Hilton Reports Third Quarter Results
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Hilton Reports Third Quarter Results

MCLEAN, Va. - (BUSINESS WIRE) - November 04, 2020 - Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE: HLT) today reported its third quarter 2020 results. The following results reflect the material impact that the novel coronavirus ("COVID-19") pandemic has had on Hilton's business. Highlights include:

  • Diluted EPS was $(0.28) for the third quarter, and diluted EPS, adjusted for special items, was $0.06
  • Net loss was $81 million for the third quarter
  • Adjusted EBITDA was $224 million for the third quarter
  • System-wide comparable RevPAR decreased 59.9 percent on a currency neutral basis for the third quarter from the same period in 2019
  • Approved 17,400 new rooms for development during the third quarter, bringing Hilton's development pipeline to 408,000 rooms as of September 30, 2020, representing 8 percent growth from September 30, 2019
  • Opened 17,100 rooms in the third quarter, contributing to 14,800 net additional rooms in Hilton's system, representing 4.7 percent net unit growth from September 30, 2019, with full year net unit growth expected to be between 4.5 percent and 5.0 percent
  • As of November 2, 2020, 97 percent of Hilton's system-wide hotels were open

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "Our third quarter results show meaningful improvement over the second quarter. The vast majority of our properties around the world are now open and have gradually begun to recover from the limitations that the COVID-19 pandemic has imposed on the travel industry, with occupancy increasing more than 20 percentage points from the second quarter. While a full recovery will take time, we are well positioned to capture rising demand and execute on growth opportunities."

On a global level, the pervasive impact of the COVID-19 pandemic began in March, with its most significant adverse impact on occupancy and RevPAR in April. Since April, system-wide occupancy has increased month over month, with the most notable recoveries in Asia Pacific, the U.S. and Europe, with comparable hotel occupancy levels up approximately 32 percentage points, 32 percentage points and 31 percentage points, respectively, from April to September.

For the three and nine months ended September 30, 2020, system-wide comparable RevPAR decreased 59.9 percent and 55.9 percent, respectively, compared to the prior year periods, due to both occupancy and ADR decreases. Additionally, management fee and franchise and licensing fee revenues decreased 53 percent and 51 percent during the three and nine months ended September 30, 2020, respectively, compared to the prior year periods. The decreases were due to the COVID-19 pandemic and the related reduction in global travel and tourism, which required the complete or partial suspensions of hotel operations at approximately 20 percent of Hilton's properties at some point during the nine months ended September 30, 2020. As of November 2, 2020, 97 percent of Hilton's system-wide properties were open.

For the three months ended September 30, 2020, diluted EPS was $(0.28) and diluted EPS, adjusted for special items, was $0.06 compared to $1.00 and $1.05, respectively, for the three months ended September 30, 2019. Net income (loss) and Adjusted EBITDA were $(81) million and $224 million, respectively, for the three months ended September 30, 2020, compared to $290 million and $605 million, respectively, for the three months ended September 30, 2019.

For the nine months ended September 30, 2020, diluted EPS was $(1.76) and diluted EPS, adjusted for special items, was $0.20 compared to $2.42 and $2.90, respectively, for the nine months ended September 30, 2019. Net income (loss) and Adjusted EBITDA were $(495) million and $638 million, respectively, for the nine months ended September 30, 2020, compared to $710 million and $1,722 million, respectively, for the nine months ended September 30, 2019.

Development

In the third quarter of 2020, Hilton opened 133 new hotels totaling 17,100 rooms, and achieved net unit growth of over 14,800 rooms. Notable openings in the quarter included the Conrad Punta de Mita in Mexico and the Hilton Beijing Tongzhou in China, as well as the Motto by Hilton Washington DC City Center, the first hotel under the Motto by Hilton brand.

Notable additions to Hilton's development pipeline during the quarter included the Conrad Rabat Arzana in Morocco and the Waldorf Astoria Monarch Beach Resort & Club in California.

As of September 30, 2020, Hilton's development pipeline totaled approximately 2,640 hotels consisting of more than 408,000 rooms throughout 120 countries and territories, including 33 countries and territories where Hilton does not currently have any open hotels. Additionally, of the rooms in the development pipeline, 237,000 rooms were located outside the U.S., and 217,000 rooms were under construction.

Balance Sheet and Liquidity

As of September 30, 2020, Hilton had $10.6 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 3.86 percent. Excluding finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $10.3 billion of long-term debt outstanding with a weighted average interest rate of 3.81 percent and no maturities until 2024. Total cash and cash equivalents were $3,468 million as of September 30, 2020, including $63 million of restricted cash and cash equivalents.

In March 2020, Hilton suspended share repurchases and the payment of dividends to preserve capital and maintain liquidity. No share repurchases have been made since March 5, 2020, and no dividends have been declared or paid since March 31, 2020. The stock repurchase program remains authorized by the board of directors, and the amount remaining under Hilton's stock repurchase program is approximately $2.2 billion.

Conference Call

Hilton will host a conference call to discuss third quarter 2020 results on November 4, 2020 at 10:00 a.m. Eastern Time. Participants may listen to the live webcast by logging on to the Hilton Investor Relations website. A replay and transcript of the webcast will be available within 24 hours after the live event at their IR webpage.

