Market Overview

Hilton Reports Third Quarter Results, Raises Full Year Outlook

Share:

Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE:HLT)
today reported its third quarter 2017 results. All results herein
present the performance of Hilton giving effect to the spin-offs of Park
Hotels & Resorts Inc. ("Park") and Hilton Grand Vacations Inc. ("HGV")
on January 3, 2017 (the "spin-offs"), with the historical financial
results of Park and HGV reflected as discontinued operations.
Additionally, all share and share-related information presented herein
for periods prior to January 3, 2017 have been retrospectively adjusted
to reflect the 1-for-3 reverse stock split of Hilton's outstanding
common stock that occurred on January 3, 2017 (the "Reverse Stock
Split"). Highlights include:

This press release features multimedia. View the full release here:
http://www.businesswire.com/news/home/20171026005349/en/

  • Diluted EPS for the third quarter was $0.55 and diluted EPS,
    adjusted for special items, was $0.56, an increase of 37 percent from
    the third quarter of 2016 on a pro forma basis
  • Net income for the third quarter was $181 million
  • Adjusted EBITDA for the third quarter was $524 million, an increase
    of 11 percent from pro forma Adjusted EBITDA for the third quarter of
    2016
  • Adjusted EBITDA margin was 56.9 percent, an increase of 170 basis
    points from pro forma Adjusted EBITDA margin for the third quarter of
    2016
  • System-wide comparable RevPAR increased 1.3 percent on a currency
    neutral basis for the third quarter compared to the prior year
  • Added 12,000 net rooms in the third quarter
  • Approved 23,400 new rooms for development during the third quarter,
    growing Hilton's development pipeline to a record 335,000 rooms,
    representing 13 percent growth from September 30, 2016
  • Repurchased 4.3 million shares of Hilton common stock for an
    aggregate cost of $273 million during the third quarter, bringing
    total capital return year to date, including dividends, to
    approximately $840 million
  • Raised Adjusted EBITDA guidance for full year 2017 to between
    $1,920 million and $1,940 million, an increase of $30 million at the
    midpoint
  • Full year 2018 system-wide RevPAR is expected to increase between
    1.0 percent and 3.0 percent on a comparable and currency neutral basis
    compared to 2017; net unit growth is expected to be approximately 6.5
    percent

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton,
said, "We had another strong quarter, exceeding the high end of our
guidance for Adjusted EBITDA and diluted EPS, adjusted for special
items, and, as a result, we are increasing our full year outlook. We
approved nearly 24,000 rooms in the quarter, with approvals for the full
year expected to exceed last year's record level. Our development
pipeline now spans 13 more countries than our pipeline did a year ago,
with 104 countries and territories represented. Looking forward to 2018,
we expect stable to moderately improving fundamentals to drive RevPAR
growth of 1.0 percent to 3.0 percent and net unit growth of
approximately 6.5 percent for the year."

For the three and nine months ended September 30, 2017, system-wide
comparable RevPAR grew 1.3 percent and 2.1 percent, respectively, driven
by increases in both ADR and occupancy. In particular, strength at
Hilton's international hotels benefited results. Management fee and
franchise fee revenues increased in both periods as a result of
increases in RevPAR of 1.1 percent and 2.0 percent, respectively, at
comparable managed and franchised hotels, as well as from the addition
of new managed and franchised properties to Hilton's portfolio.

2017 vs. 2016 Pro Forma Results

For the three months ended September 30, 2017, diluted earnings per
share ("EPS") from continuing operations was $0.55 compared to $0.37 on
a pro forma basis for the three months ended September 30, 2016. Diluted
EPS, adjusted for special items, was $0.56 for the three months ended
September 30, 2017 compared to $0.41 on a pro forma basis for the three
months ended September 30, 2016. Income from continuing operations, net
of taxes was $181 million for the three months ended September 30, 2017
compared to $122 million on a pro forma basis for the three months ended
September 30, 2016. Adjusted EBITDA increased 11 percent to $524 million
for the three months ended September 30, 2017 compared to $470 million
on a pro forma basis for the three months ended September 30, 2016.
Management and franchise fees increased 11 percent compared to the pro
forma three months ended September 30, 2016.

For the nine months ended September 30, 2017, diluted EPS from
continuing operations was $1.28 compared to $1.45 on a pro forma basis
for the nine months ended September 30, 2016. Diluted EPS, adjusted for
special items, was $1.46 for the nine months ended September 30, 2017
compared to $1.05 on a pro forma basis for the nine months ended
September 30, 2016. Income from continuing operations, net of taxes was
$423 million for the nine months ended September 30, 2017 compared to
$482 million on a pro forma basis for the nine months ended September
30, 2016. Adjusted EBITDA increased 12 percent to $1,467 million for the
nine months ended September 30, 2017 compared to $1,309 million on a pro
forma basis for the nine months ended September 30, 2016. Management and
franchise fees increased 10 percent compared to the pro forma nine
months ended September 30, 2016.

2017 vs. 2016 Actual Results

For the three months ended September 30, 2017, diluted EPS from
continuing operations was $0.55 compared to $0.27 for the three months
ended September 30, 2016. Diluted EPS, adjusted for special items, was
$0.56 for the three months ended September 30, 2017 compared to $0.30
for the three months ended September 30, 2016. Income from continuing
operations, net of taxes was $181 million for the three months ended
September 30, 2017 compared to $89 million for the three months ended
September 30, 2016. Adjusted EBITDA was $524 million for the three
months ended September 30, 2017 compared to $415 million for the three
months ended September 30, 2016.

