Presentation May 2021 - The Yucatan Resort Playa Del Carmen, Tapestry Collection by Hilton - Hilton - Investor Relations
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Presentation
May 2021
The Yucatan Resort Playa Del Carmen, Tapestry Collection by Hilton
HLT VALUE PROPOSITION
Hilton's scale, global presence and leading brands at multiple price points drive
a network effect delivering industry-leading performance
Leading
Brands serving
• Award-winning brands that serve guests for virtually any
virtually any lodging need they have anywhere HLT Financial
lodging need
in the world Performance
anywhere
• Leads to satisfied customers, including more
than 115 million Hilton Honors loyalty members
• Creates a network effect that drives a strong
global RevPAR premium of 16%(a) Satisfied,
Leading Loyal
• These premiums drive strong financial returns Hotel Customers
for the company and our hotel owners Supply &
Pipeline
• Satisfied owners continue to invest in growing
Hilton’s brands, driving leading organic net unit
growth with de minimis use of capital
• We believe the reinforcing nature of these Premium,
activities will allow Hilton to outperform the Growing
Satisfied
competition Market Share
Owners
(a) Source: STR (three months ended 3/31/2021). “RevPAR” or “Revenue per Available Room” represents hotel room revenue divided by room nights available to guests for a given period.
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© 2021 Hilton ProprietaryInvestment Thesis
1. INDUSTRY-LEADING PORTFOLIO OF BRANDS
WITH A GLOBAL PRESENCE
2. A SIMPLIFIED, FEE-BASED BUSINESS
3. A HIGH-QUALITY PIPELINE GENERATING
SUBSTANTIAL RETURNS ON MINIMAL CAPITAL
INVESTMENT
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© 2021 Hilton Proprietary1. INDUSTRY-LEADING PORTFOLIO OF BRANDS
With ~6,600 properties & ~1,032,000 rooms in 119 countries and territories,
Hilton is one of the world’s largest and most diversified hotel companies
Industry-leading, clearly defined, global brands drive a
16% global RevPAR premium(a)
Luxury & Lifestyle Full Service All Suites Focused Service Timeshare
2019 ADJ. EBITDA BY GEOGRAPHY(b) ROOMS BY CHAIN SCALE(c)
Americas Midscale
Middle East & Other
Non-U.S. Luxury 2%
Africa 1%
Asia 3% 3% 3%
Pacific
10% Upper
Upscale
Upper 29%
Europe Midscale
11% 32%
U.S.
No single U.S. market 73%
accounts for more than Upscale
3% of Adj. EBITDA 33%
(a) Source: STR (three months ended 3/31/2021).
(b) Based on year ended 12/31/2019, reflecting a more normalized environment. For the last twelve months (“LTM”) period ended 3/31/2021 calculated as the three months ended 3/31/2021 plus the year ended 12/31/2020 less the three months ended
3/31/2020, reflective of the significant impact of COVID-19 on demand levels, Adjusted EBITDA by Geography would be 104% U.S., 2% Americas Non-U.S., (16%) Europe, 1% Middle East & Africa, and 9% Asia Pacific. Adjusted EBITDA excludes corporate
and other.
(c) Room count as of 3/31/2021. Other includes HGV.
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© 2021 Hilton Proprietary1. INDUSTRY-LEADING PORTFOLIO OF BRANDS
Hilton Honors loyalty program enables a better, more personalized
hotel stay, driving incremental value to the system
HILTON HONORS IS OFFERING MORE VALUE TO MORE MEMBERS
Members 115M
Share of system
36M Occupancy(b)
2012 2021(a)
~60%
+15% CAGR +150 BPS per year
on average(b)
INNOVATIVE NEW FEATURES & PARTNERSHIPS
POINTS & MONEY 2.0 SHOP WITH POINTS POINTS POOLING RIDESHARING
Can choose any The first hotel loyalty Can pool Points into a single When a member rides with
combination of Points and program to enable members account (for free), Lyft, they earn
money to pay for a stay, to use their Points on generating incremental Hilton Honors Points.
using an interactive “Slider.” Amazon.com. reward stays and increasing
engagement.
(a) As of 3/31/2021. All trademarks, service marks and trade names appearing in this
(b) Average share of occupancy and increase per year for the five year period ended 12/31/2020. For the three months ended 3/31/2021, Hilton Honors share of occupancy presentation are, to our knowledge, the property of their
was down 118 bps year-over-year to ~55% due to the significant impacts from the COVID-19 pandemic. respective owners.
