Hilton Worldwide Holdings Inc. is a global hospitality company that owns, leases, manages, develops, and franchises luxury and full-service hotels and resorts, as well as focused-service hotels. A leading player in its space, Hilton boasts a portfolio of 18 brands, over 6500 properties, and more than 1 million rooms in 119 countries and territories. The company was founded in 1919 by Conrad Hilton and is headquartered in Virginia, USA.
Hilton primarily focuses on the high-end market, offering exceptional guest experiences to its customers in rooms categorised as Upper Midscale, Upscale, Upper Upscale, and Luxury. Throughout its existence, the company has displayed immense business leadership and innovation in the hospitality industry. Hilton famously pioneered the concept of Airport Hotels and currently runs one of the most successful loyalty programmes, Hilton Honours, which routinely drives over 50% of its occupancy rates.
Hilton has never been an active player in the mergers and acquisitions market, with the company’s management long holding the view that organic growth is more lucrative, sustainable, and safer for their business. In recent years, Hilton has adopted an asset-light strategy that has seen the company franchise or operate properties under a management agreement rather than own them outright. This has seen the company become capital-efficient and has enabled them to maintain high growth potential. Hilton operates in an industry that is highly dependent on prevailing economic conditions, but its unique and innovative business model ensures that the company remains resilient even during uncertain times.
Previously a private company, Hilton went public in December 2013, listing on the New York Stock Exchange, where it trades under the ticker symbol HLT. The stock is categorised in the Consumer Cyclical sector, under the Lodging industry.
Hilton Stock History
HLT stock debuted with a price of $20 during the 2013 IPO. Since then, Hilton has implemented one stock split: a 1-for-3 reverse stock split in December 2017. Most companies perform reverse splits due to negative reasons such as preventing delisting from an exchange or boosting the stock’s image after a bad period. But Hilton implemented the reverse split out of positive concerns – the company spun off its real estate and timeshare business to unlock its true potential.
HLT stock started with a split-adjusted price of just under $50 and remained largely stagnant until late 2016, when it picked up steam. The stock then rallied steadily and managed to print a temporary peak of around $90 by January 2018. The stock then consolidated throughout the year and drifted lower to a temporary trough of around $65 by December 2018. The stock then resumed its uptrend and edged higher to a peak of circa $115 in January 2020. The COVID-19 pandemic then triggered a stock selloff, which dipped to circa $55 by April 2020. The stock, however, recovered impressively and embarked on a sharp rally that saw it print an all-time at circa $135 in July 2021.
Hilton is a willing dividend payer, but the cyclical nature of its business has always seen the company adjust (or even suspend) its pay-outs according to existing economic realities.
How to Trade the HLT Stock
Here are the factors to consider when trading Hilton stock:
- Legislative Issues
Hilton has to deal with numerous legislative issues such as franchise contracts, labour compliance, guest security and privacy, sanitation, insurance, and many others as a global hospitality giant with operations in multiple countries. These issues differ in different jurisdictions, and random changes can significantly impact the company’s bottom line.
Hilton is a big player in its industry, but it faces stiff competition from equally big rivals such as Marriot International, Hyatt Hotels, and the Intercontinental Group. Competition also comes from numerous other local, convenient players, and in recent years, players in the sharing economy, such as Airbnb, have successfully managed to encroach into Hilton’s previously well-guarded market share. Travel agencies that offer comprehensive guest experiences can also be considered threats to Hilton’s business.
- Changing Consumer Preferences
Hilton has grown organically as consumers in this generation generally shifted their spending from materialistic goods towards experiences that provide pleasure, such as vacationing and travelling. But the COVID-19 pandemic showed that this can change, with trends, such as videoconferencing and working-from-home, capable of altering life and changing spending habits.
- Periodic Earnings
The Hilton fiscal year runs from January 1st to December 31st, and the company releases periodic earnings reports to update investors on its business performance. Some of the most important metrics to watch out for include occupancy levels, revenues, and future guidance. Positive numbers can inspire higher prices, whereas negative figures can trigger lower stock prices.
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