 (1.3 ) Hilton Hotels & Resorts 75.3 (0.5 )
168.09 2.6 126.63 1.9 Curio - A Collection by Hilton 74.0 (0.2 )
185.04 5.0 136.97 4.7 DoubleTree by Hilton 75.5 0.6 136.91 2.7
103.40 3.4 Embassy Suites by Hilton 80.7 0.4 162.86 2.7 131.50 3.3
Hilton Garden Inn 77.1 (0.1 ) 133.81 1.9 103.16 1.7 Hampton by
Hilton 75.7 (0.2 ) 121.95 1.7 92.34 1.4 Homewood Suites by Hilton
80.5 (0.2 ) 135.55 1.9 109.09 1.7 Home2 Suites by Hilton 80.8 3.8
117.08 1.7 94.60 6.7 System-wide 76.3 (0.1 ) 144.56 2.2 110.28 2.1
HILTON WORLDWIDE HOLDINGS INC. COMPARABLE AND
CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS BY
SEGMENT (unaudited) Three Months Ended
September 30, Occupancy ADR
RevPAR 2016 vs. 2015 2016
vs. 2015 2016 vs. 2015
Ownership(1) 83.0 % (0.4 )% pts. $ 187.50 0.5
% $ 155.59 — % U.S. 84.6 (0.6 ) 202.21 2.5 171.11 1.8 International
(non-U.S.) 81.1 (0.2 ) 169.91 (2.3 ) 137.80 (2.5 )
Management and franchise 79.1 (0.2 ) 141.27 1.7 111.77 1.5
U.S. 80.1 (0.3 ) 141.93 1.9 113.71 1.4 International (non-U.S.)
75.1 0.4 138.43 1.0 103.94 1.5
System-wide 79.5 (0.2
) 145.43 1.5 115.54 1.3 U.S. 80.4 (0.3 ) 145.68 1.9 117.10 1.5
International (non-U.S.) 76.2 0.3 144.49 0.2 110.06 0.6
Nine Months Ended September 30, Occupancy
ADR RevPAR 2016 vs. 2015 2016
vs. 2015 2016 vs. 2015
Ownership(1) 79.4 % (0.8 )% pts. $ 187.69 2.2 % $
148.94 1.1 % U.S. 82.8 (0.7 ) 200.98 2.9 166.46 2.0 International
(non-U.S.) 75.4 (1.0 ) 170.94 1.0 128.85 (0.2 )
Management and franchise 76.0 — 140.31 2.3 106.63 2.2 U.S.
77.3 (0.1 ) 140.80 2.2 108.87 2.1 International (non-U.S.) 70.6 0.2
138.18 2.6 97.59 3.0
System-wide 76.3 (0.1 ) 144.56
2.2 110.28 2.1 U.S. 77.7 (0.1 ) 144.59 2.2 112.28 2.1 International
(non-U.S.) 71.5 — 144.43 2.2 103.25 2.2 ____________ (1)
Includes owned and leased hotels, as well
as hotels owned or leased by entities in which Hilton owns a
noncontrolling interest.
HILTON WORLDWIDE HOLDINGS INC. MANAGEMENT
AND FRANCHISE FEES AND OTHER REVENUES (unaudited, dollars in
millions) Three Months Ended September
30, Increase / (Decrease) 2016 2015
$ % Management fees: Base fees(1) $ 87 $ 87 —
— Incentive fees(2) 37 34 3 8.8 Total base and
incentive fees 124 121 3 2.5 Other management fees(3) 10 7
3 42.9 Total management fees 134 128 6 4.7 Franchise
fees(4) 336 310 26 8.4 Total management and
franchise fees 470 438 32 7.3 Other revenues(5) 24 25 (1 ) (4.0 )
Intersegment fees elimination(1)(2)(4)(5) (48 ) (47 ) (1 ) 2.1
Management and franchise fees and other revenues $ 446 $ 416
30 7.2
Nine Months Ended
September 30, Increase / (Decrease) 2016
2015 $ % Management fees: Base fees(1) $ 265 $
257 8 3.1 Incentive fees(2) 115 107 8 7.5
Total base and incentive fees 380 364 16 4.4 Other management
fees(3) 29 24 5 20.8 Total management fees 409
388 21 5.4 Franchise fees(4) 941 875 66 7.5
Total management and franchise fees 1,350 1,263 87 6.9 Other
revenues(5) 69 67 2 3.0 Intersegment fees elimination(1)(2)(4)(5)
(143 ) (136 ) (7 ) 5.1 Management and franchise fees and other
revenues $ 1,276 $ 1,194 82 6.9 ____________
(1)
Includes fees charged to consolidated
owned and leased properties of $30 million and $32 million for the
three months ended September 30, 2016 and 2015, respectively, and
$92 million and $90 million for the nine months ended September 30,
2016 and 2015, respectively.
