CONF CALL
- Occupancy growth was strong
- Strong demand from small groups and company meetings
- Transient demand: strong corporate and rack-rate business
- Group: expect strength will continue into seasonally strong Q2. Continue to track up in mid-single-digits in 2015.
- F&B grew in mid-single-digits in 1Q. Japanese F&B outlets drove majority of gains.
- Announced sale of Hilton Sydney - AUD$442 (15x EBITDA multiple). Will use proceeds to pay down debt.
- Hilton has > 20% room share globally
- Fundamentals of cycle remain strong.
- Outlook: US - maintain mid-to-high single digit REVPAR forecast
- NY: strong demand tempered by supply
- Mid-single-digit REVPAR growth, Mexico offset by Brazil and Argentina.
- Europe: positive Germany, geopolitical concerns weighing on France and Eastern Europe
- Egypt: mid-single digit growth
- Asia-Pacific: high-single digit REVPAR growth; Japan robust, Beijing/Shanghai positive; soft in HK and Singapore
- China 2015 REVPAR outlook: +6-8% REVPAR growth
- $15m beat in 1Q due to normal calendar timing
- Incentive growth: high teens forecast
- Timeshare EBITDA decline: accelerated sales that were booked in 2014 was offset by timing of sales efficiency. 78% of intervals sold by 3rd parties. Supply: 5 yrs of intervals at current pace. 80% capital light.
- Corporate/other segment: in-line with their expectations
- US REVPAR grew 6.5% (gateway cities (Chicago/San Francisco strong)
- Bad weather: overall impacted US REVPAR by 1%; 50bps in January, 300bps in February
- Europe REVPAR: +5.5%
- London - lower than expected group business and soft demand
- 3.9x - net debt/EBITDA
- Paid down additional $100m in debt post Q - YTD, paid down $325m
Q & A
- M&A possibilities: will not comment and will look at opportunities
- HOT's M&A rumor: not surprising
- They're seeing REVPAR acceleration
- Hard not to feel very good at this time. Nothing to suggest there is a problem.
- Talking about launching a new midscale entry-level franchise brand (where Hampton brand used to be)
- FX impact outlook: slightly worse but not by much
- Curio/Canopy: competitive world but faring well. Highest avg market share: 15-25% above previous market share
- Large conversions: Doubletree and Curio
- Corporate travel: HLT believes there is no cutback; instead, they are increasing volumes and paying higher rates
- NY down in REVPAR (5% of HLT's US exposure); outlook for 2015: feels good about April.
- Outbound visitation: Europe was declining from Germany/France. Spain was up. China meaningfully up.
- European visitation into US lower due to stronger $
- Early summer bookings show strength in Europe visitation
- Ex FX guidance: $25-35m FX-adjusted raise in EBITDA (at midpoint)
- Franchise rates: should move up over time (+10bps in 1Q, have gone from 4% to 4.7% over past couple of years)
- Cypress hotel will become a Curio
- Believe transient/group will both be in the 6-7% growth range
- Mid-scale segment: more supply there.
- Timeshare: consumer demand up. VPG up 20% in 1Q 2015 (opened a high-priced product in Hawaii). For 2015, expect VPG up 10% and high-single digit growth in tour.
- F&B: sees stabilization trends
- Internal vs external brand build: De minimus investment (millions of $, not tens of millions of $), infinite return (Curio: single million $)
- Why no recent Blackstone secondaries? Up to Blackstone. HLT believes pattern established last year will continue in 2015.
- Thinking about dividend policy program in 2H 2015 but also want to be investment-grade at same time.
- Flattish mgmt fees because of FX headwinds
- Not in peak of the cycle because of occupancy gains
- China Tier 1 cities: Shanghai/Beijing will have good year. Rate/occupancy pretty balanced for 2015.
