Market Value Added (MVA)
Market value added (MVA) is the difference between a firm fair value and its invested capital. MVA is a measure of the value a company has created in excess of the resources already committed to the enterprise.
MVA
Hilton Worldwide Holdings Inc., MVA calculation
US$ in millions
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 Fair value of debt. See details »
2 Invested capital. See details »
The analysis of Market Value Added (MVA) from 2019 to 2023 reveals a substantial and consistent upward trajectory in shareholder value creation, despite a brief contraction in 2022. The MVA increased from US$ 29,432 million in 2019 to US$ 48,783 million by the end of 2023, indicating that the market's valuation of the entity has grown significantly faster than the capital invested in its operations.
- Market Value Trends
- The fair market value exhibited a general growth pattern, rising from US$ 40,841 million in 2019 to a peak of US$ 59,276 million in 2023. While a temporary decline was observed in 2022, where value dropped to US$ 49,238 million, the subsequent recovery in 2023 represents the highest valuation within the analyzed period.
- Invested Capital Dynamics
- Invested capital followed a contrasting trend to the market value. After reaching a peak of US$ 12,956 million in 2020, there was a continuous year-over-year decline, ending at US$ 10,493 million in 2023. This reduction in the capital base suggests an optimization of the balance sheet or a shift toward a more capital-efficient operating model.
- Analysis of Market Value Added (MVA)
- The MVA expansion is a result of the widening gap between the increasing market valuation and the decreasing invested capital. The most pronounced growth occurred between 2020 and 2021, with MVA rising by US$ 12,032 million. The overall trend suggests that the company is creating significant value beyond the cost of its capital, as the market premium has grown by approximately 65.7% over the five-year period.
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MVA Spread Ratio
Hilton Worldwide Holdings Inc., MVA spread ratio 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) | ||||||
| Market value added (MVA)1 | 48,783) | 37,896) | 42,085) | 30,053) | 29,432) | |
| Invested capital2 | 10,493) | 11,342) | 11,581) | 12,956) | 11,409) | |
| Performance Ratio | ||||||
| MVA spread ratio3 | 464.91% | 334.12% | 363.39% | 231.96% | 257.97% | |
| Benchmarks | ||||||
| MVA Spread Ratio, Competitors4 | ||||||
| Airbnb Inc. | 1,551.16% | 1,119.95% | 1,602.12% | — | — | |
| Booking Holdings Inc. | 1,200.63% | 645.29% | 637.88% | — | — | |
| Chipotle Mexican Grill Inc. | 1,142.84% | 775.57% | 750.94% | — | — | |
| DoorDash, Inc. | 762.68% | 272.76% | 975.30% | — | — | |
| McDonald’s Corp. | 430.22% | 426.12% | 393.79% | — | — | |
| Starbucks Corp. | 540.56% | 553.87% | 552.49% | 492.67% | — | |
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 MVA. See details »
2 Invested capital. See details »
3 2023 Calculation
MVA spread ratio = 100 × MVA ÷ Invested capital
= 100 × 48,783 ÷ 10,493 = 464.91%
4 Click competitor name to see calculations.
The financial performance from 2019 to 2023 indicates a significant expansion in value creation relative to the capital base. The overall trajectory is characterized by a substantial increase in market value added alongside a gradual reduction in invested capital, resulting in a sharply improving value-to-investment profile.
- Market Value Added (MVA)
- A consistent upward trend is observed in Market Value Added, which rose from US$ 29,432 million in 2019 to US$ 48,783 million in 2023. The most pronounced growth occurred between 2020 and 2021, with a temporary contraction in 2022 before reaching a five-year peak in the final year of the period.
- Invested Capital
- Invested capital exhibited a peak of US$ 12,956 million in 2020, followed by a steady decline to US$ 10,493 million by 2023. This downward trend suggests a more lean capital structure or a strategic reduction in the capital employed to generate returns.
- MVA Spread Ratio
- The MVA spread ratio demonstrates a strong positive correlation with the growth in market value and the decrease in invested capital. After a slight decline to 231.96% in 2020, the ratio climbed aggressively to 464.91% by 2023. This expansion indicates that the market's valuation of the company's value-adding capabilities has grown significantly faster than the actual capital invested in the business.
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MVA Margin
Hilton Worldwide Holdings Inc., MVA 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) | ||||||
| Market value added (MVA)1 | 48,783) | 37,896) | 42,085) | 30,053) | 29,432) | |
| Revenues | 10,235) | 8,773) | 5,788) | 4,307) | 9,452) | |
| Add: Increase (decrease) in deferred revenues | 215) | 173) | (128) | 215) | (17) | |
| Adjusted revenues | 10,450) | 8,946) | 5,660) | 4,522) | 9,435) | |
| Performance Ratio | ||||||
| MVA margin2 | 466.82% | 423.61% | 743.54% | 664.59% | 311.94% | |
| Benchmarks | ||||||
| MVA Margin, Competitors3 | ||||||
| Airbnb Inc. | 902.27% | 889.82% | 1,448.64% | — | — | |
| Booking Holdings Inc. | 641.48% | 515.10% | 873.40% | — | — | |
| Chipotle Mexican Grill Inc. | 693.54% | 483.21% | 544.85% | — | — | |
| DoorDash, Inc. | 462.55% | 220.43% | 634.30% | — | — | |
| McDonald’s Corp. | 844.34% | 834.91% | 808.92% | — | — | |
| Starbucks Corp. | 334.25% | 352.88% | 450.20% | 480.36% | — | |
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 MVA. See details »
2 2023 Calculation
MVA margin = 100 × MVA ÷ Adjusted revenues
= 100 × 48,783 ÷ 10,450 = 466.82%
3 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by a consistent increase in total market value added (MVA) and a volatile but recovering revenue stream, which collectively influenced the MVA margin.
- Market Value Added (MVA)
- A general upward trajectory in MVA is observed, increasing from 29,432 million US$ in 2019 to 48,783 million US$ by 2023. Despite a slight contraction in 2022 to 37,896 million US$, the overall trend indicates a substantial expansion in the value created for shareholders over the five-year period.
- Adjusted Revenues
- Revenue exhibited significant volatility, with a sharp decline from 9,435 million US$ in 2019 to a low of 4,522 million US$ in 2020. A steady recovery followed, with revenues returning to pre-pandemic levels by 2022 and reaching a peak of 10,450 million US$ in 2023.
- MVA Margin
- The MVA margin showed an inverse relationship with adjusted revenues. The margin peaked at 743.54% in 2021, driven by the combination of recovering market value and significantly depressed revenue levels. As revenues rebounded toward 10,450 million US$ in 2023, the margin normalized to 466.82%, though it remained notably higher than the 311.94% recorded in 2019.
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