Hilton Cuts Forecast For Key Revenue Measure Amid Slowing Economic Growth
Hilton Worldwide Holdings Inc has cut its full-year outlook for a key revenue measure, citing a slowing global economy which is weighing on spending plans of businesses.
The forecast comes in the wake of the International Monetary Fund lowering its estimate for global growth in 2019, as the US-China trade spat and Brexit uncertainties are seen to be eroding business confidence and weakening investment spending.
The slowing growth is known to directly affect travel budgets of corporations.
"[People including corporate heads] are incrementally more cautious because of what's going on in the broader [political] environment," Hilton chief executive Chris Nassetta said on a post-earnings call with analysts.
Hilton, the owner of Waldorf Astoria and Conrad hotel chains, said it now expects global corporate profit growth to be positive, but "incrementally" lower than its previous estimates, as international economies including China see a slowdown.
"China is clearly going to be worse in the second half of the year than the first," Nassetta said.
China's economic growth is expected to slow to a near 30-year low of 6.2% this year, according to a Reuters poll, amid a bruising trade war with the United States.
Hilton now expects full-year revenue per available room (RevPAR) - a key performance metric for the hotel industry - to increase between 1% and 2%, down from an earlier range of 1% to 3% rise.
Profit, Adjusted Earnings Net Income And Revenue
The company's quarterly profit, however, topped Wall Street estimates, helped by a steady demand for its rooms in the United States and the recently concluded Cricket World Cup that aided travel in Europe.
Hilton's adjusted earnings for 2019 is expected to range between $3.78 and $3.85 per share, compared to its previous forecast of $3.74 to $3.84 per share.
Net income attributable to Hilton stockholders rose to $260 million, or 89 cents per share, in the quarter that ended on June 30, from $217 million, or 71 cents per share, a year earlier.
On an adjusted basis, Hilton earned $1.06 per share in the quarter beating analysts' average estimate of $1.02 per share, according to IBES data from Refinitiv.
Revenue rose 8.4% to $2.48 billion.