Company Press Release
May 3, 2000
BEVERLY HILLS, CA -- Hilton Hotels Corp. (NYSE:HLT) yesterday reported results for the first quarter ended March
31, 2000, highlighted by significant increases in earnings before interest, taxes, depreciation, amortization and
non-cash items (EBITDA) and revenue per available room (RevPAR) at the company's owned hotels.
Financial information for 1999 is presented on a pro forma basis as if the company's acquisition of Promus Hotel
Corp. had occurred on Jan. 1, 1999.
Hilton reported net income for the first quarter of $58 million, compared with $42 million for the same period
a year ago, an increase of 38 percent. Diluted net income per share increased 45 percent to $.16 per share from
$.11 last year. The $.16 includes $.04 related to a net gain on asset dispositions, specifically the sale of certain
securities.
The first-quarter 1999 results include non-recurring charges totaling $.02 per share and exclude a $.01 per share
charge due to an accounting change. On a recurring basis, Hilton's net income per share for the first-quarter 2000
was $.12, compared with pro forma $.13 in the 1999 period.
First-quarter EBITDA improved 11 percent to $280 million, a result of strong performances and RevPAR gains at most
major-market Hilton owned hotels as well as the benefit of 1999 acquisitions and new hotel openings. The comparable
1999 period included the aforementioned non-recurring charges totaling $7 million, and includes EBITDA from owned
Homewood Suites and Hampton Inn hotels that were subsequently sold later in the year.
Across all brands, EBITDA from owned properties in the first quarter totaled $183 million, with comparable EBITDA
up 6.8 percent. RevPAR from comparable owned properties improved 4.7 percent, with occupancy flat at 71.1 percent
and average daily rate (ADR) up 4.8 percent to $154.95. Owned hotel leverage was 1.5 times for the quarter across
all brands, in line with the company's target. EBITDA margins across the company's owned hotel system were strong
at 34 percent.
Comparable owned hotels in the Hilton portfolio showed a first- quarter EBITDA increase of 8.9 percent. RevPAR
rose 5.3 percent on flat occupancy of 73.0 percent but a significant ADR gain of 5.7 percent to $169.23. RevPAR-to-EBITDA
flow-through was strong at 1.7 times, as were operating margins of 34.5 percent.
Demonstrating the continued high demand in major metropolitan markets, as well as the locations and unique competitive
positions of Hilton's owned hotels, particularly strong RevPAR and EBITDA results were reported at the Hilton Hawaiian
Village, Hilton New Orleans, Hilton New York, Hilton San Francisco, Waldorf-Astoria, Hilton Washington, Hilton
at Short Hills and Hilton Minneapolis.
Impacting first-quarter results was sluggishness at the company's Chicago and Phoenix owned hotels, owing to new
competitive supply in those markets and low citywide convention demand in Chicago. Additionally, Hilton's Chicago
properties had a difficult quarter-over-quarter comparison as each of its three owned hotels in that market had
a record first quarter 1999.
Based on good advance group bookings, however, the company anticipates a strong remainder of 2000 for its Chicago
hotels. Contributing to first-quarter EBITDA, though on a non-comparable basis, was Hilton's new hotel at Logan
Airport in Boston, which opened in September 1999 and continues to exceed the company's forecasts.
RevPAR at comparable Doubletree owned hotels improved 2.5 percent in the first quarter -- occupancy down 1.6 points
to 67.6 percent and ADR up 4.9 percent to $111.12 -- as a result of gains at properties in San Jose and Santa Barbara,
Calif., and Bellevue, Wash., while EBITDA at this group of properties declined in the quarter.
Fee income from franchising and managing hotels (across all brands) increased 6 percent to $82 million in the first-quarter
2000. The increase was attributable mainly to growth in the Hilton Garden Inn and Hampton Inn brands.
Brand Development
During the first quarter, Hilton added a net 27 hotels and 3,087 rooms to its portfolio as follows: Hilton (2 hotels,
324 rooms); Hilton Garden Inn (7 hotels, 1,093 rooms); Hampton Inn (15 hotels, 2,016 rooms); Embassy Suites (3
hotels, 904 rooms); Homewood Suites by Hilton (3 hotels, 337 rooms); other brands (a net addition of 2 hotels,
including three Red Lions, with a net decrease of 493 rooms).
