Hilton profit beats on higher room rates, shares rise

[February 13, 2019]   By Rama Venkat Raman

(Reuters) - Hilton Worldwide Holdings Inc reported a better-than-expected quarterly profit on Wednesday, as healthy travel demand helped the U.S. hotel operator boost room prices at a time when concerns linger around slowing global economic growth.

Shares of the owner of Waldorf Astoria and Conrad hotel chains were up 4.4 percent at $77.51 before the opening bell.

The hotel industry in the United States has thrived against the backdrop of a robust economy, allowing corporations to raise their travel budgets which helped hotel occupancy rates hit a record high last year.

Though both Hilton and larger rival Marriott International Inc have pointed to a deceleration in revenue growth per room in 2019, investors are closely monitoring the progress of trade talks between the United States and China. The trade issues, if resolved, could have a positive impact on business travel.

Hilton cut its 2019 outlook for growth in RevPAR - a key performance metric for the hotel industry - to a range of 1 percent to 3 percent, from an earlier forecast of an increase between 2 percent and 4 percent.

Analysts said Hilton's lowered outlook was expected.

"We believe the resetting of expectations sets an achievable hurdle and de-risks the stock for the near term," Jefferies analyst David Katz wrote in a note to clients.

Hilton's fourth-quarter occupancy rate in the United States, its biggest market, fell for the second consecutive quarter by 0.4 percentage points to 72 percent, while all international markets including Europe and Asia showed strong growth.

The company said overall RevPAR grew 2 percent in the latest quarter ended Dec. 31, primarily driven by increased average daily rate.

On an adjusted basis, Hilton earned 79 cents per share in the quarter, beating analysts' estimates of 69 cents, according to IBES data from Refinitiv.

Revenue rose 10.6 percent to $2.29 billion, beating Wall Street estimates of $2.27 billion.

(An interactive graphic on U.S. hotel metrics over past 12 years, click: https://tmsnrt.rs/2UWYIXy)

(Reporting by Rama Venkat and Ankit Ajmera in Bengaluru; Editing by Maju Samuel)

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