1. Hilton Worldwide Holdings Inc. (NYSE:HLT)
Number of Hedge Fund Holders: 64
Hilton Worldwide Holdings Inc. (NYSE:HLT) is one of the biggest hotel chains in the world, with more than 6,500 locations worldwide. It has 22 brands and 1.2 million rooms. It has a number of midscale and premium properties. The two biggest brands, Hampton and Hilton, account for 28% and 19% of the total rooms offered by the company. It also has a loyalty program with over 115 million members called Hilton Honors.
The company’s brand strength is demonstrated by the company’s mid-single-digit share of global hotel rooms and a 20% share of all industry pipeline rooms under construction.
Additionally, the firm has the ability to increase its market share further since its present portfolio amounts to 5% of all industry rooms, while its pipeline accounts for 21% of all rooms under construction globally.
Hilton’s strong upper scale, lifestyle, and luxury presence are boosting its brand intangible asset, the main source of its wide moat, even though the travel industry is facing some short-term downturn in demand. With a partnership with Small Luxury Hotels in February 2024 and the acquisition of a majority stake in the Nomad brand in April 2024, the firm’s portfolio is growing by several hundred hotels. Its pricing prowess is supported by its newly launched midscale brand, Spark by Hilton, which debuted in 2023; its extended-stay product, LivSmart Studios, which debuted in 2023; and its acquisition of Graduate Hotels in 2024. The extended-stay idea LivSmart and the luxury economy/midscale brand Spark of Hilton actually have several hundred partners in talks to become part of the company’s portfolio. Spark has the potential to reach a few thousand units over time, making it an appealing unit growth catalyst for the company.
Pershing Square Holdings stated the following regarding Hilton Worldwide Holdings Inc. (NYSE:HLT) in its Q2 2024 investor letter:
“In the first half of 2024, Hilton Worldwide Holdings Inc. (NYSE:HLT) generated strong revenue growth as the lodging industry experienced solid global demand against a favorable supply backdrop. Near-term industry trends remain positive, with continued strong international growth, improving business transient demand and extremely robust group demand, which is poised to sequentially accelerate in the third quarter. Leisure travel continued to moderate from the high levels of recent years following the COVID-19 reopening.
In the second quarter, HLT’s revenue per room (“RevPAR”), the industry metric for same-store sales, increased 3.5% as compared to 2023. Combined with strong 6% net unit growth, aggregate fee revenues grew 10%. Earnings per share grew 17% year-over-year, benefiting from Hilton’s excellent cost control and continued best-in-class capital return. Reflecting an incrementally challenging macroeconomic picture, principally in China, the company slightly reduced the upper end of their prior RevPAR guidance, now estimated by management to be +2% to +3%, while modestly increasing full year’s earnings guidance…” (Click here to read the full text)
Bill Ackman’s Pershing Square is the largest shareholder in the company, with 8,952,290 shares worth $1.95 billion.
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