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Vacationers have been Hilton’s breadwinner lately, and the hotel giant expects to soon be filled with briefcase brigades.
sean o’neil
Hilton continues to do well as it rides the wave of tourists. But executives at the hotel giant now see the return of corporate travel and conferences as the fuel for the company’s next phase of growth.
Executives predicted Wednesday that occupancy by corporate travelers and conference attendees will soon fully return to pre-pandemic levels.
“By the end of the year from a demand perspective, BT [business travel] will get there,” said Christopher Nassetta, president and CEO. “Given the continued growth of large enterprises and highly resilient small and medium-sized enterprises; [small-and-medium-sized] business. ”
The McLean, Virginia-based company, which operates more than 20 brands including DoubleTree and Waldorf Astoria, said small business travelers are already trending above 2019 levels.
Thanks to their strong balance sheets, business travel companies are expected to follow suit.
“What we’re hearing from our large corporate clients is that they’re traveling more because their balance sheets are strong and their revenues are relatively strong,” Nassetta said.
Conferences and events are also poised to fully return to pre-pandemic scale.
“If you look at the trends of the group, they are really strong,” Nassetta added. “Group demand will eventually return by the end of the year and certainly by the end of the year, based on the underlying strength in that sector.”
Hilton pricing power
Hilton bosses predicted the company would maintain the strong pricing power it has enjoyed over the past few years.
“In fact, while we may see a slight decline in occupancy during leisure times, we have more pricing power most days of the week, and I think that gives us the ability to continue to push rates higher,” Nassetta said. Stated.
Changes in occupancy and occupancy rates have broadly led to a gradual deceleration in revenue per available room, a key industry metric, as the pattern reverts to the mean. In 2019, executives claimed a 2% to 3% year-over-year increase in system-wide annual revenue per available room was a positive result.
The company expects revenue per available room to increase 2% to 4% this year, executives said.
Some analysts were bullish, in part because Hilton executives have recently tended to tone down their company’s guidance to meet Wall Street expectations.
Case in point: Analysts Patrick Scholes and Gregory Miller predicted in a Wednesday report from Trust Securities that Hilton would see 5% growth in revenue per available room this year on a currency-neutral basis.
Views of the pool and guest room balconies at the Waldorf Astoria Seychelles Pratte Island, which opened in January 2024.Source: Hilton
Hilton first quarter
The hotel operator’s first quarter earnings demonstrate its strong financial position.
In the first three months of this year, Hilton generated net income of $268 million on revenue of $1.05 billion. After he deducts the proceeds, he must pass them on to the managed and franchised facility.
Hilton’s adjusted EBITDA was $750 million.
More acquisitions?
Hilton executives surprised the hotel industry earlier this year by announcing two acquisitions. The company has not acquired a hotel brand in 16 years, including a planned $210 million acquisition with Graduate Hotels and another with Sydel Group’s NoMad brand, which closed this month.
“I don’t think we should expect more netroom growth in that space,” Nassetta said. “From now on I’m going to say what I always do: ‘Never say never.'”
Nassetta called the acquisition a “one-off” and suggested Hilton could increase its number of properties primarily through its own efforts with brands it already owns and brands it creates internally. .
“We don’t have any other tricks like that for the time being,” Nassetta said.
Year-to-date performance of the Lodging Sector Stock Index
What am I looking at? Performance of hotel and short-term rental sector stocks within the ST200. The index includes publicly traded companies in global markets, including international and regional hotel brands, hotel REITs, hotel management companies, alternative accommodations, and timeshares.
The Skift Travel 200 (ST200) combines the financial performance of nearly 200 travel companies worth more than $1 trillion into one number. See more performance in the hotel and short-term rental finance sector.
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