For the nine months ended September 30, 2017, diluted EPS from
continuing operations was $1.28 compared to $1.14 for the nine months
ended September 30, 2016. Diluted EPS, adjusted for special items, was
$1.46 for the nine months ended September 30, 2017 compared to $0.74 for
the nine months ended September 30, 2016. Income from continuing
operations, net of taxes was $423 million for the nine months ended
September 30, 2017 compared to $380 million for the nine months ended
September 30, 2016. Adjusted EBITDA was $1,467 million for the nine
months ended September 30, 2017 compared to $1,142 million for the nine
months ended September 30, 2016.

Development

In the third quarter of 2017, Hilton opened 99 hotels consisting of
14,500 rooms, achieving net unit growth of 12,000 rooms.

As of September 30, 2017, Hilton's development pipeline totaled over
335,000 rooms at 2,191 hotels throughout 104 countries and territories,
including 37 countries and territories where Hilton does not currently
have any open hotels. Nearly 172,000 rooms in the pipeline, or more than
half, were located outside the U.S. Additionally, over 171,000 rooms in
the pipeline, or more than half, were under construction.

Hilton continues to grow its newest brands with 18 percent of room
openings for the year through September 2017 under the Curio, Tapestry,
Home2 Suites and Tru brands.

Balance Sheet and Liquidity

As of September 30, 2017, Hilton had $6.7 billion of long-term debt
outstanding, excluding deferred financing costs and discount, with a
weighted average interest rate of 4.1 percent.

Total cash and cash equivalents were $796 million as of September 30,
2017, including $126 million of restricted cash and cash equivalents. No
borrowings were outstanding under the $1.0 billion revolving credit
facility as of September 30, 2017.

During the third quarter of 2017, Hilton repurchased 4.3 million shares
of common stock at a cost of approximately $273 million and an average
price per share of $63.23. From March 2017, when Hilton's share
repurchase program began, through October 2017, Hilton has repurchased
11.0 million shares for approximately $693 million at an average price
per share of $63.17.

In September 2017, Hilton paid a quarterly cash dividend of $0.15 per
share on shares of its common stock, for a total of $48 million. In
October 2017, Hilton's board of directors authorized a regular quarterly
cash dividend of $0.15 per share of common stock to be paid on or before
December 29, 2017 to holders of record of its common stock as of the
close of business on November 17, 2017.

Outlook

Share-based metrics in Hilton's outlook do not include the effect of
potential share repurchases.

Full Year 2017

  • System-wide RevPAR is expected to increase between 1.0 percent and 3.0
    percent on a comparable and currency neutral basis compared to 2016.
  • Diluted EPS, before special items, is projected to be between $1.68
    and $1.72.
  • Diluted EPS, adjusted for special items, is projected to be between
    $1.87 and $1.91.
  • Net income is projected to be between $556 million and $568 million.
  • Adjusted EBITDA is projected to be between $1,920 million and $1,940
    million.
  • Management and franchise fee revenue is projected to increase between
    8 percent and 10 percent compared to 2016 on a pro forma basis.
  • Capital expenditures, excluding amounts reimbursed by hotel owners,
    are expected to be between $150 million and $200 million.
  • Cash available for capital return is projected to be between $1.0
    billion and $1.1 billion.
  • General and administrative expenses are projected to be between $430
    million and $440 million, including approximately $30 million of
    transaction-related costs.
  • Net unit growth is expected to be approximately 50,000 rooms to 55,000
    rooms.

Fourth Quarter 2017

  • System-wide RevPAR is expected to increase between 1.0 percent and 3.0
    percent on a comparable and currency neutral basis compared to the
    fourth quarter of 2016.
  • Diluted EPS, before special items, is projected to be between $0.41
    and $0.45.
  • Diluted EPS, adjusted for special items, is projected to be between
    $0.41 and $0.45.
  • Net income is projected to be between $133 million and $145 million.
  • Adjusted EBITDA is projected to be between $453 million and $473
    million.
  • Management and franchise fee revenue is projected to increase between
    8 percent and 10 percent compared to the fourth quarter of 2016 on a
    pro forma basis.

Full Year 2018

For 2018, system-wide RevPAR is expected to increase between 1.0 percent
and 3.0 percent on a comparable and currency neutral basis compared to
2017. Given Hilton's strong development pipeline, unit growth should
continue to accelerate in 2018 as its global system of rooms is expected
to expand by approximately 6.5 percent on a net basis.

Conference Call

Hilton will host a conference call to discuss third quarter 2017
results on October 26, 2017 at 10:00 a.m. Eastern Time. Participants may
listen to the live webcast by logging on to the Hilton Investor
Relations website at http://ir.hilton.com/events-and-presentations.
A replay and transcript of the webcast will be available within 24 hours
after the live event at http://ir.hilton.com/financial-reporting/quarterly-results/2017.

Alternatively, participants may listen to the live call by dialing
1-888-317-6003 in the United States or 1-412-317-6061 internationally.
Please use the conference ID 4957281. 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 United States or 1-412-317-0088
internationally using the conference ID 10112571.

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 performance of Hilton's business, financial
results, liquidity and capital resources and other non-historical
statements, including the statements in the "Outlook" section of this
press release. In some cases, you can identify these forward-looking
statements 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 inherent to the
hospitality industry, macroeconomic factors beyond Hilton's control,
competition for hotel guests, management and franchise agreements, 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
United States of America ("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 the Annual Report on
Form 10-K for the fiscal year ended December 31, 2016, filed with the
Securities and Exchange Commission ("SEC"), as such factors may be
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; net debt to Adjusted EBITDA ratio; and trailing
twelve month financial information. See the schedules to this press
release including the "Definitions" section for additional information
and reconciliations of such non-GAAP financial measures.