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© 2021 Hilton Proprietary1. INDUSTRY-LEADING PORTFOLIO OF BRANDS
We are one of the most innovative hotel companies, leading in delivering
personalized experiences for guests in every interaction they have with Hilton
Our Hilton Honors app is one example of how we offer end-to-end experiences for guests:
• Our Digital Key and welcome experience empower guests to pick their room before
arrival and bypass the front desk
• Connected Room enables guests to control lighting, HVAC and entertainment options
using their mobile device
• We partner with SHOWTIME and Netflix to allow guests to stream their favorite content
• Digital Check-Out gives guests the convenience of checking out of their room in the app
30 million ~115 million
Digital Keys downloaded Hilton Honors Members
5,300 122 million ~28,000 +8% YOY
Digital Key hotels Doors opened with Digital Key Connected Rooms
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© 2021 Hilton Proprietary1. INDUSTRY-LEADING PORTFOLIO OF BRANDS
We are committed to sustainable travel and tourism
Our Travel with Purpose initiatives aim to drive positive social and environmental change across
our operations, supply chain, and communities
GOALS FOR 2030 FOCUS ON
ENVIRONMENTAL IMPACT SOCIAL IMPACT
Energy Youth
Carbon Diversity & Inclusion
Water Community Investment
Waste Disaster Relief
Responsible Sourcing Human Rights
LEADING THE WAY TO POSITIVELY CHANGE THE WORLD
The only global hotel
100% brand named to the
Rating on the
Corporate Equality 100 Best Corporate
Index for the seventh Citizens of 2020 List
Global Industry Leader
year in a row by CR Magazine
in 2020 and 2019
Included on Dow Jones
Sustainability Indices (DJSI)
since 2016
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© 2021 Hilton Proprietary2. A SIMPLIFIED, FEE-BASED BUSINESS
Top-Line Driven Majority Franchise Fees
90% Adj. EBITDA from fees,
90% revenue driven(a)
~75% of total fees
franchise driven(a)
Increasing franchise fees as contracts
+/- 1% of RevPAR growth is roughly roll over at higher published rates
~5.0% in-place rate vs. ~$120M annual
+/- 1% of Adjusted EBITDA growth(b) 5.6% published rate(c) Adj. EBITDA
Meaningful Fee Growth on a Normalized Basis Capital Efficient Growth
MANAGEMENT & FRANCHISE FEES(d)
$2,272M
$814M
~5% NUG YOY(f)
~$300M Total HLT investment in
pipeline(g) with ~50% under construction
2009(e) 2019(a) and average contract term of 19 years
+11% CAGR
Fee-based model drives significant free cash flow in stabilized markets
(a) Based on year ended 12/31/2019 and therefore not reflective of the meaningful impact of COVID-19 pandemic on 2020 or 2021 results. Our 2020 results did not reflect stabilized performance and we do not expect 2021 results to reflect stabilized performance. Adjusted EBITDA excludes corporate and
other.
(b) Historical relationship holds up in environments when RevPAR declines 30% or less. It is slightly more than that beyond 30% declines.
(c) As of or for the three months ended 3/31/2021. Effective franchise rate is up 95 bps since FY 2007 and is calculated as the total franchise fee revenue divided by total franchise room revenue. Published franchise rate is calculated as the weighted average of current published brand franchise fee rates.
(d) Excludes amortization of contract acquisition costs recorded as contra-revenue. Management and Franchise fees for the LTM period ended 3/31/2021 were $992M, reflecting the significant impact of the COVID-19 pandemic and are not indicative of our future performance in any future period.
(e) Does not include the effect of the revenue recognition standard adopted on January 1, 2018. 7
(f) Net Unit Growth (“NUG”) was 5.8% based on LTM period ended 3/31/2021 and 5.1% for the year ended 12/31/2020.
(g) Reflects committed contract acquisition costs as of 3/31/2021..
© 2021 Hilton Proprietary3. A HIGH-QUALITY PIPELINE GENERATING SUBSTANTIAL
RETURNS ON MINIMAL CAPITAL INVESTMENT
DIVERSIFIED PIPELINE OF INDUSTRY-LEADING BRANDS
PIPELINE BY GEOGRAPHY(a) PIPELINE BY SEGMENT(a)
Americas
Non-U.S.