Alternatively, participants may listen to the live call by dialing 1-888-317-6003 in the United States ("U.S.") or 1-412-317-6061 internationally using the conference ID 3909291. 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 U.S. or 1-412-317-0088 internationally using the conference ID 10148747.

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 impact of the COVID-19 pandemic, the performance of Hilton's business, financial results, liquidity and capital resources and other non-historical statements. In some cases, these forward-looking statements can be identified by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "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 related to the impact of the COVID-19 pandemic, risks inherent to the hospitality industry, macroeconomic factors beyond Hilton's control, competition for hotel guests and management and franchise contracts, risks related to doing business with third-party hotel owners, performance of Hilton's information technology systems, growth of reservation channels outside of Hilton's system, risks of doing business outside of the U.S. 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 Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and "Part II —Item 1A. Risk Factors" of Hilton's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2020, filed with the Securities and Exchange Commission (the "SEC"), as supplemented in Hilton's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020, which is expected to be filed on or about the date of this press release, as such factors may be further 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 press 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 financial measures that are not recognized under U.S. generally accepted accounting principles ("GAAP") in this press release, including: net income, adjusted for special items; diluted EPS, adjusted for special items; Adjusted EBITDA; Adjusted EBITDA margin; net debt; and net debt to Adjusted EBITDA ratio. See the schedules to this press release, including the "Definitions" section, for additional information and reconciliations of such non-GAAP financial measures.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 18 world-class brands comprising more than 6,300 properties with nearly one million rooms in 118 countries and territories. Dedicated to fulfilling its mission to be the world's most hospitable company, Hilton has welcomed more than 3 billion guests in its more than 100-year history, earned a top spot on the 2020 World's Best Workplaces list and was named the 2019 Global Industry Leader on the Dow Jones Sustainability Indices. In 2020, Hilton CleanStay was introduced, bringing an industry-defining standard of cleanliness and disinfection to hotels worldwide. Through the award-winning guest loyalty program Hilton Honors, the more than 110 million members who book directly with Hilton can earn Points for hotel stays and experiences money can't buy, plus enjoy instant benefits, including contactless check-in with room selection, Digital Key and Connected Room. Visit Newsroom for more information, and connect with Hilton on Facebook, Twitter, Linkedin, Instagram, and You Tube.

 

HILTON WORLDWIDE HOLDINGS INC.

EARNINGS RELEASE SCHEDULES

TABLE OF CONTENTS

 

Condensed Consolidated Statements of Operations

Comparable and Currency Neutral System-Wide Hotel Operating Statistics

Property Summary

Capital Expenditures and Contract Acquisition Costs

Reconciliations of Non-GAAP Financial Measures

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,

 

 

2020

 

2019

 

2020

 

2019

Revenues

 

 

 

 

 

 

 

 

Franchise and licensing fees

 

$

241

 

 

$

443

 

 

$

712

 

 

$

1,269

 

Base and other management fees

 

24

 

 

80

 

 

92

 

 

249

 

Incentive management fees

 

7

 

 

54

 

 

25

 

 

167

 

Owned and leased hotels

 

94

 

 

361

 

 

335

 

 

1,060

 

Other revenues

 

19

 

 

23

 

 

52

 

 

75

 

 

 

385

 

 

961

 

 

1,216

 

 

2,820

 

Other revenues from managed and franchised properties

 

548

 

 

1,434

 

 

2,201

 

 

4,263

 

Total revenues

 

933

 

 

2,395

 

 

3,417

 

 

7,083

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Owned and leased hotels

 

144

 

 

310

 

 

478

 

 

942

 

Depreciation and amortization

 

90

 

 

86

 

 

269

 

 

256

 

General and administrative

 

66

 

 

107

 

 

189

 

 

327

 

Reorganization costs

 

 

 

 

 

38

 

 

 

Impairment losses

 

9

 

 

 

 

136

 

 

 

Other expenses

 

21

 

 

11

 

 

48

 

 

46

 

 

 

330

 

 

514

 

 

1,158

 

 

1,571

 

Other expenses from managed and franchised properties

 

592

 

 

1,443

 

 

2,482

 

 

4,284

 

Total expenses

 

922

 

 

1,957

 

 

3,640

 

 

5,855

 

 

 

 

 

 

 

 

 

 

Gain on sale of assets, net

 

 

 

81

 

 

 

 

81

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

11

 

 

519

 

 

(223

)

 

1,309

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(116

)

 

(105

)

 

(316

)

 

(304

)

Gain (loss) on foreign currency transactions

 

(12

)

 

7

 

 

(16

)

 

4

 

Other non-operating income (loss), net

 

3

 

 

 

 

(20

)

 

(8

)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(114

)

 

421

 

 

(575

)

 

1,001

 

 

 

 

 

 

 

 

 

 

Income tax benefit (expense)

 

33

 

 

(131

)

 

80

 

 

(291

)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

(81

)

 

290

 

 

(495

)

 

710

 

Net loss (income) attributable to noncontrolling interests

 

2

 

 

(2

)

 

4

 

 

(4

)

Net income (loss) attributable to Hilton stockholders

 

$

(79

)

 

$

288

 

 

$

(491

)

 

$

706

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

277

 

 

285

 

 

277

 

 

289

 

Diluted

 

279

 

 

288

 

 

279

 

 

292

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.29

)

 

$

1.01

 

 

$

(1.77

)

 

$

2.44

 

Diluted

 

$

(0.28

)

 

$

1.00

 

 

$

(1.76

)

 

$

2.42

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per share

 

$

 

 

$

0.15

 

 

$

0.15

 

 

$

0.45

 

     

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION

(unaudited)

     

 

 

Three Months Ended September 30,

 

 

Occupancy

 

ADR

 

RevPAR

 

 

2020

 

vs. 2019

 

2020

 

vs. 2019

 

2020

 

vs. 2019

U.S.