The Doubletree brand portfolio decreased by a net five hotels and 1,094 rooms in the first quarter. At March 31,
2000, the Hilton system consisted of 1,779 hotels with 303,366 rooms, a net gain of 160 hotels and 20,353 rooms
from March 31, 1999.
Illustrating its rapid growth, the 1,000th Hampton Inn was opened in early April, marking the shortest period of
time that any new hotel brand has reached that milestone. The company replenished its strong pipeline in the first
quarter by receiving and/or approving applications for 75 new franchised hotels (approximately 9,300 rooms).
Hilton remains on track to open more than 400 hotels and 60,000 rooms across all of its brands in the next two
years, with Hilton Garden Inn, Hampton Inn and Homewood Suites by Hilton accounting for most of the openings.
Hilton HHonors
On April 3, 2000, Hilton's industry-leading HHonors frequent guest program was successfully introduced to the Hampton
Inn, Doubletree, Embassy Suites and Homewood Suites by Hilton brands -- some 1,400 additional hotels around the
country -- only four months after the completion of the Promus acquisition.
The only program in the industry to offer guests ``Double Dipping'' (the ability to earn both hotel points and
airline miles), HHonors is now featured in more than 2,000 hotels throughout the world and has a total membership
of approximately 7.5 million, with membership expected to increase to 10 million by year-end 2000. Since April
3, membership in HHonors has increased by approximately 1.5 million, in large part due to ``auto enrollment'' of
customers of the former Promus brands.
It is expected that the introduction of the HHonors program will have a particularly significant and positive impact
on the performance of the Doubletree brand in the second half of 2000.
Cross-Selling
Cross-selling among all of the brands in the Hilton portfolio resulted in approximately $8.5 million in incremental
systemwide revenue during the first quarter, with sequential improvements from January to March. Hilton is on schedule
to complete by year-end 2000 its consolidated reservation system, thereby enhancing cross-selling opportunities.
``The excellent results we showed in the first quarter are very real indicators that we are achieving our goals
for the two main parts of our business -- maximizing RevPAR and EBITDA at our owned hotels, and growing our fee
income stream by adding management and franchise agreements -- and that the underlying fundamentals of our business
and our industry are very strong,'' said Stephen F. Bollenbach, president and chief executive officer.
``Our owned hotels in major markets like New York, Boston, Washington, San Francisco and Honolulu continue to benefit
from a strong economy which is helping fuel high demand, as well as limited construction of new hotels designed
to compete directly with these kinds of properties. We are pleased to see a significant turnaround in Hawaii, and
look for improvement in the Chicago market during the rest of this year.''
Bollenbach continued: ``On the brand development side of our company, there continues to be demand among owners
for the high-quality, well-known brands that we offer, and we are seeing big unit growth numbers out of Hampton
Inn, Hilton Garden Inn and Homewood Suites by Hilton. Our pipeline of planned openings and committed deals gives
us the confidence we can achieve our fee income growth goals for the next several years.
``The third priority for our company in 2000 -- successfully integrating Promus -- for all intents and purposes,
is done,'' he said. ``Hilton HHonors and our cross-selling initiatives are already yielding outstanding results,
we are achieving the cost-savings opportunities we identified, and we are well on our way to not only meeting,
but exceeding, the synergies we promised our shareholders.
``From both the people and financial perspectives, our successful integration of Promus rounded out a very good
first quarter and leaves us well-positioned for the remainder of 2000.''
This news release contains ``forward-looking statements'' within the meaning of federal securities law, including
statements concerning business strategies and their intended results, and similar statements concerning anticipated
future events and expectations that are not historical facts. The forward-looking statements in this news release
are subject to numerous risks and uncertainties, including the effects of economic conditions; supply and demand
changes for hotel rooms; competitive conditions in the lodging industry, relationships with clients and property
owners; the impact of government regulations; and the availability of capital to finance growth, which could cause
actual results to differ materially from those expressed in or implied by the statements herein.
