Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Hilton Worldwide Holdings Inc., profitability ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The profitability metrics reveal a significant period of volatility characterized by a sharp downturn in 2020 and a subsequent recovery that peaked in 2022. The overall trend indicates a resilient return to profitability, with most metrics in 2023 remaining higher than the 2019 baseline.
- Operating Profit Margin
- A substantial decline is observed from 17.53% in 2019 to -9.71% in 2020. This was followed by a rapid recovery to 17.45% in 2021 and a peak of 23.87% in 2022. The margin experienced a slight contraction to 21.74% by the end of 2023, yet it remains significantly above pre-2020 levels.
- Net Profit Margin
- The net profit margin mirrored the operating trend, falling from 9.32% in 2019 to -16.60% in 2020. Recovery began in 2021 at 7.08%, accelerating to a high of 14.31% in 2022 before moderating to 11.15% in 2023.
- Return on Assets (ROA)
- Asset utilization efficiency dropped from 5.89% in 2019 to -4.27% in 2020. A gradual recovery is evident through 2021 (2.66%), reaching a peak efficiency of 8.09% in 2022 and concluding the period at 7.41% in 2023.
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Operating Profit Margin
Hilton Worldwide Holdings Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating income (loss) | 2,225) | 2,094) | 1,010) | (418) | 1,657) | |
| Revenues | 10,235) | 8,773) | 5,788) | 4,307) | 9,452) | |
| Profitability Ratio | ||||||
| Operating profit margin1 | 21.74% | 23.87% | 17.45% | -9.71% | 17.53% | |
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | 15.31% | 21.45% | 7.17% | — | — | |
| Booking Holdings Inc. | 27.31% | 29.85% | 22.78% | — | — | |
| Chipotle Mexican Grill Inc. | 15.78% | 13.44% | 10.67% | — | — | |
| DoorDash, Inc. | -6.71% | -17.07% | -9.25% | — | — | |
| McDonald’s Corp. | 45.68% | 40.42% | 44.59% | — | — | |
| Starbucks Corp. | 16.32% | 14.32% | 16.77% | 6.64% | — | |
| Operating Profit Margin, Sector | ||||||
| Consumer Services | 23.23% | 21.77% | 22.66% | — | — | |
| Operating Profit Margin, Industry | ||||||
| Consumer Discretionary | 9.02% | 8.35% | 8.71% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Revenues
= 100 × 2,225 ÷ 10,235 = 21.74%
2 Click competitor name to see calculations.
The operating performance between 2019 and 2023 is characterized by a significant V-shaped recovery, moving from a period of severe contraction to a state of expanded profitability and record revenue levels.
- Revenue Trajectory
- A substantial decline in revenues occurred between 2019 and 2020, dropping from US$ 9,452 million to US$ 4,307 million. This decline was followed by a consistent year-over-year increase, with revenues scaling to US$ 5,788 million in 2021, US$ 8,773 million in 2022, and peaking at US$ 10,235 million by the end of 2023.
- Operating Profit Margin Volatility
- The operating profit margin exhibited extreme volatility, falling from a healthy 17.53% in 2019 to a negative 9.71% in 2020, resulting in an operating loss of US$ 418 million. A rapid recovery was observed in 2021, where the margin returned to 17.45%, effectively mirroring pre-pandemic profitability levels.
- Operational Efficiency and Margin Expansion
- Operational efficiency peaked in 2022, with the operating profit margin expanding to 23.87%, the highest point in the five-year period. Although revenues continued to grow in 2023, the operating profit margin experienced a slight contraction to 21.74%. This suggests that while the scale of operations increased, the growth in operating expenses slightly outpaced the growth in operating income during the final year of the analysis.