 

44.3

%

 

(34.8

)% pts.

 

$

109.45

 

 

(26.0

)%

 

$

48.47

 

 

(58.6

)%

Americas (excluding U.S.)

 

24.8

 

 

(48.4

)

 

85.84

 

 

(27.1

)

 

21.25

 

 

(75.3

)

Europe

 

31.6

 

 

(51.5

)

 

103.45

 

 

(28.0

)

 

32.71

 

 

(72.6

)

Middle East & Africa

 

25.2

 

 

(42.8

)

 

117.71

 

 

(12.5

)

 

29.65

 

 

(67.6

)

Asia Pacific

 

53.1

 

 

(21.0

)

 

85.45

 

 

(25.2

)

 

45.35

 

 

(46.4

)

System-wide

 

42.5

 

 

(36.0

)

 

105.87

 

 

(26.0

)

 

44.95

 

 

(59.9

)

     

 

 

Nine Months Ended September 30,

 

 

Occupancy

 

ADR

 

RevPAR

 

 

2020

 

vs. 2019

 

2020

 

vs. 2019

 

2020

 

vs. 2019

U.S.

 

42.5

%

 

(34.6

)% pts.

 

$

122.07

 

 

(17.6

)%

 

$

51.88

 

 

(54.6

)%

Americas (excluding U.S.)

 

29.9

 

 

(40.1

)

 

102.91

 

 

(12.0

)

 

30.74

 

 

(62.4

)

Europe

 

30.6

 

 

(46.0

)

 

111.79

 

 

(18.4

)

 

34.22

 

 

(67.4

)

Middle East & Africa

 

34.1

 

 

(34.0

)

 

126.52

 

 

(9.5

)

 

43.20

 

 

(54.7

)

Asia Pacific

 

40.0

 

 

(29.8

)

 

92.61

 

 

(19.6

)

 

37.02

 

 

(54.0

)

System-wide

 

40.4

 

 

(35.4

)

 

118.23

 

 

(17.3

)

 

47.74

 

 

(55.9

)

     

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY BRAND

(unaudited)

     

 

 

Three Months Ended September 30,

 

 

Occupancy

 

ADR

 

RevPAR

 

 

2020

 

vs. 2019

 

2020

 

vs. 2019

 

2020

 

vs. 2019

Waldorf Astoria Hotels & Resorts

 

32.1

%

 

(38.1

)% pts.

 

$

247.26

 

 

(34.1

)%

 

$

79.30

 

 

(69.9

)%

Conrad Hotels & Resorts

 

31.1

 

 

(46.3

)

 

178.63

 

 

(30.1

)

 

55.58

 

 

(71.9

)

Canopy by Hilton

 

31.5

 

 

(44.6

)

 

139.40

 

 

(30.0

)

 

43.94

 

 

(71.0

)

Hilton Hotels & Resorts

 

28.8

 

 

(49.5

)

 

121.24

 

 

(28.4

)

 

34.93

 

 

(73.6

)

Curio Collection by Hilton

 

27.1

 

 

(43.3

)

 

147.95

 

 

(24.9

)

 

40.05

 

 

(71.1

)

DoubleTree by Hilton

 

35.4

 

 

(41.7

)

 

97.67

 

 

(24.0

)

 

34.53

 

 

(65.1

)

Tapestry Collection by Hilton

 

43.3

 

 

(34.8

)

 

116.63

 

 

(25.5

)

 

50.45

 

 

(58.7

)

Embassy Suites by Hilton

 

36.5

 

 

(43.7

)

 

122.61

 

 

(26.1

)

 

44.81

 

 

(66.4

)

Hilton Garden Inn

 

42.8

 

 

(35.6

)

 

96.43

 

 

(26.4

)

 

41.23

 

 

(59.8

)

Hampton by Hilton

 

51.2

 

 

(27.0

)

 

98.62

 

 

(20.2

)

 

50.46

 

 

(47.8

)

Tru by Hilton

 

55.6

 

 

(17.5

)

 

90.00

 

 

(18.0

)

 

50.08

 

 

(37.7

)

Homewood Suites by Hilton

 

62.2

 

 

(21.6

)

 

110.02

 

 

(22.4

)

 

68.41

 

 

(42.4

)

Home2 Suites by Hilton

 

63.4

 

 

(17.2

)

 

99.37

 

 

(16.4

)

 

63.02

 

 

(34.2

)

System-wide

 

42.5

 

 

(36.0

)

 

105.87

 

 

(26.0

)

 

44.95

 

 

(59.9

)

 

 

Nine Months Ended September 30,

 

 

Occupancy

 

ADR

 

RevPAR

 

 

2020

 

vs. 2019

 

2020

 

vs. 2019

 

2020

 

vs. 2019

Waldorf Astoria Hotels & Resorts

 

30.4

%

 

(41.5

)% pts.

