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Mar 11, 2020
, Bloomberg News
(Bloomberg) -- Hilton Worldwide Holdings Inc. is planning to draw down a portion of its revolving credit line as it grapples with the impact of coronavirus on global travel,
The hotel company is taking some of its $1.75 billion loan in response to market turmoil, according to people with knowledge of the matter, who requested anonymity because the matter is private. A Hilton spokesman declined to comment.
The spreading coronavirus outbreak has roiled markets around the world, and crimped demand for travel as business trips are curtailed and large corporate events are canceled. The crisis has hammered stocks of lodging companies, which have seen room revenue and occupancy rates plummet.
Hilton had said that the virus would be a minor drag on earnings, mainly affecting its business in Asia. But that tone has changed as the outbreak hits more and more people. Earlier this week, the company pulled its 2020 guidance.
“With the coronavirus now spreading beyond China and the Asia Pacific region, and the related increase in travel restrictions and cancellations around the world, we believe that the potential negative impact will be greater than our previous estimate and have decided to withdraw our previously announced guidance,” Chief Executive Officer Christopher Nassetta said in a statement.
The McLean, Virginia-based company increased the borrowing capacity of its revolving credit facility to $1.75 billion last June. It had drawn down $255 million of that total by the end of 2019, according to filings. Hilton’s revolving credit lenders include affiliates of Deutsche Bank AG and Goldman Sachs Group Inc.
The company’s shares have tumbled more than 25% in the past month, outpacing declines in the S&P 500 Index. The stock slipped as much as 11% on Wednesday to $80.46, the biggest intraday plunge since August 2015.
Hilton is not alone in taking quick steps to shore up its balance sheets as broader market volatility raises concerns about a potential liquidity crunch. Boeing Co. is planning to draw down the full amount of a $13.8 billion loan as early as Friday, Bloomberg News reported earlier.
(Updates with background on coronavirus impact to hotels)
--With assistance from Patrick Clark.
To contact the reporter on this story: Gillian Tan in New York at gtan129@bloomberg.net
To contact the editors responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net, Craig Giammona, Christine Maurus
©2020 Bloomberg L.P.
