Outlook weighs on Hilton

MCLEAN, Va. – Hilton cut its expectations for a key revenue figure, overshadowing an otherwise solid third-quarter performance.

Hilton had previously expected its revenue per-available room to rise between 3 per cent and 4 per cent for 2016. On Wednesday, it trimmed those expectations to just a 1.5 per cent to 2 per cent increase compared with last year, and flat to 1 per cent for the current and final quarter of 2016.

The company reported net income of $187 million, compared with $283 million for the same quarter in 2015, which was in line with Wall Street expectations.

But the more modest outlook sent shares of Hilton Worldwide Holdings Inc. down more than 2 per cent in midday trading.

Stock gains from earlier in the week, when China’s HNA Group said it would buy a 25 per cent ownership stake in the hotel chain for about $6.5 billion, have been erased.

On a per-share basis, the McLean, Virginia, company had net income of 19 cents for the quarter, compared with 28 cents per share for the same period last year. Earnings, adjusted for one-time gains and costs, were 23 cents per share, which is what had been projected by analyst polled by Zacks Investment Research.

Revenue rose slightly to $2.94 billion, but it was a little light of Wall Street expectations.

For the current quarter ending in December, Hilton expects its per-share earnings to range from 20 cents to 23 cents.

The company expects full-year earnings in the range of 86 to 89 cents per share.

Analysts are looking for per-share earnings of 24 cents for this quarter, and 90 cents for the year.

The investment by HNA group Is just the latest entry by a Chinese interest in the U.S. hotel sector. With real estate investors looking to cash out of a red hot market over the last several years, Chinese interests have stepped in.

Anbang Insurance Group bought the flagship Waldorf Astoria in New York two years ago from Hilton. It tried unsuccessfully to acquire Starwood Hotels in a $14 billion deal.

Late last year, the Starwood Capital Group sold the 50-story Baccarat Hotel in Manhattan to the Sunshine Insurance Group of China.

Last week China Life Insurance Co., the country’s biggest life insurance company, took an approximately $2 billion stake in U.S. hotels owned by Starwood.

HNA Group runs hotels, airlines, airports and financial services and real estate businesses. Earlier this year, a wing of HNA acquired Carlson Hotels, which owns Radisson, Country Inns & Suites and other chains.


This story was generated in part by Automated Insights ( using data from Zacks Investment Research. Access a Zacks stock report on HLT at


Keywords: Hilton, Earnings Report