 

$

350.64

 

 

(8.4

)%

 

$

106.57

 

 

(61.3

)%

Conrad Hotels & Resorts

 

32.2

 

 

(43.7

)

 

206.08

 

 

(21.9

)

 

66.32

 

 

(66.9

)

Canopy by Hilton

 

30.6

 

 

(40.9

)

 

163.25

 

 

(18.8

)

 

49.98

 

 

(65.2

)

Hilton Hotels & Resorts

 

32.1

 

 

(43.9

)

 

143.73

 

 

(15.3

)

 

46.07

 

 

(64.2

)

Curio Collection by Hilton

 

31.4

 

 

(36.8

)

 

175.13

 

 

(14.2

)

 

55.02

 

 

(60.5

)

DoubleTree by Hilton

 

35.3

 

 

(38.9

)

 

111.55

 

 

(13.7

)

 

39.32

 

 

(58.9

)

Tapestry Collection by Hilton

 

41.3

 

 

(30.1

)

 

115.45

 

 

(23.9

)

 

47.65

 

 

(56.0

)

Embassy Suites by Hilton

 

38.0

 

 

(41.2

)

 

139.63

 

 

(15.8

)

 

52.99

 

 

(59.6

)

Hilton Garden Inn

 

40.7

 

 

(35.3

)

 

107.24

 

 

(18.0

)

 

43.59

 

 

(56.2

)

Hampton by Hilton

 

44.8

 

 

(30.1

)

 

103.39

 

 

(15.0

)

 

46.30

 

 

(49.2

)

Tru by Hilton

 

46.2

 

 

(21.0

)

 

90.22

 

 

(14.7

)

 

41.72

 

 

(41.4

)

Homewood Suites by Hilton

 

56.2

 

 

(25.1

)

 

116.97

 

 

(16.9

)

 

65.71

 

 

(42.6

)

Home2 Suites by Hilton

 

55.5

 

 

(22.1

)

 

102.28

 

 

(13.2

)

 

56.80

 

 

(37.9

)

System-wide

 

40.4

 

 

(35.4

)

 

118.23

 

 

(17.3

)

 

47.74

 

 

(55.9

)

     

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY SEGMENT

(unaudited)

     

 

 

Three Months Ended September 30,

 

 

Occupancy

 

ADR

 

RevPAR

 

 

2020

 

vs. 2019

 

2020

 

vs. 2019

 

2020

 

vs. 2019

Management and franchise

 

42.8

%

 

(35.5

)% pts.

 

$

105.43

 

 

(25.7

)%

 

$

45.14

 

 

(59.4

)%

Ownership(1)

 

24.2

 

 

(59.2

)

 

146.87

 

 

(25.7

)

 

35.50

 

 

(78.5

)

System-wide

 

42.5

 

 

(36.0

)

 

105.87

 

 

(26.0

)

 

44.95

 

 

(59.9

)

     
     

 

 

Nine Months Ended September 30,

 

 

Occupancy

 

ADR

 

RevPAR

 

 

2020

 

vs. 2019

 

2020

 

vs. 2019

 

2020

 

vs. 2019

Management and franchise

 

40.6

%

 

(35.1

)% pts.

 

$

117.74

 

 

(17.0

)%

 

$

47.86

 

 

(55.5

)%

Ownership(1)

 

26.7

 

 

(51.0

)

 

156.96

 

 

(18.7

)

 

41.88

 

 

(72.1

)

System-wide

 

40.4

 

 

(35.4

)

 

118.23

 

 

(17.3

)

 

47.74

 

 

(55.9

)

____________

(1)

 

Includes owned and leased hotels, as well as hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

                 

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of September 30, 2020

                 

 

 

Owned / Leased(1)

 

Managed

 

Franchised

 

Total

 

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Waldorf Astoria Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

14

 

 

5,913

 

 

 

 

 

 

14

 

 

5,913

 

Americas (excluding U.S.)

 

 

 

 

 

2

 

 

257

 

 

 

 

 

 

2

 

 

257

 

Europe

 

2

 

 

463

 

 

4

 

 

898

 

 

 

 

 

 

6

 

 

1,361

 

Middle East & Africa

 

 

 

 

 

5

 

 

1,224

 

 

 

 

 

 

5

 

 

1,224

 

Asia Pacific

 

 

 

 

 

5

 

 

1,014

 

 

 

 

 

 

5

 

 

1,014

 

LXR Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Americas (excluding U.S.)

 

 

 

 

 

 

 

 

 

1

 

 

76

 

 

1

 

 

76

 

Europe

 

 

 

 

 

2

 

 

383

 

 

 

 

 

 

2

 

 

383

 

Middle East & Africa

 

 

 

 

 

 

 

 

 

1

 

 

234

 

 

1

 

 

234

 

Conrad Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

6

 

 

2,211

 

 

1

 

 

225

 

 

7

 

 

2,436

 

Americas (excluding U.S.)

 

 

 

 

 

2

 

 

458

 

 

 

 

 

 

2

 

 

458

 

Europe

 

 

 

 

 

4

 

 

1,155

 

 

 

 

 

 

4

 

 

1,155

 

Middle East & Africa

 

1

 

 

614

 

 

2

 

 

993

 

 

 

 

 

 

3

 

 

1,607

 

Asia Pacific

 

1

 

 

164

 

 

21

 

 

6,138

 

 

1

 

 

659

 

 

23

 

 

6,961

 

Canopy by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

 

 

 

 

18

 

 

3,030

 

 

18

 

 

3,030

 

Americas (excluding U.S.)

