Hilton Hotels (HLT) is a hospitality company. The Company is engaged in managing, franchising, owning and leasing hotels and resorts, plus licensing its brands and intellectual property. HLT manages, franchises, owns or leases approximately 6,837 properties comprising approximately 1,074,791 rooms in over122 countries and territories. The ownership segment includes approximately 54 properties totaling over 18,151 rooms (6,783 properties are leased, rented or franchised = 1,056,640 rooms).

COVID-19 led to a 75%+ reduction in revenues as business and leisure travel collapsed in 2020. A recovery began in Q2 2021 and the most recent results saw quarterly revenues return to their pre-COVID level. Likewise, earnings have rebounded as Q3 FY22 EPS were $1.31 v. $0.78 the prior year. A quarterly cash dividend of $0.15 per share was resumed in Q1 2022, after a two-year hiatus. After-tax earnings through three quarters of 2022 are $0.924B v. $0.259B for the same three quarters in 2021.

Institutional investors own 98.65% of HTL common stock. In 2017 HLT began a program of share buybacks, reducing the number of shares outstanding from 331M to 275M (Q3 2022). After trading on 11/10/22, HLT announced that it would increase its share repurchases by $2.5B. The following day, HLT common stock rose $4.01 to $140.63 per share. The firm had $1.28B in cash as of 9/30/22.

[1] At the current price of the stock, how many shares could HLT buyback with $2.5B?

[2] If HLT buys back all the shares (in your answer to #1), what would be the new number of shares outstanding? What would be the percentage reduction in shares outstanding after the buyback?

[3] Compute the percentage increase in HLTs common stock price on 11/11/22 (its one-day holding period return). What was the increase in the market capitalization of HLT on 11/11/22 and how does it compare to the size of the (increased) buy-back that was announced?

[4] Was this new distribution policy announced by HLT management a success or not? If not, what might be some reasons why it was not?