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Hilton (HLT) Q1 Earnings & Revenues Miss Estimates, Stock Down

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Hilton Worldwide Holdings Inc. (HLT - Free Report) reported dismal first-quarter 2021 results, wherein both earnings and revenues not only missed the Zacks Consensus Estimate but also declined on a year-over-year basis. Notably, the company’s operations were negatively impacted by strict travel restrictions due to resurgence in COVID-19 cases particularly across Europe and Asia Pacific region. Following the results, the company’s shares declined 2.2% in pre-market trading session on May 5.

Christopher J. Nassetta, president & CEO of Hilton, said, “We are pleased with our first quarter results. While rising COVID-19 cases and tightened travel restrictions, particularly across Europe and our Asia Pacific region, weighed on demand in January and February, we saw meaningful improvement in March and April. We expect this positive momentum to continue as vaccines are more widely distributed and our customers feel safe traveling again.”

Q1 in Detail

In the quarter under review, Hilton reported adjusted earnings per share of 2 cents, which lagged the Zacks Consensus Estimate of 5 cents. In the prior-year quarter, the company reported adjusted earnings per share 74 cents.

Quarterly revenues of $874 million missed the consensus mark of $953 million. Moreover, the top line declined 54.5% from the year-ago quarter. Both the top and the bottom lines were negatively impacted by the coronavirus pandemic.

RevPAR and Adjusted EBITDA

In the quarter under review, system-wide comparable revenue per available room (RevPAR) slumped 38.4% on a currency-neutral basis on account of decline in occupancy and average daily rate (ADR). The downtrend was due to re-imposed travel restrictions and re-suspensions of hotel operations (particularly in Europe and Asia Pacific region), owing to rise in coronavirus cases.

During the quarter under review, fee revenues declined 34%. The company announced that its operations of nearly 275 properties mostly located in the United States and Europe were suspended for some period during the quarter.

Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) during the first quarter was $198 million compared with $363 million in the prior-year quarter.

Cash, Debt and Share Repurchase

As of Mar 31, 2021, cash and cash equivalent balance (inclusive of restricted cash) amounted to $2,447 million. The company had $10.1 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 3.66%.

Business Updates

Notably, Hilton opened 105 new hotels in first-quarter 2021. It also achieved net unit growth of nearly 13,100 rooms. During the quarter, the company marked the opening of 100th Curio Collection by Hilton and its 50th Tapestry Collection by Hilton.

As of Mar 31, 2021, Hilton's development pipeline comprised more than 2,570 hotels, with nearly 399,000 rooms across 114 countries and territories — including 31 countries and territories where it currently does not have any running hotels. Moreover, 241,000 rooms in the development pipeline were located outside the United States and 204,000 rooms were under construction.

As of Apr 28, 2021, 97% of Hilton's global hotel properties were open.

Hilton, which shares space with Marriott International, Inc. (MAR - Free Report) , Choice Hotels International (CHH - Free Report) and Hyatt Hotels Corporation (H - Free Report) , currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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