Hilton Worldwide Holdings and Choice Hotels International reported Q4 2020 earnings on Wednesday. Here are the hightlights:
Baird Equity Research said Hilton’s Q4 earnings came up short of expectations. “Relative to our modeling, the primary drivers of the earnings shortfall were a greater-than-expected loss within the ownership segment and below-the-line ‘other adjustment items’ that were a headwind…Systemwide RevPAR growth was flat sequentially but not unexpected, and the focus of investors is likely to be on the pace of the near-term fundamental recovery and management’s expectation for 2021 net unit growth and signings.”
Highlights include:
• Diluted EPS was US$.80 for the fourth quarter and US$2.56 for the full year, and diluted EPS, adjusted for special items, was US$.10 for the fourth quarter and $0.10 for the full year
• Net loss was US$225 million for the fourth quarter and US$720 million for the full year
• Adjusted EBITDA was US$204 million for the fourth quarter and US$842 million for the full year
• System-wide comparable RevPAR decreased 59.2% and 56.7% on a currency neutral basis for the fourth quarter and full year, respectively, from the same periods in 2019
• Approved 18,700 new rooms for development during the fourth quarter, bringing Hilton’s development pipeline to 397,000 rooms as of December 31, 2020
• Opened 22,900 rooms in the fourth quarter, reaching the one million room milestone and contributing to 47,400 net additional rooms in Hilton’s system for the full year, which represented approximately 5.1% net unit growth from December 31, 2019
Choice Hotels earnings also missed expectations, according to analysts. Baird Equity Research analysts said that Choice’s earnings were “mixed or short of expectations… despite RevPAR growth trends performing in line with or better than expected.” Baird added that RevPAR trends were boosted by strong performance within the extended-stay segment and added that, while shares could react negatively in the near term due to the headline earnings miss, “Choice’s business is recovering nicely and the balance sheet is on solid footing.”
Highlights include:
• Net income was US$7.9 million for fourth quarter and US$75.4 million for full year 2020, representing diluted earnings per share of US$0.14 and US$1.35, respectively
• Full year adjusted net income decreased 49% over the prior full year period to US$123.9 million
• Adjusted EBITDA for full year 2020 were US$241.1 million, a 35% decrease from the same period of 2019. Adjusted EBITDA for fourth quarter 2020 were US$54.7 million, a 35% decrease from fourth quarter 2019
• Domestic systemwide RevPAR change outperformed the total industry by nearly 26 percentage points, declining 25.1% for fourth quarter 2020, compared to the same period of the prior year, and improved by 370 basis points from third quarter 2020. Full year and fourth quarter 2020 RevPAR performance also exceeded the chain scale segments in which the company competes, as reported by STR
• Fourth quarter 2020 domestic RevPAR change outperformed the industry by an average of 26 percentage points per week, an approximately 600 basis points expansion since third quarter 2020
• The company achieved a number of major milestones in the execution of its long-term strategy to grow its presence in more revenue-intense segments and locations, including a return to unit growth for the Comfort brand family following the successful completion of its transformation, significant expansion of its extended stay portfolio and the continued growth of Cambria Hotels
• The company awarded 427 domestic franchise agreements in 2020, a 38% decrease compared to the prior year. Over 70% of the agreements awarded in 2020 were for conversion hotels and 28% were executed in the month of December