(2)
Includes fees charged to consolidated
owned and leased properties of $3 million and $1 million for the
three months ended September 30, 2016 and 2015, respectively, and
$12 million and $9 million for the nine months ended September 30,
2016 and 2015, respectively.
(3)
Includes timeshare homeowners'
association, early termination, product improvement plan and other
fees.
(4)
Includes a licensing fee charged to the
timeshare segment of $12 million and $11 million for the three
months ended September 30, 2016 and 2015, respectively, and $33
million and $31 million for the nine months ended September 30,
2016 and 2015, respectively.
(5)
Includes charges to consolidated owned and
leased properties for services provided by Hilton's wholly owned
laundry business of $3 million for each of the three months ended
September 30, 2016 and 2015 and $6 million for each of the nine
months ended September 30, 2016 and 2015.
HILTON WORLDWIDE HOLDINGS INC.
TIMESHARE REVENUES AND OPERATING
EXPENSES
(unaudited, dollars in
millions)
Three
Months Ended September 30, Increase /
(Decrease)
2016 2015 $ %
Revenues
Timeshare sales $ 263 $ 246 17 6.9 Resort operations 57 51 6 11.8
Financing and
other
38 37 1 2.7 $ 358 $ 334 24 7.2
Operating
Expenses Timeshare sales $ 204 $ 172 32 18.6 Resort operations
34 31 3 9.7 Financing and other 19 16 3 18.8 $ 257 $
219 38 17.4
Nine Months Ended September 30,
Increase / (Decrease) 2016 2015 $
% Revenues Timeshare sales $ 737 $ 716 21 2.9 Resort
operations 172 152 20 13.2 Financing and other 111
106 5 4.7 $ 1,020 $ 974 46 4.7
Operating Expenses
Timeshare sales $ 544 $ 532 12 2.3 Resort operations 98 94 4 4.3
Financing and other 55 47 8 17.0 $ 697 $ 673 24 3.6
HILTON WORLDWIDE HOLDINGS INC.
