:max_bytes(150000):strip_icc()/GettyImages-1682229679-cadb643b255a4c479e73e31c0a2862c7.jpg "Hilton Stock Jumps as Luxury Brands Boost Earnings")
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Key Takeaways
- Hilton boosted its earnings outlook after posting stronger-than-expected quarterly results.
- Demand remains strong at higher-end properties such as LXR, Conrad and Waldorf Astoria.
Not everyone is scaling back on discretionary spending.
Aided by gains in its luxury brands, Hilton Worldwide Holdings (HLT) reported better-than-expected third-quarter results. Hilton stock was among the top gainers in the S&P 500 Wednesday morning, up 5% recently and trading near an all-time high.
The McLean, Va.-based company posted adjusted earnings of $2.11 per share on revenue that rose almost 9% year-over-year to $3.12 billion. Analysts polled by Visible Alpha had expected $2.06 and $3.01 billion, respectively.
Why This Is Significant
Hilton’s strong quarter shows luxury travel is still booming even as other spending slows. Affluent travelers are filling rooms at high-end brands such as Waldorf Astoria and Conrad, helping offset weaker demand elsewhere.
Revenue per available room (RevPAR), an important measure of hotel performance, rose at luxury brands LXR, Conrad and Waldorf Astoria by 6.4%, 2.6%, and 1.7%, respectively—indicating a continued interest in travel among more affluent consumers.
Overall, system-wide RevPAR decreased 1.1%, slightly worse than expected. The drop was due to “modest occupancy” and declines in daily rates, Hilton said. That figure in the U.S. fell by 2.3% but was buoyed by a 9.9% increase in Africa and the Middle East.
Hilton now sees full-year RevPAR from flat to up 1% versus the prior projection of flat to up 2%, but lifted its adjusted EPS guidance to a range of $7.97 to $8.06 from $7.83 to $8.00.
“We remain optimistic that in the U.S., lower interest rates, a more favorable regulatory environment, certainty on tax policy and a significant investment cycle will accelerate economic growth and travel demand,” CEO Christopher Nassetta said.
Hilton shares had gained about 8% so far this year coming into today’s session.
