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Consensus estimates, management guidance and commentary, and questions for management in preparation for the earnings release/call tomorrow.

Q1 2014 CONSENSUS ESTIMATES

• Total revenues:  $2,366 million

• Adjusted EBITDA:  $490 million

• EPS:  $0.09/share

MANAGEMENT GUIDANCE

Q1 2014:

  • System-wide RevPAR:  4.5% to 6.5% - in the U.S. and UK, we expect the weather to marginally affect Q1 RevPAR growth. However, this should be somewhat offset by the lapping of the beginning of the U.S. government's sequester during the Q1 2013
  • Adjusted EBITDA:  $480-$500 million, including a 1x benefit of approximately $25 million from the reversal of an accrual related to the conversion of our prior cash-based long-term incentive compensation plan.
  • Management and franchise fees:  +10% to 12%
  • Diluted EPS:  $0.08 - $0.10

FY 2014

  • System-wide RevPAR:  5% to 7%,
    • 60% to 70% ADR driven.
    • between 0.5% and 1% of occupancy growth
  • Ownership segment RevPAR:  4.5% to 6.5%
  • Adjusted EBITDA:  $2,365-$2,435 million
  • Management and franchise fees:  +10% to +12%
  • Incentive Management Fees:  sort of in the 8% to 10% range
  • Timeshare Adjusted EBITDA:  $310-$325 million
  • Corporate and other segment expense: +3% to 5%%, including incremental public company costs.
  • Diluted EPS:  $0.57 - $0.61
  • Capital expenditures:  excluding timeshare inventory, total approx. $350 million including about $250-$260 million in hotel CapEx, which represents roughly 6% of ownership revenue
  • Net unit growth: 35,000 rooms to 40,000 rooms.
  • Tax Rate: 32%
  • Overall basis, we're optimistic that 2014 will be stronger than 2013

QUESTIONS FOR MANAGEMENT

  1. Expectation for additional Owned & Leased margin improvement and flow through for the remainder of 2014 and 2015?
  2. Group pace update at Big 8 owned hotels for 2014 and 2015 (early 2014 comments were stronger than peers, but peer commentary has caught up)?
  3. Outlook for ADR vs. occupancy growth in RevPAR?
  4. What are the opportunities to move-out lower yielding government/flight crews for higher priced transient?
  5. Additional updates on value creation opportunities Waldorf Astoria, NY Hilton, Waikoloa, Park Lane? 
  6. Update on new brand development/brand extension, boutique offering?
  7. How is Europe looking for this coming summer?
  8. Which parts of the World are experiencing weakness? 
  9. Where are inflation pressures negatively impacting margins?
  10. ITYFTY trends?
  11. Viability of asset light timeshare strategy?
  12. Exposure to China and thoughts on macro impact?

RECENT MANAGEMENT COMMENTARY

Embedded/Value Drivers

  • Margin expansion in ownership segment due to group strength
  • Higher and better use land opportunities
  • Migration to capital-light & divesting of some or all of the real estate over time

Big 8

  • Up 10% in group in our Big 8 last year, we're up 10% again this year
  • Expect 2014 to have very good RevPAR growth higher than the high end of our guidance driven by these factors, which is building both occupancy but also rates in the group side and providing that strong foundation for us to continue to squeeze out lower-priced transient business and only take the best transient business

Group

  • We are in the sweet spot of the cycle with group demand driving premium revenue growth in our big group boxes
  • Picking up momentum during 2013 and into 2014
  • A very positive outlook for 2014 group business with both rooms on the books, and rate up meaningfully versus last year (2013).
  • 2014 group revenue position at our Big 8 hotels is up 10% compared to the same time last year (2013).
  • Group business for the same period for our larger group of managed hotels in the U.S. is up 70%.

Asia Pacific

  • Expect continued strong performance again in 2014.

  • Japan was particularly strong as all our hotels delivered double-digit RevPAR growth in 2013.

  • Japan's outlook for 2014 remains very strong, as the government continues to inject liquidity into their markets.

  • China to moderate a bit, and we expect to see slightly lower RevPAR growth in 2014 of 5.5% to 6%, down from nearly 7% in 2013.

Europe

  • Expect the improving economic climate experience in 2013 to continue into 2014 and we expect HLT's RevPAR performance to continue to improve

  • London continues to pick up and in 2014, group revenue position in the region overall was up significantly at 20%.

Middle East & Africa:

  • A tail of individual markets.
  • Africa, Indian Ocean, Arabian Peninsula, and Kingdom of Saudi Arabia markets have been and are expected to continue to be strong, and of course
  • Egypt remains highly volatile.

Time Share

  • In 2013, 54% of our interval sales were on behalf of third party and 78% of our year-ends inventory was capital-light.

  • By expanding our new capital-light deals, combined with continuing to develop additional smaller phases of new developments on our own balance sheet, we can continue to grow our timeshare EBITDA at a steady pace with significantly less capital investment than has been spent historically

  • Can continue to grow timeshare EBITDA at a steady pace

Margins

  • Group demand driving premium revenue growth in our big group boxes, combined with our disciplined approach to managing costs should allow us to continue to drive premium margin growth.

Additions/Attritions/Cancellations

  • Expect net unit growth to accelerate in 2014 and 2015 (as compared to  2013, opened 207 hotels with nearly 34,000 rooms, conversions accounted for 35% of the openings, and after removals had net unit growth of more than 25,000 rooms representing growth of over 4%)

Balance Sheet

  • The outstanding balance of the term loan facility at year-end was $6 billion
  • Ended the year with cash and cash equivalents of $860 million including $266 million of restricted cash.
  • No borrowings outstanding under our $1 billion revolver
  • About $700 million to $900 million should be available for debt reduction in 2014

  • Finish 2014 at about 4.5 times net debt/EBITDA

Asset Sales

  • Do not have a lot that we intend to sell in 2014.
  • We do have a few, what I would describe as dribs and drabs, very small assets, a few in the UK that we've been working on