HOTEL AND TIMESHARE PROPERTY
SUMMARY
As of September 30, 2016
Owned / Leased(1) Managed
Franchised Total Properties
Rooms Properties Rooms
Properties Rooms Properties
Rooms Waldorf Astoria Hotels & Resorts U.S. 4
1,174 9 5,409 — — 13 6,583 Americas (excluding U.S.) — — 1 144 1
984 2 1,128 Europe 2 463 4 898 — — 6 1,361 Middle East & Africa
— — 3 703 — — 3 703 Asia Pacific — — 2 431 — — 2 431
Conrad
Hotels & Resorts U.S. — — 3 1,029 — — 3 1,029 Americas
(excluding U.S.) — — — — 1 294 1 294 Europe 1 191 2 707 1 256 4
1,154 Middle East & Africa 1 614 3 1,079 — — 4 1,693 Asia
Pacific — — 14 4,315 2 776 16 5,091
Canopy by Hilton Europe
— — — — 1 112 1 112
Hilton Hotels & Resorts U.S. 25
23,087 38 24,094 177 53,647 240 100,828 Americas (excluding U.S.) 3
1,668 22 7,428 18 5,810 43 14,906 Europe 68 17,691 44 14,910 40
9,822 152 42,423 Middle East & Africa 6 2,279 45 13,966 1 410
52 16,655 Asia Pacific 7 3,391 72 27,176 7 2,826 86 33,393
Curio
- A Collection by Hilton U.S. 1 224 1 998 19 4,395 21 5,617
Americas (excluding U.S.) — — — — 3 525 3 525 Europe — — — — 2 311
2 311
DoubleTree by Hilton U.S. 11 4,264 27 8,141 283 67,473
321 79,878 Americas (excluding U.S.) — — 4 863 17 3,275 21 4,138
Europe — — 12 3,649 63 10,964 75 14,613 Middle East & Africa —
— 9 2,114 4 488 13 2,602 Asia Pacific — — 43 12,156 2 965 45 13,121
Embassy Suites by Hilton U.S. 10 2,402 33 8,931 181 41,292
224 52,625 Americas (excluding U.S.) — — 3 634 5 1,282 8 1,916
Hilton Garden Inn U.S. 2 290 4 430 593 81,881 599 82,601
Americas (excluding U.S.) — — 8 1,071 28 4,491 36 5,562 Europe — —
18 3,306 32 5,275 50 8,581 Middle East & Africa — — 6 1,337 — —
6 1,337 Asia Pacific — — 12 2,344 — — 12 2,344
Hampton by
Hilton U.S. 1 130 49 6,070 1,980 192,360 2,030 198,560 Americas
(excluding U.S.) — — 11 1,416 85 10,055 96 11,471 Europe — — 13
2,090 34 5,027 47 7,117 Asia Pacific — — — — 7 1,277 7 1,277
Homewood Suites by Hilton U.S. — — 25 2,687 367 41,401 392
44,088 Americas (excluding U.S.) — — 3 321 15 1,699 18 2,020
Home2 Suites by Hilton U.S. — — — — 112 11,572 112 11,572
Americas (excluding U.S.) — — — — 3 317 3 317
Other — — 2
888 3 407 5 1,295 Lodging 142 57,868 545 161,735 4,087 561,669
4,774 781,272
Hilton Grand Vacations — — 46 7,592 — — 46
7,592 Total 142 57,868 591 169,327 4,087 561,669 4,820 788,864
____________
(1)
Includes hotels owned or leased by
entities in which Hilton owns a noncontrolling interest.
HILTON WORLDWIDE HOLDINGS INC.
CAPITAL EXPENDITURES
(unaudited, dollars in
millions)
Three Months Ended September 30,
Increase / (Decrease) 2016 2015
$ % Hotel property and equipment $ 50 $ 52 (2
) (3.8 ) Timeshare property and equipment 4 2 2 NM(1) Corporate and
other property and equipment 4 1 3
NM(1) Total capital expenditures for property and equipment 58 55 3
5.5 Capitalized software costs 21 15 6 40.0 Contract acquisition
costs 17 8 9 NM(1) Expenditures for timeshare inventory net of
costs of sales(2) (14 ) 6 (20 ) NM(1) Total capital
expenditures $ 82 $ 84 (2 ) (2.4 )
Nine Months
Ended September 30, Increase / (Decrease)
2016 2015 $ % Hotel property and
equipment $ 203 $ 200 3 1.5 Timeshare property and equipment 15 7 8
NM(1) Corporate and other property and equipment 9
7 2 28.6 Total capital expenditures for property and
equipment 227 214 13 6.1 Capitalized software costs 56 38 18 47.4
Contract acquisition costs 35 27 8 29.6 Expenditures for timeshare
inventory net of costs of sales(2) (25 ) 20 (45 )
NM(1) Total capital expenditures $ 293 $ 299 (6 ) (2.0 )
____________ (1) Fluctuation in terms of percentage
change is not meaningful. (2) Timeshare capital expenditures for
inventory additions were $16 million and $34 million for the three
months ended September 30, 2016 and 2015, respectively, and $50
million and $110 million for the nine months ended September 30,
2016 and 2015, respectively, and timeshare costs of sales were $30
million and $28 million for the three months ended September 30,
2016 and 2015, respectively, and $75 million and $90 million for
the nine months ended September 30, 2016 and 2015, respectively.
