Hilton (NYSE:HLT) is about to release earnings. Ponder this Bear Case Scenario.
Hilton is highly levered. Debt means interest costs. Interest rates will rise; profits will shrink. See how this arithmetic works. Not well!
Hilton is trading at a premium to Marriott and Starwood. Consider the tear the Starwood has been on and then you need to wonder about Hilton and why its a supposedly superior value. Not!
Lots of fixed costs make Hilton sluggish to respond to market place changes. Hotels are constantly refurbished. Hilton cannot mobilize capital fast enough to keep the game up.
George Gutowski writes from a caveat emptor perspective.