Pro Forma Financial Information

This press release includes pro forma financial information for Hilton
adjusted to reflect the spin-offs, including: unaudited pro forma
condensed consolidated statements of operations; pro forma net income
and diluted EPS, adjusted for special items; pro forma Adjusted EBITDA;
pro forma Adjusted EBITDA margin; and pro forma net debt to Adjusted
EBITDA ratio. The unaudited pro forma financial information has been
prepared to reflect the spin-offs as if they had occurred on January 1,
2016. See "Definitions—Pro Forma Adjustments" for additional details.
The unaudited pro forma financial information is provided for
informational purposes only and is not necessarily indicative of what
Hilton's results of operations would actually have been had the
spin-offs occurred on the date indicated or what Hilton's results of
operations will be after giving effect to the completion of the
spin-offs.

In addition to the pro forma financial information herein, refer to
Hilton's Current Report on Form 8-K filed with the SEC on January 4,
2017 for additional information.

About Hilton

Hilton (NYSE:HLT) is a leading global hospitality company, with a
portfolio of 14 world-class brands comprising more than 5,100 properties
with nearly 838,000 rooms in 103 countries and territories. Hilton
is dedicated to fulfilling its mission to be the world's most hospitable
company by delivering exceptional experiences - every hotel, every
guest, every time. The Company's portfolio includes Hilton Hotels &
Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts,
Canopy by Hilton, Curio Collection by Hilton, DoubleTree by Hilton,
Tapestry Collection by Hilton, Embassy Suites by Hilton, Hilton Garden
Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2
Suites by Hilton and Hilton Grand Vacations. The Company also manages an
award-winning customer loyalty program, Hilton Honors. Hilton Honors
members who book directly through preferred Hilton channels have access
to instant benefits, including a flexible payment slider that allows
members to choose exactly how many Points to combine with money, an
exclusive member discount that can't be found anywhere else and free
standard Wi-Fi. Visit newsroom.hilton.com
for more information and connect with Hilton on facebook.com/hiltonnewsroom,
twitter.com/hiltonnewsroom,
linkedIn.com/company/hilton,
instagram.com/hiltonnewsroom
and youtube.com/hiltonnewsroom.

 

HILTON WORLDWIDE HOLDINGS INC.

EARNINGS RELEASE SCHEDULES

TABLE OF CONTENTS

 

 

Condensed Consolidated Statements of Operations and Pro Forma
Condensed Consolidated Statements of Operations

Comparable and Currency Neutral System-Wide Hotel Operating
Statistics

Property Summary

Capital Expenditures

Non-GAAP Financial Measures Reconciliations

Definitions

 
 

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)

 
 
    Three Months Ended September 30,
2017     2016
(as reported) (as reported)    

(pro forma

adjustments(1))

    (pro forma)
Revenues
Franchise fees $ 373 $ 314 $ 20 (a) $ 334
Base and other management fees 87 59 20 (a) 79
Incentive management fees 52 34 14 (a) 48
Owned and leased hotels 388 372 372
Other revenues   21     18         18  
921 797 54 851
Other revenues from managed and franchised properties   1,433     1,070     278   (b)   1,348  
Total revenues 2,354 1,867 332 2,199
 
Expenses
Owned and leased hotels 345 325 325
Depreciation and amortization 83 90 90
General and administrative 104 107 107
Other expenses   7     10         10  
539 532 532
Other expenses from managed and franchised properties   1,433     1,070     278   (b)   1,348  
Total expenses 1,972 1,602 278 1,880
 
Operating income 382 265 54 319
 
Interest expense (100 ) (97 ) (97 )
Gain (loss) on foreign currency transactions 2 (10 ) (10 )
Other non-operating income, net   5              
 
Income from continuing operations before income taxes 289 158 54 212
 
Income tax expense   (108 )   (69 )   (21 ) (c)   (90 )
 
Income from continuing operations, net of taxes 181 89 33 122
Income from discontinued operations, net of taxes       103         103  
Net income 181 192 33 225
Net income attributable to noncontrolling interests   (2 )   (5 )       (5 )
Net income attributable to Hilton stockholders $ 179   $ 187   $ 33   $ 220  
 
Weighted average shares outstanding(2)
Basic   322     329   (d)   329  
Diluted   325     331   (d)   330  
 
Earnings per share
Basic:
Net income from continuing operations per share $ 0.56 $ 0.27 $ 0.37  
Net income from discontinued operations per share       0.30  
Net income per share $ 0.56   $ 0.57  
 
Diluted:
Net income from continuing operations per share $ 0.55 $ 0.27 $ 0.37  
Net income from discontinued operations per share       0.30  
Net income per share $ 0.55   $ 0.57  
 
Cash dividends declared per share(2) $ 0.15   $ 0.21   $ 0.21  
 
___________

(1)

 

Pro forma adjustments include the effect of the spin-offs of Park
and HGV, excluding amounts reported as discontinued operations.
See "Definitions" for additional details.

(2)

Weighted average shares outstanding used in the computation of
basic and diluted earnings per share and cash dividends declared
per share for the three months ended September 30, 2016 were
adjusted to reflect the Reverse Stock Split.

