Hilton Worldwide to spin off its real estate and timeshare businesses
Published
McLean-based Hilton Worldwide announced plans Friday to spin off its real estate and its timeshare businesses as separate publicly traded companies.
The move will result in the creation of three corporations.
Hilton Worldwide currently has more than 4,600 managed, franchised, owned and leased hotels and timeshare properties with more than 758,000 rooms in 100 countries and territories. Its portfolio includes 13 brands, such as Hilton Hotels & Resorts, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton and Hilton Grand Vacations.
“The transactions we announced today will result in three pure-play companies, enabling dedicated management teams to fully activate their respective businesses, taking advantage of both organic and inorganic growth opportunities as well as capital market and tax efficiencies,” Christopher J. Nassetta, the president and CEO of Hilton Worldwide, said in a statement. “We intend to have the appropriate leadership, strategies and capital structures in place to set up all three companies for further success.”
The bulk of Hilton’s real estate business will become a real estate investment trust. It will include approximately 70 properties with 35,000 guest rooms.
The new timeshare company would manage nearly 50 club resorts in the United States and Europe.
The timeshare company would retain an exclusive, long-term affiliation with Hilton Worldwide to market, sell and operate resorts under the Hilton Grand Vacations brand.
Hilton Worldwide would focus primarily on its fee business as a hotel management company.
Hilton Worldwide announced the spinoffs the same day it released its fourth-quarter and full-year results for 2015.
The company had revenue of $2.86 billion for the fourth quarter, up from $2.83 billion for the same period the previous year. Full-year revenue for 2015 was $11.27 billion, up from $10.5 billion.
Earnings per share for the quarter were 82 cents, up from 16 cents, while full-year EPS were $1.42, up from 68 cents per share in 2014.
With adjustments, fourth-quarter and full-year EPS were 22 cents and 81 cents, respectively.
Hilton Worldwide said it had received a letter from the Internal Revenue Service saying the spin-offs would qualify as tax-free transactions. Stock in the spun-off companies will be distributed to existing Hilton Worldwide shareholders.
The company plans to file registration statements with the Securities and Exchange Commission during the second quarter and to complete the spin-offs by the end of the year.
