Last updated: 10:20 AM ET, Mon October 31 2016

Impending Spinoffs Projected to Boost Hilton's Value by 25 Percent

Hotel & Resort | Patrick Clarke | October 31, 2016

Impending Spinoffs Projected to Boost Hilton's Value by 25 Percent

PHOTO: The Hilton Bandung in Indonesia. (Photo via Flickr/Zul Rosle) 

According to a recent report from financial newspaper Barron's, Hilton Worldwide's value could increase by as much as 25 percent when it completes its planned split into three separate companies.

Citing Barron's, Reuters reported the split is expected to boost Hilton's earnings and cash flow. The company is also expected to benefit from expansion in key markets around the world. 

The McLean, Virginia-based company expects to complete the spinoffs of Park Hotels & Resorts and Hilton Grand Vacations by the end of the year.

In February, Hilton confirmed plans to spin off approximately 70 properties into a real estate investment trust in a move aimed at improving shareholder value since real estate investment trusts typically pay fewer corporate taxes and trade at higher multiples of their earnings compared to their parent companies.

READ MORE: Hilton to Spin Off Real Estate, Timeshare Businesses

The company also revealed plans to spin off its timeshare business, Hilton Grand Vacations, into a separate publicly-traded company.

Last week, Hilton said the spinoffs remain on pace to be completed by the year's end and announced a cut in its profit forecast, with CEO Christopher Nassetta citing "a macroeconomic environment that continues to underperform expectations," according to the Wall Street Journal. Afterward, the company's share price reached its lowest level in four months.

Earlier this month, China's HNA Group agreed to acquire 25 percent of Hilton and its planned spinoffs from affiliates of the Blackstone Group in a deal valued at $6.5 billion.

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