Hilton Reports 4Q Loss Of $225 Million
Hilton reported a loss of $225 million for the fourth quarter of 2020 and $720 million for the year.
“Our fourth quarter results were largely in line with our expectations as rising COVID-19 cases and tightening travel restrictions disrupted the positive momentum we saw throughout the summer and fall,” said Christopher J. Nassetta, president/CEO of Hilton. “Yet even with a challenging environment, we celebrated our one million room milestone during the quarter and achieved net unit growth of more than 5% for the year. We continued this momentum into 2021 with the opening of our 900th Hilton Garden Inn and the conversion of Oceana Santa Monica, which marked the U.S. debut of LXR. We expect our industry-leading brands to continue driving new development and conversion opportunities, enabling us to further grow our network and capture a disproportionate share of demand as travel resumes.”
On a global level, the pervasive impact of the COVID-19 pandemic began in late March, with its most significant adverse impact on occupancy and RevPAR in April. System-wide occupancy showed sequential month-over-month improvement from April through October and, in the fourth quarter, there was both occupancy and RevPAR improvement in the Americas (excluding U.S.), Middle East and Africa and Asia-Pacific regions. However, travel restrictions re-imposed in late 2020 resulted in additional temporary suspensions and, in some cases, re-suspensions of hotel operations, particularly in Europe, which led to further declines in occupancy and RevPAR in that region in the fourth quarter.
For the three months and year ended Dec. 31, 2020, system-wide comparable RevPAR decreased 59.2% and 56.7%, respectively, compared to the same periods in 2019, due to both occupancy and ADR decreases. Additionally, fee revenues decreased 50% and 51% during the three months and year ended Dec. 31, 2020, respectively, compared to the same periods in 2019. The decreases were due to the COVID-19 pandemic, which resulted in the complete or partial suspensions of hotel operations at approximately 20% of Hilton’s global hotel properties for some portion of the year ended Dec. 31, 2020. As of Feb. 10, 97% of Hilton’s global hotel properties were open, while approximately 220 hotels had temporarily suspended operations.
For the three months ended Dec. 31, 2020, diluted EPS was $(0.80) and diluted EPS, adjusted for special items, was $(0.10) compared to $0.61 and $1.00, respectively, for the three months ended Dec. 31, 2019. Net income (loss) and adjusted EBITDA were $(225) million and $204 million, respectively, for the three months ended Dec. 31, 2020, compared to $176 million and $586 million, respectively, for the three months ended Dec. 31, 2019.
For the year ended Dec. 31, 2020, diluted EPS was $(2.56) and diluted EPS, adjusted for special items, was $0.10 compared to $3.04 and $3.90, respectively, for the year ended Dec. 31, 2019. Net income (loss) and adjusted EBITDA were $(720) million and $842 million, respectively, for the year ended Dec. 31, 2020, compared to $886 million and $2,308 million, respectively, for the year ended Dec. 31, 2019.
In the fourth quarter of 2020, Hilton opened 154 new hotels totaling 22,900 rooms and achieved net unit growth of 20,900 rooms. During the full-year 2020, Hilton opened 414 new hotels totaling 55,600 rooms and achieved net unit growth of 47,400 rooms. Hilton opened the Waldorf Astoria Xiamen, Hilton’s 300th hotel in China, in December 2020, and continued to add to its luxury portfolio in 2021 with the opening of the Waldorf Astoria Monarch Beach Resort & Club.
As of Dec. 31, 2020, Hilton’s development pipeline totaled nearly 2,570 hotels consisting of more than 397,000 rooms throughout 116 countries and territories, including 31 countries and territories where Hilton does not currently have any open hotels. Additionally, of the rooms in the development pipeline, 233,000 rooms were located outside the U.S., and 204,000 rooms were under construction.
Balance Sheet and Liquidity
As of Dec. 31, 2020, Hilton had $10.6 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 3.77%. 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 3.72% and no maturities until 2024. Total cash and cash equivalents were $3,263 million as of Dec. 31, 2020, including $45 million of restricted cash and cash equivalents.
In January 2021, Hilton repaid $250 million of the outstanding debt balance under its senior secured revolving credit facility, resulting in an outstanding debt balance of $1.44 billion. In February 2021, Hilton issued $1.5 billion aggregate principal amount of 3.625% senior notes due 2032 and used the net proceeds to redeem $1.5 billion in aggregate principal amount of outstanding 5.125% senior notes due 2026. Giving effect to the January 2021 repayment on the revolving credit facility and the February 2021 issuance of the 2032 senior notes and redemption of the 2026 senior notes, Hilton’s weighted average interest rate on its long-term debt outstanding would have been lowered to 3.61%, or 3.56% excluding finance lease liabilities and other debt of Hilton’s consolidated variable interest entities, with the weighted average maturity extended by nearly one year.
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.