New York, July 01, 2021 -- Moody's Investors Service ("Moody's") has assigned a Ba1 corporate
family rating, a Ba1-PD probability of default rating,
Baa3 senior secured bank facility ratings, a Ba2 senior unsecured
rating, a SGL-1 Speculative Grade Liquidity rating and a
negative outlook to Hilton Domestic Operating Company Inc. ("HOC").
These ratings had previously been assigned to a related entity,
Hilton Worldwide Finance, LLC ("HWF"), which has
been merged into HOC. HOC's existing backed senior unsecured
rating of Ba2 is unchanged. All ratings of HWF have been withdrawn.
Assignments:
..Issuer: Hilton Domestic Operating Company Inc.
.... Corporate Family Rating, Assigned
Ba1
.... Probability of Default Rating,
Assigned Ba1-PD
.... Speculative Grade Liquidity Rating,
Assigned SGL-1
....Gtd Senior Secured Term Loan B2,
Assigned Baa3 (LGD2)
....Gtd Senior Secured Revolving Credit Facility,
Assigned Baa3 (LGD2)
....Gtd Senior Unsecured Regular Bond/Debenture,
Assigned Ba2 (LGD5)
LGD Adjustments:
..Issuer: Hilton Domestic Operating Company Inc.
....LGD senior unsecured regular bond/debenture
adjusted to (LGD5) from (LGD4)
Outlook Actions:
..Issuer: Hilton Domestic Operating Company Inc.
....Outlook, Assigned Negative
Withdrawals:
..Issuer: Hilton Worldwide Finance, LLC
.... Corporate Family Rating, Withdrawn
, previously rated Ba1
.... Probability of Default Rating,
Withdrawn , previously rated Ba1-PD
.... Speculative Grade Liquidity Rating,
Withdrawn , previously rated SGL-1
....Senior Secured Bank Credit Facility,
Withdrawn , previously rated Baa3 (LGD2)
....Senior Unsecured Regular Bond/Debenture,
Withdrawn , previously rated Ba2 (LGD4)
Outlook Actions:
..Issuer: Hilton Worldwide Finance, LLC
....Outlook, Changed To Rating Withdrawn
From Negative
RATINGS RATIONALE
Today's rating action results from an error correction. Since
the last rating action in April 2020 confirming the ratings of HWF,
Moody's has learned that in February 2020 HWF was merged with and
into HOC, with HOC assuming the senior notes previously issued by
HWF. Moody's has therefore assigned new ratings to HOC,
and withdrawn the ratings previously assigned to HWF.
HOC's (described herein as "Hilton") credit profile
derives support from its large scale; with about 1,032,000
rooms Hilton is the second largest rated hotel company after Marriott.
Hilton' s credit profile is also supported by its well-recognized
brands and good diversification by geography and industry segment.
Hilton's hotels are located in more than 115 countries around the world.
Hilton's credit profile also benefits from its very good liquidity with
$2.4 billion of cash and $500 million available under
its $1.75 billion revolving credit facility at March 31,
2021. In the short run, Hilton's credit profile will be dominated
by the length of time that the lodging industry continues to be highly
disrupted and the resulting impacts on the company's liquidity profile
and metrics. The normal ongoing credit risks include its historically
high leverage relative to other Ba1 rated companies and our expectation
that its debt/EBITDA will remain above its 4.5x downgrade factor
through 2022.
The negative outlook reflects the risk Hilton faces in terms of the pace
of leisure and business travel recovery enabling the company to de-lever
to below 4.5x.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Hilton's ratings could be downgraded if the leisure recovery stalls
and the pace of the return of business travel is such that debt/EBITDA
will remain above 4.5x or EBITA/interest expense below 3.5x
over the longer term. Ratings could also be downgraded if Hilton's
liquidity weakened in any way. The outlook could be revised to
stable if there are signs of improving travel trends, including
business travel, into 2022 leading to an expectation that the company's
finances will stabilize in the near term and that debt/EBITDA will improve
to below 4.5x over the medium term. An upgrade could come
if travel demand returns to near prior levels and debt/EBITDA improved
to a level approaching 3.5x.
Hilton Worldwide Holdings Inc., the ultimate parent of HOC,
is a leading hospitality company with more than 6,500 managed,
franchised, owned and leased hotels, resorts and timeshare
properties comprising about 1,032,000 rooms in 119 countries
and territories around the world. 2020 net revenues were $1.6
billion.
The principal methodology used in these ratings was Business and Consumer
Service Industry published in October 2016 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1037985.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The ratings have been disclosed to the rated entity or its designated
agent(s) and issued with no amendment resulting from that disclosure.
These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288435.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed
by Moody's Investors Service Limited, One Canada Square,
Canary Wharf, London E14 5FA under the law applicable to credit
rating agencies in the UK. Further information on the UK endorsement
status and on the Moody's office that issued the credit rating is
available on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Peter Trombetta
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Margaret Taylor
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 1 212 553 0376
Client Service: 1 212 553 1653