 
 

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited, in millions, except per share data)

 
 
    Nine Months Ended September 30,
2017     2016
(as reported) (as reported)    

(pro forma

adjustments(1))

    (pro forma)
Revenues
Franchise fees $ 1,039 $ 878 $ 60 (a) $ 938
Base and other management fees 255 179 61 (a) 240
Incentive management fees 160 103 44 (a) 147
Owned and leased hotels 1,065 1,089 1,089
Other revenues   78     53         53  
2,597 2,302 165 2,467
Other revenues from managed and franchised properties   4,264     3,241     865   (b)   4,106  
Total revenues 6,861 5,543 1,030 6,573
 
Expenses
Owned and leased hotels 947 981 981
Depreciation and amortization 259 273 273
Impairment loss 15 15
General and administrative 326 287 287
Other expenses   41     39         39  
1,573 1,595 1,595
Other expenses from managed and franchised properties   4,264     3,241     865   (b)   4,106  
Total expenses 5,837 4,836 865 5,701
 
Gain on sales of assets, net 1 1
 
Operating income 1,024 708 165 873
 
Interest expense (304 ) (286 ) (286 )
Gain (loss) on foreign currency transactions 3 (36 ) (36 )
Loss on debt extinguishment (60 )
Other non-operating income, net   11     5         5  
 
Income from continuing operations before income taxes 674 391 165 556
 
Income tax expense   (251 )   (11 )   (63 ) (c)   (74 )
 
Income from continuing operations, net of taxes 423 380 102 482
Income from discontinued operations, net of taxes       366         366  
Net income 423 746 102 848
Net income attributable to noncontrolling interests   (4 )   (11 )       (11 )
Net income attributable to Hilton stockholders $ 419   $ 735   $ 102   $ 837  
 
Weighted average shares outstanding(2)
Basic   326     329   (d)   329  
Diluted   328     330   (d)   330  
 
Earnings per share
Basic:
Net income from continuing operations per share $ 1.29 $ 1.14 $ 1.45  
Net income from discontinued operations per share       1.09  
Net income per share $ 1.29   $ 2.23  
 
Diluted:
Net income from continuing operations per share $ 1.28 $ 1.14 $ 1.45  
Net income from discontinued operations per share       1.09  
Net income per share $ 1.28   $ 2.23  
 
Cash dividends declared per share(2) $ 0.45   $ 0.63   $ 0.63  
 
___________

(1)

  Pro forma adjustments include the effect of the spin-offs of Park
and HGV, excluding amounts reported as discontinued operations. See
"Definitions" for additional details.

(2)

Weighted average shares outstanding used in the computation of basic
and diluted earnings per share and cash dividends declared per share
for the nine months ended September 30, 2016 were adjusted to
reflect the Reverse Stock Split.
 
 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING
STATISTICS

BY REGION

(unaudited)

 
 
    Three Months Ended September 30,
Occupancy     ADR     RevPAR
2017     vs. 2016 2017     vs. 2016 2017     vs. 2016
U.S. 79.8 %

(0.4

)% pts.

$ 147.43 0.5 % $ 117.61 (0.1 )%
Americas (excluding U.S.) 76.6 1.6 128.52 1.2 98.46 3.4
Europe 81.8 3.7 148.74 3.2 121.65 8.0
Middle East & Africa 69.9 5.4 130.18 (7.6 ) 90.93 0.2
Asia Pacific 76.6 4.5 139.93 1.9 107.23 8.3
System-wide 79.3 0.5 145.80 0.6 115.68 1.3
 
 
 
Nine Months Ended September 30,
Occupancy ADR RevPAR
2017 vs. 2016 2017 vs. 2016 2017 vs. 2016
U.S. 77.4 %

% pts.

$ 147.37 1.0 % $ 114.07 1.0 %
Americas (excluding U.S.) 72.5 2.2 124.49 1.8 90.24 5.0
Europe 76.0 3.6 140.09 2.6 106.42 7.6
Middle East & Africa 65.9 4.8 145.07 (4.7 ) 95.61 2.7
Asia Pacific 72.5 5.4 138.14 (0.8 ) 100.17 7.1
System-wide 76.4 1.0 145.00 0.8 110.78 2.1
 
 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING
STATISTICS

BY BRAND

(unaudited)

 
 
    Three Months Ended September 30,
Occupancy     ADR     RevPAR
2017     vs. 2016 2017     vs. 2016 2017     vs. 2016
Waldorf Astoria Hotels & Resorts 64.9 % (2.5 )% pts. $ 297.47 3.5 % $ 192.93 (0.4 )%
Conrad Hotels & Resorts 78.8 4.4 240.06 4.2 189.16 10.3
Hilton Hotels & Resorts 79.3 1.2 166.63 0.2 132.11 1.7
Curio - A Collection by Hilton 75.4 3.5 179.57 (1.3 ) 135.33 3.5
DoubleTree by Hilton 77.6 0.7 136.45 0.1 105.86 1.0
Embassy Suites by Hilton 81.7 0.2 161.90 0.2 132.28 0.4
Hilton Garden Inn 79.4 0.3 135.85 0.2 107.84 0.7
Hampton by Hilton 79.1 (0.2 ) 126.11 1.1 99.81 0.9
Homewood Suites by Hilton 84.2 1.0 139.35 1.2 117.34 2.4
Home2 Suites by Hilton 84.4 2.6 120.13 1.1 101.34 4.3
System-wide 79.3 0.5 145.80 0.6 115.68 1.3
 
 
 
