Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
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Hilton Worldwide Holdings Inc. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2013
- Operating Profit Margin since 2013
- Price to Book Value (P/BV) since 2013
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Return on Invested Capital (ROIC)
Hilton Worldwide Holdings Inc., ROIC 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 operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT experienced a significant decline from a positive US$1,213 million in 2019 to a negative US$279 million in 2020, indicating a substantial decrease in operating profitability during that year. Subsequently, there was a recovery with NOPAT rising to US$614 million in 2021, and then a strong increase to US$1,814 million in 2022, representing the highest value in the observed period. However, in 2023, NOPAT declined to US$1,514 million, though it remained notably above the pre-pandemic level of 2019.
- Invested Capital
- Invested capital grew from US$11,409 million in 2019 to a peak of US$12,956 million in 2020, indicating increased capital deployment during that year. Following this peak, there was a gradual reduction in invested capital, decreasing to US$11,581 million in 2021, then further to US$11,342 million in 2022, and reaching US$10,493 million in 2023. This downward trend suggests a period of capital optimization or divestiture after the peak in 2020.
- Return on Invested Capital (ROIC)
- The ROIC mirrored the NOPAT trend, starting at a solid 10.63% in 2019 before plunging to -2.15% in 2020, indicating a period where the returns on invested capital were negative. The following years show a recovery to 5.3% in 2021, a substantial improvement to 16% in 2022, which marks the highest return in the period examined, and a slight decrease to 14.43% in 2023. Overall, despite fluctuations, the company's efficiency in generating returns from its capital improved significantly from the low point in 2020.
Decomposition of ROIC
Hilton Worldwide Holdings Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × |
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 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin experienced considerable fluctuations over the observed period. It declined sharply from 17.88% in 2019 to a negative margin of -3.28% in 2020, indicating operational challenges likely linked to external disruptions during that year. Subsequently, the margin improved significantly, reaching 15.23% in 2021 and continuing an upward trend to 26.3% in 2022. In 2023, the margin slightly decreased but remained robust at 23.21%, suggesting a strong recovery phase and improved operational efficiency compared to the pre-pandemic level.
- Turnover of Capital (TO)
- The turnover of capital showed a declining trend from 0.83 in 2019 to a low of 0.35 in 2020, reflecting reduced efficiency in utilizing capital potentially due to market downturns or asset underutilization. It began a gradual recovery in 2021 at 0.49, improving further to 0.79 in 2022, and finally reaching parity at 1.0 in 2023. This indicates enhanced capital use efficiency and potentially improved revenue generation per unit of invested capital over time.
- 1 – Effective Cash Tax Rate (CTR)
- The effective cash tax rate expressed inversely (1 - CTR) varied considerably, starting at 71.89% in 2019, rising sharply to 100% in 2020, suggesting that the company possibly did not pay cash taxes during the downturn. It then returned closer to prior levels with 71.17% in 2021 and increased to 77.11% in 2022, before decreasing to 62.44% in 2023. The fluctuations likely reflect changes in taxable income, tax planning strategies, or temporary tax benefits over the period.
- Return on Invested Capital (ROIC)
- The return on invested capital mirrored the operating profit margin’s volatility. It decreased from 10.63% in 2019 to a negative return of -2.15% in 2020, indicating a period of capital underperformance. Recovery ensued with a rise to 5.3% in 2021 and a marked improvement to 16% in 2022. A slight decline to 14.43% in 2023 was observed but remained well above the levels before and during 2020, reflecting renewed profitability and more effective use of invested capital.
Operating Profit Margin (OPM)
Hilton Worldwide Holdings Inc., OPM 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 operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes demonstrated considerable volatility over the analyzed period. There was a significant decline in 2020, with the value turning negative at -148 million USD, indicating operational challenges or exceptional costs during that year. Subsequently, the NOPBT showed a recovery, increasing to 862 million USD in 2021. This upward trend continued strongly in 2022 and 2023, reaching 2353 million USD and 2425 million USD, respectively, exceeding pre-2020 levels and demonstrating a robust financial rebound.