HILTON WORLDWIDE HOLDINGS INC.
NON-GAAP FINANCIAL MEASURES
RECONCILIATIONS
NET INCOME AND EPS, ADJUSTED FOR
SPECIAL ITEMS
(unaudited, in millions, except per
share data)
Three Months Ended Nine Months
Ended September 30, September 30, 2016
2015 2016 2015 Net income
attributable to Hilton stockholders, as reported $ 187 $ 279 $ 735
$ 590 Diluted EPS, as reported $ 0.19 $ 0.28 $ 0.74 $ 0.60 Special
items: Impairment loss $ — $ — $ 15 $ — Costs incurred for planned
spin-offs(1) 27 — 54 — Share-based compensation expense(2) — — — 66
Asset acquisitions and dispositions(3) 16 (129 ) 18 (172 ) Gain on
capital lease amendment(4) — — — (24 ) Secondary offering
expenses(5) — — — 2 Financing transactions(6) 14 — 14 — Tax-related
adjustments(7) — — (153 )
4 Total special items before tax 57 (129 ) (52 ) (124 )
Income tax benefit (expense) on special items (13 )
80 (30 ) 125 Total special items after
tax $ 44 $ (49 ) $ (82 ) $ 1 Net income,
adjusted for special items $ 231 $ 230 $ 653 $
591 Diluted EPS, adjusted for special items $ 0.23 $
0.23 $ 0.66 $ 0.60 ____________ (1)
These amounts include expenses that were recognized in general,
administrative and other expenses related to the planned spin-offs
of Park and HGV. (2) This amount includes expenses that were
recognized in general, administrative and other expenses related to
share-based compensation prior to and in connection with the
initial public offering. This amount excludes share-based
compensation expense related to awards issued under the Hilton
Worldwide Holdings Inc. 2013 Omnibus Incentive Plan. (3) The
amounts for the three and nine months ended September 30, 2016
relate to severance costs from the sale of the Waldorf Astoria New
York recognized in general, administrative and other expenses. The
amounts for the three and nine months ended September 30, 2015
relate primarily to the net gains on the sale of the Waldorf
Astoria New York and Hilton Sydney, as well as amounts recognized
in relation to the sale of the Waldorf Astoria New York and the
properties acquired from the proceeds of that sale. The amounts are
detailed as follows:
Three Months Ended
Nine Months Ended
September 30, 2015
September 30, 2015
Gain on sale of the Waldorf Astoria New
York and Hilton Sydney, net of transaction costs
$
(164
)
$
(306
)
Severance costs
35
89
Transaction costs related to
property acquisitions
—
26
Reduction of unamortized management
contract intangible asset related to properties that were managed
by Hilton prior to acquisition
—
13
Reduction of remaining deferred
issuance costs related to the mortgage loan secured by the Waldorf
Astoria New York
—
6
$
(129
)
$
(172
)
(4) In June 2015, one of Hilton's consolidated properties
modified the terms of its lease agreement, resulting in a reduction
in the capital lease obligation and recognition of a gain included
in other gain (loss), net. (5) Expense was recognized in general,
administrative and other expenses related to costs incurred in
connection with a secondary equity offering by certain selling
stockholders. (6) These amounts represent expenses incurred in
connection with the Financing Transactions for the planned
spin-offs of Park and HGV, which included $5 million recognized in
interest expense and $9 million recognized in other gain (loss),
net. (7) The amount for the nine months ended September 30, 2016
relates to the release of reserves of unrecognized tax benefits
that Hilton has either settled or determined that Hilton was more
likely than not to receive the full benefit for. The amount for the
nine months ended September 30, 2015 includes the effect of the
reduction in the statutory tax rate on March 31, 2015 in a foreign
jurisdiction where the Company had deferred tax assets, resulting
in a reduction to the deferred tax asset and a corresponding
recognition of income tax expense of $6 million, including $2
million attributable to noncontrolling interests. These amounts
were recognized in income tax expense.
