Hilton selling $1 billion loyalty points to American Express
Hilton Worldwide Holdings Inc. is raising cash by selling loyalty points and offering bonds as the company rides out the coronavirus crisis.
The company said it pre-sold $1 billion worth of points in its Hilton Honors loyalty program to American Express Co., and plans to use the proceeds for working capital and general corporate purposes. Hilton also plans to offer $500 million in senior unsecured notes, the company said in a filing.
In a separate statement on its website, Amex said the purchase was part of a preexisting agreement between the companies and was already contemplated in the firm’s capital and liquidity planning. Hilton is one of AmEx’s largest co-brand partners, with the cards representing about 2% of spending on the firm’s network and 5% of its loans.
Like other hotel companies, Hilton is dealing with the impact of the coronavirus, which has brought global travel to a virtual halt. The company has suspended operations at nearly 1,000 hotels, representing roughly 16% of its portfolio. Revenue per available room, which accounts for occupancy and pricing, declined as much as 58% in March, according to the company’s preliminary estimates.
Hilton was among the earliest companies to tap credit lines to weather the virus, drawing down a $1.75 billion loan about a month ago. Since then, nearly 450 American companies have raised almost $300 billion by drawing down existing credit lines or raising new funds.
Several companies hit hard by the virus have tapped the bond market in recent weeks, capitalizing on a Federal Reserve-induced rally to raise new funds. Marriott International Inc. sold $1.6 billion in a sale Tuesday, while Wynn Resorts Ltd. raised $600 million last week.
Both were able to boost the size of their offerings and cut the interest rate amid strong investor demand. Separately, Marriott and Wynn are also among a growing list of companies that have been able to get leniency from lenders in loosening borrowing restrictions.