Asia 7%
Pacific
Middle East
35%
& Africa
9% Full
Service
40%
Focused
Service
Europe U.S. 60%
9% 40%
Resulting in: High-quality pipelines across all brand segments with minimal HLT capital investment
Pipeline rooms % Under Construction % New Brands 3rd Party Investment HLT Investment(b)
399K ~50% ~30% $50B ~$300M
Stabilized Pipeline Illustrative
Adj. EBITDA Value Creation(c)
~$800M $11,000M
(a) Pipeline as of 3/31/2021.
(b) Reflects committed contract acquisition costs as of 3/31/2021.
(c) Based on 13.5 times Illustrative Adjusted EBITDA. Figure is illustrative only and does not reflect the actual valuation or the view of Hilton with respect to proper valuation. The market may attribute a different valuation. Valuation is based on historical
approximation and does not reflect current valuations inclusive of the impact of the COVID-19 pandemic. Pipeline as of 3/31/2021.
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© 2021 Hilton Proprietary3. A HIGH-QUALITY PIPELINE GENERATING SUBSTANTIAL
RETURNS ON MINIMAL CAPITAL INVESTMENT
Development focused on balanced global growth
Brand portfolio drives high quality, high return, industry-leading
organic growth enabled by demand patterns around the world
A LEADING SHARE OF DEVELOPMENT MARKET SHARE IS
FUTURE DEVELOPMENT(a) ~3X+ LARGER THAN CURRENT SHARE
Existing GLOBAL SHARE OF ROOMS UNDER
CONSTRUCTION/EXISTING SHARE(a)
Room Rooms Under
Supply Construction
3.4x
% of Total % of Total
United States 13% 23%
2.6x
Americas ex. U.S. 3% 19%
2.1x
Europe 2% 7%
Middle East, Africa 3% 14%
Asia Pacific 2% 23%
Global System 5% 18%
(a) Source: STR Global Census, April 2021 (adjusted to March 2021) and STR Global New Development Pipeline, March 2021. All trademarks, service marks and trade names appearing in this
presentation are, to our knowledge, the property of their
respective owners.
Source: Company filings.
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© 2021 Hilton Proprietary3. A HIGH-QUALITY PIPELINE GENERATING SUBSTANTIAL
RETURNS ON MINIMAL CAPITAL INVESTMENT
Industry-leading growth with solid sight lines into future development
GLOBAL SYSTEM ROOM GROWTH HLT NET UNIT GROWTH (000s of rooms)
2007-TODAY(a)
International U.S. 58
57
108%
52
47
45
(b)
43
98%
36 56% 58%
(c)
80% 66%
61%
57% 69%
25
24 53%
57%
19 18
(d)
43% 57%
56%
60% 51% 44% 42%
(e)
47% 57% 47% 43% 31% 34% 39%
40% 49% 43%
35%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
23% 46% 38% 35% 26% 29% 22% 20% 25% 17% 19%
% Conversions(f)
(a) Note: “2007” metrics are as of 6/30/07, except for H which is as of 12/31/07; “Today” metrics are as of 3/31/2021 for HLT and peers. All trademarks, service marks and trade names appearing in this
(b) Room count reflects H’s acquisition of Two Roads Hospitality in both periods, adding 12,000 rooms. presentation are, to our knowledge, the property of their
(c) Reflects MAR acquisition of HOT in both periods.. respective owners.
(d) Accor data reflects sale of Motel 6 and Studio 6 brands and the acquisition of Fairmont Raffles Hotels International Group. Source: Company filings.
(e) Excl. timeshare properties due to lack of 2007 data availability for WYN.
(f) As a % of gross room openings. 10
© 2021 Hilton ProprietaryAppendix Virgin Hotels Las Vegas, Curio Collection by Hilton
FLEXIBLE CAPITAL STRUCTURE
CAPITAL STRUCTURE DEBT BREAKDOWN / SCHEDULED AMORTIZATION
OVERVIEW AND MATURITIES(a)
Net debt % fixed ($ in millions) Weighted average term: 7.1 years
$3,000
$7.6B 77% $2,619
$2,000
Net leverage(b) % unsecured
$1,500
11.2x 61% $1,000
$1,190
$1,000
$1,100
$800
% freely $500 $600
WACD $500
prepayable
3.7% 39% $0
$0 $0 $0
2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
(a) Excludes finance lease liabilities and other debt of our consolidated variable interest entities.