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Net Profit Margin
Hilton Worldwide Holdings Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hilton stockholders | 1,141) | 1,255) | 410) | (715) | 881) | |
| Revenues | 10,235) | 8,773) | 5,788) | 4,307) | 9,452) | |
| Profitability Ratio | ||||||
| Net profit margin1 | 11.15% | 14.31% | 7.08% | -16.60% | 9.32% | |
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Airbnb Inc. | 48.32% | 22.54% | -5.88% | — | — | |
| Booking Holdings Inc. | 20.07% | 17.89% | 10.63% | — | — | |
| Chipotle Mexican Grill Inc. | 12.45% | 10.41% | 8.65% | — | — | |
| DoorDash, Inc. | -6.46% | -20.74% | -9.57% | — | — | |
| McDonald’s Corp. | 33.22% | 26.65% | 32.49% | — | — | |
| Starbucks Corp. | 11.46% | 10.18% | 14.45% | 3.95% | — | |
| Net Profit Margin, Sector | ||||||
| Consumer Services | 20.08% | 14.50% | 15.60% | — | — | |
| Net Profit Margin, Industry | ||||||
| Consumer Discretionary | 7.84% | 5.02% | 9.12% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Net profit margin = 100 × Net income (loss) attributable to Hilton stockholders ÷ Revenues
= 100 × 1,141 ÷ 10,235 = 11.15%
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by a sharp contraction followed by a robust recovery and subsequent stabilization. A significant volatility in both revenue and net income was observed during the early part of the period, with a return to growth and improved profitability margins in the later years.
- Revenue Trends
- Revenues experienced a severe decline from 9,452 million US$ in 2019 to 4,307 million US$ in 2020. Following this trough, a consistent upward trajectory was maintained, with revenues increasing annually to reach 10,235 million US$ by December 31, 2023. This indicates a full recovery and an expansion of the top line beyond pre-2020 levels.
- Net Profit Margin Volatility
- The net profit margin shifted from a positive 9.32% in 2019 to a negative 16.60% in 2020, reflecting a period of significant loss. A recovery phase began in 2021 with a margin of 7.08%, which peaked at 14.31% in 2022. In 2023, the margin moderated to 11.15%, suggesting a slight decrease in efficiency or an increase in relative expenses despite record revenues.
- Net Income Correlation
- Net income followed a pattern similar to the profit margin, moving from a net loss of 715 million US$ in 2020 to a peak of 1,255 million US$ in 2022. Although revenues continued to climb in 2023 to 10,235 million US$, net income decreased slightly to 1,141 million US$. This divergence between revenue growth and net income growth in the final year contributed to the observed compression of the net profit margin.
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Return on Equity (ROE)
Hilton Worldwide Holdings Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hilton stockholders | 1,141) | 1,255) | 410) | (715) | 881) | |
| Total Hilton stockholders’ deficit | (2,360) | (1,102) | (821) | (1,490) | (482) | |
| Profitability Ratio | ||||||
| ROE1 | — | — | — | — | — | |
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Airbnb Inc. | 58.69% | 34.05% | -7.37% | — | — | |
| Booking Holdings Inc. | — | 109.92% | 18.86% | — | — | |
| Chipotle Mexican Grill Inc. | 40.13% | 37.97% | 28.42% | — | — | |
| DoorDash, Inc. | -8.20% | -20.21% | -10.03% | — | — | |
| McDonald’s Corp. | — | — | — | — | — | |
| Starbucks Corp. | — | — | — | — | — | |
| ROE, Sector | ||||||
| Consumer Services | 863.51% | 506.32% | 159.36% | — | — | |
| ROE, Industry | ||||||
| Consumer Discretionary | 29.93% | 20.78% | 33.71% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROE = 100 × Net income (loss) attributable to Hilton stockholders ÷ Total Hilton stockholders’ deficit
= 100 × 1,141 ÷ -2,360 = —
2 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by significant volatility in net income and a persistent stockholders' deficit, which fundamentally alters the interpretation of profitability metrics.