HILTON
WORLDWIDE HOLDINGS INC. NON-GAAP FINANCIAL MEASURES
RECONCILIATIONS ADJUSTED EBITDA AND ADJUSTED EBITDA
MARGIN (unaudited, dollars in millions)
Three Months Ended Nine Months Ended September
30, September 30, 2016 2015
2016 2015 Net income $ 192 $ 283 $ 746 $ 600
Interest expense 148 138 434 431 Income tax expense 145 247 255 555
Depreciation and amortization 169 171 509 519 Interest expense,
income tax and depreciation and amortization included in equity in
earnings from unconsolidated affiliates 8 6 23
20 EBITDA 662 845 1,967 2,125 Gain on sales of assets, net —
(164 ) (2 ) (306 ) Loss on foreign currency transactions 8 8 33 21
FF&E replacement reserve 13 9 42 36 Share-based compensation
expense 26 21 70 143 Impairment loss — — 15 — Other loss (gain),
net(1) 10 (1 ) 15 6 Other adjustment items(2) 46 40
84 109 Adjusted EBITDA $ 765 $ 758 $
2,224 $ 2,134 ____________
(1)
Represents costs related primarily to the
Financing Transactions and acquisitions of property and equipment,
as well as a loss related to a disposition of property and
equipment.
(2)
Represents adjustments for spin-off and
reorganization costs, severance and other items.
Three Months Ended Nine Months
Ended September 30, September 30, 2016
2015 2016 2015 Total revenues,
as reported $ 2,942 $ 2,895 $ 8,743 $ 8,416 Less: other revenues
from managed and franchised properties (1,105 ) (1,063 ) (3,342 )
(3,074 ) Total revenues, excluding other revenues from managed and
franchised properties $ 1,837 $ 1,832 $ 5,401
$ 5,342 Adjusted EBITDA $ 765 $ 758 $ 2,224 $ 2,134
Adjusted EBITDA margin 41.6 % 41.4 % 41.2 % 39.9 %
HILTON WORLDWIDE HOLDINGS INC. NON-GAAP FINANCIAL
MEASURES RECONCILIATIONS NET DEBT AND NET DEBT TO ADJUSTED
EBITDA RATIO (unaudited, in millions)
September 30, December 31, 2016 2015
Long-term debt, including current maturities $ 9,984 $ 9,951 Add:
unamortized deferred financing costs 88 90 Long-term
debt, including current maturities and excluding unamortized
deferred financing costs 10,072 10,041 Add: Hilton's share of
unconsolidated affiliate debt, excluding unamortized deferred
financing costs 226 229 Less: cash and cash equivalents (859 ) (609
) Less: restricted cash and cash equivalents (272 ) (247 ) Net debt
$ 9,167 $ 9,414
Nine
Months Ended Year Ended TTM(1)
September 30, December 31, September 30,
2016 2015 2015 2016 Net income $
746 $ 600 $ 1,416 $ 1,562 Interest expense 434 431 575 578 Income
tax expense (benefit) 255 555 80 (220 ) Depreciation and
amortization 509 519 692 682 Interest expense, income tax and
depreciation and amortization included in equity in earnings from
unconsolidated affiliates 23 20 32 35
EBITDA 1,967 2,125 2,795 2,637 Gain on sales of assets, net (2 )
(306 ) (306 ) (2 ) Loss on foreign currency transactions 33 21 41
53 FF&E replacement reserve 42 36 48 54 Share-based
compensation expense 70 143 162 89 Impairment loss 15 — 9 24 Other
loss, net(2) 15 6 1 10 Other adjustment items(3) 84 109
129 104 Adjusted EBITDA $ 2,224 $ 2,134
$ 2,879 $ 2,969 Net debt $ 9,167
Net debt to Adjusted EBITDA ratio 3.1 ____________ (1)
Trailing twelve months ("TTM") September
30, 2016 is calculated as nine months ended September 30, 2016 plus
year ended December 31, 2015 less nine months ended September 30,
2015.