 

 

 

 

 

1

 

 

174

 

 

 

 

 

 

1

 

 

174

 

Europe

 

 

 

 

 

 

 

 

 

2

 

 

263

 

 

2

 

 

263

 

Middle East & Africa

 

 

 

 

 

1

 

 

200

 

 

 

 

 

 

1

 

 

200

 

Asia Pacific

 

 

 

 

 

2

 

 

329

 

 

 

 

 

 

2

 

 

329

 

Hilton Hotels & Resorts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

62

 

 

46,081

 

 

176

 

 

54,112

 

 

238

 

 

100,193

 

Americas (excluding U.S.)

 

1

 

 

405

 

 

26

 

 

9,446

 

 

21

 

 

7,096

 

 

48

 

 

16,947

 

Europe

 

47

 

 

13,137

 

 

46

 

 

15,229

 

 

40

 

 

10,919

 

 

133

 

 

39,285

 

Middle East & Africa

 

5

 

 

1,998

 

 

40

 

 

13,086

 

 

2

 

 

1,415

 

 

47

 

 

16,499

 

Asia Pacific

 

5

 

 

2,999

 

 

101

 

 

36,163

 

 

6

 

 

2,203

 

 

112

 

 

41,365

 

Curio Collection by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

6

 

 

2,485

 

 

46

 

 

9,190

 

 

52

 

 

11,675

 

Americas (excluding U.S.)

 

 

 

 

 

2

 

 

99

 

 

8

 

 

825

 

 

10

 

 

924

 

Europe

 

 

 

 

 

5

 

 

520

 

 

15

 

 

1,846

 

 

20

 

 

2,366

 

Middle East & Africa

 

 

 

 

 

4

 

 

685

 

 

1

 

 

356

 

 

5

 

 

1,041

 

Asia Pacific

 

 

 

 

 

4

 

 

773

 

 

2

 

 

248

 

 

6

 

 

1,021

 

DoubleTree by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

32

 

 

10,874

 

 

336

 

 

77,571

 

 

368

 

 

88,445

 

Americas (excluding U.S.)

 

 

 

 

 

2

 

 

306

 

 

34

 

 

6,680

 

 

36

 

 

6,986

 

Europe

 

 

 

 

 

14

 

 

3,525

 

 

99

 

 

17,000

 

 

113

 

 

20,525

 

Middle East & Africa

 

 

 

 

 

13

 

 

3,396

 

 

5

 

 

567

 

 

18

 

 

3,963

 

Asia Pacific

 

 

 

 

 

63

 

 

17,277

 

 

3

 

 

1,072

 

 

66

 

 

18,349

 

Tapestry Collection by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

 

 

 

 

38

 

 

4,910

 

 

38

 

 

4,910

 

Americas (excluding U.S.)

 

 

 

 

 

 

 

 

 

2

 

 

190

 

 

2

 

 

190

 

Embassy Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

41

 

 

10,924

 

 

209

 

 

46,869

 

 

250

 

 

57,793

 

Americas (excluding U.S.)

 

 

 

 

 

3

 

 

667

 

 

5

 

 

1,336

 

 

8

 

 

2,003

 

Motto by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

 

 

 

 

1

 

 

245

 

 

1

 

 

245

 

Hilton Garden Inn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

4

 

 

425

 

 

691

 

 

95,700

 

 

695

 

 

96,125

 

Americas (excluding U.S.)

 

 

 

 

 

11

 

 

1,571

 

 

44

 

 

6,829

 

 

55

 

 

8,400

 

Europe

 

 

 

 

 

20

 

 

3,763

 

 

53

 

 

8,788

 

 

73

 

 

12,551

 

Middle East & Africa

 

 

 

 

 

15

 

 

3,272

 

 

2

 

 

271

 

 

17

 

 

3,543

 

Asia Pacific

 

 

 

 

 

32

 

 

6,766

 

 

 

 

 

 

32

 

 

6,766

 

Hampton by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

30

 

 

3,717

 

 

2,242

 

 

220,875

 

 

2,272

 

 

224,592

 

Americas (excluding U.S.)

 

 

 

 

 

14

 

 

1,786

 

 

103

 

 

12,450

 

 

117

 

 

14,236

 

Europe

 

 

 

 

 

16

 

 

2,688

 

 

73

 

 

11,236

 

 

89

 

 

13,924

 

Middle East & Africa

 

 

 

 

 

3

 

 

723

 

 

 

 

 

 

3

 

 

723

 

Asia Pacific

 

 

 

 

 

 

 

 

 

139

 

 

23,425

 

 

139

 

 

23,425

 

Tru by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

 

 

 

 

159

 

 

15,462

 

 

159

 

 

15,462

 

Americas (excluding U.S.)

 

 

 

 

 

 

 

 

 

1

 

 

90

 

 

1

 

 

90

 

Homewood Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

9

 

 

971

 

 

475

 

 

54,171

 

 

484

 

 

55,142

 

Americas (excluding U.S.)

 

 

 

 

 

3

 

 

406

 

 

22

 

 

2,457

 

 

25

 

 

2,863

 

Home2 Suites by Hilton

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

 

 

 

 

3

 

 

313

 

 

428

 

 

44,795

 

 

431

 

 

45,108

 

Americas (excluding U.S.)