(b) Ratio of net debt as of 3/31/2021 to LTM period ended 3/31/2021 Adjusted EBITDA.
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© 2021 Hilton ProprietaryRECONCILIATIONS
($ in millions)
Q1 2021 LTM FY 2020
Net loss $ (847) $ (720)
Interest expense 438 429
Income tax benefit (204) (204)
Depreciation and amortization 291 331
EBITDA (322) (164)
Loss on foreign currency transactions 34 27
Loss on debt extinguishments 117 48
FF&E replacement reserves (a) 47 57
Share‐based compensation expense 148 97
Reorganization costs 41 41
Impairment losses 146 258
Amortization of contract acquisition costs 28 29
Net other expenses from managed and franchised properties 390 397
Other adjustments (b) 48 52
Adjusted EBITDA $ 677 $ 842
As of As of
March 31, 2021 December 31, 2020
Long‐term debt, including current maturities $ 9,956 $ 10,487
Add: unamortized deferred financing costs and discount 97 93
Long‐term debt, including current maturities and excluding unamortized deferred financing costs and discount 10,053 10,580
Add: Hilton's share of unconsolidated affiliate debt 8 8
Less: cash and cash equivalents (2,402) (3,218)
Less: restricted cash and cash equivalents (45) (45)
Net Debt $ 7,614 $ 7,325
Net Debt/Adjusted EBITDA ratio 11.2 8.7
(a) Represents furniture, fixture & equipment (“FF&E”) replacement reserves established for the benefit of lessors for requisition of capital assets under certain lease agreements.
(b) Both periods include severance not related to the 2020 reorganization and other items. Also includes costs recognized for the settlement of a dispute with an owner of a managed hotel, losses related to the disposal of an investment and a loan
guarantee for a franchised hotel and a gain related to the reimbursement by a third party for taxes owed resulting from the sale of a hotel in a prior period.
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© 2021 Hilton ProprietaryDISCLAIMER
This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to our expectations regarding the
impact of the COVID-19 pandemic, the performance of our business, our financial results, our liquidity and capital resources and other non-historical
statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,”
“will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable
words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks inherent to the hospitality industry,
macroeconomic factors beyond our control, risks related to the impact of the COVID-19 pandemic, competition for hotel guests and management and
franchise contracts, risks related to doing business with third-party hotel owners, performance of our information technology systems, growth of
reservation channels outside of our system, risks of doing business outside of the United States and our indebtedness, as well as those described under the
section entitled “Risk Factors” in Hilton Worldwide Holdings Inc.’s Annual Report on Form 10-K for the year ended December 31, 2020, as such factors may
be updated from time to time in our periodic filings with the Securities and Exchange Commission (“SEC”), which are accessible on the SEC’s website at
www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in
these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are
included in this presentation and in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statement,
whether as a result of new information, future developments or otherwise, except as required by law.
This presentation includes certain financial measures, including earnings before interest expense, taxes, depreciation and amortization (“EBITDA”), or
Adjusted EBITDA (“Adj. EBITDA”), Net Debt, and Net Debt to Adj. EBITDA ratio that are not calculated in accordance with U.S. generally accepted accounting
principles (“GAAP”). These non-GAAP financial measures should be considered only as supplemental to, and not as a substitute for or superior to, financial
measures prepared in accordance with GAAP. Please refer to the Appendix and footnotes of this presentation for a reconciliation of the historical non-
GAAP financial measures included in this presentation to the most directly comparable financial measures prepared in accordance with GAAP.
Slides in this presentation include certain Adj. EBITDA amounts that are used only for illustrative purposes to present illustrative Adj. EBITDA amounts by
applying assumptions to existing rooms pipeline, increases of in-place rates and increases in RevPAR, as applicable, in each case based on information for
the LTM period ended March 31, 2021. These amounts do not represent projections of future results and may not be realized. Value information on such
slides that is derived from such illustrative Adj. EBITDA amounts is indicative only, based upon a number of assumptions, and does not reflect actual
valuation. Please review carefully the detailed footnotes in this presentation.
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© 2021 Hilton Proprietary© 2021 Hilton Proprietary
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