(2)
For the nine months ended September 30,
2016, primarily includes costs related to the Financing
Transactions. For the nine months ended September 30, 2015,
primarily represents gains and losses on the acquisitions and
dispositions of property and equipment and lease restructuring
transactions.
(3)
Represents adjustments for spin-off and
reorganization costs, severance, offering costs and other
items.
HILTON WORLDWIDE HOLDINGS INC. NON-GAAP
FINANCIAL MEASURES RECONCILIATIONS OUTLOOK: ADJUSTED
EBITDA FORECASTED 2016 (unaudited, in millions)
Three Months Ending December 31,
2016
Low Case High Case Net income $ 202 $ 235
Interest expense 145 145 Income tax expense 133 155 Depreciation
and amortization 174 174 Interest expense, income tax and
depreciation and amortization included in equity in earnings from
unconsolidated affiliates 8 8 EBITDA 662 717 FF&E
replacement reserve 11 11 Share-based compensation expense 23 23
Other adjustment items(1) 40 15 Adjusted EBITDA $ 736
$ 766
Year Ending December 31,
2016
Low Case High Case Net income $ 948 $ 981 Interest
expense 579 579 Income tax expense 388 410 Depreciation and
amortization 683 683 Interest expense, income tax and depreciation
and amortization included in equity in earnings from unconsolidated
affiliates 31 31 EBITDA 2,629 2,684 Loss on foreign currency
transactions 33 33 FF&E replacement reserve 53 53 Share-based
compensation expense 93 93 Impairment loss 15 15 Other adjustment
items(1) 137 112 Adjusted EBITDA $ 2,960 $ 2,990
____________ (1)
Represents adjustments for spin-offs and
reorganization costs, severance and other items.
HILTON WORLDWIDE HOLDINGS INC. NON-GAAP
FINANCIAL MEASURES RECONCILIATIONS OUTLOOK: NET INCOME AND
DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS FORECASTED 2016
(unaudited, in millions, except per share data)
Three Months Ending December 31,
2016
Low Case High Case Net income attributable to
Hilton stockholders, before special items $ 198 $ 231 Diluted EPS,
before special items $ 0.20 $ 0.23 Net income attributable
to Hilton stockholders, adjusted for special items $ 198 $
231 Diluted EPS, adjusted for special items $ 0.20 $
0.23
Year Ending December 31,
2016
Low Case High Case Net income attributable to Hilton
stockholders, before special items $ 933 $ 966 Diluted EPS, before
special items $ 0.94 $ 0.97 Special items(1): Impairment loss $ 15
$ 15 Costs incurred for planned spin-offs 54 54 Asset disposition
18 18 Financing transactions 14 14 Tax-related adjustment (153 )
(153 ) Total special items before tax (52 ) (52 ) Income tax
expense on special items (30 ) (30 ) Total special items after tax
$ (82 ) $ (82 ) Net income attributable to Hilton
stockholders, adjusted for special items $ 851 $ 884
Diluted EPS, adjusted for special items $ 0.86 $ 0.89
____________ (1)
See "Net Income and EPS, Adjusted for
Special Items" for details of these special items.
HILTON WORLDWIDE HOLDINGS
INC.DEFINITIONS
EBITDA, Adjusted EBITDA and Adjusted
EBITDA Margin
Earnings before interest expense, taxes and depreciation and
amortization ("EBITDA"), presented herein, is a financial measure
not recognized under United States ("U.S.") generally accepted
accounting principles ("GAAP") that reflects net income, excluding
interest expense, a provision for income taxes and depreciation and
amortization. The Company considers EBITDA to be a useful measure
of operating performance, due to the significance of the Company's
long-lived assets and level of indebtedness.
