Hilton Worldwide recently announced that its second-quarter systemwide revenue per available room (RevPAR) generated by large corporates increased by 5 per cent year over year. This positive growth was highlighted during an earnings call on Wednesday, where officials also noted a notable recovery in the technology sector. Overall, Hilton’s second-quarter systemwide RevPAR saw a 3.5 per cent increase year over year, with transient RevPAR, including business and leisure, increasing by 2 per cent for the same period.
During the earnings call, CEO Christopher Nassetta shared insights into the different segments contributing to Hilton’s RevPAR growth. He mentioned that group business is still performing well, with a 10 per cent increase in RevPAR year over year. This growth was driven by strong demand for corporate and social meetings and events, with booking windows continuing to lengthen. Nassetta also highlighted the resilience of business transient, which is steadily increasing, albeit not at a rapid pace. Additionally, leisure transient is normalizing as life returns to a more typical state post-pandemic.
Despite the positive trends in group and business transient segments, Hilton, along with other major hotel chains like Hyatt Hotels, Marriott International, and Wyndham Hotels & Resorts, adjusted its projected full-year RevPAR increase. Hilton now expects a 2 to 3 per cent increase in 2024 RevPAR above 2023 levels, down from its previous projection of between 2 and 4 per cent. This adjustment was made due to softer trends in certain international markets and the normalization of leisure growth.
In terms of performance metrics, Hilton’s systemwide second-quarter occupancy increased by 1.3 percentage points year over year to 75.3 per cent. The average daily rate also saw a 1.7 per cent increase to $163.70, resulting in a systemwide RevPAR of $123.30. In Europe, occupancy increased by 2.4 percentage points to 77.4 per cent, with ADR rising by 3.4 per cent to $173.38 and RevPAR increasing by 6.7 per cent to $134.12. In the US, Hilton’s largest market, occupancy increased by 1.1 percentage points to 76.8 per cent, with ADR increasing by 1.4 per cent to $172.36 and RevPAR rising by 2.9 per cent to $132.33.
Overall, Hilton reported a second-quarter revenue increase of about 11 per cent year over year to $2.95 billion, with net income rising to $422 million from $413 million one year ago. Looking ahead, Hilton projects a 2 to 3 per cent increase in third-quarter systemwide RevPAR year over year. The company’s development pipeline at the end of the second quarter totaled 3,870 hotels, representing 508,300 rooms and showing a 15 per cent increase year over year.
In conclusion, Hilton’s second-quarter performance reflects a positive trend in RevPAR growth, driven by strong demand in group and business transient segments. Despite some adjustments to full-year projections, Hilton remains optimistic about the future outlook, especially in higher-end chain scales. As the hospitality industry continues to recover, Hilton’s strategic approach and focus on key market segments position it well for sustained growth in the coming quarters.