Nine Months Ended September 30,
Occupancy ADR RevPAR
2017 vs. 2016 2017 vs. 2016 2017 vs. 2016
Waldorf Astoria Hotels & Resorts 69.4 % (0.4 )% pts. $ 328.61 3.6 % $ 228.21 3.0 %
Conrad Hotels & Resorts 72.7 3.3 243.34 (0.1 ) 176.85 4.6
Hilton Hotels & Resorts 76.1 1.7 166.73 0.5 126.95 2.8
Curio - A Collection by Hilton 72.6 5.2 191.40 (0.4 ) 138.89 7.2
DoubleTree by Hilton 75.1 1.2 135.34 0.6 101.65 2.2
Embassy Suites by Hilton 80.2 0.5 163.08 0.9 130.77 1.5
Hilton Garden Inn 76.6 0.5 133.61 0.5 102.41 1.1
Hampton by Hilton 75.5 0.2 122.95 1.1 92.83 1.4
Homewood Suites by Hilton 81.3 1.3 137.34 0.7 111.65 2.4
Home2 Suites by Hilton 80.2 2.9 117.62 1.3 94.37 5.0
System-wide 76.4 1.0 145.00 0.8 110.78 2.1
 
 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING
STATISTICS

BY SEGMENT

(unaudited)

 
 
    Three Months Ended September 30,
Occupancy     ADR     RevPAR
2017     vs. 2016 2017     vs. 2016 2017     vs. 2016
Ownership(1) 82.2 % 0.9 % pts. $ 181.65 5.0 % $ 149.32 6.2 %
Management and franchise 79.2 0.5 144.60 0.5 114.59 1.1
System-wide 79.3 0.5 145.80 0.6 115.68 1.3
 
 
 
Nine Months Ended September 30,
Occupancy ADR RevPAR
2017 vs. 2016 2017 vs. 2016 2017 vs. 2016
Ownership(1) 77.7 % 2.1 % pts. $ 173.50 3.0 % $ 134.79 5.8 %
Management and franchise 76.4 0.9 144.07 0.7 110.01 2.0
System-wide 76.4 1.0 145.00 0.8 110.78 2.1
 
____________

(1)

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

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of September 30, 2017

 
 
Owned / Leased(1) Managed Franchised Total
Properties Rooms Properties Rooms Properties Rooms Properties Rooms
Waldorf Astoria Hotels & Resorts
U.S. 1 215 12 5,451 13 5,666
Americas (excluding U.S.) 1 142 1 984 2 1,126
Europe 2 463 4 898 6 1,361
Middle East & Africa 3 703 3 703
Asia Pacific 3 723 3 723
Conrad Hotels & Resorts
U.S. 4 1,287 1 319 5 1,606
Americas (excluding U.S.) 1 134 1 294 2 428
Europe 3 899 1 256 4 1,155
Middle East & Africa 1 614 3 1,076 4 1,690
Asia Pacific 1 164 15 4,630 2 776 18 5,570
Canopy by Hilton
Europe 1 112 1 112
Hilton Hotels & Resorts
U.S. 64 47,555 180 54,339 244 101,894
Americas (excluding U.S.) 1 405 25 9,235 17 5,469 43 15,109
Europe 55 14,933 53 16,595 32 8,609 140 40,137
Middle East & Africa 5 1,998 43 13,186 2 605 50 15,789
Asia Pacific 7 3,412 81 30,027 7 2,826 95 36,265
Curio - A Collection by Hilton
U.S. 4 1,981 25 5,661 29 7,642
Americas (excluding U.S.) 5 973 5 973
Europe 2 187 5 633 7 820
Middle East & Africa 1 201 1 201
Asia Pacific 1 266 1 266
DoubleTree by Hilton
U.S. 37 12,246 300 71,224 337 83,470
Americas (excluding U.S.) 5 1,035 19 3,833 24 4,868
Europe 11 2,899 80 13,635 91 16,534
Middle East & Africa 10 2,350 4 488 14 2,838
Asia Pacific 46 13,086 2 965 48 14,051
Tapestry Collection by Hilton
U.S. 1 58 1 58
Embassy Suites by Hilton
U.S. 44 11,568 186 42,164 230 53,732
Americas (excluding U.S.) 3 667 5 1,322 8 1,989
Hilton Garden Inn
U.S. 4 430 622 85,977 626 86,407
Americas (excluding U.S.) 7 930 36 5,594 43 6,524
Europe 21 3,870 36 5,906 57 9,776
Middle East & Africa 7 1,574 7 1,574
Asia Pacific 20 4,301 20 4,301
Hampton by Hilton
U.S. 49 6,048 2,077 202,593 2,126 208,641
Americas (excluding U.S.) 13 1,678 86 10,252 99 11,930
Europe 14 2,291 50 7,631 64 9,922
Asia Pacific 20 3,200 20 3,200
Tru by Hilton
U.S. 5 457 5 457
Homewood Suites by Hilton
U.S. 21 2,240 400 45,600 421 47,840
Americas (excluding U.S.) 2 219 17 1,920 19 2,139
Home2 Suites by Hilton
U.S. 176 18,139 176 18,139
Americas (excluding U.S.) 3 317 3 317
Other 2 888 3 760 5 1,648
Lodging 73 22,204 639 203,496 4,408 603,891 5,120 829,591
Hilton Grand Vacations 48 8,101 48 8,101
Total 73 22,204 639 203,496 4,456 611,992 5,168 837,692
 
____________

(1)

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

HILTON WORLDWIDE HOLDINGS INC.

CAPITAL EXPENDITURES

(unaudited, dollars in millions)

 
 
    Three Months Ended        
September 30, Increase / (Decrease)
2017     2016 $ %
Capital expenditures for property and equipment(1) $ 18 $ 13 5 38.5
Capitalized software costs(2) 16 18 (2 ) (11.1 )
Contract acquisition costs   19   17 2   11.8
Total capital expenditures $ 53 $ 48 5   10.4
 
 
 
Nine Months Ended
September 30, Increase / (Decrease)
2017 2016 $ %
Capital expenditures for property and equipment(1) $ 36 $ 42 (6 ) (14.3 )
Capitalized software costs(2) 45 50 (5 ) (10.0 )
Contract acquisition costs   51   35 16   45.7
Total capital expenditures $ 132 $ 127 5   3.9
 
____________

(1)

  Includes expenditures for hotels, corporate and other property and
equipment.

