Hilton Cuts 2016 Forecast, Says Spin Offs On Track for Year's End

Hilton Worldwide Holdings Inc., in the process of turning itself into three separate entities, cut its profit forecast for the year as a key indicator of pricing power grew less than expected in the latest period.

Hilton Chief Executive Christopher Nassetta said the company faced "a macroeconomic environment that continues to underperform expectations."

System wide revenue per available room—also known as RevPar, a key industry gauge of pricing power—rose to a currency-neutral 1.3%. The company expected RevPAR to increase between 2% and 4%.

The company now sees full-year earnings in a range of 86 cents to 89 cents a share, on an adjusted basis, after previously projecting 87 cents to 91 cents a share. The company also issued a downbeat view for earnings in the current quarter, expecting between 20 cents a share and 23 cents a share. Analysts, polled by Thomson Reuters, expected 24 cents a share.

Hilton sees fourth-quarter RevPar flat to up 1% in the fourth quarter, and rising between 1% and 3% in 2017.

Hilton said earlier this year it plans to spin off a chunk of its hotels into a real-estate investment trust, a popular move among companies looking to slim down and unlock value in their real estate holdings.

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. Hilton said the spinoffs are expected to wrap up by year's end.

Over all, Hilton earned $187 million, or 19 cents a share, compared with $279 million, or 28 cents a share, in the year-ago period. Excluding special items such as costs related to the spin offs, the company earned 23 cents a share; it had guided for earnings between 21 cents and 23 cents a share.

Sales rose 1.6% to $2.94 billion, as analysts expected $3 billion.

Total expenses rose 2.2% in the quarter.

Blackstone Group LP on Monday agreed to sell a roughly 25% stake in Hilton to Chinese conglomerate HNA Group for $6.5 billion.

Shares, which have fallen 9.1% in the past 12 months, were inactive premarket.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

October 26, 2016 07:25 ET (11:25 GMT)

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