HILTON HOTELS CORP.
Financial Highlights
(in millions, except per share amounts)
Three Months Ended
March 31,
Pro Forma %
1999 (a) 2000 Change
--------- --------- ---------
Revenue $ 735 $ 793 8 %
========= ========= =========
EBITDA (b)
Operations $ 272 $ 296 9 %
Corporate expense, net (19) (16) (16)
--------- --------- ---------
Total EBITDA $ 253 $ 280 11 %
========= ========= =========
Operating income $ 160 $ 173 8 %
Interest and dividend income 18 19 6
Interest expense (97) (112) 15
Net interest from unconsolidated
affiliates (5) (3) (40)
Net gain on asset dispositions -- 29 --
--------- --------- ---------
Income before taxes
and minority interest 76 106 39
Provision for taxes (30) (45) 50
Minority interest, net (4) (3) (25)
--------- --------- ---------
Net income $ 42 $ 58 38 %
========= ========= =========
Net income per share:
Basic $ .11 $ .16 45 %
========= ========= =========
Diluted $ .11 $ .16 45 %
========= ========= =========
Average shares - diluted 399 391 (2) %
========= ========= =========
Reconciliation of Operating
Income to EBITDA (b)
Operating income $ 160 $ 173 8 %
Pre-opening expense -- 1 --
Operating interest and dividend
income 5 8 60
Depreciation and amortization (c) 88 98 11
--------- --------- ---------
EBITDA $ 253 $ 280 11 %
========= ========= =========
(a) The 1999 financial information is presented on a pro forma basis
as if the acquisition of Promus had occurred on Jan. 1, 1999. The
financial results include non-recurring charges totaling $.02 per
share for the three months ended March 31, 1999. The 1999 results
exclude a $.01 per share charge related to the cumulative effect
of an accounting change.
(b) EBITDA is earnings before interest, taxes, depreciation,
amortization, pre-opening expense and non-cash items. EBITDA can
be computed by adding depreciation, amortization, pre-opening
expense, interest and dividend income from investments related to
operating activities and non-cash items to operating income.
(c) Includes proportionate share of unconsolidated affiliates.
HILTON HOTELS CORP.
Summary Statistical Information (a)
Three Months Ended
March 31,
1999 2000 %/ pt Change
---------- ----------- ------------
Hilton
Occupancy 69.8 % 70.3 % 0.5 pts
Average Rate $130.17 $135.10 3.8 %
RevPAR $ 90.81 $ 95.03 4.6 %
Hilton Garden Inn
Occupancy 57.8 % 64.7 % 6.9 pts
Average Rate $ 94.51 $ 95.86 1.4 %
RevPAR $ 54.67 $ 62.06 13.5 %
Doubletree
Occupancy 66.4 % 66.6 % 0.2 pts
Average Rate $104.59 $106.10 1.4 %
RevPAR $ 69.43 $ 70.63 1.7 %
Embassy Suites
Occupancy 72.4 % 72.3 % (0.1) pts
Average Rate $123.72 $126.13 1.9 %
RevPAR $ 89.58 $ 91.24 1.9 %
Homewood Suites by Hilton
Occupancy 69.2 % 71.7 % 2.5 pts
Average Rate $ 97.67 $ 98.87 1.2 %
RevPAR $ 67.61 $ 70.88 4.8 %
Hampton
Occupancy 63.5 % 62.0 % (1.5) pts
Average Rate $ 70.34 $ 72.67 3.3 %
RevPAR $ 44.69 $ 45.02 0.7 %
Other
Occupancy 61.6 % 64.0 % 2.4 pts
Average Rate $ 99.55 $ 99.58 -- %
RevPAR $ 61.34 $ 63.76 3.9 %
(a) Statistics are for comparable hotels, and include only those
hotels in the system as of March 31, 2000, and owned, managed or
franchised by Hilton since Jan. 1, 1999.
HILTON HOTELS CORP.