- Net Income Trajectory
- A sharp contraction in profitability is observed in 2020, where net income shifted from a profit of US$ 881 million in 2019 to a net loss of US$ 715 million. A recovery phase followed, with net income returning to positive values in 2021 and peaking at US$ 1,255 million in 2022. The 2023 period shows a slight moderation in earnings, closing at US$ 1,141 million.
- Stockholders' Equity Position
- The company operated with a negative equity position throughout the entire five-year period. The stockholders' deficit showed a general trend of expansion, increasing from US$ 482 million in 2019 to US$ 2,360 million by the end of 2023. This persistent deficit suggests a capital structure where liabilities exceed assets, often associated with aggressive share repurchases or accumulated losses.
- Return on Equity (ROE) Analysis
- The utility of the Return on Equity ratio is severely limited due to the negative denominator (stockholders' deficit). In periods where net income is positive but equity is negative, the resulting ROE is mathematically negative, which does not accurately reflect operational profitability. Conversely, when both net income and equity are negative, as seen in 2020, the ratio produces a misleading positive value. Consequently, the ROE cannot be used as a reliable indicator of performance for this entity during the analyzed timeframe.
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Return on Assets (ROA)
Hilton Worldwide Holdings Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income (loss) attributable to Hilton stockholders | 1,141) | 1,255) | 410) | (715) | 881) | |
| Total assets | 15,401) | 15,512) | 15,441) | 16,755) | 14,957) | |
| Profitability Ratio | ||||||
| ROA1 | 7.41% | 8.09% | 2.66% | -4.27% | 5.89% | |
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Airbnb Inc. | 23.21% | 11.80% | -2.57% | — | — | |
| Booking Holdings Inc. | 17.62% | 12.06% | 4.93% | — | — | |
| Chipotle Mexican Grill Inc. | 15.27% | 12.98% | 9.81% | — | — | |
| DoorDash, Inc. | -5.15% | -13.94% | -6.87% | — | — | |
| McDonald’s Corp. | 15.08% | 12.25% | 14.01% | — | — | |
| Starbucks Corp. | 14.01% | 11.73% | 13.38% | 3.16% | — | |
| ROA, Sector | ||||||
| Consumer Services | 14.95% | 10.21% | 9.37% | — | — | |
| ROA, Industry | ||||||
| Consumer Discretionary | 7.57% | 4.81% | 7.99% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
ROA = 100 × Net income (loss) attributable to Hilton stockholders ÷ Total assets
= 100 × 1,141 ÷ 15,401 = 7.41%
2 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by a period of extreme volatility followed by a robust recovery in profitability and asset utilization efficiency. The transition from a significant net loss to a higher-than-baseline return on assets indicates a successful rebound in operational effectiveness.
- Return on Assets (ROA) Trends
- The ROA exhibited a sharp contraction from 5.89% in 2019 to a low of -4.27% in 2020, reflecting a period where the asset base failed to generate positive net income. A consistent recovery trend followed, with the ratio increasing to 2.66% in 2021 and peaking at 8.09% in 2022. The 2023 ROA of 7.41% suggests that while there was a slight moderation from the 2022 peak, the company is maintaining a level of asset efficiency that exceeds its 2019 performance.
- Net Income Dynamics
- Net income shifted from 881 million USD in 2019 to a loss of 715 million USD in 2020. The recovery phase saw earnings return to positive territory in 2021 at 410 million USD, followed by a substantial increase to 1,255 million USD in 2022. The final period ending December 31, 2023, recorded a net income of 1,141 million USD, confirming a sustained trend of profitability significantly above pre-2020 levels.
- Asset Base Analysis
- Total assets remained relatively stable throughout the analyzed period, fluctuating within a range of approximately 14.9 billion USD to 16.7 billion USD. An increase in total assets to 16,755 million USD in 2020 occurred simultaneously with the decline in net income, contributing to the negative ROA. From 2021 through 2023, the asset base stabilized near 15.4 billion USD, which allowed the growth in net income to directly amplify the return on assets.
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