(2)

Includes $13 million and $9 million of expenditures that are
reimbursed by hotel owners for the three months ended September 30,
2017 and 2016, respectively, and $28 million and $27 million for the
nine months ended September 30, 2017 and 2016, respectively.
 
 

HILTON WORLDWIDE HOLDINGS INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATIONS

NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS AND

PRO FORMA 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,
2017     2016 2017     2016
Income from continuing operations attributable to Hilton
stockholders, net of taxes, as reported
$ 179 $ 87 $ 419 $ 375
Diluted EPS from continuing operations, as reported $ 0.55 $ 0.27 $ 1.28 $ 1.14
Special items:
Loss on debt extinguishment $ $ $ 60 $
Transaction costs(1) 2 17
Financing transactions(2) 4 5 4
Asset dispositions(3) 3 16 12 18
Impairment loss 15
Tax-related adjustments(4)               (153 )
Total special items before tax 5 20 94 (116 )
Income tax expense on special items   (1 )   (8 )   (34 )   (14 )
Total special items after tax $ 4   $ 12   $ 60   $ (130 )
 
Net income, adjusted for special items $ 183   $ 99   $ 479   $ 245  
Diluted EPS, adjusted for special items $ 0.56   $ 0.30   $ 1.46   $ 0.74  
 
Net income, adjusted for special items, including pro forma
adjustments(5)
$ 132   $ 347  
Diluted EPS, adjusted for special items, including pro forma
adjustments(5)
$ 0.41   $ 1.05  
 
____________

(1)

  Includes expenses related to the spin-offs that were recognized in
general and administrative expenses. Transaction costs for the three
and nine months ended September 30, 2016 are included in
discontinued operations and, therefore, are excluded from the
presentation above.

(2)

Includes expenses incurred in connection with the refinancing of the
senior secured term loan facility that were recognized in other
non-operating income, net.

(3)

Includes severance costs that were recognized in general and
administrative expenses from the February 2015 sale of the Waldorf
Astoria New York.

(4)

Relates to the release of reserves of unrecognized tax benefits that
Hilton has either settled or determined that Hilton was more likely
than not to receive the full benefit for.

(5)

Reflects the effect of the spin-offs as if they had occurred on
January 1, 2016. See "Definitions—Pro Forma Adjustments" for
additional details.
 
 

HILTON WORLDWIDE HOLDINGS INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATIONS

ADJUSTED EBITDA AND PRO FORMA ADJUSTED EBITDA

(unaudited, dollars in millions)

 
 
    Three Months Ended September 30,
2017     2016
(as reported) (as reported)     (pro forma)
Income from continuing operations, net of taxes $ 181 $ 89 $ 122
Interest expense 100 97 97
Income tax expense 108 69 90
Depreciation and amortization   83     90     90  
EBITDA 472 345 399
Loss (gain) on foreign currency transactions (2 ) 10 10
FF&E replacement reserve 16 13 13
Share-based compensation expense 32 23 24
Other adjustment items(1)   6     24     24  
Adjusted EBITDA $ 524   $ 415   $ 470  
 
 
 
Nine Months Ended September 30,
2017 2016
(as reported) (as reported) (pro forma)
Income from continuing operations, net of taxes $ 423 $ 380 $ 482
Interest expense 304 286 286
Income tax expense 251 11 74
Depreciation and amortization   259     273     273  
EBITDA 1,237 950 1,115
Gain on sales of assets, net (1 ) (1 )
Loss (gain) on foreign currency transactions (3 ) 36 36
Loss on debt extinguishment 60
FF&E replacement reserve 37 41 41
Share-based compensation expense 91 62 64
Impairment loss 15 15
Other adjustment items(1)   45     39     39  
Adjusted EBITDA $ 1,467   $ 1,142   $ 1,309  
 
____________

(1)

  Includes adjustments for severance and other items and, for the
three and nine months ended September 30, 2017, also includes
transaction costs. Transaction costs for the three and nine months
ended September 30, 2016 are included in discontinued operations
and, therefore, are excluded from the presentation above.
 
 

HILTON WORLDWIDE HOLDINGS INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATIONS

ADJUSTED EBITDA MARGIN AND PRO FORMA ADJUSTED EBITDA MARGIN

(unaudited, dollars in millions)

 
 
    Three Months Ended September 30,
2017     2016
(as reported) (as reported)     (pro forma)
Total revenues, as reported $ 2,354 $ 1,867 $ 2,199
Less: other revenues from managed and franchised properties   (1,433 )   (1,070 )   (1,348 )
Total revenues, excluding other revenues from managed and franchised
properties
$ 921   $ 797   $ 851  
 
Adjusted EBITDA $ 524 $ 415 $ 470
 
Adjusted EBITDA margin   56.9 %   52.1 %   55.2 %
 
 
 
Nine Months Ended September 30,
2017 2016
(as reported) (as reported) (pro forma)
Total revenues, as reported $ 6,861 $ 5,543 $ 6,573
Less: other revenues from managed and franchised properties   (4,264 )   (3,241 )   (4,106 )
Total revenues, excluding other revenues from managed and franchised
properties
$ 2,597   $ 2,302   $ 2,467  
 