- Adjusted Revenues
- Adjusted revenues exhibited a sharp drop from 9435 million USD in 2019 to 4522 million USD in 2020, less than half of the previous year's figure. This contraction was followed by a gradual recovery, with revenues rising to 5660 million USD in 2021 and further climbing to 8946 million USD in 2022. The upward trajectory culminated in 2023 with revenues reaching 10450 million USD, surpassing the 2019 baseline. This pattern indicates a strong recovery in sales and operational activity within the company.
- Operating Profit Margin (OPM)
- The operating profit margin experienced a sharp decline from 17.88% in 2019 to a negative margin of -3.28% in 2020, reflecting a loss at the operating level that aligns with the negative NOPBT in the same year. Following this downturn, the margin improved markedly to 15.23% in 2021 and continued to strengthen substantially, reaching a peak of 26.3% in 2022. In 2023, the margin slightly decreased to 23.21%, which nonetheless remains well above the levels observed before the 2020 downturn, signalling enhanced operational efficiency or improved cost management in the later years.
Turnover of Capital (TO)
Hilton Worldwide Holdings Inc., TO 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) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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 Invested capital. See details »
2 2023 Calculation
TO = Adjusted revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Revenue Trends
- Adjusted revenues exhibited a significant decline from 2019 to 2020, decreasing from 9,435 million to 4,522 million US dollars, reflecting a reduction of over 50%. However, the subsequent years showed a recovery trend, with revenues increasing to 5,660 million in 2021, 8,946 million in 2022, and surpassing the pre-decline level by reaching 10,450 million in 2023. This suggests a strong rebound and growth trajectory in the most recent year.
- Invested Capital
- Invested capital experienced a gradual increase from 11,409 million US dollars in 2019 to a peak of 12,956 million in 2020. Following this peak, the invested capital steadily declined over the next three years, reaching 10,493 million in 2023. The decrease may indicate divestment, asset optimization, or other capital management strategies during this period.
- Turnover of Capital (TO)
- The turnover of capital ratio decreased sharply from 0.83 in 2019 to 0.35 in 2020, indicating a reduced efficiency in generating revenues from invested capital during that period. Subsequently, the ratio improved considerably to 0.49 in 2021 and 0.79 in 2022, nearly recovering to the initial 2019 level. By 2023, the turnover of capital reached 1.0, the highest in the observed period, demonstrating enhanced capital utilization efficiency and possibly reflecting the positive impact of recovering revenues alongside strategic capital reduction.
- Overall Insights
- The data portrays a pronounced impact on business performance in 2020, likely influenced by external factors resulting in a revenue drop and decreased capital turnover. The following years reveal consistent recovery with revenues surpassing pre-2020 figures by 2023 and invested capital being managed more efficiently, as indicated by the rising turnover of capital ratio. This indicates a successful period of financial recovery and capital deployment optimization.
Effective Cash Tax Rate (CTR)
Hilton Worldwide Holdings Inc., CTR 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 operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- Cash operating taxes exhibited a significant decline from 474 million USD in 2019 to 130 million USD in 2020, reflecting a reduced tax burden likely due to decreased profitability or temporary tax relief measures. This amount increased substantially in 2021 to 249 million USD and continued an upward trend in 2022 reaching 539 million USD. By 2023, cash operating taxes nearly doubled from the previous year to 911 million USD, indicating an increased taxable income base or changes in tax regulations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes showed a marked decline from 1,687 million USD in 2019 to a negative value of -148 million USD in 2020, signaling a period of operational loss, most likely caused by external factors impacting business performance. Following recovery, the figure improved to 862 million USD in 2021 and surged to 2,353 million USD in 2022. The 2023 figure remained strong at 2,425 million USD, representing a sustained level of profitability above pre-pandemic levels.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate was 28.11% in 2019 and data for 2020 is unavailable. In 2021, the rate was slightly higher at 28.83%, which then decreased to 22.89% in 2022, suggesting a more favorable tax environment or utilization of tax credits. However, in 2023, the tax rate increased significantly to 37.56%, indicating higher tax liabilities relative to pre-tax profit, which could be due to changes in tax policy or reduced available deductions.