Adjusted EBITDA, presented herein, is calculated as EBITDA, as
previously defined, further adjusted to exclude certain items,
including gains, losses and expenses in connection with: (i) asset
dispositions for both consolidated and unconsolidated investments;
(ii) foreign currency transactions; (iii) debt
restructurings/retirements; (iv) non-cash impairment losses; (v)
furniture, fixtures and equipment ("FF&E") replacement reserves
required under certain lease agreements; (vi) reorganization costs;
(vii) share-based compensation expense; (viii) severance,
relocation and other expenses; and (ix) other items.
Adjusted EBITDA margin represents Adjusted EBITDA as a
percentage of total revenues, excluding other revenues from managed
and franchised properties.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not
recognized terms under U.S. GAAP and should not be considered as
alternatives to net income (loss) or other measures of financial
performance or liquidity derived in accordance with U.S. GAAP. In
addition, the Company's definitions of EBITDA, Adjusted EBITDA and
Adjusted EBITDA margin may not be comparable to similarly titled
measures of other companies.
The Company believes that EBITDA, Adjusted EBITDA and Adjusted
EBITDA margin provide useful information to investors about the
Company and its 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.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have
limitations as analytical tools and should not be considered either
in isolation or as a substitute for net income (loss), cash flow or
other methods of analyzing results as reported under U.S. GAAP.
Net Income and EPS, Adjusted for Special
Items
Net income and EPS, adjusted for special items, are not
recognized terms under U.S. GAAP and should not be considered as
alternatives to net income (loss) or other measures of financial
performance or liquidity derived in accordance with U.S. GAAP. In
addition, the Company's definition of Net income and EPS, adjusted
for special items, may not be comparable to similarly titled
measures of other companies.
Net income and 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.
Net Debt
Net debt, presented herein, is a non-GAAP financial measure that
the Company uses to evaluate its financial leverage. Net debt
is calculated as (i) long-term debt, including current maturities
and excluding unamortized deferred financing costs; and (ii) the
Company's share of investments in affiliate debt, excluding
unamortized deferred financing costs; reduced by (a) cash and cash
equivalents; and (b) restricted cash and cash equivalents.
The Company believes Net debt provides useful information about
its indebtedness to investors as it is frequently used by
securities analysts, investors and other interested parties to
compare the indebtedness of companies. Net debt should not be
considered as a substitute to debt presented in accordance with
U.S. GAAP. Net debt may not be comparable to a similarly titled
measure of other companies.
Net Debt to Adjusted EBITDA
Ratio
Net debt to Adjusted EBITDA ratio, presented herein, is a
non-GAAP financial measure and is included as it is frequently used
by securities analysts, investors and other interested parties to
compare the financial condition of companies. Net debt to Adjusted
EBITDA ratio should not be considered as an alternative to measures
of financial condition derived in accordance with U.S. GAAP and it
may not be comparable to a similarly titled measure of other
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 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 are not available.
Of the 4,774 hotels in the Company's system as of September 30,
2016, 3,760 were classified as comparable hotels. The 1,014
non-comparable hotels included 151 properties, or approximately
three percent of the total hotels in the system, that were removed
from the comparable group during the last twelve months because
they sustained substantial property damage, business interruption,
underwent large-scale capital projects or comparable results were
not available.
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. 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 Average Daily Rate
levels as demand for hotel rooms increases or decreases.
Average Daily Rate ("ADR")
ADR represents hotel room revenue divided by total number of
room nights sold in a given period. ADR measures 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 have a different effect on overall
revenues and incremental profitability than changes in occupancy,
as described above.
Revenue per Available Room
("RevPAR")
The Company calculates RevPAR by dividing hotel room revenue by
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: occupancy and ADR. RevPAR is also a useful indicator in
measuring performance over comparable periods for comparable
hotels.
References to RevPAR, ADR and occupancy throughout this press
release are presented on a comparable basis and references to
RevPAR and ADR are presented on a currency neutral basis (all
periods use the same exchange rates), unless otherwise noted.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161026005456/en/
Investor ContactChristian Charnaux+1 703 883
5205orMedia ContactAaron Radelet+1 703 883 5804
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