Adjusted EBITDA $ 1,467 $ 1,142 $ 1,309
 
Adjusted EBITDA margin   56.5 %   49.6 %   53.1 %
 
 

HILTON WORLDWIDE HOLDINGS INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATIONS

NET DEBT, PRO FROMA NET DEBT TO ADJUSTED EBITDA RATIO AND

NET DEBT TO ADJUSTED EBITDA RATIO

(unaudited, in millions)

 
 
            September 30,     December 31,
2017 2016
Long-term debt, including current maturities $ 6,613 $ 6,616
Add: unamortized deferred financing costs and discount   84     90  
Long-term debt, including current maturities and excluding
unamortized deferred financing costs and discount
6,697 6,706
Add: Hilton's share of unconsolidated affiliate debt, excluding
unamortized deferred financing costs
13 12
Less: cash and cash equivalents (670 ) (1,062 )
Less: restricted cash and cash equivalents   (126 )   (121 )
Net debt $ 5,914   $ 5,535  
 
 

PRO FORMA RESULTS:

 

Nine Months Ended Year Ended TTM(1)
September 30, December 31, September 30,
2017 2016 2016 2017
(as reported) (pro forma) (pro forma) (pro forma)
Income from continuing operations, net of taxes $ 423 $ 482 $ 127 $ 68
Interest expense 304 286 394 412
Income tax expense 251 74 647 824
Depreciation and amortization   259     273     364     350  
EBITDA 1,237 1,115 1,532 1,654
Gain on sales of assets, net (1 ) (8 ) (7 )
Loss (gain) on foreign currency transactions (3 ) 36 16 (23 )
Loss on debt extinguishment 60 60
FF&E replacement reserve 37 41 55 51
Share-based compensation expense 91 64 83 110
Impairment loss 15 15
Other adjustment items(2)   45     39     70     76  
Adjusted EBITDA $ 1,467   $ 1,309   $ 1,763   $ 1,921  
 
Net debt $ 5,914
 
Net debt to Adjusted EBITDA ratio   3.1  

____________

(1) Trailing twelve months ("TTM") September 30, 2017
on a pro forma basis is calculated as the nine months ended
September 30, 2017 plus the pro forma year ended December 31, 2016
less the pro forma nine months ended September 30, 2016.

(2) Includes adjustments for severance and other items
and, for the nine months ended September 30, 2017, also includes
transaction costs. Transaction costs for the nine months ended
September 30, 2016 are included in discontinued operations and,
therefore, are excluded from the presentation above.

 
 

ACTUAL RESULTS:

Nine Months Ended Year Ended TTM(1)
September 30, December 31, September 30,
2017 2016 2016 2017
Income (loss) from continuing operations, net of taxes $ 423 $ 380 $ (8 ) $ 35
Interest expense 304 286 394 412
Income tax expense 251 11 564 804
Depreciation and amortization   259     273     364     350  
EBITDA 1,237 950 1,314 1,601
Gain on sales of assets, net (1 ) (8 ) (7 )
Loss (gain) on foreign currency transactions (3 ) 36 16 (23 )
Loss on debt extinguishment 60 60
FF&E replacement reserve 37 41 55 51
Share-based compensation expense 91 62 81 110
Impairment loss 15 15
Other adjustment items(2)   45     39     70     76  
Adjusted EBITDA $ 1,467   $ 1,142   $ 1,543   $ 1,868  
 
Net debt $ 5,914
 
Net debt to Adjusted EBITDA ratio   3.2  

____________

(1) TTM September 30, 2017 is calculated as the nine
months ended September 30, 2017 plus the year ended December 31,
2016 less the nine months ended September 30, 2016.

(2) Includes adjustments for severance and other items
and, for the nine months ended September 30, 2017, also includes
transaction costs. Transaction costs for the nine months ended
September 30, 2016 are included in discontinued operations and,
therefore, are excluded from the presentation above.

 
 

HILTON WORLDWIDE HOLDINGS INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATIONS

OUTLOOK: NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

FORECASTED 2017

(unaudited, in millions, except per share data)

 
 
   

Three Months Ending

December 31, 2017

Low Case     High Case
Net income attributable to Hilton stockholders $ 131 $

144

Diluted EPS, before special items $ 0.41 $ 0.45
 
Net income, adjusted for special items $ 131   $

144

 
Diluted EPS, adjusted for special items(1) $ 0.41   $ 0.45  
 
 

Year Ending

December 31, 2017

Low Case High Case
Net income attributable to Hilton stockholders $ 550 $ 563
Diluted EPS, before special items $ 1.68 $ 1.72
Special items(2):
Loss on debt extinguishment $ 60 $ 60
Transaction costs 17 17
Financing transactions 5 5
Asset dispositions   12     12  
Total special items before tax 94 94
Income tax expense on special items   (34 )   (34 )
Total special items after tax $ 60   $ 60  
 
Net income, adjusted for special items $ 610   $ 623  
Diluted EPS, adjusted for special items(1) $ 1.87   $ 1.91  
 
____________

(1)

  Does not include the effect of potential share repurchases.

(2)

See "—Net Income and Diluted EPS, Adjusted for Special Items" for
details of these special items.
 
 

HILTON WORLDWIDE HOLDINGS INC.