Supplementary Statistical Information
March
1999 2000
Number of Number of
Hotels Rooms Hotels Rooms
--------------- ---------------
Hilton
Owned 32 23,639 37 26,350
Joint Venture 2 1,453 2 1,453
Managed 17 12,220 15 10,844
Franchised 171 44,072 168 44,065
--------------- ---------------
222 81,384 222 82,712
Hilton Garden Inn
Owned 1 197 2 359
Joint Venture 1 152 2 280
Franchised 23 3,068 66 9,290
--------------- ---------------
25 3,417 70 9,929
Doubletree
Owned 18 5,561 13 4,303
Leased 9 3,050 9 3,050
Joint Venture 34 8,324 31 8,476
Managed 63 17,742 59 16,407
Franchised 50 11,789 47 11,084
--------------- ---------------
174 46,466 159 43,320
Embassy Suites
Owned 6 1,299 6 1,299
Joint Venture 18 4,777 21 5,600
Managed 60 14,820 60 15,049
Franchised 61 13,777 65 14,829
--------------- ---------------
145 34,673 152 36,777
Homewood Suites by Hilton
Owned 21 2,468 14 1,800
Leased 1 83 -- --
Managed 4 471 16 1,772
Franchised 54 5,459 59 6,220
--------------- ---------------
80 8,481 89 9,792
Hampton
Owned 11 1,504 1 133
Leased 18 2,250 18 2,250
Managed 10 1,337 12 1,598
Franchised 858 88,946 968 100,438
--------------- ---------------
897 94,037 999 104,419
Other
Owned 10 1,620 13 1,975
Leased 41 6,433 46 7,298
Joint Venture 3 1,511 3 1,433
Managed 21 4,857 22 5,174
Franchised 1 134 4 537
--------------- ---------------
76 14,555 88 16,417
Total
Owned 99 36,288 86 36,219
Leased 69 11,816 73 12,598
Joint Venture 58 16,217 59 17,242
Managed 175 51,447 184 50,844
Franchised 1,218 167,245 1,377 186,463
--------------- ---------------
TOTAL HOTELS 1,619 283,013 1,779 303,366
=============== ===============
Change to
March 1999 December 1999
Number of Number of
Hotels Rooms Hotels Rooms
--------------- ---------------
Hilton
Owned 5 2,711 1 350
Joint Venture -- -- -- --
Managed (2) (1,376) -- --
Franchised (3) (7) 1 (26)
--------------- ---------------
-- 1,328 2 324
Hilton Garden Inn
Owned 1 162 1 162
Joint Venture 1 128 -- --
Franchised 43 6,222 6 931
--------------- ---------------
45 6,512 7 1,093
Doubletree
Owned (5) (1,258) (1) (454)
Leased -- -- -- --
Joint Venture (3) 152 1 569
Managed (4) (1,335) (4) (934)
Franchised (3) (705) (1) (275)
--------------- ---------------
(15) (3,146) (5) (1,094)
Embassy Suites
Owned -- -- -- --
Joint Venture 3 823 2 502
Managed -- 229 -- --
Franchised 4 1,052 1 402
--------------- ---------------
7 2,104 3 904
Homewood Suites by Hilton
Owned (7) (668) 1 145
Leased (1) (83) (1) (83)
Managed 12 1,301 1 83
Franchised 5 761 2 192
--------------- ---------------
9 1,311 3 337
Hampton
Owned (10) (1,371) -- --
Leased -- -- -- --
Managed 2 261 2 261
Franchised 110 11,492 13 1,755
--------------- ---------------
102 10,382 15 2,016
Other
Owned 3 355 (1) (351)
Leased 5 865 -- --
Joint Venture -- (78) -- --
Managed 1 317 -- (545)
Franchised 3 403 3 403
--------------- ---------------
12 1,862 2 (493)
Total
Owned (13) (69) 1 (148)
Leased 4 782 (1) (83)
Joint Venture 1 1,025 3 1,071
Managed 9 (603) (1) (1,135)
Franchised 159 19,218 25 3,382
--------------- ---------------
TOTAL HOTELS 160 20,353 27 3,087
=============== ===============
--------------------------------------------------------------------------------
Contact:
Hilton Hotels Corp., Beverly Hills
Marc Grossman, 310/205-4030
http://www.hilton.com