Hilton Hotels Corporation (NYSE:HLT) today reported diluted earnings per share from continuing operations of $.16 for the first quarter ended March 31, 1999, an increase of 14 percent over $.14 per diluted share in the same period a year ago.
In accordance with the required implementation of a new accounting standard relating to the expensing of pre-opening costs, Hilton in the first quarter recorded an after-tax charge of $2.2 million, or $.01 per diluted share, to reflect the one-time cumulative impact of this change in accounting.
The company reported first quarter 1999 earnings before interest, taxes, depreciation, amortization and non-cash items (EBITDA) of $156 million, a 28 percent increase from $122 million in the 1998 period. The EBITDA gain was driven by strong earnings contributions from hotels acquired in 1998 and revenue per available room (RevPAR) increases at Hilton`s owned hotels in major markets throughout the continental U.S.
Hilton`s U.S. owned and equity hotels generated $135 million of EBITDA in the first quarter, compared to $103 million in the prior year, a 31 percent increase. Strong results at the company`s newly acquired hotels in East Brunswick, New Jersey, Charlotte, North Carolina, La Jolla, California and Short Hills, New Jersey, coupled with double-digit EBITDA gains at the Chicago, Capital, O`Hare, San Diego, New Orleans, McLean, Palmer House and San Francisco Hiltons drove the increase.
Conditions remain particularly difficult in Hawaii, where the company has two major properties—the Hilton Hawaiian Village in Honolulu and the Hilton Waikoloa Village on the Big Island of Hawaii. The market outlook and advance bookings do, however, point to improvement in 2000. Given the significance of the declines at these properties and the subsequent impact on the quarterly comparisons, the following data on Hilton`s domestic owned and equity hotel operations is presented both on an “excluding Hawaii” and “including Hawaii” basis.
Owned Hotel Operations (Excluding Hawaii) Excluding Hawaii, comparable EBITDA at Hilton`s U.S. owned and equity properties increased 10 percent in the first quarter. An occupancy increase of 3.2 points to 73.2 percent, combined with an improvement in average daily rate (ADR) of 1.5 percent (to $159.41), resulted in a RevPAR gain of 6.1 percent. EBITDA margins improved one point to 32 percent.
At the company`s Top Ten hotels (minus Hawaii), EBITDA for the first quarter improved 13 percent, with RevPAR increasing 8.3 percent on an occupancy gain of 4.6 points to 75.9 percent and a 1.7 percent increase in ADR to $173.12. EBITDA margins improved two points to 32 percent. Particularly strong results—double-digit EBITDA and RevPAR gains—were recorded at the Capital Hilton, Chicago Hilton, Palmer House, New Orleans Hilton and San Francisco Hilton, while results at the New York Hilton were slightly lower than last year`s quarter due to the major refurbishment being undertaken at the property, a project scheduled for completion in late 1999.
Hilton stated that the results at its owned and equity hotels are evidence of its long-held assertion that there is very little new competitive supply being added in the company`s key markets, and that business trends in the majority of these markets remain strong—a view that has been confirmed in recent Wall Street research reports.