Hilton Hotels Corp.’s revenue for the fourth quarter business travel rose 3 percent from 2019 levels, company executives said on an earnings call Thursday, and “almost all industries saw continued recovery compared to the prior quarter.”
The transit and group business proved to be strong sectors in the fourth quarter for the company. According to Hilton president and CEO Christopher Nassetta, small and medium-sized businesses were a “growing part of our business travel segment.” Additionally, “group travel accounted for approximately 85 percent of our segment mix and increased the company’s overall resilience,” he said.
Group travel in the fourth quarter improved the most of all segments during the quarter, with revenue per available room fully recovering to 2019 levels, according to Hilton executives. “Prompted both by housing and by [average daily rate] earnings, the company’s meetings boosted performance, improving more than seven points versus the third quarter,” Nassetta said.
In the fourth quarter, Hilton’s systemwide RevPAR increased 24.8 percent year-over-year to $101.72, up 7.5 percent compared to 2019. Thanks to “continued recovery in occupancy and rate strong in the Americas outside the US fourth quarter, RevPAR increased 53 percent year-over-year and 25 percent versus 2019,” said Hilton CFO Kevin Jacobs.
Systemwide occupancy rose 5.5 percent year-on-year to 67 percent, just three points off previous highs, Nassetta added.
Hilton’s fourth quarter system-wide ADR rose 14.5 percent from 2021 levels to $151.81.
Looking Forward
“Even with strong reservations ahead, [group] the pipeline still remains strong with advance bookings up more than 20 percent over last year, helped by increased demand for company meetings as organizations bring their teams together,” said Nassetta.
While China’s reopening came too late to boost the company’s fourth-quarter numbers, it is a source of optimism for Hilton executives.
“You’re already starting to see significant travel within China in terms of growth. And we expect, especially in the second half of the year, you’re going to have a big tailwind from that,” Nassetta said.
Hilton executives also have high expectations about Spark, the “premium economy” brand the company unveiled last month. With 100 percent of Spark properties open in 2023 slated for conversions, Nassetta said the brand will have a “significant impact” on Hilton’s numbers next year. Nassetta also expects the brand to become Hilton’s largest in terms of units over time.
“We think we’ve cracked the code,” Nassetta said, “We’ll have to test it.”
Looking ahead, Hilton executives acknowledged “macroeconomic uncertainty” but project a “soft to bumpy landing.” Nassetta said he expects “system top-line growth of 4 [percent] to 8 percent versus 2022” with performance driven by continued growth in all segments. The company expects “meaningful recovery across Asia and solid growth in US urban markets as the group’s business continues to recover,” Nassetta said.
Additional Q4 results
In the US, Hilton’s ADR increased 11.9 percent year-over-year to $157.20, while US-only RevPAR increased 19.6 percent to $106.99. Hilton’s US occupancy reached 68.1 percent, up 4.4 percentage points during 2021.
Hilton’s total revenue for the fourth quarter was $2.44 billion, up 33 percent year over year. The company reported net income of $333 million in the fourth quarter — up from $148 million a year earlier.
For the full year, Hilton added 355 new hotels with another 2,820 in the pipeline.
Hilton Q3 Results
