Hilton Hotels Corporation (NYSE:HLT) today reported financial results for the fourth quarter and fiscal year ended December 31, 2003. The company reported fourth quarter 2003 net income of $67 million, versus $40 million in the 2002 quarter. Diluted net income per share was $.17 in the fourth quarter, compared with $.11 in the 2002 quarter. The 2003 quarter included a $27 million reduction in the provision for income taxes ($.07 per share); and pre-tax losses totaling $8 million related to an impairment charge and asset dispositions ($.01 per share.)
For full year 2003, Hilton reported net income of $164 million, versus $198 million in 2002. Diluted net income per share was $.43 for the year compared to $.53 in 2002.
Hilton reported 2003 fourth quarter total company operating income of $139 million (compared with $136 million in the 2002 period), on total revenue of $989 million (compared with $957 million in the corresponding 2002 period). Total company earnings before interest, taxes, depreciation, amortization and non-recurring items (“Adjusted EBITDA”) were $239 million in the 2003 fourth quarter, compared with $232 million in the 2002 quarter.
For the full year 2003, total company operating income was $515 million (compared with $603 million in 2002), on total revenue of $3.853 billion (compared with $3.847 billion in 2002). Total company Adjusted EBITDA was $906 million for full-year 2003, compared with $990 million in 2002.
The company`s owned hotels maintained solid occupancy levels during the fourth quarter, along with achieving moderately improved average daily rate (ADR), resulting from generally improved business transient and international travel, an increase in group room nights and strong leisure travel during the holidays. Company-owned hotels in New York, Washington, D.C., Honolulu, San Diego, Phoenix and Portland posted particularly strong results in the quarter. The San Francisco/San Jose market continued to be sluggish, while Boston and Chicago also were soft during the quarter.
Across all brands, revenues from the company`s owned hotels (majority owned and controlled hotels) totaled $530 million in the fourth quarter, a 3 percent decline from the 2002 period due primarily to property sales. Total revenues from comparable owned properties were approximately flat in the quarter. Increased room revenues (as a result of the re-opening of the Kalia Tower at the Hilton Hawaiian Village) were offset by lower non-room revenues (cancellation fees, food and beverage, telephone and retail) owing to lower group spending levels. Revenue per available room (RevPAR) from comparable owned hotels was essentially flat in the quarter; occupancy at these hotels showed a slight 0.2-point decline to 68.1 percent, while ADR improved 0.3 percent to $153.09.
Total owned hotel expenses declined 1 percent in the fourth quarter to $380 million, again as a result of property sales. Expenses at the comparable owned hotels increased 2 percent in the quarter. Owned hotel profitability continued to be constrained by the aforementioned lower non-room revenues, as well as increased healthcare costs and property taxes.
For full-year 2003, revenues from the company`s owned hotels totaled $2.031 billion compared with $2.100 billion in 2002, a 3 percent decline. Total revenues from comparable owned hotels showed a similar percentage decline. RevPAR from comparable owned hotels declined 2.9 percent for the full year; occupancy declined 0.6 points to 70.4 percent and ADR showed a 2.1 percent decline to $145.52. Total owned hotel expenses increased 3 percent to $1.500 billion for full-year 2003; expenses at the comparable owned hotels also increased 3 percent for the year.
Improvement in business travel in the latter part of 2003, combined with continued strong leisure travel, helped almost all of Hilton`s brands achieve positive year-over-year RevPAR growth in the fourth quarter. The following of the company`s brands (including franchise properties) reported system-wide RevPAR gains in the quarter: Hilton Garden Inn, 3.1 percent; Hampton Inn, 1.6 percent; Embassy Suites, 0.9 percent; Homewood Suites by Hilton, 0.8 percent and Hilton, 0.6 percent. Doubletree posted a quarterly RevPAR decline of 1.8 percent.
Management and franchise fees for the quarter totaled $82 million, a 5 percent increase from the 2002 period, as a result of these RevPAR increases and the addition of new franchised units.
For the full year, system-wide RevPAR at the Hilton Garden Inn brand improved 1.1 percent, with system-wide RevPAR at other company brands declining as follows: Hampton Inn, 0.2 percent; Homewood Suites by Hilton, 0.9 percent; Embassy Suites, 1.3 percent; Hilton, 2.6 percent, and Doubletree, 3.6 percent.
Management and franchise fees in 2003 increased 2 percent from 2002 to $337 million.
Year-to-date November 2003 (the latest period for which data is available), all but one of the company`s brands continued to operate well above their fair share of RevPAR versus their segment competitors. With 100 representing a brand`s fair share of the market, the Hilton brands, according to Smith Travel Research, posted RevPAR index numbers as follows for the first 11 months of 2003: Embassy Suites, 125.5; Homewood Suites by Hilton, 118.7; Hampton Inn, 118.0; Hilton Garden Inn, 114.4; Hilton 108.8, and Doubletree, 99.3.
In the fourth quarter, the company added 28 properties and 5,249 rooms to its system as follows: Hampton Inn, 12 hotels and 1,260 rooms; Hilton Garden Inn, 8 hotels and 1,047 rooms; Hilton, 2 hotels and 2,000 rooms; Homewood Suites by Hilton, 2 hotels and 241 rooms; Embassy Suites, 1 hotel and 246 rooms; Doubletree, 1 hotel and 100 rooms, and Hilton Grand Vacations, 2 properties and 355 units. Twelve hotels and 1,907 rooms were removed from the system during the quarter.
During 2003, a total of 116 properties and 16,585 rooms were added to the Hilton system, in line with the company`s expectations and guidance, while 27 properties and 5,218 rooms were removed from the system. At year-end 2003, the Hilton system consisted of 2,173 properties and 348,483 rooms.