Hilton Shares Shrug Off Weak Earnings Report

Big Earnings Miss in Q2

Shares in US hotelier Hilton Worldwide are trading higher by 3% pre-market on Tuesday as the group extends its recent rally. This is despite a disappointing earnings report last week. Hilton posted Q2 earnings per share of -$1.48, well below the expected loss -$0.31. Net loss for the quarter was $432 million. This is as a result of the negative impact suffered as a result of the COVID-19 pandemic.

COVID Impact Noted

Announcing the results, Hilton chairman and CEO Christopher J Nassetta said:

“Our second-quarter results reflect the challenges that our business has experienced as a result of the pandemic. However, as restrictions are lifting and properties around the world are reopening, we are seeing improved occupancy. While we have a long journey in front of us, we are on the road to recovery and look forward to the opportunities ahead.”

In terms of the material impact of the pandemic, Hilton noted the biggest downside effects were seen in occupancy and RevPAR.

In terms of the recovery seen over recent weeks, Hilton noted that the biggest improvements were in the US and the Asia Pacific. There, over April – June, occupancy has rebounded by around 20% and 15% respectively. 

China Development Plans Highlighted

In terms of development, Hilton noted that it opened a further 60 new hotels across the quarter totaling an additional 6800 rooms. Net unit growth is 5500 rooms.

Alongside this, Hilton noted that it has also entered into an exclusive management license agreement with Country Garden. This is aimed at developing its Home2 Suites in Hilton properties in China. This strategy looks to capture growth opportunities in smaller cities in China which are seeing an increase in consumer spending power.

Hilton Breaks Above Bearish Trend Line

Shares in Hilton look to be rebounding firmly following the failure and reversal at the 89.96 level. Price has since traded back down to retest the bottom of the bullish channel which is holding as support. This is pushing price back above the 80.93 level and the bearish trend line from 2020 highs. While price holds above here, focus is on a further push higher. The next objective for bulls is a break above the 89.96 level 

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