Hilton beats Q2 estimates on strong travel demand

By Doyinsola Oladipo and Priyamvada C

(Reuters) -Hilton Worldwide Holdings beat Wall Street estimates for second-quarter revenue and earnings on Wednesday and lifted its annual outlook again, as record lodging prices and rebounding travel demand boosted results.

U.S. hotel operators like Hilton are benefiting from a rebound in international travel post-pandemic despite domestic demand faltering as U.S. travelers take advantage of a stronger dollar and vacation in Europe.

Shares fell 1.4% in afternoon trading. The stock has gained about 17.5% this year.

The company's revenue per available room, or RevPAR, an important metric in the hospitality industry, rose about 12% in the quarter from a year earlier.

Second-quarter revenue rose about 19% to $2.66 billion, exceeding the average Wall Street estimate of $2.58 billion, according to Refinitiv. Adjusted earnings of $1.63 were above average estimates of $1.58 per share.

Hilton said it now expects full-year adjusted profit between $5.93 and $6.06 per share, compared with its prior forecast of $5.68 to $5.88 per share.

"There's still huge amounts of pent-up demand that haven't been released," CEO Christopher Nassetta said.

U.S. hotel demand has been below pre-pandemic levels for four consecutive months. About 69% of Hilton's rooms are in the U.S. and North America, according to Kate Xiao, Bernstein research associate.

Hilton downgraded its net unit growth (NUG) – which reflects room additions - guidance from 5-5.5% to approximately 5% for the full year.

It posted record adjusted EBITDA of $811 million, exceeding the average estimate by 3%, according to Refinitiv.

But the 3% beat on EBITDA "is below the norm for Hilton to be honest, and (the) NUG downgrade plays into fears of a slowing development environment," said Richard Clarke, Bernstein hotel and online travel agency equity analyst.

Higher interest rates and an uncertain demand outlook have slowed construction for larger hotel companies, Clarke said in a research note in July.

(Reporting by Priyamvada C in Bengaluru and Doyinsola Oladipo in New York; Editing by Krishna Chandra Eluri, Jan Harvey and Nick Zieminski)