NON-GAAP FINANCIAL MEASURES RECONCILIATIONS

OUTLOOK: ADJUSTED EBITDA

FORECASTED 2017

(unaudited, in millions)

 
 
   

Three Months Ending

December 31, 2017

Low Case     High Case
Net income $ 133 $ 145
Interest expense 100 100
Income tax expense 83 90
Depreciation and amortization   87     87  
EBITDA 403 422
FF&E replacement reserve 16 16
Share-based compensation expense 25 25
Other adjustment items(1)   9     10  
Adjusted EBITDA $ 453   $ 473  
 
 

Year Ending

December 31, 2017

Low Case High Case
Net income $ 556 $ 568
Interest expense 404 404
Income tax expense 334 341
Depreciation and amortization   346     346  
EBITDA 1,640 1,659
Gain on foreign currency transactions (3 ) (3 )
Loss on debt extinguishment 60 60
FF&E replacement reserve 53 53
Share-based compensation expense 116 116
Other adjustment items(1)   54     55  
Adjusted EBITDA $ 1,920   $ 1,940  
 
____________

(1)

  Includes adjustments for severance, transaction costs and other
items.
 
 

HILTON WORLDWIDE HOLDINGS INC.

DEFINITIONS

 

Pro Forma Adjustments

The unaudited pro forma condensed consolidated statements of operations
are based on Hilton's unaudited condensed consolidated statements of
operations for the three and nine months ended September 30, 2016 and
have been adjusted to reflect the spin-offs of Park and HGV as if they
had occurred on January 1, 2016. The unaudited pro forma adjustments are
based on estimates, accounting judgments and currently available
information and assumptions that Hilton management believes are
reasonable. The pro forma adjustments include the following:

 
(a) The management and franchise fee revenue related to the management
and franchise agreements with Park, effective at completion of the
spin-offs, as well as the franchise fee revenue related to the
license agreement with HGV, effective at completion of the spin-offs.
 
(b) The revenues and expenses for payroll and related costs, certain
other operating costs, marketing expenses and other expenses
associated with Hilton's brands and shared services that will be
directly reimbursed to Hilton by Park under the terms of the
management and franchise agreements with Park, effective at
completion of the spin-offs.
 
(c) The income tax effect of the pro forma adjustments by applying an
estimated statutory tax rate of 38 percent.
 
(d) Pro forma basic and diluted weighted average shares outstanding were
based on the historical weighted average number of common shares
outstanding, and the calculation of pro forma diluted weighted
average shares outstanding reflects the effect of the spin-offs.
 

Refer to pro forma financial information included in the Current Report
on Form 8-K filed with the SEC on January 4, 2017 for additional details
on the pro forma adjustments.

The adjustments in the unaudited pro forma condensed consolidated
statements of operations do not include general and administrative
expenses that do not meet the requirements to be presented in
discontinued operations as they are not specifically related to Park or
HGV. Accordingly, the pro forma general and administrative expenses are
not necessarily indicative of future general and administrative expenses
of Hilton. The unaudited pro forma condensed consolidated statements of
operations also do not reflect any cost savings that Hilton believes
could have been achieved had the spin-offs been completed on the date
indicated.

Trailing Twelve Month Financial Information

This press release also includes certain unaudited financial information
for the TTM period ended September 30, 2017, which is calculated as the
nine months ended September 30, 2017 plus the actual or pro forma year
ended December 31, 2016 less the actual or pro forma nine months ended
September 30, 2016. 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.

Net Income and EPS, Adjusted for Special Items

Net income and 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 and EPS, adjusted for special items, may not be comparable to
similarly titled measures of other companies.

Net income and 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 before interest expense, taxes and depreciation and
amortization ("EBITDA"), presented herein, reflects income (loss) from
continuing operations, net of taxes, excluding interest expense, a
provision for income taxes and depreciation and amortization.

Adjusted EBITDA, presented herein, is calculated as EBITDA, as
previously defined, further adjusted to exclude certain items, including
gains, losses and expenses in connection with: (i) asset dispositions
for both consolidated and unconsolidated investments; (ii) foreign
currency transactions; (iii) debt restructurings and retirements; (iv)
furniture, fixtures and equipment ("FF&E") replacement reserves required
under certain lease agreements; (v) reorganization costs; (vi)
share-based compensation expense; (vii) non-cash impairment losses;
(viii) severance, relocation and other expenses; and (ix) other items.

Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of
total revenues, excluding 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 the provision for income taxes are dependent on company
specifics, including, among other things, the Company's capital
structure and operating jurisdictions, respectively, and, therefore
could vary significantly across companies. Depreciation and amortization
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) share-based
compensation expense, as this could vary widely among companies due to
the different plans in place and the usage of them; (ii) FF&E
replacement reserve to be consistent with the treatment of FF&E for its
owned and leased hotels where it is capitalized and depreciated over the
life of the FF&E; and (iii) other items that are not core to the
Company's operations and are not reflective of the Company's performance.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not recognized
terms under GAAP and should not be considered as alternatives, in
isolation or as a substitute, 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 (b) the Company's
share of unconsolidated affiliate debt, excluding unamortized deferred
financing costs; reduced by (a) cash and cash equivalents; and (ii)
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, excluding the hotels
distributed in the spin-offs; and (iii) have not sustained substantial
property damage, business interruption, undergone large-scale capital
projects or for which comparable results are not available.

Of the 5,120 hotels in the Company's system as of September 30, 2017,
3,956 hotels were classified as comparable hotels. The 1,164
non-comparable hotels included 253 hotels, or approximately five percent
of the total hotels in the system, that were removed from the comparable
group during the last twelve months.

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 levels as
demand for hotel rooms increases or decreases.

Average Daily Rate ("ADR")

ADR represents hotel room revenue divided by 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 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 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: 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 (all periods presented use the
actual exchange rates for the three and nine months ended September 30,
2017, as applicable), unless otherwise noted.

View Comments and Join the Discussion!