February 19, 2015
Hilton Worldwide Holdings Inc, owner of the Waldorf Astoria hotel brand, forecast lower-than-expected earnings for the first quarter as a strong dollar makes it more expensive for foreigners to travel to the United States.
Hilton expects "recent sharp movements" of the dollar against the euro, Australian dollar and yen to hurt adjusted earnings before interest, tax, depreciation and amortization by $35 million-$45 million, CFO Kevin Jacobs said.
Hilton and rival Marriott International Inc reported a rise in fourth-quarter RevPAR, a key metric for the hotel industry.
Marriott's international systemwide RevPAR rose just 0.5 percent. On a constant currency basis, however, international RevPAR rose 4.6 percent.
Starwood Hotels & Resorts Worldwide Inc, owner of the Sheraton and Westin brands, forecast a profit below market estimates last week, citing the strengthening of dollar that lowers revenue from outside the United States.
Marriott reported a better-than-expected fourth-quarter profit and revenue and forecast worldwide systemwide constant dollar RevPAR to rise 5 to 7 percent in the first quarter.
"Based on signings to date, we expect special corporate room rates across all our managed North American hotels will increase 5 to 6 percent in 2015," Marriott Chief Executive Arne Sorenson said.
Marriott shares were up 3.5 percent in trading after the bell.
Hyatt Hotels Corp reported lower-than-expected quarterly revenue on Wednesday.
Hilton CFO said the impact from the dollar would be the hardest in the company's leased business. A significant portion of leased properties are outside the United States.
The owned and leased business brought in about 40 percent of Hilton's 2014 revenue.
The dollar is expected to keep rising after gaining nearly 13 percent against a basket of major currencies in 2014.
Hilton's owned hotels business was "pretty reliant" on New York even after selling the Waldorf Astoria New York, Macquarie Research analyst Chad Beynon said.
The company, which also owns the Conrad brand, gets about three-quarters of its revenue from the United States.
The company said on Wednesday it expected an adjusted profit of 10-12 cents per share for the first quarter and 78-83 cents per share for the full year.
Analysts were expecting earnings of 15 cents per share for the first quarter and 85 cents for the year, according to Thomson Reuters I/B/E/S.
Hilton's quarterly adjusted profit narrowly missed market expectations despite a 7 percent rise in revenue.