 

 

 

 

 

 

 

 

 

7

 

 

753

 

 

7

 

 

753

 

Other

 

 

 

 

 

5

 

 

2,530

 

 

4

 

 

1,293

 

 

9

 

 

3,823

 

Hotels

 

62

 

 

19,780

 

 

700

 

 

221,814

 

 

5,516

 

 

747,732

 

 

6,278

 

 

989,326

 

Hilton Grand Vacations

 

 

 

 

 

 

 

 

 

55

 

 

8,956

 

 

55

 

 

8,956

 

Total

 

62

 

 

19,780

 

 

700

 

 

221,814

 

 

5,571

 

 

756,688

 

 

6,333

 

 

998,282

 

__________

(1)

 

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

           

HILTON WORLDWIDE HOLDINGS INC.

CAPITAL EXPENDITURES AND CONTRACT ACQUISITION COSTS

(unaudited, dollars in millions)

           

 

 

Three Months Ended

 

 

 

 

 

September 30,

 

Increase / (Decrease)

 

 

2020

 

2019

 

$

 

%

Capital expenditures for property and equipment(1)

 

$

8

 

 

$

20

 

 

(12

)

 

(60.0

)

Capitalized software costs(2)

 

5

 

 

35

 

 

(30

)

 

(85.7

)

Total capital expenditures

 

13

 

 

55

 

 

(42

)

 

(76.4

)

Contract acquisition costs

 

14

 

 

6

 

 

8

 

 

NM(3)

Total capital expenditures and contract acquisition costs

 

$

27

 

 

$

61

 

 

(34

)

 

(55.7

)

           
           

 

 

Nine Months Ended

 

 

 

 

 

September 30,

 

Increase / (Decrease)

 

 

2020

 

2019

 

$

 

%

Capital expenditures for property and equipment(1)

 

$

38

 

 

$

66

 

 

(28

)

 

(42.4

)

Capitalized software costs(2)

 

38

 

 

79

 

 

(41

)

 

(51.9

)

Total capital expenditures

 

76

 

 

145

 

 

(69

)

 

(47.6

)

Contract acquisition costs

 

37

 

 

49

 

 

(12

)

 

(24.5

)

Total capital expenditures and contract acquisition costs

 

$

113

 

 

$

194

 

 

(81

)

 

(41.8

)

____________
(1)  

Includes expenditures for hotels, corporate and other property and equipment, of which $3 million were indirectly reimbursed by hotel owners for the three months ended September 30, 2020 and 2019, and $10 million and $9 million for the nine months ended September 30, 2020 and 2019, respectively. Excludes expenditures for furniture, fixtures and equipment ("FF&E") replacement reserves of $18 million and $13 million for the three months ended September 30, 2020 and 2019, respectively, and $39 million and $42 million for the nine months ended September 30, 2020 and 2019, respectively.

(2)  

Includes $4 million and $28 million of expenditures that were indirectly reimbursed by hotel owners for the three months ended September 30, 2020 and 2019, respectively, and $31 million and $64 million for the nine months ended September 30, 2020 and 2019, respectively.

(3)  

Fluctuation in terms of percentage change is not meaningful.

         

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(unaudited, in millions, except per share data)

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Net income (loss) attributable to Hilton stockholders, as reported

 

$

(79

)

 

$

288

 

 

$

(491

)

 

$

706

 

Diluted EPS, as reported

 

$

(0.28

)

 

$

1.00

 

 

$

(1.76

)

 

$

2.42

 

Special items:

 

 

 

 

 

 

 

 

Net other expenses from managed and franchised properties

 

$

44

 

 

$

9

 

 

$

281

 

 

$

21

 

Purchase accounting amortization(1)

 

47

 

 

50

 

 

143

 

 

152

 

FF&E replacement reserves

 

18

 

 

13

 

 

39

 

 

42

 

Asset dispositions(2)

 

 

 

(80

)

 

 

 

(79

)

Reorganization costs

 

 

 

 

 

38

 

 

 

Impairment losses

 

9

 

 

 

 

136

 

 

 

Financing transactions(3)

 

 

 

3

 

 

 

 

11

 

Other adjustments(4)

 

14

 

 

3

 

 

39

 

 

12

 

Total special items before tax

 

132

 

 

(2

)

 

676

 

 

159

 

Income tax benefit (expense) on special items

 

(36

)

 

15

 

 

(130

)

 

(20

)

Total special items after tax

 

$

96

 

 

$

13

 

 

$

546

 

 

$

139

 

 

 

 

 

 

 

 

 

 

Net income, adjusted for special items

 

$

17

 

 

$

301

 

 

$

55

 

 

$

845

 

Diluted EPS, adjusted for special items

 

$

0.06

 

 

$

1.05

 

 

$

0.20

 

 

$

2.90

 

____________

(1)

 

Represents the amortization of intangible assets that were recorded at fair value in October 2007 when the Company became a wholly owned subsidiary of affiliates of The Blackstone Group Inc.

(2)

 

Includes the gain on sale of the Hilton Odawara Resort & Spa, which was recognized in gain on sale of assets, net, and severance costs recognized in general and administrative expenses related to the 2015 sale of the Waldorf Astoria New York.

(3)

 

Includes expenses recognized in connection with the June 2019 refinancings and repayments of the senior secured credit facilities that were included in other non-operating income (loss), net.

