Hilton’s Stock Falls Premarket After 2024 Guidance Falls Short of Estimates

Hilton Worldwide Holdings Inc. encountered a 0.8% decline in its stock early Wednesday, following the release of its guidance for 2024, which fell short of estimates and somewhat overshadowed a fourth-quarter profit beat.

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The company reported a net income of $148 million, or 57 cents per share, for the quarter, down from $328 million, or $1.21 per share, in the same period the previous year. Adjusted earnings per share stood at $1.68, surpassing the $1.57 FactSet consensus.

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Revenue experienced growth, reaching $2.609 billion compared to $2.444 billion a year ago, aligning with the FactSet consensus. Systemwide revenue per available room demonstrated a notable increase of 5.7% on a currency-neutral basis and a substantial 13.5% rise when compared to the same period in 2019, predating the onset of the COVID-19 pandemic.

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Hilton's CEO, Christopher J. Nassetta, highlighted the positive momentum in hotel openings throughout the year, emphasizing that the fourth quarter witnessed more openings than any other quarter in the company's history.

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Looking ahead to 2024, Hilton anticipates systemwide revenue per available room to climb between 2% and 4% on a currency-neutral basis. The company expects earnings per share (EPS) to fall within the range of $6.57 to $6.71, with adjusted EPS projected to range from $6.80 to $6.94. However, these projections fall short of the FactSet consensus, which stands at $7.05 for EPS.

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For the first quarter of the year, Hilton forecasts adjusted EPS in the range of $1.36 to $1.44, slightly below the FactSet expectation of $1.42.

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In addition to its financial performance, Hilton also announced a strategic partnership with Small Luxury Hotels of the World, a consortium of 560 luxury boutique hotels spanning 90 countries. Under this collaboration, Hilton guests gain the ability to book stays at these hotels, as well as earn and redeem points for their stays.

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Describing the partnership, Hilton stated that these boutique hotels complement Hilton's extensive network, providing guests with access to additional luxury accommodations in numerous new destinations. This move aligns with Hilton's commitment to enhancing its offerings and expanding its reach in the competitive hospitality industry.

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Despite the recent stock decline, Hilton has witnessed a 31.3% gain in the last 12 months, outperforming the S&P 500, which has recorded a 19% gain during the same period. The company's solid financial performance and strategic partnerships contribute to its positive trajectory, positioning it as a noteworthy player in the evolving landscape of the hospitality sector.

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Investors will likely monitor how Hilton addresses the gap between its 2024 guidance and market expectations, as well as how the newly announced partnership with Small Luxury Hotels of the World unfolds in terms of customer engagement and overall impact on the company's market position.

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