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Hilton Worldwide to spin off real estate and timeshare businesses

29 February 2016 by
Hilton Worldwide to spin off real estate and timeshare businesses

Hilton Worldwide has announced it will spin off the bulk of its real estate business, along with its timeshare business Hilton Grand Vacations (HGV) to create two new companies.

The group, which numbers more than 4,600 hotels globally, said it will spin off around 70 properties (35,000 rooms) to form a real estate investment trust (REIT) and HGV will also become a separate publicly traded entity.

Christopher Nassetta, Hilton Worldwide's president and chief executive said: "The transactions we announced 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.

"We intend to have the appropriate leadership, strategies and capital structures in place to set up all three companies for further success."

The REIT portfolio will include luxury and upper upscale properties in a range of international markets including resorts and airport locations. Meanwhile the time share business is expected to manage nearly 50 resorts in the US and Europe. It will continue to use the Hilton Grand Vacations name as part of a licensing deal with Hilton Worldwide.

Hilton aims to complete the spin-offs by the end of this year and said the scheme will simplify and focus Hilton Worldwide's business model on its core, capital efficient fee business.

The news coincided with the release of Hilton Worldwide's 2015 financial results. Adjusted EBITDA for the whole year increased by 13% to $2,879m (£2,073m) and by 7% to $754m (£543m) for the three months ended 31 December, compared to $699m (£503m) for the same period the previous year.

Meanwhile system-wide comparable revpar increased 5.4% and 3.7% for full year and fourth quarter respectively for 2015.

Nassetta said: "In 2015, we entered our 100th country and territory and our distinct, market-leading brands continued to deliver accelerating organic growth, with 50,000 new rooms opened and over 100,000 new rooms approved in the year.

"Last month we launched our 13th brand, Tru by Hilton, an innovative midscale brand that already has commitments for 163 properties and is set to further strengthen our brand portfolio and continue to grow our development pipeline, which is already the largest in the industry."

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