(4)

 

Includes costs recognized for the settlement of a dispute with an owner of a managed hotel, which was recognized in other expenses for the three and nine months ended September 30, 2020 and, for the nine months ended September 30, 2020, also includes losses related to the disposal of an investment and a loan guarantee for a franchised hotel, which were recognized in other non-operating income (loss), net. Includes a loss on the disposal of a real estate investment recognized in other non-operating income (loss), net for the three and nine months ended September 30, 2019 and, for the nine months ended September 30, 2019, also includes impairment losses recognized in other expenses.

         

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(unaudited, dollars in millions)

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Net income (loss)

 

$

(81

)

 

$

290

 

 

$

(495

)

 

$

710

 

Interest expense

 

116

 

 

105

 

 

316

 

 

304

 

Income tax expense (benefit)

 

(33

)

 

131

 

 

(80

)

 

291

 

Depreciation and amortization

 

90

 

 

86

 

 

269

 

 

256

 

EBITDA

 

92

 

 

612

 

 

10

 

 

1,561

 

Gain on sale of assets, net

 

 

 

(81

)

 

 

 

(81

)

Loss (gain) on foreign currency transactions

 

12

 

 

(7

)

 

16

 

 

(4

)

FF&E replacement reserves

 

18

 

 

13

 

 

39

 

 

42

 

Share-based compensation expense

 

25

 

 

42

 

 

37

 

 

123

 

Reorganization costs

 

 

 

 

 

38

 

 

 

Impairment losses

 

9

 

 

 

 

136

 

 

 

Amortization of contract acquisition costs

 

7

 

 

7

 

 

22

 

 

21

 

Net other expenses from managed and franchised properties

 

44

 

 

9

 

 

281

 

 

21

 

Other adjustment items(1)

 

17

 

 

10

 

 

59

 

 

39

 

Adjusted EBITDA

 

$

224

 

 

$

605

 

 

$

638

 

 

$

1,722

 

____________

(1)

 

Includes severance not related to the reorganization and other items. The three and nine months ended September 30, 2020 also include costs recognized for the settlement of a dispute with an owner of a managed hotel. Additionally, the nine months ended September 30, 2020 include losses related to the disposal of an investment and a loan guarantee for a franchised hotel. The three and nine months ended September 30, 2019 also include expenses recognized in connection with refinancings and repayments of the senior secured credit facilities.

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30,

 

September 30,

 

 

2020

 

2019

 

2020

 

2019

Total revenues, as reported

 

$

933

 

 

$

2,395

 

 

$

3,417

 

 

$

7,083

 

Add: amortization of contract acquisition costs

 

7

 

 

7

 

 

22

 

 

21

 

Less: other revenues from managed and franchised properties

 

(548

)

 

(1,434

)

 

(2,201

)

 

(4,263

)

Total revenues, as adjusted

 

$

392

 

 

$

968

 

 

$

1,238

 

 

$

2,841

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

224

 

 

$

605

 

 

$

638

 

 

$

1,722

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

57.1

%

 

62.5

%

 

51.5

%

 

60.6

%

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO

(unaudited, dollars in millions)

       

 

September 30,

 

December 31,

 

2020

 

2019

Long-term debt, including current maturities

$

10,490

 

 

$

7,993

 

Add: unamortized deferred financing costs and discount

87

 

 

83

 

Long-term debt, including current maturities and excluding unamortized deferred financing costs and discount

10,577

 

 

8,076

 

Add: Hilton's share of unconsolidated affiliate debt, excluding unamortized deferred financing costs

8

 

 

2

 

Less: cash and cash equivalents

(3,405

)

 

(538

)

Less: restricted cash and cash equivalents

(63

)

 

(92

)

Net debt

$

7,117

 

 

$

7,448

 

             
             

 

 

Nine Months Ended

 

Year Ended

 

TTM(1)

 

 

September 30,

 

December 31,

 

September 30,

 

 

2020

 

2019

 

2019

 

2020

Net income (loss)

 

$

(495

)

 

$

710

 

 

$

886

 

 

$

(319

)

Interest expense

 

316

 

 

304

 

 

414

 

 

426

 

Income tax expense (benefit)

 

(80

)

 

291

 

 

358

 

 

(13

)

Depreciation and amortization

 

269

 

 

256

 

 

346

 

 

359

 

EBITDA

 

10

 

 

1,561

 

 

2,004

 

 

453

 

Gain on sale of assets, net

 

 

 

(81

)

 

(81

)

 

 

Loss (gain) on foreign currency transactions

 

16

 

 

(4

)

 

2

 

 

22

 

FF&E replacement reserves

 

39

 

 

42

 

 

59

 

 

56

 

Share-based compensation expense

 

37

 

 

123

 

 

154

 

 

68

 

Reorganization costs

 

38

 

 

 

 

 

 

38

 

Impairment losses

 

136

 

 

 

 

 

 

136

 

Amortization of contract acquisition costs

 

22

 

 

21

 

 

29

 

 

30

 

Net other expenses from managed and franchised properties

 

281

 

 

21

 

 

77

 

 

337

 

Other adjustment items(2)

 

59

 

 

39

 

 

64

 

 

84

 

Adjusted EBITDA

 

$

638

 

 

$

1,722

 

 

$

2,308

 

 

$

1,224

 

 

 

 

 

 

 

 

 

 

Net debt

 

 

 

 

 

 

 

$

7,117

 

 

 

 

 

 

 

 

 

 

Net debt to Adjusted EBITDA ratio

 

 

 

 

 

 

 

5.8

 

____________

(1)

 

Trailing twelve months ("TTM") September 30, 2020 is calculated as the nine months ended September 30, 2020 plus the year ended December 31, 2019 less the nine months ended September 30, 2019.

(2)

 

Includes severance not related to the reorganization and other items. The nine months ended September 30, 2020 also includes costs or losses recognized related to the settlement of a dispute with an owner of a managed hotel, the disposal of an investment and a loan guarantee for a franchised hotel. The nine months ended September 30, 2019 and year ended December 31, 2019 also include expenses recognized in connection with refinancings and repayments of the senior secured credit facilities and the year ended December 31, 2019 also includes impairment losses.

HILTON WORLDWIDE HOLDINGS INC.
DEFINITIONS

Trailing Twelve Month Financial Information

This press release includes certain unaudited financial information for the TTM period ended September 30, 2020, which is calculated as the nine months ended September 30, 2020 plus the year ended December 31, 2019 less the nine months ended September 30, 2019. This presentation is not in accordance with GAAP. However, the Company believes that this presentation provides useful information to investors regarding its recent financial performance, and it views this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess its historical results. In addition, the Company’s management uses TTM information to evaluate the Company’s financial performance for ongoing planning purposes.

The COVID-19 pandemic had a material adverse impact on the Company's results for the three and nine months ended September 30, 2020, and the Company expects it to continue to have a material adverse impact on the results in future periods. Management is making estimates and judgments in light of the circumstances, and this interim period, as well as upcoming periods, are unlikely to be comparable to past performance or indicative of future performance. As such, TTM information may not currently be useful for projecting future operating results.

Net Income, Adjusted for Special Items, and Diluted EPS, Adjusted for Special Items

Net income, adjusted for special items, and diluted earnings per share ("EPS"), adjusted for special items, are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. In addition, the Company's definition of net income, adjusted for special items, and diluted EPS, adjusted for special items, may not be comparable to similarly titled measures of other companies. Net income, adjusted for special items, and diluted 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.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

Earnings (loss) before interest expense, taxes and depreciation and amortization ("EBITDA"), presented herein, reflects net income (loss), excluding interest expense, income tax benefit (expense) and depreciation and amortization.

Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated equity investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) FF&E replacement reserves required under certain lease agreements; (v) reorganization, severance, relocation and other related expenses; (vi) share-based compensation; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) the net effect of reimbursable costs included in other revenues and other expenses from managed and franchised properties; and (x) other items.

Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenues, adjusted to exclude the amortization of contract acquisition costs and other revenues from managed and franchised properties.

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. Additionally, these measures exclude certain items that can vary widely across different industries and among competitors within the Company's industry. For instance, interest expense and income taxes are dependent on company specifics, including, among other things, capital structure and operating jurisdictions, respectively, and, therefore, could vary significantly across companies. Depreciation and amortization, as well as amortization of contract acquisition costs, are dependent upon company policies, including the method of acquiring and depreciating assets and the useful lives that are used. For Adjusted EBITDA, the Company also excludes items such as: (i) FF&E replacement reserves for leased hotels to be consistent with the treatment of FF&E for owned hotels, where it is capitalized and depreciated over the life of the FF&E; (ii) share-based compensation expense (benefit), as this could vary widely among companies due to the different plans in place and the usage of them; (iii) the net effect of the Company's cost reimbursement revenues and reimbursed expenses, as the Company contractually does not operate the related programs to generate a profit over the terms of the respective contracts; and (iv) other items, including reorganization and related severance costs, that are not core to the Company's operations and are not reflective of the Company's operating performance.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not recognized terms under GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. The Company's definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies and may have limitations as analytical tools.

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 discount and (ii) the Company's share of unconsolidated affiliate debt, excluding unamortized deferred financing costs; reduced by: (a) cash and cash equivalents and (b) restricted cash and cash equivalents. Net debt should not be considered as a substitute to debt presented in accordance with GAAP. Net debt may not be comparable to a similarly titled measure of other companies. 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 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 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 type 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 were not available.

Of the 6,278 hotels in the Company's system as of September 30, 2020, 4,996 hotels were classified as comparable hotels. The 1,282 non-comparable hotels included 152 hotels, or approximately two 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 otherwise not available.

When considering business interruption in the context of the Company's definition of comparable hotels, any hotel that had completely or partially suspended operations on a temporary basis at any point during the nine months ended September 30, 2020 as a result of the COVID-19 pandemic was considered to be part of the definition of comparable hotels. Despite these temporary suspensions of hotel operations, Hilton believes that including these hotels within occupancy, average daily rate and revenue per available room, reflects the underlying results of the business for the three and nine months ended September 30, 2020.

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 for a given period. 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 pricing levels as demand for hotel rooms increases or decreases.

Average Daily Rate ("ADR")

ADR represents hotel room revenue divided by the total number of room nights sold for 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 charged to customers have a different effect on overall revenues and incremental profitability than changes in occupancy, as described above.

Revenue per Available Room ("RevPAR")

RevPAR is calculated by dividing hotel room revenue by the 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, as previously described: 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, unless otherwise noted. As such, comparisons of these hotel operating statistics for the three and nine months ended September 30, 2020 and 2019 use the exchange rates for the three and nine months ended September 30, 2020, respectively.

SOURCE Hilton

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